Document:

Exhibit 4.9

$650,000,000

MIDAMERICAN ENERGY HOLDINGS COMPANY

5.75% Senior Notes due 2018

REGISTRATION RIGHTS AGREEMENT

March 28, 2008

Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

Barclays Capital Inc.

200 Park Avenue

New York, NY 10166

Greenwich Capital Markets, Inc.

600 Steamboat Road

Greenwich, CT 06830

Wachovia Capital Markets, LLC

One Wachovia Center, DC-6

301 South College Street

Charlotte, NC 28288-0613

Dear Sirs:

MidAmerican Energy Holdings Company, an Iowa corporation (the “Company”), proposes to issue and sell to Lehman Brothers Inc., Barclays Capital Inc., Greenwich Capital Markets, Inc., Wachovia Capital Markets, LLC (collectively the “Representatives”) and the other Initial Purchasers named in the Purchase Agreement described below (collectively with the Representatives, the “Initial Purchasers”), upon the terms set forth in a purchase agreement dated March 25, 2008 (the “Purchase Agreement”), $650,000,000 aggregate principal amount of its 5.75% Senior Notes due 2018 (the “Initial Securities”). The Initial Securities will be issued pursuant to that certain Indenture, dated as of October 4, 2002, as amended by Article IV of the Second Supplemental Indenture thereto dated as of May 16, 2003, as further amended by Article IV of the Fourth Supplemental Indenture thereto dated as of March 24, 2006, as further amended by Article IV of the Fifth Supplemental Indenture thereto dated as of May 11, 2007, and as supplemented by the Seventh Supplemental Indenture to be entered into thereunder to be dated on or about March 28, 2008 (collectively, the “Indenture”), between the Company and Bank of New York 

 

 

Trust Company, N.A., as trustee (the “Trustee”). As an inducement to the Initial Purchasers to enter into the Purchase Agreement, the Company agrees with the Initial Purchasers, for the benefit of the Initial Purchasers and the holders of the Securities (as defined below) (collectively, the “Holders”), as follows:

1. Registered Exchange Offer. Unless not permitted by applicable law (after the Company has complied with the ultimate paragraph of this Section 1), the Company shall prepare and file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Exchange Offer Registration Statement”) on an appropriate form under the Securities Act of 1933, as amended (the “Securities Act”), with respect to a proposed offer (the “Registered Exchange Offer”) to the Holders of Transfer Restricted Securities (as defined in Section 6 hereof), who are not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer, to issue and deliver to such Holders, in exchange for the Initial Securities, a like aggregate principal amount of debt securities of the Company issued under the Indenture, substantially identical in all material respects to the Initial Securities and registered under the Securities Act (the “Exchange Securities”). The Company shall use its reasonable best efforts to cause the Exchange Offer Registration Statement to become effective under the Securities Act within 270 days (such 270th day being an
“Effectiveness Deadline”) after the date on which the Initial Purchasers purchase the Initial Securities pursuant to the Purchase Agreement (the “Closing Date”) and will keep the Exchange Offer Registration Statement effective for not less than 30 days (or longer, if required by applicable law) after the date notice of the Registered Exchange Offer is mailed to the Holders (such period being called the “Exchange Offer Registration Period”).

If the Company commences the Registered Exchange Offer, the Company will be entitled to consummate the Registered Exchange Offer 30 days after such commencement (provided that the Company has accepted all the Initial Securities theretofore validly tendered in accordance with the terms of the Registered Exchange Offer).

Following the declaration of the effectiveness of the Exchange Offer Registration Statement, the Company shall promptly commence the Registered Exchange Offer, it being the objective of the Registered Exchange Offer to enable each Holder of Transfer Restricted Securities electing to exchange the Initial Securities for Exchange Securities (assuming that such Holder is not an affiliate of the Company within the meaning of the Securities Act, acquires the Exchange Securities in the ordinary course of such Holder’s business and has no arrangements or understanding with any person to participate in the distribution of the Exchange Securities and is not prohibited by any law or policy of the Commission from participating in the Registered Exchange Offer) to trade such Exchange Securities from and after their receipt without any limitations or restrictions under the Securities Act.

The Company acknowledges that, pursuant to current interpretations by the Commission’s staff of Section 5 of the Securities Act, in the absence of an applicable exemption therefrom, (i) each Holder which is a broker-dealer electing to exchange Initial Securities, acquired for its own account as a result of market making activities or other trading activities, for Exchange Securities (an “Exchanging Dealer”), is required to deliver a prospectus containing the information set forth in (a) Annex A hereto on the cover, (b) Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section, and (c) Annex C hereto in the “Plan of Distribution” section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to the Registered Exchange Offer and (ii) an Initial Purchaser that elects to sell Securities (as defined below) acquired in exchange for Initial Securities constituting any portion of an unsold allotment, is required to deliver a prospectus containing the information required by Items 507 or 508, as applicable, of Regulation S-K under the Securities Act in connection with such sale.

 

 

2

 

The Company shall use its reasonable best efforts to keep the Exchange Offer Registration Statement effective and to amend and supplement the prospectus contained therein, in order to permit such prospectus to be lawfully delivered by all persons subject to the prospectus delivery requirements of the Securities Act for such period of time as such persons must comply with such requirements in order to resell the Exchange Securities; provided, however, that (i) in the case where such prospectus and any amendment or supplement thereto must be delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be the lesser of 120 days and the date on which all Exchanging Dealers and the Initial Purchasers have sold
all Exchange Securities held by them (unless such period is extended pursuant to Section 3(j) below) and (ii) the Company shall make such prospectus and any amendment or supplement thereto available to any broker-dealer for use in connection with any resale of any Exchange Securities for a period of not less than 120 days after the consummation of the Registered Exchange Offer.

If, upon consummation of the Registered Exchange Offer, any Initial Purchaser holds Initial Securities acquired by it as part of its initial distribution, the Company, simultaneously with the delivery of the Exchange Securities pursuant to the Registered Exchange Offer, shall issue and deliver to such Initial Purchaser upon the written request of such Initial Purchaser, in exchange (the “Private Exchange”) for the Initial Securities held by such Initial Purchaser, a like principal amount of debt securities of the Company issued under the Indenture and substantially identical in all material respects to the Initial Securities (the “Private Exchange
Securities”). The Initial Securities, the Exchange Securities and the Private Exchange Securities are herein collectively called the “Securities”.

In connection with the Registered Exchange Offer, the Company shall:

(a) mail to each Holder a copy of the prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents

(b) keep the Registered Exchange Offer open for not less than 30 days (or longer, if required by applicable law) after the date notice thereof is mailed to the Holders;

(c) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York, which may be the Trustee or an affiliate of the Trustee;

(d) permit Holders to withdraw tendered Securities at any time prior to the close of business, New York time, on the last business day on which the Registered Exchange Offer shall remain open; and

(e) otherwise comply with all applicable laws.

As soon as practicable after the close of the Registered Exchange Offer or the Private Exchange, as the case may be, the Company shall:

(x) accept for exchange all the Initial Securities validly tendered and not withdrawn pursuant to the Registered Exchange Offer and the Private Exchange; 

(y) deliver to the Trustee for cancellation all the Initial Securities so accepted for exchange; and

(z) cause the Trustee to authenticate and deliver promptly to each Holder of the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, equal in principal amount to the Initial Securities of such Holder so accepted for exchange.

 

 

3

 

The Indenture provides that the Exchange Securities will not be subject to the transfer restrictions set forth in the Indenture and that all the Securities will vote and consent together on all matters as one class and that none of the Securities will have the right to vote or consent as a class separate from one another on any matter.

Interest on each Exchange Security and Private Exchange Security issued pursuant to the Registered Exchange Offer and in the Private Exchange will accrue from the last interest payment date on which interest was paid on the Initial Securities surrendered in exchange therefor or, if no interest has been paid on the Initial Securities, from the date of original issue of the Initial Securities.

Each Holder participating in the Registered Exchange Offer shall be required to represent to the Company that at the time of the consummation of the Registered Exchange Offer (i) any Exchange Securities received by such Holder will be acquired in the ordinary course of its business, (ii) at the time of commencement of the Registered Exchange Offer, such Holder had no arrangements or understanding with any person to participate in the distribution of the Securities or the Exchange Securities within the meaning of the Securities Act, (iii) such Holder is not an “affiliate,” as defined in Rule 405 of the Securities Act, of the Company or if it is an affiliate, such Holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable, (iv) if such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Securities and (v) if such Holder is a broker-dealer, that it will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities and that it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities.

Notwithstanding any other provisions hereof, the Company will ensure that (i) any Exchange Offer Registration Statement and any amendment thereto and any prospectus forming part thereof and any supplement thereto complies in all material respects with the Securities Act and the rules and regulations thereunder, (ii) any Exchange Offer Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any prospectus forming part of any Exchange Offer Registration Statement, and any supplement to such prospectus, does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

If following the date hereof there has been announced a change in Commission policy with respect to exchange offers that in the reasonable opinion of counsel to the Company raises a substantial question as to whether the Registered Exchange Offer is permitted by applicable federal law, the Company will seek a no-action letter or other favorable decision from the Commission allowing the Company to consummate the Registered Exchange Offer. The Company will pursue the issuance of such a decision to the Commission staff level. In connection with the foregoing, the Company will take all such other actions as may be requested by the Commission or otherwise reasonably required in connection with the issuance of such decision, including without limitation (i) participating in telephonic conferences with the Commission, (ii) delivering to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that the Registered Exchange Offer should be permitted and (iii) diligently pursuing a resolution (which need not be favorable) by the Commission staff.

2. Shelf Registration. If, (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect a Registered Exchange Offer, as contemplated by Section 1 hereof, (ii) the Registered Exchange Offer is not consummated by the 

 

 

4

 

date that is 40 days after the date on which the Exchange Offer Registration Statement is declared effective (such 40th day being the “Consummation Deadline”), (iii) any Initial Purchaser so requests with respect to the Initial Securities (or the Private Exchange Securities) not eligible to be exchanged for Exchange Securities in the Registered Exchange Offer and held by it following consummation of the Registered Exchange Offer or (iv) any Holder (other than an Exchanging Dealer) is not eligible to participate in the Registered Exchange Offer or, in the case of any Holder (other than an Exchanging Dealer) that participates in the Registered Exchange Offer, such Holder does not receive freely tradeable Exchange Securities on the date of the exchange and any such Holder so requests for any reason other than
the failure by such Holder to make a timely and valid tender in accordance with the Registered Exchange Offer, the Company shall take the following actions (the date on which any of the conditions described in the foregoing clauses (i) through (iv) occur, including in the case of clauses (iii) or (iv) the receipt of the required notice, being a “Trigger Date”):

(a) The Company shall as promptly as practicable prepare and file with the Commission and thereafter use its reasonable best efforts to cause to be declared effective not later than the latter to occur of the date that is (i) 150 days after the Trigger Date and (ii) 270 days after the Closing Date (such 150th or 270th day, as the case may be, being an “Effectiveness Deadline”), a registration statement (the “Shelf Registration Statement” and, together with the Exchange Offer Registration Statement, a “Registration
Statement”) on an appropriate form under the Securities Act relating to the offer and sale of the Transfer Restricted Securities by the Holders thereof from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under the Securities Act (hereinafter, the “Shelf Registration”); provided, however, that no Holder (other than an Initial Purchaser) shall be entitled to have the Securities held by it covered by the Shelf Registration Statement unless such Holder agrees in writing to be bound by all the provisions of this Agreement applicable to such Holder. 

(b) The Company shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective in order to permit the prospectus included therein to be lawfully delivered by the Holders of the relevant Securities, for a period of one year (or for such longer period if extended pursuant to Section 3(j) below) from the Closing Date or such shorter period that will terminate when all the Securities covered by the Shelf Registration Statement (i) have been sold pursuant thereto or (ii) are no longer Transfer Restricted Securities (such applicable period being called the “Shelf Registration Period”).

(c) Notwithstanding any other provisions of this Agreement to the contrary, the Company shall cause the Shelf Registration Statement and the related prospectus and any amendment or supplement thereto, as of the effective date of the Shelf Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission promulgated thereunder and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

3. Registration Procedures. In connection with any Shelf Registration Statement contemplated by Section 2 hereof and, to the extent applicable, any Registered Exchange Offer contemplated by Section 1 hereof, the following provisions shall apply:

(a) The Company shall (i) furnish to each Initial Purchaser, prior to the filing thereof with the Commission, a copy of the Registration Statement and each amendment thereof and each supplement, if any, to the prospectus included therein and, in the event that an Initial Purchaser 

 

 

5

 

(with respect to any portion of an unsold allotment from the original offering of the Initial Securities) is participating in the Registered Exchange Offer or the Shelf Registration Statement, the Company shall use its best efforts to reflect in each such document, when so filed with the Commission, such comments as such Initial Purchaser reasonably may propose not later than five business days after delivery of such documents to such Initial Purchaser; (ii) include the information set forth in Annex A hereto on the cover, in Annex B hereto in the “Exchange Offer Procedures” section and the “Purpose of the Exchange Offer” section and in Annex C hereto in the “Plan of Distribution” section of the prospectus forming a part of the Exchange Offer Registration Statement and include the information set forth in Annex D hereto in the letter of transmittal
delivered pursuant to the Registered Exchange Offer; (iii) if requested by an Initial Purchaser, include the information required by Items 507 or 508, as applicable, of Regulation S-K under the Securities Act in the prospectus forming a part of the Exchange Offer Registration Statement; (iv) include within the prospectus contained in the Exchange Offer Registration Statement a section entitled “Plan of Distribution,” reasonably acceptable to the Initial Purchasers, which shall contain a summary statement of the positions taken or policies made by the staff of the Commission with respect to the potential “underwriter” status of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of Exchange Securities received by such broker-dealer in the Registered Exchange Offer (a
“Participating Broker-Dealer”), whether such positions or policies have been publicly disseminated by the staff of the Commission or such positions or policies, in the reasonable judgment of the Initial Purchasers based upon advice of counsel (which may be in-house counsel), represent the prevailing views of the staff of the Commission; and (v) in the case of a Shelf Registration Statement, include the names of the Holders who propose to sell Securities pursuant to the Shelf Registration Statement as selling securityholders.

(b) The Company shall give written notice to the Initial Purchasers, the Holders of the Securities and any Participating Broker-Dealer from whom the Company has received prior written notice that it will be a Participating Broker-Dealer in the Registered Exchange Offer (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made):

(i) when the Registration Statement or any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective;

(ii) of any request by the Commission for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;

(iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose;

(iv) of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose of which the Company has knowledge; and

(v) of the happening of any event that requires the Company to make changes in the Registration Statement or the prospectus in order that the Registration Statement or the prospectus do not contain an untrue statement of a material fact nor omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in light of the circumstances under which they were made) not misleading.

 

 

6

 

(c) The Company shall make every reasonable effort to obtain the withdrawal, at the earliest possible time, of any order suspending the effectiveness of the Registration Statement.

(d) The Company shall furnish to each Holder of Securities included within the coverage of the Shelf Registration, without charge, at least one copy of the Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits thereto (including those, if any, incorporated by reference).

(e) The Company shall deliver to each Exchanging Dealer and each Initial Purchaser, and to any other Holder who so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if any Initial Purchaser or any such Holder requests, all exhibits thereto (including those incorporated by reference).

(f) The Company shall, during the Shelf Registration Period, deliver to each Holder of Securities included within the coverage of the Shelf Registration, without charge, as many copies of the prospectus (including each preliminary prospectus) included in the Shelf Registration Statement and any amendment or supplement thereto as such person may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use in accordance with applicable law of the prospectus or any amendment or supplement thereto by each of the selling Holders of the Securities in connection with the offering and sale of the Securities covered by the prospectus, or any amendment or supplement thereto, included in the Shelf Registration Statement.

(g) The Company shall deliver to each Initial Purchaser, any Exchanging Dealer, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer, without charge, as many copies of the final prospectus included in the Exchange Offer Registration Statement and any amendment or supplement thereto as such persons may reasonably request. The Company consents, subject to the provisions of this Agreement, to the use in accordance with applicable law of the prospectus or any amendment or supplement thereto by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such other persons required to deliver a prospectus following the Registered Exchange Offer in connection with the offering and sale of the Exchange Securities covered by the prospectus, or any amendment or supplement thereto,
included in such Exchange Offer Registration Statement.

(h) Prior to any public offering of the Securities pursuant to any Registration Statement, the Company shall cooperate with the Holders of the Securities included therein and their Special Counsel (as defined in paragraph (p) below) in connection with the registration or qualification of the Securities for offer and sale under the securities or “blue sky” laws of such states of the United States as any Holder of the Securities reasonably requests in writing and do any and all other acts or things reasonably necessary or advisable to enable the offer and sale in such jurisdictions of the Securities covered by such Registration Statement; provided, however, that the Company shall not be required to
(i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action which would subject it to general service of process or to taxation in any jurisdiction where it is not then so subject.

 

 

7

 

(i) The Company shall cooperate with the Holders of the Securities to facilitate the timely preparation and delivery of certificates representing the Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders may request a reasonable period of time prior to sales of the Securities pursuant to such Registration Statement.

(j) Upon the occurrence of any event contemplated by paragraphs (ii) through (v) of Section 3(b) above during the period for which the Company is required to maintain an effective Registration Statement, the Company shall promptly prepare and file a post-effective amendment to the Registration Statement or a supplement to the related prospectus and any other required document so that, as thereafter delivered to Holders of the Securities or purchasers of Securities, the prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer in accordance with paragraphs
(ii) through (v) of Section 3(b) above to suspend the use of the prospectus until the requisite changes to the prospectus have been made, then the Initial Purchasers, the Holders of the Securities and any such Participating Broker-Dealers shall suspend use of such prospectus, and the period of effectiveness of the Shelf Registration Statement provided for in Section 2(b) above and the Exchange Offer Registration Statement provided for in Section 1 above shall each be extended by the number of days from and including the date of the giving of such notice to and including the date when the Initial Purchasers, the Holders of the Securities and any known Participating Broker-Dealer shall have received such amended or supplemented prospectus pursuant to this Section 3(j).

(k) Not later than the effective date of the applicable Registration Statement, the Company will provide a CUSIP number for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, and provide the applicable trustee with printed certificates for the Initial Securities, the Exchange Securities or the Private Exchange Securities, as the case may be, in a form eligible for deposit with The Depository Trust Company.

(l) The Company will use its reasonable best efforts to comply with all rules and regulations of the Commission to the extent and so long as they are applicable to the Registered Exchange Offer or the Shelf Registration and will make generally available to its security holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period.

(m) The Company shall use its reasonable best efforts to cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended, in a timely manner and, in connection therewith, cooperate with the Trustee under the Indenture and the Holders of Securities to effect such changes to the Indenture as may be required for such qualification. In the event that such qualification would require the appointment of a new trustee under the Indenture, the Company shall appoint a new trustee thereunder pursuant to the applicable provisions of the Indenture.

(n) The Company may require each Holder of Securities to be sold pursuant to the Shelf Registration Statement to furnish to the Company such information regarding the Holder and the distribution of the Securities as the Company may from time to time reasonably require 

 

 

8

 

for inclusion in the Shelf Registration Statement, and the Company may exclude from such registration the Securities of any Holder that fails to furnish such information within a reasonable time after receiving such request.

(o) The Company shall enter into such customary agreements (including, if requested, an underwriting agreement in customary form) and take all such other action, if any, as any Holder of the Securities shall reasonably request in order to facilitate the disposition of the Securities pursuant to any Shelf Registration.

(p) In the case of any Shelf Registration, the Company shall (i) make available at reasonable times and upon reasonable notice for inspection by a representative of the Holders of a majority in aggregate principal amount of the Securities being sold, any underwriter participating in any disposition pursuant to the Shelf Registration Statement and any attorney, accountant or other agent retained by the Holders of the Securities or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Company and (ii) cause the Company’s officers, directors, employees, accountants and auditors to supply all relevant information reasonably requested by the Holders of the Securities or any such underwriter, attorney, accountant or agent in connection with the Shelf Registration Statement, in each case, as shall be
reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by you and on behalf of the other parties, by one counsel designated by and on behalf of such other parties as described herein (which counsel shall be Latham & Watkins LLP or another law firm reasonably acceptable to the Company, such counsel being referred to herein as the “Special Counsel”); provided, further,
however, that, as a condition to supplying such information, the Company shall receive an agreement in writing from such Special Counsel agreeing that any information that is designated in writing by the Company, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Special Counsel and any other person entitled to receive such information pursuant to this paragraph (p) unless (w) disclosure of such information is required pursuant to applicable law or by court or administrative order, (x) disclosure of such information is, in the reasonable opinion of counsel to the Company, necessary to avoid or correct a misstatement or omission of a material fact in any Registration Statement, prospectus or any supplement or post-effective amendment thereto or disclosure is otherwise required by law, (y) such information becomes generally available to the public
other than as a result of a disclosure by such counsel or any other person entitled to receive such information pursuant to this paragraph (p) in violation of this proviso or (z) such information is approved for release by the Company in writing.

(q) In the case of any Shelf Registration, the Company, if requested by any Holder of Securities covered thereby, shall cause (i) its counsel to deliver an opinion and updates thereof relating to the Securities in customary form addressed to such Holders and the managing underwriters, if any, thereof and dated, in the case of the initial opinion, the effective date of such Shelf Registration Statement (it being agreed that the matters to be covered by such opinion shall include, without limitation, the due incorporation and good standing of the Company and its “significant subsidiaries” (as defined in Rule 1-02(w) of Regulation S-X); the qualification of the Company and its significant subsidiaries to transact business as foreign corporations; the due authorization, execution and delivery of the relevant agreement of the type referred to in Section 3(o)
hereof; the due authorization, execution, authentication and issuance, and the validity and enforceability, of the applicable Securities; the absence of material legal or governmental proceedings involving the Company and its significant subsidiaries; the absence of governmental approvals required to be obtained in connection with the Shelf Registration Statement, the 

 

 

9

 

offering and sale of the applicable Securities, or any agreement of the type referred to in Section 3(o) hereof; the compliance as to form of such Shelf Registration Statement and any documents incorporated by reference therein and of the Indenture with the requirements of the Securities Act and the Trust Indenture Act, respectively; and, as of the date of the opinion and as of the effective date of the Shelf Registration Statement or most recent post-effective amendment thereto, as the case may be, the absence from such Shelf Registration Statement and the prospectus included therein, as then amended or supplemented, and from any documents incorporated by reference therein, if applicable, of an untrue statement of a material fact or the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case
of any such documents, in the light of the circumstances existing at the time that such documents were filed with the Commission under the Exchange Act); (ii) its officers to execute and deliver all customary documents and certificates and updates thereof requested by any underwriters of the applicable Securities; and (iii) its independent public accountants and the independent public accountants with respect to any other entity, if any, for which financial information is provided in the Shelf Registration Statement to provide to the selling Holders of the applicable Securities and any underwriter therefor a comfort letter in customary form and covering matters of the type customarily covered in comfort letters in connection with underwritten offerings, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72.

(r) In the case of the Registered Exchange Offer, if requested by any Initial Purchaser or any known Participating Broker-Dealer, the Company shall cause (i) its counsel to deliver to such Initial Purchaser or such Participating Broker-Dealer a signed opinion in the form set forth in Section 6(d)-(f) of the Purchase Agreement with such changes as are customary in connection with the preparation of a Registration Statement and (ii) its independent public accountants and the independent public accountants with respect to any other entity, if any, for which financial information is provided in the Registration Statement to deliver to such Initial Purchaser or such Participating Broker-Dealer a comfort letter or comfort letters, as applicable, in customary form, meeting the requirements as to the substance thereof as set forth in Section 6(a)-(b) of the Purchase
Agreement, with appropriate date changes.

(s) If a Registered Exchange Offer or a Private Exchange is to be consummated, upon delivery of the Initial Securities by Holders to the Company (or to such other Person as directed by the Company) in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be, the Company shall mark, or caused to be marked, on the Initial Securities so exchanged that such Initial Securities are being canceled in exchange for the Exchange Securities or the Private Exchange Securities, as the case may be; in no event shall the Initial Securities be marked as paid or otherwise satisfied.

(t) The Company will use its reasonable best efforts to cause the Securities covered by any Registration Statement to continue to be rated by the rating agencies that initially rated the Securities during the period that any such Registration Statement is required hereunder to remain effective (it being acknowledged, however, that the foregoing shall not be deemed to require the Company to maintain the rating of such Securities at the rating initially given to the Securities). 

(u) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “Rules”) of the Financial Industry Regulatory Authority (“FINRA”)) thereof, whether as a Holder of such Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of 

 

 

10

 

such Rules, including, without limitation, by (i) if such Rules, including Rule 2720, shall so require, engaging a “qualified independent underwriter” (as defined in Rule 2720) to participate in the preparation of the Registration Statement relating to such Securities, to exercise usual standards of due diligence in respect thereto and, if any portion of the offering contemplated by such Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield of such Securities, (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 5 hereof and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the Rules.

(v) The Company shall use its reasonable best efforts to take all other steps necessary to effect the registration of the Securities covered by a Registration Statement contemplated hereby.

(w) Notwithstanding any other provision hereof, the Company may postpone or suspend the filing or the effectiveness of a Registration Statement (or any amendments or supplements thereto) if (i) such action is required by applicable law or (ii) such action is taken by the Company in good faith and for valid business reasons (not including the avoidance of the Company’s obligations hereunder), including the acquisition or divestiture of assets, other pending corporate developments, public filings with the Commission or other similar events, so long as the Company promptly thereafter complies with the requirements of Section 3(j) hereof, if applicable. Notwithstanding the occurrence of any event referred to in the immediately preceding sentence (each such occurrence, a “Suspension”), no such Suspension shall suspend, postpone or in any other manner affect the running of the time period after which a Registration Default shall be deemed to occur and, if the filing or effectiveness of any such Registration Statement is postponed or suspended as a result of a Suspension, a Registration Default shall nonetheless exist if all other requirements required for the occurrence of a Registration Default shall then be satisfied, and the provisions of Section 6 hereof requiring the accrual and payment of Additional Interest, as set forth in such Section, on the Securities shall be payable.

4. Registration Expenses. 

(a) All expenses incident to the Company’s performance of and compliance with this Agreement will be borne by the Company, regardless of whether a Registration Statement is ever filed or becomes effective, including without limitation; 

(i) all registration and filing fees and expenses; 

(ii) all fees and expenses of compliance with federal securities and state “blue sky” or securities laws; 

(iii) all expenses of printing (including printing certificates for the Securities to be issued in the Registered Exchange Offer and the Private Exchange and printing of Prospectuses), messenger and delivery services and telephone; 

(iv) all fees and disbursements of counsel for the Company; and

(v) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance). 

 

 

11

 

The Company will bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company.

(b) In connection with any Registration Statement required by this Agreement, the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities who are tendering Initial Securities in the Registered Exchange Offer and/or selling or reselling Securities pursuant to the “Plan of Distribution” contained in the Exchange Offer Registration Statement or the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of the Special Counsel.

5. Indemnification. 

(a) The Company agrees to indemnify and hold harmless each Holder of the Securities, any Participating Broker-Dealer and each person, if any, who controls such Holder or such Participating Broker-Dealer within the meaning of the Securities Act or the Exchange Act (each Holder, any Participating Broker-Dealer and such controlling persons are referred to collectively as the “Indemnified Parties”) from and against any losses, claims, damages or liabilities, joint or several, or any actions in respect thereof (including, but not limited to, any losses, claims, damages, liabilities or actions relating to purchases and sales of the Securities) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of, or are based upon, the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action in respect thereof; provided, however, that (i) the Company
shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Participating Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus relating to
such Securities was required to be delivered by such Holder or Participating Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Participating Broker-Dealer results from the fact that there was not delivered to such person, at or prior to the confirmation of the sale of such Securities to such person, a prospectus correcting any such untrue statement or omission or alleged untrue statement or omission; provided that the Company had previously furnished copies thereof to such Holder or Participating Broker-Dealer; provided further, however, that this indemnity agreement will be in addition to
any liability which the Company may otherwise have to such Indemnified Party. The Company shall also indemnify underwriters, their officers and directors and each person who controls such underwriters within the meaning of the Securities Act or the Exchange Act to the same extent as provided above with respect to the indemnification of the Holders of the Securities if requested by such Holders.

 

 

12

 

(b) Each Holder of the Securities, severally and not jointly, will indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act from and against any losses, claims, damages or liabilities or any actions in respect thereof, to which the Company or any such controlling person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities or actions arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement or prospectus or in any amendment or supplement thereto or in any preliminary prospectus relating to a Shelf Registration, or arise out of or are based upon the omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading, but in each case only to the extent that the untrue statement or omission or alleged untrue statement or omission was made in reliance upon and in conformity with written information pertaining to such Holder and furnished to the Company by or on behalf of such Holder specifically for inclusion therein; and, subject to the limitation set forth immediately preceding this clause, shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, claim, damage, liability or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons.

(c) Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action or proceeding (including a governmental investigation), such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 5, notify the indemnifying party of the commencement thereof; provided, however, that the omission so to notify the indemnifying party (i) shall not relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof the indemnifying party will not be liable to such indemnified party under this Section 5 for any legal or other expenses, other than reasonable costs of investigation, subsequently incurred by such indemnified party in connection with the defense thereof; provided, however, that the indemnified party shall have the right to employ
counsel to represent the indemnified party and their respective controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified party against the indemnifying party under this Section 5 if the employment of such counsel shall have been authorized in writing by the indemnifying party in connection with the defense of such action, if in the written opinion of counsel to either the indemnifying party or the indemnified party, representation of both parties by the same counsel would be inappropriate due to actual or likely conflicts of interest between them or the indemnifying party shall have failed to employ counsel within a reasonable period of time, and in that event the fees and expenses of one firm of separate counsel (in addition to the fees and expenses of one firm of local counsel in each applicable jurisdiction) shall be paid by the indemnifying party. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought 

 

 

13

 

hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

(d) If the indemnification provided for in this Section 5 is unavailable or insufficient to hold harmless an indemnified party under subsections (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to in subsection (a) or (b) above in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and the indemnified party on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities (or actions in respect thereof) as well as any other relevant equitable considerations. The relative fault of the parties shall be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or such Holder or such other indemnified party, as the case may be, on the other, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding any other provision of this Section 5(d), the Holders of the Securities shall not be required to contribute any amount in excess of the amount by which the net proceeds received by such Holders from the sale of the Securities pursuant
to a Registration Statement exceeds the amount of damages which such Holders have otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this paragraph (d), each person, if any, who controls such indemnified party within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as such indemnified party and each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act shall have the same rights to contribution as the Company.

(e) The agreements contained in this Section 5 shall survive the sale of the Securities pursuant to a Registration Statement and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party.

6. Additional Interest Under Certain Circumstances. 

(a) Additional interest (the “Additional Interest”) with respect to each Transfer Restricted Security shall be assessed as follows if either of the following events occur (each such event in clauses (i) and (ii) below being herein called an “Registration Default”):

(i) any Registration Statement required by this Agreement is not declared effective by the Commission on or prior to the applicable Effectiveness Deadline; or

(ii) on and after the applicable Effectiveness Deadline (plus an additional 30 days in respect of the Exchange Offer Registration Statement), any Registration

 

 

14

 

Statement required by this Agreement has been declared effective by the Commission but (A) such Registration Statement thereafter ceases to be effective or (B) such Registration Statement or the related prospectus ceases to be usable in connection with resales of Transfer Restricted Securities during the periods specified herein because (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus to comply with the Securities Act or the Exchange Act or the respective rules thereunder or (3) of a Suspension by the Company in
accordance with Section 3(w) hereof.

Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Company or pursuant to operation of law or as a result of any action or inaction by the Commission.

Additional Interest shall accrue on each Transfer Restricted Security over and above the interest set forth in the title of such Transfer Restricted Security from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have ceased to be continuing, at a rate of 0.50% per annum (the “Additional Interest Rate”).

(b) A Registration Default referred to in Section 6(a)(ii) hereof shall be deemed not to have occurred and be continuing in relation to a Shelf Registration Statement or the related prospectus if (i) such Registration Default has occurred solely as a result of (x) the filing of a post-effective amendment to such Shelf Registration Statement to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus or (y) other material events with respect to the Company that would need to be described in such Shelf Registration Statement or the related prospectus and (ii) in the case of clause (y), the Company is proceeding promptly and in good faith to amend or supplement such Shelf Registration Statement and related
prospectus to describe such events; provided, however, that in any case if such Registration Default occurs for a continuous period in excess of 30 days, Additional Interest shall be payable in accordance with the above paragraph from the date of such Registration Default until such Registration Default ceases.

(c) Notwithstanding the foregoing, the Company shall not be required to pay the Additional Interest required pursuant to paragraph (a) above to a Holder of Transfer Restricted Securities if the applicable Registration Default arises by reason of the failure of such Holder to provide such information as (i) the Company may reasonably request, with reasonable prior written notice, for use in the Shelf Registration Statement or any prospectus included therein to the extent the Company reasonably determines that such information is required to be included therein by applicable law, (ii) the FINRA or the Commission may request in connection with such Shelf Registration Statement or (iii) is required to comply with the agreements of such Holder contained in Section 3(a) to the extent compliance thereof is necessary for the Shelf Registration Statement to be declared effective.

(d) Any amounts of Additional Interest due pursuant to Section 6(a) will be payable in cash on the regular interest payment dates with respect to the Securities. The amount of Additional Interest will be determined by multiplying the applicable Additional Interest Rate by the principal amount of the Securities and further multiplied by a fraction, the numerator of which is the number of days such Additional Interest Rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months), and the denominator of which is 360.

 

 

15

 

(e) “Transfer Restricted Securities” means each Security until (i) the date on which such Security has been exchanged by a person other than a broker-dealer for a freely transferable Exchange Security in the Registered Exchange Offer, (ii) following the exchange by a broker-dealer in the Registered Exchange Offer of an Initial Security for an Exchange Security, the date on which such Exchange Security is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Security has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement, (iv) the date on which such Security is
distributed to the public pursuant to Rule 144 under the Securities Act or (v) two years from the Closing Date, provided, however, that at the written request of the Company, the Representatives may in their sole discretion agree to shorten such two-year period to one year from the Closing Date.

7. Rules 144 and 144A. The Company agrees with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Company (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of
such Transfer Restricted Securities pursuant to Rule 144.

8. Underwritten Registrations. If any of the Transfer Restricted Securities covered by any Shelf Registration are to be sold in an underwritten offering, subject to the proviso in Section 3(o) hereof, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the Holders of a majority in aggregate principal amount of such Transfer Restricted Securities to be included in such offering and will be reasonably acceptable to the Company.

No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Transfer Restricted Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

9. Miscellaneous.

(a) Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under Section 1 and 2 hereof may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Initial Purchasers or any Holder may obtain such relief as may be required to specifically enforce the Company’s obligations under Sections 1 and 2 hereof. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

 

 

16

 

(b) No Inconsistent Agreements. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The Company hereby represents that the rights granted to the Holders hereunder do not conflict with and are not inconsistent with the rights granted to the holders of the Company’s securities under any agreement in effect on the date hereof.

(c) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, except by the Company and with the written consent of the Holders of a majority in principal amount of the Securities affected by such amendment, modification, supplement, waiver or consents; provided, however, that, with respect to any matter that directly or indirectly adversely affects the rights of any Holder of Transfer Restricted Securities occurring within the period in which any Registration Statement is effective for such Holder, the
Company shall obtain the written consent of each such Holder against which such amendment, modification, supplement, waiver, consent or departure is to be effective. Notwithstanding the foregoing (except of the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of any Holder of Securities whose Securities are being sold or exchanged pursuant to a Registration Statement and that does not directly or indirectly adversely affect the rights of any other Holder of Securities may be given by Holders of at least a majority in aggregate principal amount of the Securities being sold or exchanged by such holders pursuant to such Registration Statement; provided, however, that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately preceding sentence. Without the consent of the Holder of each Security, however, no modification may change the provisions relating to the payment of Additional Interest.

(d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, first-class mail, facsimile transmission, or air courier which guarantees overnight delivery:

(1) if to a Holder of the Securities, at the most current address given by such Holder to the Company.

(2) if to the Initial Purchasers;

Lehman Brothers Inc.

745 Seventh Avenue

New York, NY 10019

Fax: (646) 834-8133

Attention: Debt Capital Markets, Global Power Group (with a copy to the General Counsel at the same address)

Barclays Capital Inc.

200 Park Avenue

New York, NY 10166

Fax: (212) 412-1615

Attention: Debt Capital Markets

 

 

17

 

Greenwich Capital Capital Markets, LLC

600 Steamboat Road

Greenwich, CT 06830

Fax: 203-422-4534

Attention: Fixed Income Syndicate

Wachovia Capital Markets, LLC

One Wachovia Center, DC-6

301 South College Street

Charlotte, NC 28288-0613

Fax: (704) 383-0661

Attention: Debt Capital Markets 

and with a copy to:

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022-4802

Fax No.: (212) 751-4864

Attention: Jonathan R. Rod

(3) if to the Company, at its address as follows:

MidAmerican Energy Holdings Company

666 Grand Avenue

P.O. Box 657

Des Moines, Iowa 50306-0657

Fax No.: (402) 241-1658

Attention: General Counsel 

with a copy to:

Willkie Farr & Gallagher

787 Seventh Avenue

New York, New York 10019

Fax No.: (212) 728-8111

Attention: Peter J. Hanlon

All such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally delivered; three business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged by recipient’s facsimile machine operator, if sent by facsimile transmission; and on the day delivered, if sent by overnight air courier guaranteeing next day delivery.

 

 

18

 

(e) Third Party Beneficiaries. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder.

(f) Successors and Assigns. This Agreement shall be binding upon the Company and its successors and assigns.

(g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

(j) Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

(k) Securities Held by the Company. Whenever the consent or approval of Holders of a specified percentage of principal amount of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(l) Submission to Jurisdiction. Each of the parties hereto hereby submits to the exclusive jurisdiction of the Federal and State Courts of the Borough of Manhattan in the City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

 

 

19

 

If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the several Initial Purchasers and the Company in accordance with its terms.

  

	
                         
 	
                         
 	
                        Very truly yours,
  
 MIDAMERICAN ENERGY HOLDINGS COMPANY
 
	
                         
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                        By: 
 	
                        /s/ Patrick J. Goodman
 
	
                         
 	
                         
 	
                         
 	
                        Name: Patrick J. Goodman
 
	
                         
 	
                         
 	
                         
 	
                        Title:  Senior Vice President and Chief Financial Officer
 

 

 

(Registration Rights Agreement)

 

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written.

Lehman Brothers Inc. 

Barclays Capital Inc.

Greenwich Capital Markets, Inc.

Wachovia Capital Markets, LLC

as Representatives of the several Initial Purchasers

 

	
                        LEHMAN BROTHERS INC.
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                         
 
	
      By: 
 	
                        /s/ Gregory J. Hall
 	
                         
 	
                         
 	
                         
 
	
                        Name: 
 	
                        Gregory J. Hall
 	
                         
 	
                         
 	
                         
 
	
                        Title: 
 	
                        Managing Director
 	
                         
 	
                         
 	
                         
 

 

	
                        BARCLAYS CAPITAL INC.
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                         
 
	
      By: 
 	
                        /s/ Pamela Kendall
 	
                         
 	
                         
 	
                         
 
	
                        Name: 
 	
                        Pamela Kendall
 	
                         
 	
                         
 	
                         
 
	
                        Title: 
 	
                        Director
 	
                         
 	
                         
 	
                         
 

 

	
                        GREENWICH CAPITAL MARKETS, INC.
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                         
 
	
      By: 
 	
                        /s/ Okwudiri Onyedum
 	
                         
 	
                         
 	
                         
 
	
                        Name: 
 	
                        Okwudiri Onyedum
 	
                         
 	
                         
 	
                         
 
	
                        Title: 
 	
                        Senior Vice President
 	
                         
 	
                         
 	
                         
 

 

	
                        WACHOVIA CAPITAL MARKETS, LLC
 	
                         
 	
                         
 
	
                         
 	
                         
 	
                         
 
	
      By: 
 	
                        /s/ Jake Horstman
 	
                         
 	
                         
 	
                         
 
	
                        Name: 
 	
                        Jake Horstman
 	
                         
 	
                         
 	
                         
 
	
                        Title: 
 	
                        Director
 	
                         
 	
                         
 	
                         
 

 

 

(Registration Rights Agreement)

 

ANNEX A

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. The Letter of Transmittal states that by so acknowledging and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 120 days after the Expiration Date (as defined herein), it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

 

 

ANNEX B

Each broker-dealer that receives Exchange Securities for its own account in exchange for Initial Securities, where such Initial Securities were acquired by such broker-dealer as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. See “Plan of Distribution.”

 

 

ANNEX C

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Securities for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Securities. This Prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of Exchange Securities received in exchange for Initial Securities where such Initial Securities were acquired as a result of market-making activities or other trading activities. The Company has agreed that, for a period of 120 days after the Expiration Date, it will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until                 , 200  ,  all dealers
effecting transactions in the Exchange Securities may be required to deliver a prospectus.(1)

The Company will not receive any proceeds from any sale of Exchange Securities by broker-dealers. Exchange Securities received by broker-dealers for their own account pursuant to the Exchange Offer may be sold from time to time in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Exchange Securities or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such Exchange Securities. Any broker-dealer that resells Exchange Securities that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of such Exchange Securities may be deemed to be an “underwriter” within the meaning of the Securities Act and any profit on any such resale of Exchange Securities and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that, by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

For a period of 120 days after the Expiration Date the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents in the Letter of Transmittal. The Company has agreed to pay all expenses incident to the Exchange Offer (including the expenses of one counsel for the Holders of the Securities) other than commissions or concessions of any brokers or dealers and will indemnify the Holders of the Securities (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act.

______________

	
                        (1) 
 	
                        In addition, the legend required by Item 502(e) of Regulation S-K will appear on the inside front cover page of the Exchange Offer prospectus below the Table of Contents.
 

 

 

ANNEX D

o CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE INITIAL SECURITIES FOR YOUR OWN ACCOUNT AS A RESULT OF MARKET MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

o CHECK HERE IF YOU ARE NOT SUCH A BROKER-DEALER BUT ARE A QUALIFIED INSTITUTIONAL BUYER OR OTHERWISE RECEIVED THE INITIAL SECURITIES IN A TRANSACTION OR SERIES OF TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.

 

	
                        Name:
 	
                         
 
	
                        Address: 
 	
                         
 

If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Securities. If the undersigned is a broker-dealer that will receive Exchange Securities for its own account in exchange for Initial Securities that were acquired as a result of market-making activities or other trading activities, it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Securities; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.exv10w1

Exhibit 10.1

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of June 2, 2008 (the “Effective Date”), between
Questcor Pharmaceuticals, Inc., a California corporation (the “Company”), and Don Bailey
(“Executive”).

W I T N E S S E T H:

WHEREAS, Executive has been employed by the Company pursuant to an Offer Letter dated May 20, 2007
(the “Offer Letter”), and the Company and Executive desire to enter into a more detailed agreement
relating to the employment of Executive by the Company.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, the Company and
Executive hereby agree as follows:

     1. Employment.

     (a) Agreement to Employ. Upon the terms and subject to the conditions of this
Agreement, the Company hereby agrees to employ Executive and Executive hereby agrees to be employed
by the Company under the terms of this Agreement, effective as of the Effective Date.

     (b) Term of Employment. Executive’s employment with the Company pursuant to this
Agreement shall commence on the Effective Date and shall continue for an indefinite period of time
until terminated as provided in Section 5 hereof (the “Employment Period”).

     2. Duties and Responsibilities. During the Employment Period, Executive shall serve
as President and Chief Executive Officer of the Company and shall have duties and responsibilities
as may be assigned to him from time to time by the Board of Directors of the Company (the “Board”);
provided, however, that the Board shall delegate to Executive duties and responsibilities
consistent with the duties and responsibilities of a chief executive officer. Executive shall
report directly to the Board and shall comply with directives of the Board and all policies of the
Company. Executive shall devote all of his skill and knowledge and all of his working time (other
than periods of vacation, illness or disability) to the business of the Company. During the
Employment Period, Executive shall not serve as an employee, officer, director, or consultant of,
or otherwise perform services for compensation for, any other entity without the prior written
consent of the Board; provided that Executive may serve as an officer or director
of or otherwise participate in purely not-for-profit educational, welfare, social, religious and
civic organizations so long as such activities do not interfere with Executive’s employment
hereunder. The Company acknowledges that Executive currently serves on the board of directors of
the entities set forth on Schedule 2, and the Board hereby consents to Executive’s continued
service on these boards.

     3. Board Membership; Post-Employment Option Vesting. Upon the termination of
Executive’s employment (including, without limitation, a termination by the Company with or

 

 

Without Cause (as hereinafter defined) or termination by Executive for Good Reason (as
hereinafter defined), if Executive is a member of the Company’s Board at the time of such
termination, he shall immediately tender to the Board his written and signed resignation from the
Board, which resignation shall be effective immediately. If Executive desires to remain on the
Board following the termination of his employment, he shall condition his resignation solely on the
Board’s acceptance thereof and the Board shall in its sole discretion decide whether or not to
accept the resignation. If the Board does not accept the resignation, then Executive shall
continue to serve as a member of the Board and any stock options or restricted shares held by
Executive shall continue to vest in accordance with their terms for so long as Executive remains on
the Board. If Executive fails to tender his resignation from the Board in accordance with this
Section 3 or if the Board accepts his resignation, then Executive’s stock options will stop vesting
as of the date Executive’s employment was terminated.

     4. Compensation and Benefits.

     (a) Base Salary. During the Employment Period, the Company shall pay Executive a base
salary at the annual rate of $525,000, subject to review and change by the Board at its discretion,
which will be paid in a manner consistent with the Company’s customary payroll practices.
Executive’s annual base salary payable hereunder is referred to herein as “Base Salary”.

     (b) Annual Bonus. In addition to Base Salary, Executive shall be eligible to receive
a discretionary annual cash bonus (the “Cash Bonus”) in accordance with the Company’s “Incentive
Compensation Policy and Process” (as such may be amended or replaced from time to time), in an
amount up to a target percentage of Base Salary, which target percentage shall be set annually by
the Board. For the year ending December 31, 2008, the target percentage is sixty-five percent
(65%). The actual amount of any year end Cash Bonus will be determined by and within the
discretion of the Board, and the Cash Bonus shall be paid on or before the fifteenth (15th) day
after the completion of the external audit of the Company’s financial statements for the period for
which the Cash Bonus relates.

     (c) Equity Incentive Compensation. In addition to Base Salary and the discretionary
Cash Bonus, Executive shall be eligible to receive stock option awards and grants of restricted
stock under the Company’s equity incentive plans, as determined from time to time by the Board.

     (d) Employee Benefit/Plan Participation. During the Employment Period, Executive
shall be eligible, but shall not be required, to participate in various employee benefit plans
sponsored or maintained by the Company in accordance with the terms and conditions of such plans,
including those related to medical, dental, disability, and life insurance. Executive recognizes
that the Company has the right, in its sole discretion, to amend, modify or terminate any employee
benefit plans in accordance with their terms.

     (e) Business Expenses. Subject to the Company’s reimbursement policies and
procedures, the Company shall reimburse Executive for all reasonable and necessary expenses
incurred in the performance of Executive’s duties hereunder, upon presentation of expense

2

 

statements or vouchers, receipts, and such other information and documentation as the Company
may require.

     5. Termination of Employment.

     (a) Termination of the Employment Period. The Employment Period shall end if
Executive’s employment with the Company terminates with or without Cause at the election of either
Executive or the Company, or as a result of Executive’s death or Disability (“Disability” shall
mean a physical or mental impairment that renders Executive unable to perform the essential
functions of his position, with or without reasonable accommodation). In any such event, the
Employment Period shall end and, except as otherwise provided herein, including with respect to the
ongoing post-employment restrictions and covenants contained in Section 11, this Agreement shall
terminate upon the effective date of such termination.

     (b) Termination by the Company With or Without Cause. The Company may terminate
Executive’s employment at any time during the Employment Period with or without Cause effective
immediately upon delivery of a Notice of Termination to Executive. Subject to the immediately
following sentence “Cause” shall mean with respect to Executive, any of the following:
(i) Executive’s material neglect of assigned duties with the Company or Executive’s failure or
refusal to perform assigned duties with the Company, which continues uncured for thirty (30) days
following receipt of written notice of such deficiency from the Board, specifying the scope and
nature of the deficiency; (ii) Executive’s commission of a felony or fraud; or Executive’s
misappropriation of property belonging to the Company or its affiliates; (iii) Executive’s
commission of a misdemeanor or act of dishonesty, which causes material harm to the Company;
(iv) Executive’s engaging in any act of moral turpitude which causes material harm to the Company;
(v) Executive’s breach of the terms of this Agreement or any trading compliance program or any
confidentiality, proprietary information or nondisclosure agreement with the Company; or
(vi) Executive’s working for another company, partnership or other entity, whether as an employee,
consultant or director, while an employee of the Company without the prior written consent of the
Board (unless permitted by Section 2). Following a Change in Control, “Cause” shall not include
Executive’s acts or omissions contemplated by clause (i) in the immediately preceding sentence and
shall only include those acts and omissions set forth in (ii) through (vi) above. Any
determination of Cause as used herein will be made in good faith by the Board. A termination by
the Company for reasons other than set forth in clauses (i) through (vi) (but excluding clause (i)
following a Change in Control) above, or for no reason at all but not including a termination of
the Employment Period as a result of death or Disability, shall be deemed a “Termination Without
Cause.”

     (c) Voluntary Termination by Executive. Executive may voluntarily terminate his
employment with the Company upon 30 days written notice to the Company.

     (d) Termination by Executive for Good Reason. Executive may terminate his employment
with the Company for Good Reason. “Good Reason” shall mean the occurrence, without Executive’s
written consent, of one or more of the following events: (i) the Company decreases Executive’s Base
Salary below $400,000, (ii) the Company decreases Executive’s Annual Bonus target percentage to
below 50% of Base Salary, (iii) the Company materially decreases Executive’s responsibilities, or
(iv) the Company breaches the terms of this

3

 

Agreement; provided that no such event shall constitute Good Reason hereunder unless
(a) Executive shall have given written notice to the Company of Executive’s intent to resign for
Good Reason within 30 days after Executive becomes aware of the occurrence of any such event
(specifying in detail the nature and scope of the event) and (b) such event or occurrence shall not
have been resolved to Executive’s reasonable satisfaction within 30 days of the Company’s receipt
of such notice. For purposes of clause (iii) above, a material decrease in Executive’s
responsibilities shall include, without limitation, a situation where Executive was no longer
serving as the sole Chief Executive Officer of the Company’s parent corporation.

     (e) Notice of Termination. Any termination of Executive’s employment by the Company
or by Executive shall be communicated by a written Notice of Termination addressed to Executive or
the Company, as applicable. The Company may also communicate its Notice of Termination verbally,
in accordance with Section 13(g). Termination may be effective immediately upon communication of
such Notice of Termination. A “Notice of Termination” shall mean a notice stating that Executive’s
employment with the Company has been or will be terminated and the specific provisions of this
Section 5 under which such termination is being effected.

     (f) Payments Upon Termination. Upon termination of Executive’s employment for any
reason, the Company shall pay Executive (i) his Base Salary earned but not yet paid for services
rendered to the Company on or prior to the date on which the Employment Period ends, (ii) any
accrued but unused vacation days, (iii) any incurred but unpaid business expenses contemplated by
Section 4(e) and other insurance related reimbursable expenses, and (iv) any amounts required under
the Company’s Employee Stock Purchase Plan (or successor plans).

     6. Payments Upon Certain Terminations Not Involving a Change in Control.

     (a) Termination by the Company Without Cause or Termination by Executive for Good
Reason. In addition to the payments described in Section 5(f) and subject to Section 9,
provided that Executive has resigned from the Board as contemplated by Section 3 and is in
compliance with his obligations under Section 11, in the event the Employment Period ends by reason
of termination of Executive’s employment by the Company Without Cause or by Executive for Good
Reason, the Company shall (i) pay Executive any annual bonus payable for services rendered in any
annual bonus period for the year which had been completed in its entirety prior to the date on
which the Employment Period ends and that had not previously been paid, (ii) continue to make Base
Salary payments for a period 12 months following such termination of employment (the period of time
such payments are provided, the “Severance Period”), payable in accordance with the Company’s
payroll practices as in effect on such termination date, except that such continued Base Salary
payments shall not commence until the first payroll date following the effective date of the
Release Agreement referenced in Section 9, and the first continued Base Salary payment shall cover
the period between the termination date and such payment. Each installment payment made pursuant
to this Section 6(a) (ii) shall be considered a separate payment for purposes of Section 409A of
the Internal Revenue Code of 1986 (the “Code”). In the event the Employment Period ends on or
prior to December 31, 2009 by reason of termination of Executive’s employment by the Company
Without Cause or by Executive for Good Reason, subject to Section 9, Executive shall receive a pro
rata portion (based upon the number of complete months within the fiscal year that shall have
elapsed

4

 

through the date of Executive’s termination of employment) of any Annual Bonus that the Board
determines Executive would otherwise have received pursuant to Section 4(b) hereof for that
calendar year had Executive been employed through the end of the year, which will be payable when
and if such Annual Bonus would otherwise have been payable had Executive’s employment not
terminated, provided again that Executive resigned from the Board immediately as contemplated by
Section 3 and has been in compliance with his obligations under Section 11 from the date of
termination through such payment dates. Notwithstanding the foregoing, Executive shall not be
entitled to any pro-rated bonus unless the date of termination is after the first six months of the
fiscal year in which it occurs. During the Severance Period, the Company shall continue to pay
health insurance premiums for continued health insurance coverage for Executive and his currently
insured dependents, provided that Executive makes a timely election to continue such coverage under
COBRA and is not otherwise eligible for health insurance through any subsequent employer. If the
termination is a result of Executive’s death or Disability, then Executive’s currently insured
dependents shall upon their timely election be eligible to receive continued benefits pursuant to
COBRA.

     (b) Duty to Mitigate. If Executive is reemployed for at least twenty (20) hours per
week on average at any time after the termination date and before the end of the Severance Period,
Executive shall promptly provide written notice to the Company of such reemployment, and all
further severance compensation payments under this Section 6 shall be decreased by the amount of
the annual compensation received by Executive from the new employer.

     7. Payments Upon Certain Terminations Involving a Change in Control.

     (a) Statement of Intent. The Board recognizes that, as is the case with many publicly
held corporations, the possibility of a change in control of the Company may exist and that the
uncertainty and questions that it may raise among management could result in the departure or
distraction of management personnel to the detriment of the Company and its shareholders.
Accordingly, the Board has decided to reinforce and encourage Executive’s attention and dedication
to Executive’s assigned duties without the distraction arising from the possibility of a change in
control of the Company.

     (b) Accelerated Vesting. Notwithstanding anything to the contrary in Section 12 of
the Company’s 2006 Equity Incentive Award Plan (the “2006 Plan”), other than Sections 12.2(a) and
12.2(e) of the 2006 Plan, in the event that a Change in Control (as defined in the 2006 Plan)
occurs, and Executive’s employment with the Company is terminated by the Company Without Cause or
by Executive for Good Reason at any time within the three (3) month period before the date of such
Change in Control or during the twelve (12) month period following the date of such Change in
Control, one-hundred percent (100%) of the then-unvested shares of Questcor’s common stock subject
to each of Executive’s outstanding stock options and one-hundred percent (100%) of Executive’s
restricted shares subject to vesting will become immediately vested and exercisable on the date of
such termination. The Company shall cause each option agreement evidencing the grant of stock
options to Executive under the 2006 Plan (and successors to such plan) to reflect the accelerated
vesting provisions set forth in this Agreement.

     (c) Cash Severance Upon Termination Without Cause or for Good Reason. In the event
that a Change in Control occurs, and Executive’s employment with the Company is

5

 

terminated by the Company Without Cause or by Executive for Good Reason at any time within the
three (3) month period before the date of such Change in Control or during the twelve (12) month
period following the date of such Change in Control, Executive will receive severance compensation
equal to the sum of (i) an amount equal to the product of his highest Base Salary in the calendar
year in which the Change in Control occurs (but in no event less than $400,000) multiplied by the
number two (2), plus (ii) an amount equal to the product of his target bonus as established by the
Board or its Compensation Committee for the year during which the termination takes place (or if
such target bonus has not yet been established, the target bonus for the prior year, but in no
event using less than a 50% target percentage to establish the target bonus) multiplied by the
number two (2).

     (d) Payment Administration. The severance payment under Section 7(c) shall be made in
a single lump sum on the release effective date of the Release Agreement referenced in Section 9.
Payments under Section 7(c) shall be in addition to the payments under Section 5(f) but shall be in
lieu of, and not in addition to, the payment of any cash severance payments that Executive may
otherwise be entitled to under Section 6 of this Agreement.

     (e) No Duty to Mitigate. Executive’s reemployment at any time following the
termination of Executive’s employment shall have no effect on his right to collect severance under
this Section 7.

     8. Excise Tax Gross-Up.

     (a) Definitions. For purposes of this Section 8, the following terms shall have the
meanings set forth below:

          (i) “Excise Tax” shall mean the Excise Tax imposed by Section 4999 of the Code, together with
any interest or penalties imposed with the respect to such Excise Tax.

          (ii) “Parachute Value” of a Payment shall mean the present value as of the date of the Change
of Control for purposes of Section 280G of the Code of the portion of such Payment that constitutes
a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm (as defined
below) for purposes of determining whether and to what extent the Excise Tax will apply to such
Payment.

          (iii) A “Payment” shall mean any payment or distribution in the nature of compensation (within
the meaning of Section 280G(b)(2) of the Code) to or for the benefit of Executive, whether paid or
payable pursuant to this Agreement or otherwise.

          (iv) The “Safe Harbor Amount” means 2.99 times Executive’s “base amount,” within the meaning
of Section 280G(b)(3) of the Code.

          (v) “Value” of a Payment shall mean the economic present value of a Payment as of the date of
the Change of Control for purposes of Section 280G of the Code, as determined by the Accounting
Firm using the discount rate required by Section 280G(d)(4) of the Code.

     (b) Anything in this Agreement to the contrary notwithstanding and except as set forth below,
in the event it shall be determined that any Payment would be subject to the Excise Tax, then
Executive shall be entitled to receive an additional payment (“Gross-Up Payment”) in an amount such
that, after payment by Executive of all taxes (and any interest or penalty imposed with respect to
such taxes), including, without limitation, any income taxes (and any

6

 

interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments; provided, however, that if the aggregate Parachute Value of all Payments does not
exceed 125% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Executive and
the amounts payable under this Agreement shall be reduced so that the Parachute Value of all
Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by first reducing the Payments which are cash and
thereafter the noncash Payments, unless Executive shall elect another method of reduction by
written notice to the Company prior to the Change of Control.

     (c) Subject to the provisions of Section 8(e), all determinations required to be made under
this Section 8, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by a nationally recognized accounting firm designated by the Company immediately prior to the
Change of Control (the “Accounting Firm”) which shall provide detailed supporting calculations both
to the Company and Executive within fifteen (15) business days of the receipt of notice from
Executive that there has been a Payment, or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, the Company shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). Any determination by the Accounting Firm shall be
binding upon the Company and Executive. All fees and expenses of the Accounting Firm shall be borne
solely by the Company.

     (d) Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the
Company to Executive as and when the Excise Tax is incurred on a Payment. The Gross-Up Payment
shall be paid in accordance with Code Section 409A, to the extent applicable. If required in order
to comply with Code Section 409A, (i) the Gross-Up Payment attributable to Payments other than
severance compensation and benefits described in Section 7 shall be paid in a lump sum payment upon
the closing of the Change of Control, and (ii) the Gross-Up Payment attributable to severance
compensation and benefits shall be paid in a lump sum payment on the first day on which severance
compensation is paid pursuant to Section 7. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder,
it is possible that Gross-Up Payments which will not have been made by the Company should have been
made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 8(e) and Executive thereafter is
required to make a Payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of Executive.

     (e) Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the Payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten (10) business days after
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.

7

 

Executive shall not pay such claim prior to the expiration of the 30-day period following the
date on which Executive gives such notice to the Company (or such shorter period ending on the date
that any Payment of taxes with respect to such claim is due). If the Company notifies Executive in
writing prior to the expiration of such period that it desires to contest such claim, Executive
shall:

          (i) give the Company any information reasonably requested by the Company relating to such
claim,

          (ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,

          (iii) cooperate with the Company in good faith in order to effectively contest such claim, and

          (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold Executive harmless, on an after-tax basis, for any Excise Tax or income or other tax
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this
Section 8(e), the Company shall control all proceedings taken in connection with such contest and,
at its sole option, may pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Company shall determine; provided, however, that if the Company directs Executive to pay such
claim and sue for a refund, the Company shall indemnify and hold Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax (including interest or penalties with
respect thereto) imposed with respect to such payment; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of Executive with
respect to which such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

     (f) Notwithstanding any other provision of this Section 8, the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing
authority, for the benefit of Executive, all or any portion of any Gross-Up Payment, and Executive
hereby consents to such withholding.

     9. Release.

     (a) Execution of Release. As a condition of Executive’s right to receive the payments
described in Sections 6(a), 7(c) and 8, Executive shall within 21 days following Executive’s

8

 

termination of employment execute and deliver to the Company a full and complete release of
all claims, known and unknown, that Executive may have against the Company and its related past and
present entities, officers, directors, shareholders, agents, representatives, successors and
employees, such release to be substantially in the form of the release attached hereto as
Exhibit A (the “Release Agreement”); provided, however, that any conflict between the terms
of this Agreement and such form of release attached as Exhibit A shall be resolved in favor
of this Agreement.

     (b) Effect of Failure. In the event Executive fails to deliver or revokes the release
referred to in Section 9(a) above, Executive shall not be entitled to any of the payments described
in Section 6(a), 7(c) or 9 above. In the event that, prior to the end of the Severance Period,
Executive breaches any of his obligations under this Agreement, including Sections 9 or 11 hereof,
the Company’s obligations to provide the payments under Sections 6(a), 7(c) and 8 shall thereupon
cease and the Company shall be entitled to recover from Executive any and all amounts theretofore
paid to Executive pursuant to Section 6(a), 7(c) or 8.

     10. Death and Disability. In the event the Employment Period ends as a result of
Executive’s death, this Agreement shall automatically terminate and Executive’s estate shall be
entitled to receive (i) the amounts described in Section 5(f), (ii) any annual bonus payable for
services rendered in any annual bonus period for the year which had been completed in its entirety
prior to the date on which the Employment Period ends and that had not previously been paid, and
(iii) a pro rata portion (based upon the number of complete months within the fiscal year that
shall have elapsed through the date on which the Employment Period ends) of any annual bonus that
the Board determines Executive would otherwise have received pursuant to Section 4(b) for that
calendar year had Executive been employed through the end of the year. The bonus amounts under
clauses (ii) and (iii) will be payable to Executive’s estate when and if such annual bonuses would
otherwise have been payable had the Employment Period not ended. Notwithstanding the foregoing,
Executive’s estate shall not be entitled to any pro-rated bonus under clause (iii) unless the date
the Employment Period ends is after the first six months of the fiscal year in which the Employment
Period ends. In the event of Executive’s Disability, the Company shall have the right to terminate
this Agreement and Executive’s employment immediately and, if this Agreement and Executive’s
employment are so terminated, the Company shall to pay Executive in a lump sum payment an amount
equal to ninety (90) days of Executive’s salary. Additionally, Executive shall be entitled to his
annual bonus, or pro rata portion thereof, as applicable, as described under clauses (ii) and (iii)
above, except that the payments shall be to Executive and not his estate.

     11. Proprietary Information.

     (a) Obligation to Maintain Confidentiality. Executive acknowledges that the continued
success of the Company and its subsidiaries or affiliates depends upon the use and protection of
proprietary information. Executive further acknowledges that the proprietary information obtained
by him during the course of his employment with the Company or any of its subsidiaries or
affiliates concerning the business or affairs of the Company, or any of its subsidiaries or
affiliates is the property of the Company or such subsidiaries or affiliates, including information
concerning acquisition opportunities in or reasonably related to the Company’s business or
industry. Therefore, Executive agrees that he will not disclose to any

9

 

unauthorized person or use for his own account any proprietary information, whether or not
such information is developed by him, without the Board’s written consent, unless and to the extent
that the proprietary information (i) becomes generally known to the public other than as a result
of Executive’s acts or omissions to act or (ii) is required to be disclosed pursuant to any
applicable law or court order. Executive shall take reasonable and appropriate steps to safeguard
proprietary information and to protect it against disclosure, misuse, espionage, loss and theft.
Executive shall deliver to the Company upon his termination of employment, and at any subsequent
time the Company may request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof) embodying or relating to
the proprietary information, Work Product (as defined below) or the business of the Company or any
of its subsidiaries or affiliates (including, without limitation, all acquisition prospects, lists
and contact information) which he may then possess or have under his control, and shall destroy any
electronic copies of such materials and confirm such destruction in writing to the Company.

     (b) Ownership of Property. Executive acknowledges that all discoveries, concepts,
ideas, inventions, innovations, improvements, developments, methods, processes, programs, designs,
analyses, drawings, reports, patent applications, copyrightable work and mask work (whether or not
including any confidential information) and all registrations or applications related thereto, all
other proprietary information and all similar or related information (whether or not patentable)
that relate to the Company’s or any of its subsidiaries’ or affiliates’ (including their
predecessors prior to being acquired by the Company) actual or anticipated business, research and
development, or existing or future products or services and that are conceived, developed,
contributed to, made, or reduced to practice by Executive (either solely or jointly with others)
while employed by the Company or any of its subsidiaries or affiliates, including any of the
foregoing that constitutes any proprietary information or records (“Work Product”), belong to the
Company or such subsidiary or affiliate, and Executive hereby assigns, and agrees to assign, all of
the above Work Product to the Company or to such subsidiary or affiliate; provided,
however, that the provisions of this Agreement requiring assignment of Work Product to the
Company do not apply to any invention which qualifies under the provisions of California Labor Code
Section 2870, the text of which is set forth in Exhibit B hereto. Any copyrightable work
prepared in whole or in part by Executive in the course of his work for any of the foregoing
entities shall be deemed a “work made for hire” under the copyright laws, and the Company or such
subsidiary or affiliate shall own all rights therein. To the extent that any such copyrightable
work is not a “work made for hire,” Executive hereby assigns and agrees to assign to the Company or
such subsidiary or affiliate all right, title, and interest, including without limitation,
copyright in and to such copyrightable work. Executive shall perform all actions reasonably
requested by the Board, at the Company’s sole expense, to establish and confirm the Company’s or
such subsidiary’s or affiliate’s ownership (including, without limitation, assignments, consents,
powers of attorney, and other instruments) in Work Product and copyrightable work identified by the
Board.

     (c) Third Party Information. Executive understands that the Company and its
subsidiaries and affiliates will receive from third parties confidential or proprietary information
(“Third Party Information”) subject to a duty on the Company’s and its subsidiaries’ or affiliates’
part to maintain the confidentiality of such information and to use it only for certain limited
purposes. During Executive’s employment with the Company and thereafter, and

10

 

without in any way limiting the provisions of Section 7(a) above, Executive will hold Third
Party Information in the strictest confidence and will not disclose to anyone (other than personnel
and consultants of the Company or its subsidiaries, affiliates, advisors or financing sources who
need to know such information in connection with their work for the Company or its subsidiaries,
affiliates, advisors or financing sources) or use, except in connection with his work for the
Company or its subsidiaries, affiliates, advisors or financing sources, Third Party Information
unless expressly authorized by the Board in writing.

     (d) Use of Information of Prior Employers. During Executive’s employment with the
Company, Executive will not improperly use or disclose any confidential information or trade
secrets, if any, of any former employers or any other person to whom Executive has an obligation of
confidentiality, and will not bring onto the premises of the Company or any of its subsidiaries or
affiliates any confidential information or trade secrets of any former employer or any other person
to whom Executive has an obligation of confidentiality unless consented to in writing by the former
employer or person.

     12. Injunctive Relief with Respect to Covenants. Each party acknowledges and agrees
that the agreements and covenants of such party under Section 11 hereof relate to special, unique
and extraordinary matters and that a violation or threatened violation of any of the terms of such
agreements and covenants will cause the other party irreparable injury for which adequate remedies
are not available at law. Therefore, each party agrees that the other party shall be entitled to
an injunction, restraining order or such other equitable relief (without the requirement to post
bond) restraining the first party from committing any violation of the agreements and covenants
contained in Section 11. These injunctive remedies are cumulative and are in addition to any other
rights and remedies either party may have under this Agreement.

     13. Miscellaneous.

     (a) Survival. To the extent necessary to give effect to such provisions, the
provisions of this Agreement shall survive the termination hereof, whether such termination shall
be by expiration of the Employment Period or otherwise.

     (b) Binding Effect. This Agreement shall be binding on, and shall inure to the
benefit of, the Company and any person or entity that succeeds to the interest of the Company
(regardless of whether such succession occurs by operation of law) by reason of the sale of all or
a portion of the Company’s equity securities, a merger, consolidation or reorganization involving
the Company or, unless the Company otherwise elects in writing, a sale of all or a portion of the
assets of the business of the Company. This Agreement shall also inure to the benefit of
Executive’s heirs, executors, administrators and legal representatives.

     (c) Assignment. Executive may not assign this Agreement. The Company may assign its
rights, together with its obligations, under this Agreement (i) to any affiliate or subsidiary or
(ii) to third parties in connection with any sale, transfer or other disposition of all or
substantially all of its business or assets.

     (d) Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with respect to the matters referred to herein and supersedes any and all prior

11

 

agreements, whether written or oral. The Offer Letter is hereby superseded and of no further
force or effect, and no other agreement relating to the terms of Executive’s employment by the
Company, oral or otherwise, shall be binding between the employee and the Company or any other
party unless it is in writing and signed by the party against whom enforcement is sought. There
are no promises, representations, inducements or statements between the parties other than those
that are expressly contained herein. Executive acknowledges that he is entering into this
Agreement of his own free will and accord, and with no duress, that he has read this Agreement and
that he understands it and its legal consequences.

     (e) Severability; Reformation. In the event that one or more of the provisions of
this Agreement is or shall become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall not be affected
thereby. In the event any covenant contained herein is not enforceable in accordance with its
terms, including, but not limited to, if found to be excessively broad as to duration, scope,
activity or subject, Executive and the Company agree that such covenant shall be reformed to make
it enforceable in a manner that provides as nearly as possible the result intended by this
Agreement so as to be enforceable to the maximum extent compatible with applicable law.

     (f) Waiver. Waiver by any party hereto of any breach or default by the other party of
any of the terms of this Agreement shall not operate as a waiver of any other breach or default,
whether similar to or different from the breach or default waived. No waiver of any provision of
this Agreement shall be implied from any course of dealing between the parties hereto or from any
failure by either party hereto to assert its or his rights hereunder on any occasion or series of
occasions.

     (g) Notices. Any notice required or desired to be delivered under this Agreement
shall be in writing and shall be delivered personally, by courier service, by registered mail,
return receipt requested, or by email and shall be effective upon actual receipt by the party to
which such notice shall be directed, and shall be addressed as follows (or to such other address as
the party entitled to notice shall hereafter designate in accordance with the terms hereof):

If to the Company:

Questcor Pharmaceuticals, Inc.

Attention: Chairman of the Board of Directors

3260 Whipple Road

Union City, California 94587

If to Executive:

To the most recent address of the Executive set forth in the personnel records
of the Company. In addition to written notice, the Company shall use its
commercially reasonable efforts to provide Executive with email and live (or
voice mail) telephonic communication for any notice made hereunder.

     (h) Amendments. This Agreement may not be altered, modified or amended except by a
written instrument signed by each of the parties hereto.

12

 

     (i) Headings. Headings to sections in this Agreement are for the convenience of the
parties only and are not intended to be part of or to affect the meaning or interpretation hereof.

     (j) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the same instrument.

     (k) Withholding. Any payments provided for herein shall be reduced by any amounts
required to be withheld by the Company under applicable Federal, State or local income or
employment tax laws or similar statutes or other provisions of law then in effect.

     (l) Disputes. Any and all disputes connected with, relating to or arising from
Executive’s employment with the Company, this Agreement, or the Release attached as Exhibit A, will
be settled by final and binding arbitration in accordance with the rules of the American
Arbitration Association as presently in force. The only claims not covered by this Agreement are
claims for benefits under the unemployment insurance or workers’ compensation laws. Any such
arbitration will take place in Orange County, California. The parties hereby incorporate into this
agreement all of the arbitration provisions of Section 1283.05 of the California Code of Civil
Procedure. The Company understands and agrees that it will bear the costs of the arbitration
filing and hearing fees and the cost of the arbitrator. Each side will bear his/its own attorneys’
fees, and the arbitrator will not have authority to award attorneys’ fees unless a statutory
section at issue in the dispute authorizes the award of attorneys’ fees to the prevailing party, in
which case the arbitrator has authority to make such award as permitted by the statute in question.
The arbitration shall be instead of any civil litigation; this means that Executive is waiving any
right to a jury trial, and that the arbitrator’s decision shall be final and binding to the fullest
extent permitted by law and enforceable by any court having jurisdiction thereof. Judgment upon
any award rendered by the arbitrators may be entered in any court having jurisdiction.

     (m) Governing Law. This Agreement shall be governed by the laws of the State of
California, without reference to principles of conflicts or choice of law under which the law of
any other jurisdiction would apply.

     (n) Representation. Executive acknowledges that Stradling Yocca Carlson & Rauth
represents the Company and Executive has neither sought nor received legal advice from Stradling
Yocca Carlson & Rauth in connection with this Agreement.

[SIGNATURE PAGE FOLLOWS]

13

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized
officer and Executive has hereunto set his hand as of the day and year first above written.

	 	 	 	 	 
	 	Questcor Pharmaceuticals, Inc.

 	 
	 	By:  	/s/ Virgil Thompson
 	 
	 	 	Name:  	Virgil Thompson 	 
	 	 	Title:  	Chairman of the Board of Directors 	 
	 

	 	 	 	 	 
	 	Executive

 	 
	 	By:  	/s/ Don Bailey
 	 
	 	 	Don Bailey 	 
	 	 	 	 
	 

14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00143-of-00352.parquet"}]]