Document:

EXHIBIT 4.5

	
 
    	
 
    

 

ASHFORD HOSPITALITY TRUST, INC.

 

AND

 

[                    ]

 

Trustee

 

 

INDENTURE

 

DATED AS OF            , 20

 

 

SUBORDINATED DEBT SECURITIES

	
 
    	
 
    

 

 

ASHFORD HOSPITALITY TRUST, INC.
 RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED, 
 AND INDENTURE, DATED AS OF            , 20

 

	
TRUST INDENTURE ACT SECTION
    	
 
    	
INDENTURE SECTION
    
	
 
    	
 
    	
 
    
	
Section 310(a)(1)
    	
 
    	
6.9
    
	
(a)(2)
    	
 
    	
6.9
    
	
(a)(3)
    	
 
    	
Not Applicable
    
	
(a)(4)
    	
 
    	
Not Applicable
    
	
(a)(5)
    	
 
    	
6.9
    
	
(b)
    	
 
    	
6.8
    
	
 
    	
 
    	
 
    
	
Section 311
    	
 
    	
6.13
    
	
 
    	
 
    	
 
    
	
Section 312(a)
    	
 
    	
7.1, 7.2(a)
    
	
(b)
    	
 
    	
7.2(b)
    
	
(c)
    	
 
    	
7.2(c)
    
	
 
    	
 
    	
 
    
	
Section 313(a)
    	
 
    	
7.3
    
	
(b)
    	
 
    	
*
    
	
(c)
    	
 
    	
*
    
	
(d)
    	
 
    	
7.3
    
	
 
    	
 
    	
 
    
	
Section 314(a)
    	
 
    	
7.4
    
	
(a)(4)
    	
 
    	
10.5
    
	
(b)
    	
 
    	
Not Applicable
    
	
(c)(1)
    	
 
    	
1.3
    
	
(c)(2)
    	
 
    	
1.3
    
	
(c)(3)
    	
 
    	
Not Applicable
    
	
(d)
    	
 
    	
Not Applicable
    
	
(e)
    	
 
    	
1.3
    
	
 
    	
 
    	
 
    
	
Section 315(a)
    	
 
    	
6.1(a)
    
	
(b)
    	
 
    	
6.2
    
	
(c)
    	
 
    	
6.1(b)
    
	
(d)
    	
 
    	
6.1(c)
    
	
(d)(1)
    	
 
    	
6.1(a)(1)
    
	
(d)(2)
    	
 
    	
6.1(c)(2)
    
	
(d)(3)
    	
 
    	
6.1(c)(3)
    
	
(e)
    	
 
    	
5.14
    
	
 
    	
 
    	
 
    
	
Section 316(a)
    	
 
    	
1.1, 1.2
    
	
(a)(1)(A)
    	
 
    	
5.2, 5.12
    
	
(a)(1)(B)
    	
 
    	
5.13
    
	
(a)(2)
    	
 
    	
Not Applicable
    
	
(b)
    	
 
    	
5.8
    
	
(c)
    	
 
    	
1.5(f)
    

 

 

	
TRUST INDENTURE ACT SECTION
    	
 
    	
INDENTURE SECTION
    
	
 
    	
 
    	
 
    
	
Section 317(a)(1)
    	
 
    	
5.3
    
	
(a)(2)
    	
 
    	
5.4
    
	
(b)
    	
 
    	
10.3
    
	
 
    	
 
    	
 
    
	
Section 318(a)
    	
 
    	
1.8
    

 

NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture.

 

* Deemed included pursuant to Section 318(c) of the Trust Indenture Act

 

 

TABLE OF CONTENTS

 

	
ARTICLE ONE   DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
    	
1
    
	
Section 1.1.
    	
Definitions
    	
1
    
	
Section 1.2.
    	
Incorporation by   Reference of Trust Indenture Act
    	
8
    
	
Section 1.3.
    	
Compliance Certificates   and Opinions
    	
9
    
	
Section 1.4.
    	
Form of Documents   Delivered to Trustee
    	
9
    
	
Section 1.5.
    	
Acts of Holders; Record   Dates
    	
10
    
	
Section 1.6.
    	
Notices, Etc., to   Trustee, Company and Guarantors
    	
11
    
	
Section 1.7.
    	
Notice to Holders;   Waiver
    	
12
    
	
Section 1.8.
    	
Conflict with Trust   Indenture Act
    	
12
    
	
Section 1.9.
    	
Effect of Headings and   Table of Contents
    	
12
    
	
Section 1.10.
    	
Successors and Assigns
    	
12
    
	
Section 1.11.
    	
Separability Clause
    	
12
    
	
Section 1.12.
    	
Benefits of Indenture
    	
13
    
	
Section 1.13.
    	
Force Majeure
    	
13
    
	
Section 1.14.
    	
Waiver of Jury Trial
    	
13
    
	
Section 1.15.
    	
Governing Law
    	
13
    
	
Section 1.16.
    	
Legal Holidays
    	
13
    
	
Section 1.17.
    	
Securities in a   Composite Currency, Currency Unit or Foreign Currency
    	
13
    
	
Section 1.18.
    	
Payment in Required   Currency; Judgment Currency
    	
14
    
	
Section 1.19.
    	
Language of Notices,   Etc.
    	
14
    
	
Section 1.20.
    	
Incorporators,   Shareholders, Officers and Directors of the Company and the Guarantors Exempt   from Individual Liability
    	
14
    
	
 
    	
 
    	
 
    
	
ARTICLE TWO   SECURITY FORMS
    	
15
    
	
Section 2.1.
    	
Forms Generally
    	
15
    
	
Section 2.2.
    	
Form of Face of   Security
    	
15
    
	
Section 2.3.
    	
Form of Reverse of   Security
    	
17
    
	
Section 2.4.
    	
Global Securities
    	
22
    
	
Section 2.5.
    	
Form of Trustee’s   Certificate of Authentication
    	
23
    
	
 
    	
 
    	
 
    
	
ARTICLE THREE   THE SECURITIES
    	
23
    
	
Section 3.1.
    	
Amount Unlimited;   Issuable in Series
    	
23
    
	
Section 3.2.
    	
Denominations
    	
26
    
	
Section 3.3.
    	
Execution,   Authentication, Delivery and Dating
    	
26
    
	
Section 3.4.
    	
Temporary Securities
    	
27
    
	
Section 3.5.
    	
Registration,   Registration of Transfer and Exchange
    	
28
    
	
Section 3.6.
    	
Mutilated, Destroyed,   Lost and Stolen Securities
    	
30
    
	
Section 3.7.
    	
Payment of Interest;   Interest Rights Preserved
    	
31
    
	
Section 3.8.
    	
Persons Deemed Owners
    	
32
    
	
Section 3.9.
    	
Cancellation
    	
32
    
	
Section 3.10.
    	
Computation of Interest
    	
32
    
	
Section 3.11.
    	
CUSIP or CINS Numbers
    	
32
    
	
 
    	
 
    	
 
    
	
ARTICLE FOUR   SATISFACTION AND DISCHARGE
    	
33
    
	
Section 4.1.
    	
Satisfaction and   Discharge of Indenture
    	
33
    
	
Section 4.2.
    	
Application of Trust   Money
    	
34
    

 

i

 

	
ARTICLE FIVE   REMEDIES
    	
34
    
	
Section 5.1.
    	
Events of Default
    	
34
    
	
Section 5.2.
    	
Acceleration of   Maturity; Rescission and Annulment
    	
35
    
	
Section 5.3.
    	
Collection of   Indebtedness and Suits for Enforcement by Trustee
    	
36
    
	
Section 5.4.
    	
Trustee May File   Proofs of Claim
    	
36
    
	
Section 5.5.
    	
Trustee   May Enforce Claims Without Possession of Securities
    	
37
    
	
Section 5.6.
    	
Application of Money   Collected
    	
37
    
	
Section 5.7.
    	
Limitation on Suits
    	
38
    
	
Section 5.8.
    	
Unconditional Right of   Holders to Receive Principal, Premium and Interest
    	
38
    
	
Section 5.9.
    	
Restoration of Rights   and Remedies
    	
38
    
	
Section 5.10.
    	
Rights and Remedies   Cumulative
    	
39
    
	
Section 5.11.
    	
Delay or Omission Not   Waiver
    	
39
    
	
Section 5.12.
    	
Control by Holders
    	
39
    
	
Section 5.13.
    	
Waiver of Past Defaults
    	
39
    
	
Section 5.14.
    	
Undertaking for Costs
    	
40
    
	
Section 5.15.
    	
Waiver of Stay,   Extension or Usury Laws
    	
40
    
	
 
    	
 
    	
 
    
	
ARTICLE SIX   THE TRUSTEE
    	
40
    
	
Section 6.1.
    	
Certain Duties and Responsibilities
    	
40
    
	
Section 6.2.
    	
Notice of Defaults
    	
41
    
	
Section 6.3.
    	
Certain Rights of   Trustee
    	
42
    
	
Section 6.4.
    	
Not Responsible for   Recitals or Issuance of Securities
    	
43
    
	
Section 6.5.
    	
May Hold   Securities
    	
43
    
	
Section 6.6.
    	
Money Held in Trust
    	
43
    
	
Section 6.7.
    	
Compensation and   Reimbursement
    	
44
    
	
Section 6.8.
    	
Disqualification;   Conflicting Interests
    	
44
    
	
Section 6.9.
    	
Corporate Trustee   Required; Eligibility
    	
44
    
	
Section 6.10.
    	
Resignation and   Removal; Appointment of Successor
    	
45
    
	
Section 6.11.
    	
Acceptance of   Appointment by Successor
    	
46
    
	
Section 6.12.
    	
Merger, Conversion,   Consolidation or Succession to Business
    	
47
    
	
Section 6.13.
    	
Preferential Collection   of Claims Against Company
    	
47
    
	
Section 6.14.
    	
Appointment of   Authenticating Agent
    	
48
    
	
 
    	
 
    	
 
    
	
ARTICLE SEVEN   HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
    	
49
    
	
Section 7.1.
    	
Company to Furnish   Trustee Names and Addresses of Holders
    	
49
    
	
Section 7.2.
    	
Preservation of   Information; Communications to Holders
    	
49
    
	
Section 7.3.
    	
Reports by Trustee
    	
50
    
	
Section 7.4.
    	
Reports by Company
    	
51
    
	
 
    	
 
    	
 
    
	
ARTICLE EIGHT   CONSOLIDATION, AMALGAMATION, MERGER AND SALE
    	
51
    
	
Section 8.1.
    	
Company   May Consolidate, Etc., Only on Certain Terms
    	
51
    
	
Section 8.2.
    	
Successor Substituted
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE NINE   AMENDMENT, SUPPLEMENT AND WAIVER
    	
52
    
	
Section 9.1.
    	
Without Consent of   Holders
    	
52
    
	
Section 9.2.
    	
With Consent of Holders
    	
54
    
	
Section 9.3.
    	
Execution of Amendments   and Supplemental Indentures
    	
55
    
	
Section 9.4.
    	
Effect of Amendments   and Supplemental Indentures
    	
55
    
	
Section 9.5.
    	
Conformity with Trust Indenture   Act
    	
55
    
	
Section 9.6.
    	
Reference in Securities   to Amendments or Supplemental Indentures
    	
55
    
	
Section 9.7.
    	
Effect of Consents
    	
56
    

 

ii

 

	
ARTICLE TEN   COVENANTS
    	
56
    
	
Section 10.1.
    	
Payment of Principal,   Premium and Interest
    	
56
    
	
Section 10.2.
    	
Maintenance of Office   or Agency
    	
56
    
	
Section 10.3.
    	
Money for Securities   Payments to Be Held in Trust
    	
56
    
	
Section 10.4.
    	
Existence
    	
58
    
	
Section 10.5.
    	
Statement by Officers   as to Default
    	
58
    
	
 
    	
 
    	
 
    
	
ARTICLE ELEVEN   REDEMPTION OF SECURITIES
    	
58
    
	
Section 11.1.
    	
Applicability of   Article
    	
58
    
	
Section 11.2.
    	
Election to Redeem;   Notice to Trustee
    	
58
    
	
Section 11.3.
    	
Selection by Trustee of   Securities to Be Redeemed
    	
58
    
	
Section 11.4.
    	
Notice of Redemption
    	
59
    
	
Section 11.5.
    	
Deposit of Redemption   Price
    	
60
    
	
Section 11.6.
    	
Securities Payable on   Redemption Date
    	
60
    
	
Section 11.7.
    	
Securities Redeemed in   Part
    	
60
    
	
 
    	
 
    	
 
    
	
ARTICLE TWELVE   SINKING FUNDS
    	
60
    
	
Section 12.1.
    	
Applicability of   Article
    	
60
    
	
Section 12.2.
    	
Satisfaction of Sinking   Fund Payments with Securities
    	
61
    
	
Section 12.3.
    	
Redemption of   Securities for Sinking Fund
    	
61
    
	
 
    	
 
    	
 
    
	
ARTICLE THIRTEEN   DEFEASANCE
    	
61
    
	
Section 13.1.
    	
Option to Effect Legal   Defeasance or Covenant Defeasance
    	
61
    
	
Section 13.2.
    	
Legal Defeasance and Discharge
    	
61
    
	
Section 13.3.
    	
Covenant Defeasance
    	
62
    
	
Section 13.4.
    	
Conditions to Legal or   Covenant Defeasance
    	
63
    
	
Section 13.5.
    	
Deposited Money and   U.S. Government Obligations to be Held in Trust, Other Miscellaneous   Provisions
    	
64
    
	
Section 13.6.
    	
Reinstatement
    	
64
    
	
 
    	
 
    	
 
    
	
ARTICLE FOURTEEN   GUARANTEE OF SECURITIES
    	
65
    
	
Section 14.1.
    	
Securities Guarantee
    	
65
    
	
Section 14.2.
    	
Limitation on Guarantor   Liability
    	
66
    
	
Section 14.3.
    	
Execution and Delivery   of Securities Guarantee Notation
    	
66
    
	
 
    	
 
    	
 
    
	
ARTICLE FIFTEEN   SUBORDINATION OF SECURITIES
    	
67
    
	
Section 15.1.
    	
Securities Subordinated   to Senior Debt
    	
67
    
	
Section 15.2.
    	
No Payment on   Securities in Certain Circumstances
    	
67
    
	
Section 15.3.
    	
Payment over of   Proceeds upon Dissolution, Etc.
    	
68
    
	
Section 15.4.
    	
Subrogation
    	
69
    
	
Section 15.5.
    	
Obligations of Company   Unconditional
    	
70
    
	
Section 15.6.
    	
Notice to Trustee
    	
70
    
	
Section 15.7.
    	
Reliance on Judicial   Order or Certificate of Liquidating Agent
    	
71
    
	
Section 15.8.
    	
Trustee’s Relation to   Senior Debt
    	
71
    
	
Section 15.9.
    	
Subordination Rights   Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt
    	
71
    
	
Section 15.10.
    	
Holders Authorize   Trustee to Effectuate Subordination of Securities
    	
72
    
	
Section 15.11.
    	
Not to Prevent Events   of Default
    	
72
    
	
Section 15.12.
    	
Trustee’s Compensation   Not Prejudiced
    	
72
    
	
Section 15.13.
    	
No Waiver of   Subordination Provisions
    	
72
    
	
Section 15.14.
    	
Payments May Be   Paid Prior to Dissolution
    	
72
    

 

iii

 

	
Section 15.15.
    	
Trust Moneys Not Subordinated
    	
73
    
	
 
    	
 
    	
 
    
	
ARTICLE SIXTEEN   SUBORDINATION OF SECURITIES GUARANTEES
    	
73
    
	
Section 16.1.
    	
Securities Guarantees   Subordinated to Guarantor Senior Debt
    	
73
    
	
Section 16.2.
    	
No Payment on   Securities Guarantees in Certain Circumstances
    	
73
    
	
Section 16.3.
    	
Payment over of   Proceeds upon Dissolution, Etc.
    	
74
    
	
Section 16.4.
    	
Subrogation
    	
75
    
	
Section 16.5.
    	
Obligations of   Guarantor Unconditional
    	
76
    
	
Section 16.6.
    	
Notice to Trustee
    	
76
    
	
Section 16.7.
    	
Reliance on Judicial   Order or Certificate of Liquidating Agent
    	
77
    
	
Section 16.8.
    	
Trustee’s Relation to   Guarantor Senior Debt
    	
77
    
	
Section 16.9.
    	
Subordination Rights   Not Impaired by Acts or Omissions of a Guarantor or Holders of Guarantor   Senior Debt
    	
78
    
	
Section 16.10.
    	
Holders Authorize   Trustee to Effectuate Subordination of Securities Guarantees
    	
78
    
	
Section 16.11.
    	
Not to Prevent Events   of Default
    	
78
    
	
Section 16.12.
    	
Trustee’s Compensation   Not Prejudiced
    	
78
    
	
Section 16.13.
    	
No Waiver of   Subordination Provisions
    	
78
    
	
Section 16.14.
    	
Payments May Be   Paid Prior to Dissolution
    	
79
    

 

NOTE:  This table of contents shall not, for any purpose, be deemed to be a part of the Indenture.

 

iv

 

PARTIES

 

INDENTURE, dated as of             , 20  , among ASHFORD HOSPITALITY TRUST, INC., a corporation duly organized and existing under the laws of the State of Maryland (herein called the “Company”), the Guarantors (as defined hereinafter) and [                    ], a [national banking association], as trustee (the “Trustee”).

 

RECITALS OF THE COMPANY:

 

The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured subordinated debentures, notes or other evidences of indebtedness (herein called the “Securities”), which may be guaranteed by the Guarantors, to be issued in one or more series as provided in this Indenture.

 

All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.

 

This Indenture is subject to the provisions of the Trust Indenture Act (as defined herein) that are required to be a part of this Indenture and, to the extent applicable, shall be governed by such provisions.

 

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

 

For and in consideration of the premises and the purchase of the Securities by the Holders (as defined herein) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows:

 

ARTICLE ONE
 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 1.1.           Definitions.

 

For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

 

(a)           the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

 

(b)           all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;

 

(c)           the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

 

(d)           the words “Article” and “Section” refer to an Article and Section, respectively, of this Indenture;

 

(e)           the word “includes” and its derivatives means “includes, but is not limited to” and corresponding derivative definitions; and

 

(f)            references to any officer of any partnership or limited liability company that does not have officers but is managed or controlled, directly or indirectly, by an entity that does have officers, shall be deemed to be references to the officers of such managing or controlling entity.

 

 

Certain terms, used principally in Article Six, are defined in that Article.

 

“Act,” when used with respect to any Holder, has the meaning specified in Section 1.5.

 

“Additional Defeasible Provision” means a covenant or other provision that is (a) made part of this Indenture pursuant to an indenture supplemental hereto, a Board Resolution or an Officer’s Certificate delivered pursuant to Section 3.1, and (b) pursuant to the terms set forth in such supplemental indenture, Board Resolution or Officer’s Certificate, made subject to the provisions of Article Thirteen.

 

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.  For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” have correlative meanings.

 

“Authenticating Agent” means any Person authorized by the Trustee to act on behalf of the Trustee to authenticate Securities.

 

“Banking Day” means, in respect of any city, any date on which commercial banks are open for business in that city.

 

“Bankruptcy Law” means any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law.

 

“Board of Directors” means:

 

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

 

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

 

(c) with respect to a limited liability company, the managing member or members or any controlling committee of managers or members thereof or any board or committee serving a similar management function; and

 

(d) with respect to any other Person, the individual or board or committee of such Person serving a management function similar to those described in clauses (a), (b) or (c) of this definition.

 

“Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or a Guarantor, the principal financial officer of the Company or a Guarantor, any other authorized officer of the Company or a Guarantor, or a person duly authorized by any of them, in each case as applicable, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee.  Where any provision of this Indenture refers to action to be taken pursuant to a Board Resolution (including the establishment of any series of the Securities and the forms and terms thereof), such action may be taken by any committee, officer or employee of the Company or a Guarantor, as applicable, authorized to take such action by the Board of Directors, as evidenced by a Board Resolution.

 

“Business Day,” when used with respect to any Place of Payment or other location, means, except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, each

 

2

 

Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions and trust companies in that Place of Payment or other location are authorized or obligated by law, executive order or regulation to close.

 

“CINS” means CUSIP International Numbering System.

 

“Code” means the United States Internal Revenue Code of 1986, as amended.

 

“Company” means the Person named as the “Company” in the first paragraph of this instrument until a successor or resulting Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor or resulting Person.

 

“Company Request” or “Company Order” means, in the case of the Company, a written request or order signed in the name of the Company by its Chairman of the Board, its Chief Executive Officer, its Chief Financial Officer, its President, any of its Vice Presidents or any other duly authorized officer of the Company or any person duly authorized by any of them, and delivered to the Trustee and, in the case of a Guarantor, a written request or order signed in the name of such Guarantor by its Chairman of the Board, its Chief Executive Officer, its President, any of its Vice Presidents or any other duly authorized officer of such Guarantor or any person duly authorized by any of them, and delivered to the Trustee.

 

“Corporate Trust Office” means the office of the Trustee at the address specified in Section 3.5 or such other address as to which the Trustee may give notice to the Company.

 

“corporation,” when used in reference to the Trustee or any prospective Trustee, shall include any corporation, company, association, partnership, limited partnership, limited liability company, joint-stock company, trust or other entity, in each case, satisfying the requirements of Section 310(a)(1) of the Trust Indenture Act.

 

“Covenant Defeasance” has the meaning specified in Section 13.3.

 

“CUSIP” means the Committee on Uniform Securities Identification Procedures.

 

“Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

 

“Debt” means any obligation created or assumed by any Person for the repayment of money borrowed and any purchase money obligation created or assumed by such Person and any guarantee of the foregoing.

 

“Default” means, with respect to a series of Securities, any event that is, or after notice or lapse of time or both would be, an Event of Default.

 

“Defaulted Interest” has the meaning specified in Section 3.7.

 

“Definitive Security” means a security other than a Global Security or a temporary Security.

 

“Depositary” means, with respect to the Securities of any series issuable or issued in whole or in part in the form of one or more Global Securities, a clearing agency registered under the Exchange Act that is designated to act as Depositary for such Securities as contemplated by Section 3.1, until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and

 

3

 

thereafter shall mean or include each Person which is a Depositary hereunder, and if at any time there is more than one such Person, shall be a collective reference to such Persons.

 

“Designated Guarantor Senior Debt” shall have the meaning given to such term in a Board Resolution, Officer’s Certificate or indenture supplemental hereto delivered pursuant to Section 3.1.

 

“Designated Senior Debt” shall have the meaning given to such term in a Board Resolution, Officer’s Certificate or indenture supplemental hereto delivered pursuant to Section 3.1.

 

“Dollar” or “$” means the coin or currency of the United States of America, which at the time of payment is legal tender for the payment of public and private debts.

 

“Event of Default” has the meaning specified in Section 5.1.

 

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

 

“Foreign Currency” means a currency used by the government of a country other than the United States of America.

 

“GAAP” means generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in (1) the Financial Accounting Standards Board  Accounting Standards Codification and any related Accounting Standards Updates by the Financial Accounting Standards Board, (2) such other statements by such other entity as are approved by a significant segment of the accounting profession and (3) the rules and regulations of the SEC governing the inclusion of financial statements in periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. All computations based on GAAP contained in the Indenture shall be computed in conformity with GAAP.

 

“Global Security” means a Security in global form that evidences all or part of a series of Securities and is authenticated and delivered to, and registered in the name of, the Depositary for the Securities of such series or its nominee.

 

“Guaranteed Securities” has the meaning specified in Section 14.1.

 

“Guarantor” means each Person that becomes a guarantor of any Securities pursuant to the applicable provisions of this Indenture.

 

“Guarantor Senior Debt” means, unless otherwise provided with respect to the Securities of a series as contemplated by Section 3.1, (a) all Debt of a Guarantor, whether currently outstanding or hereafter issued, unless, by the terms of the instrument creating or evidencing such Debt, it is provided that such Debt is not superior in right of payment to the Securities Guarantee or to other Debt which is pari passu with or subordinated to the Securities Guarantee, and (b) any modifications, refunding, deferrals, renewals or extensions of any such Debt or securities, notes or other evidence of Debt issued in exchange for such Debt; provided that in no event shall “Guarantor Senior Debt” include (i) Debt of a Guarantor owed or owing to any Subsidiary of such Guarantor or any officer, director or employee of such Guarantor or any Subsidiary of such Guarantor, (ii) Debt to trade creditors or (iii) any liability for taxes owed or owing by a Guarantor.

 

“Holder” means a Person in whose name a Security is registered in the Security Register.

 

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“Indenture” means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this instrument, and any such amendment or supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be part of and govern this instrument and any such amendment or supplemental indenture, respectively.  The term “Indenture” also shall include the terms of particular series of Securities established as contemplated by Section 3.1.

 

“interest,” when used with respect to an Original Issue Discount Security which by its terms bears interest only after Maturity, means interest payable after Maturity.

 

“Interest Payment Date,” when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.

 

“Judgment Currency” has the meaning specified in Section 1.18.

 

“Legal Defeasance” has the meaning specified in Section 13.2.

 

“mandatory sinking fund payment” has the meaning specified in Section 12.1.

 

“Market Exchange Rate” has the meaning specified in Section 1.17.

 

“Maturity,” when used with respect to any Security, means the date on which the principal of such Security or an installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

 

“Notice of Default” means a written notice of the kind specified in Section 5.1(c) or Section 5.1(d).

 

“Officer’s Certificate” means, in the case of the Company, a certificate signed by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President or any other duly authorized officer of the Company, or a person duly authorized by any of them, and delivered to the Trustee and, in the case of a Guarantor, a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or any other duly authorized officer of such Guarantor, or a person duly authorized by any of them, and delivered to the Trustee.

 

“Opinion of Counsel” means a written opinion of counsel, who may be an employee of or counsel for the Company or a Guarantor, as the case may be, and who shall be reasonably acceptable to the Trustee.

 

“optional sinking fund payment” has the meaning specified in Section 12.1.

 

“Original Issue Discount Security” means any Security which provides for an amount less than the principal amount thereof to be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2.

 

“Outstanding,” when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:

 

(a)           Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;

 

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(b)           Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, however, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and

 

(c)           Securities that have been paid pursuant to Section 3.6 or in exchange for or in lieu of which other Securities have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a protected purchaser in whose hands such Securities are valid obligations of the Company;

 

provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, (i) the principal amount of an Original Issue Discount Security that shall be deemed to be Outstanding shall be the amount of the principal thereof that would be due and payable as of the date of such determination upon acceleration of the Maturity thereof on such date pursuant to Section 5.2, (ii) the principal amount of a Security denominated in one or more currencies or currency units other than U.S. dollars shall be the U.S. dollar equivalent of such currencies or currency units, determined in the manner provided as contemplated by Section 3.1 on the date of original issuance of such Security or by Section 1.17, if not otherwise so provided pursuant to Section 3.1, of the principal amount (or, in the case of an Original Issue Discount Security, the U.S. dollar equivalent (as so determined) on the date of original issuance of such Security of the amount determined as provided in clause (i) above) of such Security, and (iii) Securities owned by the Company, any Guarantor or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded.  Securities so owned as described in clause (iii) of the immediately preceding sentence which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to act with respect to such Securities and that the pledgee is not the Company, a Guarantor or any other obligor upon the Securities or any Affiliate of the Company or of such other obligor.

 

“Paying Agent” means any Person authorized by the Company to pay the principal of and any premium or interest on any Securities on behalf of the Company.

 

“Payment Blockage Period” has the meaning specified in Section 15.2.

 

“Periodic Offering” means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of interest or formula for determining the rate or rates of interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the original issue date or dates thereof, the redemption provisions, if any, with respect thereto, and any other terms specified as contemplated by Section 3.1 with respect thereto, are to be determined by the Company upon the issuance of such Securities.

 

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

 

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“Place of Payment,” when used with respect to the Securities of any series, means, unless otherwise specifically provided for with respect to such series as contemplated by Section 3.1, the office or agency of the Company and such other place or places where, subject to the provisions of Section 10.2, the principal of and any premium and interest on the Securities of that series are payable as contemplated by Section 3.1.

 

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 3.6 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

 

“Redemption Date,” when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.

 

“Redemption Price,” when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.

 

“Regular Record Date” for the interest payable on any Interest Payment Date on the Securities of any series means the date specified for that purpose as contemplated by Section 3.1.

 

“Required Currency” has the meaning specified in Section 1.18.

 

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

 

“SEC” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this instrument such commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time.

 

“Securities” has the meaning stated in the first recital of this Indenture and more particularly means any Securities authenticated and delivered under this Indenture.

 

“Securities Guarantee” means each guarantee of the obligations of the Company under this Indenture and the Securities by a Guarantor in accordance with the provisions hereof.

 

“Securities Guarantee Payment Blockage Period” has the meaning specified in Section 16.2.

 

“Security Register” and “Security Registrar” have the respective meanings specified in Section 3.5.

 

“Senior Debt” means, unless otherwise provided with respect to the Securities of a series as contemplated by Section 3.1, (a) all Debt of the Company, whether currently outstanding or hereafter issued, unless, by the terms of the instrument creating or evidencing such Debt, it is provided that such Debt is not superior in right of payment to the Securities or to other Debt which is pari passu with or subordinated to the Securities, and (b) any modifications, refunding, deferrals, renewals or extensions of any such Debt or securities, notes or other evidence of Debt issued in exchange for such Debt; provided  

 

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that in no event shall “Senior Debt” include (i) Debt of the Company owed or owing to any Subsidiary of the Company or any officer, director or employee of the Company or any Subsidiary of the Company, (ii) Debt to trade creditors or (iii) any liability for taxes owed or owing by the Company.

 

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.7.

 

“Stated Maturity,” when used with respect to any Security or any installment of principal thereof or interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of principal or interest is due and payable.

 

“Subsidiary” means (a) a corporation more than 50% of the outstanding voting stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries or (b) any partnership or other business organization more than 50% of the ownership interests having ordinary voting power of which is so owned.  For the purposes of this definition, “voting stock” means capital stock or equity interests which ordinarily have voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.

 

“Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Trustee” shall mean or include each Person who is then a Trustee hereunder, and if at any time there is more than one such Person, “Trustee” as used with respect to the Securities of any series shall mean the Trustee with respect to Securities of that series.

 

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended, as in force at the date as of which this instrument was executed, except as provided in Section 9.5; provided, however, that if the Trust Indenture Act of 1939 is amended after such date, “Trust Indenture Act” means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended.

 

“U.S. Person” shall have the meaning assigned to such term in Section 7701(a)(30) of the Code.

 

“U.S. Government Obligations” means securities which are (a) direct obligations of the United States for the payment of which its full faith and credit is pledged, or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States, and which are not callable or redeemable at the option of the issuer thereof.

 

“Vice President,” when used with respect to the Company, the Guarantor or the Trustee, means any vice president, regardless of whether designated by a number or a word or words added before or after the title “vice president.”

 

Section 1.2.           Incorporation by Reference of Trust Indenture Act.

 

Whenever this Indenture refers to a provision of the Trust Indenture Act, the provision is incorporated by reference in and made a part of this Indenture.  The following Trust Indenture Act terms used in this Indenture have the following meanings:

 

“commission” means the SEC.

 

“indenture securities” means the Securities.

 

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“indenture security holder” means a Holder.

 

“indenture to be qualified” means this Indenture.

 

“indenture trustee” or “institutional trustee” means the Trustee.

 

“obligor” on the indenture securities means the Company, the Guarantor (if applicable) or any other obligor on the indenture securities.

 

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

 

Section 1.3.           Compliance Certificates and Opinions.

 

Upon any application or request by the Company or a Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or such Guarantor, as the case may be, shall furnish to the Trustee an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished except as required under Section 314(c) of the Trust Indenture Act.

 

Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (except for certificates provided for in Section 10.5) shall include:

 

(a)           a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto;

 

(b)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

 

(c)           a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether such covenant or condition has been complied with; and

 

(d)           a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with.

 

Section 1.4.           Form of Documents Delivered to Trustee.

 

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

 

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Any certificate or opinion of an officer of the Company or a Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows or, in the exercise of reasonable care, should know that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous.  Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or the Guarantor, as the case may be, stating that the information with respect to such factual matters is in the possession of the Company or the Guarantor, as the case may be, unless such counsel knows that the certificate or opinion or representations with respect to such matters are erroneous.

 

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

 

Section 1.5.           Acts of Holders; Record Dates.

 

(a)           Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed (either physically or by means of a facsimile or an electronic transmission, provided that such electronic transmission is transmitted through the facilities of a Depositary) by such Holders in person or by agent duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company or the Guarantors.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments.  Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 315 of the Trust Indenture Act) conclusive in favor of the Trustee, the Company and, if applicable, the Guarantors, if made in the manner provided in this Section.

 

(b)           The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof.  Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority.  The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.

 

(c)           The ownership, principal amount and serial numbers of Securities held by any Person, and the date of commencement of such Person’s holding of same, shall be proved by the Security Register.

 

(d)           Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company or, if applicable, the Guarantors in reliance thereon, regardless of whether notation of such action is made upon such Security.

 

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(e)           Without limiting the foregoing, a Holder entitled to give or take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any different part of such principal amount.

 

(f)            The Company may set any day as the record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give or take any request, demand, authorization, direction, notice, consent, waiver or other Act provided or permitted by this Indenture to be given or taken by Holders of Securities of such series, but the Company shall have no obligation to do so.  With regard to any record date set pursuant to this paragraph, the Holders of Outstanding Securities of the relevant series on such record date (or their duly appointed agents), and only such Persons, shall be entitled to give or take the relevant action, regardless of whether such Holders remain Holders after such record date.

 

Section 1.6.           Notices, Etc., to Trustee, Company and Guarantors.

 

(a)           Any notice, request, demand, authorization, direction, consent, waiver or other communication by the Company, any of the Guarantors or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail, postage prepaid, facsimile or overnight air courier guaranteeing next day delivery, to the others’ address:

 

If to the Company and/or any Guarantor:

 

Ashford Hospitality Trust, Inc.
 14185 Dallas Parkway, Suite 1100
 Dallas, Texas 75254
 Telephone: (972) 490-9600
 Facsimile: [                      ]
 Attention: David A. Brooks

 

with a copy to:

 

Andrews Kurth LLP
 600 Travis, Suite 4200
 Houston, Texas 77002
 Telephone: (713) 220-4200
 Facsimile: (713) 220-4285
 Attention: [                       ]

 

If to the Trustee:

 

[                       ]
 [                       ]
 [                       ]
 Telephone: [                           ]
 Facsimile: [                            ]
 Attention: [                             ]

 

(b)           The Company, the Guarantors or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

 

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(c)           All notices and communications (other than those sent to Holders) 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 acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

 

Section 1.7.           Notice to Holders; Waiver.

 

Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class postage prepaid, to each Holder affected by such event, at such Holder’s address as it appears in the Security Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice.  In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders.  Any notice mailed to a Holder in the manner herein prescribed shall be conclusively deemed to have been received by such Holder, regardless of whether such Holder actually receives such notice.

 

Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice.  Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

 

In case it shall be impracticable to give such notice by mail by reason of the suspension of regular mail service or by reason of any other cause, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

 

Section 1.8.           Conflict with Trust Indenture Act.

 

If any provision hereof limits, qualifies or conflicts with a provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the provision of the Trust Indenture Act shall control.  If any provision of this Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the Trust Indenture Act shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.

 

Section 1.9.           Effect of Headings and Table of Contents.

 

The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof.

 

Section 1.10.         Successors and Assigns.

 

All covenants and agreements in this Indenture by each of the Company and the Guarantors shall bind their respective successors and assigns, whether so expressed or not.

 

Section 1.11.         Separability Clause.

 

In case any provision in this Indenture or in the Securities or, if applicable, the Securities Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

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Section 1.12.         Benefits of Indenture.

 

Nothing in this Indenture or in the Securities or, if applicable, the Securities Guarantee, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Debt and the Holders any benefit or any legal or equitable right, remedy or claim under this Indenture.

 

Section 1.13.         Force Majeure.

 

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

 

Section 1.14.         Waiver of Jury Trial.

 

EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS INDENTURE.

 

Section 1.15.         Governing Law.

 

THIS INDENTURE, THE SECURITIES AND THE SECURITIES GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Section 1.16.         Legal Holidays.

 

In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day at any Place of Payment, then (notwithstanding any other provision of this Indenture or of the Securities or, if applicable, the Securities Guarantee (other than a provision of the Securities of any series or, if applicable, the Securities Guarantee that specifically states that such provision shall apply in lieu of this Section 1.16)) payment of interest or principal and any premium need not be made at such Place of Payment on such date, but may be made on the next succeeding Business Day at such Place of Payment with the same force and effect as if made on the Interest Payment Date or Redemption Date, or at the Stated Maturity, and if payment is so made, no interest shall accrue for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be.

 

Section 1.17.         Securities in a Composite Currency, Currency Unit or Foreign Currency.

 

Unless otherwise specified in a Board Resolution, Officer’s Certificate or indenture supplemental hereto delivered pursuant to Section 3.1 of this Indenture with respect to a particular series of Securities, whenever for purposes of this Indenture any action may be taken by the Holders of a specified percentage in aggregate principal amount of Securities of all series or all series affected by a particular action at the time Outstanding and, at such time, there are Outstanding Securities of any affected series which are denominated in a coin, currency or currencies other than Dollars (including, but not limited to, any

 

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composite currency, currency units or Foreign Currency), then the principal amount of Securities of such series that shall be deemed to be Outstanding for the purpose of taking such action shall be that amount of Dollars that could be obtained for such amount at the Market Exchange Rate.  For purposes of this Section 1.17, the term “Market Exchange Rate” shall mean the noon Dollar buying rate in The City of New York for cable transfers of such currency or currencies as published by the Federal Reserve Bank of New York, as of the most recent available date.  If such Market Exchange Rate is not so available for any reason with respect to such currency, such quotation of the Federal Reserve Bank of New York as of the most recent available date, or quotations or rates of exchange from one or more major banks in The City of New York or in the country of issue of the currency in question, which for purposes of Euros shall be Brussels, Belgium, or such other quotations or rates of exchange as appropriate shall be used.  The provisions of this paragraph shall apply in determining the equivalent principal amount in respect of Securities of a series denominated in a currency other than Dollars in connection with any action taken by Holders of Securities pursuant to the terms of this Indenture.

 

In no event will the Trustee have any duty or liability regarding the Market Exchange Rate or any alternative determination provided for in the preceding paragraph.

 

Section 1.18.         Payment in Required Currency; Judgment Currency.

 

Each of the Company and the Guarantors agrees, to the fullest extent that it may effectively do so under applicable law, that (a) if for the purpose of obtaining judgment in any court it is necessary to convert the sum due in respect of the principal of or interest on the Securities of any series (the “Required Currency”) into a currency in which a judgment will be rendered (the “Judgment Currency”), the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Required Currency could be purchased in The City of New York with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a Banking Day, then, to the extent permitted by applicable law, the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Required Currency could be purchased in The City of New York with the Judgment Currency on the Banking Day next preceding the day on which final unappealable judgment is entered and (b) its obligations under this Indenture to make payments in the Required Currency (i) shall not be discharged or satisfied by any tender, or any recovery pursuant to any judgment (regardless of whether entered in accordance with subclause (a)), in any currency other than the Required Currency, except to the extent that such tender or recovery shall result in the actual receipt, by the payee, of the full amount of the Required Currency expressed to be payable in respect of such payments, (ii) shall be enforceable as an alternative or additional cause of action for the purpose of recovering in the Required Currency the amount, if any, by which such actual receipt shall fall short of the full amount of the Required Currency so expressed to be payable and (iii) shall not be affected by judgment being obtained for any other sum due under this Indenture.

 

Section 1.19.         Language of Notices, Etc.

 

Any request, demand, authorization, direction, notice, consent, waiver or Act required or permitted under this Indenture shall be in the English language, except that any published notice may be in an official language of the country of publication.

 

Section 1.20.         Incorporators, Shareholders, Officers and Directors of the Company and the Guarantors Exempt from Individual Liability.

 

No recourse under or upon any obligation, covenant or agreement of or contained in this Indenture or of or contained in any Security or, if applicable, the Securities Guarantee, or for any claim based thereon or otherwise in respect thereof, or because of the creation of any indebtedness represented

 

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thereby, shall be had against any incorporator, shareholder, member, officer, manager, employee, partner or director, as such, past, present or future, of the Company, any Guarantor or any successor Person, either directly or through the Company, any Guarantor or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a part of the consideration for, the execution of this Indenture and the issue of the Securities.

 

ARTICLE TWO
 SECURITY FORMS

 

Section 2.1.           Forms Generally.

 

The Securities of each series and, if applicable, the notation thereon relating to the Securities Guarantee, shall be in substantially the form set forth in this Article Two, or in such other form or forms as shall be established by or pursuant to a Board Resolution or in one or more indentures supplemental hereto, in each case with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any securities exchange or as may, consistently herewith, be determined by the officers executing such Securities and, if applicable, any notation of the Securities Guarantee, as evidenced by their execution thereof.

 

The definitive Securities shall be printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Securities, as evidenced by their execution thereof.  If the form of Securities of any series is established by action taken pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Company and delivered to the Trustee at or prior to the delivery of the Company Order contemplated by Section 3.3 for the authentication and delivery of such Securities.

 

The forms of Global Securities of any series shall have such provisions and legends as are customary for Securities of such series in global form, including without limitation any legend required by the Depositary for the Securities of such series.

 

Section 2.2.           Form of Face of Security.

 

[If the Security is an Original Issue Discount Security and is not “publicly offered” within the meaning of Treasury Regulations Section 1.1275-1(h), insert—FOR PURPOSES OF SECTION 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, THE AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS [                        % OF ITS PRINCIPAL AMOUNT] [$             PER $1,000 OF PRINCIPAL AMOUNT], THE ISSUE DATE IS               , 20        AND, THE YIELD TO MATURITY IS                           , COMPOUNDED [SEMIANNUALLY OR OTHER PROPER PERIOD].

 

[In the alternative instead of providing such legend, insert the following legend—FOR PURPOSES OF SECTION 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT, AND                      [THE NAME OR TITLE AND ADDRESS OR TELEPHONE NUMBER OF A REPRESENTATIVE OF THE COMPANY] WILL, BEGINNING NO LATER THAN 10 DAYS AFTER THE ISSUE DATE, PROMPTLY MAKE AVAILABLE TO HOLDERS THE AMOUNT OF ORIGINAL ISSUE

 

15

 

DISCOUNT, THE ISSUE DATE, THE YIELD TO MATURITY AND ANY OTHER INFORMATION REQUIRED BY APPLICABLE TREASURY REGULATIONS.]

 

[Insert any other legend required by the Code or the regulations thereunder.]

 

[If a Global Security,—insert legend required by Section 2.4 of the Indenture] [If applicable, insert —UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

 

ASHFORD HOSPITALITY TRUST, INC.

 

[TITLE OF SECURITY]

 

	
No
    	
 
    	
U.S. $
    

 

[CUSIP No.  ]

 

ASHFORD HOSPITALITY TRUST, INC., a corporation duly organized and existing under the laws of the State of Maryland (herein called the “Company,” which term includes any successor or resulting Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to                                             , or registered assigns, the principal sum of                                            United States Dollars on                                                  [If the Security is to bear interest prior to Maturity, insert—, and to pay interest thereon from                                       or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on                        and                     in each year, commencing                     , at the rate of                  % per annum, until the principal hereof is paid or made available for payment [if applicable, insert—, and at the rate of         % per annum on any overdue principal and premium and on any installment of interest (to the extent that the payment of such interest shall be legally enforceable)].  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the             or             (regardless of whether a Business Day), as the case may be, next preceding such Interest Payment Date.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture].

 

[If the Security is not to bear interest prior to Maturity, insert—The principal of this Security shall not bear interest except in the case of a default in payment of principal upon acceleration, upon redemption or at Stated Maturity and in such case the overdue principal of this Security shall bear interest at the rate of

 

16

 

        % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such default in payment to the date payment of such principal has been made or duly provided for.  Interest on any overdue principal shall be payable on demand.  Any such interest on any overdue principal that is not so paid on demand shall bear interest at the rate of            % per annum (to the extent that the payment of such interest shall be legally enforceable), which shall accrue from the date of such demand for payment to the date payment of such interest has been made or duly provided for, and such interest shall also be payable on demand.]

 

[If a Global Security, insert—Payment of the principal of (and premium, if any) and [if applicable, insert—any such] interest on this Security will be made by transfer of immediately available funds to a bank account in                          designated by the Holder in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts [state other currency].]

 

[If a Definitive Security, insert—Payment of the principal of (and premium, if any) and [if applicable, insert—any such] interest on this Security will be made at the office or agency of the Company maintained for that purpose in                                    , in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts] [state other currency] [or subject to any laws or regulations applicable thereto and to the right of the Company (as provided in the Indenture) to rescind the designation of any such Paying Agent, at the [main] offices of                                    in                                       , or at such other offices or agencies as the Company may designate, by [United States Dollar] [state other currency] check drawn on, or transfer to a [United States Dollar] account maintained by the payee with, a bank in The City of New York (so long as the applicable Paying Agency has received proper transfer instructions in writing at least        days prior to the payment date)] [if applicable, insert—; provided, however, that payment of interest may be made at the option of the Company by [United States Dollar] [state other currency] check mailed to the addresses of the Persons entitled thereto as such addresses shall appear in the Security Register] [or by transfer to a [United States Dollar] [state other currency] account maintained by the payee with a bank in The City of New York [state other Place of Payment] (so long as the applicable Paying Agent has received proper transfer instructions in writing by the record date prior to the applicable Interest Payment Date)].]

 

Reference is hereby made to the further provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

 

Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.

 

Dated:

 

	
 
    	
ASHFORD HOSPITALITY   TRUST, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    

 

Section 2.3.           Form of Reverse of Security.

 

This Security is one of a duly authorized issue of subordinated securities of the Company (herein called the “Securities”), issued and to be issued in one or more series under an Indenture, dated as of            , 

 

17

 

20     (herein called the “Indenture”), between the Company, the Guarantors, if any, and [                                           ], as trustee (herein called the “Trustee”, which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantors, if any, the Trustee and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.  As provided in the Indenture, the Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted.  This Security is one of the series designated on the face hereof [, limited in aggregate principal amount to $                       ].

 

This security is the general, unsecured, subordinated obligation of the Company [if applicable, insert—and is guaranteed pursuant to a guarantee (the “Securities Guarantee”) by [insert name of each Guarantor] (the “Guarantors”).  The Securities Guarantee is the general, unsecured, subordinated obligation of each Guarantor.]

 

[If applicable, insert—The Securities of this series are subject to redemption upon not less than      days’ notice by mail (or electronic transmission in the case of Global Securities), [if applicable, insert—(1) on                               in any year commencing with the year              and ending with the year              through operation of the sinking fund for this series at a Redemption Price equal to 100% of the principal amount, and (2) ] at any time [on or after                           , 20        ], as a whole or in part, at the election of the Company, at the following Redemption Prices (expressed as percentages of the principal amount): If redeemed [on or before                                    , .             %, and if redeemed] during the 12-month period beginning                  of the years indicated,

 

	
Year
    	
 
    	
Redemption Price
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

and thereafter at a Redemption Price equal to            % of the principal amount, together in the case of any such redemption [if applicable, insert—(whether through operation of the sinking fund or otherwise)] with accrued interest to the Redemption Date, but interest installments the Stated Maturity of which is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]

 

[If applicable, insert—The Securities of this series are subject to redemption upon not less than       nor more than         days’ notice by mail (or electronic transmission in the case of Global Securities), (1) on                   in any year commencing with the year                   and ending with the year              through operation of the sinking fund for this series at the Redemption Prices for redemption through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below, and (2) at any time [on or after                            ], as a whole or in part, at the election of the Company, at the Redemption Prices for redemption otherwise than through operation of the sinking fund (expressed as percentages of the principal amount) set forth in the table below:  If redeemed during the 12-month period beginning                                        of the years indicated,

 

18

 

	
Year
    	
 
    	
Redemption Price For
   Redemption Through
   Operation of the Sinking Fund
    	
 
    	
Redemption Price for
   Redemption Otherwise Than
   Through Operation of the
   Sinking Fund
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

and thereafter at a Redemption Price equal to          % of the principal amount, together in the case of any such redemption (whether through operation of the sinking fund or otherwise) with accrued interest to the Redemption Date, but interest installments the Stated Maturity of which is on or prior to such Redemption Date will be payable to the Holders of such Securities, or one or more Predecessor Securities, of record at the close of business on the relevant record dates referred to on the face hereof, all as provided in the Indenture.]

 

[If applicable, insert—Notwithstanding the foregoing, the Company may not, prior to                           , redeem any Securities of this series as contemplated by [clause (2) of] the preceding paragraph as a part of, or in anticipation of, any refunding operation by the application, directly or indirectly, of moneys borrowed having an interest cost to the Company (calculated in accordance with generally accepted financial practice) of less than           % per annum.]

 

[If applicable, insert—The sinking fund for this series provides for the redemption on                                 in each year beginning with the year           and ending with the year                    of [not less than] $                             [ (“mandatory sinking fund”) and not more than $                           ] aggregate principal amount of Securities of this series. [Securities of this series acquired or redeemed by the Company otherwise than through [mandatory] sinking fund payments may be credited against subsequent [mandatory] sinking fund payments otherwise required to be made [If applicable, insert— in the inverse order in which they become due].]

 

[If the Securities are subject to redemption in part of any kind, insert—In the event of redemption of this Security in part only, a new Security or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof.]

 

[If applicable, insert—The Securities of this series are not redeemable prior to Stated Maturity.]

 

[If the Security is not an Original Issue Discount Security,—If an Event of Default with respect to Securities of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.]

 

[If the Security is an Original Issue Discount Security,—If an Event of Default with respect to Securities of this series shall occur and be continuing, an amount of principal of the Securities of this series may be declared due and payable in the manner and with the effect provided in the Indenture.  Such amount shall be equal to —insert formula for determining the amount.  Upon payment (i) of the amount of principal so declared due and payable and (ii) of interest on any overdue principal and overdue interest (in each case to the extent that the payment of such interest shall be legally enforceable), all of the Company’s

 

19

 

obligations in respect of the payment of the principal of and interest, if any, on the Securities of this series shall terminate.]

 

The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company [If applicable, insert—and the Guarantors] and the rights of the Holders of the Securities of each series to be affected under the Indenture at any time by the Company [If applicable, insert—and the Guarantors] and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Securities at the time Outstanding of each series to be affected.  The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance by the Company [If applicable, insert—and the Guarantors]  with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, regardless of whether notation of such consent or waiver is made upon this Security.

 

No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of (and premium, if any) and interest on this Security at the times, place(s) and rate, and in the coin or currency, herein prescribed.

 

[If a Global Security, insert—This Global Security or portion hereof may not be exchanged for Definitive Securities of this series except in the limited circumstances provided in the Indenture.  The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders thereof for any purpose under the Indenture.]

 

[If a Definitive Security, insert—As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registerable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in [if applicable, insert—any place where the principal of and any premium and interest on this Security are payable] [if applicable, insert—The City of New York [, or, subject to any laws or regulations applicable thereto and to the right of the Company (limited as provided in the Indenture) to rescind the designation of any such transfer agent, at the [main] offices of                                  in                                   or at such other offices or agencies as the Company may designate]], duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.]

 

The Securities of this series are issuable only in registered form without coupons in denominations of U.S. $                   and any integral multiple thereof.  As provided in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.

 

No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

20

 

Prior to due presentment of this Security for registration of transfer, the Company, [If applicable, insert—any Guarantor,] the Trustee and any agent of the Company [If applicable, insert—, a Guarantor] or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, regardless of whether this Security be overdue, and none of the Company, [If applicable, insert—the Guarantors,] the Trustee nor any such agent shall be affected by notice to the contrary.

 

This Security is subordinated in right of payment to Senior Debt [If applicable, insert-and the Securities Guarantee is subordinated in right of payment to Guarantor Senior Debt], to the extent and in the manner provided in the Indenture.

 

No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, [If applicable, insert—, or the Securities Guarantee endorsed thereon,] or for any claim based thereon or otherwise in respect thereof, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, shareholder, member, officer, manager or director, as such, past, present or future, of the Company [If applicable, insert—or any Guarantor] or of any successor Person, either directly or through the Company [If applicable, insert—or any Guarantor] or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture.

 

The Indenture provides that the Company [If applicable, insert—and the Guarantors] (a) will be discharged from any and all obligations in respect of the Securities (except for certain obligations described in the Indenture), or (b) need not comply with certain restrictive covenants of the Indenture, in each case if the Company [If applicable, insert—or a Guarantor] deposits, in trust, with the Trustee money or U.S. Government Obligations (or a combination thereof) which through the payment of interest thereon and principal thereof in accordance with their terms will provide money, in an amount sufficient to pay all the principal of and interest on the Securities, but such money need not be segregated from other funds except to the extent required by law.

 

Except as otherwise defined herein, all terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

[If a Definitive Security, insert as a separate page—

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

 

(Please Print or Type Name and Address of Assignee)

 

the within instrument of [                                            ] and does hereby irrevocably constitute and appoint                                       Attorney to transfer said instrument on the books of the within-named Company, with full power of substitution in the premises.

 

Please Insert Social Security or Other Identifying Number of Assignee:

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature)
    
				

 

21

 

NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatsoever.]

 

[If a Security to which Article Fourteen has been made applicable, insert the following Form of Notation on such Security relating to the Securities Guarantee—

 

Each of the Guarantors (which term includes any successor Person in such capacity under the Indenture), has fully, unconditionally and absolutely guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture, the due and punctual payment of the principal of, and premium, if any, and interest on the Securities of this series and all other amounts due and payable under the Indenture and the Securities of this series by the Company.

 

The obligations of the Guarantors to the Holders of Securities of this series and to the Trustee pursuant to the Securities Guarantee and the Indenture are expressly set forth in Article Fourteen of the Indenture and reference is hereby made to the Indenture for the precise terms of the Securities Guarantee.

 

	
 
    	
Guarantors:
    
	
 
    	
 
    
	
 
    	
[NAME OF EACH GUARANTOR]
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
]
    

 

Section 2.4.                                 Global Securities.

 

Every Global Security authenticated and delivered hereunder shall bear a legend in substantially the following form:

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES.

 

If Securities of a series are issuable in whole or in part in the form of one or more Global Securities, as specified as contemplated by Section 3.1, then, notwithstanding clause (i) of Section 3.1 and the provisions of Section 3.2, any Global Security shall represent such of the Outstanding Securities of such series as shall be specified therein and may provide that it shall represent the aggregate amount of Outstanding Securities from time to time endorsed thereon and that the aggregate amount of Outstanding Securities represented thereby may from time to time be reduced or increased, as the case may be, to reflect exchanges.  Any endorsement of a Global Security to reflect the amount, or any reduction or

 

22

 

increase in the amount, of Outstanding Securities represented thereby shall be made in such manner and upon instructions given by such Person or Persons as shall be specified therein or in a Company Order.  Subject to the provisions of Section 3.3, Section 3.4 and Section 3.5, the Trustee shall deliver and redeliver any Global Security in the manner and upon instructions given by the Person or Persons specified therein or in the applicable Company Order.  Any instructions by the Company with respect to endorsement or delivery or redelivery of a Global Security shall be in a Company Order (which need not comply with Section 1.3 and need not be accompanied by an Opinion of Counsel).

 

The provisions of the last sentence of Section 3.3 shall apply to any Security represented by a Global Security if such Security was never issued and sold by the Company and the Company delivers to the Trustee the Global Security together with a Company Order (which need not comply with Section 1.3 and need not be accompanied by an Opinion of Counsel) with regard to the reduction or increase, as the case may be, in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 3.3.

 

Section 2.5.                                 Form of Trustee’s Certificate of Authentication.

 

The Trustee’s certificate(s) of authentication shall be in substantially the following form:

 

This is one of the Securities of the series designated [insert title of applicable series] referred to in the within-mentioned Indenture.

 

	
 
    	
[                    ],   as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Officer
    

 

ARTICLE THREE
 THE SECURITIES

 

Section 3.1.                                 Amount Unlimited; Issuable in Series.

 

The aggregate principal amount of Securities that may be authenticated and delivered under this Indenture is unlimited.

 

The Securities may be issued in one or more series.  There shall be established in or pursuant to a Board Resolution, and set forth, or determined in the manner provided, in an Officer’s Certificate, or established in one or more indentures supplemental hereto, prior to the issuance of Securities of any series:

 

(a)                                 the title of the Securities of the series (which shall distinguish the Securities of the series from all other Securities and which may be part of a series of Securities previously issued);

 

(b)                                 any limit upon the aggregate principal amount of the Securities of the series which may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Section 3.4, Section 3.5, Section 3.6, Section 9.6 or Section 11.7 and except for any Securities which, pursuant to Section 3.3, are deemed never to have been authenticated and delivered hereunder);

 

23

 

(c)                                  the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest;

 

(d)                                 the date or dates on which the principal of the Securities of the series is payable or the method of determination thereof;

 

(e)                                  the rate or rates at which the Securities of the series shall bear interest, if any, or the formula, method or provision pursuant to which such rate or rates are determined, the date or dates from which such interest shall accrue or the method of determination thereof, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Interest Payment Date;

 

(f)                                   the place or places where, subject to the provisions of Section 10.2, the principal of and any premium and interest on Securities of the series shall be payable, Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange, and notices and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served;

 

(g)                                  the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company;

 

(h)                                 the obligation, if any, of the Company to redeem or purchase Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a Holder thereof and the period or periods within which, the price or prices at which and the terms and conditions upon which Securities of the series shall be redeemed or purchased, in whole or in part, pursuant to such obligation;

 

(i)                                     if other than denominations of $1,000 and any integral multiple thereof, the denominations in which Securities of the series shall be issuable;

 

(j)                                    whether payment of principal of and premium, if any, and interest, if any, on the Securities of the series shall be without deduction for taxes, assessments or governmental charges paid by Holders of the series;

 

(k)                                 if other than the principal amount thereof, the portion of the principal amount of Securities of the series that shall be payable upon declaration of acceleration of the Maturity thereof pursuant to Section 5.2;

 

(l)                                     if the amount of payments of principal of and any premium or interest on the Securities of the series may be determined with reference to an index, the manner in which such amounts shall be determined;

 

(m)                             if and as applicable, that the Securities of the series shall be issuable in whole or in part in the form of one or more Global Securities and, in such case, the Depositary or Depositaries for such Global Security or Global Securities and any circumstances other than those set forth in Section 3.5 in which any such Global Security may be transferred to, and registered and exchanged for Securities registered in the name of, a Person other than the Depositary for such Global Security or a nominee thereof and in which any such transfer may be registered;

 

24

 

(n)                                 any deletions from, modifications of or additions to the Events of Default set forth in Section 5.1 or the covenants of the Company set forth in Article Ten with respect to the Securities of such series;

 

(o)                                 whether and under what circumstances the Company will pay additional amounts on the Securities of the series held by a Person who is not a U.S. Person in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Company will have the option to redeem the Securities of the series rather than pay such additional amounts;

 

(p)                                 if the Securities of the series are to be issuable in definitive form (whether upon original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions;

 

(q)                                 if the Securities of the series are to be convertible into or exchangeable for any other security or property of the Company, including, without limitation, securities of another Person held by the Company or its Affiliates and, if so, the terms thereof;

 

(r)                                    if other than as provided in Section 13.2 and Section 13.3, the means of Legal Defeasance or Covenant Defeasance as may be specified for the Securities of the series;

 

(s)                                   if other than the Trustee, the identity of the initial Security Registrar and any initial Paying Agent;

 

(t)                                    whether the Securities of the series will be guaranteed pursuant to the Securities Guarantee set forth in Article Fourteen, any modifications to the terms of Article Fourteen applicable to the Securities of such series and the applicability of any other guarantees; and

 

(u)                                 any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).

 

All Securities of any one series shall be substantially identical except as to denomination and except as may otherwise be provided in or pursuant to the Board Resolution referred to above and (subject to Section 3.3) set forth, or determined in the manner provided, in the Officer’s Certificate referred to above or in any such indenture supplemental hereto.

 

All Securities of any one series need not be issued at the same time and, unless otherwise provided, a series may be reopened, without the consent of the Holders, for increases in the aggregate principal amount of such series of Securities and issuances of additional Securities of such series or for the establishment of additional terms with respect to the Securities of such series.

 

If any of the terms of the series are established by action taken by or pursuant to a Board Resolution, a copy of an appropriate record of such action shall be certified by an authorized officer or other authorized person on behalf of the Company and, if applicable, the Guarantors and delivered to the Trustee at or prior to the delivery of the Officer’s Certificate setting forth, or providing the manner for determining, the terms of the series.

 

With respect to Securities of a series subject to a Periodic Offering, such Board Resolution or Officer’s Certificate may provide general terms for Securities of such series and provide either that the specific terms of particular Securities of such series shall be specified in a Company Order or that such

 

25

 

terms shall be determined by the Company and, if applicable, the Guarantors or one or more agents thereof designated in an Officer’s Certificate, in accordance with a Company Order.

 

Section 3.2.                                 Denominations.

 

The Securities of each series shall be issuable in registered form without coupons in such denominations as shall be specified as contemplated by Section 3.1.  In the absence of any such provisions with respect to the Securities of any series, the Securities of such series shall be issuable in denominations of $1,000 and any integral multiple thereof.

 

Section 3.3.                                 Execution, Authentication, Delivery and Dating.

 

The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer or any of its Vice Presidents and need not be attested.  The signature of any of these officers on the Securities may be manual or facsimile.  Any notation of Securities Guarantee endorsed on the Securities shall be executed on behalf of the applicable Guarantor by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer or any of its Vice Presidents and need not be attested.  The signature of any of these officers on any notation of the Securities Guarantee may be manual or facsimile.

 

Securities and any notation of a Securities Guarantee bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company or a Guarantor, as the case may be, shall bind the Company or such Guarantor, as the case may be, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.

 

At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities; provided, however, that in the case of Securities offered in a Periodic Offering, the Trustee shall authenticate and deliver such Securities from time to time in accordance with such other procedures (including, without limitation, the receipt by the Trustee of written instructions from the Company) acceptable to the Trustee as may be specified by or pursuant to a Company Order delivered to the Trustee prior to the time of the first authentication of Securities of such series.  If the forms or terms of the Securities of the series have been established in or pursuant to one or more Board Resolutions as permitted by Section 2.1 and Section 3.1, in authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be fully protected in relying on such Board Resolution and shall be entitled to receive such documents as it may reasonably request.  The Trustee shall also be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Officer’s Certificate pursuant to Section 3.1 and complying with Section 1.3 and an Opinion of Counsel complying with Section 1.3 stating:

 

(a)                                 if the form or forms of such Securities has been established in or pursuant to a Board Resolution as permitted by Section 2.1, that each such form has been established in conformity with the provisions of this Indenture;

 

(b)                                 if the terms of such Securities have been, or in the case of Securities of a series offered in a Periodic Offering will be, established in or pursuant to a Board Resolution as permitted by Section 3.1, that such terms have been, or in the case of Securities of a series offered in a Periodic Offering will be, established in conformity with the provisions of this Indenture,

 

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subject, in the case of Securities of a series offered in a Periodic Offering, to any conditions specified in such Opinion of Counsel; and

 

(c)                                  that such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions and assumptions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company and, if applicable, the Securities Guarantees thereof will constitute valid and legally binding obligations of the Guarantors, enforceable in accordance with their respective terms, subject to the following limitations: (i) bankruptcy, insolvency, moratorium, reorganization, liquidation, fraudulent conveyance or transfer and other similar laws of general applicability relating to or affecting the enforcement of creditors’ rights, or to general equity principles, (ii) the availability of equitable remedies being subject to the discretion of the court to which application therefor is made; and (iii) such other usual and customary matters as shall be specified in such Opinion of Counsel.

 

The Trustee shall not be required to authenticate such Securities if the issue of such Securities pursuant to this Indenture will affect the Trustee’s own rights, duties or immunities under the Securities and this Indenture or otherwise in a manner that is not reasonably acceptable to the Trustee.

 

Notwithstanding the provisions of Section 3.1 and of the preceding paragraph, if all Securities of a series are not to be originally issued at one time, it shall not be necessary to deliver the Officer’s Certificate otherwise required pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise required pursuant to such preceding paragraph at or prior to the time of authentication of each Security of such series if such documents are delivered at or prior to the authentication upon original issuance of the first Security of such series to be issued.

 

With respect to Securities of a series offered in a Periodic Offering, the Trustee may rely, as to the authorization by the Company of any of such Securities, on the form or forms and terms thereof and the legality, validity, binding effect and enforceability thereof, upon the Opinion of Counsel and the other documents delivered pursuant to Section 2.1 and Section 3.1 and this Section, as applicable, in connection with the first authentication of Securities of such series.

 

Each Security shall be dated the date of its authentication.

 

No Security nor any related Securities Guarantee shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee or an Authenticating Agent by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture.  Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.9, for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.

 

Section 3.4.                                 Temporary Securities.

 

Pending the preparation of Definitive Securities of any series, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the Definitive Securities in lieu of which they are issued and with such

 

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appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.

 

If temporary Securities of any series are issued, the Company will cause Definitive Securities of that series to be prepared without unreasonable delay.  After the preparation of Definitive Securities of such series, the temporary Securities of such series shall be exchangeable for Definitive Securities of such series upon surrender of the temporary Securities of such series at the office or agency of the Company in a Place of Payment for that series, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Securities of any series the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Securities of the same series and tenor of authorized denominations.  Until so exchanged the temporary Securities of any series shall in all respects be entitled to the same benefits under this Indenture as Definitive Securities of such series.

 

Section 3.5.                                 Registration, Registration of Transfer and Exchange.

 

The Company shall cause to be kept at the office or agency of the Company in a Place of Payment required by Section 10.2 a register (the register maintained in such office being herein sometimes referred to as the “Security Register”) in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Securities and of transfers of Securities.  The Trustee is hereby appointed as the initial “Security Registrar” for the purpose of registering Securities and transfers of Securities as herein provided, and its Corporate Trust Office, which, at the date hereof, is located at [                              ], is the initial office or agency where the Securities Register will be maintained.  The Company may at any time replace such Security Registrar, change such office or agency or act as its own Security Registrar.  The Company will give prompt written notice to the Trustee of any change of the Security Registrar or of the location of such office or agency.

 

Upon surrender for registration of transfer of any Security of any series at the office or agency maintained pursuant to Section 10.2 for such purpose, the Company and, if applicable, the Guarantors shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations and of a like aggregate principal amount.

 

At the option of the Holder, Securities of any series (except a Global Security) may be exchanged for other Securities of the same series and tenor, of any authorized denominations and of a like aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency.  Whenever any Securities are so surrendered for exchange, the Company and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver, the Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, which the Holder making the exchange is entitled to receive.

 

All Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company and, if applicable, the Guarantors evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such registration of transfer or exchange.

 

Every Security presented or surrendered for registration of transfer or for exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed, by the Holder thereof or such Holder’s attorney duly authorized in writing.

 

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No service charge shall be made for any registration of transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Securities, other than exchanges pursuant to Section 3.4, Section 9.6 or Section 11.7 not involving any transfer.

 

The Company shall not be required (a) to issue, register the transfer of or exchange Securities of any series during a period beginning at the opening of business 15 days before the notice of redemption of Securities of that series selected for redemption under Section 11.3 is sent and ending at the close of business on the day of the delivery thereof, or (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

 

Notwithstanding any other provisions of this Indenture and except as otherwise specified with respect to any particular series of Securities as contemplated by Section 3.1, a Global Security representing all or a portion of the Securities of a series may not be transferred, except as a whole by the Depositary for such series to a nominee of such Depositary or by a nominee of such Depositary to such Depositary or another nominee of such Depositary or by such Depositary or any such nominee to a successor Depositary for such series or a nominee of such successor Depositary.  Every Security authenticated and delivered upon registration of, transfer of, or in exchange for or in lieu of, a Global Security shall be a Global Security except as provided in the two paragraphs immediately following.

 

If at any time the Depositary for any Securities of a series represented by one or more Global Securities notifies the Company that it is unwilling or unable to continue as Depositary for such Securities or if at any time the Depositary for such Securities shall no longer be eligible to continue as Depositary under Section 3.1 or ceases to be a clearing agency registered under the Exchange Act, the Company shall appoint a successor Depositary with respect to such Securities.  If a successor Depositary for such Securities is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company’s election pursuant to Section 3.1 that such Securities be represented by one or more Global Securities shall no longer be effective and the Company and, if applicable, the Guarantors will execute and the Trustee, upon receipt of a Company Order for the authentication and delivery of Definitive Securities of such series, will authenticate and deliver, Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of such series in definitive registered form without coupons, in any authorized denominations, in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such Securities in exchange for such Global Security or Securities registered in the names of such Persons as the Depositary shall direct.

 

If specified by the Company pursuant to Section 3.1 with respect to Securities represented by a Global Security, the Depositary for such Global Security may surrender such Global Security in exchange in whole or in part for Securities of the same series and tenor in definitive registered form on such terms as are acceptable to the Company, the Trustee and such Depositary.  Thereupon, the Company and, if applicable, the Guarantors shall execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of Securities in definitive registered form, shall authenticate and deliver, without service charge:

 

(a)                                 to the Person specified by such Depositary a new Security or Securities, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and tenor, of any authorized denominations as requested by such Person, in an aggregate principal amount equal to and in exchange for such Person’s beneficial interest in the Global Security; and

 

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(b)                                 to such Depositary a new Global Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities authenticated and delivered pursuant to clause (a) above.

 

Every Person who takes or holds any beneficial interest in a Global Security agrees that:

 

(i)                                     the Company, the Guarantors (if applicable) and the Trustee may deal with the Depositary as sole owner of the Global Security and as the authorized representative of such Person;

 

(ii)                                  such Person’s rights in the Global Security shall be exercised only through the Depositary and shall be limited to those rights established by law and agreement between such Person and the Depositary and/or direct and indirect participants of the Depositary;

 

(iii)                               the Depositary and its participants make book-entry transfers of beneficial ownership among, and receive and transmit distributions of the principal of (and premium, if any) and interest on the Global Securities to, such Persons in accordance with their own procedures; and

 

(iv)                              none of the Company, the Guarantors (if applicable), the Trustee, nor any agent of any of them will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.

 

Section 3.6.                                 Mutilated, Destroyed, Lost and Stolen Securities.

 

If any mutilated Security is surrendered to the Trustee, together with such security or indemnity as may be required by the Company, the Guarantors (if applicable) or the Trustee to save each of them and any agent of any of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a protected purchaser, the Company and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

If there shall be delivered to the Company, the Guarantors (if applicable) and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Security and (b) such security or indemnity as may be required by them to save each of them and any agent of any of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a protected purchaser, the Company and, if applicable, the Guarantors shall execute and the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security, with a notation of the Securities Guarantee, if applicable, executed by the Guarantors, of the same series and of like tenor and principal amount and bearing a number not contemporaneously outstanding.

 

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.

 

Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

 

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Every new Security of any series issued pursuant to this Section in lieu of any destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company and, if applicable, the Guarantors, regardless of whether the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities of that series duly issued hereunder.

 

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

 

Section 3.7.                                 Payment of Interest; Interest Rights Preserved.

 

Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

 

Any interest on any Security of any series that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (a) or (b) below:

 

(a)                                 The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security of such series and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided.  Thereupon, the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest that shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid (or sent by electronic transmission in the case of Global Securities), to each Holder of Securities of such series at such Holder’s address as it appears in the Security Register, not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed or sent, such Defaulted Interest shall be paid to the Persons in whose names the Securities of such series (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause (b).

 

(b)                                 The Company may make payment of any Defaulted Interest on the Securities of any series in any other lawful manner not inconsistent with the requirements of any securities exchange on which such Securities may be listed, and upon such notice as may be required by

 

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such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment shall be deemed practicable by the Trustee.

 

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

 

Section 3.8.                                 Persons Deemed Owners.

 

Except as otherwise provided as contemplated by Section 3.1 with respect to any series of Securities, prior to due presentment of a Security for registration of transfer, the Company, the Trustee and, if applicable, the Guarantors and any agent thereof may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any premium and (subject to Section 3.5 and Section 3.7) any interest on such Security and for all other purposes whatsoever, regardless of whether such Security be overdue, and none of the Company, the Trustee nor, if applicable, the Guarantors nor any agent of any of them shall be affected by notice to the contrary.

 

No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee, and, if applicable, the Guarantors and any agent of any thereof as the owner of such Global Security for all purposes whatsoever.

 

Section 3.9.                                 Cancellation.

 

All Securities surrendered for payment, redemption, registration of transfer or exchange or for credit against any sinking fund payment shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it.  The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and may deliver to the Trustee (or to any other Person for delivery to the Trustee) for cancellation any Securities previously authenticated hereunder that the Company has not issued and sold, and all Securities so delivered shall be promptly canceled by the Trustee.  No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture.  All canceled Securities held by the Trustee shall be disposed of in accordance with its customary practices, and the Trustee shall thereafter deliver to the Company a certificate with respect to such disposition from time to time upon written request.

 

Section 3.10.                          Computation of Interest.

 

Except as otherwise specified as contemplated by Section 3.1 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Section 3.11.                          CUSIP or CINS Numbers.

 

The Company in issuing the Securities may use CUSIP or CINS numbers (if then generally in use, and in addition to the other identification numbers printed on the Securities), and, if so, the Trustee shall use CUSIP or CINS numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such CUSIP or CINS numbers either as printed on the Securities or as contained in any notice of a redemption

 

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and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such CUSIP or CINS numbers.

 

ARTICLE FOUR
 SATISFACTION AND DISCHARGE

 

Section 4.1.                                 Satisfaction and Discharge of Indenture.

 

This Indenture shall cease to be of further effect and will be discharged with respect to the Securities of any series (except as to any surviving rights of registration of transfer or exchange of Securities and certain rights of the Trustee, in each case, herein expressly provided for), and the Trustee, upon Company Request and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to such Securities, when:

 

(a)                                 either:

 

(i)                                     all such Securities theretofore authenticated and delivered (other than (A) such Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 3.6, and (B) such Securities for the payment of which money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust, as provided in Section 10.3) have been delivered to the Trustee for cancellation; or

 

(ii)                                  all such Securities not theretofore delivered to the Trustee for cancellation:

 

(A)                               have become due and payable; or

 

(B)                               will become due and payable at their Stated Maturity within one year; or

 

(C)                               are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,

 

and the Company, in the case of (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal (and premium, if any) and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Stated Maturity or Redemption Date, as the case may be, together with instructions from the Company irrevocably directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be;

 

(b)                                 the Company has paid or caused to be paid all other sums payable hereunder by the Company with respect to such Securities; and

 

(c)                                  the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, which, taken together, state that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture with respect to such Securities have been complied with.

 

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Notwithstanding the satisfaction and discharge of this Indenture with respect to the Securities of any series, (x) the obligations of the Company to the Trustee under Section 6.7, the obligations of the Trustee to any Authenticating Agent under Section 6.14 and the right of the Trustee to resign under Section 6.10 shall survive, and (y) if money shall have been deposited with the Trustee pursuant to clause (a) of this Section, the obligations of the Company and the Trustee under Section 3.5, Section 3.6, Section 4.2, Section 6.6, Section 10.2, the last paragraph of Section 10.3 and Section 13.6 shall survive.

 

Section 4.2.                                 Application of Trust Money.

 

Subject to the provisions of the last paragraph of Section 10.3, all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by it, in accordance with the provisions of the Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest for the payment of which such money has been deposited with the Trustee.

 

ARTICLE FIVE
 REMEDIES

 

Section 5.1.                                 Events of Default.

 

“Event of Default,” wherever used herein with respect to Securities of any series, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

 

(a)                                 default in the payment of any interest upon any Security of that series when it becomes due and payable, and continuance of such default for a period of 30 days (regardless of whether such payment is prohibited by the provisions of Article Fifteen hereof); or

 

(b)                                 default in the payment of the principal of (or premium, if any, on) any Security of that series at its Maturity (regardless of whether such payment is prohibited by the provisions of Article Fifteen hereof); or

 

(c)                                  default in the performance, or breach, of any covenant set forth in Article Ten in this Indenture (other than a covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 90 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

 

(d)                                 default in the performance, or breach, of any covenant in this Indenture (other than a covenant in Article Ten or any other covenant a default in the performance of which or the breach of which is elsewhere in this Section specifically dealt with or which has expressly been included in this Indenture solely for the benefit of series of Securities other than that series), and continuance of such default or breach for a period of 180 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that

 

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series a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or

 

(e)                                  the Company pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case, (ii) consents to the entry of any order for relief against the Company in an involuntary case, (iii) consents to the appointment of a Custodian of the Company or for all or substantially all of the property of the Company, or (iv) makes a general assignment for the benefit of the creditors of the Company; or

 

(f)                                   a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (i) is for relief against the Company in an involuntary case, (ii) appoints a Custodian of the Company or for all or substantially all of the property of the Company, or (iii) orders the liquidation of the Company; and the order or decree remains unstayed and in effect for 60 consecutive days; or

 

(g)                                  default in the deposit of any sinking fund payment when due; or

 

(h)                                 any other Event of Default provided with respect to Securities of that series in accordance with Section 3.1.

 

Section 5.2.                                 Acceleration of Maturity; Rescission and Annulment.

 

If an Event of Default with respect to Securities of any series at the time Outstanding occurs and is continuing, then in every such case the Trustee or the Holders of 25% in aggregate principal amount of the Outstanding Securities of that series may declare the principal amount (or, if the Securities of that series are Original Issue Discount Securities, such portion of the principal amount as may be specified in the terms of that series) and all accrued and unpaid interest of all of the Securities of that series to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration such principal amount (or specified amount) shall become immediately due and payable.  Notwithstanding the foregoing, if an Event of Default specified in clause (e) or (f) of Section 5.1 occurs, the Securities of any series at the time Outstanding shall be due and payable immediately without further action or notice.

 

At any time after such a declaration of acceleration with respect to Securities of any series has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article Five provided, the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if:

 

(a)                                 the Company or, if applicable, one or more of the Guarantors has paid or deposited with the Trustee a sum sufficient to pay:

 

(i)                                     all overdue interest on all Securities of that series;

 

(ii)                                  the principal of (and premium, if any, on) any Securities of that series that has become due otherwise than by such declaration of acceleration and any interest thereon at the rate or rates prescribed therefor in such Securities;

 

(iii)                               to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such Securities; and

 

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(iv)                              all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and

 

(b)                                 all Events of Default with respect to Securities of that series, other than the non-payment of the principal of Securities of that series that has become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.13.

 

No such rescission shall affect any subsequent default or impair any right consequent thereon.

 

Section 5.3.                                 Collection of Indebtedness and Suits for Enforcement by Trustee.

 

The Company covenants that if:

 

(a)                                 default is made in the payment of any installment of interest on any Security when such interest becomes due and payable and such default continues for a period of 30 days (regardless of whether such payment is prohibited by the provisions of Article Fifteen hereof); or

 

(b)                                 default is made in the payment of the principal of (or premium, if any, on) any Security at the Maturity thereof (regardless of whether such payment is prohibited by the provisions of Article Fifteen hereof);

 

the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest and, to the extent that payment of such interest shall be legally enforceable, interest on any overdue principal and any premium and on any overdue interest, at the rate or rates prescribed therefor in such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

 

If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company or, if applicable, the Guarantors or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or, if applicable, the Guarantors or any other obligor upon such Securities, wherever situated.

 

If an Event of Default with respect to Securities of any series occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities of such series by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

 

Section 5.4.                                 Trustee May File Proofs of Claim.

 

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or, if applicable, any Guarantor or any other obligor upon the Securities, their property or their creditors, the Trustee (irrespective of whether the principal of the Securities shall then be due and payable as therein

 

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expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company or, if applicable, the Guarantors for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

(a)                                 to file and prove a claim for the whole amount of principal (and premium, if any) and interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and

 

(b)                                 to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, if the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7.

 

No provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, compromise, arrangement, adjustment or composition affecting the Securities or, if applicable, the Securities Guarantee or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding; provided, however, that the Trustee may, on behalf of the Holders, vote for the election of a trustee in bankruptcy or similar official and be a member of a creditors’ or other similar committee.

 

Section 5.5.                                 Trustee May Enforce Claims Without Possession of Securities.

 

All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.

 

Section 5.6.                                 Application of Money Collected.

 

Any money collected by the Trustee pursuant to this Article Five shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money on account of principal or any premium or interest, upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

 

FIRST: To the payment of all amounts due the Trustee under Section 6.7;

 

SECOND: Subject to Article Fifteen, to the payment of the amounts then due and unpaid for principal of and any premium and interest on the Securities in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Securities for principal and any premium and interest, respectively; and

 

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THIRD: The balance, if any, to the Company.

 

Section 5.7.                                 Limitation on Suits.

 

No Holder of any Security of any series shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture (including, if applicable, the Securities Guarantee), or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

 

(a)                                 such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities of that series;

 

(b)                                 the Holders of not less than 25% in aggregate principal amount of the Outstanding Securities of that series shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;

 

(c)                                  such Holder or Holders have offered to the Trustee reasonable indemnity satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;

 

(d)                                 the Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

 

(e)                                  no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series;

 

it being understood and intended that no one or more of such Holders shall have any right in any manner whatsoever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holder of the same series of Security, or to obtain or to seek to obtain priority or preference over any other Holder of the same series of Security or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all Holders of the same series of Security.

 

Section 5.8.                                 Unconditional Right of Holders to Receive Principal, Premium and Interest.

 

Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional (subject to Article Fifteen and Article Sixteen), to receive payment of the principal of and any premium and  interest on such Security on the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on the Redemption Date) and to institute suit for the enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder.

 

Section 5.9.                                 Restoration of Rights and Remedies.

 

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Guarantors, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

 

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Section 5.10.                          Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 3.6, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

 

Section 5.11.                          Delay or Omission Not Waiver.

 

To the fullest extent permitted by applicable law, no delay or omission of the Trustee or of any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.  Every right and remedy given by this Article Five or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

Section 5.12.                          Control by Holders.

 

The Holders of a majority in aggregate principal amount of the Outstanding Securities of any series shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee, with respect to the Securities of such series; provided, however, that:

 

(a)                                 such direction shall not be in conflict with any rule of law or with this Indenture;

 

(b)                                 the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction; and

 

(c)                                  subject to the provisions of Section 6.1, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall determine that the direction would expose the Trustee to personal liability.

 

Section 5.13.                          Waiver of Past Defaults.

 

By written notice to the Company and the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Securities of any series may on behalf of the Holders of all the Securities of such series waive any past default hereunder with respect to such series and its consequences, except:

 

(a)                                 a continuing default in the payment of the principal of or any premium, if any, or interest on any Security of such series; or

 

(b)                                 a default in respect of a covenant or provision hereof that under Article Nine cannot be modified or amended without the consent of the Holder of each Outstanding Security of such series affected.

 

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Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.

 

Section 5.14.                          Undertaking for Costs.

 

All parties to this Indenture agree, and each Holder of any Security by such Holder’s acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant, other than the Trustee, in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Company, to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in aggregate principal amount of the Outstanding Securities of any series, or to any suit instituted by any Holder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Security on or after the Stated Maturity or Maturities expressed in such Security (or, in the case of redemption, on or after the Redemption Date).

 

Section 5.15.                          Waiver of Stay, Extension or Usury Laws.

 

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

 

ARTICLE SIX
 THE TRUSTEE

 

Section 6.1.                                 Certain Duties and Responsibilities.

 

(a)                                 Except during the continuance of an Event of Default with respect to the Securities of a particular series:

 

(i)                                     the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and as are provided by the Trust Indenture Act with respect to the Securities of such series, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

 

(ii)                                  in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether they conform to the requirements of this Indenture.

 

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(b)                                 In case an Event of Default has occurred and is continuing with respect to the Securities of a particular series, the Trustee shall exercise with respect to the Securities of such series such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

 

(c)                                  No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or willful misconduct, except that:

 

(i)                                     this Subsection shall not be construed to limit the effect of Subsection (a) of this Section;

 

(ii)                                  the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

 

(iii)                               the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of a majority in aggregate principal amount of the Outstanding Securities of any series, given pursuant to Section 5.12, relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture with respect to the Securities of such series; and

 

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

 

(d)                                 Regardless of whether therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

 

Section 6.2.                                 Notice of Defaults.

 

Within 90 days after the occurrence of any Default hereunder with respect to the Securities of any series, the Trustee shall transmit by mail (or electronic transmission in the case of Global Securities) to all Holders of Securities of such series, as their names and addresses appear in the Security Register, notice of such Default hereunder known to the Trustee, unless such Default shall have been cured or waived; provided, however, that, except in the case of a Default in the payment of the principal of or any premium or interest on any Security of such series or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee may withhold from Holders of Securities notice of any continuing Default or Event of Default if a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interest of the Holders of Securities of such series; and, provided, further, that in the case of any Default of the character specified in Section 5.1(c) with respect to Securities of such series, no such notice to Holders shall be given until at least 60 days after the occurrence thereof and that in the case of any Default of the character specified in Section 5.1(d) with respect to Securities of such series, no such notice to Holders shall be given until at least 90 days after the occurrence thereof.

 

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Section 6.3.                                 Certain Rights of Trustee.

 

Subject to the provisions of Section 6.1:

 

(a)                                 the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

 

(b)                                 any request or direction of the Company or a Guarantor mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;

 

(c)                                  whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) shall be entitled to receive and may, in the absence of bad faith on its part, rely upon an Officer’s Certificate;

 

(d)                                 the Trustee may consult with counsel and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;

 

(e)                                  the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction;

 

(f)                                   the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;

 

(g)                                  the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder and shall not be responsible for the supervision of officers and employees of such agents or attorneys;

 

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

 

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(i)                                     the Trustee shall be entitled to the rights and protections afforded to the Trustee pursuant to this Article Six in acting as a Paying Agent or Security Registrar hereunder;

 

(j)                                    the Trustee shall not be deemed to have notice of any Default or Event of Default unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event that is in fact such a Default is received by the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Securities and this Indenture;

 

(k)                                 the Trustee shall not be liable for any action it takes or omits to take that it believes in good faith to be authorized or within its powers conferred upon it by this Indenture or pursuant to applicable law;

 

(l)                                     the Trustee shall not be required to provide any bond or surety in respect of the execution of the trusts and powers in respect of this Indenture or otherwise;

 

(m)                             under no circumstances shall the Trustee be liable in its individual or any other capacity for the obligations evidenced by any Securities; and

 

(n)                                 anything in this Indenture notwithstanding, in no event shall the Trustee be liable for any special, indirect, punitive, incidental or consequential loss or damage of any kind whatsoever (including but not limited to loss of profit), even if the Company has been advised as to the likelihood of such loss or damage and regardless of the form of action.

 

Section 6.4.                                 Not Responsible for Recitals or Issuance of Securities.

 

The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company or, if applicable, the Guarantors, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness.  Neither the Trustee nor any Authenticating Agent makes any representations as to the validity or sufficiency of this Indenture or of the Securities.  The Trustee or any Authenticating Agent shall not be accountable for the use or application by the Company of Securities or the proceeds thereof.

 

Section 6.5.                                 May Hold Securities.

 

The Trustee, any Authenticating Agent, any Paying Agent, any Security Registrar or any other agent of the Company or, if applicable, any Guarantor, in its individual or any other capacity, may become the owner or pledgee of Securities and, subject to Sections 310(b) and 311 of the Trust Indenture Act and Section 6.8, Section 6.9 and Section 6.13, may otherwise deal with the Company or, if applicable, the Guarantors with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other agent.

 

Section 6.6.                                 Money Held in Trust.

 

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.  The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company or, if applicable, one or more of the Guarantors.

 

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Section 6.7.                                 Compensation and Reimbursement.

 

The Company agrees:

 

(a)                                 to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

 

(b)                                 except as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as has been adjudicated to have resulted from its own negligence or willful misconduct; and

 

(c)                                  to indemnify each of the Trustee and its officers, directors, agents and employees for, and to hold it and them harmless against, any loss, liability or expense arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses of defending itself or themselves against any claim or liability in connection with the exercise or performance of any of its or their powers or duties hereunder, except any such loss, liability or expense as has been adjudicated to have resulted from any of its or their own negligence or willful misconduct.

 

As security for the performance of the obligations of the Company under this Section, the Trustee shall have a lien prior to the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the payment of the principal of (and premium, if any) or interest on particular Securities.  Such obligations of the Company under this Section shall not be subordinated to the payment of Senior Debt pursuant to Article Fifteen.

 

Without limiting any rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(e) or Section 5.1(f), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services of the Trustee are intended to constitute expenses of administration under any applicable Bankruptcy Law.

 

The provisions of this Section 6.7 shall survive the resignation or removal of the Trustee and the termination or satisfaction and discharge of this Indenture and the Legal Defeasance of the Securities.

 

Section 6.8.                                 Disqualification; Conflicting Interests.

 

Reference is made to Section 310(b) of the Trust Indenture Act.  There shall be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act this Indenture with respect to the Securities of more than one series.

 

Section 6.9.                                 Corporate Trustee Required; Eligibility.

 

There shall at all times be a Trustee hereunder that shall be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus required by the Trust Indenture Act, subject to supervision or examination by Federal or State authority.  If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements

 

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of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  The Trustee shall not be an obligor upon the Securities or an Affiliate thereof.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, then it shall resign immediately in the manner and with the effect hereinafter specified in this Article Six.

 

Section 6.10.                          Resignation and Removal; Appointment of Successor.

 

(a)                                 No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 6.11.

 

(b)                                 The Trustee may resign at any time with respect to the Securities of one or more series by giving written notice thereof to the Company.  If the instrument of acceptance of appointment by a successor Trustee required by Section 6.11 shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

 

(c)                                  The Trustee may be removed at any time with respect to the Securities of any series by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series, delivered to the Trustee and to the Company.

 

(d)                                 If at any time:

 

(i)                                     the Trustee shall fail to comply with Section 310(b) of the Trust Indenture Act after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Security for at least six months; or

 

(ii)                                  the Trustee shall cease to be eligible under Section 6.9 and shall fail to resign after written request therefor by the Company or by any such Holder; or

 

(iii)                               the Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a Custodian of the Trustee or of its property shall be appointed or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

 

then, in any such case, (A) the Company by a Board Resolution may remove the Trustee with respect to all Securities, or (B) subject to Section 5.14, any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee with respect to all Securities and the appointment of a successor Trustee or Trustees.

 

(e)                                  If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, with respect to the Securities of one or more series, the Company, by a Board Resolution, shall promptly appoint a successor Trustee or Trustees with respect to the Securities of that or those series (it being understood that any such successor Trustee may be appointed with respect to the Securities of one or more or all of such series and that at any time there shall be only one Trustee with respect to the Securities of any particular series), and the Company and the successor Trustee shall comply with the applicable

 

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requirements of Section 6.11.  If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee with respect to the Securities of any series shall be appointed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 6.11, become the successor Trustee with respect to the Securities of such series and to that extent supersede the successor Trustee appointed by the Company.  If no successor Trustee with respect to the Securities of any series shall have been so appointed by the Company or the Holders and accepted appointment in the manner required by Section 6.11, any Holder who has been a bona fide Holder of a Security of such series for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee with respect to the Securities of such series.

 

(f)                                   The Company shall give notice of each resignation and each removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee with respect to the Securities of any series to all Holders of Securities of such series in the manner provided in Section 1.7.  Each notice shall include the name of the successor Trustee with respect to the Securities of such series and the address of its Corporate Trust Office.

 

Section 6.11.                          Acceptance of Appointment by Successor.

 

(a)                                 In case of the appointment hereunder of a successor Trustee with respect to all Securities, the successor Trustee so appointed shall execute, acknowledge and deliver to the Company, the Guarantors (if applicable) and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company, any Guarantor (if applicable) or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder, subject nevertheless to its lien under Section 6.7.

 

(b)                                 In case of the appointment hereunder of a successor Trustee with respect to the Securities of one or more (but not all) series, the Company, the Guarantors (if applicable), the retiring Trustee and each successor Trustee with respect to the Securities of one or more series shall execute and deliver an indenture supplemental hereto wherein each successor Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates, (ii) if the retiring Trustee is not retiring with respect to all Securities, shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series as to which the retiring Trustee is not retiring shall continue to be vested in the retiring Trustee, and (iii) shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee; and upon the execution and delivery of

 

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such supplemental indenture the resignation or removal of the retiring Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee with respect to the Securities of that or those series to which the appointment of such successor Trustee relates; but, on request of the Company, any Guarantor (if applicable) or any successor Trustee, such retiring Trustee, upon payment of its charges, shall execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee with respect to the Securities of the series to which the appointment of such successor relates and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder with respect to the Securities of such series, subject nevertheless to its lien under Section 6.7.

 

(c)                                  Upon request of any such successor Trustee, the Company and, if applicable, the Guarantors shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in paragraph (a) or (b) of this Section, as the case may be.

 

(d)                                 No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article and the Trust Indenture Act.

 

Section 6.12.                          Merger, Conversion, Consolidation or Succession to Business.

 

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto.  As soon as practicable, the successor Trustee shall mail (or send by electronic transmission in the case of Global Securities) a notice of its succession to the Company and the Holders of the Securities then Outstanding.  In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

 

Section 6.13.                          Preferential Collection of Claims Against Company.

 

Reference is made to Section 311 of the Trust Indenture Act.  For purposes of Section 311(b) of the Trust Indenture Act:

 

(a)                                 the term “cash transaction” means any transaction in which full payment for goods or securities sold is made within seven days after delivery of the goods or securities in currency or in checks or other orders drawn upon banks or bankers and payable upon demand;

 

(b)                                 the term “self-liquidating paper” means any draft, bill of exchange, acceptance or obligation which is made, drawn, negotiated or incurred by the Company or, if applicable, any Guarantor for the purpose of financing the purchase, processing, manufacturing, shipment, storage or sale of goods, wares or merchandise and which is secured by documents evidencing title to, possession of, or a lien upon, the goods, wares or merchandise or the receivables or proceeds arising from the sale of the goods, wares or merchandise previously constituting the security, provided the security is received by the Trustee simultaneously with the creation of the

 

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creditor relationship with the Company or, if applicable, such Guarantor arising from the making, drawing, negotiating or incurring of the draft, bill of exchange, acceptance or obligation.

 

Section 6.14.                          Appointment of Authenticating Agent.

 

The Trustee may appoint an Authenticating Agent or Agents with respect to one or more series of Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities of such series issued upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6, and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder.  Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent.  Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority.  If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.  If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section.

 

Any corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.

 

An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company and, if applicable, the Guarantors.  The Trustee for any series of Securities may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company and, if applicable, the Guarantors.  Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be qualified and eligible in accordance with the provisions of this Section, the Trustee for such series may appoint a successor Authenticating Agent that shall be acceptable to the Company and, if applicable, the Guarantors and shall mail (or send by electronic transmission in the case of Global Securities) written notice of such appointment by first-class mail, postage prepaid, to all Holders of Securities of the series with respect to which such Authenticating Agent will serve, as their names and addresses appear in the Security Register.  Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.  No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section.

 

Except with respect to an Authenticating Agent appointed at the request of the Company or, if applicable, the Guarantors, the Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.14, and the Trustee shall be entitled to be

 

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reimbursed by the Company or, if applicable, the Guarantors for such payments, subject to the provisions of Section 6.7.

 

If an appointment with respect to one or more series is made pursuant to this Section 6.14, the Securities of such series may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternate certificate of authentication in the following form:

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
 
    	
[                    ],   as Trustee
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
As Authenticating Agent
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Officer
    

 

ARTICLE SEVEN
 HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY

 

Section 7.1.                                 Company to Furnish Trustee Names and Addresses of Holders.

 

The Company will furnish or cause to be furnished to the Trustee:

 

(a)                                 semi-annually, not more than 5 days after each Regular Record Date for a series of Securities, a list for such series of Securities, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Securities of such series as of such Regular Record Date; and

 

(b)                                 at such other times as the Trustee may request in writing, within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished;

 

provided, however, that if and so long as the Trustee shall be the Security Registrar, no such list need be furnished with respect to such series of Securities.

 

Section 7.2.                                 Preservation of Information; Communications to Holders.

 

(a)                                 The Trustee shall preserve, with respect to each series of Securities, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar.  The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.

 

(b)                                 If three or more Holders (herein referred to as “applicants”) apply in writing to the Trustee, and furnish to the Trustee reasonable proof that each such applicant has owned a Security for a period of at least six months preceding the date of such application, and such application states that the applicants desire to communicate with other Holders with respect to their rights under this Indenture or under the Securities and is accompanied by a copy of the form

 

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of proxy or other communication which such applicants propose to transmit, then the Trustee shall, within five Business Days after the receipt of such application, at its election, either:

 

(i)                                     afford such applicants access to the information preserved at the time by the Trustee in accordance with Section 7.2(a); or

 

(ii)                                  inform such applicants as to the approximate number of Holders whose names and addresses appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a), and as to the approximate cost of mailing to such Holders the form of proxy or other communication, if any, specified in such application.

 

If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Holder whose name and address appear in the information preserved at the time by the Trustee in accordance with Section 7.2(a) a copy of the form of proxy or other communication that is specified in such request, with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender the Trustee shall mail to such applicants and file with the SEC, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interest of the Holders or would be in violation of applicable law.  Such written statement shall specify the basis of such opinion.  If the SEC, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, the SEC shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Holders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

 

(c)                                  Every Holder of Securities, by receiving and holding the same, agrees with the Company, the Guarantors (if applicable) and the Trustee that none of the Company, the Guarantors (if applicable) nor the Trustee nor any agent of any of them shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the Holders in accordance with Section 7.2(b), regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under Section 7.2(b).

 

Section 7.3.                                 Reports by Trustee.

 

Any Trustee’s report required pursuant to Section 313(a) of the Trust Indenture Act shall be dated as of May 15, and shall be transmitted within 60 days after May 15 of each year (but in all events at intervals of not more than 12 months), commencing with the year 20  , by mail (or electronic transmission in the case of Global Securities) to all Holders, as their names and addresses appear in the Security Register.  A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, and with the SEC.  The Company will notify the Trustee when any Securities are listed on any stock exchange.

 

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Section 7.4.                                 Reports by Company.

 

The Company shall:

 

(a)                                 file with the Trustee, within 15 days after the Company files the same with the SEC, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may from time to time by rules and regulations prescribe) which the Company may be required to file with the SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it shall file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Exchange Act in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations;

 

(b)                                 file with the Trustee and the SEC, in accordance with rules and regulations prescribed from time to time by the SEC, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and

 

(c)                                  transmit by mail (or electronic transmission in the case of Global Securities) to all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to clauses (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the SEC.

 

ARTICLE EIGHT
 CONSOLIDATION, AMALGAMATION, MERGER AND SALE

 

Section 8.1.                                 Company May Consolidate, Etc., Only on Certain Terms.

 

The Company shall not convert into, or consolidate, amalgamate or merge with or into any other Person or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of the properties and assets of the Company on a consolidated basis to any other Person unless:

 

(a)                                 either: (i) the Company is the surviving Person; or (ii) the Person formed by or surviving any such consolidation, amalgamation or merger or resulting from such conversion (if other than the Company) or to which such sale, conveyance, assignment, transfer, lease or other disposition has been made is a corporation, limited liability company or limited partnership organized or existing under the laws of the United States, any State thereof or the District of Columbia;

 

(b)                                 the Person formed by or surviving any such conversion, consolidation, amalgamation or merger (if other than the Company) or the Person to which such sale, conveyance, assignment, transfer, lease or other disposition has been made assumes by an indenture supplemental hereto, executed and delivered to the Trustee, the due and punctual payment of the principal of (and premium, if any) and interest on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;

 

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(c)                                  immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and

 

(d)                                 the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such conversion, consolidation, amalgamation, merger, sale, conveyance, assignment, transfer, lease or other disposition and such supplemental indenture comply with this Article Eight and that all conditions precedent herein provided for relating to such transaction have been complied with.

 

Section 8.2.                                 Successor Substituted.

 

Upon any consolidation, amalgamation or merger of the Company with or into any other Person or any sale, conveyance, assignment, transfer, lease or other disposition of all or substantially all of the properties and assets of the Company and, if applicable, the Guarantors on a consolidated basis in accordance with Section 8.1, the successor or resulting Person formed by or resulting upon such consolidation, amalgamation or merger (if other than the Company) or to which such sale, conveyance, assignment, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Company and, if applicable, each of the Guarantors shall be relieved of all obligations and covenants under this Indenture and the Securities.

 

ARTICLE NINE
 AMENDMENT, SUPPLEMENT AND WAIVER

 

Section 9.1.                                 Without Consent of Holders.

 

The Company, the Guarantors (if any) and the Trustee may amend or supplement this Indenture, the Securities Guarantee or the Securities without the consent of any holder of a Security:

 

(a)                                 to cure any ambiguity or defect or to correct or supplement any provision herein that may be inconsistent with any other provision herein; or

 

(b)                                 to evidence the succession of another Person to the Company and the assumption by any such successor of the covenants of the Company herein and, to the extent applicable, of the Securities; or

 

(c)                                  to provide for uncertificated Securities in addition to or in place of certificated Securities; provided that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code, or in the manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; or

 

(d)                                 to add a Securities Guarantee and cause any Person to become a Guarantor, and/or to evidence the succession of another Person to a Guarantor and the assumption by any such successor of the Securities Guarantee of such Guarantor herein and, to the extent applicable, endorsed upon any Securities of any series[, and/or to cause any corporate subsidiary of the Company to become a co-issuer of the Securities of any series]; or

 

(e)                                  to secure the Securities of any series; or

 

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(f)                                   to add to the covenants of the Company such further covenants, restrictions, conditions or provisions as the Company shall consider to be appropriate for the benefit of the Holders of all or any series of Securities (and if such covenants, restrictions, conditions or provisions are to be for the benefit of less than all series of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Company, and to make the occurrence, or the occurrence and continuance, of a Default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, that in respect of any such additional covenant, restriction, condition or provision such amendment or supplemental indenture may provide for a particular period of grace after Default (which period may be shorter or longer than that allowed in the case of other Defaults), may provide for an immediate enforcement upon such an Event of Default, may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the Holders of a majority in aggregate principal amount of the Securities of such series to waive such an Event of Default; or

 

(g)                                  to make any change to any provision of this Indenture that does not adversely affect the rights or interests of any Holder of Securities; or

 

(h)                                 to provide for the issuance of additional Securities in accordance with the provisions set forth in this Indenture; or

 

(i)                                     to add any additional Defaults or Events of Default in respect of all or any series of Securities; or

 

(j)                                    to add to, change or eliminate any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Securities in bearer form, registrable or not registrable as to principal, and with or without interest coupons; or

 

(k)                                 to change or eliminate any of the provisions of this Indenture; provided that any such change or elimination shall become effective only when there is no Security Outstanding of any series created prior to the execution of such amendment or supplemental indenture that is entitled to the benefit of such provision; or

 

(l)                                     to establish the form or terms of Securities of any series as permitted by Section 2.1 and Section 3.1, including to reopen any series of any Securities as permitted under Section 3.1; or

 

(m)                             to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11(b); or

 

(n)                                 to conform the text of this Indenture (and/or any supplemental indenture) or any Securities issued hereunder to any provision of a description of such text or Securities appearing in a prospectus, prospectus supplement, offering memorandum or offering circular pursuant to which such Securities were offered to the extent that such provision was intended by the Company to be a verbatim recitation of a provision of this Indenture (and/or any supplemental indenture) or any Securities or Securities Guarantee issued hereunder, with such intention being evidenced by an Officer’s Certificate; or

 

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(o)                                 to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the Trust Indenture Act or under any similar federal statute subsequently enacted, and to add to this Indenture such other provisions as may be expressly required under the Trust Indenture Act.

 

Section 9.2.                                 With Consent of Holders.

 

The Company, the Guarantors (if any) and the Trustee may amend or supplement this Indenture, the Securities Guarantee and the Securities with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of each series of Securities affected by such amendment or supplemental indenture, with each such series voting as a separate class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities) and, subject to Section 5.8 and Section 5.13 hereof, any existing Default or Event of Default or compliance with any provision of this Indenture, the Securities Guarantee or the Securities may be waived with respect to each series of Securities with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of such series voting as a separate class (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Securities).

 

It is not necessary for the consent of the Holders of Securities under this Section 9.2 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance of the proposed amendment, supplement or waiver.

 

After an amendment, supplement or waiver under this Section 9.2 becomes effective, the Company will mail to the Holders of Securities affected thereby a notice briefly describing the amendment, supplement or waiver.  Any failure of the Company to mail such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amendment, supplemental indenture or waiver.  Notwithstanding anything contained herein to the contrary, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.2 may not (with respect to any Securities held by a non-consenting Holder):

 

(a)                                 change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof, or reduce the amount of the principal of an Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the Maturity thereof pursuant to Section 5.2, or change the coin or currency in which any Security or any premium or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Stated Maturity thereof (or, in the case of redemption, on or after the Redemption Date therefor); or

 

(b)                                 reduce the percentage in aggregate principal amount of the Outstanding Securities of any series, the consent of whose Holders is required for any such amendment or supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; or

 

(c)                                  modify any of the provisions of Section 5.8 or Section 5.13; or

 

(d)                                 waive a redemption payment with respect to any Security; provided, however, that any purchase or repurchase of Securities shall not be deemed a redemption of the Securities; or

 

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(e)                                  release any Guarantor from any of its obligations under its Securities Guarantee or this Indenture, except in accordance with the terms of this Indenture (as amended or supplemented); or

 

(f)                                   make any change in the foregoing amendment and waiver provisions, except to increase any percentage provided for therein or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby.

 

An amendment or supplemental indenture that changes or eliminates any covenant or other provision of this Indenture that has expressly been included solely for the benefit of one or more particular series of Securities, or that modifies the rights of the Holders of Securities of such series with respect to such covenant or other provision, shall be deemed not to affect the rights under this Indenture of the Holders of Securities of any other series.

 

Section 9.3.                                 Execution of Amendments and Supplemental Indentures.

 

In executing, or accepting the additional trusts created by, any amendment or supplemental indenture permitted by this Article Nine or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment or supplemental indenture is authorized or permitted by this Indenture.

 

Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such amendment or supplemental indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Securities as aforesaid, and upon receipt by the Trustee of the documents described in Section 6.3 hereof, the Trustee will join with the Company and the Guarantors in the execution of such amendment or supplemental indenture unless such amendment or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amendment or supplemental Indenture.

 

Section 9.4.                                 Effect of Amendments and Supplemental Indentures.

 

Upon the execution of any amendment or supplemental indenture under this Article Nine, this Indenture shall be modified in accordance therewith, and such amendment or supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

 

Section 9.5.                                 Conformity with Trust Indenture Act.

 

Every amendment or supplemental indenture executed pursuant to this Article Nine shall conform to the requirements of the Trust Indenture Act as then in effect.

 

Section 9.6.                                 Reference in Securities to Amendments or Supplemental Indentures.

 

Securities of any series authenticated and delivered after the execution of any amendment or supplemental indenture pursuant to this Article Nine may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such amendment or supplemental indenture.  If the Company shall so determine, new Securities of any series so modified as to conform, in the opinion of the Trustee and the Company, to any such amendment or supplemental 

 

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indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities of such series.

 

Section 9.7.                                 Effect of Consents.

 

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Security of a series is a continuing consent by the Holder of a Security of such series and every subsequent Holder of a Security of such series or portion of a Security of such series that evidences the same debt as the consenting Holder’s Security of such series, even if the notation of the consent is not made on any Security.  An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder of the Securities of such series.

 

ARTICLE TEN
 COVENANTS

 

Section 10.1.                          Payment of Principal, Premium and Interest.

 

The Company covenants and agrees for the benefit of each series of Securities that it will duly and punctually pay the principal of and any premium and interest on the Securities of that series in accordance with the terms of the Securities and this Indenture.

 

Section 10.2.                          Maintenance of Office or Agency.

 

The Company will maintain in the United States an office or agency (which may be an office of the Trustee or Security Registrar or agent of the Trustee or Security Registrar) where Securities of each series may be presented or surrendered for payment and surrendered for registration of transfer or exchange and where notices and demands to or upon the Company in respect of the Securities of that series and this Indenture may be served.  The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

 

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

 

Except as otherwise specified with respect to a series of Securities as contemplated by Section 3.1, the Company hereby initially designates the Corporate Trust Office of the Trustee as the Company’s office or agency for each such purpose for each series of Securities.  The Trustee shall initially serve as Paying Agent.  In the event the Company makes any payment in any currency in which the Trustee is unable to pay, and notwithstanding anything herein to the contrary, the Company will appoint a Paying Agent other than the Trustee to make such payment and the Trustee will have no obligations with respect to such payment and will incur no liability with respect to the failure by the Company or such other Paying Agent to make, or cause to be made, such payment.

 

Section 10.3.                          Money for Securities Payments to Be Held in Trust.

 

If the Company shall at any time act as its own Paying Agent, with respect to any series of Securities, it will, on or before each due date of the principal of or any premium or interest on any of the 

 

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Securities of that series, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium and interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act.

 

Whenever the Company shall have one or more Paying Agents for any series of Securities, it will, prior to each due date of the principal of or any premium or interest on any Securities of that series, deposit with a Paying Agent a sum sufficient to pay the principal and any premium or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal, premium or interest, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act.  For purposes of this Section 10.3, should a due date for principal of or any premium or interest on, or sinking fund payment with respect to, any series of Securities not be on a Business Day, such payment shall be due on the next Business Day without any interest for the period from the due date until such Business Day.

 

The Company will cause each Paying Agent for any series of Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will:

 

(a)                                 hold all sums held by it for the payment of the principal of or any premium or interest on Securities of that series in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided;

 

(b)                                 give the Trustee notice of any Default by the Company (or any other obligor upon the Securities of that series) in the making of any payment of principal or any premium or interest on the Securities of that series; and

 

(c)                                  at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

 

The Company and, if applicable, the Guarantors may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.

 

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

 

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Section 10.4.                          Existence.

 

Subject to Article Eight, the Company and, if any Securities of a series to which Article Fourteen has been made applicable are Outstanding, each Guarantor will do or cause to be done all things necessary to preserve and keep in full force and effect its existence, rights (charter and statutory) and franchises; provided, however, that the Company and, if applicable, each Guarantor shall not be required to preserve any such right or franchise if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or such Guarantor, as the case may be.

 

Section 10.5.                          Statement by Officers as to Default.

 

Annually, within 120 days after the close of each fiscal year beginning with the first fiscal year during which one or more series of Securities are Outstanding, the Company and, if any Securities of a series to which Article Fourteen has been made applicable are Outstanding, each Guarantor will deliver to the Trustee a brief certificate (which need not include the statements set forth in Section 1.3) from the principal executive officer, principal financial officer or principal accounting officer of the Company and, if applicable, such Guarantor, stating that a review of the activities of the Company during such year and of performance under this Indenture has been made, and as to his or her knowledge of the Company’s or such Guarantor’s, as the case may be, compliance (without regard to any period of grace or requirement of notice provided herein) with all conditions and covenants under this Indenture and, if the Company or such Guarantor, as the case may be, shall be in Default, specifying all such Defaults and the nature and status thereof of which such officer has knowledge.

 

ARTICLE ELEVEN
 REDEMPTION OF SECURITIES

 

Section 11.1.                          Applicability of Article.

 

Securities of any series that are redeemable before their Stated Maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 3.1 for Securities of any series) in accordance with this Article Eleven.

 

Section 11.2.                          Election to Redeem; Notice to Trustee.

 

The election of the Company to redeem any Securities shall be evidenced by a Board Resolution.  In case of any redemption at the election of the Company of less than all the Securities of any series, the Company shall, at least 15 days prior to the last date for the giving of notice of such redemption (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such Redemption Date and of the principal amount of Securities of such series to be redeemed and, if applicable, of the tenor of the Securities to be redeemed.  In the case of any redemption of Securities (a) prior to the expiration of any restriction on such redemption provided in the terms of such Securities or elsewhere in this Indenture or (b) pursuant to an election of the Company that is subject to a condition specified in the terms of the Securities of the series to be redeemed, the Company shall furnish the Trustee with an Officer’s Certificate evidencing compliance with such restriction or condition.

 

Section 11.3.                          Selection by Trustee of Securities to Be Redeemed.

 

If less than all the Securities of any series are to be redeemed (unless all of the Securities of such series and of a specified tenor are to be redeemed), the particular Securities to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the Outstanding 

 

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Securities of such series not previously called for redemption, by such method as the Trustee shall deem fair and appropriate (and in accordance with the applicable procedures of the Depositary in the case of Global Securities) and which may provide for the selection for redemption of portions (equal to the minimum authorized denomination for Securities of that series or any integral multiple thereof) of the principal amount of Securities of such series of a denomination larger than the minimum authorized denomination for Securities of that series.

 

The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.  If the Securities of any series to be redeemed consist of Securities having different dates on which the principal is payable or different rates of interest, or different methods by which interest may be determined or have any other different tenor or terms, then the Company may, by written notice to the Trustee, direct that the Securities of such series to be redeemed shall be selected from among the groups of such Securities having specified tenor or terms and the Trustee shall thereafter select the particular Securities to be redeemed in the manner set forth in the preceding paragraph from among the group of such Securities so specified.

 

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.

 

Section 11.4.                          Notice of Redemption.

 

Notice of redemption shall be given by first-class mail, postage prepaid, or sent electronically in the case of Global Securities, in each case, not less than 30 nor more than 60 days prior to the Redemption Date, to each Holder of Securities to be redeemed, at such Holder’s address appearing in the Security Register.

 

All notices of redemption shall state:

 

(a)                                 the Redemption Date;

 

(b)                                 the Redemption Price, or if not then ascertainable, the manner of calculation thereof;

 

(c)                                  if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed;

 

(d)                                 that on the Redemption Date the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after said date;

 

(e)                                  the place or places where such Securities are to be surrendered for payment of the Redemption Price;

 

(f)                                   that the redemption is for a sinking fund, if such is the case; and

 

(g)                                  the conditions, if any, to which such redemption shall be subject.

 

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Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company.

 

Section 11.5.                          Deposit of Redemption Price.

 

Prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust as provided in Section 10.3) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the Securities which are to be redeemed on that date.

 

Section 11.6.                          Securities Payable on Redemption Date.

 

Notice of redemption having been given as aforesaid, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest, or fail to pay the Redemption Price and accrued interest as a result of any failure of any condition to which such redemption is subject to be satisfied or waived) such Securities shall cease to bear interest.  Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that unless otherwise specified with respect to Securities of any series as contemplated in Section 3.1, installments of interest the Stated Maturity of which is on or prior to the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record dates according to their terms and the provisions of Section 3.7.

 

If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal (and premium, if any) shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.

 

Section 11.7.                          Securities Redeemed in Part.

 

Any Security which is to be redeemed only in part shall be surrendered at a Place of Payment therefor (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of the same series and tenor, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.

 

ARTICLE TWELVE
 SINKING FUNDS

 

Section 12.1.                          Applicability of Article.

 

The provisions of this Article Twelve shall be applicable to any sinking fund for the retirement of Securities of a series except as otherwise specified as contemplated by Section 3.1 for Securities of such series.

 

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The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a “mandatory sinking fund payment,” and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an “optional sinking fund payment.” If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.2.  Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of Securities of such series.

 

Section 12.2.                          Satisfaction of Sinking Fund Payments with Securities.

 

The Company (a) may deliver Outstanding Securities of a series (other than any previously called for redemption) and (b) may apply as a credit Securities of a series that have been redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities, in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series; provided that such Securities have not been previously so credited.  Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund and the amount of such sinking fund payment shall be reduced accordingly.

 

Section 12.3.                          Redemption of Securities for Sinking Fund.

 

Not less than 45 days prior to each sinking fund payment date for any series of Securities (unless a shorter period shall be satisfactory to the Trustee), the Company will deliver to the Trustee an Officer’s Certificate specifying the amount of the next ensuing sinking fund payment for that series pursuant to the terms of that series, the portion thereof, if any, which is to be satisfied by payment of cash and the portion thereof, if any, which is to be satisfied by delivering and crediting Securities of that series pursuant to Section 12.2 and stating the basis for such credit and that such Securities have not been previously so credited, and will also deliver to the Trustee any Securities to be so delivered.  Not less than 30 days before each such sinking fund payment date the Trustee shall select the Securities to be redeemed upon such sinking fund payment date in the manner specified in Section 11.3 and cause notice of the redemption thereof to be given in the name of and at the expense of the Company in the manner provided in Section 11.4.  Such notice having been duly given, the redemption of such Securities shall be made upon the terms and in the manner stated in Section 11.6 and Section 11.7.

 

ARTICLE THIRTEEN
 DEFEASANCE

 

Section 13.1.                          Option to Effect Legal Defeasance or Covenant Defeasance.

 

The Company may, at the option of its Board of Directors evidenced by a Board Resolution, and at any time, elect to have either Section 13.2 or Section 13.3 hereof be applied to all Outstanding Securities of any series upon compliance with the conditions set forth below in this Article Thirteen.

 

Section 13.2.                          Legal Defeasance and Discharge.

 

Upon the Company’s exercise under Section 13.1 hereof of the option applicable to this Section 13.2, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be deemed to have been discharged from their obligations with respect to all Outstanding Securities of such series (including the Securities Guarantee) on the date the conditions set forth below are satisfied (hereinafter, “Legal Defeasance”).  For this purpose, Legal Defeasance means 

 

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that the Company and the Guarantors will be deemed to have paid and discharged the entire Debt represented by the Outstanding Securities of such series (including the Securities Guarantee), which will thereafter be deemed to be “outstanding” only for the purposes of Section 13.5 hereof and the other sections of this Indenture referred to in clauses (a) and (b) below, and to have satisfied all their other obligations under such Securities, the Securities Guarantee and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions, which will survive until otherwise terminated or discharged hereunder:

 

(a)                                 the rights of Holders of Outstanding Securities of such series to receive payments in respect of the principal of, or interest or premium, if any, on, such Securities when such payments are due from the trust referred to in Section 13.4 hereof;

 

(b)                                 the Company’s obligations with respect to such Securities under Section 3.4, Section 3.5, Section 3.6, Section 10.2 and Section 10.3 hereof;

 

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

 

(d)                                 this Article Thirteen.

 

Subject to compliance with this Article Thirteen, the Company may exercise its option under this Section 13.2 notwithstanding the prior exercise of its option under Section 13.3 hereof with respect to the same series of Securities.

 

Section 13.3.                          Covenant Defeasance.

 

Upon the Company’s exercise under Section 13.1 hereof of the option applicable to this Section 13.3, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, be released from each of their obligations with respect to the Securities of such series under the covenants contained in Section 7.4, Section 8.1 and Section 10.4 hereof as well as any Additional Defeasible Provisions (such release and termination hereinafter referred to as “Covenant Defeasance”), and the Securities of such series will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Securities will not be deemed outstanding for accounting purposes).  For this purpose, Covenant Defeasance means that, with respect to the Outstanding Securities of such series and the Securities Guarantee, the Company and the Guarantors may fail to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such failure to comply will not constitute a Default or an Event of Default under Section 5.1 hereof, but, except as specified above, the remainder of this Indenture and such Securities and Securities Guarantees will be unaffected thereby.  In addition, upon the Company’s exercise under Section 13.1 hereof of the option applicable to this Section 13.3 hereof, subject to the satisfaction of the conditions set forth in Section 13.4 hereof, any Event of Default that constitutes an Additional Defeasible Provision will no longer constitute an Event of Default.

 

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Section 13.4.                          Conditions to Legal or Covenant Defeasance.

 

In order to exercise either Legal Defeasance or Covenant Defeasance with respect to any series of Securities under either Section 13.2 or Section 13.3 hereof:

 

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

 

(b)                                 in the case of an election under Section 13.2 hereof, the Company must deliver to the Trustee an Opinion of Counsel stating that:

 

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

 

(ii)                                  since the Issue Date, there has been a change in the applicable U.S. federal income tax law,

 

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

 

(c)                                  in the case of an election under Section 13.3 hereof, the Company must deliver to the Trustee an Opinion of Counsel stating that the Holders of the Outstanding Securities of such series will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

 

(d)                                 no Default or Event of Default with respect to such series of Securities shall have occurred and be continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit);

 

(e)                                  the deposit must not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;

 

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

 

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

 

(h)                                 the Company must deliver to the Trustee an Officer’s Certificate stating that all conditions precedent set forth in clauses (a) through (f) of this Section 13.4 have been complied with; and

 

(i)                                     the Company must deliver to the Trustee an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions, qualifications and exclusions) stating that all conditions precedent set forth in clauses (b), (c) and (f) of this Section 13.4 have been complied with.

 

Section 13.5.                          Deposited Money and U.S. Government Obligations to be Held in Trust, Other Miscellaneous Provisions.

 

Subject to the last paragraph of Section 10.3 hereof, all money and non-callable U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 13.5, the “Trustee”) pursuant to Section 13.4 hereof in respect of the Outstanding Securities of any series will be held in trust and applied by the Trustee, in accordance with the provisions of such Securities and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Securities of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

 

The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable U.S. Government Obligations deposited pursuant to Section 13.4 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge that by law is for the account of the Holders of the Outstanding Securities.

 

Notwithstanding anything in this Article Thirteen to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable U.S. Government Obligations held by it as provided in Section 13.4 hereof which, in the opinion of a nationally recognized investment bank, appraisal firm or firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 13.4(a) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

Section 13.6.                          Reinstatement.

 

If the Trustee or Paying Agent is unable to apply any United States dollars or non-callable U.S. Government Obligations in accordance with Section 4.1, Section 13.2 or Section 13.3 hereof with respect to the Securities of any series, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Guarantors’ obligations under this Indenture and such Securities and the Securities Guarantee will be revived and reinstated as though no deposit had occurred pursuant to Section 4.1, Section 13.2 or Section 13.3 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money or non-callable U.S. Government Obligations in accordance with Section 4.1, Section 13.2 or Section 13.3 hereof, as the case may be; provided, however, that, if the Company makes 

 

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any payment of principal of or premium, if any, or interest on any such Security following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Securities to receive such payment from the money or non-callable U.S. Government Obligations held by the Trustee or Paying Agent.

 

ARTICLE FOURTEEN
 GUARANTEE OF SECURITIES

 

Section 14.1.                          Securities Guarantee.

 

(a)                                 Subject to the other provisions of this Article Fourteen, each of the Guarantors hereby fully and unconditionally and jointly and severally guarantees to each Holder of a Security of each series to which this Article Fourteen has been made applicable as provided in Section 3.1(t) (the Securities of such series being referred to herein as the “Guaranteed Securities”) (which Security has been authenticated and delivered by the Trustee), and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Guaranteed Securities, or the obligations of the Company hereunder or thereunder, that:

 

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

 

(ii)                                  in case of any extension of time of payment or renewal of any Guaranteed Securities or any of such other obligations, that same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration or otherwise.

 

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

 

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

 

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

 

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

 

Section 14.2.                          Limitation on Guarantor Liability.

 

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

 

Section 14.3.                          Execution and Delivery of Securities Guarantee Notation.

 

To evidence its Securities Guarantee set forth in Section 14.1 hereof, each Guarantor hereby agrees that a notation of such Securities Guarantee substantially in the form set forth in Section 2.3 or established in or pursuant to a Board Resolution or in an indenture supplemental hereto, in accordance with the provisions of Section 2.1, will be endorsed by an officer of such Guarantor on each Guaranteed Security authenticated and delivered by the Trustee and that this Indenture or a supplement to this Indenture will be executed on behalf of such Guarantor by one of its officers.

 

Each Guarantor hereby agrees that its Securities Guarantee set forth in Section 14.1 hereof will remain in full force and effect notwithstanding any failure to endorse on each Guaranteed Security a notation of such Securities Guarantee.

 

If an officer whose signature is on this Indenture or on the Securities Guarantee no longer holds that office at the time the Trustee authenticates the Guaranteed Security on which a notation of Securities Guarantee is endorsed, the Securities Guarantee will be valid nevertheless.

 

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

 

ARTICLE FIFTEEN
  SUBORDINATION OF SECURITIES

 

Section 15.1.                          Securities Subordinated to Senior Debt.

 

The Company covenants and agrees, and each Holder, by its acceptance of a Security, likewise covenants and agrees, that all Securities shall be issued subject to the provisions of this Article Fifteen; and each Person holding any Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of the principal of and interest and premium, if any, on each and all of the Securities shall, to the extent and in the manner set forth in this Article Fifteen, be subordinated in right of payment to the prior payment in full, in cash or cash equivalents, of all existing and future Senior Debt.

 

Section 15.2.                          No Payment on Securities in Certain Circumstances.

 

(a)                                 No direct or indirect payment by or on behalf of the Company of the principal of or interest or premium, if any, on each and all of the Securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), whether pursuant to the terms of the Securities or upon acceleration or otherwise, shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of the obligations on any Designated Senior Debt and such default shall not have been cured or waived or the benefits of this sentence waived by or on behalf of the holders of such Senior Debt.

 

(b)                                 During the continuance of any other event of default with respect to any Designated Senior Debt pursuant to which the maturity thereof may be accelerated, upon receipt by the Trustee of written notice from the trustee or other representative for the holders of such Designated Senior Debt (or the holders of at least a majority in principal amount of such Designated Senior Debt then outstanding), no payment of the principal of or interest or premium, if any, on each and all of the Securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture) may be made by or on behalf of the Company upon or in respect of the Securities for a period (a “Payment Blockage Period”) commencing on the date of receipt of such notice and ending 179 days thereafter (unless, in each case, such Payment Blockage Period has been terminated by written notice to the Trustee from such trustee of, or other representatives for, such holders or by payment in full in cash or cash equivalents of such Designated Senior Debt or such event of default has been cured or waived). Not more than one Payment Blockage Period may be commenced with respect to the Securities during any period of 360 consecutive days. Notwithstanding anything in this Indenture to the contrary, there must be 180 consecutive days in any 360-day period in which no Payment Blockage Period is in effect. No event of default that existed or was continuing (it being acknowledged that any subsequent action that would give rise to an event of default pursuant to any provision under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose) on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Debt initiating such Payment Blockage Period shall be, or shall be made, the basis for the commencement of a second Payment Blockage Period by the trustee or other representative for the holders of such Designated Senior

 

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Debt, whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days.

 

(c)                                  In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by clause (a) or (b) above, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Persons making payment or distribution of the assets of the Company for application to the payment of all Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any of such Senior Debt may have been issued, and any excess above such amounts due and owing on Senior Debt shall be paid to the Company.

 

Section 15.3.                          Payment over of Proceeds upon Dissolution, Etc.

 

(a)                                 Upon any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, property or securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), in connection with any dissolution or winding up or total or partial liquidation or reorganization of the Company, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, assignment of assets for the benefit of creditors or other marshalling of assets and liabilities of the Company, all amounts due or to become due upon all Senior Debt shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee on their behalf shall be entitled to receive any payment by (or on behalf of) the Company on account of the Securities, or any payment to acquire any of the Securities for cash, property or securities, or any distribution with respect to the Securities of any cash, property or securities. Before any payment may be made by, or on behalf of, the Company on any Security (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture) in connection with any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on their behalf would be entitled, but for the provisions of this Article Fifteen, shall be made by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, or by the Holders or the Trustee if received by them or it, to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of the Company for application to the payment of all Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any such Senior Debt may have been issued, to the extent necessary to pay all such Senior Debt in full, in cash or cash equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt.

 

(b)                                 To the extent any payment of Senior Debt (whether by or on behalf of the Company, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other similar Person, the Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent the obligation to repay any Senior Debt is declared to be fraudulent or invalid or otherwise set aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then the obligation so declared fraudulent or invalid or otherwise set aside (and all other amounts that would come due with

 

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respect thereto had such obligation not been so affected) shall be deemed to be reinstated and outstanding as Senior Debt for all purposes hereof as if such declaration or setting aside had not occurred.

 

(c)                                  In the event that, notwithstanding the provision in clause (a) above prohibiting such payment or distribution, any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder at a time when such payment or distribution is prohibited by clause (a) above and before all obligations in respect of Senior Debt are paid in full, in cash or cash equivalents, such payment or distribution shall be received and held in trust for the benefit of, and shall be paid over or delivered to, the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of the Company for application to the payment of all Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any such Senior Debt may have been issued, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Debt.

 

(d)                                 For purposes of this Section 15.3, the words “cash, property or securities” shall not be deemed to include, so long as the effect of this clause is not to cause the Securities to be treated in any case or proceeding or similar event described in this Section 15.3 as part of the same class of claims as the Senior Debt or any class of claims pari passu with, or senior to, the Senior Debt for any payment or distribution, securities of the Company or any other Person provided for by a plan of reorganization or readjustment that are subordinated, at least to the extent that the Securities are subordinated, to the payment of all Senior Debt then outstanding; provided that (i) if a new Person results from such reorganization or readjustment, such Person assumes the Senior Debt and (ii) the rights of the holders of the Senior Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company with or into, another Person or the liquidation or dissolution of the Company following the sale, conveyance, transfer, lease or other disposition of all or substantially all of its property and assets to another Person upon the terms and conditions provided in Section 8.1 of this Indenture shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 15.3 if such other Person shall, as a part of such consolidation, merger, sale, conveyance, transfer, lease or other disposition, comply (to the extent required) with the conditions stated in Section 8.1 of this Indenture.

 

Section 15.4.                          Subrogation.

 

(a)                                 Upon the payment in full of all Senior Debt in cash or cash equivalents, the Holders shall be subrogated to the rights of the holders of Senior Debt to receive payments or distributions to the holders of Senior Debt of cash, property or securities of the Company made on such Senior Debt until the principal of and premium, if any, and interest on the Securities shall be paid in full; and, for the purposes of such subrogation, no payments or distributions of any cash, property or securities to which the Holders or the Trustee on their behalf would be entitled except for the provisions of this Article Fifteen, and no payment pursuant to the provisions of this Article Fifteen to the holders of Senior Debt by the Holders or the Trustee on their behalf shall, as between the Company, its creditors other than holders of Senior Debt, and the Holders, be deemed to be a payment by the Company to or on account of the Senior Debt. It is understood that the provisions of this Article Fifteen are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Debt, on the other hand.

 

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(b)                                 If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Article Fifteen shall have been applied, pursuant to the provisions of this Article Fifteen, to the payment of all amounts payable under Senior Debt, then, and in such case, the Holders shall be entitled to receive from the holders of such Senior Debt any payments or distributions received by such holders of Senior Debt in excess of the amount required to make payment in full, in cash or cash equivalents, of such Senior Debt of such holders.

 

Section 15.5.                          Obligations of Company Unconditional.

 

(a)                                 Nothing contained in this Article Fifteen or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and premium, if any, and interest on the Securities as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Debt, nor shall anything herein or therein prevent the Holders or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Fifteen of the holders of the Senior Debt.

 

(b)                                 Without limiting the generality of the foregoing, nothing contained in this Article Fifteen will restrict the right of the Trustee or the Holders to take any action to declare the Securities to be due and payable prior to their Stated Maturity pursuant to Section 5.2 of this Indenture or to pursue any rights or remedies hereunder; provided, however, that all Senior Debt then due and payable or thereafter declared to be due and payable shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee are entitled to receive any direct or indirect payment from the Company with respect to any Security.

 

Section 15.6.                          Notice to Trustee.

 

(a)                                 The Company shall give prompt written notice to the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities pursuant to the provisions of this Article Fifteen. The Trustee shall not be charged with the knowledge of the existence of any default or event of default with respect to any Senior Debt or of any other facts that would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing at its Corporate Trust Office to that effect signed by an officer of the Company, or by a holder of Senior Debt or trustee or agent thereof; and prior to the receipt of any such written notice, the Trustee shall, subject to Article Six, be entitled to assume that no such facts exist; provided that, if the Trustee shall not have received the notice provided for in this Section 15.6 at least three Business Days prior to the date upon which, by the terms of this Indenture, any monies shall become payable for any purpose (including, without limitation, the payment of the principal of or premium, if any, or interest on any Security), then, notwithstanding anything herein to the contrary, the Trustee shall have full power and authority to receive any monies from the Company and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary that may be received by it on or after such three Business Day period except for an acceleration of the Securities prior to such application. Nothing contained in this Section 15.6 shall limit the right of the holders of Senior Debt to recover payments as contemplated by this Article Fifteen. The foregoing shall not apply if the Paying Agent is the Company. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Debt (or a trustee on behalf of, or other representative of, such holder) to

 

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establish that such notice has been given by a holder of such Senior Debt or a trustee or representative on behalf of any such holder.

 

(b)                                 In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Fifteen, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Fifteen and, if such evidence is not furnished to the Trustee, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

 

Section 15.7.                          Reliance on Judicial Order or Certificate of Liquidating Agent.

 

Upon any payment or distribution of assets or securities referred to in this Article Fifteen, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which bankruptcy, dissolution, winding up, liquidation or reorganization proceedings are pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, delivered to the Trustee or to the Holders for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Debt and other Debt of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Fifteen.

 

Section 15.8.                          Trustee’s Relation to Senior Debt.

 

(a)                                 Each of the Trustee and any Paying Agent shall be entitled to all the rights set forth in this Article Fifteen with respect to any Senior Debt that may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Senior Debt and nothing in this Indenture shall deprive the Trustee or any Paying Agent of any of its rights as such holder.

 

(b)                                 With respect to the holders of Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Fifteen, and no implied covenants or obligations with respect to the holders of Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article Fifteen or otherwise.

 

Section 15.9.                          Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Debt.

 

No right of any present or future holders of any Senior Debt to enforce subordination as provided in this Article Fifteen will at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. The provisions of this Article Fifteen are intended to be for the benefit of, and shall be enforceable directly by, the holders of Senior Debt.

 

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Section 15.10.                   Holders Authorize Trustee to Effectuate Subordination of Securities.

 

Each Holder by such Holder’s acceptance of any Securities authorizes and expressly directs the Trustee on his behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Fifteen, and appoints the Trustee such Holder’s attorney-in-fact for such purposes, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the property and assets of the Company, the filing of a claim for the unpaid balance of its Securities in the form required in those proceedings.

 

Section 15.11.                   Not to Prevent Events of Default.

 

The failure to make a payment on account of principal of or premium, if any, or interest on the Securities by reason of any provision of this Article Fifteen will not be construed as preventing the occurrence of an Event of Default.

 

Section 15.12.                   Trustee’s Compensation Not Prejudiced.

 

Nothing in this Article Fifteen will apply to amounts due to the Trustee pursuant to other sections of this Indenture, including Section 6.7.

 

Section 15.13.                   No Waiver of Subordination Provisions.

 

Without in any way limiting the generality of Section 15.9, the holders of Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Holders and without impairing or releasing the subordination provided in this Article Fifteen or the obligations hereunder of the Holders to the holders of Senior Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is outstanding or secured; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (c) release any Person liable in any manner for the collection of Senior Debt; and (d) exercise or refrain from exercising any rights against the Company and any other Person.

 

Section 15.14.                   Payments May Be Paid Prior to Dissolution.

 

Nothing contained in this Article Fifteen or elsewhere in this Indenture shall prevent (a) the Company, except under the conditions described in Section 15.2 or Section 15.3, from making payments of principal of and premium, if any, and interest on the Securities, or from depositing with the Trustee any money for such payments, or (b) the application by the Trustee of any money deposited with it for the purpose of making such payments of principal of and premium, if any, and interest on the Securities to the holders entitled thereto unless, at least two Business Days prior to the date upon which such payment becomes due and payable, the Trustee shall have received the written notice provided for in Section 15.2(b) of this Indenture (or there shall have been an acceleration of the Securities prior to such application) or in Section 15.6 of this Indenture. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company.

 

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Section 15.15.      Trust Moneys Not Subordinated.

 

Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article Four by the Trustee for the payment of principal of and premium, if any, and interest on the Securities shall not be subordinated to the prior payment of any Senior Debt (provided that, at the time deposited, such deposit did not violate any then outstanding Senior Debt), and none of the Holders shall be obligated to pay over any such amount to any holder of Senior Debt.

 

ARTICLE SIXTEEN
 SUBORDINATION OF SECURITIES GUARANTEES

 

Section 16.1.         Securities Guarantees Subordinated to Guarantor Senior Debt .

 

Each Guarantor covenants and agrees, and each Holder, by its acceptance of a Securities Guarantee, likewise covenants and agrees, that all Securities Guarantees shall be issued subject to the provisions of this Article Sixteen; and each Person holding any Security, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that the payment of all obligations on each and all of the Securities Guarantees shall, to the extent and in the manner set forth in this Article Sixteen, be subordinated in right of payment to the prior payment in full, in cash or cash equivalents, of all existing and future Guarantor Senior Debt of such Guarantor.

 

Section 16.2.         No Payment on Securities Guarantees in Certain Circumstances.

 

(a)           No direct or indirect payment by or on behalf of any Guarantor of any obligations on each and all of the Securities Guarantees (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), whether pursuant to the terms of the Securities Guarantees or upon acceleration or otherwise, shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of the obligations on any Designated Guarantor Senior Debt of such Guarantor and such default shall not have been cured or waived or the benefits of this sentence waived by or on behalf of the holders of such Guarantor Senior Debt.

 

(b)           During the continuance of any other event of default with respect to any Designated Guarantor Senior Debt pursuant to which the maturity thereof may be accelerated, upon receipt by the Trustee of written notice from the trustee or other representative for the holders of such Designated Guarantor Senior Debt (or the holders of at least a majority in principal amount of such Designated Guarantor Senior Debt then outstanding), no payment of any obligations on each and all of the Securities Guarantees (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture) may be made by or on behalf of any Guarantor upon or in respect of the Securities Guarantees for a period (a “Securities Guarantee Payment Blockage Period”) commencing on the date of receipt of such notice and ending 179 days thereafter (unless, in each case, such Securities Guarantee Payment Blockage Period has been terminated by written notice to the Trustee from such trustee of, or other representatives for, such holders or by payment in full in cash or cash equivalents of such Designated Guarantor Senior Debt or such event of default has been cured or waived). Not more than one Securities Guarantee Payment Blockage Period may be commenced with respect to the Securities Guarantees during any period of 360 consecutive days. Notwithstanding anything in this Indenture to the contrary, there must be 180 consecutive days in any 360-day period in which no Securities Guarantee Payment Blockage Period is in effect. No event of default that existed or was continuing (it being acknowledged that any subsequent action that

 

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would give rise to an event of default pursuant to any provision under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose) on the date of the commencement of any Securities Guarantee Payment Blockage Period with respect to the Designated Guarantor Senior Debt initiating such Securities Guarantee Payment Blockage Period shall be, or shall be made, the basis for the commencement of a second Securities Guarantee Payment Blockage Period by the trustee or other representative for the holders of such Designated Guarantor Senior Debt, whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 90 consecutive days.

 

(c)           In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by clause (a) or (b) above, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent or other Persons making payment or distribution of the assets of the Company for application to the payment of all Guarantor Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any of such Guarantor Senior Debt may have been issued, and any excess above such amounts due and owing on Guarantor Senior Debt shall be paid to such Guarantor.

 

Section 16.3.         Payment over of Proceeds upon Dissolution, Etc.

 

(a)           Upon any payment or distribution of assets or securities of a Guarantor of any kind or character, whether in cash, property or securities (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture), in connection with any dissolution or winding up or total or partial liquidation or reorganization of such Guarantor, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, assignment of assets for the benefit of creditors or other marshalling of assets and liabilities of such Guarantor, all amounts due or to become due upon all Guarantor Senior Debt shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee on their behalf shall be entitled to receive any payment by (or on behalf of) such Guarantor on account of the Securities Guarantees, or any payment to acquire any of the Securities Guarantees for cash, property or securities, or any distribution with respect to the Securities Guarantees of any cash, property or securities. Before any payment may be made by, or on behalf of, any Guarantor on any Securities Guarantee (other than with the money, securities or proceeds held under any defeasance trust established in accordance with this Indenture) in connection with any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets or securities of such Guarantor of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee on their behalf would be entitled, but for the provisions of this Article Sixteen, shall be made by such Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, or by the Holders or the Trustee if received by them or it, to the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of such Guarantor for application to the payment of all Guarantor Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any such Guarantor Senior Debt may have been issued, to the extent necessary to pay all such Guarantor Senior Debt in full, in cash or cash equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Guarantor Senior Debt.

 

(b)           To the extent any payment of Guarantor Senior Debt (whether by or on behalf of any Guarantor, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in

 

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bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other similar Person, the Guarantor Senior Debt or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent the obligation to repay any Guarantor Senior Debt is declared to be fraudulent or invalid or otherwise set aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then the obligation so declared fraudulent or invalid or otherwise set aside (and all other amounts that would come due with respect thereto had such obligation not been so affected) shall be deemed to be reinstated and outstanding as Guarantor Senior Debt for all purposes hereof as if such declaration or setting aside had not occurred.

 

(c)           In the event that, notwithstanding the provision in clause (a) above prohibiting such payment or distribution, any payment or distribution of assets or securities of any Guarantor of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder at a time when such payment or distribution is prohibited by clause (a) above and before all obligations in respect of Guarantor Senior Debt are paid in full, in cash or cash equivalents, such payment or distribution shall be received and held in trust for the benefit of, and shall be paid over or delivered to, the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee, agent, or other Persons making payment or distribution of the assets of such Guarantor for application to the payment of all Guarantor Senior Debt remaining unpaid, or to the trustee or trustees under any indenture pursuant to which any such Guarantor Senior Debt may have been issued, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Guarantor Senior Debt.

 

(d)           For purposes of this Section 16.3, the words “cash, property or securities” shall not be deemed to include, so long as the effect of this clause is not to cause the Securities Guarantees to be treated in any case or proceeding or similar event described in this Section 16.3 as part of the same class of claims as the Guarantor Senior Debt or any class of claims pari passu with, or senior to, the Guarantor Senior Debt for any payment or distribution, securities of any Guarantor or any other Person provided for by a plan of reorganization or readjustment that are subordinated, at least to the extent that the Securities Guarantees are subordinated, to the payment of all Guarantor Senior Debt then outstanding; provided that (i) if a new Person results from such reorganization or readjustment, such Person assumes the Guarantor Senior Debt and (ii) the rights of the holders of the Guarantor Senior Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of a Guarantor with, or the merger of a Guarantor with or into, another Person or the liquidation or dissolution of a Guarantor following the sale, conveyance, transfer, lease or other disposition of all or substantially all of its property and assets to another Person without violation of the terms and conditions provided in this Indenture shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 16.3.

 

Section 16.4.         Subrogation.

 

(a)           Upon the payment in full of all Guarantor Senior Debt in cash or cash equivalents, the Holders shall be subrogated to the rights of the holders of Guarantor Senior Debt to receive payments or distributions of cash, property or securities of the Guarantors made on such Guarantor Senior Debt until all obligations arising under the Securities Guarantees shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of the Guarantor Senior Debt of any cash, property or securities to which the Holders or the Trustee on their behalf would be entitled except for the provisions of this Article Sixteen, and no

 

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payment pursuant to the provisions of this Article Sixteen to the holders of Guarantor Senior Debt by the Holders or the Trustee on their behalf shall, as between each Guarantor, its creditors other than holders of Guarantor Senior Debt, and the Holders, be deemed to be a payment by such Guarantor to or on account of the Guarantor Senior Debt. It is understood that the provisions of this Article Sixteen are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Guarantor Senior Debt, on the other hand.

 

(b)           If any payment or distribution to which the Holders would otherwise have been entitled but for the provisions of this Article Sixteen shall have been applied, pursuant to the provisions of this Article Sixteen, to the payment of all amounts payable under Guarantor Senior Debt, then, and in such case, the Holders shall be entitled to receive from the holders of such Guarantor Senior Debt any payments or distributions received by such holders of Guarantor Senior Debt in excess of the amount required to make payment in full, in cash or cash equivalents, of such Guarantor Senior Debt of such holders.

 

Section 16.5.         Obligations of Guarantor Unconditional.

 

(a)           Nothing contained in this Article Sixteen or elsewhere in this Indenture or in the Securities is intended to or shall impair, as among the Guarantors and the Holders, the obligation of such Guarantors, which is absolute and unconditional, to pay to the Holders all obligations arising under the Securities Guarantees as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Guarantors other than the holders of the Guarantor Senior Debt, nor shall anything herein or therein prevent the Holders or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Sixteen of the holders of the Guarantor Senior Debt.

 

(b)           Without limiting the generality of the foregoing, nothing contained in this Article Sixteen will restrict the right of the Trustee or the Holders to take any action to declare the Securities to be due and payable prior to their Stated Maturity pursuant to Section 5.2 of this Indenture or to pursue any rights or remedies hereunder; provided, however, that all Guarantor Senior Debt then due and payable or thereafter declared to be due and payable shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee are entitled to receive any direct or indirect payment from any Guarantor with respect to its Securities Guarantee.

 

Section 16.6.         Notice to Trustee.

 

(a)           Each Guarantor shall give prompt written notice to the Trustee of any fact known to such Guarantor that would prohibit the making of any payment to or by the Trustee in respect of the Securities Guarantees pursuant to the provisions of this Article Sixteen. The Trustee shall not be charged with the knowledge of the existence of any default or event of default with respect to any Guarantor Senior Debt of any Guarantor or of any other facts that would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing at its Corporate Trust Office to that effect signed by an Officer of such Guarantor, or by a holder of such Guarantor Senior Debt or trustee or agent thereof; and prior to the receipt of any such written notice, the Trustee shall, subject to Article Six, be entitled to assume that no such facts exist; provided that, if the Trustee shall not have received the notice provided for in this Section 16.6 at least three Business Days prior to the date upon which, by the terms of this Indenture, any monies shall become payable for any purpose (including, without limitation, the payment of all obligations arising under any Securities Guarantee), then, notwithstanding anything herein to the contrary, the Trustee shall have full power and authority to

 

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receive any monies from such Guarantor and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary that may be received by it on or after such three Business Day period except for an acceleration of the Securities prior to such application. Nothing contained in this Section 16.6 shall limit the right of the holders of Guarantor Senior Debt to recover payments as contemplated by this Article Sixteen. The foregoing shall not apply if the Paying Agent is the Company. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Guarantor Senior Debt (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Guarantor Senior Debt or a trustee or representative on behalf of any such holder.

 

(b)           In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Guarantor Senior Debt to participate in any payment or distribution pursuant to this Article Sixteen, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Guarantor Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Sixteen and, if such evidence is not furnished to the Trustee, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.

 

Section 16.7.         Reliance on Judicial Order or Certificate of Liquidating Agent.

 

Upon any payment or distribution of assets or securities referred to in this Article Sixteen, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which bankruptcy, dissolution, winding up, liquidation or reorganization proceedings are pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, delivered to the Trustee or to the Holders for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Guarantor Senior Debt and other Debt of a Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Sixteen.

 

Section 16.8.         Trustee’s Relation to Guarantor Senior Debt.

 

(a)           Each of the Trustee and any Paying Agent shall be entitled to all the rights set forth in this Article Sixteen with respect to any Guarantor Senior Debt that may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Guarantor Senior Debt and nothing in this Indenture shall deprive the Trustee or any Paying Agent of any of its rights as such holder.

 

(b)           With respect to the holders of Guarantor Senior Debt, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Sixteen, and no implied covenants or obligations with respect to the holders of Guarantor Senior Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Guarantor Senior Debt and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Securities Guarantees or to a Guarantor or to any other person cash, property or securities to which any holders of Guarantor Senior Debt shall be entitled by virtue of this Article Sixteen or otherwise.

 

77

 

Section 16.9.         Subordination Rights Not Impaired by Acts or Omissions of a Guarantor or Holders of Guarantor Senior Debt.

 

No right of any present or future holders of any Guarantor Senior Debt to enforce subordination as provided in this Article Sixteen will at any time in any way be prejudiced or impaired by any act or failure to act on the part of a Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by such Guarantor with the terms of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. The provisions of this Article Sixteen are intended to be for the benefit of, and shall be enforceable directly by, the holders of Guarantor Senior Debt.

 

Section 16.10.      Holders Authorize Trustee to Effectuate Subordination of Securities Guarantees.

 

Each Holder by such Holder’s acceptance of any Securities Guarantees authorizes and expressly directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Sixteen, and appoints the Trustee such Holder’s attorney-in-fact for such purposes, including, in the event of any dissolution, winding up, liquidation or reorganization of a Guarantor (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the property and assets of such Guarantor, the filing of a claim for the unpaid balance of its Securities Guarantees in the form required in those proceedings. If the Trustee does not file a proper claim or proof of indebtedness in the form required in such proceeding at least 30 days before the expiration of the time to file such claim or proof, each holder of Guarantor Senior Debt is hereby authorized to file an appropriate claim for and on behalf of the Holders.

 

Section 16.11.      Not to Prevent Events of Default.

 

The failure to fulfill any obligation arising under the Securities Guarantees by reason of any provision of this Article Sixteen will not be construed as preventing the occurrence of an Event of Default.

 

Section 16.12.      Trustee’s Compensation Not Prejudiced.

 

Nothing in this Article Sixteen will apply to amounts due to the Trustee pursuant to other sections of this Indenture, including Section 6.7.

 

Section 16.13.      No Waiver of Subordination Provisions.

 

Without in any way limiting the generality of Section 16.9, the holders of Guarantor Senior Debt may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Holders and without impairing or releasing the subordination provided in this Article Sixteen or the obligations hereunder of the Holders to the holders of Guarantor Senior Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Guarantor Senior Debt or any instrument evidencing the same or any agreement under which Guarantor Senior Debt is outstanding or secured; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt; (c) release any Person liable in any manner for the collection of Guarantor Senior Debt; and (d) exercise or refrain from exercising any rights against the Company and any other Person.

 

78

 

Section 16.14.      Payments May Be Paid Prior to Dissolution.

 

Nothing contained in this Article Sixteen or elsewhere in this Indenture shall prevent (a) a Guarantor, except under the conditions described in Section 16.2 or Section 16.3, from fulfilling any obligation arising under the Securities Guarantees, or from depositing with the Trustee any money for such payments, or (b) the application by the Trustee of any money deposited with it for the purpose of fulfilling any obligation arising under the Securities Guarantees to the holders entitled thereto unless, at least two Business Days prior to the date upon which such payment becomes due and payable, the Trustee shall have received the written notice provided for in Section 16.2(b) of this Indenture (or there shall have been an acceleration of the Securities Guarantees prior to such application) or in Section 16.6 of this Indenture. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of such Guarantor.

 

* * *

 

79

 

This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, as of the day and year first above written.

 

	
 
    	
ASHFORD HOSPITALITY   TRUST, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[                    ]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:Exhibit

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Exhibit 10.14

COLLABORATION AND LICENSE AGREEMENT
between
LEXICON PHARMACEUTICALS, INC.
and
SANOFI
Dated as of November 5, 2015

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

TABLE OF CONTENTS

	
			
	ARTICLE 1
	DEFINITIONS
	1

	ARTICLE 2
	GRANT OF RIGHTS
	24

	2.1
	Grants to Sanofi
	24

	2.2
	Grants to Lexicon
	24

	2.3
	Sublicenses
	25

	2.4
	Disclosure of Know-How and Regulatory Documentation
	25

	2.5
	Confirmatory Patent License
	26

	2.6
	Exclusivity
	26

	2.7
	LX2761 Rights
	27

	ARTICLE 3
	DEVELOPMENT AND REGULATORY ACTIVITIES
	31

	3.1
	Development
	31

	3.2
	Regulatory Activities
	35

	ARTICLE 4
	COMMERCIALIZATION
	39

	4.1
	In General
	39

	4.2
	Diligence
	39

	4.3
	Commercialization Plan
	39

	4.4
	Booking of Sales; Distribution
	40

	4.5
	Statements and Compliance with Applicable Law
	40

	4.6
	Subcontracting; Distributors
	40

	4.7
	Leadership of T1DM Commercialization and Medical Affairs Activities in the (Co-)Promotion Territory
	40

	4.8
	(Co-)Promotion Agreement
	41

	4.9
	Product Label, Packaging and Promotional Materials
	42

	4.10
	Commercialization Reports
	42

	ARTICLE 5
	COLLABORATION MANAGEMENT
	42

	5.1
	Joint Steering Committee
	42

	5.2
	Development and Regulatory Committee
	43

	5.3
	Manufacturing and Supply Committee
	44

	5.4
	Joint Commercialization Committee
	45

	5.5
	General Provisions Applicable to Committees
	45

	ARTICLE 6
	SUPPLY
	48

	6.1
	Supply of Licensed Products
	48

	6.2
	Manufacturing Technology Transfer
	49

	6.3
	Subsequent Manufacturing Technology Transfer
	50

	6.4
	Technology Transfer Agreement
	50

	ARTICLE 7
	PAYMENTS AND RECORDS
	50

	7.1
	Upfront Payment
	50

	7.2
	Milestones
	50

	7.3
	Royalties
	53

	7.4
	Estimated Sales Levels
	57

	7.5
	Royalty Payments and Reports
	57

	7.6
	Development Costs
	57

	7.7
	Commercialization Costs and Medical Affairs Costs
	59

i

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

	
			
	7.8
	Calculation of T1DM Sales
	61

	7.9
	Mode of Payment
	61

	7.10
	Failure to Achieve Positive Results
	61

	7.11
	Taxes
	61

	7.12
	Interest on Late Payments
	62

	7.13
	Financial Records
	62

	7.14
	Audit Procedures
	62

	7.15
	Right to Offset
	63

	ARTICLE 8
	INTELLECTUAL PROPERTY
	64

	8.1
	Ownership of Intellectual Property
	64

	8.2
	Trademarks and Domain Names
	65

	8.3
	Maintenance and Prosecution of Patents
	66

	8.4
	Post Grant Proceedings
	68

	8.5
	Enforcement of Patents
	71

	8.6
	Invalidity or Unenforceability Defenses or Actions
	73

	8.7
	Infringement Claims by Third Parties
	73

	8.8
	Third Party Rights
	74

	8.9
	Product Trademarks
	74

	ARTICLE 9
	CONFIDENTIALITY AND NON-DISCLOSURE
	75

	9.1
	Confidentiality Obligations
	75

	9.2
	Permitted Disclosures
	76

	9.3
	Additional Permitted Disclosures by Sanofi
	77

	9.4
	Use of Name
	77

	9.5
	Public Announcements
	77

	9.6
	Publications
	78

	9.7
	Return of Confidential Information
	78

	9.8
	Privileged Communications
	78

	9.9
	Form 8-K
	79

	ARTICLE 10
	REPRESENTATIONS AND WARRANTIES
	79

	10.1
	Mutual Representations and Warranties
	79

	10.2
	Additional Representations and Warranties of Lexicon
	80

	10.3
	Additional Covenants of Lexicon
	84

	10.4
	Additional Covenants of Sanofi
	85

	10.5
	DISCLAIMER OF WARRANTIES
	86

	10.6
	Anti-Bribery and Anti-Corruption Compliance
	87

	10.7
	Knowledge
	87

	ARTICLE 11
	INDEMNITY
	87

	11.1
	Indemnification of Lexicon
	87

	11.2
	Indemnification of Sanofi
	88

	11.3
	Indemnification Procedures
	88

	11.4
	Special, Indirect and Other Lossess
	90

	11.5
	Insurance
	90

	ARTICLE 12
	TERM AND TERMINATION
	90

	12.1
	HSR Filings
	91

	12.2
	Term and Expiration
	91

ii

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

	
			
	12.3
	Termination
	91

	12.4
	Rights in Bankruptcy
	94

	12.5
	Consequences of Termination
	94

	12.6
	Remedies
	96

	12.7
	Accrued Rights; Surviving Obligations
	96

	ARTICLE 13
	MISCELLANEOUS
	98

	13.1
	Force Majeure
	98

	13.2
	Export Control
	99

	13.3
	Assignment and Change of Control
	99

	13.4
	Severability
	101

	13.5
	Dispute Resolution
	101

	13.6
	Governing Law, Jurisdiction, Venue and Service
	103

	13.7
	Notices
	103

	13.8
	Entire Agreement; Amendments
	105

	13.9
	English Language
	105

	13.10
	Equitable Relief
	105

	13.11
	Waiver and Non-Exclusion of Remedies
	106

	13.12
	No Benefit to Third Parties
	106

	13.13
	Further Assurance
	106

	13.14
	Performance by Affiliates
	106

	13.15
	Relationship of the Parties
	106

	13.16
	References
	107

	13.17
	Construction
	107

	13.18
	Counterparts
	107

	13.19
	Non-Solicit
	107

SCHEDULES

Schedule 1.40        Corporate Names
Schedule 1.68        FTE Rates
Schedule 1.106    LX2761 Description
Schedule 1.111    LX4211 Description 
Schedule 2.4        Transferred Materials
Schedule 3.1.2    Development Plan 
Schedule 3.1.7    Development Reporting  
Schedule 4.8.2    (Co-)Promotion Agreement Key Terms
Schedule 9.5        Press Release
Schedule 9.9        Form 8-K
Schedule 10.2.2    Existing Patents

iii

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

COLLABORATION AND LICENSE AGREEMENT
This Collaboration and License Agreement (the “Agreement”) is made and entered into effective as of November 5, 2015 (the “Execution Date”) by and between Lexicon Pharmaceuticals, Inc., a Delaware corporation (“Lexicon”), and Sanofi, a société anonyme under the laws of France (“Sanofi”).  Lexicon and Sanofi are sometimes referred to herein individually as a “Party” and collectively as the “Parties.” 
RECITALS
WHEREAS, Lexicon owns and controls certain intellectual property rights with respect to the Licensed Compound (as defined herein) and Licensed Products (as defined herein) in the Territory (as defined herein); and
WHEREAS, Lexicon wishes to grant to Sanofi, and Sanofi wishes to take, an exclusive license under such intellectual property rights to develop, manufacture and commercialize Licensed Products in the Territory in the Field, in each case in accordance with the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual promises and conditions set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, do hereby agree as follows:
ARTICLE 1
DEFINITIONS

Unless otherwise specifically provided herein, the following terms shall have the following meanings:
1.1.    “306 Study” means that certain study described as the 306 study in the Development Plan.
1.2.    “311 Study” means that certain study described as the 311 study in the Development Plan.
1.3.    “Accounting Standards” means, with respect to a Party or its Affiliates or its or their (sub)licensees, GAAP, International Financial Reporting Standards or such other similar national standards as such Party, Affiliate or its or their (sub)licensee uses for its financial reporting obligations, in each case, consistently applied.
1.4.    “Acquiring Party” has the meaning set forth in Section 2.6.2.
1.5.    “Adverse Event” means any untoward medical occurrence in a patient or clinical study subject administered any Licensed Products (or, in the case of a clinical study with respect to the Licensed Product, any placebo or other comparator administered in such clinical study to the extent required to be reported as an adverse event under Applicable Law), including any such occurrence (with respect to a Licensed Product, placebo or comparator, as applicable, in such circumstance) even if it does not necessarily have a causal relationship with any Licensed Product (or, in the case of any placebo or 

1

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

comparator in any such clinical study, to the extent such occurrence is required to be reported as an adverse event under Applicable Law.
1.6.    “Affiliate” means, with respect to a Party or other Person, any Person that, as of any applicable time(s), directly or indirectly, through one (1) or more intermediaries, controls, is controlled by or is under common control with such Party or other Person.  For purposes of this definition, “control” and, with correlative meanings, the terms “controlled by” and “under common control with” means: (i) the possession, directly or indirectly, of the power to direct the management or policies of a business entity, whether through the ownership of voting securities, by contract relating to voting rights or corporate governance or otherwise; or (ii) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a business entity (or, with respect to a limited partnership or other similar entity, its general partner or controlling entity).  Notwithstanding the foregoing, Invus, L.P., a Bermuda limited partnership, and any of its Affiliates that would not otherwise be Affiliates of Lexicon but for its and their ownership of Lexicon’s capital stock, shall not be Affiliates of Lexicon, but, for clarity, shall be Third Parties.
1.7.    “Agreement” has the meaning set forth in the preamble hereto.
1.8.    “Ancillary Agreements” means the (Co-)Promotion Agreement, the Quality Agreement(s), the Technology Transfer Agreement, the Supply Agreement(s) and the SDEA. 
1.9.    “Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act, as amended, the UK Bribery Act 2010, as amended and any other applicable anti-corruption laws and laws for the prevention of fraud, racketeering, money laundering or terrorism.
1.10.    “Applicable Law” means applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Regulatory Authorities, that may be in effect from time to time, including any applicable regulations and guidances of the FDA and European Union (and national implementations thereof) that constitute good laboratory practices, good manufacturing practices, good pharmacovigilance practices and good clinical practices.
1.11.    “Approval Holder” has the meaning set forth in Section 3.2.1(v).
1.12.    “Arbitration Notice” has the meaning set forth in Section 13.5.1.
1.13.    “Arbitrators” has the meaning set forth in Section 13.5.2.
1.14.    “Assigned Regulatory Documentation” has the meaning set forth in Section 3.2.1(iii).
1.15.    “At-fault Party” has the meaning set forth in Section 7.6.1.
1.16.    “Benefit Data” means the Study Data from the T2DM CVOT regarding cardiovascular risk/benefit.
1.17.    “Board of Directors” has the meaning set forth in the definition of “Change of Control.”
1.18.    “Breaching Party” has the meaning set forth in Section 12.3.1.

2

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

1.19.    “Business Day” means a day other than a Saturday or Sunday or a day on which banking institutions in New York, New York or in Paris (France) are permitted or required to be closed.
1.20.    “Calendar Quarter” means each successive period of three (3) calendar months commencing on January 1, April 1, July 1 and October 1, except that the first Calendar Quarter of the Term shall commence on the Effective Date and end on the day immediately prior to the first to occur of January 1, April 1, July 1 or October 1 after the Effective Date and the last Calendar Quarter shall end on the last day of the Term.
1.21.    “Calendar Year” means each successive period of twelve (12) calendar months commencing on January 1 and ending on December 31, except that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31 of the year in which the Effective Date occurs and the last Calendar Year of the Term shall commence on January 1 of the year in which the Term ends and end on the last day of the Term.
1.22.    “Carry-Over Amount” has the meaning set forth in Section 7.7.1.
1.23.    “Change of Control,” with respect to a Party, shall be deemed to have occurred if any of the following occurs after the Effective Date: 
1.23.1.    as a result of any transaction or series of related transactions any “person” or “group” (as such terms are defined below) (i) becomes the “beneficial owner” (as defined below, except that a “person” or “group” shall be deemed to have “beneficial ownership” of all shares of capital stock or other equity interests if such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of shares of capital stock or other interests (including partnership interests) of such Party then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of the directors, managers or similar supervisory positions (“Voting Stock”) of such Party representing fifty percent (50%) or more of the total voting power of all outstanding classes of Voting Stock of such Party, or (ii) acquires the power, directly or indirectly, to elect a majority of the members of the Party’s board of directors or similar governing body (“Board of Directors”);
1.23.2.    such Party enters into a merger, consolidation or similar transaction with another Person (whether or not such Party is the surviving entity) and as a result of such merger, consolidation or similar transaction (i) the members of the Board of Directors of such Party immediately prior to such transaction constitute less than a majority of the members of the Board of Directors of such Party or such surviving Person immediately following such transaction, or (ii) the Persons that beneficially owned, directly or indirectly, the shares of Voting Stock of such Party immediately prior to such transaction cease to beneficially own, directly or indirectly, shares of Voting Stock of the surviving Person representing at least a majority of the total voting power of all outstanding classes of Voting Stock of the surviving Person;
1.23.3.    such Party sells or transfers to any Third Party, in one or more related transactions, properties or assets representing all or substantially all of such Party’s consolidated total assets to which this Agreement relates; or
1.23.4.     the holders of capital stock of such Party approve a plan or proposal for the liquidation or dissolution of such Party.

3

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

For the purpose of this definition of Change of Control: (i) “person” and “group” have the meanings given such terms under Section 13(d) and 14(d) of the United States Securities Exchange Act of 1934 and the term “group” includes any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the aforesaid Act; (ii) a “beneficial owner” shall be determined in accordance with Rule 13d-3 under the aforesaid Act; and (iii) the terms “beneficially owned” and “beneficially own” shall have meanings correlative to that of “beneficial owner.”
1.24.    [**] has the meaning set forth in Section 7.3.3(v).
1.25.    “Combination Product” means any pharmaceutical preparation in final form containing a Licensed Compound in combination with one (1) or more additional active ingredients, sold either as a fixed dose/unit or as separate doses/units in a single package.
1.26.    “Commercialization” means any and all activities directed to the preparation for sale of, offering for sale of or sale of a Licensed Product, including activities related to marketing, promoting, distributing and importing such Licensed Product, and Phase 4 Studies, except Required Phase 4 Studies, and interacting with Regulatory Authorities regarding any of the foregoing.  When used as a verb, “to Commercialize” and “Commercializing” means to engage in Commercialization and “Commercialized” has a corresponding meaning.
1.27.    “Commercialization Costs” means, subject to Section 7.7, the FTE Costs (charged in accordance with Section 7.7) and the direct out-of-pocket costs, including all external costs for advertising and promotion (e.g., agencies, print material, congress costs (booth, symposia)), costs for post-marketing surveillance activities, costs for independent contractors engaged as permitted under this Agreement, in each case, recorded as an expense, in accordance with applicable Accounting Standards, and incurred by or on behalf of the applicable Party or any of its Affiliates after the Effective Date during the Term that are specifically identified in the Commercialization Plan or reasonably allocable to the Commercialization of a Licensed Product in accordance with this Agreement and the Commercialization Plan.  For clarity, Commercialization Costs shall not include costs for general overhead, postage, communications, photocopying, printing or internet expense, professional dues, operating supplies, laboratory supplies, printers, photocopiers, fax machines or other office equipment, laboratory equipment, computers or computer service charges or any costs that were included in the calculation of or intended to be covered by the FTE Rate.
1.28.    “Commercialization Plan” and “Commercialization Plans” has the meaning set forth in Section 4.3.
1.29.    “Commercially Reasonable Efforts” means (a) with respect to the performance of Development or Commercialization activities with respect to the Licensed Compound or a Licensed Product by Sanofi, the use of efforts and resources, not less than commercially reasonable, good faith efforts and resources, consistent with the efforts and resources generally applied by Sanofi to its owned and in-licensed compounds and products of a similar value, stage of development, life cycle, and commercial potential, taking into account all relevant factors, including issues of safety and efficacy, product profile, difficulty in developing or manufacturing the applicable Licensed Product, competitiveness of alternative Third Party products in the marketplace (including generic products), the patent or other proprietary position of the applicable Licensed Product (including patent coverage and regulatory exclusivity), the regulatory requirements involved and the potential profitability of the applicable Licensed Product and (b) with respect to the performance of Development or 

4

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Commercialization activities with respect to the Licensed Compound or a Licensed Product by Lexicon, the use of efforts and resources, not less than commercially reasonable, good faith efforts and resources, consistent with the efforts and resources generally applied by Lexicon to its owned compounds and products of a similar value, stage of development, life cycle, and commercial potential, taking into account all relevant factors.  “Commercially Reasonable” shall have a corresponding meaning.
1.30.    “Competing Product” has the meaning set forth in Section 2.6.1.
1.31.    “Confidential Information” has the meaning set forth in Section 9.1.
1.32.    “Control” means, with respect to any Information and Inventions, Regulatory Documentation, material, Patent or other intellectual property right, and subject to Section 13.3.3, possession of the right, whether directly or indirectly and whether by ownership, license or otherwise (other than by operation of the license and other grants in Section 2.1 or 2.2), to grant a license, sublicense or other right (including the right to reference Regulatory Documentation) to or under such Information and Inventions, Regulatory Documentation, material, Patent or other intellectual property right as provided for herein without violating the terms of any agreement with any Third Party.
1.33.    “(Co-)Promote” or “(Co-)Promotion” means the Detailing of the (Co-)Promotion Product(s) for T1DM and T2DM by Lexicon or its Affiliates under the relevant Regulatory Approval and the Product Trademarks.
1.34.    “(Co-)Promotion Agreement” has the meaning set forth in Section 4.8.2.
1.35.    “(Co-)Promotion Product(s)” has the meaning set forth in Section 4.8.1.
1.36.    “(Co-)Promotion Right” has the meaning set forth in Section 4.8.1.
1.37.    “(Co-)Promotion Term” means that period commencing on the effective date of the (Co-)Promotion Agreement and ending on the first date on which Lexicon’s (Co-)Promotion Right with respect to the (Co-)Promotion Product(s) terminate pursuant to this Agreement or the (Co-)Promotion Agreement.
1.38.    “(Co-)Promotion Territory” means the United States.
1.39.    “Core Development Plan” means those activities under the Development Plan sufficient for [**] in the United States and [**] in the European Union [**].
1.40.    “Corporate Names” means the Trademarks and logos identified on Schedule 1.40 and such other names and logos as Lexicon may designate in writing from time to time.
1.41.    “Cost Sharing Trigger Point” has the meaning set forth in Section 7.6.1(i).
1.42.    “Cover” means, with respect to a Patent and a compound, product, invention or other technology, that the making, using, selling, offering for sale or importing of such compound, product, invention or other technology would, but for ownership or a license to such Patent, infringe such Patent (or, in the case such Patent is a patent application, a patent that issues on such patent application).  “Covered” has a corresponding meaning.
1.43.    “Decision Point” has the meaning set forth in Section 3.1.3.

5

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

1.44.    “Detail” means, with respect to a (Co-)Promotion Product in the (Co-)Promotion Territory, a sales presentation or interaction by a professional sales representative to or with a target physician or other medical professional with prescribing authority involved in prescribing a (Co-)Promotion Product or to other individuals influencing prescription activity with respect to a (Co-)Promotion Product, in any case, in which the primary purpose is to discuss the benefits and features of the (Co-)Promotion Product.  The term Detail may be further defined in the (Co-)Promotion Agreement.  When used as a verb, “Detail” or “Detailing” means to perform a Detail.
1.45.    “Development” means all activities related to research, pre-clinical and other non-clinical testing, test method development and stability testing, toxicology, formulation, process development, manufacturing scale-up, qualification and validation, quality assurance/quality control, clinical studies, including Manufacturing in support thereof, statistical analysis and report writing, the preparation and submission of Drug Approval Applications, regulatory affairs with respect to the foregoing and all other activities necessary or reasonably useful or otherwise requested or required by a Regulatory Authority as a condition or in support of obtaining or maintaining a Regulatory Approval (including any Required Phase 4 Studies).  When used as a verb, “Develop” means to engage in Development.
1.46.    “Development and Regulatory Committee” or “DRC” has the meaning set forth in Section 5.2.
1.47.    “Development Costs” means, subject to Section 7.6, the FTE Costs (charged in accordance with Section 7.6.1) and the direct out-of-pocket costs recorded as an expense, in accordance with applicable Accounting Standards, in each case, incurred by or on behalf of the applicable Party or any of its Affiliates after the Effective Date during the Term that are specifically identified in the Development Plan or reasonably allocable to the Development of a Licensed Product in accordance with this Agreement and the Development Plan.  For clarity, Development Costs shall not include costs for general overhead, postage, communications, photocopying, printing or internet expense, professional dues, operating supplies, laboratory supplies, printers, photocopiers, fax machines or other office equipment, laboratory equipment, computers or computer service charges or any costs that were included in the calculation of or intended to be covered by the FTE Rate.  For clarity, Development Costs for clinical quantities of Licensed Product and placebo or comparator supplied hereunder or under any Supply Agreement shall be based on the Manufacturing Costs therefor as set forth in Section 6.1 and, if applicable, shared in accordance with Section 7.6.
1.48.    “Development Plan” has the meaning set forth in Section 3.1.2(i).
1.49.    “Dispute” has the meaning set forth in Section 13.5.1.
1.50.    “Distributor” means any Third Party appointed by Sanofi or any of its Affiliates or its or their Sublicensees to distribute, market and sell Licensed Product(s), with or without packaging rights, in one or more countries in the Territory, in circumstances where (i) the Third Party purchases its requirements of Licensed Product(s) from Sanofi or its Affiliates or its or their Sublicensees but does not otherwise make any upfront, royalty or other payment (separate from a payment for supply of Licensed Product) to Sanofi or its Affiliates or its or their Sublicensees with respect to  Licensed Product(s) and (ii) the Third Party does not engage in any material promotional activity with respect to Licensed Product(s).
1.51.    “Dollars” or “$” means United States Dollars.

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1.52.    “Domain Names” has the meaning set forth in Section 8.2.3.
1.53.    “Drug Approval Application” means a New Drug Application or Supplemental New Drug Application as defined in the FFDCA or any corresponding foreign application in the Territory, including, with respect to the European Union, a Marketing Authorization Application filed with the EMA pursuant to the centralized approval procedure or with the applicable Regulatory Authority of a country in Europe with respect to the mutual recognition or any other national approval.
1.54.    “Effective Date” has the meaning set forth in Section 12.1.
1.55.    “EMA” means the European Medicines Agency and any successor agency thereto.
1.56.    “European Union” means the economic, scientific and political organization of member states as it may be constituted from time to time, which as of the Execution Date consists of Austria, Belgium, Bulgaria, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom of Great Britain and Northern Ireland and that certain portion of Cyprus included in such organization.
1.57.    “Execution Date” has the meaning set forth in the preamble hereto.
1.58.    “Existing Clinical Trial Applications” means those clinical trial applications listed on Schedule 1.58.
1.59.    “Existing Patents” has the meaning set forth in Section 10.2.2.
1.60.    “Existing Regulatory Documentation” means the Regulatory Documentation Controlled by Lexicon or any of its Affiliates as of the Effective Date, including that certain IND number 102191 and the Existing Clinical Trial Applications.
1.61.    “Exploit” means to make, have made, import, use, sell or offer for sale, including to research, Develop, Commercialize, register, Manufacture, have Manufactured, hold or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market or have sold or otherwise dispose of a compound, product or process, including to make Licensed Compound for use in Licensed Products.  “Exploitation” means the act of Exploiting a compound, product or process.
1.62.    “FDA” means the United States Food and Drug Administration and any successor agency thereto.
1.63.    “FFDCA” means the United States Federal Food, Drug, and Cosmetic Act, as amended from time to time, together with any rules, regulations and requirements promulgated thereunder (including all additions, supplements, extensions and modifications thereto).
1.64.    “Field” means any and all uses in humans or animals, including therapeutic, diagnostic and prophylactic uses.
1.65.    “First Commercial Sale” means, with respect to a Licensed Product or the (Co-)Promotion Product, as applicable, and a country, the first sale for monetary value for use or consumption by the end user of such Licensed Product or the (Co-)Promotion Product, as applicable, in such country 

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after Regulatory Approval for such Licensed Product or the (Co-)Promotion Product, as applicable, has been obtained in such country.  Sales prior to receipt of Regulatory Approval for such Licensed Product or the (Co-)Promotion Product, as applicable, such as so-called “treatment IND sales,” “named patient sales,” and “compassionate use sales,” shall not be construed as a First Commercial Sale.
1.66.    “FTE” means the equivalent of the work of one (1) employee full time for one (1) Calendar Year (consisting of at least a total of [**] hours per Calendar Year) of work directly related to the applicable Development activities with respect to a Licensed Product or the applicable Commercialization activities or Medical Affairs Activities with respect to a Licensed Product, as applicable.  No additional payment shall be made with respect to any person who works more than [**] hours per Calendar Year and any person who devotes less than [**] hours per Calendar Year (or such other number as may be agreed by the JSC) shall be treated as an FTE on a pro rata basis based upon the actual number of hours worked divided by [**].  For purposes of the T1DM Commercialization Plan for the United States (and thus determination of Commercialization Costs and Medical Affairs Costs subject to sharing by the Parties), FTEs shall include only such personnel as are specifically devoted to (i) sales and sales management devoted to Specialist Efforts that are directed, principally or at least in substantial part, to T1DM, (ii) marketing, market analytics or market access for T1DM or (iii) Medical Affairs Activities for T1DM, and in each case ((i), (ii) and (iii)) not for other personnel or functions involved in Commercialization or Medical Affairs Activities more generally.
1.67.    “FTE Costs” means, for any period, the applicable FTE Rate multiplied by the applicable number of FTEs of the Party performing Development activities during such period in accordance with the Development Plan or Commercialization activities or Medical Affairs Activities during such period in accordance with the Commercialization Plan.  Schedule 1.68 or the (Co-)Promotion Agreement shall set forth the costs and expenses which are included in each FTE Rate.
1.68.    “FTE Rate” means, as of the Effective Date, for the applicable category of activity, the rate as set forth in Schedule 1.68; provided that such rates shall be adjusted annually, with each annual adjustment effective as of January 1 of each Calendar Year, with the first such annual adjustment to be made as of [**], to correspond with the total percentage change in the Producer Price Index (PPI) for Pharmaceutical and Medicine Manufacturing (NAICS 325400) for the twelve (12)-month period preceding each such January 1; provided further, the (Co-)Promotion Agreement shall set forth the initial FTE Rates for any other category of Commercialization activities or Medical Affairs Activities not described in Schedule 1.68, which FTE Rates shall be adjusted pursuant to the preceding proviso in this Section 1.68.
1.69.    “Fundamental Event” means a circumstance outside the control of the Parties, such as a material change in the regulatory, pricing or reimbursement environment, that has a material adverse impact on the commercial viability of the Licensed Products or the SGLT1/2 class of products; provided, however, that none of the following shall constitute, or shall be considered in determining whether there has occurred, a Fundamental Event:  (i) any change arising out of or resulting from actions contemplated by the Parties in connection with this Agreement; (ii) any action taken pursuant to or in accordance with this Agreement or at the request of or with the consent of Sanofi; (iii) any fees or expenses anticipated as of the Execution Date to be incurred in connection with the transactions contemplated by this Agreement; or (iv) any change of circumstances with respect to any product or product candidate of Sanofi other than the Licensed Product.
1.70.    “GAAP” means United States generally accepted accounting principles.

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1.71.    “Generic Product” means, with respect to a Licensed Product, any pharmaceutical or biological product that (i) is distributed by a Person other than Sanofi or its Affiliates under a Drug Approval Application approved by a Regulatory Authority in reliance, in whole or in part, on the prior approval (or on safety or efficacy data submitted in support of the prior approval) of such Licensed Product, including any product authorized for sale (a) in the U.S. pursuant to Section 505(b)(2) or Section 505(j) of the FFDCA (21 U.S.C. 355(b)(2) and 21 U.S.C. 355(j), respectively), (b) in the European Union pursuant to a provision of Articles 10, 10a or 10b of Parliament and Council Directive 2001/83/EC as amended (including an application under Article 6.1 of Parliament and Council Regulation (EC) No 726/2004 that relies for its content on any such provision) or (c) in any other country or jurisdiction pursuant to all equivalents of such provisions or (ii) is otherwise substitutable under Applicable Law for such Licensed Product when dispensed without the intervention of a physician or other health care provider with prescribing authority.
1.72.    “Generic Version” means, with respect to a Competing Product, any pharmaceutical or biological product that (i) is distributed by a Person under a Drug Approval Application approved by a Regulatory Authority in reliance, in whole or in part, on the prior approval (or on safety or efficacy data submitted in support of the prior approval) of such Competing Product, including any product authorized for sale (a) in the U.S. pursuant to Section 505(b)(2) or Section 505(j) of the FFDCA (21 U.S.C. 355(b)(2) and 21 U.S.C. 355(j), respectively), (b) in the European Union pursuant to a provision of Articles 10, 10a or 10b of Parliament and Council Directive 2001/83/EC as amended (including an application under Article 6.1 of Parliament and Council Regulation (EC) No 726/2004 that relies for its content on any such provision) or (c) in any other country or jurisdiction pursuant to all equivalents of such provisions or (ii) is otherwise substitutable under Applicable Law for such Competing Product when dispensed without the intervention of a physician or other health care provider with prescribing authority.
1.73.    “Government Official” means (i) any Person employed by or acting on behalf of a government, government-controlled agency or entity or public international organization, (ii) any political party, party official or candidate, (iii) any Person who holds or performs the duties of an appointment, office or position created by custom or convention or (iv) any Person who holds himself out to be the authorized intermediary of any of the foregoing.
1.74.    “Hatch-Waxman Act” means the U.S. “Drug Price Competition and Patent Term Restoration Act” of 1984, as set forth at 21 U.S.C. §355(b)(2)(A)(iv) or (j)(2)(A)(vii)(IV).
1.75.    “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (15 U.S.C. §18a) and the rules and regulations promulgated thereunder.
1.76.    “HSR Filing” has the meaning set forth in Section 12.1.
1.77.    “IFRS” shall mean International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union.
1.78.    “IND” means (i) an investigational new drug application filed with the FDA for authorization to commence clinical studies or its equivalent in other countries or regulatory jurisdictions and (ii) all supplements and amendments that may be filed with respect to the foregoing, together with all non-United States equivalents for (i) or (ii) (in each case ((i) and (ii)), including any clinical trial applications filed with the EMA or other jurisdictions.

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1.79.    “Indemnification Claim Notice” has the meaning set forth in Section 11.3.1.
1.80.    “Indemnified Party” has the meaning set forth in Section 11.3.1.
1.81.    “Information and Inventions” means all inventions, discoveries, technical, scientific and other know-how and information, trade secrets, knowledge, technology, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, technical assistance, designs, drawings, assembly procedures, computer programs, apparatuses, specifications, data, results and other material, including: biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, pre-clinical, clinical, safety, manufacturing and quality control data and information, including study designs and protocols, assays and biological methodology, in each case (whether or not confidential, proprietary, patented or patentable) in written, electronic or any other form now known or hereafter developed.
1.82.    “Infringement” has the meaning set forth in Section 8.5.1.
1.83.    “Initial Data” means the analysis of the T2DM CVOT Study Data for the first filing for Regulatory Approval in the United States.
1.84.    “In-License Agreements” has the meaning set forth in Section 10.2.4.
1.85.    “Inventor Personnel” means officers, employees, agents and consultants of a Party or any of its Affiliates who are inventors of or have otherwise contributed in a material manner to the creation or development of any Lexicon Patent, Lexicon Know-How, Sanofi Patent, Sanofi Know-How, Joint Patent, Joint Know-How or who are or will be performing Development activities hereunder or who otherwise have access to any Confidential Information or Information and Inventions of either Party.
1.86.    “Invoiced Sales” has the meaning set forth in the definition of “Net Sales.”
1.87.    “Japan Decision Date” has the meaning set forth in Section 12.3.3.
1.88.    “Joint Commercialization Committee” or “JCC” has the meaning set forth in Section 5.4.
1.89.    “Joint Intellectual Property Rights” has the meaning set forth in Section 8.1.2.
1.90.    “Joint Know-How” has the meaning set forth in Section 8.1.2.
1.91.    “Joint Patents” has the meaning set forth in Section 8.1.2.
1.92.    “Joint Steering Committee” or “JSC” has the meaning set forth in Section 5.1.
1.93.    “JSC Dispute” has the meaning set forth in Section 13.5.1.
1.94.    “Know-How Transfer Plan” has the meaning set forth in Section 2.4.4.
1.95.    “Legal Dispute” has the meaning set forth in Section 5.5.4.
1.96.    “Lexicon” has the meaning set forth in the preamble hereto.

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1.97.    “Lexicon CMOs” means contract manufacturing organizations, including [**], currently subcontracting manufacturing activities related to any Licensed Compound or Licensed Product in the name and on behalf of Lexicon.
1.98.    “Lexicon CROs” means contract research organizations, including [**], currently subcontracting clinical development activities related to any Licensed Compound or Licensed Product in the name and on behalf of Lexicon.
1.99.    “Lexicon Consent Right” means, with respect to a decision or dispute as to the following matters, Lexicon or its JSC representatives have a right of consent:  (i) if Lexicon exercises the (Co-)Promotion Right, the adoption of or any amendment to the T1DM Commercialization Plan, (ii) any amendment of the Development Plan that would [**], (iii) an amendment to the Development Plan that would [**], (iv) any material amendment to the Development Plan other than to the extent such amendment is [**], (v) any amendment of the Development Plan with respect to the Development of Licensed Products for T1DM (including any modification of the activities to be performed by Lexicon), including any agreement with a Regulatory Authority to undertake Required Phase 4 Studies in connection with obtaining a Regulatory Approval of a Licensed Product for T1DM, or (vi) any matter that expressly requires consent of Lexicon hereunder.
1.100.    “Lexicon Know-How” means, subject to Section 13.3.3, all Information and Inventions that are Controlled by Lexicon or any of its Affiliates as of the Execution Date or at any time prior to the end of the Term and that are either (i) (a) generated in the course of the research or Development of Licensed Compound(s) or Licensed Product(s), and (b) related to any Licensed Compounds or Licensed Product or the Exploitation of any of the foregoing and that are useful for such Exploitation, or (ii) otherwise generated or acquired and necessary for or used by or on behalf of Lexicon to manufacture, or incorporated by or on behalf of Lexicon into, the LX4211 Product; provided that Lexicon Know-How excludes Joint Know-How.
1.101.    “Lexicon Maximum Amount” means, for a given Calendar Year, the amount equal to [**].
1.102.    “Lexicon Patents” means, subject to Section 13.3.3, all of the Patents Controlled by Lexicon or any of its Affiliates as of the Execution Date or at any time prior to the end of the Term that Cover any Licensed Compounds or Licensed Products or the Exploitation of any of the foregoing and that are useful for such Exploitation; provided that Lexicon Patents exclude Joint Patents.  The Lexicon Patents include the Existing Patents.
1.103.    “Licensed Compound” means (i) LX4211, (ii) any other compounds (other than LX2761) Covered by the Existing Patents, and (iii) any metabolite, salt, ester, hydrate, solvate, isomer, enantiomer, free acid form, free base form, crystalline form, co-crystalline form, amorphous form, pro-drug (including ester pro-drug) form, racemate, polymorph, chelate, stereoisomer, tautomer or optically active form of any of the foregoing, in each case of clauses (i) through (iii), that are, as of the Execution Date, or thereafter become Controlled by Lexicon or, subject to Section 13.3.3, any of its Affiliates.
1.104.    “Licensed Product” means any pharmaceutical preparation in final form that is comprised of or contains a Licensed Compound, alone or in combination with one (1) or more additional active ingredients in any and all forms, presentations, delivery systems, dosages and formulations, for sale by prescription, over-the-counter or any other method.

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1.105.    “Losses” has the meaning set forth in Section 11.1.
1.106.    “LX2761” means the pharmaceutical compound known as LX2761 described in Schedule 1.106.
1.107.    “LX2761 Development Costs” means FTE Costs and the direct out-of-pocket costs, in each case recorded as an expense, in accordance with applicable Accounting Standards, and incurred by or on behalf of Lexicon or any of its Affiliates that are reasonably allocable to the Development of LX2761.  For clarity, LX2761 Development Costs shall not include costs for general overhead, postage, communications, photocopying, printing or internet expense, professional dues, operating supplies, laboratory supplies, printers, photocopiers, fax machines or other office equipment, laboratory equipment, computers or computer service charges.  For clarity, LX2761 Development Costs include manufacturing costs for clinical quantities of LX2761 and placebo calculated consistent with the definition of “Manufacturing Cost” as if LX2761 were a Licensed Compound.
1.108.    “LX2761 Phase 3 T2DM Study” means a pivotal human clinical trial, the results of which could be used to establish safety and efficacy of a product comprised of or containing LX2761 in T2DM as a basis for a Drug Approval Application in accordance with or otherwise in satisfaction of the requirements of 21 CFR 312.21(c) or analogous requirements of the European Union.
1.109.    “LX2761 POC Study” means a human clinical trial that is intended to initially evaluate the dosing and effectiveness of LX2761 for T1DM or T2DM in patients with T1DM or T2DM, as applicable, in accordance with or otherwise in satisfaction of the requirements of 21 CFR 312.21(b) or analogous requirements of the European Union.
1.110.    “LX2761 Study Data” has the meaning set forth in Section 2.7.2(ii).
1.111.    “LX4211” means the pharmaceutical compound known as LX4211 described in Schedule 1.111.
1.112.    “LX4211 Product” means a Licensed Product that includes LX4211.
1.113    “Major Market” means, subject to Section 12.3.3, each of the United States, France, Germany, Italy, the United Kingdom and Spain.
1.114.    “Major Pharmaceutical Company” means a pharmaceutical company that, together with its Affiliates, on a worldwide basis, was one of the [**] largest global pharmaceutical companies, as measured by [**], during the most recently ended Calendar Year as of the relevant time.
1.115.    “Manufacture” and “Manufacturing” means all activities related to the production, manufacture, processing, filling, finishing, packaging, labeling, shipping and holding of any Licensed Compound, any Licensed Product or any intermediate thereof, including process development, process qualification and validation, scale-up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, stability testing, quality assurance and quality control, and chemistry, manufacturing and controls.
1.116.    “Manufacturing and Supply Committee” or “MSC” has the meaning set forth in Section 5.3.

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1.117.    “Manufacturing Cost” means, with respect to any Licensed Product, Licensed Compound, placebo or comparator Manufactured directly by a Party, its Affiliates or its or their Sublicensees hereunder, the standard unit cost of Manufacture of such Licensed Product, Licensed Compound, placebo or comparator consisting of direct material and added value attributable to such Licensed Product, Licensed Compound, placebo or comparator all calculated in accordance with internal cost accounting policy and procedures, consistently applied.  Standard unit cost may be adjusted on an exceptional basis for any significant attributable variances as agreed by the Parties.  Direct material costs will consist of the costs incurred in Manufacturing or purchasing materials for use in Manufacturing such Licensed Product, Licensed Compound, placebo or comparator including Third Party purchase price, taxes, transportation costs, freight, customs duty and charges levied by governmental authorities and all costs of packaging components.  Added value will consist of (i) direct labor costs representing the costs of employees engaged in direct Manufacturing activities, (ii) direct labor costs representing the costs of employees engaged in direct or indirect quality control and quality assurance activities which are involved in the Manufacturing and packaging of such Licensed Product, Licensed Compound, placebo or comparator and (iii) such manufacturing site’s (sites’) overhead and depreciation that are attributable to the Manufacturing and packaging such Licensed Product, Licensed Compound, placebo or comparator based on calculations and allocations consistent with the industrial cost accounting method used by such Party (provided that such overhead and depreciation shall exclude any costs that such Party does not customarily include in the determination of cost of goods sold under its Accounting Standards).  For clarity, overhead will not include any corporate or non-manufacturing site specific administrative overhead costs, plant start-up costs or costs associated with excess or idle capacity.  Such Manufacturing Costs are updated periodically according to the policy of such Party and promptly notified to the other Party.  Alternatively, if such Licensed Product, Licensed Compound, placebo or comparator is Manufactured by a Third Party manufacturer, the Manufacturing Cost means the actual price paid by such Party or its Affiliates to the Third Party for the Manufacture, supply and packaging of such Licensed Product, Licensed Compound, placebo or comparator transportation costs, freight, customs duty and charges levied by governmental authorities, all taxes and shipping costs related thereto, depreciation (on any equipment used in such Manufacture that is owned by the Party or any of its Affiliates and allocated as described above, depreciation shall be included to the extent provided and calculated as above), the cost of any materials supplied and paid for by such Party, reasonable and necessary costs (including salaries and benefits, supplies and equipment and other disposable goods to the extent required for the performance of the applicable activities) of such Party’s or its Affiliates’ employees engaged in activities relating to the selection and management of such Third Party manufacturer and the management of such supply (including quality control, quality assurance, procurement and supply chain activities) and the enforcement of agreements with Third Party manufacturers.  Manufacturing Costs include any amounts paid to a Third Party supplier for intellectual property rights relating to Licensed Product or Licensed Compound supplied by such supplier, whether through a higher transfer price or separate payment of milestones, royalties or other financial consideration.
1.118.    [**] has the meaning set forth in Section 7.3.3(v).
1.119.    “Manufacturing Process” has the meaning set forth in Section 6.2.
1.120.    “Material Breach Notice” has the meaning set forth in Section 12.3.1.
1.121.    “Medical Affairs Activities” means the coordination of medical information requests and field based medical scientific liaisons with respect to the Licensed Product, including 

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activities of medical scientific liaisons and the provision of medical information services with respect to the Licensed Product.
1.122.    “Medical Affairs Costs” means, subject to Section 7.7, the FTE Costs (charged in accordance with Section 7.7) and the direct out-of-pocket costs, including costs for independent contractors engaged as permitted under this Agreement, in each case, recorded as an expense, in accordance with applicable Accounting Standards, and incurred by or on behalf of the applicable Party or any of its Affiliates after the Effective Date during the Term that are specifically identified in the Commercialization Plan or reasonably allocable to the Medical Affairs Activities in accordance with this Agreement and the Commercialization Plan.  For clarity, Medical Affairs Costs shall not include costs for general overhead, postage, communications, photocopying, printing or internet expense, professional dues, operating supplies, laboratory supplies, printers, photocopiers, fax machines or other office equipment, laboratory equipment, computers or computer service charges or any costs that were included in the calculation of or intended to be covered by the FTE Rate.
1.123.    “Net Sales” means, with respect to a Licensed Product for any period, the gross amount billed or invoiced by Sanofi, its Affiliates or its or their Sublicensees for the sale of such Licensed Product in the Territory during the Royalty Term for the applicable Licensed Product in the applicable country to Third Parties (including Distributors, but excluding distributors other than Distributors (which non-Distributor distributors shall, for purposes of this definition, be deemed to be Sublicensees)) (the “Invoiced Sales”), less deductions for:
1.123.1. normal and customary trade, quantity and prompt settlement discounts (including chargebacks and allowances) actually allowed, incurred or accrued;
1.123.2. amounts repaid or credited by reason of rejection, return or recall of goods, rebates or bona fide price reductions;
1.123.3. freight, postage, shipping and insurance expenses to the extent that such items are included in the gross amount invoiced;
1.123.4. customs and excise duties and other taxes or duties related to the sales to the extent that such items are included in the gross amount invoiced;
1.123.5. rebates and similar payments made with respect to sales paid to any governmental or regulatory authority such as, by way of illustration and not in limitation of the Parties’ rights hereunder, Federal or state Medicaid, Medicare or similar state program or equivalent foreign governmental program;
1.123.6. the portion of normal and customary administrative fees paid during the relevant time period to group purchasing organizations or pharmaceutical benefit managers relating to such Licensed Product; and
1.123.7. any invoiced amounts that are not collected by Sanofi, its Affiliates or its or their Sublicensees, including bad debts; and
1.123.8. that portion of the [**] that Sanofi, its Affiliate or its or their Sublicensee, as applicable, allocates to sales of the Licensed Products in accordance with Sanofi’s, its Affiliate’s or its 

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or their Sublicensee’s standard policies and procedures consistently applied across its products, as applicable, and [**];
Any of the deductions listed above that involves a payment by Sanofi, its Affiliates or its or their Sublicensees shall be taken as a deduction in the Calendar Quarter in which the payment is accrued by such entity.  For purposes of determining Net Sales, a Licensed Product shall be deemed to be sold when invoiced and a “sale” shall not include transfers or dispositions of such Licensed Product for pre-clinical or clinical purposes or as samples, in each case, without charge.  Sanofi’s, its Affiliates’ or its or their Sublicensees’ transfer of any Licensed Product to an Affiliate or Sublicensee shall not result in any Net Sales, unless such Licensed Product is consumed by such Affiliate or Sublicensee in the course of its commercial activities.
(a) In the event that a Licensed Product is sold in any country in the form of a Combination Product, and there is a valid and unexpired Patent in such country that Covers the active ingredient(s) in such Combination Product other than the Licensed Compound(s) included in the Combination Product and such active ingredient(s) have not become available as a generic product(s) in such country, Net Sales of such Combination Product shall be adjusted by multiplying actual Net Sales of such Combination Product in such country calculated pursuant to the foregoing definition of “Net Sales” by the fraction A/(A+B), where A is the average invoice price in such country of any Licensed Product that contains the same Licensed Compound(s) as such Combination Product as its sole active ingredient(s), if sold separately in such country, and B is the average invoice price in such country of each product that contains active ingredient(s) other than the Licensed Compound(s) contained in such Combination Product as its sole active ingredient(s) if sold separately in such country; provided that the invoice price in a country for each Licensed Product that contains only the Licensed Compound(s) and each product that contains solely active ingredient(s) other than the Licensed Compound(s) included in the Combination Product shall be for a dosage quantity comparable to that used in such Combination Product and of substantially the same class, purity and potency or functionality, as applicable.
(b) In the event that a Licensed Product is sold in any country in the form of a Combination Product, and either there is no valid and unexpired Patent in such country that Covers the active ingredient(s) in such Combination Product other than the Licensed Compound(s) included in the Combination Product or all such active ingredient(s) have become available as a generic product(s) in such country, Net Sales of such Combination Product shall be adjusted by multiplying actual Net Sales of such Combination Product in such country calculated pursuant to the foregoing definition of “Net Sales” by the fraction X/Y, where X is the average invoice price in such country of any Licensed Product that contains the same Licensed Compound(s) as such Combination Product as its sole active ingredient(s), if sold separately in such country in significant quantities, and Y is the average invoice price in such country of such Combination Product; provided that the invoice price in a country for each Licensed Product that contains only the Licensed Compound(s) shall be for a dosage quantity comparable to that used in such Combination Product and of substantially the same class, purity and potency or functionality, as applicable; provided, further that if such Licensed Product is not sold in significant quantities in such country, then Net Sales of such Combination Product shall be calculated in accordance with the immediately following paragraph.
In the case of paragraphs (a) above, if either such Licensed Product that contains the Licensed Compound(s) as its sole active ingredient or a product that contains the active ingredient(s) (other than the Licensed Product) in the Combination Product as its sole active ingredient(s) is not sold separately in a particular country, or in the case of paragraph (b) above, if such Licensed Product having the Licensed Compound(s) as its sole active ingredient is not sold separately in the particular country in significant quantities, such 

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that the applicable invoice price(s) needed for the calculations in such paragraphs are not available or representative, the Parties shall negotiate in good faith a reasonable adjustment to Net Sales in such country that takes into account the commercial value contribution to the Combination Product of and all other factors reasonably relevant to the relative commercial value of, the Licensed Compound(s), on the one hand and all of the other active ingredient(s), collectively, on the other hand.  If the Parties are unable to reach agreement on any such adjustment, such matter shall be resolved through binding arbitration in accordance with Section 13.5.
In the case of pharmacy incentive programs, hospital performance incentive programs, chargebacks, disease management programs, similar programs or discounts on portfolio product offerings, all rebates, discounts and other forms of reimbursements shall be allocated among products on the basis on which such rebates, discounts and other forms of reimbursements were actually granted or, if such basis cannot be determined, in accordance with Sanofi’s, its Affiliates’ or its or their Sublicensees’ existing allocation method consistently applied across their products, as applicable; provided that any such allocation shall be done in accordance with Applicable Law, including any price reporting laws, rules and regulations.
Subject to the above, Net Sales shall be calculated in accordance with the standard internal policies and procedures of Sanofi, its Affiliates or its or their Sublicensees, which must be in accordance with applicable Accounting Standards.
1.124.     “Non-Breaching Party” has the meaning set forth in Section 12.3.1.
1.125.    “Non-Competitive Acquirer” means a Third Party Acquirer that is not a Sanofi Competitor and does not have any Affiliates that are Sanofi Competitors.
1.126.    “Notice Period” has the meaning set forth in Section 12.3.1.
1.127.    “Opt-In” means the withdrawal under Article 83(4) of the Agreement on a Unified Patent Court between the participating Member States of the European Union (2013/C 175/01) of the Opt-Out of a Patent.
1.128.    “Opt-Out” means the opt-out of a Patent from the exclusive competence of the Unified Patent Court under Article 83(3) of the Agreement on a Unified Patent Court between the participating Member States of the European Union (2013/C 175/01).
1.129.    “Party” and “Parties” have the meaning set forth in the preamble hereto.
1.130.    “Patents” means:  (i) all national, regional and international patents and patent applications, including provisional patent applications; (ii) all patent applications filed either from such patents, patent applications or provisional applications or from an application claiming priority from either of these, including divisionals, continuations, continuations-in-part, provisionals, converted provisionals and continued prosecution applications; (iii) any and all patents that have issued or in the future issue from the foregoing patent applications ((i) and (ii)), including utility models, petty patents, innovation patents and design patents and certificates of invention; (iv) any and all extensions or restorations by existing or future extension or restoration mechanisms, including revalidations, reissues, re-examinations and extensions (including any supplementary protection certificates and the like) of the foregoing patents or patent applications ((i), (ii) and (iii)); and (v) any similar rights, including so-called pipeline protection or any importation, revalidation, confirmation or introduction patent or registration patent or patent of additions to any of such foregoing patent applications and patents.

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1.131.    “Payment” has the meaning set forth in Section 7.11.1.
1.132.    “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government.
1.133.    “Phase 4 Study” means a study or data collection effort with respect to any Licensed Product that are performed after the receipt of Regulatory Approval in the country where such trial is conducted, regardless of when such study or data collection effort has commenced.
1.134.    “PoC Successful Completion” means achievement of the primary endpoint in any LX2761 PoC Study based on top line data [**].
1.135.    “Positive Results” has the meaning set forth in Section 3.1.3.
1.136.    “Positive Results Failure” has the meaning set forth in Section 12.3.2(i).
1.137.    “Post Grant Proceeding” means any proceedings before any national Patent authority involving the review, examination, analysis or any combination thereof, of any issued Patent.  Examples of Post Grant Proceedings include post grant review proceedings, inter partes review proceedings, supplemental examination, patent interference proceedings, opposition proceedings initiated on and after issuance of the applicable Patent, reissue and reexamination.
1.138.    “Pre-Generic Launch Net Sales” has the meaning set forth in Section 7.3.3(i).
1.139.    “Product Trademarks” means the Trademark(s) used or to be used by Sanofi or its Affiliates or its or their Sublicensees for the Commercialization of any Licensed Product in the Territory and any registrations thereof or any pending applications relating thereto in the Territory (excluding, in any event, any trademarks, service marks, names or logos that include any corporate name or logo of the Parties or their Affiliates or its or their Sublicensees).
1.140.    “P3 Successful Completion” means the completion of the first two (2) LX2761 Phase 3 T2DM Studies, in each case, in which the primary endpoint is achieved based on top line data [**].
1.141.    “Quality Agreement(s)” means the quality agreement(s) entered into between the Parties or their Affiliates relating to (i) the conduct of clinical studies of Licensed Products pursuant to Section 3.1.2(v) or (ii) the supply of Licensed Products pursuant to Section 6.1.
1.142.    “Regulatory Approval” means, with respect to a country in the Territory, any and all approvals (including Drug Approval Applications), licenses, registrations or authorizations of any Regulatory Authority necessary to commercially distribute, sell or market a Licensed Product in such country, including, where applicable, (i) [**], (ii) pre- and post-approval marketing authorizations (including any prerequisite Manufacturing approval or authorization related thereto) and (iii) labeling approval.
1.143.    “Regulatory Authority” means any applicable supra-national, federal, national, regional, state, provincial or local regulatory agencies, departments, bureaus, commissions, councils or 

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other government entities regulating or otherwise exercising authority with respect to the Exploitation of Licensed Compound or Licensed Products in the Territory, including the FDA in the United States and the EMA in the European Union.
1.144.    “Regulatory Documentation” means all (i) applications (including all INDs and Drug Approval Applications), registrations, licenses, authorizations and approvals (including Regulatory Approvals); (ii) correspondence and reports submitted to or received from Regulatory Authorities (including minutes and official contact reports relating to any communications with any Regulatory Authority) and all supporting documents with respect thereto, including all Adverse Event files and complaint files; and (iii) clinical and other data, including Study Data, agreements and correspondence with investigators, Lexicon CROs or Lexicon CMOs, contained or relied upon in any of the foregoing; in each case ((i), (ii) and (iii)) relating to the Licensed Compound or a Licensed Product.
1.145.    “Regulatory Exclusivity Period” means, with respect to each Licensed Product in any country in the Territory, a period of exclusivity (other than Patent exclusivity) granted or afforded by Applicable Law or by a Regulatory Authority in such country that confers exclusive marketing rights with respect to such Licensed Product in such country or that confers data exclusivity or similar exclusivity such that Third Parties or the applicable Regulatory Authority(-ies) in such country are restricted from relying on data used to obtain Regulatory Approval for the Licensed Product in applying for or granting Regulatory Approval to Third Party products.
1.146.    “Required Phase 4 Studies” means any Phase 4 Studies that are required by the applicable Regulatory Authority to be performed after Regulatory Approval as a condition for Regulatory Approval, regardless of when commenced.
1.147.    “Restricted Rights” has the meaning set forth in Section 2.6.2.
1.148.    “Retained Regulatory Documentation” has the meaning set forth in Section 3.2.1(ii).
1.149.    “Reversion Products” means any LX4211 Product and any other Licensed Product for which pre-clinical animal studies or human clinical Development or Commercialization has been conducted prior to the applicable termination of this Agreement.
1.150.    “ROFN1 Development Costs” has the meaning set forth in Section 2.7.2(ii).
1.151.    “ROFN2 Development Costs” has the meaning set forth in Section 2.7.3(ii).
1.152.    “ROW” or “Rest of World” has the meaning set forth in Section 7.3.1(iv).
1.153.    “Royalty Term” means, with respect to each Licensed Product and each country in the Territory, the period beginning on the Effective Date and ending on the latest to occur of:  (i) the expiration of the last-to-expire issued (A) Sanofi Patent that meets the criteria set forth in clause (i) of Section 1.158, (B) Lexicon Patent or (C) Joint Patent in such country, in each case ((A), (B) and (C)), that contains a Valid Claim that Covers the applicable Licensed Product [**]; (ii) the expiration of the Regulatory Exclusivity Period in such country for such Licensed Product; and (iii) the tenth (10th) anniversary of the First Commercial Sale of the first Licensed Product in such country.
1.154.    “Rules” has the meaning set forth in Section 13.5.2.

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1.155.    “Sanofi” has the meaning set forth in the preamble hereto.
1.156.    “Sanofi Competitor” means a Third Party that (i) is a Major Pharmaceutical Company or is an Affiliate of a Major Pharmaceutical Company and (ii) actively commercializes in the United States one or more approved pharmaceutical product(s) for [**], which commercialization generated more than [**] in annual sales revenue in the most recently completed Calendar Year as of the closing of the applicable Change of Control transaction, or an Affiliate of any such Third Party.
1.157.    “Sanofi Know-How” means all Information and Inventions Controlled by Sanofi or any of its Affiliates during the Term that are (i) developed by Sanofi or any of its Affiliates or its or their Sublicensees under this Agreement or (ii) Information and Inventions other than those described in the foregoing clause (i) that are used by Sanofi or any of its Affiliates or its or their Sublicensees for the Exploitation of Licensed Product(s) after the Effective Date and during the Term, but in the case of clause (ii) shall exclude Know-How specifically related to any device, device technology or active pharmaceutical ingredients other than the Licensed Compounds; provided that Sanofi Know-How excludes Joint Know-How.
1.158.    “Sanofi Patents” means all of the Patents Controlled by Sanofi or any of its Affiliates during the Term, that (i) Cover inventions that are made or conceived by Sanofi or any of its Affiliates or its or their Sublicensees under this Agreement after the Effective Date and during the Term or (ii) are Patents other than those described in the foregoing clause (i) that Cover technologies applied to or incorporated by Sanofi, its Affiliates or its or their Sublicensees into Licensed Products, but this clause (ii) shall exclude Patents specifically related to any device, device technology or active pharmaceutical ingredients other than the Licensed Compounds; provided that Sanofi Patents exclude Joint Patents.
1.159.    “Sanofi Product Data” has the meaning set forth in Section 12.5.1(iii).
1.160.    “SDEA” has the meaning set forth in Section 3.2.4.
1.161.    “Senior Officer” means, with respect to Lexicon, its Chief Executive Officer and with respect to Sanofi, its Executive Vice President, Global Divisions & Strategic Development (or such other member of Sanofi’s Executive Committee as may be the successor to such responsibilities).
1.162.    “SGLT1” or “SGLT2” means the applicable member of the sodium-glucose linked transporter family.
1.163.    “Specialist Efforts” has the meaning set forth in Section 4.8.1.
1.164.    “Specialists” has the meaning set forth in Section 4.8.1.
1.165.    “Study Data” means any and all data (together with the results of analysis thereof) generated as a result of any clinical trial of any Licensed Product.
1.166.    “Sublicensee” means a Person, other than an Affiliate or a Distributor, that is granted a sublicense by Sanofi or its Affiliate under the grants in Section 2.1, as provided in Section 2.3.
1.167.    “Supply Agreement” means any agreement entered into between the Parties with respect to supply of Licensed Compound, Licensed Product, placebo or comparator including pursuant to Section 6.1.1.

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1.168.    “T1DM” means type 1 diabetes.
1.169.    “T1DM Commercialization Plan” has the meaning set forth in Section 4.3.
1.170.    “T1DM Funding Agreements” means (a) the Clinical Development Funding Agreement, dated May 2, 2012, by and between Lexicon and McNair Medical Institute, LLC and (b) the Development Agreement, dated June 27, 2014, by and between Lexicon and JDRF International.
1.171.    “T1DM Net Sales” means Net Sales attributable to sales of Licensed Products for the treatment of T1DM patients in the (Co-)Promotion Territory as determined pursuant to Section 7.8.
1.172.    “T2DM” means type 2 diabetes.
1.173.    “T2DM Commercialization Plan” has the meaning set forth in Section 4.3.
1.174.    “T2DM CVOT” means that certain cardiovascular outcomes trial for the LX4211 Product in T2DM set forth in the Development Plan.
1.175.    “T2DM Net Sales” means all Net Sales in the Territory other than T1DM Net Sales.  For clarity, T2DM Net Sales shall not be restricted to Net Sales in T2DM, but shall include Net Sales in all indications other than T1DM.
1.176.    “Technology Transfer” has the meaning set forth in Section 6.2.
1.177.    “Technology Transfer Agreement” has the meaning set forth in Section 6.4.
1.178.    “Term” has the meaning set forth in Section 12.1.
1.179.    “Terminated Product” means a Licensed Product with respect to which this Agreement is terminated in its entirety or in one or more Terminated Territory(-ies) pursuant to ARTICLE 12.  In the case of termination of this Agreement with respect to a Licensed Product in less than the entire Territory, such Licensed Product shall be considered a Terminated Product only in the Terminated Territory(-ies).  In the case of a termination of this Agreement in its entirety, all Licensed Products shall be considered Terminated Products.
1.180.    “Terminated Territory” means the country(ies) with respect to which this Agreement is terminated pursuant to ARTICLE 12 or, if this Agreement is terminated in its entirety, the entire Territory.
1.181.    “Territory” means the entire world, other than the Terminated Territory.
1.182.    “Third Party” means any Person other than Lexicon, Sanofi and their respective Affiliates.
1.183.    “Third Party Acquirer” has the meaning set forth in Section 13.3.2.
1.184.    “Third Party Acquirer Family” has the meaning set forth in Section 13.3.2(i).
1.185.    “Third Party Claims” has the meaning set forth in Section 11.1.

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1.186.    “Third Party Infringement Claim” has the meaning set forth in Section 8.7.
1.187.    “Third Party Payments” has the meaning set forth in Section 7.3.3(ii).
1.188.    “Third Party Right” has the meaning set forth in Section 8.8.
1.189.    “Tier 2 Countries” means all current and future member countries of the European Union, the European Free Trade Association, or the Commonwealth of Independent States, Brazil, Russia, India, China, South Korea, Australia, New Zealand, Canada, Mexico, Chile, Argentina, Turkey, Taiwan, Singapore, Saudi Arabia, Kuwait, United Arab Emirates, Qatar, and Israel.
1.190.    “Trademark” means any word, name, symbol, color, shape, designation or any combination thereof, including any trademark, service mark, trade name, brand name, sub-brand name, trade dress, product configuration, program name, delivery form name, certification mark, collective mark, logo, tagline, slogan, design or business symbol, that functions as an identifier of source or origin, whether or not registered and all statutory and common law rights therein and all registrations and applications therefor, together with all goodwill associated with, or symbolized by, any of the foregoing.
1.191.    “Transferred Materials” has the meaning set forth in Section 2.4.1.
1.192.    “United States” or “U.S.” means the United States of America and its territories and possessions (including the District of Columbia and Puerto Rico).
1.193.    “Valid Claim” means a claim of any issued and unexpired (i) Sanofi Patent that meets the criteria set forth in clause(i) of Section 1.158, (ii) Lexicon Patent or (iii) Joint Patent, in each case ((i) through (iii)) existing in the country in the Territory in which the Licensed Product is sold to a Third Party at the time of such sale, which Sanofi Patent, Lexicon Patent or Joint Patent Covers the applicable Licensed Product, in each case the validity, enforceability or patentability of which has not been revoked, found or held unenforceable, invalid or unpatentable by a court, governmental agency, national or regional patent office or other appropriate body having competent jurisdiction in a decision for which no appeal can or has been taken, and which has not been affected or rendered unenforceable through disclaimer, irretrievable lapse, abandonment or dedication to the public.
1.194.    “VAT” has the meaning set forth in Section 7.11.2.
1.195.    “Voting Stock” has the meaning set forth in Section 1.23.

ARTICLE 2
GRANT OF RIGHTS

2.1.    Grants to Sanofi.  Lexicon hereby grants to Sanofi:
2.1.1.    an exclusive (including with regard to Lexicon and its Affiliates, but subject to a retained right by Lexicon and its Affiliates to exercise their rights and perform their obligations with respect to Licensed Products under this Agreement) license (or sublicense), with the right to grant sublicenses in accordance with Section 2.3, under the Lexicon Patents, the Lexicon Know-How and Lexicon’s interests in the Joint Intellectual Property Rights, to Exploit Licensed Products (and, for clarity, 

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the Licensed Compounds contained therein) for any and all uses in the Field in the Territory and, in the case of any Terminated Territory, to Develop and Manufacture Licensed Products (including the Licensed Compounds contained therein) in any country in the Terminated Territory in support of Development and Commercialization in the Field in the Territory; and
2.1.2.    an exclusive (including with regard to Lexicon and its Affiliates, but subject to a retained right by Lexicon and its Affiliates to exercise their rights and perform their obligations with respect to Licensed Products under this Agreement) license (or sublicense) and right of reference, with the right to grant sublicenses and further rights of reference in accordance with Section 2.3, under the Retained Regulatory Documentation to Exploit Licensed Products in the Field in the Territory and, in the case of any Terminated Territory, to Develop and Manufacture Licensed Products in any country in the Terminated Territory in support of Development and Commercialization in the Field in the Territory.
Lexicon agrees, pursuant to a separate trademark license agreement to be negotiated by the Parties, but for no additional financial consideration, to grant to Sanofi a royalty-free, non-exclusive license to use Lexicon’s Corporate Names solely as required by this Agreement or Applicable Law in order to Manufacture the Licensed Products (including the Licensed Compounds contained therein) in the Field in the Territory and for no other purpose.
2.2.    Grants to Lexicon.  Sanofi hereby grants to Lexicon a non-exclusive, royalty-free (sub)license and right of reference, without the right to grant sublicenses or further rights of reference (except to permitted subcontractors as provided in Section 3.1.5), under the Sanofi Patents, the Sanofi Know-How and the Assigned Regulatory Documentation and Sanofi’s interests in the Joint Intellectual Property Rights, to perform Lexicon’s obligations as set forth herein or in the Ancillary Agreements.  Except as expressly provided herein, Sanofi grants no other right or license, including any rights or licenses to the Sanofi Patents, the Sanofi Know-How, Sanofi’s interest in the Joint Intellectual Property, Assigned Regulatory Documentation or any other Patent or intellectual property rights not otherwise expressly granted herein.
2.3.    Sublicenses.  Sanofi shall have the right to grant sublicenses (or further rights of reference) to its Affiliates throughout the Territory.  In the Major Markets (except with respect to Manufacturing of the Licensed Product or Licensed Compounds in the Major Markets), for so long as the applicable Major Market remains part of the Territory, Sanofi shall have the right to grant sublicenses (or further rights of reference) to Third Parties (other than to service providers) only with Lexicon’s prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.  In all other cases, including service providers and Manufacturing worldwide, Sanofi shall have the right to grant sublicenses (or further rights of reference) to Third Parties, through multiple tiers of (sub)licensees, under the licenses and rights of reference granted in Section 2.1; provided however, that Sanofi shall provide Lexicon with prompt written notice of any such sublicense (or further right of reference).  Notwithstanding any sublicenses granted by Sanofi, Sanofi shall remain responsible and primarily liable for the performance of its obligations and the performance of its (sub)licensees hereunder.
2.4.    Disclosure of Know-How and Regulatory Documentation
2.4.1.    Lexicon shall and shall cause its Affiliates and Lexicon CMOs to disclose and make available to Sanofi, the Regulatory Documentation, Lexicon Know-How and other Information and Inventions, in each case, as set forth on Schedule 2.4 and existing as of the Effective Date (the materials required to be disclosed under this sentence, “Transferred Materials”) within [**] after the 

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Effective Date.  During the Term, each Party shall provide to the other Party all material Sanofi Know-How and Lexicon Know-How, as the case may be, that is reasonably necessary or useful for the other Party to perform its activities under this Agreement or any Ancillary Agreement and that comes into existence after the Effective Date, promptly after the earlier of the development, making, conception or reduction to practice of such Know-How.  During the Term, each Party shall provide to the other Party Joint Know-How that comes into existence after the Effective Date, promptly after the earlier of the development, making, conception or reduction to practice of such Joint Know-How by or on behalf of such disclosing Party.  
2.4.2.    Lexicon shall provide Sanofi with reasonable assistance required in order to transfer to Sanofi the Transferred Materials in a timely manner for Sanofi to Exploit the Licensed Products (including for clarity any adjustment to Lexicon’s existing Regulatory Documentation reasonably required by Sanofi).  Without limiting the foregoing, Lexicon shall make available to Sanofi, at Lexicon’s facilities, those of Lexicon’s representatives as Sanofi may reasonably request for purposes of transferring the Transferred Materials to Sanofi or for purposes of Sanofi acquiring expertise on the practical application of such Transferred Materials or assisting on issues arising during such Exploitation.
2.4.3.    All costs and expenses of Lexicon’s internal personnel and other resources and any out‐of‐pocket expenditures incurred by Lexicon in performing its obligations pursuant to this Section 2.4 shall be the responsibility of Lexicon; provided, however, that Sanofi shall be responsible for any payments required to be made to Third Parties in connection with such transfers to the extent incurred by Lexicon after the Effective Date.
2.4.4.    Within [**] following the Effective Date, the Parties shall create a mutually acceptable transfer plan, detailing the timeline and responsibilities of both Parties in connection with the transfer of the Transferred Materials from Lexicon to Sanofi (the “Know-How Transfer Plan”); provided, however, that the failure to create a Know-How Transfer Plan shall not relieve Lexicon of its obligations to conduct the disclosures and transfers contemplated by this Section 2.4.
2.5.    Confirmatory Patent License.  Lexicon shall, if requested to do so by Sanofi, immediately enter into confirmatory license agreements in such form as may be reasonably requested by Sanofi for purposes of recording the licenses granted under this Agreement with such patent offices in the Territory as Sanofi considers appropriate.  Until the execution of any such confirmatory licenses, so far as may be legally possible, Lexicon and Sanofi shall have the same rights in respect of the Lexicon Patents and be under the same obligations to each other in all respects as if the said confirmatory licenses had been executed.
2.6.    Exclusivity
2.6.1.    Neither Party nor any of its Affiliates shall, itself or through, with or on behalf of any Third Party, undertake in the Territory during the Royalty Term in the applicable country (i) any clinical Development of any SGLT1, SGLT2 or dual SGLT1/SGLT2 inhibitors that are not Licensed Products (a “Competing Product”), except clinical Development of a Competing Product (including the manufacture of validation batches thereof) conducted prior to the expiration of the Royalty Term in the applicable country reasonably in advance of the expiration of the Royalty Term in order to launch such Competing Product promptly following expiration of the Royalty Term or (ii) in the case of the Major Markets and the Tier 2 Countries, commercialization of any Competing Product, other than (a) pursuant to this Agreement, (b) in the case of Sanofi, Development and commercialization of a Generic Version of a 

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Competing Product in a country after the date on which there is no valid and unexpired Patent in such country that Covers (i) [**] or (ii) [**], (c) in the case of Sanofi, fee-for-service manufacturing of Competing Product(s) for Third Parties, or (d) in the case of Lexicon, and subject to Section 2.7, Development and commercialization of LX2761.
2.6.2.    Notwithstanding Section 2.6.1, if a Party or any of its Affiliates (the “Acquiring Party”) signs a definitive agreement with respect to a merger, acquisition or other transaction by which such Acquiring Party would acquire rights (other than residual financial rights) or an entity that has rights in a Competing Product, or would be acquired by an entity that has or has Affiliates that have rights in a Competing Product, as a result of which transaction Section 2.6.1, would (but for this Section 2.6.2) be violated, then the Acquiring Party (or other acquiring or surviving entity), as the case may be, shall have [**] from the closing of such transaction to either (i) divest itself of the rights with respect to the applicable restricted activities as described in 2.6.1 (the “Restricted Rights”) or (ii) terminate all of such restricted activities with respect to such Competing Product, unless the other Party (i.e., the non-Acquiring Party) agrees in writing that such divestiture is not required.  In such event, during such period (or in the case of such a writing from the other Party), the activities described in Section 2.6.1, with respect to such Competing Product shall not constitute a violation of Section 2.6.1.  Any divestiture under this Section 2.6.2 may occur by either (x) an outright sale of the Restricted Rights to a Third Party, or (y) an out-license of the Restricted Rights (exclusive as to the Acquiring Party (or other acquiring or surviving entity) and its Affiliates, except that in each case ((x) and (y)) (A) the Acquiring Party (or other acquiring or surviving entity) and its Affiliates may continue manufacturing or supplying the applicable Competing Product to the licensee or acquirer for a reasonable period of time, and conduct customary transitional services for the licensee or acquirer, as applicable, but may not otherwise continue to participate in Development or commercialization of the Competing Product, and (B) the Acquiring Party (or other acquiring or surviving entity) and its Affiliates may retain residual financial rights to such Competing Product and reversion rights in the case of a termination of the out-license agreement (provided that upon such a reversion, the Acquiring Party would again be subject to the divestiture/termination requirements of this Section 2.6.2 if Section 2.6.1 were to apply upon such reversion).
2.7.    LX2761 Rights
2.7.1.    Development and Commercialization by Lexicon.  Except for the promotional restrictions set forth in the (Co-)Promotion Terms, nothing in Section 2.6 or elsewhere in this Agreement shall restrict Lexicon from Developing and commercializing, at Lexicon’s sole discretion, LX2761 and products that include LX2761, subject to Lexicon’s obligations and Sanofi’s rights as set forth in this Section 2.7.  Lexicon agrees that its Development activities under this Agreement with respect to LX4211 shall have priority over the Development of LX2761, and that Lexicon shall not prioritize LX2761 in any manner detrimental to its Development obligations with respect to LX4211 or divert material resources from its Development of LX4211 under the T1DM Development Plan without the consent of Sanofi.   Except as otherwise agreed by the Parties in a definitive agreement entered into by the Parties pursuant to Section 2.7.2 or Section 2.7.3, and notwithstanding anything to the contrary elsewhere in this Agreement, all LX2761 Study Data (as defined below) shall be solely owned by Lexicon.  Lexicon shall provide Sanofi a development plan describing Lexicon’s Development activities with respect to LX2761 prior to commencing clinical development for LX2761 and thereafter shall provide Sanofi with any material amendments to such development plan until Sanofi has no further option or rights hereunder with respect to the Development and commercialization of LX2761.  Lexicon shall not enter into any agreements with any Third Parties that would deprive Sanofi of its rights under this Section 2.7.

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2.7.2.    Sanofi Initial Right of First Negotiation after PoC.  Sanofi shall have an initial right of first negotiation to opt-in to the further Development and commercialization of LX2761 if Lexicon Develops LX2761 in T1DM or T2DM through PoC Successful Completion, in accordance with the following:
(i)    Lexicon shall provide Sanofi with prompt written notice following PoC Successful Completion.  Within [**] after such notice, Sanofi shall provide Lexicon with written notice as to whether or not Sanofi is exercising its initial right of first negotiation with respect to LX2761 as provided in this Section 2.7.2.
(ii)    If Sanofi exercises such right of first negotiation, Lexicon shall promptly provide Sanofi with access, to the extent reasonably required to permit fulsome due diligence, to data (together with the results of analysis thereof) generated in Lexicon’s pre-clinical and clinical studies of LX2761, including study reports and, if requested by Sanofi, raw data (the “LX2761 Study Data”) which is then available to Lexicon, a statement of LX2761 Development Costs incurred between the Effective Date and PoC Successful Completion (the “ROFN1 Development Costs”), and Lexicon’s then-current plan for the further Development of LX2761.  Lexicon shall also make its personnel and additional material information relating to the LX2761 program reasonably available to Sanofi upon Sanofi’s request to assist Sanofi with its due diligence of the LX2761 program.  Sanofi shall have a right to audit the ROFN1 Development Costs pursuant to Section 7.14.
(iii)    Upon written notice from Sanofi that Sanofi desires to negotiate terms for further Development and commercialization of LX2761, which notice must be provided by Sanofi to Lexicon within [**] after Lexicon first makes the LX2761 Study Data available to Sanofi pursuant to paragraph (ii) above, the Parties shall commence good faith negotiations for a definitive agreement under which Lexicon would grant Sanofi an exclusive license for the further Development and commercialization of LX2761 on a worldwide basis with such exceptions as may be agreed by the Parties in writing.  Such agreement shall include an upfront payment from Sanofi to Lexicon equal to [**].  Except to the extent otherwise agreed by the Parties, such agreement shall also provide for the following:
(1)    If the Parties agree on a development plan designed to achieve regulatory approval for both T1DM and T2DM, then Lexicon would [**] and Sanofi would [**];
(2)    If the Parties agree on a development plan designed to achieve regulatory approval in T1DM but not T2DM, then Lexicon and Sanofi would [**];
(3)    If the Parties agree on a development plan designed to achieve regulatory approval in T2DM but not T1DM, then Lexicon would [**] and Sanofi would [**].
Additional terms of such definitive agreement, including milestones and royalties to be paid to Lexicon and Lexicon’s participation in the promotion of resulting products comprised of or containing LX2761, shall be subject to good faith negotiations between the Parties.
(iv)    If Sanofi does not exercise its right of first negotiation pursuant to paragraph (i), does not notify Lexicon that it desires to proceed with the negotiation of a definitive agreement providing for the further Development and commercialization of LX2761 pursuant to paragraph (iii), or fails to provide timely notice pursuant to paragraph (i) or (iii) of this Section 2.7.2, or if the Parties agree to cease negotiations or do not enter into a definitive license agreement under paragraph (iii) of this Section 2.7.2 within [**] after such negotiations commence (unless such period is extended by the mutual agreement of 

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the Parties in writing), then Lexicon shall have the right to further Develop and commercialize LX2761 in T1DM or T2DM, subject (if applicable) to Sanofi’s second right of first negotiation pursuant to Section 2.7.3 (but free of any and all other obligations to Sanofi with respect to LX2761 other than as described in Section 2.7.1), at Lexicon’s option in its sole discretion.
2.7.3.    Sanofi Second Right of First Negotiation.  If the Parties do not enter into a definitive agreement providing for the further Development and commercialization of LX2761 pursuant to Section 2.7.2 and Lexicon further Develops LX2761 in T2DM following PoC Successful Completion pursuant to Section 2.7.2(iv), then, following P3 Successful Completion, and in the event (and only in the event) Lexicon achieves P3 Successful Completion within [**] after the Effective Date, Sanofi shall have a second right of first negotiation to opt-in to the further Development and commercialization of LX2761, in accordance with the following:
(i)    Lexicon shall provide Sanofi with prompt written notice of the achievement of P3 Successful Completion.  Within [**] after such notice, Sanofi shall provide Lexicon with written notice as to whether or not Sanofi is exercising its second right of first negotiation with respect to LX2761 as provided herein.
(ii)    If Sanofi exercises such right of first negotiation, Lexicon shall promptly provide Sanofi with access, to the extent reasonably required to permit fulsome due diligence, to LX2761 Study Data that has been generated by Lexicon (including study reports and, if requested by Sanofi, raw data), a statement of LX2761 Development Costs incurred with respect to T2DM between the Effective Date and P3 Successful Completion (the “ROFN2 Development Costs”), and Lexicon’s then-current plan for the further Development of LX2761.  Lexicon shall also make its personnel and additional material information relating to the LX2761 program reasonably available to Sanofi upon Sanofi’s request to assist Sanofi with its due diligence of the LX2761 program.  Sanofi shall have a right to audit the ROFN2 Development Costs pursuant to Section 7.14.
(iii)    Upon written notice from Sanofi that Sanofi desires to negotiate terms for further Development and commercialization of LX2761 in T2DM (and, if applicable, in T1DM outside the United States), which notice must be provided by Sanofi to Lexicon within [**] after Lexicon first makes the LX2761 Study Data available to Sanofi pursuant to paragraph (ii) above, the Parties shall commence good faith negotiations for a definitive agreement under which Lexicon would grant Sanofi an exclusive license for the further Development and commercialization of LX2761 in T2DM (and, if applicable, in T1DM outside the United States).  Such agreement shall include an upfront payment from Sanofi to Lexicon equal to [**].  Except to the extent otherwise agreed by the Parties, such agreement shall also provide that Sanofi would assume [**].  Additional terms of such definitive agreement, including milestones and royalties to be paid to Lexicon, Lexicon’s participation in the promotion of resulting products comprised of or containing LX2761 for T2DM, and an additional upfront payment if such agreement includes rights to LX2761 in T1DM outside the United States, shall be subject to good faith negotiations between the Parties.
(iv)    If Sanofi does not exercise its second right of first negotiation pursuant to paragraph (i), does not notify Lexicon that it desires to proceed with the negotiation of a definitive agreement providing for the further Development and commercialization of LX2761 in T2DM pursuant to paragraph (iii), or fails to provide timely notice pursuant to paragraph (i) or (iii) of this Section 2.7.3, or if the Parties agree to cease negotiations or do not enter into a definitive license agreement under paragraph (iii) of this Section 2.7.3 within [**] after such negotiations commence (unless such period is extended by the mutual 

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agreement of the Parties in writing), then Lexicon shall have the right to further Develop and commercialize LX2761 in T2DM and T1DM worldwide except as provided in the second sentence of Section 2.7.1 and the promotional restrictions set forth in the (Co-)Promotion Terms, and Sanofi shall have no further option or rights hereunder with respect to the Development and commercialization of LX2761.
(v)    If Sanofi exercises its second right of first negotiation pursuant to Section 2.7.3(i), elects to obtain rights to LX2761 in T1DM outside the United States, and the Parties enter into a definitive agreement with respect thereto, any subsequent Development or commercialization of LX2761 in T1DM by Lexicon outside the United States shall be subject to the terms of such agreement.

ARTICLE 3
DEVELOPMENT AND REGULATORY ACTIVITIES

3.1.    Development
3.1.1.    In General.  Except as otherwise provided in this Agreement, Lexicon shall have the sole right and responsibility for all aspects of the Development of Licensed Products for T1DM at its expense (other than regulatory matters, which are governed by Section 3.2) which shall be conducted in accordance with and pursuant to the Development Plan.  Otherwise, subject to the Lexicon Consent Right and the other terms of this Agreement, Sanofi shall have the sole right and responsibility for all aspects of the Development of Licensed Products (other than regulatory matters, which are governed by Section 3.2), with Development Costs shared as set forth in Section 7.6, which shall be conducted in accordance with and pursuant to the Development Plan.  The Parties shall cooperate in performing such Development activities as provided in this ARTICLE 3.
3.1.2.    Development.
(i)    Attached hereto as Schedule 3.1.2 is the initial plan for the Development of the Licensed Products for T1DM and T2DM in the Major Markets in the Territory as of the Execution Date (such plan, as amended from time to time in accordance with this Agreement, the “Development Plan”), which plan shall describe the Development activities and, with respect to Development activities for T2DM, the budget therefor, including the internal personnel and other resources and out‐of‐pocket expenditures required for Sanofi to perform such activities; provided that upon the earlier of (a) the Cost-Sharing Trigger Point and (b) the date upon which Lexicon has paid one hundred million Dollars ($100,000,000) of Development Costs in connection with T2DM Development under and in accordance with the Development Plan, the Development Plan shall not contain such budget.
(ii)    The JSC shall review the Development Plan at least [**] for the purpose of considering appropriate amendments thereto.  In addition, each Party, through its representatives on the JSC, may propose amendments to the Development Plan for Development activities at any time.  As part of the process of amending the Development Plan, the JSC shall determine the internal personnel and other resources and out‐of‐pocket expenditures required for Sanofi with respect to Development activities for T2DM for the applicable Calendar Year and for each Calendar Quarter within such Calendar Year.  All internal personnel and resources shall be expressed in terms of FTEs and the budgeted cost shall be calculated using the relevant FTE Rates.
(iii)    Under the direction and supervision of the DRC and the JSC as set forth in ARTICLE 5, each Party shall use Commercially Reasonable Efforts to perform the responsibilities 

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assigned to it under the Development Plan and shall use Commercially Reasonable Efforts to do so in accordance with the timelines set forth in the Development Plan, in good scientific manner and in compliance with all Applicable Law by allocating sufficient time, effort, equipment, and skilled personnel to complete such Development activities; provided that, (a) with respect to Lexicon, such obligation shall be subject to Sanofi’s and its Affiliates’ performing their respective obligations hereunder and under the Ancillary Agreements on which Lexicon’s performance depends, and (b) with respect to Sanofi, Sanofi shall not be in breach of this Section 3.1.2(iii), to the extent that its failure to perform its obligations under this Section 3.1.2(iii) arises from Lexicon’s and its Affiliates’ failure to perform their respective obligations hereunder and under the Ancillary Agreements on which Sanofi’s performance depends.
(iv)    If Lexicon elects to permanently cease all Development in T1DM before completion of the Development activities set forth in the Development Plan, Lexicon shall promptly notify Sanofi thereof, and Sanofi shall have the right, at Sanofi’s sole election, to assume and complete any such Development activities.  If Sanofi exercises such right, such exercise shall be Sanofi’s sole and exclusive remedy and Lexicon’s sole and exclusive liability for any such cessation by Lexicon (but this sentence shall not limit any liability of Lexicon for a material breach of this Agreement other than its diligence obligations under Sections 3.1.2(iii) and 3.1.4).  If Sanofi so elects to assume and complete any of the Development activities under the Development Plan with respect to T1DM, the actions set forth in the remainder of this Section 3.1.2(iv) shall be Sanofi’s sole and exclusive remedy and Lexicon’s sole and exclusive liability for any such cessation by Lexicon (but this sentence shall not limit any liability of Lexicon for a material breach of this Agreement other than its diligence obligations under Sections 3.1.2(iii) and 3.1.4) and, to the extent reasonably requested by Sanofi in writing, Lexicon shall cooperate in facilitating the orderly transfer of such Development activities and ensure that Sanofi obtains the material benefits of any or all Third Party agreements relating to such Development activities, in conformity with any Applicable Law.  If Sanofi does not elect to assume any such Development activities, Lexicon shall wind down such Development activities in accordance with Applicable Law at its sole cost and expense.  In the event of Lexicon’s cessation of Development in T1DM in accordance with this Section 3.1.2(iv), the licenses granted by Sanofi to Lexicon under Section 2.2, the Parties’ obligations under Section 2.6.1 with respect to T1DM, the Quality Agreements under Section 3.1.2(v), the JCC, Lexicon’s rights under Section 3.2.2 to participate in meetings with Regulatory Authorities, and Lexicon’s (Co-)Promotion Rights under Section 4.8 and any (Co-)Promotion Agreement shall terminate, effective upon Lexicon’s notice with respect thereto; Sanofi shall be responsible for any and all additional T1DM Development Costs (if it exercises its right to assume and continue Development in T1DM) and all T1DM Commercialization Costs and Medical Affairs Costs; Lexicon shall not be entitled to the milestone payments contemplated by Section 7.2.1(b)(i) and Section 7.2.1(b)(ii), to the extent subsequently achieved based on Development activities subsequently conducted by Sanofi under its right to assume and continue such Development; and the royalty rates described in Section 7.3.1(ii) shall apply to all Net Sales in the United States, regardless of whether such Net Sales would otherwise constitute T1DM Net Sales or T2DM Net Sales.
(v)    Quality.
(1)    Within [**] after the Effective Date, but in any event prior to shipment of clinical quantities of Licensed Product or placebo pursuant to Section 6.1.1, Lexicon and Sanofi shall enter into a reasonable and customary Quality Agreement that shall set forth the terms and conditions with respect to quality regarding the conduct of the Parties’ Development activities under the Development Plan, including supply of such clinical material by Lexicon to Sanofi, which agreement shall include (a) coordination regarding inspections by Regulatory Authorities and (b) the exchange of information between the Parties regarding the foregoing and quality issues in general.

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(2)    The Quality Agreements shall provide for each Party’s right to conduct quality audits of the other Party and its subcontractors prior to the Technology Transfer and thereafter with respect to T1DM and T2DM clinical studies, as deemed necessary by the auditing Party to secure the regulatory status of the Licensed Product in the Territory.
(3)    Each Party shall be notified reasonably in advance of any audit or inspection intended to be conducted by a Regulatory Authority at any of the other Party’s or any of its subcontractor’s facilities or operations related to the Development or Manufacture of the Licensed Products.  The Parties shall reasonably cooperate with each other with respect to such audits or inspections.
(4)    Promptly following the Effective Date, the Parties shall appoint quality contact persons within their respective organization, with the mission to oversee the negotiation and implementation of the Quality Agreement.  The Parties shall maintain scientific records, in sufficient detail and in sound scientific manner appropriate for patent and regulatory purposes and in compliance with Applicable Law with respect to activities intended to be submitted in the context of any Regulatory Approval hereunder. The Quality Agreement shall describe in sufficient detail how the Parties intend to manage any quality-related issues likely to impact the activities to be performed under this Agreement.
3.1.3.    Decision Points and Positive Results for Development Activities.  The Development Plan sets forth certain decision points associated with the completion of certain clinical studies (the “Decision Points”).  At each Decision Point, within [**] after the earlier of (i) [**] and (ii) [**], the JSC shall determine whether or not Positive Results have been achieved.  With respect to a given Decision Point, “Positive Results” means that, based on review of [**] (in the case of clause (i)) or [**] (in the case of clause (ii)), the primary endpoint of the study was achieved (or, in the case of the Initial Data, as applicable, the cardiovascular safety results supporting the filing of a New Drug Application for Regulatory Approval consistent with applicable FDA guidance for cardiovascular safety of diabetes drugs) with overall safety and efficacy supporting continued Development or application for Regulatory Approval.  If Positive Results have not been achieved, then (a) Sanofi may elect to terminate this Agreement as set forth in Section 12.3.2(i)(b) or (b) the JSC may elect to immediately discontinue or cancel all or part of any Development activities under the Development Plan that are conditioned on the achievement of Positive Results with respect to the applicable Decision Point, including any ongoing or planned clinical studies or regulatory filings, or to modify the Development Plan as it deems appropriate in good faith, in the interest of securing Regulatory Approval for a Licensed Product in the Field in the Major Markets in the Territory.
3.1.4.    Diligence.  Sanofi shall use Commercially Reasonable Efforts to Develop at least one LX4211 Product in the Major Markets in the Territory for T2DM as set forth in the Development Plan, but Sanofi shall not be in breach of this Section 3.1.4 to the extent that a failure to do so arises from Lexicon’s and its Affiliates’ failure to perform their respective obligations hereunder and under the Ancillary Agreements on which Sanofi’s performance depends.  Lexicon shall use Commercially Reasonable Efforts to Develop at least one LX4211 Product for T1DM as set forth in the Development Plan, and, subject to the Parties’ incorporating such requirements in the Development Plan, to conduct any Required Phase 4 Studies relating to the United States and European Union Regulatory Approvals, subject to Sanofi’s and its Affiliates’ performing their respective obligations hereunder and under the Ancillary Agreements and subject to Lexicon’s right to cease such Development under Section 3.1.2(v).  Each Party acknowledges and agrees that nothing in this Section 3.1.4 is intended, or shall be construed, to require the other Party to Develop more than one Licensed Product at any given time or to Develop any other Licensed Product other than the LX4211 Product.

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3.1.5.    Subcontracting.  Each Party shall have the right to subcontract material portions of its Development activities to a Third Party (e.g., engagement of a CRO or clinical manufacturer prior to commencement of clinical activities or commercial Manufacture) (i) to the extent expressly provided for in the Development Plan or Quality Agreements, which shall set forth certain Development activities for which corresponding subcontractors have been pre-approved, or (ii) in the case that such subcontracting has not been pre-approved in the Development Plan, with the approval of the JSC, which approval shall not be unreasonably withheld, conditioned or delayed.  Either Party shall have the right to subcontract to a Third Party without approval any of its Development activities to which the foregoing sentence does not apply, and for the avoidance of doubt, the foregoing sentence does not apply to general services not specific to the Licensed Products (e.g., copying and shipping).
3.1.6.    Development Records.  Each Party shall maintain, in good scientific manner, complete and accurate books and records pertaining to its Development activities, in sufficient detail to verify compliance with its obligations under this Agreement and which shall be appropriate for patent and regulatory purposes, in compliance with Applicable Law, including good laboratory practices, good manufacturing practices, good pharmacovigilance practices and good clinical practices, and properly reflect all work done and results achieved in the performance of its Development activities.  Such books and records shall be retained by Lexicon or Sanofi, as the case maybe, for at least [**] after the expiration or termination of this Agreement in its entirety or for such longer period as may be required by Applicable Law.  Each Party shall have the right, during normal business hours and upon reasonable notice, to inspect and copy all records of the other Party maintained pursuant to this Section 3.1.6; provided that the inspecting Party shall maintain such records and the information disclosed therein in confidence in accordance with ARTICLE 9.
3.1.7.    Development Reports.  Without limiting Section 3.1.6, on a semi-annual basis within [**] after January 1 and July 1 of each Calendar Year during the Term, each Party shall provide to the JSC or DRC, as applicable, a written report of such Development activities conducted by such Party during such Calendar Quarter.  Such report shall contain reasonable detail sufficient to enable the JSC or DRC, as applicable, to assess such Party’s performance of activities pursuant to and compliance with the Development Plan, including:  (i) the Party’s, or its Affiliates’ or its or their Sublicensees’ activities with respect to achieving Regulatory Approvals of such Licensed Product in the Major Markets in the Territory, (ii) clinical study results and results of other Development activities and (iii) other Development matters listed on Schedule 3.1.7.  In addition, each Party shall provide the other Party with prompt notification of material developments arising in the course of Development activities conducted by such Party.
3.2.    Regulatory Activities.
3.2.1.    Regulatory Approvals.
(i)    The Parties shall coordinate in good faith to transfer those INDs owned by Lexicon or its Affiliates relating to the Licensed Compounds or Licensed Products.  To effect the foregoing, within [**] after the Effective Date, the DRC shall finalize a plan for the transfer to Sanofi or withdrawal of such INDs, which transfer shall be coordinated with the transfer of required safety and other information hereunder.  Once adopted, the Parties shall use their reasonable efforts to effect the plan on the agreed upon timeline.

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(ii)    Except to the extent prohibited by Applicable Law or as otherwise specified herein or agreed by the DRC, all Regulatory Documentation (including all Regulatory Approvals) relating to the Licensed Compounds or Licensed Products with respect to the Territory, other than the Retained Regulatory Documentation, including any retained INDs, shall be owned by and shall be the sole property and held in the name of Sanofi or its Affiliate, Sublicensee or designee.
(iii)    Effective as of the date of transfer of the applicable Regulatory Documentation (including INDs) pursuant to the agreed plan under Section 3.2.1(i), Lexicon hereby assigns to Sanofi all of its right, title and interest to such Regulatory Documentation, including all Existing Regulatory Documentation.  Any Regulatory Documentation unless and until assigned pursuant to this Section shall be the “Retained Regulatory Documentation.”  Once assigned to Sanofi, such Regulatory Documentation shall be deemed the “Assigned Regulatory Documentation.”  Promptly following any such assignment of Regulatory Documentation, Sanofi shall grant to Lexicon such authorizations under the Assigned Regulatory Documentation necessary or desirable to enable Lexicon to perform the Development activities for which Lexicon is responsible under the Development Plan.
(iv)    With regard to any assignments made or required under this Section 3.2.1, Lexicon shall duly execute and deliver or cause to be duly executed and delivered, such instruments and shall do and cause to be done such acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary under or as Sanofi may reasonably request in connection with or to carry out more effectively the purpose of or to better assure and confirm unto Sanofi its rights under this Section 3.2.1.  In addition, concurrent with the assignments described in this Section 3.2.1, with respect to any IND to be transferred to Sanofi, Lexicon shall deliver to Sanofi a letter to the applicable Regulatory Authority transferring to Sanofi the applicable IND, which letters shall be mutually agreed upon by the Parties in advance of the transfer of the applicable IND.
(v)    The holder of any IND or Drug Approval Application shall be considered the “Approval Holder”.  The Approval Holder or its designee shall own such IND or Drug Approval Application and shall have the sole right and responsibility, at its sole expense, to make all other submissions with the Regulatory Authorities relating thereto.  In the case in which Lexicon is the Approval Holder, it shall take direction from Sanofi with regard to T2DM and otherwise comply with this Agreement.  Unless otherwise agreed, the Approval Holder shall have the right to conduct all meetings (subject to Section 3.2.2) and correspondence and communications with Regulatory Authorities regarding matters relating to such Drug Approval Applications as to which it is the Approval Holder.  The Approval Holder shall report all Adverse Events to Regulatory Authorities if and to the extent required by Applicable Law under such Drug Approval Applications as to which it is the Approval Holder.
(vi)    Lexicon shall only use any Retained Regulatory Documentation in a manner consistent with this Agreement to perform its obligations hereunder and agrees to comply with Applicable Law with respect thereto and act at the reasonable direction of Sanofi and otherwise reasonably cooperate with Sanofi in order to afford to Sanofi the benefits of such Retained Regulatory Documentation as if it were held in the name of Sanofi, including making any filings as reasonably requested by Sanofi to enable Sanofi to commence Development Activities as contemplated in the Development Plan under any Retained Regulatory Documentation.
(vii)    Following, and subject to, the successful completion by the Parties of the Development activities in accordance with the Development Plan with respect to T2DM or T1DM, as the case may be, for the LX4211 Product, Sanofi shall use Commercially Reasonable Efforts to obtain 

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Regulatory Approval for the LX4211 Product in the Major Markets in the Territory (in the case of the European Major Markets, such Regulatory Approval may be a centralized Regulatory Approval from the European Commission) for such indication, but shall be excused from such obligation to the extent Lexicon has failed to perform its obligations hereunder and under the Ancillary Agreements upon which Sanofi is expecting to rely in connection with the applicable Sanofi activity.
(viii)    Lexicon shall cooperate and support Sanofi, as may be reasonably necessary, in obtaining Regulatory Approvals for the Licensed Products and in the activities in support thereof, including providing all documents or other materials in the possession or control or Lexicon or any of its Affiliates, Lexicon CMOs or Lexicon CROs and participating in regulatory meetings at the request of Sanofi, in each case, as may be necessary or useful for Sanofi or any of its Affiliates or its or their Sublicensees to obtain Regulatory Approvals for the Licensed Products.  Lexicon shall invoice Sanofi for, and Sanofi shall pay to Lexicon within [**] following any such invoice, the out-of-pocket costs and expenses incurred by Lexicon and payable to Third Parties in connection with providing any such cooperation, support or participation requested by Sanofi.  For clarity, such reimbursement applies only to out-of-pocket costs incurred in connection with providing cooperation pursuant to the foregoing and not in connection with the exercise of any rights under this Agreement by Lexicon.  Any such costs shall be considered Development Costs incurred by Sanofi for purposes of Section 7.6.
(ix)    The Approval Holder shall provide the Party that is not the Approval Holder with a reasonable opportunity to review and comment on all major regulatory submissions and documents (i.e., INDs, Drug Approval Applications, material labeling supplements, Regulatory Authority meeting requests and core data sheets) submitted to the Regulatory Authorities in the Major Markets in the Territory (including the EMA).
(x)    The Approval Holder shall consider in good faith any such comments of the other Party and otherwise act in a manner consistent with this Agreement.
(xi)    Sanofi shall notify Lexicon of the filing and approval of any Drug Approval Application for a Licensed Product or major supplements or amendments thereto with or by a Regulatory Authority in a Major Market in the Territory (or the European Commission or EMA, as applicable), promptly after the filing or approval thereof.
3.2.2.    Meetings with Regulatory Authorities.   The Approval Holder has the right and responsibility to prepare for and lead all meetings with Regulatory Authorities regarding the Licensed Compounds and Licensed Products under the Regulatory Approvals as to which it is the Approval Holder; provided that, subject to Applicable Law, the other Party shall have the right to participate fully in all such meetings until completion of the Core Development Plan, unless such activities have been abandoned by the Parties hereunder, and, at the reasonable request of the Approval Holder, shall participate fully in all such meetings led by the Approval Holder.  Except to the extent prohibited by Applicable Law, until completion of the Core Development Plan, unless such activities have been abandoned by the Parties hereunder, the Approval Holder shall afford the other Party a reasonable period of time to review and comment on all substantive communications with Regulatory Authorities by or on behalf of the Approval Holder and its Affiliates (including at such meetings and in anticipation of such meetings).  Until completion of the Core Development Plan, unless such activities have been abandoned by the Parties hereunder, each Party shall notify the other Party at least [**] (or shorter if such notice period is not practicable) in advance of any meeting with Regulatory Authorities to which it becomes aware regarding the Licensed Compounds, Licensed Products or Development activities.

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3.2.3.    Recalls, Suspensions or Withdrawals.  In the event that any government agency or authority issues or requests a recall or takes similar action in connection with the Licensed Compounds or the Licensed Products, or in the event either Party determines that an event, incident or circumstance has occurred that may result in the need for a recall or market withdrawal, the Party notified of or desiring such recall or market withdrawal shall as promptly as reasonably practical under the circumstances advise the other Party thereof.  As between the Parties, Sanofi shall have the right to make the final determination whether to voluntarily implement any such recall, market suspension or market withdrawal in the Territory.  If a recall, market suspension or market withdrawal is mandated by a Regulatory Authority in the Territory, as between the Parties, Sanofi shall initiate such a recall, market suspension or market withdrawal in compliance with Applicable Law.  For all recalls, market suspensions or market withdrawals undertaken pursuant to this Section 3.2.3, as between the Parties, Sanofi shall be solely responsible for the execution and Lexicon shall reasonably cooperate in all such efforts.  Subject to ARTICLE 11, Sanofi shall be responsible for all costs of any such recall, market suspension or market withdrawal, except to the extent that a recall, market suspension or market withdrawal resulted from Lexicon’s or its Affiliate’s breach of its obligations hereunder or under any Ancillary Agreement or from Lexicon’s or its Affiliate’s or subcontractor’s breach of this Agreement or its negligence or willful misconduct, in which case, Lexicon shall bear the expense of such recall, market suspension or market withdrawal.
3.2.4.     Global Safety Database. Promptly after the Effective Date, in accordance with a plan to be established by the DRC in coordination with the transfer of Regulatory Documentation contemplated by Section 3.2.1, Lexicon shall transfer the global safety database for Licensed Products to Sanofi.  Prior to such transfer, Lexicon shall bear the costs and expenses of holding and maintaining such global safety database.  Following such transfer, Sanofi shall hold and maintain such global safety database (at Sanofi’s expense, except to the extent included in the Development Plan).  Each Party shall provide the other Party with all information necessary or desirable for such other Party to comply with its pharmacovigilance responsibilities in the Territory, including, as applicable, any Adverse Events or other adverse drug experiences (including those events or experiences that are required to be reported to the FDA under 21 C.F.R. sections 312.32 or 314.80 or to other Regulatory Authorities under corresponding Applicable Law outside the United States), from pre-clinical or clinical laboratory, animal toxicology and pharmacology studies, clinical studies and commercial experiences with a Licensed Product, in each case in the form reasonably requested by such other Party.  The Parties shall promptly negotiate, and no later than the first dosing of the first human subject in clinical studies commenced after the Execution Date for a Licensed Product for T2DM or as otherwise required by Applicable Law, enter into a reasonable and customary safety data exchange agreement (the “SDEA”), which shall describe the responsibilities and detailed procedures to be followed by the Parties with regard to all pharmacovigilance obligations to ensure safety surveillance for the Licensed Products under this Agreement.

ARTICLE 4
COMMERCIALIZATION

4.1.    In General.  As between the Parties, Sanofi (itself or through its Affiliates or its or their Sublicensees) shall have the sole right to Commercialize Licensed Products in the Territory at its sole cost and expense, subject to Lexicon’s (Co-)Promotion Right pursuant to the (Co-)Promotion Agreement.
4.2.    Diligence.  Sanofi shall use Commercially Reasonable Efforts to Commercialize the LX4211 Product in the Major Markets in the Territory for T1DM and T2DM, following receipt of Regulatory Approval for the applicable indication in the applicable country; provided that if Lexicon 

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exercises the (Co-)Promotion Right, Sanofi’s obligation to use Commercially Reasonable Efforts shall not extend to the responsibilities allocated to Lexicon under the (Co-)Promotion Agreement and applicable T1DM Commercialization Plan; provided further Sanofi shall be excused from such obligation to the extent Lexicon fails to perform its obligations on which Sanofi’s performance depends.  If Lexicon exercises the (Co-)Promotion Right, Lexicon shall use Commercially Reasonable Efforts to perform its obligations in the United States under the T1DM Commercialization Plan.  Without limiting Sanofi’s obligations hereunder, Sanofi shall promptly notify Lexicon of any decision to cease using Commercially Reasonable Efforts to Commercialize any Licensed Product in any Major Market in the Territory.  Lexicon acknowledges and agrees that nothing in this Section 4.2 is intended, or shall be construed, to require Sanofi to Commercialize more than one Licensed Product at any given time or to Commercialize any other Licensed Product other than the LX4211 Product.  If Sanofi implements and uses Commercially Reasonable Efforts to carry out its responsibilities under the T1DM Commercialization Plan pursuant to Section 4.3, Sanofi shall be deemed to have satisfied its obligation to use Commercially Reasonable Efforts under this Section 4.2 and shall have no liability resulting from any failure of the activities described in the T1DM Commercialization Plan.
4.3.    Commercialization Plan  No later than [**] prior to the anticipated First Commercial Sale of a Licensed Product for T1DM, (i) if Lexicon has exercised the (Co-)Promotion Right, (a) Lexicon shall prepare and provide to the JCC for review and discussion a proposed written plan for the Commercialization of the Licensed Product for T1DM in the (Co-)Promotion Territory, which shall include a reasonably detailed description of the Parties’ anticipated Commercialization activities and Medical Affairs Activities relating to T1DM in the (Co-)Promotion Territory, and the anticipated timeline and budget therefor and (b) Sanofi shall prepare and provide to the JCC for review and discussion a proposed written plan for the Commercialization of the Licensed Product for T1DM in the Territory outside of the (Co-)Promotion Territory, which shall include global branding strategy and a launch plan, or (ii) if Lexicon has not exercised the (Co-)Promotion Right, Sanofi shall prepare and provide to the JCC for review and discussion a proposed written plan for the Commercialization of the Licensed Product for T1DM in the Territory, which shall include a global branding strategy and a launch plan (in either case, ((i) or (ii)) the “T1DM Commercialization Plan”).  No later than [**] prior to the anticipated First Commercial Sale of a Licensed Product for T2DM, Sanofi shall prepare and provide to the JCC for review and discussion a written plan for the Commercialization of the Licensed Product for T2DM in the Territory, which shall include global branding strategy and a launch plan and, if Lexicon has exercised the (Co-)Promotion Right, a reasonably detailed description of Sanofi’s anticipated Commercialization activities and Medical Affairs Activities relating to T2DM in the (Co-)Promotion Territory (the “T2DM Commercialization Plan”).  The T1DM Commercialization Plan and the T2DM Commercialization Plan are sometimes referred to herein individually as a “Commercialization Plan” and collectively as the “Commercialization Plans”.  The Party that initially prepared the applicable Commercialization Plan pursuant to this Section 4.3 above shall periodically (at least on an [**] basis) prepare updates and amendments to such Commercialization Plan to reflect changes in its plans, including in response to changes in the marketplace, relative success of the Licensed Product for T1DM or T2DM, as applicable, and other relevant factors influencing such plans and activities, and shall submit such updates and amendments to the JCC for review and discussion (which shall include the coordination of strategies for Commercialization activities and Medical Affairs Activities across the T1DM and T2DM indications pursuant to Section 5.4.1) before adopting such updates and amendments.
4.4.    Booking of Sales; Distribution  As between the Parties, Sanofi shall have the sole right to invoice and book sales, establish all terms of sale (including pricing and discounts) and warehouse and distribute the Licensed Products in the Territory and perform or cause to be performed all related 

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services.  As between the Parties, Sanofi shall handle all returns, recalls or withdrawals, order processing, invoicing, collection, distribution and inventory management with respect to the Licensed Products in the Territory.
4.5.    Statements and Compliance with Applicable Law.  Each Party shall and shall cause its Affiliates to, comply with all Applicable Law with respect to its Commercialization of Licensed Products hereunder.  
4.6.    Subcontracting; Distributors.  Subject to Section 2.3 and Lexicon’s (Co-)Promotion Right pursuant to the (Co-)Promotion Agreement, each Party shall have the right to subcontract any of its Commercialization activities to a Third Party (including by appointing one or more contract sales forces or, in the case of Sanofi, co-promotion partners or Distributors); provided, however, neither Party may subcontract more than [**] of its Detailing efforts with respect to Licensed Products under this Agreement or the (Co-)Promotion Agreement to a Third Party, without the prior written consent of the other Party.
4.7.    Leadership of T1DM Commercialization and Medical Affairs Activities in the (Co-)Promotion Territory.  In the event Lexicon exercises its (Co-)Promotion Right, from and after such exercise until the expiration or earlier termination of the (Co-)Promotion Agreement, unless otherwise agreed by the Parties and subject to oversight by the JCC and the JSC and subject to the dispute resolution procedures in Section 13.5, Lexicon shall be assigned a lead role in the oversight, execution and management of (i) Commercialization activities under the T1DM Commercialization Plan other than (a) the sales and sales management efforts and (b) pricing and market access encompassed by the (Co-)Promotion Agreement and (ii) Medical Affairs Activities under the T1DM Commercialization Plan.
4.8.    (Co-)Promotion Agreement.
4.8.1.    (Co-)Promotion Right.  Subject to Section 13.3.2(iii), this Section 4.8.1 and the terms of the (Co-)Promotion Agreement, following the first Regulatory Approval of a Licensed Product for T1DM by FDA, Lexicon shall have the right to elect to perform a portion (to be set forth in the T1DM Commercialization Plan) of the (Co-)Promotion efforts to diabetes specialist physicians (e.g., endocrinologists, diabetologists and selected internal medicine or general physicians) (such physicians, “Specialists” and such efforts, “Specialist Efforts”) for Licensed Products for T1DM (the “(Co-)Promotion Product(s)”) in the (Co-)Promotion Territory (the “(Co-)Promotion Right”) in accordance with the terms of the (Co-)Promotion Agreement; provided that, for clarity, Sanofi or its applicable Affiliate or Sublicensee will continue to book one hundred percent (100%) of sales of the Licensed Products.  No later than [**] prior to the anticipated First Commercial Sale of the (Co-)Promotion Product(s) for T1DM, Lexicon shall provide to Sanofi in writing details regarding the Lexicon promotional structure, such as the number of Lexicon sales representatives, management structure, regional coverage and activity monitoring system, which details may be included in the T1DM Commercialization Plan.
4.8.2.    Terms of (Co-)Promotion Agreement.  In order to exercise the (Co-)Promotion Right, Lexicon shall provide Sanofi of its decision thereof at least [**] prior to the anticipated First Commercial Sale of the (Co-)Promotion Product(s) in the (Co-)Promotion Territory.  If Lexicon exercises the (Co-)Promotion Right prior to such date, the Parties shall enter into the (Co-)Promotion Agreement with respect to (Co-)Promotion Products in the (Co-)Promotion Territory (the “(Co-)Promotion Agreement”), the terms of which (Co-)Promotion Agreement shall conform in all material respects with the terms and conditions set forth in Schedule 4.8.2.  The Parties will use Commercially 

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Reasonable Efforts to negotiate and execute the (Co-)Promotion Agreement no later than [**] before the anticipated First Commercial Sale of the (Co-)Promotion Product in the (Co-)Promotion Territory; provided Sanofi shall be excused from such obligation to the extent Lexicon has failed to perform its obligations hereunder and under the Ancillary Agreements upon which Sanofi’s performance depends.
4.8.3.    Termination of (Co-)Promotion Agreement.  Lexicon may terminate the (Co-)Promotion Agreement for Lexicon’s convenience upon twelve (12) months' prior notice to Sanofi.  Sanofi may terminate the (Co-)Promotion Agreement (i) immediately, as of twelve (12) months prior to the anticipated First Commercial Sale of the LX4211 Product in the United States for T1DM, in the event of a material failure by Lexicon to implement the promotional structure communicated to Sanofi pursuant to Section 4.8.1 on the required timeline prior to anticipated First Commercial Sale or on the schedule set forth in the (Co-)Promotion Agreement or (ii) as a result of a Change of Control as provided in Section 13.3.2(iii) of this Agreement.  The (Co-)Promotion Agreement may also include other customary termination rights.
4.9.    Product Label, Packaging and Promotional Materials.  The two names “Sanofi” and “Lexicon” shall be displayed on all Licensed Product label, packaging and promotional materials in the Territory for use in the Field, to the extent permitted by Applicable Law, and shall be displayed in equal prominence on such materials in the United States.
4.10.    Commercialization Reports.  With respect to each Licensed Product Developed pursuant to this Agreement, commencing with the Calendar Year in which a Drug Approval Application is first filed with respect to such Licensed Product in any Major Market in the Territory, and for each subsequent Calendar Year thereafter, each Party (in the case of Lexicon, only if Lexicon has exercised the (Co-)Promotion Right) shall provide to the other Party (through the JSC, if the JSC is in place) for such other Party’s review and comment, within [**] following January 1 and July 1 of each Calendar Year during the Term, a written report setting forth in reasonable detail the providing Party’s and its Affiliates’ and Sublicensees’ (a) activities and progress during such preceding [**] period related to the Commercialization of and Medical Affairs activities relating to Licensed Products, including information in such Party’s possession concerning First Commercial Sale of the Licensed Products, achievement of sales milestones, and the territories (by each Major Market in the Territory and the rest of the world) in which the foregoing activities are conducted, such information to be provided separately for each Licensed Product, and (b) any planned Commercialization activities in the next [**] period, including expected timelines.

ARTICLE 5
COLLABORATION MANAGEMENT

5.1.    Joint Steering Committee.  Within [**] after the Effective Date, the Parties shall establish a joint steering committee (the “Joint Steering Committee” or “JSC”), which shall consist of three (3) representatives of each Party, each with the requisite experience and seniority to enable such person to make decisions on behalf of the applicable Party with respect to the issues falling within the jurisdiction of the JSC.  From time to time, each Party may substitute one or more of its representatives to the JSC on written notice to the other Party.  Sanofi shall select from its representatives the chairperson for the JSC, which chairperson may be changed from time to time, on written notice to Lexicon.  The JSC shall, with respect to the Licensed Products:

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5.1.1.    periodically serve as a forum for discussing the Development activities, including by reviewing the Development Plan and overseeing the conduct of the Development activities as provided in Section 3.1.2 and reviewing Development reports as provided pursuant to Section 3.1.7;
5.1.2.    review and approve amendments and modifications to the Development Plan;
5.1.3.    review and discuss regulatory matters;
5.1.4.    review and discuss Manufacturing and supply matters;
5.1.5.    periodically serve as a forum for discussing the overall strategy for Licensed Products in the Territory with respect to Commercialization activities and Medical Affairs Activities, including by coordinating such strategy between T1DM and T2DM indications, reviewing Commercialization activities and Medical Affairs Activities, reviewing Commercialization reports as provided pursuant to Section 4.8 and overseeing (Co-)Promotion of the (Co-)Promotion Product(s) in the (Co-)Promotion Territory;
5.1.6.    review and approve amendments and modifications to the Commercialization Plans;
5.1.7.    periodically serve as a forum for discussing the overall strategy for obtaining, maintaining and enforcing Patents and market and data exclusivity for Licensed Products in the Field in the Territory;
5.1.8.    determine at each Decision Point in the Development Plan whether Positive Results have been achieved and advise the Parties in writing of such findings no later than [**] following the applicable Decision Point;
5.1.9.    delegate any of its responsibilities to the DRC, MSC and JCC and oversee and review the DRC, MSC and JCC in the performance of their respective activities;
5.1.10.    subject to Sections 5.5.3 and 5.5.4, resolve disputes that may arise in the DRC, MSC and JCC; and
5.1.11.    perform such other functions as are set forth herein or in any Ancillary Agreement, or as the Parties may mutually agree in writing, except where in conflict with any provision of this Agreement.
5.2.    Development and Regulatory Committee.  Within [**] after the Effective Date, the Parties shall establish a joint development and regulatory committee (the “Development and Regulatory Committee” or “DRC”), which shall consist of three (3) representatives of each Party, each with the requisite experience and seniority to enable such person to make decisions on behalf of the applicable Party with respect to the issues falling within the jurisdiction of the DRC.  From time to time, each Party may substitute one or more of its representatives to the DRC on written notice to the other Party.  Sanofi shall select from its representatives the chairperson for the DRC, which chairperson may be changed from time to time, on written notice to Lexicon.  The DRC shall:

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5.2.1.    periodically serve as a forum for discussing Development activities, including by reviewing the Development Plan and overseeing the conduct of the Development activities as provided in Section 3.1.2 and reviewing Development reports as provided in Section 3.1.7;
5.2.2.    review amendments to the Development Plan and provide recommendations to the JSC;
5.2.3.    facilitate the flow of information with respect to Development activities;
5.2.4.    oversee pharmacovigilance operations and discuss and recommend risk mitigation plans;
5.2.5.    recommend to the JSC, at each Decision Point in the Development Plan, whether Positive Results have been achieved;
5.2.6.    review reports related to Development Costs as provided in Section 7.6 and identify any concerns to the JSC; and
5.2.7.    perform such other functions as are set forth herein, in any Ancillary Agreement, or as the Parties may mutually agree in writing or as directed by the JSC, except where in conflict with any provision of this Agreement.
5.3.    Manufacturing and Supply Committee.  Within [**] after the Effective Date, the Parties shall establish a joint manufacturing and supply committee (the “Manufacturing and Supply Committee” or “MSC”), which shall include appropriate representation of each Party (which such representation need not be equal), and each representative shall possess the requisite experience and seniority to enable such person to make decisions on behalf of the applicable Party with respect to the issues falling within the jurisdiction of the MSC.  From time to time, each Party may substitute one or more of its representatives to the MSC on written notice to the other Party.  Sanofi shall select from its representatives the chairperson for the MSC, which chairperson may be changed from time to time, on written notice to Lexicon.  On the MSC, Lexicon shall have an advisory role only, and for clarity, any Dispute arising within the MSC shall not be resolved through the dispute resolution procedures in Section 13.5.2, but instead shall be decided by Sanofi’s MSC representatives.  The MSC shall:
5.3.1.    periodically serve as a forum for discussing Manufacturing and supply of Licensed Products in the Territory hereunder or under any Supply Agreement;
5.3.2    oversee and ensure an efficient Technology Transfer to Sanofi or its designee from Lexicon, its Affiliates, Lexicon CMOs or other Third Parties, as set forth in Section 6.2 or any Technology Transfer Agreement;
5.3.3.    facilitate the flow of information with respect to Manufacturing activities; and
5.3.4.    perform such other functions as are set forth herein, or in any Ancillary Agreement, or if and as applicable, as the Parties may mutually agree in writing or as directed by the JSC, except where in conflict with any provision of this Agreement or any Ancillary Agreements.

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5.4.    Joint Commercialization Committee.  Within [**] after the Effective Date, the Parties shall establish a joint commercialization committee (the “Joint Commercialization Committee” or “JCC”), which shall include appropriate representation of each Party (which such representation need not be equal), and each representative shall possess the requisite experience and seniority to enable such person to make decisions on behalf of the applicable Party with respect to the issues falling within the jurisdiction of the JCC.  From time to time, each Party may substitute one or more of its representatives to the JCC on written notice to the other Party.  Sanofi shall select from its representatives the chairperson for the JCC, which chairperson may be changed from time to time, on written notice to Lexicon.  The JCC shall:
5.4.1.    periodically serve as a forum for discussing Commercialization of the Licensed Products in the Territory and Medical Affairs Activities in the Territory hereunder or the (Co-)Promotion Agreement, including the coordination of strategies for Commercialization activities and Medical Affairs Activities across the T1DM and T2DM indications;
5.4.2.    coordinate the activities of the Parties under the Commercialization Plans and oversee the implementation of the Commercialization Plans;
5.4.3.    review and discuss the Commercialization Plans and amendments thereto in accordance with Section 4.3;
5.4.4.    facilitate the flow of information with respect to Commercialization activities and Medical Affairs Activities with respect to the Licensed Product in the Territory;
5.4.5.    review reports related to Commercialization Costs and Medical Affairs Costs as provided in Section 7.7 and identify any concerns to the JSC; and
5.4.6.    perform such other functions as are set forth herein, or in any Ancillary Agreement, or if and as applicable, as the Parties may mutually agree in writing or as directed by the JSC, except where in conflict with any provision of this Agreement or any Ancillary Agreements.
5.5.     General Provisions Applicable to Committees.
5.5.1.    Meetings and Minutes.  The JSC, DRC, MSC and JCC shall each meet at locations to be mutually agreed upon by the Parties from time to time or otherwise in accordance with Section 5.5.2, and at the frequencies provided for below, unless otherwise agreed to by the Parties:
(i)    the JSC shall meet at least [**] per Calendar Year;
(ii)    the DRC shall meet at least [**] per Calendar Year prior to[**], and at least [**] per Calendar Year thereafter;
(iii)    the MSC shall meet at least [**]per Calendar Year; and
(iv)    the JCC shall meet at least [**] per Calendar Year.
The chairperson of the respective committee shall be responsible for calling meetings on no less than [**] notice unless exigent circumstances require shorter notice.  Each Party shall make all proposals for agenda items at least [**] in advance of the applicable meeting and shall provide all 

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appropriate information with respect to such proposed items at least [**] in advance of the applicable meeting; provided that under exigent circumstances requiring input by the respective committee, a Party may provide its agenda items to the other Party within a shorter period of time in advance of the meeting or may propose that there not be a specific agenda for a particular meeting, so long as the other Party consents to such later addition of such agenda items or the absence of a specific agenda for such meeting (which consent shall not be unreasonably withheld, conditioned or delayed).  The chairperson of the respective committee shall prepare and circulate for review and approval of the Parties minutes of each meeting within [**] after the meeting.  The Parties shall agree on the minutes of each meeting promptly, but in no event later than the next meeting of the respective committee.
5.5.2.    Procedural Rules.  Each committee shall have the right to adopt such standing rules as shall be necessary for its work, to the extent that such rules are not inconsistent with this Agreement.  A quorum of each committee shall exist whenever there is present at a meeting at least one (1) representative appointed by each Party.  Representatives of the Parties on each committee may attend a meeting either in person or by telephone, video conference or similar means in which each participant can hear what is said by and be heard by, the other participants.  Representation by proxy shall be allowed.  Subject to Section 5.5.3 (solely with respect to decisions of the JSC), each committee shall take action by unanimous decision of the representatives present at a meeting at which a quorum exists, with each Party having a single vote irrespective of the number of representatives of such Party in attendance or by a written resolution signed by at least one (1) representative appointed by each Party.  Alliance Managers or other employees or consultants of a Party who are not representatives of the Parties on the committee may attend meetings; provided, however, that such attendees (i) shall not vote or otherwise participate in the decision-making process of the committee and (ii) are bound by obligations of confidentiality and non-disclosure at least as protective of the other Party as those set forth in ARTICLE 9.  If a committee (other than the JSC) cannot, or does not, reach a unanimous decision on an issue within [**], then the dispute shall be referred to the JSC for resolution and a special meeting of the JSC may be called for such purpose.
5.5.3.    Decision-Making.  If the JSC does not reach a unanimous decision on an issue within the jurisdiction and authority of the JSC within [**], then either Party may refer such matter to the Senior Officers for resolution pursuant to Section 13.5.
5.5.4.    Limitations on Authority.  Without limitation to the foregoing, the Parties hereby agree that the following matters are outside the jurisdiction and authority of the JSC and any other committee:  (i) amendment, modification or waiver of compliance with this Agreement, (which may only be amended or modified as provided in Section 13.8 or compliance with which may only be waived as provided in Section 13.11), (ii) matters explicitly reserved to the consent, approval, agreement or other decision-making authority of either or both Parties in this Agreement and (iii) Disputes with respect to the validity (including any claim of inducement of this Agreement or any Ancillary Agreement by fraud or otherwise), application, breach, termination, interpretation or construction of this Agreement or the Ancillary Agreements (a “Legal Dispute”).
5.5.5.    Alliance Managers.  Promptly after the Effective Date, by notice to the other Party, each Party shall appoint a person(s) who shall oversee contact between the Parties and facilitate the effective exchange of information between the Parties for all matters hereunder and shall have such other responsibilities as the Parties may agree in writing after the Effective Date, which person(s) may be replaced at any time by notice in writing to the other Party.  The Alliance Managers shall work together to manage and facilitate the effective communication between the Parties under this Agreement, 

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including the resolution (in accordance with the terms of this Agreement) of issues between the Parties that arise in connection with this Agreement.
5.5.6.    Discontinuation; Disbandment; Withdrawal; Annual Reports.  The JSC, DRC, MSC or JCC, as applicable, shall continue to exist until the first to occur of: (i) the Parties’ mutually agreeing to disband such committee or as otherwise set forth in this Section 5.5.6; and (ii) Lexicon providing to Sanofi written notice of its intention to withdraw from such committee (provided that Lexicon shall not have the right to withdraw prior to [**]).  Upon the occurrence of any of the foregoing, (a) the applicable committee shall disband, have no further responsibilities or authority under this Agreement and will be considered dissolved by the Parties and (b) any requirement of a Party to provide Information and Inventions or other materials to such committee shall be deemed a requirement to provide such Information and Inventions or other materials to the other Party, or the JSC (in the case that the DRC, MSC or JCC is disbanded and the JSC is still in existence) and, solely in the case where the JSC has been disbanded, Sanofi shall, subject to Sections 5.5.4 and 13.5, have the right to solely decide, without consultation with Lexicon, all matters that are subject to the review or approval by the JSC hereunder other than determinations as to whether or not Positive Results have been achieved as set forth in Section 3.1.3 and Section 5.1.8, which determinations pursuant to Section 3.1.3 and Section 5.1.8 shall be resolved by binding arbitration pursuant to Section 13.5.2 if not otherwise agreed by the Parties.  The MSC, DRC and JCC shall each continue to exist only for so long as the JSC is in existence; provided, however, that without limiting the foregoing, the DRC, MSC or JCC may be disbanded or discontinued at any time pursuant to a written unanimous decision of the JSC or as set forth in clauses (i) and (ii) of this Section 5.5.6.  Upon disbandment of the DRC, MSC or JCC, or at any time in the JSC’s discretion, the JSC may assume from the DRC, MSC or JCC any and all of those committees respective responsibilities, and with respect to any MSC matters, any Dispute arising within the JSC shall not be resolved through the dispute resolution procedures in Section 13.5.2, but instead shall be decided by Sanofi’s JSC representatives.  If not already disbanded, then the MSC shall be disbanded upon the completion of both the Technology Transfer pursuant to Section 6.2 and the full assumption of Manufacturing of Licensed Products by Sanofi.

ARTICLE 6
SUPPLY

6.1.    Supply of Licensed Products.
6.1.1.    Clinical Supply.  In connection with the Technology Transfer, Lexicon shall transfer to Sanofi any usable inventory of Licensed Compound or Licensed Product, subject to Lexicon’s retention of reasonable requirements of such Licensed Compound or Licensed Product for its T1DM Development activities no later than [**] (or such other date as is agreed by the Parties), and Lexicon’s Manufacturing Cost paid to Lexicon CMOs for such transferred quantities of inventory shall be treated as Development Costs and borne by the Parties in accordance with Section 7.6.  Prior to the completion of the Technology Transfer in accordance with Section 6.2, Lexicon shall, to the extent requested by Sanofi and as mutually agreed by the Parties, supply clinical quantities of the Licensed Products and placebo for use by Sanofi in the Development of Licensed Products for T2DM in accordance with the Development Plan, and Lexicon’s Manufacturing Cost incurred in connection therewith shall be treated as Development Costs. After the Technology Transfer, Sanofi shall supply clinical quantities of the Licensed Products and placebo reasonably required by Lexicon for Lexicon’s use in the Development of Licensed Products for T1DM in accordance with the Development Plan and for its own use in the Development of Licensed Products.  Lexicon shall Manufacture (or have Manufactured) all such Licensed Product in accordance 

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with Applicable Law and the applicable specifications therefor, including, to the extent required by Applicable Law, cGMP; provided that Lexicon’s liability arising from a breach by the CMO of its agreement with Lexicon shall be limited to such recoveries as are obtained by Lexicon using Commercially Reasonable Efforts to obtain such recoveries and such other remedies as may be available to Lexicon for such breach under its agreement with such CMO.  Otherwise, Sanofi’s sole and exclusive remedy and Lexicon’s sole and exclusive liability to Sanofi for any nonconformity shall be for Lexicon to replace such nonconforming Licensed Compound or Licensed Product with conforming Licensed Compound or Licensed Product within reasonable timelines to be mutually agreed by the Parties in writing, but nothing in this Section 6.1.1 shall limit Lexicon’s liability for Third Party Claims under ARTICLE 11.  At either Party’s option, Lexicon and Sanofi shall enter into a clinical supply agreement and a reasonable and customary Quality Agreement that shall set forth the terms and conditions upon which Lexicon and any of its Affiliates will conduct their quality activities in connection with such supply, including (i) a right of Sanofi to audit Lexicon and the Lexicon CMOs, (ii) coordination regarding inspections by Regulatory Authorities and (iii) the exchange of information between the Parties regarding the foregoing and quality issues in general.  Such agreements shall be negotiated and agreed by the Parties in good faith.
6.1.2.    Validation Campaign and Commercial Supply.  Except as otherwise set forth in this Section 6.1, Sanofi shall have the sole right and responsibility, at its sole discretion and at its expense, to Manufacture (or have Manufactured) and supply the Licensed Products (including the Licensed Compounds contained therein) for Exploitation in or for the Territory by Sanofi and its Affiliates and its or their Sublicensees.
6.2.    Manufacturing Technology Transfer.  Without limiting the generality of the obligations in Section 2.4, Lexicon shall commence, as and when reasonably requested by Sanofi, the transfer to Sanofi or its designee (which designee may be an Affiliate, Sublicensee, Lexicon CMO or other Third Party manufacturer) of the Lexicon Know-How necessary or useful to perform the then-current process for the Manufacture of the Licensed Compound and Licensed Products, as well as any improvements or enhancements to such processes via a cGMP-compliant technology transfer (the “Manufacturing Process”) and provide such support as may be necessary or reasonably useful to Sanofi or its designee to use and practice the Manufacturing Process, including by (i) if permitted under the terms and conditions thereof, assigning to Sanofi, at its request, any agreements (including any open purchase orders) with Lexicon CMOs that are necessary or useful to perform Manufacturing activities related to the Licensed Compound or the Licensed Products or (ii) if such assignment is prohibited by the terms thereof or Applicable Law and if requested by Sanofi, by reasonably assisting Sanofi or its designee to enter into agreements with such Lexicon CMOs (the “Technology Transfer”).  The Technology Transfer shall be conducted in accordance with reasonable timelines as mutually agreed by the Parties with the goal of completing the Technology Transfer within a reasonable time.  Lexicon shall or shall cause its CMOs to allocate the necessary resources to ensure the Technology Transfer occurs in a timely and efficient manner in accordance with such deadlines.  All costs and expenses of Lexicon’s internal personnel incurred by Lexicon pursuant to such Technology Transfer or any subsequent technology transfer, as provided in Section 6.3, shall be the responsibility of Lexicon, and all out-of-pocket expenses paid to Lexicon CMOs shall be the responsibility of Sanofi.
6.3.    Subsequent Manufacturing Technology Transfer.  Without limiting the foregoing, in the event that Lexicon or any of its Affiliates generates any material additional Lexicon Know-How relating to, or that is otherwise necessary or useful for, the Manufacture of the Licensed Compound or a Licensed Product during the Term, Lexicon shall promptly disclose such Lexicon Know-

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How to Sanofi and shall, at Sanofi’s request, perform technology transfer with respect to such Lexicon Know-How in the same manner as provided in Section 6.2.
6.4.    Technology Transfer Agreement.  At Sanofi’s request, the Parties shall enter into a mutually acceptable Technology Transfer agreement consistent with Sections 6.2 and 6.3, which details the timeline and responsibilities of both Parties in connection with the Technology Transfer and any subsequent technology transfers from Lexicon to Sanofi during the Term (the “Technology Transfer Agreement”); provided, however, that the failure to enter into the Technology Transfer Agreement shall not relieve Lexicon of its obligations to conduct the Technology Transfers and disclosures contemplated by Sections 6.2 and 6.3.

ARTICLE 7
PAYMENTS AND RECORDS
1.

7.1.    Upfront Payment.  In partial consideration of the rights granted by Lexicon to Sanofi hereunder and subject to the terms and conditions of this Agreement, no later than [**] after the later of (i) the Effective Date and (ii) receipt of an invoice therefor from Lexicon, Sanofi shall pay Lexicon a noncreditable upfront payment amount of three hundred million Dollars ($300,000,000).  For clarity, Sanofi shall not pay such amount prior to receipt of such an invoice and the prescribed forms relating to tax withholding set forth in Section 7.11.1.
7.2    Milestones.
7.2.1.    Development and Regulatory Milestone Payments.  In partial consideration of the rights granted by Lexicon to Sanofi hereunder and subject to the terms and conditions of this Agreement, Sanofi shall pay to Lexicon a milestone payment, after the achievement of each of the following milestones in accordance with this Section 7.2.1, as follows:
(a)    Development Milestones.
(i)    [**];
(ii)    [**]; provided that, if [**], this milestone payment shall become payable concurrently with [**]; and
(iii)    [**].
(b)    Regulatory Milestones.
(i)    [**]; and
(ii)    [**];
(iii)    [**]; and
(iv)    [**]
Sanofi shall provide prompt written notice to Lexicon of the achievement of each applicable milestone.  Upon receipt of such notice, Lexicon shall provide an invoice to Sanofi, and payment shall be due within [**] after receipt by Sanofi of such invoice.  Each milestone payment in this Section 7.2.1 shall be payable 

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only upon the first achievement of such milestone and no amounts shall be due for subsequent or repeated achievements of such milestone, whether for the same or a different Licensed Product.
7.2.2.    Sales Milestones.  In partial consideration of the license rights granted by Lexicon to Sanofi hereunder and subject to the terms and conditions of this Agreement, Sanofi shall pay to Lexicon milestone payments, after the achievement of each of the following milestones in accordance with this Section 7.2.2; provided that if more than one such milestone is first achieved in the same Calendar Year, there shall be [**] and, in such event, the payment for [**] and the payment(s) for [**].
(a)    In the event that the aggregate of all Net Sales of all Licensed Products made by Sanofi or any of its Affiliates or its or their Sublicensees in [**] exceeds [**] for such [**], Sanofi shall pay to Lexicon [**].
(b)    In the event that the aggregate of all Net Sales of all Licensed Products made by Sanofi or any of its Affiliates or its or their Sublicensees in [**] exceeds [**] for such [**], Sanofi shall pay to Lexicon [**].
(c)    In the event that the aggregate of all Net Sales of all Licensed Products made by Sanofi or any of its Affiliates or its or their Sublicensees in [**] exceeds [**] for such [**], Sanofi shall pay to Lexicon [**].
(d)    In the event that the aggregate of all Net Sales of all Licensed Products made by Sanofi or any of its Affiliates or its or their Sublicensees in [**] exceeds [**] for such [**], Sanofi shall pay to Lexicon [**].
(e)    In the event that the aggregate of all Net Sales of all Licensed Products made by Sanofi or any of its Affiliates or its or their Sublicensees in [**] exceeds [**] for such [**], Sanofi shall pay to Lexicon [**].
(f)    In the event that the aggregate of all Net Sales of all Licensed Products made by Sanofi or any of its Affiliates or its or their Sublicensees in [**] exceeds [**] for such [**], Sanofi shall pay to Lexicon [**].
Within [**] after the end of each Calendar Quarter and in connection with the royalty reports provided to Lexicon pursuant to Section 7.5, Sanofi shall provide written notice to Lexicon of each milestone set forth in this Section 7.2.2 that was achieved in such Calendar Quarter.  Upon receipt of such notice, Lexicon shall provide an invoice to Sanofi, and payment shall be due within [**] after receipt by Sanofi of such invoice; provided that, if a higher milestone set forth in this Section 7.2.2 is first achieved in a subsequent Calendar Quarter during the same [**], Lexicon shall provide an invoice to Sanofi for, and Sanofi shall pay, [**], such that [**] under this Section 7.2.2 for such [**] equals [**].  Each milestone payment in this Section 7.2.2 shall be payable only once and no amounts shall be due for subsequent or repeated achievements of the applicable milestone in subsequent [**].
7.2.3.    Milestones and Termination.  If either Party provides a notice of termination of this Agreement pursuant to Section 12.3 (or termination of country(ies) or region(s) or any Licensed Products with respect to which a milestone is due), then in no event shall Lexicon accrue any rights to, and Sanofi shall have no obligation to make, any milestone payment under Section 7.2.1 with respect to such Terminated Territory or Terminated Product from and after the date of such notice (even if such milestone was achieved before the date of such notice); provided, that, if this Agreement is not 

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actually terminated following such notice, then any milestone payments associated with the achievement of a milestone with respect to such country or jurisdiction after such date of notice shall be due within [**] after the date on which it was determined by the Parties in writing that this Agreement would not terminate.
7.3.    Royalties.
7.3.1.    Royalty Rates.  As additional consideration for the rights granted to Sanofi hereunder and subject to the terms and conditions of this Agreement, during the applicable Royalty Term in each country of the Territory as specified below, Sanofi shall pay to Lexicon a royalty on Net Sales to Third Parties (including Distributors) of each Licensed Product in such region of the Territory during each Calendar Year within [**]  after the end of each Calendar Quarter, subject to this Section 7.3, at the following rates:
(i)    For T1DM in the United States:
(a)    for that portion of aggregate T1DM Net Sales in the United States during a Calendar Year less than or equal to [**], a royalty rate of [**];
(b)    for that portion of aggregate T1DM Net Sales in the United States during a Calendar Year greater than [**], but less than or equal to [**], a royalty rate of [**]; and
(c)    for that portion of aggregate T1DM Net Sales in the United States during a Calendar Year greater than [**], but less than or equal to [**], a royalty rate of [**]; and
(d)    for that portion of aggregate T1DM Net Sales in the United States during a Calendar Year greater than [**], a royalty rate of forty percent (40%).
Notwithstanding the foregoing, if Lexicon does not exercise the (Co-)Promotion Right in accordance with Section 4.8, enter into the (Co-)Promotion Agreement or terminates the (Co-)Promotion Agreement for convenience, the royalty rate under clause (a) of this Section 7.3.1(i) shall be [**] instead of [**].
(ii)    For T2DM in the United States:
(a)    for that portion of aggregate T2DM Net Sales in the United States during a Calendar Year less than or equal to [**], a royalty rate of [**];
(b)    for that portion of aggregate T2DM Net Sales in the United States during a Calendar Year greater than [**], but less than or equal to [**], a royalty rate of [**];
(c)    for that portion of aggregate T2DM Net Sales in the United States during a Calendar Year greater than [**], but less than or equal to [**], a royalty rate of [**]; and
(d)    for that portion of aggregate T2DM Net Sales in the United States during a Calendar Year greater than [**], a royalty rate of [**].
(iii)    For the European Union:
(a)    for that portion of aggregate Net Sales of all Licensed Products in the European Union during a Calendar Year less than or equal to [**], a royalty rate of [**];

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(b)    for that portion of aggregate Net Sales of all Licensed Products in the European Union during a Calendar Year greater than [**], but less than or equal to [**], a royalty rate of [**]; and
(c)    for that portion of aggregate Net Sales of all Licensed Products in the European Union during a Calendar Year greater than [**], a royalty rate of [**].
(iv)    For all countries in the Territory, other than the United States and those countries in the European Union (such countries, “ROW”), the royalty rate shall be [**] of aggregate Net Sales of all Licensed Products in ROW.
With respect to each Licensed Product in each country in the Territory, from and after the expiration of the Royalty Term for such Licensed Product in such country, Net Sales of such Licensed Product in such country shall be excluded for purposes of calculating the Net Sales thresholds and ceilings set forth in this Section 7.3.1.
7.3.2.    Royalty Term.  Sanofi shall have no obligation to pay any royalty with respect to Net Sales of any Licensed Product in any country after the Royalty Term for such Licensed Product in such country has expired.
7.3.3.    Reductions.  Notwithstanding the foregoing, in the event that:
(i)    in any country in the Territory during the Royalty Term for a Licensed Product, one or more Generic Products of a Licensed Product is launched in such country, and Net Sales of such Licensed Product in such country decline by the percentages described below relative to the average Net Sales of such Licensed Product in such country for the [**] immediately preceding the Calendar Quarter in which the Generic Product is launched in such country (the “Pre-Generic Launch Net Sales”), the royalty rates provided in Section 7.3.1 shall be reduced in such country by the applicable percentage described below for each Calendar Quarter ending after the Generic Product was launched in which such Net Sales remain below the applicable percentage of the Pre-Generic Launch Net Sales.  For clarity, the foregoing sentence shall not preclude the applicability of this Section 7.3.3(i) to future Calendar Quarters if such Generic Product or any other Generic Product is re-launched or launched, as applicable, in such country and Net Sales again fall below the applicable percentage of the Pre-Generic Launch Net Sales.  For a decline of:
(a)    greater than or equal to [**], but less than [**], of Net Sales of the applicable Licensed Product in such country, a royalty rate reduction of [**]; or
(b)    greater than or equal to [**] of Net Sales of the applicable Licensed Product in such country, a royalty rate reduction of [**].
(ii)    If Sanofi enters into an agreement with a Third Party in order to obtain a license or other right under a Third Party Patent that is reasonably necessary to avoid infringement of such Third Party Patent by the use, offer for sale, sale or importation of a Licensed Product (or the Licensed Compound contained therein) in a country pursuant to Section 8.8, Sanofi shall be entitled to deduct from any [**] royalties (under this Section 7.3) payable hereunder with respect to such Licensed Product in such country [**] of all upfront payments, milestone payments, royalties, and other amounts paid to such Third Party in respect of such agreement, in each case, to the extent reasonably allocable to such Third Party Right (“Third Party Payments”); provided that, Sanofi may not include in Third Party Payments 

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any amounts paid to Third Party suppliers or contract manufacturers of Licensed Products, Licensed Compounds or raw materials therefor.
(iii)    If a court or a governmental agency of competent jurisdiction requires Sanofi or any of its Affiliates or its or their Sublicensees to grant a compulsory license to a Third Party permitting such Third Party to make and sell a Licensed Product in a country in the Territory, the royalties otherwise due to Lexicon pursuant to this Section 7.3 for Net Sales by compulsory licensees shall, in lieu of the royalties that would otherwise apply, be the lesser of [**] of the amount received by Sanofi from such licensee and the applicable royalties that would otherwise be payable hereunder, and the Licensed Products sold by such Third Party in such country shall be deemed to be Generic Products for purposes of Section 7.3.3(i).
(iv)    As to royalties payable on Net Sales in [**], during any period within the applicable Royalty Term when there is no Lexicon Patent or Joint Patent in such country that contains a Valid Claim that Covers the applicable Licensed Product or its Manufacture, use, offer for sale, sale or importation in such country and the Regulatory Exclusivity Period has expired with respect to the applicable Licensed Product in such country, the otherwise applicable royalty rate percentage with respect to such Licensed Product in such country shall be reduced by [**].
(v)    On a country-by-country basis with respect to each country in [**] during each period in which there is a [**], Sanofi shall be entitled to deduct from the royalty rate payable on Net Sales in such country [**] of the [**]; provided that such deduction shall not exceed [**].  The [**] is, with respect to a given period and country outside [**], the percentage equal to (x) [**], divided by (y) [**] in such country for such period.  The [**] is, with respect to a given period, the percentage equal to [**].  For example, if the [**] for a given period and country equals [**] and the royalty rate for a given country would without application of this clause (v) equal [**], the royalty rate for such country would equal [**].  For clarity, [**] are not required to be calculated on a country-by-country basis, but may be calculated using a standard cost basis across multiple countries in accordance with Sanofi’s general internal practices.
Any reductions set forth in this Section 7.3.3 shall be applied to the royalty rate payable to Lexicon in the following order:  clause (i) (in which case no further reductions shall be applied under the subsequent clauses of this Section 7.3.3), clause (ii), clause (iii), clause (iv) and clause (v).
7.3.4.    Maximum Amount of Royalty Reduction.  In no event shall the royalty rate payable to Lexicon under this Section 7.3 be reduced below [**] of the royalty rates set forth in Section 7.3.1 in any Calendar Year as a result of the reductions set forth in Sections 7.3.3(ii) and 7.3.3(iv), collectively.
7.4.    Estimated Sales Levels.  Lexicon acknowledges and agrees that the sales levels set forth in Section 7.2.2 and Section 7.3 shall not be construed as representing an estimate or projection of anticipated sales of the Licensed Products or implying any level of diligence or Commercially Reasonable Efforts, in the Territory and that the sales levels set forth in those Sections are merely intended to define Sanofi’s royalty and other payment obligations, as applicable, in the event such sales levels are achieved.
7.5.    Royalty Payments and Reports.  Sanofi shall calculate all amounts payable to Lexicon pursuant to Section 7.2.2 and Section 7.3 at the end of each Calendar Quarter, where Net Sales shall be converted to Dollars, in accordance with Section 7.9, and Sanofi shall provide written notice of 

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such amounts to Lexicon within [**] after the end of each Calendar Quarter, which report shall include a statement of (i) Net Sales, and (ii) [**] Invoiced Sales, and the applicable deductions used to convert Invoiced Sales to Net Sales, of Licensed Product in each country during the applicable Calendar Quarter.  Each report shall be accompanied by the applicable payment of royalties due to Lexicon for such Calendar Quarter pursuant to Section 7.3.
7.6.    Development Costs.
7.6.1.    Subject to this Section 7.6, each Party shall be responsible for and shall reimburse the other Party, as applicable, for Development Costs reasonably incurred after the Effective Date in connection with the performance of Development activities in accordance with the cost-sharing principles set forth below and the Development Plan, unless otherwise agreed by the Parties and set forth in the Development Plan.  To the extent FTE efforts are included in Development Costs and reimbursable by the other Party pursuant hereto, each Party shall record and account for such FTE efforts with respect to each Licensed Product, and each Party shall report such FTE efforts to the DRC on a quarterly basis.  Each Party shall calculate and maintain records of FTE effort incurred by it consistent with past practice and in the same manner as used for other products developed by such Party, unless agreed by the Parties in writing.  The Parties shall share Development Costs according to the following principles:
(i)    Sanofi shall be responsible for [**], and Lexicon shall be responsible for [**] of Development Costs in connection with T2DM Development under and in accordance with the Development Plan, which Development Costs are incurred prior to the date that is the third (3rd) anniversary of the Effective Date, (the “Cost Sharing Trigger Point”); provided Development Costs corresponding to Development activities for T2DM Development which were, due to any action or inaction by Lexicon, incurred on and after instead of prior to the Cost-Sharing Trigger Point shall be allocated between the Parties in accordance with the allocation for Development Costs for T2DM Development in effect prior to the Cost-Sharing Trigger Point; provided further, that Lexicon’s share of Development Costs under this Section 7.6.1(i) shall not exceed one hundred million Dollars ($100,000,000) in the aggregate, and Sanofi shall be responsible for any Development Costs covered by this clause (i) in excess of such amount;
(ii)    Sanofi shall be responsible for one hundred percent (100%) of Development Costs in connection with T2DM Development under and in accordance with the Development Plan, which Development Costs are incurred after the Cost Sharing Trigger Point under the Development Plan;
(iii)    Sanofi shall be responsible for [**] of Development Costs incurred under and in accordance with the Development Plan that are not specifically attributable to T2DM Development or T1DM Development;
(iv)    Lexicon shall be responsible for one hundred percent (100%) of Development Costs incurred under and in accordance with the Development Plan in connection with T1DM Development (where for clarity, Development Costs incurred for any activity specified in the Development Plan as T1DM Development shall be borne by Lexicon); and
(v)    For clarity, any payments due under the T1DM Funding Agreements shall not be included in Development Costs or Commercialization Costs and shall be solely borne by Lexicon.
provided, that, in each case of clauses (i) through (iv) above, a Party shall not be responsible for Development Costs incurred by either Party due to a breach of this Agreement by, or the negligence or 

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willful misconduct of, the other Party or any of its Affiliates (the “At-fault Party”), including, for example, delay in shipping a bulk batch of Licensed Compound or Licensed Product, which such Development Costs shall be borne by the At-fault Party.
7.6.2.    Any Development Costs in excess of the Development Costs for a given activity budgeted in the Development Plan shall be borne by the incurring Party and shall be excluded from Development Costs hereunder unless such excess was due to breach of this Agreement by, or the negligence or willful misconduct of, the other Party or any of its Affiliates, in which case, such excess Development Costs shall be borne by the At-fault Party.
7.6.3.    For so long as Development Costs are reimbursable by a Party pursuant hereto, the other Party shall report to the reimbursing Party, within [**] after the end of each Calendar Quarter (and within [**] after receipt of each such report, the Parties shall reimburse one another, as needed, for) its respective Development Costs in order to achieve the cost sharing allocation contemplated by this Section 7.6.  Each such report shall (a) allocate the Development Costs to the extent possible to a specific Development activity under the Development Plan, (b) specify in reasonable detail all amounts included in Development Costs during such Calendar Quarter (broken down by activity), (c) if requested by the other Party, include copies of any invoices or other supporting documentation for any payments to a Third Party that individually exceed [**] (or such other amount approved by the JSC or DRC, as applicable) and (d) enable the other Party to compare the reported costs against the Development Plan on both a quarterly basis and a cumulative basis for each activity.  The Parties shall seek to resolve any questions related to such reports within [**] following receipt by the other Party of the reporting Party’s report hereunder.
7.7.    Commercialization Costs and Medical Affairs Costs.  Subject to this Section 7.7, each Party shall be responsible for and shall reimburse the other Party, as applicable, for Commercialization Costs and Medical Affairs Costs reasonably incurred after the Effective Date in connection with the performance of Commercialization activities in accordance with the cost-sharing principles set forth below and the Commercialization Plan, unless otherwise agreed by the Parties and set forth in the Commercialization Plan.  To the extent FTE efforts are included in Commercialization Costs and reimbursable by the other Party pursuant hereto, each Party shall record and account for such FTE efforts with respect to each Licensed Product, and each Party shall report such FTE efforts to the JCC on a quarterly basis.  Each Party shall calculate and maintain records of FTE effort incurred by it consistent with past practice and in the same manner as used for other products developed by such Party, unless agreed by the Parties in writing.  The Parties shall share Commercialization Costs and Medical Affairs Costs according to the following principles:
7.7.1.    If Lexicon exercises the (Co-)Promotion Right, then for each Calendar Year during the Term, Lexicon shall be responsible for forty percent (40%) of the Commercialization Costs and Medical Affairs Costs, in each case incurred in accordance with the T1DM Commercialization Plan during such Calendar Year with respect to the Licensed Product for T1DM in the (Co-)Promotion Territory, but in no event more than the Lexicon Maximum Amount for such Calendar Year.  Sanofi shall be responsible for the remainder of the Commercialization Costs and Medical Affairs Costs, whether incurred by Lexicon or Sanofi, except as otherwise agreed by the Parties in the (Co-)Promotion Agreement; except that in the event that pursuant to the immediately preceding sentence, Lexicon bears less than forty percent (40%) of such Commercialization Costs and Medical Affairs Costs due to the application of the Lexicon Maximum Amount for any Calendar Year, then the difference between what Lexicon would have borne in the absence of the application of the Lexicon Maximum Amount and the amount borne by Lexicon for the 

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applicable Calendar Year shall be considered the “Carry-Over Amount”).  Then, in the event that there is a Calendar Year in which Lexicon bears less than the Lexicon Maximum Amount, Sanofi may also charge Lexicon under this Section 7.7.1 for any Carry-Over Amount, up to the point at which Lexicon has paid, in Commercialization Costs, Medical Affairs Costs and Carry-Over Amount in aggregate under this Section 7.7.1, the Lexicon Maximum Amount for that Calendar Year, until any and all Carry-Over Amounts have been exhausted.  If Lexicon does not exercise the (Co-)Promotion Right, then Sanofi shall be responsible for one hundred percent (100%) of Commercialization Costs and Medical Affairs Costs incurred after the Effective Date with respect to the Licensed Product for T1DM.  Notwithstanding the foregoing in this Section 7.7.1, a Party shall not be responsible for Commercialization Costs or Medical Affairs Costs incurred by either Party due to a breach of this Agreement by, or the negligence or willful misconduct of, the At-fault Party (which in the case in which Lexicon is the At-fault Party shall not count towards the Lexicon Maximum Amount).
7.7.2.    Sanofi shall be responsible for one hundred percent (100%) of Commercialization Costs and Medical Affairs Costs incurred after the Effective Date with respect to the Licensed Product for T2DM.  Notwithstanding the foregoing in this Section 7.7.2, a Party shall not be responsible for Commercialization Costs or Medical Affairs Costs incurred by either Party due to a breach of this Agreement by, or the negligence or willful misconduct of, the At-fault Party.
7.7.3.    Any Commercialization Costs or Medical Affairs Costs in excess of the Commercialization Costs or Medical Affairs Costs, as applicable, for a given activity budgeted in the Commercialization Plan shall be borne by the incurring Party and shall be excluded from Commercialization Costs or Medical Affairs Costs, as applicable, hereunder unless such excess was due to breach of this Agreement by, or the negligence or willful misconduct of, the other Party or any of its Affiliates, in which case, such excess Commercialization Costs or Medical Affairs Costs, as applicable, shall be borne by the At-fault Party.
7.7.4.    With respect to any Commercialization Costs or Medical Affairs Costs that are reimbursable by a Party pursuant hereto, the other Party shall report to the reimbursing Party, within [**] after the end of each Calendar Quarter (and within [**] after receipt of each such report, the Parties shall reimburse one another, as needed, for) its respective shared Commercialization Costs and Medical Affairs Costs in order to achieve the cost sharing allocation of such shared costs contemplated by this Section 7.7.  Each such report with respect to such shared costs shall (a) allocate the Commercialization Costs and Medical Affairs Costs to the extent possible to a specific Commercialization activity or Medical Affairs Activity, as applicable, under the Commercialization Plan, (b) specify in reasonable detail all amounts included in Commercialization Costs and Medical Affairs Costs during such Calendar Quarter (broken down by activity), (c) if requested by the other Party, include copies of any invoices or other supporting documentation for any payments to a Third Party that individually exceed [**] (or such other amount approved by the JSC or JCC, as applicable) and (d) enable the other Party to compare the reported costs against the Commercialization Plan on both a quarterly basis and a cumulative basis for each activity.  The Parties shall seek to resolve any questions related to such reports within [**] following receipt by the other Party of the reporting Party’s report hereunder.
7.8.    Calculation of T1DM Net Sales.  The Parties shall agree upon a methodology for determining quarterly T1DM Net Sales based on data from a mutually agreed Third Party data source, such as IMS Health and allocation of costs as appropriate.  If the Parties are unable to reach agreement on such methodology or Third Party data source and such allocation as appropriate, the Parties shall submit such matter for resolution pursuant to Section 13.5.  T1DM Net Sales shall be determined using the 

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methodology and data established pursuant to this Section 7.8, based on the Net Sales in the United States for the applicable Calendar Quarter pursuant to Section 7.5, subject to Lexicon’s audit rights under Section 7.14.
7.9.    Mode of Payment.  All payments to either Party under this Agreement shall be made by deposit of Dollars in the requisite amount to such bank account as the receiving Party may from time to time designate by notice to the paying Party.  For the purpose of calculating any sums due under, or otherwise reimbursable pursuant to, this Agreement (including the calculation of Net Sales expressed in currencies other than Dollars), a Party shall convert any amount expressed in a foreign currency into Dollar equivalents using its, its Affiliate’s or Sublicensee’s standard conversion methodology consistent with applicable Accounting Standards.
7.10.    Failure to Achieve Positive Results.  If Positive Results are not achieved with respect to a given Decision Point, as determined in accordance with Section 3.1.3,and if elected by Sanofi, then the Parties shall promptly meet to negotiate in good faith to alter the financial terms provided for under this ARTICLE 7 to address such failure to achieve Positive Results, and if an agreement is reached among the Parties, the Agreement shall be amended to give effect to such agreement.  Otherwise, for clarity, Sanofi shall have the right to terminate for a Positive Results Failure pursuant to Section 12.3.2(i).
7.11.    Taxes.
7.11.1.    General.  The milestones, royalties and other amounts payable by Sanofi to Lexicon pursuant to this Agreement (each, a “Payment”) shall be paid free and clear of any and all taxes, except for any withholding taxes required by Applicable Law.  Notwithstanding the foregoing or anything to the contrary in this Section 7.11.1, Sanofi shall not withhold any tax from the Payments made to Lexicon for so long as Lexicon remains a tax resident of the United States and the applicable tax treaty between the United States and France provides for a withholding rate of zero on the applicable Payment, provided that Lexicon shall provide the prescribed forms necessary to reduce the applicable rate of withholding or to relieve Sanofi of its obligation to withhold such tax pursuant to such applicable tax treaty between the United States and France with any invoice supporting a Payment request hereunder.  Except as provided in this Section 7.11.1, Lexicon shall be solely responsible for paying any and all taxes (other than withholding taxes deducted from Payments and remitted by Sanofi as described above) levied on account of, or measured in whole or in part by reference to, any Payments it receives.  Sanofi and Lexicon shall cooperate with one another to communicate in advance regarding the satisfaction of any requirements necessary to reduce the applicable rate of withholding or to relieve Sanofi of its obligation to withhold any such tax.  If, in accordance with the foregoing, Sanofi withholds any amount, it shall pay to Lexicon the balance when due, make timely payment to the proper taxing authority of the withheld amount and send to Lexicon proof of such payment within [**] following such payment.
7.11.2.    Value Added Tax.  Notwithstanding anything contained in Section 7.11.1, this Section 7.11.2 shall apply with respect to value added tax (“VAT”).  All Payments are exclusive of VAT.  If any VAT is chargeable in respect of any Payments, Sanofi shall pay VAT at the applicable rate in respect of any such Payments following the receipt of a VAT invoice in the appropriate form issued by Lexicon in respect of those Payments, such VAT to be payable on the later of the due date of the payment of the Payments to which such VAT relates and [**] after the receipt by Sanofi of the applicable invoice relating to that VAT payment.

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7.12.    Interest on Late Payments.  If any payment due to either Party under this Agreement is not paid when due, then such paying Party shall pay interest thereon (before and after any judgment) at an annual rate (but with interest accruing on a daily basis) of [**] basis points above the London Interbank Offered Rate for deposits in United States Dollars having a maturity of one (1) month published by the British Bankers’ Association, as adjusted from time to time on the first London business day of each month, such interest to run from the date on which payment of such sum became due until payment thereof in full together with such interest.
7.13.    Financial Records.  Each Party shall, and shall cause its Affiliates and its and their (sub)licensees (including distributors deemed to be Sublicensees under the definition of Net Sales) to, keep complete and accurate financial books and records pertaining to (i) any Development Costs, Commercialization Costs and Medical Affairs Costs, in each case that are reimbursable (in whole or in part) by the other Party hereunder (ii) only with respect to Sanofi, Net Sales of Licensed Products, and (iii) only with respect to Lexicon, ROFN1 Development Costs and ROFN2 Development Costs, in each case ((i), (ii) and (iii)), to the extent required to calculate and verify all amounts payable hereunder.  Each Party shall, and shall cause its Affiliates and its and their (sub)licensees (including distributors deemed to be Sublicensees under the definition of Net Sales) to, retain such books and records until the later of (x) [**] after the end of the period to which such books and records pertain and (y) the expiration of the applicable tax statute of limitations (or any extensions thereof) or for such longer period as may be required by Applicable Law.
7.14.    Audit Procedures.
7.14.1.    At the request of the other Party, each Party shall, and shall cause its Affiliates and its and their Sublicensees (including distributors deemed to be Sublicensees under the definition of Net Sales) to, permit an independent auditor designated by the other Party and reasonably acceptable to the audited Party, at reasonable times and upon reasonable notice, to audit the books and records maintained pursuant to Section 7.13 to ensure the accuracy of all reports and payments made hereunder.
7.14.2    Such examinations may not (i) be conducted for any Calendar Quarter more than [**] after the end of such Calendar Quarter, (ii) be conducted more than [**] in any [**] (unless a previous audit during such [**] revealed an underpayment (or with respect to any reimbursement, an overpayment) with respect to such period) or (iii) be repeated for any Calendar Quarter; provided that Sanofi shall be permitted to audit Lexicon after Sanofi’s exercise of the applicable right of first negotiation pursuant to Section 2.7.1 or Section 2.7.2, as applicable, once (a) with respect to the ROFN1 Development Costs, such audit to be conducted after PoC Successful Completion, or (b) with respect to the ROFN2 Development Costs, such audit to be conducted after P3 Successful Completion.
7.14.3.    Upon completion of the audit, the auditor shall provide a report to both Parties, which report shall be limited to a description of any failure to comply with the terms of this Agreement and the amount of the financial discrepancy (whether relating to the royalty calculations, calculations of milestones under Section 7.2.2, Development Cost reporting or Net Sales calculations).
7.14.4.    The cost of this audit shall be borne by the auditing Party, unless the audit reveals an underpayment by or over-reporting of applicable costs or an under-reporting of applicable revenues by the audited Party, in either case of more than [**] from the reported amounts for the period under audit, in which case the audited Party shall bear the cost of the audit.  Subject to the dispute 

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resolution provisions set forth in Section 13.5, if such audit concludes that (a) Sanofi underpaid royalties or sales milestones, then Sanofi shall pay the additional amounts due, with interest from the date originally due as provided in Section 7.12, (b) Sanofi overpaid royalties or sales milestones, then Lexicon shall refund such amounts, or (c) the audited Party over-reported Development Costs, then the audited Party shall make a reconciling payment to the other Party, as required to achieve the allocation of Development Costs set forth in Section 7.6, with interest from the date originally due as provided in Section 7.12.  In each case of a payment due under this Section 7.14, such payment shall be made within [**] after the date on which the audit report is delivered to the Parties.
7.14.5.    The receiving Party shall treat all information subject to review under this ARTICLE 7 in accordance with the confidentiality provisions of ARTICLE 9 and the Parties shall cause the auditor to enter into a reasonably acceptable confidentiality agreement with the audited Party obligating such firm to retain all such financial information in confidence pursuant to such confidentiality agreement.
7.15.    Right to Offset.  Each Party shall have the right to offset any amount owed by the other Party to such first Party under or in connection with this Agreement, including pursuant to ARTICLE 11 or in connection with any breach, against any payments owed by such first Party to such other Party under this Agreement; provided that no such offset shall be applied based on breach damages unless and until such damages have been reduced to a final arbitration award pursuant to Section 13.5 or such other Party has agreed to such damages through settlement.  Such offsets shall be in addition to any other rights or remedies available under this Agreement and Applicable Law.

ARTICLE 8
INTELLECTUAL PROPERTY

8.1    Ownership of Intellectual Property.
8.1.1.    Ownership of Technology.  Subject to the licenses and other rights granted herein, as between the Parties, except for Study Data, each Party shall own all right, title and interest in and to any and all: (i) Information and Inventions that are conceived, discovered, developed or otherwise made by or on behalf of such Party or its Affiliates under this Agreement, whether or not patented or patentable and (ii) Patents and other intellectual property rights with respect thereto, other than Joint Know-How and Joint Patents.  Subject to the licenses and other rights granted herein, as between the Parties, Sanofi shall be the sole owner of, with all rights, title and interest in, all Study Data for clinical studies that are conducted by or on behalf of Sanofi.  Subject to the licenses and other rights granted herein, as between the Parties, Lexicon shall be the sole owner of, with all rights, title and interest in, all Study Data for clinical studies that are conducted by or on behalf of Lexicon.
8.1.2.    Ownership of Joint Patents and Joint Know-How.  Subject to the licenses and other rights granted herein and the last sentence of Section 8.1.1, as between the Parties, the Parties shall each own an equal, undivided interest in any and all:  (i) Information and Inventions that are conceived, discovered, developed or otherwise made jointly by or on behalf of Lexicon or its Affiliates, on the one hand and Sanofi or its Affiliates, on the other hand, under this Agreement, whether or not patented or patentable (the “Joint Know-How”); and (ii) Patents (the “Joint Patents”) and other intellectual property rights with respect to the Information and Inventions described in clause (i) (together with Joint Know-How and Joint Patents, the “Joint Intellectual Property Rights”).  Each Party shall promptly 

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disclose to the other Party in writing and shall cause its Affiliates, and its and their licensees and (sub)licensees to so disclose, the development, making, conception or reduction to practice of any Joint Intellectual Property Rights.  Subject to the licenses and other rights granted hereunder, except as otherwise prohibited hereunder, each Party shall have the right to practice or license the Joint Intellectual Property Rights without the consent of the other Party or a duty of accounting to the other Party (but for clarity, assignment of a Party’s interest in the Joint Intellectual Property Rights would require consent of the other Party).
8.1.3.    United States Law; Assignment.  The determination of whether any Information and Inventions are conceived, discovered, developed or otherwise made by a Party for the purpose of allocating proprietary rights (including Patent, copyright or other intellectual property rights) as set forth in this ARTICLE 8, shall, for purposes of this Agreement, be made in accordance with Applicable Law in the United States irrespective of where or when such conception, discovery, reduction to practice, development or making occurs.  To the extent necessary to give effect to Sections 8.1.1 and 8.1.2, each Party shall, and does hereby, assign, and shall cause its Affiliates to so assign, to the other Party, without additional compensation, such right, title and interest in and to any Information and Inventions (including Study Data), as well as any intellectual property rights with respect thereto, as is necessary to fully effect the allocation of ownership set forth in such Sections.
8.1.4.    Assignment Obligation.  Each Party shall cause all Persons who perform Development or Manufacturing activities for such Party under or in connection with this Agreement or who conceive, discover, reduce to practice, develop or otherwise make any Information and Inventions by or on behalf of either Party or its Affiliates under or in connection with this Agreement to be under an obligation to assign (or, if such Party is unable to cause such Person to agree to such assignment obligation despite such Party’s using commercially reasonable efforts to negotiate such assignment obligation, provide a license under) their rights in any Information and Inventions resulting therefrom to such Party, except where Applicable Law requires otherwise and except in the case of governmental, not-for-profit and public institutions that have standard policies against such an assignment (in which case a suitable license, or right to obtain such a license, shall be obtained).
8.2.    Trademarks and Domain Names.
8.2.1.    Ownership of Product Trademarks.  As between the Parties, Sanofi shall have the sole right to select and shall own all right, title and interest in and to the Product Trademarks on a worldwide basis.  Lexicon shall not and shall not permit its Affiliates to (i) use in their respective businesses, any Trademark that is confusingly similar to, misleading or deceptive with respect to or that dilutes any (or any part) of the Product Trademarks and (ii) do any act that endangers, destroys, or similarly affects, in any material respect, the value of the goodwill pertaining to the Product Trademarks.  Lexicon shall not and shall not permit its Affiliates to, attack, dispute or contest the validity of or ownership of any Product Trademark anywhere in the Territory or any registrations issued or issuing with respect thereto.
8.2.2.    Ownership of Corporate Names.  As between the Parties, Lexicon shall retain all right, title and interest in and to its Corporate Names.
8.2.3.    Domain Names.  Sanofi may, in exercising its rights under the licenses granted to it hereunder, register and use domain names used or intended for use in connection with the Commercialization of the Licensed Compounds and Licensed Products in the Field in the Territory (the 

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“Domain Names”).  As between the Parties, the Domain Names shall be exclusively owned and operated by Sanofi, and Sanofi shall have the sole right to protect, maintain, enforce and defend the Domain Names, except as otherwise agreed by Sanofi in writing.
8.3.    Maintenance and Prosecution of Patents.
8.3.1.    Patent Prosecution and Maintenance of Lexicon Patents.   As between the Parties, Lexicon shall have the first right, but not the obligation, using counsel of its own choice, to prepare, file, prosecute and maintain the Lexicon Patents worldwide including making decisions regarding any Opt-Out or Opt-In and to be responsible for any related interference, re-issuance, re-examination and, prior to the issuance of such Patent, opposition proceedings.  Lexicon shall be responsible for all reasonable out-of-pocket costs and expenses incurred in connection with such prosecution and maintenance of Lexicon Patents.  Lexicon shall periodically inform Sanofi of all material steps with regard to the preparation, filing, prosecution and maintenance of Lexicon Patents in the Major Markets in the Territory, including by providing Sanofi with a copy of material communications to and from any patent authority in the Major Markets in the Territory regarding such Lexicon Patents and by providing Sanofi drafts of any material filings or responses to be made to such patent authorities in the Major Markets in the Territory sufficiently in advance of submitting such filings or responses so as to allow for a reasonable opportunity for Sanofi to review and comment thereon.  Lexicon shall consider in good faith the requests and suggestions of Sanofi with respect to such drafts and with respect to strategies for filing and prosecuting the Lexicon Patents in the Major Markets in the Territory.  If, as between the Parties, Lexicon decides not to prepare, file, prosecute or maintain a Lexicon Patent in a country in the Territory entirely or with respect to the Licensed Products, Lexicon shall provide reasonable prior written notice to Sanofi of such intention and Sanofi shall thereupon have the option to assume the control and direction of the preparation, filing, prosecution and maintenance of such Lexicon Patent at its sole cost and expense in such country, unless Lexicon’s decision not to prepare, file, prosecute or maintain was based on a good faith desire to preserve the applicable invention as a trade secret or for good faith patent strategy reasons in each case relating to the Licensed Products.
8.3.2.    Patent Prosecution and Maintenance of Sanofi Patents.  As between the Parties, Sanofi shall have the sole right, but not the obligation, to prepare, file, prosecute and maintain the Sanofi Patents worldwide including making decisions regarding any Opt-Out or Opt-In, and to be responsible for any related interference, re-issuance, re-examination and opposition proceedings, in each case, at its sole cost and expense and using counsel of its own choice.
8.3.3.    Patent Prosecution and Maintenance of Joint Patents.  As between the Parties, Sanofi shall have the first right, but not the obligation, using counsel of its own choice, to prepare, file, prosecute and maintain the Joint Patents worldwide including making decisions regarding any Opt-Out or Opt-In and to be responsible for any related interference, re-issuance, re-examination and, prior to the issuance of such Patent, opposition proceedings.  Sanofi shall be responsible for all reasonable out-of-pocket costs and expenses incurred in connection with such prosecution and maintenance of Joint Patents.  Sanofi shall periodically inform Lexicon of all material steps with regard to the preparation, filing, prosecution and maintenance of Joint Patents in the Major Markets, including by providing Lexicon with a copy of material communications to and from any patent authority in the Major Markets regarding such Joint Patents and by providing Lexicon drafts of any material filings or responses to be made to such patent authorities in the Major Markets sufficiently in advance of submitting such filings or responses so as to allow for a reasonable opportunity for Lexicon to review and comment thereon.  Sanofi shall consider in good faith the requests and suggestions of Lexicon with respect to such drafts and with respect 

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to strategies for filing and prosecuting the Joint Patents in the Major Markets.  If, as between the Parties, Sanofi decides not to prepare, file, prosecute or maintain a Joint Patent in a country, Sanofi shall provide reasonable prior written notice to Lexicon of such intention and Lexicon shall thereupon have the option to assume the control and direction of the preparation, filing, prosecution and maintenance of such Joint Patent at its sole cost and expense in such country, unless Sanofi’s decision not to prepare, file, prosecute or maintain was based on a good faith desire to preserve the applicable invention as a trade secret or for good faith patent strategy reasons.  The prosecuting Party shall, at its sole discretion, determine the order in which the applicants’ names are listed in filings for Joint Patents.
8.3.4.    Cooperation.  The non-prosecuting Party shall, and shall cause its Affiliates to, assist and cooperate with the prosecuting Party, as the prosecuting Party may reasonably request from time to time, in the preparation, filing, prosecution and maintenance of the Lexicon Patents, Sanofi Patents and Joint Patents in the Territory under this Agreement, including that the non-prosecuting Party shall, and shall ensure that its Affiliates, (i) offer its comments, if any, promptly, (ii) provide access to relevant documents and other evidence and make its employees available at reasonable business hours and (iii) provide the prosecuting Party, upon its request, with copies of any patentability search reports generated by its patent counsel with respect to the Lexicon Patents, Sanofi Patents or Joint Patents, including relevant Third Party patents and patent applications located; provided that neither Party shall be required to provide legally privileged information with respect to such intellectual property unless and until procedures reasonably acceptable to such Party are in place to protect such privilege.
8.3.5.    Patent Term Extension and Supplementary Protection Certificate.  As between the Parties, Sanofi shall have the sole right to make decisions regarding, and to apply for, patent term extensions worldwide, including the United States with respect to extensions pursuant to 35 U.S.C. §156 et. seq. and in other jurisdictions pursuant to supplementary protection certificates, and in all jurisdictions with respect to any other extensions that are now or become available in the future, wherever applicable, for the Sanofi Patents, Lexicon Patents and any Joint Patents and with respect to the Licensed Compound and the Licensed Products, in each case including whether or not to do so; provided that with regard to the Lexicon Patents and any Joint Patents, the Parties shall engage in good faith consultations with respect to such decisions prior to such decisions.  Lexicon shall provide prompt and reasonable assistance, as requested by Sanofi, including by taking such action as patent holder as is required under any Applicable Law to obtain such extension or supplementary protection certificate or Opt-Out or Opt-In in relation to any such supplementary protection certificate.
8.3.6.    Common Ownership Under Joint Research Agreements.  Notwithstanding anything to the contrary in this ARTICLE 8, each Party shall have the right to invoke 35 U.S.C. 102(c) when exercising its rights under this ARTICLE 8 without the prior written consent of the other Party.  A Party intending to invoke 35 U.S.C. 102(c) shall so notify the other Party, and the Parties shall coordinate their activities with respect to any submissions, filings or other activities in support thereof.  The Parties acknowledge and agree that this Agreement is a “joint research agreement” as defined in 35 U.S.C. 100(h).
8.3.7.    Patent Listings.  As between the Parties, Sanofi shall have the sole right to make all filings with Regulatory Authorities in the Territory with respect to the Sanofi Patents, Lexicon Patents and Joint Patents, including as required or allowed (i) in the United States, in the FDA’s Orange Book and (ii) in the European Union, under the national implementations of Article 10.1(a)(iii) of Directive 2001/EC/83 or other international equivalents.

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8.3.8.    UPC Opt-Out and Opt-In.  Sanofi (with respect to Sanofi Patents), Lexicon (with respect to Lexicon Patents), or Sanofi and Lexicon (with respect to Joint Patents), as applicable, shall, at Sanofi’s (with respect to Sanofi Patents and Joint Patents) and Lexicon’s (with respect to Lexicon Patents), as applicable, sole cost and expense, as soon as reasonably practicable on request by the prosecuting Party (i.e., pursuant to Section 8.3.1, Section 8.3.2 or Section 8.3.3, as applicable) (i) lodge an application with the Registry of the Unified Patent Court in the manner specified by Rule 5 of the Rules of Procedure of the Unitary Patent Court requesting the Opt-Out or Opt-In, as specified by the prosecuting Party, of any Lexicon Patent or Joint Patent specified by the prosecuting Party, (ii) pay the prescribed fee and make such submissions, and (iii) take such other actions as may be necessary or useful to secure the Opt Out or Opt-In, as applicable, of such Patent including making any declarations required by Rule 5(3)(e) of the Rules of Procedure of the Unitary Patent Court.
8.4.    Post Grant Proceedings.
8.4.1.    Challenges by Third Parties.
(i)    Lexicon Patents.  If Lexicon learns that a Third Party has filed a Post Grant Proceeding regarding any Lexicon Patent, Lexicon shall notify Sanofi in writing of such Post Grant Proceeding no later than [**] after Lexicon learns of the filing.  Once such Post Grant Proceeding has commenced, Lexicon shall provide to Sanofi:
(1)    a copy of any action, communication, letter, or other correspondence issued by the relevant Patent authority or the Third Party within [**] of receipt thereof;
(2)    a copy of any proposed response, amendment, paper, or other correspondence to be filed with the relevant Patent authority no less than [**] prior to making such filing.  Sanofi may provide suggestions and recommendations regarding the content of the response, amendment, paper, or other correspondence at least [**] prior to its filing, which Lexicon shall consider in good faith; and
(3)    a copy of any response, amendment, paper, or other correspondence as filed with the relevant Patent authority no more than [**] after Lexicon receives confirmation from the relevant Patent authority that the response, amendment, paper, or other correspondence has been filed.
Lexicon agrees not to settle any Post Grant Proceeding filed by a Third Party regarding a Lexicon Patent without the prior written approval of Sanofi, not to be unreasonably withheld, conditioned or delayed.
(ii)    Joint Patents.  If either Party learns that a Third Party has filed a Post Grant Proceeding regarding any Joint Patent, the Party who first learns of such Post Grant Proceeding shall notify the other Party in writing no later than [**] after the Party learns of the filing.  Once such a Post Grant Proceeding has commenced, the prosecuting Party (i.e., pursuant to Section 8.3.1) shall provide to the other Party:
(1)    a copy of any proposed response, amendment, paper, or other correspondence to be filed with the relevant Patent authority no less than [**] prior to making such filing, unless otherwise agreed by counsel for both Parties.  The non-prosecuting Party may provide suggestions and recommendations regarding the content of the response, amendment, paper, or other correspondence to the prosecuting Party at least [**] prior to its filing, which the prosecuting Party must consider in good 

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faith.  Unless otherwise agreed by the Parties, any response submitted to the United States Patent and Trademark Office shall be a joint response; and
(2)    a copy of any response, amendment, paper, or other correspondence as filed on behalf of Sanofi and Lexicon jointly with the relevant Patent authority no more than [**] after the prosecuting Party  receives confirmation from the relevant Patent authority that the response, amendment, paper, or other correspondence has been filed.
The prosecuting Party agrees not to settle any Post Grant Proceeding filed by a Third Party regarding Joint Patent without the prior written approval of the non-prosecuting Party, which shall not be unreasonably withheld, conditioned or delayed.
8.4.2.    Challenge by a Party.
(i)    Should either Party wish to file a Post Grant Proceeding regarding a Lexicon Patent, such Party shall promptly notify the other Party in writing.  Upon receipt of such notice, the Parties shall engage in good faith consultations about the merits of such a Post Grant Proceeding and whether it should be filed; provided, however, that Lexicon shall have final decision authority with respect to whether such a proceeding is filed.  If such a Post Grant Proceeding is filed, Lexicon shall provide to Sanofi:
(1)    a copy of any action, communication, letter, or other correspondence issued by the relevant Patent authority within [**] of receipt thereof;
(2)    a copy of any response, amendment, paper, or other correspondence to be filed with the relevant Patent authority no less than [**] prior to making such filing, unless otherwise agreed by counsel for both Parties. Sanofi may provide suggestions and recommendations regarding the content of the response, amendment, paper, or other correspondence by no later than [**] prior to its filing, which Lexicon shall consider in good faith; and
(3)    a copy of any response, amendment, paper, or other correspondence as filed with the relevant Patent authority no more than [**] after Lexicon receives confirmation from the relevant Patent authority that the response, amendment, paper, or other correspondence has been filed.
Lexicon shall not settle such a Post Grant Proceeding without the prior written approval of Sanofi, not to be unreasonably withheld, conditioned or delayed.
(ii)    Joint Patents.  Should either Party wish to file a Post Grant Proceeding regarding a Joint Patent, such Party shall promptly notify the other Party in writing. Upon receipt of such notice, the Parties shall engage in good faith consultations about the merits of such a Post Grant Proceeding and whether it should be filed; provided, however, that the prosecuting Party (i.e., pursuant to Section 8.3.1) shall have final decision authority with respect to whether such a proceeding should be filed.  If such a Post Grant Proceeding is filed, the non-prosecuting Party shall refrain from filing any substantive response, amendment, paper or other correspondence with the relevant Patent authority, and the prosecuting Party shall provide to the non-prosecuting Party:
(1)    a copy of any action, communication, letter, or other correspondence issued by the relevant Patent authority within at least [**] of receipt thereof;

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(2)    a copy of any response, amendment, paper, or other correspondence to be filed with the relevant Patent authority no less than [**] prior to making such filing, unless otherwise agreed by counsel for both Parties. The non-prosecuting Party may provide suggestions and recommendations regarding the content of the response, amendment, paper, or other correspondence by no later than [**] prior to its filing. The prosecuting Party shall consider any suggestions or recommendations the non-prosecuting Party provides in good faith; and
(3)    a copy of any response, amendment, paper, or other correspondence as filed with the relevant Patent authority no more than [**] after the prosecuting Party receives confirmation from the relevant Patent authority that the response, amendment, paper, or other correspondence has been filed.
The prosecuting Party shall not settle such a Post Grant Proceeding without the prior written approval of the non-prosecuting Party, not to be unreasonably withheld, conditioned or delayed.
8.5.    Enforcement of Patents.
8.5.1.    Notice. Each Party shall promptly notify the other Party in writing and shall provide the other Party with a copy within [**] of receipt of (i) any alleged or threatened infringement of the Lexicon Patents, Sanofi Patents or Joint Patents in any jurisdiction in the Territory or (ii) any certification filed under the Hatch-Waxman Act claiming that any Lexicon Patents, Sanofi Patents or Joint Patents are invalid or unenforceable or claiming that any Lexicon Patents, Sanofi Patents or Joint Patents would not be infringed by the making, use, offer for sale, sale or import of a product for which an application under the Hatch-Waxman Act is filed or any equivalent or similar certification or notice in any other jurisdiction in the Territory, in each case ((i) and (ii)) of which such Party becomes aware.  The foregoing requirements shall apply to the Sanofi Patents solely to the extent relating to Generic Products or other products that compete with Licensed Products.  Any such infringement with respect to the Lexicon Patents, Joint Patents or Sanofi Patents shall constitute an “Infringement”.
8.5.2.    Enforcement of Lexicon Patents and Joint Patents.  As between the Parties, Sanofi shall have the first right, but not the obligation, to prosecute any Infringement with respect to the Lexicon Patents and Joint Patents, including as a defense or counterclaim in connection with any Third Party Infringement Claim or action brought by a Third Party seeking a declaration of non-infringement of a Lexicon Patent or Joint Patent, at Sanofi’s sole cost and expense, using counsel of its own choice.  In the event Sanofi prosecutes any such Infringement, Lexicon shall have the right to join as a party to such claim, suit or proceeding in the Territory and participate with its own counsel at its sole cost and expense; provided that Sanofi shall retain control of the prosecution of such claim, suit or proceeding, including the response to any defense or defense of any counterclaim raised in connection therewith.  If Sanofi or its designee does not take commercially reasonable steps to prosecute an Infringement (i) within [**] following the first notice provided above with respect to such Infringement or (ii) provided such date occurs after the first such notice of such Infringement is provided, [**] before the time limit, if any, set forth in appropriate laws and regulations for filing of such actions, whichever comes first, then (x) Sanofi shall so notify Lexicon and (y) Lexicon may prosecute such alleged or threatened Infringement at its sole cost and expense.
8.5.3.    Enforcement of Sanofi Patents.  As between the Parties, Sanofi shall have the sole right, but not the obligation, to prosecute Infringement with respect to the Sanofi Patents, including as a defense or counterclaim in connection with any Third Party Infringement Claim, at Sanofi’s 

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sole cost and expense, using counsel of its own choice, and Sanofi shall retain control of the prosecution of such suit.
8.5.4.    Cooperation.  The Parties agree to cooperate fully in any Infringement action pursuant to this Section 8.5, including by making the inventors, applicable records and documents (including laboratory notebooks) of the relevant Patents available to the controlling Party upon the controlling Party’s request.  Where a Party controls such an action, the other Party shall, and shall cause its Affiliates to, assist and cooperate with the controlling Party, as such controlling Party may reasonably request from time to time, in connection with its activities set forth in this Section 8.5, including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that, except with respect to Joint Patents, the controlling Party shall reimburse such other Party for its reasonable and verifiable out-of-pocket costs and expenses incurred in connection therewith.  Unless otherwise set forth herein, the Party entitled to bring any patent infringement litigation in accordance with this Section 8.5 shall have the right to settle such claim; provided that neither Party shall have the right to settle any Infringement litigation under this Section 8.5 in a manner that has a material adverse effect on the rights or interest of the other Party or in a manner that imposes any costs or liability on, or involves any admission by, the other Party, without the express written consent of the other Party (which consent shall not be unreasonably withheld, conditioned or delayed).  In connection with any activities with respect to an Infringement action prosecuted by a Party pursuant to this Section 8.5 involving Patents Controlled by the other Party or licensed under Section 2.1 to the other Party, the Party controlling such action shall (i) consult with the other Party as to the strategy for the prosecution of such claim, suit or proceeding, (ii) consider in good faith any comments from the other Party with respect thereto and (iii) keep the other Party reasonably informed of any material steps taken and provide copies of all material documents filed, in connection with such action.
8.5.5.    Recovery.  Except as otherwise agreed by the Parties in connection with a separate written cost sharing arrangement, any recovery realized as a result of such litigation described above in this Section 8.5 (whether by way of settlement or otherwise) shall be first allocated to reimburse the Parties for their costs and expenses in making such recovery (which amounts shall be allocated pro rata if insufficient to cover the totality of such expenses).  [**] of any remainder after such reimbursement is made shall be retained by the Party that has exercised its right to bring the enforcement action and [**] of any such remainder shall be paid to the other Party.
8.6.    Invalidity or Unenforceability Defenses or Actions.  Each Party shall promptly notify the other Party in writing of any alleged or threatened assertion of invalidity or unenforceability of any of the Lexicon Patents, Sanofi Patents or Joint Patents by a Third Party of which such Party becomes aware.  In the event that such allegation or threatened assertion arises in connection with a proceeding covered by Section 8.5, the allocation of rights and responsibilities, including with respect to costs and recoveries, shall be governed by Section 8.5.  For all other allegations or threatened assertions, the provisions of Section 8.4 shall govern the Parties’ rights and obligations with respect to such action, as if such action were a Post Grant Proceeding.
8.7.    Infringement Claims by Third Parties.  If the Exploitation of a Licensed Product in the Territory pursuant to this Agreement results in, or is reasonably expected to result in, any claim, suit or proceeding by a Third Party alleging infringement by Sanofi or any of its Affiliates or its or their Sublicensees, Distributors or customers (a “Third Party Infringement Claim”), including any defense or counterclaim in connection with an Infringement action initiated pursuant to Section 8.5 the Party first 

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becoming aware of such alleged infringement shall promptly notify the other Party thereof in writing.  As between the Parties, Sanofi shall have the first right, but not the obligation, to defend and control the defense of any such claim, suit or proceeding at its sole cost and expense, using counsel of its own choice.  Lexicon may participate in any such claim, suit or proceeding with counsel of its choice at its sole cost and expense.  If Sanofi or its designee elects (in a written communication submitted to Lexicon within a reasonable amount of time after notice of the alleged patent infringement) not to defend or control the defense of, or otherwise fails to initiate and maintain the defense of, any such claim, suit or proceeding, within such time period so that Lexicon is not prejudiced by any delays, Lexicon may conduct and control the defense of any such claim, suit or proceeding at its sole cost and expense.  Where a Party controls such an action, the other Party shall, and shall cause its Affiliates to, assist and cooperate with the controlling Party, as such controlling Party may reasonably request from time to time, in connection with its activities set forth in this Section 8.7, including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that the controlling Party shall reimburse such other Party for its reasonable and verifiable out-of-pocket costs and expenses incurred in connection therewith.  Each Party shall keep the other Party reasonably informed of all material developments in connection with any such claim, suit or proceeding.
8.8.    Third Party Rights.  Sanofi may, at its election, acquire from a Third Party any license to any Patent or other intellectual property right that it views as necessary or useful to the Exploitation of the Licensed Compound or Licensed Product by Sanofi or any of its Affiliates or any of its or their Sublicensees, Distributors or customers in order to avoid infringement or misappropriation of any Patent, trade secret or other intellectual property right of a Third Party in any country in the Territory (such right, a “Third Party Right”).  In the event that Sanofi negotiates and obtains any such license that meets the criteria in Section 7.3.3(ii), then Section 7.3.3(ii) shall apply.
8.9.    Product Trademarks.
8.9.1.    Prosecution of Product Trademarks.  Sanofi shall have the sole right to register, prosecute and maintain the Product Trademarks using counsel of its own choice.  All costs and expenses of registering, prosecuting and maintaining the Product Trademarks shall be borne solely by Sanofi.
8.9.2.    Enforcement of Product Trademarks.  Sanofi shall have the sole right to take such action as Sanofi deems necessary against a Third Party based on any alleged, threatened or actual infringement, dilution, misappropriation or other violation of or unfair trade practices or any other like offense relating to, the Product Trademarks by a Third Party in the Territory at its sole cost and expense and using counsel of its own choice.  Sanofi shall retain any damages or other amounts collected in connection therewith.
8.9.3.    Third Party Claims.  Sanofi shall have the sole right to defend against and settle any alleged, threatened or actual claim by a Third Party that the use or registration of the Product Trademarks in the Territory infringes, dilutes, misappropriates or otherwise violates any Trademark or other right of that Third Party or constitutes unfair trade practices or any other like offense or any other claims as may be brought by a Third Party against a Party in connection with the use of the Product Trademarks with respect to a Licensed Product in the Territory at its sole cost and expense and using counsel of its own choice.  Sanofi shall retain any damages or other amounts collected in connection therewith.

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8.9.4.    Cooperation.  Lexicon shall, and shall cause its Affiliates to, assist and cooperate with Sanofi, as Sanofi may reasonably request from time to time, in connection with its activities set forth in this Section 8.9, including where necessary, furnishing a power of attorney solely for such purpose or joining in, or being named as a necessary party to, such action, providing access to relevant documents and other evidence and making its employees available at reasonable business hours; provided that Sanofi shall reimburse Lexicon for its reasonable and verifiable out-of-pocket costs and expenses incurred in connection therewith.

ARTICLE 9
CONFIDENTIALITY AND NON-DISCLOSURE

9.1.    Confidentiality Obligations.  At all times during the Term and for a period of [**] following termination or expiration of this Agreement in its entirety, each Party shall and shall cause its officers, directors, employees and agents to, keep confidential and not publish or otherwise disclose to a Third Party and not use, directly or indirectly, for any purpose, any Confidential Information furnished or otherwise made known to it, directly or indirectly, by the other Party, except to the extent such disclosure or use is expressly permitted by the terms of this Agreement.  “Confidential Information” means any technical, business or other information provided by or on behalf of one Party to the other Party in connection with this Agreement, whether prior to, on or after the Effective Date, including the terms of this Agreement, information relating to the Licensed Compound or any Licensed Product (including the Regulatory Documentation), any Exploitation of the Licensed Compound or any Licensed Product, any Know-How with respect thereto developed by or on behalf of the disclosing Party or its Affiliates or, in the case of Sanofi, its or their Sublicensees (including Sanofi Know-How and Lexicon Know-How, as applicable) or the scientific, regulatory or business affairs or other activities of either Party.  Notwithstanding the foregoing, Confidential Information constituting (i) Regulatory Documentation owned by Sanofi pursuant to Section 3.2 shall be deemed the Confidential Information of Sanofi (and Sanofi shall be deemed to the disclosing Party and Lexicon shall be deemed the receiving Party with respect thereto) and (ii) any Joint Know-How and the terms of this Agreement shall be deemed to be the Confidential Information of both Parties (and both Parties shall be deemed to be the receiving Party and the disclosing Party with respect thereto).  Notwithstanding the foregoing, the confidentiality and non-use obligations under this Section 9.1 with respect to any Confidential Information shall not include any information that:
9.1.1.    is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no breach of this Agreement by the receiving Party;
9.1.2.    can be demonstrated by documentation or other competent proof to have been in the receiving Party’s possession prior to disclosure by the disclosing Party without any obligation of confidentiality with respect to such information; provided that the foregoing exception shall not apply with respect to Confidential Information constituting Joint Know-How or otherwise described in clauses (i) or (ii) of Section 9.1;
9.1.3.    is subsequently received by the receiving Party from a Third Party who is not bound by any obligation of confidentiality with respect to such information;
9.1.4.    has been published by a Third Party or otherwise enters the public domain through no fault of the receiving Party in breach of this Agreement; or

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9.1.5.    can be demonstrated by documentation or other competent evidence to have been independently developed by or for the receiving Party without reference to the disclosing Party’s Confidential Information.
Specific aspects or details of Confidential Information shall not be deemed to be within the public domain or in the possession of the receiving Party merely because the Confidential Information is embraced by more general information in the public domain or in the possession of the receiving Party.  Further, any combination of Confidential Information shall not be considered in the public domain or in the possession of the receiving Party merely because individual elements of such Confidential Information are in the public domain or in the possession of the receiving Party unless the combination and its principles are in the public domain or in the possession of the receiving Party.
9.2.    Permitted Disclosures.
9.2.1.    Either Party may disclose to bona fide potential investors, lenders and acquirors, and to such Party’s consultants and advisors, the existence and terms of this Agreement to the extent necessary in connection with a proposed equity or debt financing of such Party, or a proposed acquisition or business combination, and Lexicon may make such disclosures as are necessary for Lexicon to comply with its reporting obligations under the T1DM Funding Agreements, in each case, so long as such recipients are bound in writing to maintain the confidentiality of such information to the extent the Party making such disclosure remains subject to a confidentiality obligation as to such information under this Agreement.
9.2.2.    Each Party may disclose Confidential Information to the extent that such disclosure is made in response to a valid order of a court of competent jurisdiction or other supra-national, federal, national, regional, state, provincial or local governmental or regulatory body of competent jurisdiction or if such disclosure is otherwise required by law, including in order to comply with applicable securities laws or regulations or the rules or regulations of any stock exchange on which securities of the Party making such disclosure are traded; provided, however, that the receiving Party shall, if practicable, first have notified the disclosing Party of such requirement so that the disclosing Party may seek to quash such order or to obtain a protective order for confidential treatment with respect to such disclosure; provided, further, that the Confidential Information disclosed in response to such court or governmental order or other legal requirement shall be limited to that information which is legally required to be disclosed in response to such court or governmental order.
9.2.3.    Either Party may disclose Confidential Information to the extent such disclosure if (i) reasonably necessary for the filing or prosecuting Patents as contemplated by ARTICLE 8; or (ii) is reasonably necessary in connection with regulatory filings for the Licensed Products in the Field consistent with this Agreement.
9.3.    Additional Permitted Disclosures by Sanofi.  Sanofi and its Affiliates and its and their Sublicensees may disclose Confidential Information of Lexicon as may be necessary or useful in connection with the Exploitation of the Licensed Products (including the Licensed Compounds therein) (including in connection with any filing, application or request for Regulatory Approval by or on behalf of Sanofi or any of its Affiliates or its or their Sublicensees) or otherwise in connection with the performance of its obligations or exercise of Sanofi’s rights as contemplated by this Agreement, including to existing or potential Distributors, Sublicensees, collaboration partners or acquirers.

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9.4.    Use of Name.  Except as expressly provided herein, neither Party shall mention or otherwise use the name, logo or Trademark of the other Party or any of its Affiliates or any of its or their Sublicensees (or any abbreviation or adaptation thereof) in any publication, press release, marketing and promotional material or other form of publicity without the prior written approval of such other Party in each instance.  The restrictions imposed by this Section 9.5 shall not prohibit (i) Sanofi from making any disclosure identifying Lexicon to the extent required in connection with its exercise of its rights or obligations under this Agreement, (ii) either Party from making any disclosure identifying the other Party that is required by Applicable Law or the rules of a stock exchange on which the securities of the disclosing Party are listed (or to which an application for listing has been submitted) or (iii) either Party from making any disclosure identifying the other Party that has then previously been made in accordance with the terms of this Agreement provided that such disclosure remains accurate as of such time and provided the frequency and form of such disclosure are reasonable.
9.5.    Public Announcements.  The Parties have agreed upon the content of one (1) or more press releases which shall be issued in the form(s) attached hereto as Schedule 9.5, the release of which the Parties shall coordinate in order to accomplish such release promptly following the Execution Date.  Neither Party shall issue any other public announcement, press release or other public disclosure regarding this Agreement or its subject matter without the other Party’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned), except for any such disclosure that is required by Applicable Law or the rules of a stock exchange on which the securities of the disclosing Party are listed (or to which an application for listing has been submitted).  In the event a Party is required by Applicable Law or the rules of a stock exchange on which its securities are listed (or to which an application for listing has been submitted) to make such a public disclosure, such Party shall submit the proposed disclosure in writing to the other Party as far in advance as reasonably practicable (and in no event less than [**] prior to the anticipated date of disclosure except as may be required by Applicable Law or the rules of an applicable stock exchange) so as to provide a reasonable opportunity to comment thereon.  Neither Party shall be required to seek the permission of the other Party to repeat any information regarding the terms of this Agreement or any amendment hereto that has already been publicly disclosed by such Party or by the other Party, in accordance with this Section 9.5 or Section 9.9, provided that such information remains accurate as of such time and provided the frequency and form of such disclosure are reasonable.
9.6.    Publications.  The Parties recognize the desirability of publishing and publicly disclosing the results of and information regarding, activities under this Agreement.  Accordingly, each Party shall be free to publicly disclose the results of and information regarding, its activities under this Agreement, subject to prior review by the other Party of any disclosure of the other Party’s Confidential Information for issues of patentability and protection of such Confidential Information, in a manner consistent with Applicable Law and industry practices, as provided in this Section 9.7.  Accordingly, prior to publishing or disclosing any of the other Party’s Confidential Information, the publishing Party shall provide the other Party with drafts of proposed abstracts, manuscripts or summaries of presentations that cover such Confidential Information.  The non-publishing Party shall respond promptly through its designated representative and in any event no later than [**] after receipt of such proposed publication or presentation or such shorter period as may be required by the publication or presentation.  The publishing Party agrees to allow a reasonable period (not to exceed [**]) to permit filings for patent protection and to otherwise address issues of Confidential Information or related competitive harm to the reasonable satisfaction of the other Party.

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9.7.    Return of Confidential Information.  Upon the effective date of the termination of this Agreement for any reason, either Party may request in writing and the non-requesting Party shall either (at the non-requesting Party’s election), with respect to Confidential Information to which such non-requesting Party does not retain rights under the surviving provisions of this Agreement: (i) promptly destroy all copies of such Confidential Information in the possession or control of the non-requesting Party and confirm such destruction in writing to the requesting Party; or (ii) promptly deliver to the requesting Party all copies of such Confidential Information in the possession or control of the non-requesting Party.  Notwithstanding the foregoing, the non-requesting Party shall be permitted to retain such Confidential Information (x) to the extent necessary or useful for purposes of performing any continuing obligations or exercising any ongoing rights hereunder and, in any event, a single copy of such Confidential Information for archival purposes and (y) any computer records or files containing such Confidential Information that have been created solely by such non-requesting Party’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with such non-requesting Party’s standard archiving and back-up procedures, but not for any other uses or purposes.  All Confidential Information shall continue to be subject to the terms of this Agreement for the period set forth in Section 9.1.
9.8.    Privileged Communications.  In furtherance of this Agreement, it is expected that the Parties will, from time to time, disclose to one another privileged communications with counsel, including opinions, memoranda, letters and other written, electronic and verbal communications.  Such disclosures are made with the understanding that they shall remain confidential in accordance with this ARTICLE 9, that they will not be deemed to waive any applicable attorney-client or attorney work product or other privilege and that they are made in connection with the shared community of legal interests existing between Sanofi and Lexicon, including the community of legal interests in avoiding infringement of any valid, enforceable patents of Third Parties and maintaining the validity of the Sanofi Patents, Lexicon Patents and Joint Patents.  In the event of any litigation (or potential litigation) with a Third Party related to this Agreement or the subject matter hereof, the Parties shall, upon either Party’s request, enter into a reasonable and customary joint defense agreement.  In any event, each Party shall consult in a timely manner with the other Party before engaging in any conduct (e.g., producing information or documents) in connection with litigation or other proceedings that could conceivably implicate privileges maintained by the other Party. Notwithstanding anything contained in this Section 9.8, nothing in this Agreement shall prejudice a Party’s ability to take discovery of the other Party in disputes between them relating to the Agreement and no information otherwise admissible or discoverable by a Party shall become inadmissible or immune from discovery solely by this Section 9.8.
9.9.    Form 8-K.  The Parties have agreed upon the content of Lexicon’s Form 8-K containing the press release in Schedule 9.5, which shall be issued in the form(s) attached hereto as Schedule 9.9.

ARTICLE 10
REPRESENTATIONS AND WARRANTIES

10.1    Mutual Representations and Warranties.  Lexicon and Sanofi each represents and warrants to the other, as of the Execution Date and as of the Effective Date, that:
10.1.1    It is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority, corporate or otherwise, to execute, deliver and perform this Agreement;

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10.1.2.    The execution and delivery of this Agreement and the performance by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action and do not violate:  (i) such Party’s charter documents, bylaws or other organizational documents; (ii) in any material respect, any agreement, instrument or contractual obligation to which such Party is bound; (iii) any requirement of any Applicable Law; or (iv) any order, writ, judgment, injunction, decree, determination or award of any court or governmental agency presently in effect applicable to such Party;
10.1.3    This Agreement is a legal, valid and binding obligation of such Party enforceable against it in accordance with its terms and conditions, subject to the effects of bankruptcy, insolvency or other laws of general application affecting the enforcement of creditor rights, judicial principles affecting the availability of specific performance and general principles of equity (whether enforceability is considered a proceeding at law or equity); and
10.1.4.    It is not under any obligation, contractual or otherwise, to any Person that conflicts with or is inconsistent in any material respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations hereunder.
10.2.    Additional Representations and Warranties of Lexicon.  Lexicon further represents and warrants to Sanofi, as of the Execution Date, as follows:
10.2.1.    Lexicon is entitled to grant the rights and licenses specified herein, including the rights and licenses granted pursuant to this Agreement under all Regulatory Documentation, Information and Inventions and Patents to Exploit the Licensed Compound and Licensed Products as contemplated under this Agreement;
10.2.2.    All Lexicon Patents existing as of the Execution Date (the “Existing Patents”) are listed on Schedule 10.2.2 and all Existing Patents existing as of the Execution Date are (i) to the extent issued, to Lexicon’s knowledge (unless otherwise indicated on Schedule 10.2.2), subsisting and not invalid or unenforceable, in whole or in part, (ii) solely and exclusively owned or exclusively licensed by Lexicon (unless otherwise indicated on Schedule 10.2.2), free of any encumbrance, lien or claim of ownership by any Third Party, (iii) to the extent pending, being diligently prosecuted in the respective patent offices in which such applications have been filed in accordance with Applicable Law and Lexicon and its Affiliates have presented such relevant references, documents and information as required in order to comply with its duty of disclosure to the applicable patent office and (iv) filed and maintained properly and correctly and all applicable fees applicable thereto have been paid on or before the due date for payment;
10.2.3.    True, complete and correct copies of (i) the file wrappers relating to the Existing Patents and (ii) all T1DM Funding Agreements, in each case ((i) and (ii)) have been made available to Sanofi prior to the Execution Date;
10.2.4.    As of the Execution Date, there are no license or other agreements with Third Parties regarding any intellectual property rights licensed hereunder, including the Existing Patents, to which Lexicon is a party (“In-License Agreements”);
10.2.5.    The Existing Patents represent all Patents that Lexicon or its Affiliates own, Control or otherwise have rights to relating to the Licensed Compound or the Licensed Products or the Exploitation thereof, as of the Execution Date.  To Lexicon’s knowledge, there is no Information and Inventions owned by or otherwise in the possession or control of Lexicon or any of its Affiliates as of the 

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Execution Date that relates to the Licensed Compound or the Licensed Products that is not within the Lexicon Know-How.  To Lexicon’s knowledge, no rights or licenses are required under the Existing Patents or Lexicon Know-How for Sanofi to Exploit the Licensed Compound and the Licensed Products as contemplated herein other than those granted under Section 2.1;
10.2.6.    Neither Lexicon nor any of its Affiliates has previously entered into any agreement, whether written or oral, assigning, transferring, licensing, conveying or otherwise encumbering its right, title or interest in or to the Existing Patents, Lexicon Know-How, Regulatory Documentation, the Licensed Compound or the Licensed Products (including by granting any covenant not to sue with respect thereto) or any Patent or other intellectual property or proprietary right or Information and Inventions that would be Existing Patents, Lexicon Know-How or Regulatory Documentation but for such assignment, transfer, license, conveyance or encumbrance and has not entered into any agreement agreeing to do any of the foregoing, in each case other than non-exclusive licenses granted to Third Party services providers to enable such services providers to perform the services for which they were contracted by Lexicon or its Affiliates;
10.2.7.    To Lexicon’s knowledge, no claim or litigation has been brought or asserted by any Person alleging that (i) the Existing Patents are invalid or unenforceable or (ii) the conception, development, reduction to practice, disclosing, copying, making, assigning or licensing of the Existing Regulatory Documentation, the Existing Patents or the Lexicon Know-How existing as of the Execution Date or the Exploitation of the Licensed Compound or Licensed Products as contemplated herein, violates, infringes, constitutes misappropriation or otherwise conflicts or interferes with or would violate, infringe or otherwise conflict or interfere with, any intellectual property or proprietary right of any Person;
10.2.8.    Lexicon has obtained from its Affiliates the licenses and other rights necessary for Lexicon to grant to Sanofi the rights and licenses provided herein and for Sanofi to perform its obligations hereunder;
10.2.9.    The Exploitation of the Licensed Compound or the Licensed Products as contemplated herein will not be subject to any other license or agreement to which Lexicon or any of its Affiliates is a party as of the Execution Date, other than the T1DM Funding Agreements;
10.2.10. There are no amounts that will be required to be paid to a Third Party as a result of the Exploitation of the Licensed Products that arise out of any agreement to which Lexicon or any of its Affiliates is a party, other than the T1DM Funding Agreements;
10.2.11.    To Lexicon’s knowledge, no Person is infringing or threatening to infringe or misappropriating or threatening to misappropriate the Existing Patents, the Lexicon Know-How or the Regulatory Documentation;
10.2.12. To Lexicon’s knowledge, each of the Existing Patents properly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Existing Patent is issued or such application is pending;
10.2.13. Each Person who has or has had any rights in or to any Existing Patents or any Lexicon Know-How, has assigned and has executed an agreement assigning its entire right, title and interest in and to such Existing Patents and Lexicon Know-How to Lexicon.  All Inventor Personnel of Lexicon have executed and delivered to Lexicon or such Affiliate an assignment or other agreement regarding the protection of proprietary information and the assignment to Lexicon or such Affiliate of any 

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Lexicon Patents, Lexicon Know-How and any and all other Information and Inventions that relate to the Licensed Compound or Licensed Products, the current form of which has been made available for review by Sanofi.  To Lexicon’s knowledge, no current officer, employee, agent or consultant of Lexicon or any of its Affiliates is in violation of any term of any assignment or other agreement regarding the protection of Patents or other intellectual property or proprietary information of Lexicon or such Affiliate or of any employment contract or any other contractual obligation relating to the relationship of any such Person with Lexicon;
10.2.14. All material works of authorship and all other material materials subject to copyright protection included in Lexicon Know-How are original and were either created by employees of Lexicon or its Affiliates within the scope of their employment or are otherwise works made for hire and all right, title and interest in and to such materials have been legally and fully assigned and transferred to Lexicon or such Affiliate;
10.2.15. Lexicon has obtained the right (including under any Patents and other intellectual property rights) to use all Information and Inventions and all other materials (including any formulations and manufacturing processes and procedures) developed or delivered by any Third Party under any agreements between Lexicon and any such Third Party with respect to the Licensed Compound and the Licensed Product and Lexicon has the rights under each such agreement to transfer such rights, Information and Inventions or other materials to Sanofi and its designees and to grant Sanofi the right to use such rights, Information and Inventions or other materials in the Exploitation of the Licensed Compound or the Licensed Products as contemplated hereunder without restriction;
10.2.16. The inventions Covered by the Existing Patents (i) were not conceived, discovered, developed or otherwise made in connection with any research activities funded, in whole or in part, by the federal government of the United States or any agency thereof and (ii) are not a “subject invention” as that term is described in 35 U.S.C. Section 201(e) and (iii) are not otherwise subject to the provisions of the Patent and Trademark Law Amendments Act of 1980, as amended, codified at 35 U.S.C. §§ 200-212, as amended, as well as any regulations promulgated pursuant thereto, including in 37 C.F.R. Part 401;
10.2.17. Lexicon has made available to Sanofi all material Regulatory Documentation, Lexicon Know-How and other Information and Inventions in its possession or Control related to the Licensed Compound or the Licensed Products and all such Regulatory Documentation, Lexicon Know-How and other Information and Inventions are, to Lexicon’s knowledge, true, complete and correct in all material respects;
10.2.18. The Lexicon Know-How that Lexicon has determined, in the exercise of reasonable business discretion, to maintain as confidential, has been kept confidential or has been disclosed to Third Parties only under terms of confidentiality.  To the knowledge of Lexicon and its Affiliates no breach of such confidentiality has been committed by any Third Party;
10.2.19. Lexicon and its Affiliates have generated, prepared, maintained and retained all Regulatory Documentation that is required to be maintained or retained pursuant to and in accordance with, to the extent applicable, good laboratory and clinical practice and Applicable Law and all such information is true, complete and correct and what it purports to be;

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10.2.20. Neither Lexicon nor any of its Affiliates, nor any of its or their respective officers, employees or agents has (i) committed an act, (ii) made a statement or (iii) failed to act or make a statement that, in any case ((i), (ii) (iii)), that (x) would be or create an untrue statement of material fact or fraudulent statement to the FDA or any other Regulatory Authority with respect to the Exploitation of the Licensed Compound or the Licensed Products or (y) could reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto or any analogous laws or policies in the Territory, with respect the Exploitation of the Licensed Compound or the Licensed Products;
10.2.21. Lexicon and its Affiliates have conducted, and to Lexicon’s knowledge, their respective contractors and consultants have conducted, all Development of the Licensed Compound and the Licensed Products in accordance with in all material respects, to the extent applicable, good laboratory, pharmacovigilance and clinical practice and Applicable Law.  Lexicon and its Affiliates have, to Lexicon’s knowledge, employed Persons with appropriate education, knowledge and experience to conduct and to oversee the conduct of the pre-clinical and clinical studies with respect to the Licensed Compound and Licensed Products;
10.2.22. True, complete and correct copies (as of the Execution Date) of all material adverse information with respect to the safety and efficacy of the Licensed Compound and the Licensed Products known to Lexicon have been provided to Sanofi prior to the Execution Date;
10.2.23. Neither Lexicon nor any of its Affiliates has been debarred or is subject to debarment and neither it nor any of its Affiliates will use in any capacity, in connection with the services to be performed under this Agreement, any Person who has been debarred pursuant to Section 306 of the FFDCA or who is the subject of a conviction described in such section; and
10.2.24. With respect to any Licensed Compound or Licensed Product Manufactured and supplied by or on behalf of Lexicon, (i) all such Licensed Compound and Licensed Product has been Manufactured in conformity with the applicable specifications for such Licensed Compound and Licensed Product, (ii) such Licensed Compound and Licensed Product has been Manufactured in conformance with cGMP and all other Applicable Law, (iii) such Licensed Compound and Licensed Product has been Manufactured in facilities that are in compliance with Applicable Law at the time of such Manufacture, and (iv) such Licensed Compound and Licensed Product is not and has not been adulterated or misbranded under the FFDCA and similar provisions of the laws of the other Major Markets.
10.3.    Additional Covenants of Lexicon.  Lexicon hereby covenants, as of the Execution Date, as follows:
10.3.1.    During the period from the Execution Date through the end of the Term of this Agreement, Lexicon shall obtain from each of its Affiliates, (sub)licensees (other than Sublicensees), employees and agents, and from the employees and agents of its Affiliates, (sub)licensees (other than Sublicensees) and agents, who are or will be involved in the Manufacture of Licensed Products or are otherwise participating in the Exploitation of the Licensed Compounds or Licensed Products or who otherwise have access to any Confidential Information of Sanofi, rights to any and all Information and Inventions that relate to the Licensed Compound or Licensed Products and are generated pursuant to and during the time of such Person’s relationship with Lexicon or its Affiliate, such that Sanofi shall, by virtue 

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of this Agreement, receive from Lexicon, without payments beyond those required by this Agreement, the licenses and other rights granted to Sanofi hereunder (and such that the scope of such licenses and other rights are not limited in scope or exclusivity by a failure to so obtain such rights from such Persons);
10.3.2.    During the period from the Execution Date until the Effective Date, Lexicon and its Affiliates shall conduct Exploitation with respect to the Licensed Products in the ordinary course and shall not initiate any Phase 3 clinical studies for any of the Licensed Products for T2DM prior to the Effective Date;
10.3.3.    Neither Lexicon nor any of its Affiliates will enter into any agreements, grant any right, title or interest to any Person that conflicts with or violates the rights and licenses granted to Sanofi under this Agreement;
10.3.4.    Future Inventor Personnel of Lexicon will execute and deliver to Lexicon or its applicable Affiliate an assignment or other agreement regarding the protection of proprietary information and the assignment to Lexicon or such Affiliate of any Lexicon Patents, Lexicon Know-How, Joint Patents, Joint Know-How and any and all other Information and Inventions that relate to the Licensed Compound or Licensed Products, the current form of which has been made available for review by Sanofi;
10.3.5.    Lexicon will make available to Sanofi all material Regulatory Documentation, Lexicon Know-How, Joint Know-How and other Information and Inventions in its possession or Control related to the Licensed Compound or the Licensed Products;
10.3.6.    Neither Lexicon nor any of its Affiliates, nor any of its or their respective officers, employees or agents shall (i) commit an act, (ii) make a statement or (iii) fail to act or make a statement that, in any case ((i), (ii) (iii)), that (x) would be or create an untrue statement of material fact or fraudulent statement to the FDA or any other Regulatory Authority with respect to the Exploitation of the Licensed Compound or the Licensed Products or (y) could reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto or any analogous laws or policies in the Territory, with respect the Exploitation of the Licensed Compound or the Licensed Products;
10.3.7.    Lexicon and its Affiliates shall, and shall cause their respective contractors and consultants to conduct, all Development of the Licensed Compound and the Licensed Products in accordance with in all material respects, to the extent applicable, good laboratory, pharmacovigilance and clinical practice and Applicable Law.  Lexicon and its Affiliates shall employ Persons with appropriate education, knowledge and experience to conduct and to oversee the conduct of the pre-clinical and clinical studies with respect to the Licensed Compound and Licensed Products;
10.3.8.    In the event that any Patents or Information and Inventions Controlled by Lexicon or its Affiliates as of the Execution Date would be Lexicon Patents or Lexicon Know-How, as applicable, if such Patent or Know-How were Controlled by Lexicon or its Affiliates as of the Effective Date, then Lexicon agrees that during the period from the Execution Date until the Effective Date, it shall not and shall cause its Affiliates not to (i) incur, create, assume or permit the incurrence, creation or assumption of any encumbrance, lien or claim of ownership by any Third Party with respect to such Patents or Information and Inventions, (ii) dispose of any of such Patents or Information and Inventions, 

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or (iii) waive, release, grant, license or transfer any right, title or interest in or to any such Patents or Information and Inventions in any manner that would limit the scope of the Intellectual Property Rights included in, or the exclusivity of the license rights granted in Section 2.1; and
10.3.9.    Lexicon agrees to inform Sanofi in writing promptly if it or any Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306 of the FFDCA or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of its or its Affiliates’ knowledge, is threatened, relating to the debarment or conviction of it or any such Person performing services hereunder.
10.4.    Additional Covenants of Sanofi.  Sanofi hereby covenants, as of the Execution Date, as follows:
10.4.1.    During the period from the Execution Date through the end of the Term of this Agreement, Sanofi shall obtain from each of its Affiliates, (sub)licensees (other than Sublicensees), employees and agents, and from the employees and agents of its Affiliates, (sub)licensees (other than Sublicensees) and agents, who are or will be involved in the Manufacture of Licensed Products or are otherwise participating in the Exploitation of the Licensed Compounds or Licensed Products or who otherwise have access to any Confidential Information of Lexicon, rights to any and all Information and Inventions that relate to the Licensed Compound or Licensed Products and are generated pursuant to and during the time of such Person’s relationship with Sanofi or its Affiliate, such that Lexicon shall, by virtue of this Agreement, receive from Sanofi, without payments beyond those required by this Agreement, the licenses and other rights granted to Lexicon hereunder (and such that the scope of such licenses and other rights are not limited in scope or exclusivity by a failure to so obtain such rights from such Persons); 
10.4.2.    Neither Sanofi nor any of its Affiliates will enter into any agreements, grant any right, title or interest to any Person that violates the rights and licenses granted to Lexicon under this Agreement;
10.4.3.    Future Inventor Personnel of Sanofi will be subject to an assignment or other agreement regarding the protection of proprietary information and the assignment to Sanofi or such Affiliate of any Sanofi Patents, Sanofi Know-How, Joint Patents, Joint Know-How and any and all other Information and Inventions that relate to the Licensed Compound or Licensed Products;
10.4.4.    Sanofi will make available to Lexicon all material Regulatory Documentation, Joint Know-How and other Information and Inventions in its possession or Control related to the Licensed Compound or the Licensed Products;
10.4.5.    Neither Sanofi nor any of its Affiliates, nor any of its or their respective officers, employees or agents shall (i) commit an act, (ii) make a statement or (iii) fail to act or make a statement that, in any case ((i), (ii) (iii)), that (x) would be or create an untrue statement of material fact or fraudulent statement to the FDA or any other Regulatory Authority with respect to the Exploitation of the Licensed Compound or the Licensed Products or (y) could reasonably be expected to provide a basis for the FDA to invoke its policy respecting “Fraud, Untrue Statements of Material Facts, Bribery and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments thereto or any analogous laws or policies in the Territory, with respect the Exploitation of the Licensed Compound or the Licensed Products;

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10.4.6.    Sanofi and its Affiliates shall, and shall cause their respective contractors and consultants to conduct, all Development of the Licensed Compound and the Licensed Products in accordance with in all material respects, to the extent applicable, good laboratory, pharmacovigilance and clinical practice and Applicable Law.  Sanofi and its Affiliates shall employ Persons with appropriate education, knowledge and experience to conduct and to oversee the conduct of the pre-clinical and clinical studies with respect to the Licensed Compound and Licensed Products; and
10.4.7.    Sanofi agrees to inform Lexicon in writing promptly if it or any Person who is performing services hereunder is debarred or is the subject of a conviction described in Section 306 of the FFDCA or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of its or its Affiliates’ knowledge, is threatened, relating to the debarment or conviction of it or any such Person performing services hereunder.
10.5.    DISCLAIMER OF WARRANTIES.  EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE AND EACH PARTY SPECIFICALLY DISCLAIMS ANY OTHER WARRANTIES, WHETHER WRITTEN OR ORAL OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE OR ANY WARRANTY AS TO THE VALIDITY OF ANY PATENTS OR THE NON-INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
10.6.    Anti-Bribery and Anti-Corruption Compliance.  With respect to the Exploitation of Licensed Products, each Party further represents and warrants to the other Party, as of the Execution Date, and covenants, as follows:
10.6.1.    It is licensed, registered, or qualified under Applicable Law to do business, and, except for the HSR Filings and clearances under the HSR Act, has obtained such licenses, consents or authorizations or completed such registrations or made such notifications as may be necessary or required by Applicable Law;
10.6.2.    It has not taken and will not, as of the Execution Date or at any time during the Term, take any action directly or indirectly to offer, promise or pay, or authorize the offer or payment of, any money or anything of value in order to improperly or corruptly seek to influence any Government Official or any other person in order to gain an improper advantage, and has not accepted, and will not accept in the future such payment;
10.6.3    It complies with Applicable Law where it operates, including Anti-Corruption Laws, accounting and record keeping laws, and laws relating to interactions with healthcare professionals or healthcare providers and Government Officials; and
10.6.4.    It is, as between the Parties, solely responsible to ensure it and its Affiliates compliance, in all material respects, with all Applicable Laws.
10.7.    Knowledge.  As used in this Article 10, “knowledge” shall mean actual knowledge. 

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ARTICLE 11
INDEMNITY

11.1.    Indemnification of Lexicon.  Sanofi shall indemnify Lexicon, its Affiliates and its and their respective directors, officers, employees and agents and defend and save each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Losses”) in connection with any and all suits, investigations, claims or demands of Third Parties (collectively, “Third Party Claims”) arising from or occurring as a result of:  (i) the breach by Sanofi of this Agreement or any Ancillary Agreement; (ii) the gross negligence or willful misconduct on the part of Sanofi or its Affiliates or its or their respective directors, officers, employees or agents in performing its or their obligations under this Agreement or any Ancillary Agreement; or (iii) the Exploitation by Sanofi or any of its Affiliates or Sublicensees of any Licensed Product or the Licensed Compound in the Territory, including Third Party Claims asserting product liability or intellectual property infringement.  In the event that any Losses arise from (A) on the one hand, acts or omissions described in clauses (i) or (ii) of this Section 11.1 and (B) on the other hand, acts or omissions described in clauses (i) or (ii) of Section 11.2, each Party shall indemnify the other on a comparative fault basis to the extent its acts or omissions gave rise to such liability.
11.2.    Indemnification of Sanofi.  Lexicon shall indemnify Sanofi, its Affiliates and its and their respective directors, officers, employees and agents and defend and save each of them harmless, from and against any and all Losses in connection with any and all Third Party Claims arising from or occurring as a result of:  (i) the breach by Lexicon of this Agreement or any Ancillary Agreement; (ii) the gross negligence or willful misconduct on the part of Lexicon or its Affiliates or its or their respective directors, officers, employees or agents in performing its obligations under this Agreement or any Ancillary Agreement; or (iii) the Exploitation by Lexicon or any of its Affiliates of the Licensed Compound, Licensed Products or Terminated Products (a) anywhere in the world prior to the Effective Date or after the Term, or (b) in the Terminated Territory.  In the event that any Losses arise from (A) on the one hand, acts or omissions described in clauses (i) or (ii) of this Section 11.2 and (B) on the other hand, acts or omissions described in clauses (i) or (ii) of Section 11.1, each Party shall indemnify the other on a comparative fault basis to the extent its acts or omissions gave rise to such liability.
11.3.    Indemnification Procedures.
11.3.1.    Notice of Claim.  All indemnification claims in respect of a Party, its Affiliates or its or their respective directors, officers, employees and agents shall be made solely by such Party to this Agreement (the “Indemnified Party”).  The Indemnified Party shall give the indemnifying Party prompt written notice (an “Indemnification Claim Notice”) of any Losses or discovery of fact upon which such indemnified Party intends to base a request for indemnification under this ARTICLE 11, but in no event shall the indemnifying Party be liable for any Losses that result from any delay in providing such notice.  Each Indemnification Claim Notice must contain a description of the claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known at such time).  The Indemnified Party shall furnish promptly to the indemnifying Party copies of all papers and official documents received in respect of any Losses and Third Party Claims.
11.3.2. Control of Defense.  At its option, the indemnifying Party may assume the defense of any Third Party Claim by giving written notice to the Indemnified Party within [**] after the indemnifying Party’s receipt of an Indemnification Claim Notice.  The assumption of the defense of a Third Party Claim by the indemnifying Party shall not be construed as an acknowledgment that the 

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indemnifying Party is liable to indemnify the Indemnified Party in respect of the Third Party Claim, nor shall it constitute a waiver by the indemnifying Party of any defenses it may assert against the Indemnified Party’s claim for indemnification.  Upon assuming the defense of a Third Party Claim, the indemnifying Party may appoint as lead counsel in the defense of the Third Party Claim any legal counsel selected by the indemnifying Party.  In the event the indemnifying Party assumes the defense of a Third Party Claim, the Indemnified Party shall immediately deliver to the indemnifying Party all original notices and documents (including court papers) received by the Indemnified Party in connection with the Third Party Claim.  Should the indemnifying Party assume the defense of a Third Party Claim, except as provided in Section 11.3.3, the indemnifying Party shall not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party Claim unless specifically requested in writing by the indemnifying Party.  In the event that it is ultimately determined that the indemnifying Party is not obligated to indemnify, defend or hold harmless the Indemnified Party from and against the Third Party Claim, the Indemnified Party shall reimburse the indemnifying Party for any and all costs and expenses (including attorneys’ fees and costs of suit) and any Losses incurred by the indemnifying Party in its defense of the Third Party Claim.
11.3.3.    Right to Participate in Defense.  Any Indemnified Party shall be entitled to participate in, but not control, the defense of such Third Party Claim and to employ counsel of its choice for such purpose; provided, however, that such employment shall be at the Indemnified Party’s sole cost and expense unless (i) the employment thereof has been specifically authorized in writing by the indemnifying Party in writing, (ii) the indemnifying Party has failed to assume the defense and employ counsel in accordance with Section 11.3.2 (in which case the Indemnified Party shall control the defense) or (iii) the interests of the Indemnified Party and the indemnifying Party with respect to such Third Party Claim are sufficiently adverse to prohibit the representation by the same counsel of both Parties under Applicable Law, ethical rules or equitable principles.
11.3.4.    Settlement.  With respect to any Losses relating solely to the payment of money damages in connection with a Third Party Claim and that shall not result in any indemnitee’s becoming subject to injunctive or other relief and as to which the indemnifying Party shall have acknowledged in writing the obligation to indemnify the indemnitees hereunder, the indemnifying Party shall have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss, on such terms as the indemnifying Party, in its sole discretion, shall deem appropriate.  With respect to all other Losses in connection with Third Party Claims, where the indemnifying Party has assumed the defense of the Third Party Claim in accordance with Section 11.3.2, the indemnifying Party shall have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Loss; provided it obtains the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed).  If the indemnifying Party does not assume and conduct the defense of a Third Party Claim as provided above, the Indemnified Party may defend against such Third Party Claim; provided that the Indemnified Party shall not settle any Third Party Claim without the prior written consent of the indemnifying Party (which consent shall not be unreasonably withheld, conditioned or delayed).
11.3.5.    Cooperation.  Regardless of whether the indemnifying Party chooses to defend or prosecute any Third Party Claim, the Indemnified Party shall and shall cause each indemnitee to, cooperate in the defense or prosecution thereof and shall furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith.  Such cooperation shall include access during normal business hours afforded to the indemnifying Party to, and reasonable retention by the 

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Indemnified Party of, records and information that are reasonably relevant to such Third Party Claim and making Indemnified Parties and other employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder and the indemnifying Party shall reimburse the Indemnified Party for all its reasonable and verifiable out-of-pocket expenses in connection therewith.
11.3.6.    Expenses.  Except as provided above, the costs and expenses, including fees and disbursements of counsel, incurred by the Indemnified Party in connection with any claim shall be reimbursed on a Calendar Quarter basis by the indemnifying Party, without prejudice to the indemnifying Party’s right to contest the Indemnified Party’s right to indemnification and subject to refund in the event the indemnifying Party is ultimately held not to be obligated to indemnify the Indemnified Party.
11.4.    Special, Indirect and Other Losses.  EXCEPT (I) IN THE EVENT OF THE WILLFUL MISCONDUCT OR FRAUD OF A PARTY OR A PARTY’S BREACH OF ITS OBLIGATIONS UNDER ARTICLE 9 AND (II) TO THE EXTENT ANY SUCH DAMAGES ARE REQUIRED TO BE PAID TO A THIRD PARTY AS PART OF A CLAIM FOR WHICH A PARTY PROVIDES INDEMNIFICATION UNDER THIS ARTICLE 11, NEITHER PARTY NOR ANY OF ITS AFFILIATES OR SUBLICENSEES SHALL BE LIABLE IN CONTRACT, TORT, NEGLIGENCE, BREACH OF STATUTORY DUTY OR OTHERWISE FOR ANY CONSEQUENTIAL, INDIRECT, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES OR FOR LOSS OF PROFITS SUFFERED BY THE OTHER PARTY.
11.5.    Insurance.  Each Party shall have and maintain such types and amounts of insurance covering its Exploitation of the Licensed Compound and Licensed Products as is (i) normal and customary in the pharmaceutical industry generally for parties similarly situated (it being recognized that Lexicon will not be selling Licensed Products under this Agreement and, accordingly, will not carry the level of insurance that is normal and customary for commercializing parties) and (ii) otherwise required by Applicable Law.  Upon request by the other Party, each Party shall provide to the other Party evidence of its insurance coverage.  The insurance policies shall be under an occurrence form, but if only a claims-made form is available to a Party, then such Party shall continue to maintain such insurance after the expiration or termination of this Agreement in its entirety for a period of [**].  Notwithstanding the foregoing, Sanofi may self-insure in whole or in party the insurance requirements described above.

ARTICLE 12
HSR FILINGS; TERM AND TERMINATION

12.1.    HSR Filings  The Parties shall each, as promptly as practicable after the Execution Date, file or cause to be filed with the U.S. Federal Trade Commission and the U.S. Department of Justice any notifications required to be filed under the HSR Act (the “HSR Filings”) with respect to the transactions contemplated hereby; provided that the Parties shall each make the HSR Filing within [**] after the Execution Date.  The Parties shall use their reasonable best efforts to respond promptly to any requests for additional information made by such agencies, and to cause the waiting period (and any extension thereof) under the HSR Act to terminate or expire at the earliest possible date after the date of filing, including by requesting early termination of the waiting period.  Each Party is responsible for the costs and expenses of its own legal and other advice in preparing its HSR Filing; and Sanofi shall be responsible for paying the filing fee required under the HSR Act.  Notwithstanding anything in this Agreement to the contrary, this Agreement (other than this Article 12 and Section 10.3, which are binding and effective as of the Execution Date) shall become effective (unless terminated prior to such date) [**] 

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after the expiration or earlier termination of the waiting period (or any extension thereof) under the HSR (the date that is [**] after such expiration or earlier termination, the “Effective Date”).  Subject to the foregoing sentence, upon the Effective Date the full Agreement and all its terms and provisions shall be automatically effective and binding on both Parties. If, on the [**] after the date of filing under the HSR Act the waiting period (and any extension thereof) required thereunder has not expired or been terminated, either Party shall have the right, on written notice to the other Party, to terminate this Agreement, and upon receipt of such notice by such other Party, this Agreement shall be null and void and have no further force and effect.
12.2.    Term and Expiration.  The term of this Agreement shall become effective as of the Effective Date and, unless earlier terminated in accordance herewith, shall continue in force and effect until the date of expiration of the last Royalty Term for the last Licensed Product (such period, the “Term”).  Following the expiration of the Royalty Term for a Licensed Product in a country or region (but not on any earlier termination thereof), the grants in Section 2.1 shall become exclusive, fully-paid, royalty-free, perpetual and irrevocable for such Licensed Product in such country or region.  For clarity, upon the expiration of the Term (but not on any earlier termination thereof), the grants in Section 2.1 shall become fully-paid, royalty-free, perpetual and irrevocable in their entirety.
12.3.    Termination.
12.3.1.    Material Breach.  In the event that either Party (the “Breaching Party”) shall be in material breach of this Agreement, in addition to any other right and remedy the other Party (the “Non-Breaching Party”) may have, the Non-Breaching Party may terminate this Agreement in its entirety or on a country-by-country basis with respect to the country affected by such breach by providing [**] ([**] in the case of a breach of a payment obligation) (the “Notice Period”) prior written notice (the “Material Breach Notice”) to the Breaching Party and specifying the breach and its claim of right to terminate; provided that (i) the termination shall not become effective at the end of the Notice Period if the Breaching Party cures the breach specified in the Material Breach Notice during the Notice Period (or, if such default is not a breach of a payment obligation and cannot be cured within the Notice Period, if the Breaching Party commences actions to cure such breach within the Notice Period and thereafter diligently continues such actions), (ii) with respect to any alleged breach by a Party of its diligence obligations set forth herein (with respect to Sanofi, in any of Sections 3.1.2(iii), 3.1.4, 3.2.1(vii) and 4.2, and with respect to Lexicon, in any of Sections 3.1.2(iii), 3.1.4 and 4.2), the Non-Breaching Party shall first provide written notice thereof to the Breaching Party and the Parties shall meet within [**] after delivery of such notice to the Breaching Party to discuss in good faith such alleged breach and the Breaching Party’s Development or Commercialization plans, as applicable, with respect to the applicable Licensed Product, which discussions shall be concluded before the Non-Breaching Party may issue any Material Breach Notice with respect to such alleged breach (for clarity, the Notice Period shall not commence prior to the conclusion of such good faith discussions and the subsequent issuance of a Material Breach Notice by the Non-Breaching Party) and (iii) if either Party initiates a dispute resolution procedure under Section 13.5.1 as permitted under this Agreement within [**] following the end of the Notice Period to resolve the dispute for which termination is being sought and is diligently pursuing such procedure, the cure period set forth in this Section 12.3.1 shall be tolled and the termination shall become effective only if such breach remains uncured for [**] after the final resolution of the dispute through such dispute resolution procedure.
12.3.2.    Additional Termination Rights.

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(i)    Prior to completion of the Core Development Plan for T2DM, Sanofi may terminate this Agreement on a country-by-country basis with respect to the affected country or region or on a Licensed Product-by-Licensed Product basis with respect to the affected Licensed Products upon [**] written notice if (a) a Regulatory Authority, institutional review board or data safety monitoring board notifies Sanofi or Lexicon that there is a material safety issue regarding a given Licensed Product, the Licensed Products generally, or the entire class of SGLT1 or SGLT2 inhibitors, and recommends or requires that Sanofi or Lexicon cease the Development of the Licensed Product based on applicable risk-benefit profiles, (b) with respect to any Decision Point, Positive Results are not achieved in all material respects, as determined in accordance with Section 3.1.3 (a “Positive Results Failure”), (c) Sanofi’s Commercially Reasonable Efforts obligations hereunder do not require the completion of the Core Development Plan due to the occurrence of a Fundamental Event, or (d) the Exploitation of the LX4211 Product by Sanofi, its Affiliates or any of their Sublicensees infringes any Patent or any other intellectual property right of a Third Party in any Major Market in the Territory, such that Sanofi or any of its Affiliates or Sublicensees cannot Exploit the LX4211 Product in such country as contemplated hereunder without infringing the Patent of such Third Party, and Sanofi is not able to obtain a license to such Third Party Patent on commercially reasonable terms; provided that, termination pursuant to this clause (d) shall be limited to the country(-ies) in which such Third Party Patent would be infringed.  If Sanofi is entitled to terminate this Agreement, either in its entirety or on a country-by-country basis or with respect to any Licensed Products, Sanofi shall have the right to cease conducting any further activities under this Agreement in connection with Development with respect to any Terminated Product or Terminated Territory (subject only to compliance with Applicable Laws and ethical obligations).
(ii)    At any time after completion of the Core Development Plan for T2DM, Sanofi may terminate this Agreement in its entirety or on a country-by-country or Licensed Product-by-Licensed Product basis, for any or no reason, upon (a) [**] prior written notice to Lexicon, with respect to any country in which the Parties are neither Developing nor Commercializing any Licensed Product, or (b) [**] prior written notice to Lexicon, with respect to all other countries.
(iii)    If Sanofi terminates this Agreement for any or no reason, whether under this Section 12.3.2 or under any other Section(s), or if Lexicon terminates this Agreement under Section 12.3.1, as to two or more Major Markets in the European Union, such termination shall constitute termination of this Agreement as to the entire European Union and thereupon the entire European Union shall become a Terminated Territory.
(iv)    If Sanofi terminates this Agreement for any or no reason, whether under this Section 12.3.2 or under any other Section(s), or if Lexicon terminates this Agreement under Section 12.3.1, as to the United States and the European Union, this Agreement shall also terminate as to all other countries and thereupon such other countries shall become Terminated Territories.
12.3.3.    Without limitation of the termination rights set forth above, within one (1) year after the Effective Date (the “Japan Decision Date”), Sanofi may terminate this Agreement with respect to Japan upon written notice to Lexicon.  In the event that such notice is not delivered by such date, then Japan shall automatically be deemed to be a Major Market hereunder effective as of the Japan Decision Date.
12.3.4.    Termination for Insolvency.  In the event that either Party (i) files for protection under bankruptcy or insolvency laws, (ii) makes an assignment for the benefit of creditors, (iii) appoints or suffers appointment of a receiver or trustee over substantially all of its property that is not 

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discharged within [**] after such filing, (iv) proposes a written agreement of composition or extension of its debts, (v) proposes or is a party to any dissolution or liquidation, (vi) files a petition under any bankruptcy or insolvency act or has any such petition filed against that is not discharged within [**] of the filing thereof or (vii) admits in writing its inability generally to meet its obligations as they fall due in the general course, then the other Party may terminate this Agreement in its entirety effective immediately upon written notice to such Party.
12.3.5.    Termination for Cessation of Development.  If Sanofi ceases all actual Development and Commercialization of Licensed Products, whether or not such cessation is consistent with the exercise by Sanofi of Commercially Reasonable Efforts by Sanofi to Develop and Commercialize Licensed Products hereunder, Lexicon may terminate this Agreement upon six (6) months' written notice to Sanofi, unless (a) Sanofi initiates a dispute resolution procedure under Section 13.5 to resolve any dispute as to whether Lexicon has the right to seek termination pursuant to this Section 12.3.5 and Sanofi is diligently pursuing such procedure, (b) the cessation of such activities results from a force majeure, Sanofi is using commercially reasonable efforts to remedy its inability to perform in accordance with Section 13.1, and such force majeure has not continued for longer than [**] or (c) the cessation of such activities constitutes a material breach under Section 12.3.1 and Sanofi is diligently pursuing an action to cure such breach for the cure period, and is otherwise following the process, set forth in Section 12.3.1.
12.3.6.    Termination for Failure to Obtain HSR Clearance.  This Agreement may be terminated by either Party as provided in Section 12.1.
12.4.    Rights in Bankruptcy.  All rights and licenses granted under or pursuant to this Agreement by Sanofi or Lexicon are and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code.  The Parties agree that the Parties, as licensees of such rights under this Agreement, shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction.  The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, the Party hereto that is not a Party to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property and all embodiments of such intellectual property, which, if not already in the non-subject Party’s possession, shall be promptly delivered to it (i) upon any such commencement of a bankruptcy proceeding upon the non-subject Party’s written request therefor, unless the Party subject to such proceeding elects to continue to perform all of its obligations under this Agreement or (ii) if not delivered under clause (i) above, following the rejection of this Agreement by or on behalf of the Party subject to such proceeding upon written request therefor by the non-subject Party.
12.5.    Consequences of Termination.
12.5.1.    In the case of a termination of this Agreement in its entirety or with respect to one or more countries or Licensed Products for any reason other than Section 12.3.6 (Termination for Failure to Obtain HSR Clearance), the remainder of this Section 12.5.1 shall apply, but solely with respect to the Terminated Territory or the Terminated Product(s), as applicable:
(i)    all rights and licenses granted by either Party hereunder shall immediately terminate with respect to the Terminated Territory or Terminated Product(s), as applicable;

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(ii)    Sanofi shall, and hereby does, grant to Lexicon a royalty-bearing or royalty-free (as set forth below), nonexclusive license under any Sanofi Patents, Sanofi Know-How conceived, reduced to practice or otherwise made under the Development Plan or in connection with the Development or Manufacture of the Licensed Products by Sanofi or any of its Affiliates or its or their Sublicensees, or incorporated by Sanofi or any of its Affiliates or its or their Sublicensees into the Reversion Product as of the effective date of termination of this Agreement for the Exploitation of Licensed Products hereunder to the extent necessary or useful in order to Exploit the Reversion Products in the Field in the Terminated Territory; provided, however, that, (a) such license grant shall not include any rights with respect to the composition-of-matter of active ingredients in Combination Products that are not Licensed Compounds and (b) in the case of intellectual property in-licensed from Third Parties, the foregoing license grant shall apply to such Third Party intellectual property solely to the extent Sanofi is permitted to grant such license and any financial obligations with respect thereto are passed-through to Lexicon;
(iii)    if Sanofi completes the activities under the Core Development Plan for T2DM and this Agreement is terminated by Sanofi for any reason, then Lexicon shall pay to Sanofi a [**] royalty on the sale of Licensed Product in the United States for T2DM, in accordance with Section 7.3, calculated as if all T2DM Net Sales by Lexicon or its Affiliates or Sublicensees were T2DM Net Sales by Sanofi, and otherwise such license shall be royalty-free; at Lexicon’s written request and cost, Sanofi shall (a) provide to Lexicon a copy of any and all material documentation and data (including Study Data not in the possession of Lexicon) Controlled by Sanofi in tangible form at the time of termination of the Agreement that has been generated with respect to the Reversion Products and is necessary or useful to enable Lexicon to continue Development and Commercialization of the Reversion Products (collectively, the “Sanofi Product Data”), and Lexicon may use such Sanofi Product Data at its discretion on a non-exclusive basis, but only to the extent necessary to enable Lexicon to continue Development of and to Commercialize Reversion Products, and (b) promptly assign and transfer to Lexicon any and all Product Trademarks and Regulatory Approvals obtained for the Reversion Products as well as any and all Regulatory Documentation for the Reversion Products; provided that such royalty described in this Section 12.5.1(iii) shall not be payable if, in the case that Sanofi terminated this Agreement for any reason other than under Section 12.3.1, Sanofi has failed to use Commercially Reasonable Efforts pursuant to Sections 3.1.2(iii), 3.1.4, 3.2.1(vii) or 4.2 between the date Sanofi notified Lexicon of the termination of this Agreement and the effective date of termination of this Agreement or in the circumstance in which Sanofi received a notice of material breach from Lexicon for breach of Sections 3.1.2(iii), 3.1.4, 3.2.1(vii) or 4.2 prior to exercising its termination right and such material breach remains uncured as of Sanofi’s exercising such termination right.  In the event such royalties are due under this cause (iii), Lexicon shall report and pay such royalties within [**] after the end of each calendar quarter in a manner analogous to the payment, record keeping and reporting requirements as apply to the payment of royalties hereunder by Sanofi with analogous audit rights for Sanofi.
(iv)    at Lexicon’s request, Lexicon shall assume control of all clinical studies involving Licensed Products being conducted by Sanofi as of the effective date of termination; provided that, at Lexicon’s request, except in the cases of terminations by Sanofi pursuant to Section 12.3.1 (i.e., for Lexicon’s material breach) or 12.3.4 (i.e., for Lexicon’s insolvency), Sanofi shall remain obligated to continue to fund, to the extent of Sanofi’s funding obligations under this Agreement, the costs of such clinical studies then being conducted by Sanofi for Development Costs incurred [**] after the effective date of termination;

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(v)    at Lexicon’s request, Sanofi shall sell and transfer to Lexicon any or all of Sanofi’s then remaining inventory of Terminated Products at Sanofi’s Manufacturing Cost therefor;
(vi)    at Lexicon’s request, to the extent Sanofi (or an Affiliate of Sanofi) is Manufacturing (on its own or through any Third Party contract manufacturer) any Terminated Product, continue to manufacture and supply such Terminated Product to Lexicon under a supply agreement mutually agreed upon by the Parties, for a period up to two (2) years, until Manufacturing has been transitioned to Lexicon hereunder.  In such case, Sanofi shall be obligated to supply quantities of such Terminated Products sufficient to satisfy Lexicon's requirements under a manufacturing transfer and transition plan to be negotiated by the Parties in good faith so that Lexicon can assume all Development and Commercialization activities with regard to such Terminated Products.  Sanofi will supply such quantities of Terminated Products at Sanofi's Manufacturing Cost [**];
(vii)    at Lexicon’ request, assign or cause the assignment to Lexicon of any and all applicable Third Party manufacturing and supply agreements specifically relating to Terminated Products, to the extent Sanofi or its Affiliate is permitted to assign such agreement thereunder, or, if requested by Lexicon, facilitate discussions between Lexicon and the applicable Third Party manufacturer with respect to a transition of the applicable manufacturing and supply relationship to Lexicon; and
(viii)    at Lexicon’s request as to any Joint Patent, (A) Lexicon shall become the prosecuting Party with respect to such Joint Patent under Section 8.3.3, in which event Sanofi shall have the rights allocated to Lexicon thereunder, (B) Lexicon shall be entitled to take the actions set forth in Section 8.3.8 with respect to such Joint Patent, and (C) Lexicon shall have the first right to prosecute any Infringement of such Joint Patent under Section 8.5.2, in which event Sanofi shall have the rights allocated to Lexicon thereunder.
12.6.    Remedies.  Except as otherwise expressly provided herein, termination of this Agreement (either in its entirety or with respect to one (1) or more country(ies)) in accordance with the provisions hereof shall not limit remedies that may otherwise be available in law or equity.
12.7.    Accrued Rights; Surviving Obligations.
12.7.1.    Termination or expiration of this Agreement (either in its entirety or with respect to one (1) or more country(ies)) for any reason shall be without prejudice to any rights that shall have accrued to the benefit of a Party prior to such termination or expiration, subject to Section 7.2.3.  Such termination or expiration shall not relieve a Party from obligations that are expressly indicated to survive the termination or expiration of this Agreement.
12.7.2.    Without limiting the foregoing, Section 2.1 (Grants to Sanofi) (for clarity, subject to Section 12.2 and with a right to sublicense for all purposes without consent of Lexicon), Section 3.1.2(v)(4) (Quality) (second sentence only) (to the extent and for so long as required by Applicable Law), Section 3.1.6 (Development Records), Section 3.2.1(ii) (Regulatory Approvals), Section 3.2.3 (Recalls, Suspensions or Withdrawals), Section 3.2.4 (Global Safety Database) (third sentence only), Section 4.1 (In General) (but deleting the last clause of such section regarding (co-)promotion), Section 4.4 (Booking of Sales; Distribution), Section 7.5 (Royalty Payments and Reports) (with respect to any final payment for royalties on Net Sales occurring during the Royalty Term for the applicable country, as calculated under Section 7.3), Section 7.7 (Commercialization Costs and Medical Affairs Costs) (as applied to a final accounting of Commercialization Costs and Medical Affairs Costs incurred during the Term that are 

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required to be shared by the Parties), Section 7.9 (Mode of Payment) (with respect to any payment due after the Term), Section 7.11 (Taxes) (with respect to any payment due after the Term), Section 7.12 (Interest on Late Payments), Section 7.13 (Financial Records) (for the period of time set forth herein, including with respect to any payment due after the Term), Section 7.14 (Audit Procedures) (with respect to any books and records maintained pursuant to Section 7.13), Section 7.14 (Audit Procedures), Section 8.1 (Ownership of Intellectual Property) (except Section 8.1.4 (Assignment Obligation)), Section 8.2 (Trademarks and Domain Names), Section 8.9 (Product Trademarks), Section 10.5 (Disclaimer of Warranties), Section 12.2 (Term and Expiration) (second sentence and third sentence only), Section 12.4 (Rights in Bankruptcy), Section 12.6 (Remedies), this Section 12.7 (Accrued Rights; Surviving Obligations), Section 13.1 (Force Majeure) (with respect to post-expiration obligations), Section 13.2 (Export Control), Section 13.3.1 (Assignment) (with respect to surviving rights and obligations), Section 13.4 (Severability), Section 13.5 (Dispute Resolution), Section 13.6 (Governing Law, Jurisdiction, Venue and Service), Section 13.7 (Notices), Section 13.8 (Entire Agreement; Amendments) (the first sentence, the second sentence, and only with respect to surviving provisions, the third sentence), Section 13.9 (English Language), Section 13.10 (Equitable Relief), Section 13.11 (Waiver and Non-Exclusion of Remedies), Section 13.12 (No Benefit to Third Parties), Section 13.13 (Further Assurances) (with respect to surviving rights and obligations), Section 13.14 (Performance by Affiliates), Section 13.15 (Relationship of the Parties), Section 13.16 (References), and Section 13.17 (Construction), and Article 1 (Definitions), Article 9 (Confidentiality), and Article 11 (Indemnity) of this Agreement shall survive the expiration of this Agreement for any reason.
12.7.3.    Without limiting Section 12.7.1, Section 3.1.2(v)(4) (Quality) (second sentence only) (to the extent and for so long as required by Applicable Law), Section 3.1.6 (Development Records), Section 7.5 (Royalty Payments and Reports) (with respect to any payment of royalties due after the Term), Section 7.6 (Development Costs) (as applied to a final accounting for Development Costs incurred during the Term that are required to be shared by the Parties), Section 7.7 (Commercialization Costs and Medical Affairs Costs) (as applied to a final accounting of Commercialization Costs and Medical Affairs Costs incurred during the Term that are required to be shared by the Parties), Section 7.8 (Calculation of T1DM Net Sales) (with respect to any royalties due after the Term), Section 7.9 (Mode of Payment) (with respect to any payment due after the Term), Section 7.11 (Taxes) (with respect to any payment due after the Term), Section 7.12 (Interest on Late Payments), Section 7.13 (Financial Records) (for the period of time set forth herein, including with respect to any payment due after the Term), Section 7.14 (Audit Procedures) (with respect to any books and records maintained pursuant to Section 7.13), Section 8.1 (Ownership of Intellectual Property) (except Section 8.1.4 (Assignment Obligation)), Section 8.3.3 (Patent Prosecution and Maintenance of the Joint Patents) (subject to Section 12.5.1(viii)), Section 8.3.4 (Cooperation) (solely as relating to the Joint Patents), Section 8.3.6 (Common Ownership Under Joint Research Agreements) (solely with respect to the Joint Patents), Section 8.3.8 (UPC Opt-Out and Opt-In) (solely as relating to the Joint Patents) (subject to Section 12.5.1(viii)), Section 8.4.1(ii) (Challenges by Third Parties, Joint Patents), Section 8.4.2(ii) (Challenges by a Party, Joint Patents), Section 8.5 (Enforcement of Patents) (solely with respect to the Joint Patents) (subject to Section 12.5.1(viii)), Section 8.6 (Invalidity or Unenforceability Defenses or Actions) (solely with respect to the Joint Patents),  Section 10.5 (Disclaimer of Warranties), Section 12.4 (Rights in Bankruptcy), Section 12.5 (Consequences of Termination), Section 12.6 (Remedies), this Section 12.7 (Accrued Rights; Surviving Obligations), Section 13.1 (Force Majeure) (with respect to post-termination obligations), Section 13.2 (Export Control), Section 13.3.1 (Assignment) (with respect to surviving rights and obligations), Section 13.4 (Severability), Section 13.5 (Dispute Resolution), Section 13.6 (Governing Law, Jurisdiction, Venue and Service), Section 13.7 (Notices), Section 13.8 (Entire Agreement; Amendments) (the first sentence, 

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the second sentence, and only with respect to surviving provisions, the third sentence), Section 13.9 (English Language), Section 13.10 (Equitable Relief), Section 13.11 (Waiver and Non-Exclusion of Remedies), Section 13.12 (No Benefit to Third Parties), Section 13.13 (Further Assurances) (with respect to surviving rights and obligations), Section 13.14 (Performance by Affiliates), Section 13.15 (Relationship of the Parties), Section 13.16 (References), and Section 13.17 (Construction), and Article 1 (Definitions), Article 9 (Confidentiality), and Article 11 (Indemnity) of this Agreement shall survive the termination of this Agreement for any reason.  If this Agreement is terminated with respect to the Terminated Territory or a Licensed Product but not in its entirety, then following such termination the foregoing provisions of this Agreement shall remain in effect with respect to the Terminated Territory or the Terminated Product(s) (to the extent they would survive and apply in the event the Agreement expires or is terminated in its entirety) and all provisions not surviving in accordance with the foregoing shall terminate upon termination of this Agreement with respect to the Terminated Territory or Terminated Product and be of no further force and effect (and for the avoidance of doubt all provisions of this Agreement shall remain in effect with respect to all countries in the Territory and all Licensed Products other than the Terminated Territory and Terminated Products).

ARTICLE 13
MISCELLANEOUS

13.1.    Force Majeure.  Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement (other than an obligation to make payments) when such failure or delay is caused by or results from events beyond the reasonable control of the non-performing Party, including fires, floods, earthquakes, hurricanes, embargoes, shortages, epidemics, quarantines, war, acts of war (whether war be declared or not), terrorist acts, insurrections, riots, civil commotion, strikes, lockouts or other labor disturbances (whether involving the workforce of the non-performing Party or of any other Person), acts of God or acts, omissions or delays in acting by any governmental authority (except to the extent such omission or delay results from the breach by the non-performing Party or any of its Affiliates of its or their Development, Manufacturing or Commercialization obligations or any other term or condition of this Agreement).  The non-performing Party shall notify the other Party of such force majeure within [**] after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration and any action being taken to avoid or minimize its effect.  The suspension of performance shall be of no greater scope and no longer duration than is necessary and the non-performing Party shall use commercially reasonable efforts to remedy its inability to perform.  In the event that the force majeure continues for more than [**], the Party not affected by such force majeure shall have the right, at its sole election and expense, and without limitation to any other right or remedy available to such Party, to assume and complete some or all of the activities that the non-performing Party is not performing as a result of such force majeure.
13.2.    Export Control.  This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries that may be imposed on the Parties from time to time.  Each Party agrees that it will not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity in accordance with Applicable Law.
13.3.    Assignment and Change of Control.
13.3.1.    Neither Party may assign its rights or, except as expressly permitted hereunder, delegate its obligations under this Agreement, whether by operation of law or otherwise, in whole or in part, without the prior written consent of the other Party, except that each Party shall have the right, without such consent, to assign any or all of its rights and delegate any or all of its obligations hereunder to any of its Affiliates or its or their Sublicensees or to any successor in interest (whether by merger, acquisition, asset purchase or otherwise) to all or substantially all of its diabetes business; provided that the assigning or delegating Party shall provide written notice to the other Party within [**] after such assignment or delegation and shall remain primarily liable for the performance of its assignee or delegate.  Any permitted successor of a Party or any permitted assignee of all of a Party’s rights under this Agreement that has also assumed all of such Party’s obligations hereunder in writing shall, upon any such succession or assignment and assumption, be deemed to be a party to this Agreement as though named herein in substitution for the assigning Party, whereupon the assigning Party shall cease to be a party to this Agreement and shall cease to have any rights or obligations under this Agreement.  All validly assigned rights of a Party shall inure to the benefit of and be enforceable by, and all validly delegated obligations of such Party shall be binding on and be enforceable against, the permitted successors and 

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assigns of such Party.  Any attempted assignment or delegation in violation of this Section 13.3.1 shall be void and of no effect.
13.3.2.    No later than [**] following the earlier of the first public announcement of the execution of any transaction with respect to a Change of Control of Lexicon or the closing date of such a transaction, Lexicon shall notify Sanofi in writing and identify the counterparty to the transaction (the “Third Party Acquirer”).  In such a case, effective as of the later of (a) a notice from Sanofi pursuant to this Section 13.3.2 and (b) the closing of such a transaction, Sanofi shall have the following rights, except in the case of a Change of Control transaction in which the Third Party Acquirer is a Non-Competitive Acquirer:
(i)    Sanofi may, in its sole discretion and by written notice to Lexicon, require Lexicon and the Third Party Acquirer and its Affiliates (“Third Party Acquirer Family”) to adopt reasonable procedures, including firewalls, to prevent disclosure of Confidential Information of Sanofi and its Affiliates (including the Sanofi Know-How) to the Third Party Acquirer Family (other than Lexicon and its Affiliates) and to prevent the Third Party Acquirer Family (other than Lexicon and its Affiliates) from involvement in the Development, Commercialization and Manufacture of the Licensed Products;
(ii)    Sanofi may, in its sole discretion, assume and complete any Development activities with respect to T1DM on the Licensed Compounds.  If Sanofi so elects to assume and complete any of the Development activities under the Development Plan with respect to such Licensed Compound, to the extent reasonably requested by Sanofi in writing, Lexicon shall cooperate in facilitating the orderly transfer of such Development activities and ensure that Sanofi obtains the material benefits of any or all Third Party agreements relating to such Development activities, in conformity with any Applicable Law.
(iii)    Sanofi may, in its sole discretion and by written notice to Lexicon, disband the JSC (in which case the DRC and MSC shall also be disbanded) and, for clarity, Section 5.5.6 shall apply.  In such a case, neither Lexicon nor any of its Affiliates shall have the right to receive Information and Inventions from Sanofi (except for reports provided pursuant to Sections 3.1.7, 4.10 and 7.5) or provide input with respect to the Exploitation of any Licensed Products from and after the date of such Change in Control (except where such input is required by Applicable Law).  Notwithstanding the foregoing, this clause (iii) shall not deprive Lexicon of (A) its right to participate in discussions with Sanofi regarding the Development activities conducted pursuant to the Development Plan, Manufacturing and (Co-)Promotion, in each case, to the extent reasonably necessary in order for Lexicon to perform its obligations hereunder or under the applicable Ancillary Agreement or (B) its right to exercise a Lexicon Consent Right; or
(iv)    Sanofi may, upon [**] prior written notice to Lexicon given by Sanofi not later than [**] following the Change of Control transaction, terminate the (Co-)Promotion Agreement.  If Sanofi exercises its termination right under this Section 13.3.2(iii) after the commencement of (Co-)Promotion activities under the (Co-)Promotion Agreement, then Sanofi agrees to reimburse Lexicon for its reasonable wind-down costs as set forth in the (Co-)Promotion Agreement.
13.3.3.    In the case in which Lexicon is acquired by a Third Party Acquirer, the rights to Information and Inventions controlled by the Third Party Acquirer Family shall, subject to Section 13.3.2(i), be automatically excluded from the rights licensed or granted to the other Party under this Agreement unless and to the extent that Lexicon uses any such Information and Inventions in the 

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conduct of the Development Plan or incorporates any such Information and Inventions into any Licensed Product.
13.4.    Severability.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law and if the rights or obligations of either Party under this Agreement will not be materially and adversely affected thereby, (i) such provision shall be fully severable, (ii) this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (iii) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and reasonably acceptable to the Parties.  To the fullest extent permitted by Applicable Law, each Party hereby waives any provision of law that would render any provision hereof illegal, invalid or unenforceable in any respect.
13.5.    Dispute Resolution.
13.5.1.    Subject to Section 13.10, if a dispute arises (i) within the JSC with respect to any decision under the jurisdiction of the JSC that remains unresolved pursuant to Section 5.5.3 (a “JSC Dispute”) or (ii) between the Parties in connection with or relating to this Agreement or any Ancillary Agreement (collectively, (i) and (ii), a “Dispute”), then either Party shall have the right, upon notice to the other Party, to refer such Dispute to the Senior Officers for attempted resolution by good faith negotiations during the period of [**] following the date of such referral.  Any final decision mutually agreed to by the Senior Officers shall be conclusive and binding on the Parties.  If such Senior Officers are unable to resolve any such JSC Dispute within such [**] period, Sanofi shall have the right to finally and definitively resolve any Dispute in good faith in a manner consistent with this Agreement unless (a) there is a Lexicon Consent Right with respect to the matter (in the case of clause (a), such Disputes shall be resolved only by the mutual written consent of the Parties), (b) the matter is outside the jurisdiction and authority of the JSC (including as set forth in Section 5.5.4), (c) the Dispute is a Legal Dispute, or (d) the subject matter of the Dispute is whether Positive Results have been achieved in all material respects with respect to any Decision Point (in the case of clause (d), such Dispute shall be resolved, if not resolved by negotiations by the Senior Officers in accordance with this Section 13.5.1 above, by binding arbitration pursuant to Section 13.5.2).  With respect to any unresolved dispute as to a matter outside the jurisdiction and authority of the JSC or Legal Dispute, either Party shall be free to institute binding arbitration in accordance with Section 13.5.2 upon written notice to the other Party (an “Arbitration Notice”) and seek such remedies as may be available.  Notwithstanding anything in this Agreement to the contrary, either Party shall be entitled to institute litigation in accordance with Section 13.6 immediately with respect to any dispute as to a matter outside the jurisdiction and authority of the JSC or Legal Dispute if litigation is necessary to prevent irreparable harm to that Party.
13.5.2.    Upon receipt of an Arbitration Notice by a Party, the applicable Dispute shall be resolved by final and binding arbitration before a panel of three (3) arbitrators with relevant biopharmaceutical industry experience (the “Arbitrators”), who shall be selected in accordance with the Comprehensive Arbitration Rules and Procedures then in effect and the Expedited Procedures contained therein, as modified in this paragraph (the “Rules”).  Such arbitration shall be administered by JAMS (or any successor entity thereto) and in accordance with the Rules, except (i) to the extent such rules are inconsistent with this Section 13.5.2, in which case, this Section 13.5.2 shall control (including with regard to any limitations of liability or forms of relief), and (ii) three (3) discovery depositions may be 

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conducted per side.  The JAMS Expedited Procedures shall be modified to delete paragraphs 16.2(b) (Limitation on Document Requests) and 16.2(e) (Limitation on Expert Depositions) of such procedures as in effect on the Effective Date, and the timelines shall be modified to provide that (x) the discovery cutoff for percipient discovery shall not exceed [**] after the preliminary conference, (y) the discovery cutoff for expert discovery shall not exceed [**] after the preliminary conference, and (z) the hearing shall commence within [**] after the cutoff for expert discovery.  The proceedings and decisions of the arbitrators shall be confidential, final and binding on the Parties, and judgment upon the award of such arbitrator may be entered in any court having jurisdiction thereof.  The arbitration shall be conducted in English and held in New York, New York.  The Arbitrator shall, within [**] after the conclusion of the arbitration hearing, issue a written award and statement of decision describing the essential findings and conclusions on which the award is based, including the calculation of any damages awarded.  The decision or award rendered by the Arbitrator shall be final and non-appealable, and judgment may be entered upon it in accordance with Applicable Law in the State of New York or any other court of competent jurisdiction.  The Arbitrator shall be authorized to award compensatory damages, but shall not be authorized to reform, modify or materially change this Agreement or any Ancillary Agreement.  Each Party shall bear its own counsel fees, costs, and disbursements arising out of the arbitration described in this Section 13.5.2, and shall pay an equal share of the fees and costs of the Arbitrator and all other general fees related to the arbitration; provided, however, the Arbitrator shall be authorized to determine whether a Party is the prevailing Party, and if so, to award to that prevailing Party reimbursement for its reasonable counsel fees, costs and disbursements (including expert witness fees and expenses, photocopy charges, or travel expenses), or the fees and costs of the Arbitrator.  Unless the Parties otherwise agree in writing, during the period of time that any arbitration proceeding is pending under this Agreement, the Parties shall continue to comply with all those terms and provisions of this Agreement that are not the subject of the pending arbitration proceeding.  Nothing contained in this Agreement shall deny any Party the right to seek injunctive or other equitable relief from a court of competent jurisdiction in the context of a bona fide emergency or prospective irreparable harm, and such an action may be filed and maintained notwithstanding any ongoing arbitration proceeding.  All arbitration proceedings and decisions of the Arbitrator under this Section 13.5.2 shall be deemed Confidential Information of both Parties under Article 9.  The Parties intend that each award rendered by an Arbitrator hereunder shall be entitled to recognition and enforcement under the United Nations Convention on the Recognition and Enforcement of Arbitral Awards (New York, 1958).
13.6.    Governing Law, Jurisdiction, Venue and Service.
13.6.1.    Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.  The Parties agree to exclude the application to this Agreement of the United Nations Convention on Contracts for the International Sale of Goods.
13.6.2.    Jurisdiction.  Subject to Section 13.5 and Section 13.10, the Parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of New York for any action arising out of or relating to this Agreement and agree not to commence any action, suit or proceeding (other than appeals and enforcements of awards therefrom) related thereto except in such courts.  The Parties irrevocably and unconditionally waive their right to a jury trial in any such action.
13.6.3.    Venue.  Subject to Section 13.5 and Section 13.10, the Parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action arising out of or 

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relating to this Agreement in the courts of the State of New York and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action brought in any such court has been brought in an inconvenient forum.
13.6.4.    Service.  Each Party further agrees that service of any process, summons, notice or document by registered mail to its address set forth in Section 13.7.2 shall be effective service of process for any action, suit or proceeding brought against it under this Agreement in any such court.
13.7.    Notices.
13.7.1.    Notice Requirements.  Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 13.7.2 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 13.7.1.  Such notice shall be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second Business Day (at the place of delivery) after deposit with an internationally recognized overnight delivery service.  Any notice delivered by facsimile shall be confirmed by a hard copy delivered as soon as practicable thereafter.  This Section 13.7.1 is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.
13.7.2.    Address for Notice.
If to Sanofi, to: 
54 Rue La Boétie, 75008
Paris, France
Attention:  Pascale Witz
with copies (which shall not constitute notice) to:

54 Rue La Boétie, 75008
Paris, France
Tel. +331 5377 4664
Attention:  VP, Legal Operations
Facsimile: +331 5377 4453
Covington & Burling LLP
One Front Street
San Francisco, California  94111
USA
Attention:  Amy Toro
Facsimile:  +1 (415) 955-6586

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If to Lexicon, to:
Lexicon Pharmaceuticals, Inc.
8800 Technology Forest Place
The Woodlands, Texas 77381
USA
Attention:  President
with copies (which shall not constitute notice) to:
Lexicon Pharmaceuticals, Inc.
8800 Technology Forest Place
The Woodlands, Texas 77381
USA
Attention:  General Counsel
and
WilmerHale LLP
60 State Street
Boston, Massachusetts 02109
USA
Attention:  Steven D. Barrett, Esq.
Facsimile:  +1 (617) 526-5000
13.8.    Entire Agreement; Amendments.  This Agreement, together with the Schedules attached hereto and any Ancillary Agreements, sets forth and constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and all prior agreements, understandings, promises and representations, whether written or oral, with respect thereto, including that certain Confidentiality Agreement, dated as of October 12, 2015, are superseded hereby.  Each Party confirms that it is not relying on any representations or warranties of the other Party except as specifically set forth in this Agreement.  No amendment, modification, release or discharge shall be binding upon the Parties unless in writing and duly executed by authorized representatives of both Parties.  In the event of any inconsistencies between this Agreement and any schedules or other attachments hereto, the terms of this Agreement shall control.
13.9.    English Language.  This Agreement shall be written and executed in and all other communications under or in connection with this Agreement shall be in, the English language.  Any translation into any other language shall not be an official version thereof and in the event of any conflict in interpretation between the English version and such translation, the English version shall control.
13.10.    Equitable Relief.  Each Party acknowledges and agrees that the restrictions set forth in Section 2.6 and ARTICLE 9 and the requirements of ARTICLE 8 are reasonable and necessary to protect the legitimate interests of the other Party and that such other Party would not have entered into this Agreement in the absence of such restrictions and that any breach or threatened breach of any provision of such Sections and Articles may result in irreparable injury to such other Party for which there will be no adequate remedy at law.  In the event of a breach or threatened breach of any provision of such Sections and Articles, the non-breaching Party shall be authorized and entitled to seek from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance and an equitable accounting of all earnings, profits and other benefits arising from such breach, which rights shall be cumulative and in addition to any other rights or remedies to which such non-breaching Party may be 

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entitled in law or equity.  Both Parties agree to waive any requirement that the other (i) post a bond or other security as a condition for obtaining any such relief, or (ii) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy.  Nothing in this Section 13.10 is intended or should be construed, to limit either Party’s right to equitable relief or any other remedy for a breach of any other provision of this Agreement.
13.11.    Waiver and Non-Exclusion of Remedies.  Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition.  The waiver by either Party hereto of any right hereunder or of the failure to perform or of a breach by the other Party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise.  The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by Applicable Law or otherwise available except as expressly set forth herein.
13.12.    No Benefit to Third Parties.  Except as provided in ARTICLE 11, the covenants and agreements set forth in this Agreement are for the sole benefit of the Parties hereto and their successors and permitted assigns and they shall not be construed as conferring any rights on any other Persons.
13.13.    Further Assurance.  Each Party shall duly execute and deliver or cause to be duly executed and delivered, such further instruments and do and cause to be done such further acts and things, including the filing of such assignments, agreements, documents and instruments, as may be necessary or as the other Party may reasonably request in connection with this Agreement or to carry out more effectively the provisions and purposes hereof or to better assure and confirm unto such other Party its rights and remedies under this Agreement.
13.14.    Performance by Affiliates.  To the extent that this Agreement imposes obligations on Affiliates of a Party, such Party agrees to cause its Affiliates to perform such obligations.
13.15.    Relationship of the Parties.  It is expressly agreed that Lexicon, on the one hand, and Sanofi, on the other hand, shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency.  Neither Lexicon, on the one hand, nor Sanofi, on the other hand, shall have the authority to make any statements, representations or commitments of any kind, or to take any action that will be binding on the other, without the prior written consent of the other Party to do so.  All persons employed by a Party shall be employees of such Party and not of the other Party and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such first Party.
13.16.    References.  Unless otherwise specified, (i) references in this Agreement to any Article, Section or Schedule shall mean references to such Article, Section or Schedule of this Agreement, (ii) references in any Section to any clause are references to such clause of such Section and (iii) references to any agreement, instrument or other document in this Agreement refer to such agreement, instrument or other document as originally executed or, if subsequently amended, replaced or supplemented from time to time, as so amended, replaced or supplemented and in effect at the relevant time of reference thereto.

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13.17.    Construction.  Except where the context otherwise requires, wherever used, the singular shall include the plural, the plural the singular, the use of any gender shall be applicable to all genders and the word “or” is used in the inclusive sense (and/or).  Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days.  The captions of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement.  The term “including,” “include,” or “includes” as used herein shall mean including, without limiting the generality of any description preceding such term.  The language of this Agreement shall be deemed to be the language mutually chosen by the Parties and no rule of strict construction shall be applied against either Party hereto.
13.18.    Counterparts.  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may be executed by facsimile, PDF format via email or other electronically transmitted signatures and such signatures shall be deemed to bind each Party hereto as if they were original signatures.
13.19.    Non-Solicit.  Commencing on the Effective Date and for as long as either Party is promoting any Licensed Product in the (Co-)Promotion Territory, neither Party shall, directly or indirectly, actively recruit or solicit any employee of the other Party with whom such Party has come into contact or interacted for the purposes of performing this Agreement, without the prior consent of the other Party.  For purposes of this Section, “solicit” shall be deemed not to include:  (i) circumstances where an employee of one Party or any of its Affiliates initially contacts the other Party or any of such Party’s Affiliates seeking employment; or (ii) general solicitations of employment not specifically targeted at such employees.
[SIGNATURE PAGE FOLLOWS.]

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THIS AGREEMENT IS EXECUTED by the authorized representatives of the Parties as of the date first written above.
	
		
	SANOFI
	 

	 
	 

	 
	 

	 
	 

	By:
	 

	Name:
	 

	Title:
	 

	 
	 

	 
	 

	LEXICON PHARMACEUTICALS, INC.
	 

	 
	 

	 
	 

	 
	 

	By:
	 

	Name:
	 

	Title:
	 

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Schedule 1.40
Corporate Names

Lexicon Pharmaceuticals, Inc.

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 1.68
FTE Rates

Development
Development - [**]
Discovery - [**]
The Development and Discovery FTE Rates are intended to include the following costs:  The fully burdened cost of the professionals performing the activities, including allocated costs, but for clarity, not including clinical study materials.

Sales Force
Sales Force (Specialist) - [**]
		
	•
	For an employee sales representative in the Specialist sales force who carries only a Licensed Product, then the full FTE Rate for such employee may be included in Commercialization Costs.

		
	•
	For an employee sales representative in the Specialist sales force who is conducting primary details of the Licensed Product but the Licensed Product is not the only Licensed Product, then [**] of the full FTE Rate for such employee may be included in Commercialization Costs.

The Sales Force FTE Rate is intended to include the following costs:  The fully burdened cost of sales representatives, including an allocation of regional and country sales force management cost, inclusive of out-of-pocket costs and other expenses for the employee providing the services, including travel costs, information systems and allocated costs, such as, for example, allocated overhead costs.  Promotional materials (i.e., detail aids), including agency costs for development, are not included in these costs.  Further detail will be included in the (Co-)Promotion Agreement.

MSL and Medical Affairs
MSL - [**]
Medical Affairs - [**]
The MSL and Medical Affairs FTE Rates are intended to include the following costs:  The fully burdened cost of the MSLs and medical affairs professionals, inclusive of out-of-pocket costs and other expenses for the employee providing the activities, including travel costs and allocated costs, such as, for example, allocated overhead costs.  Further detail will be included in the (Co-)Promotion Agreement.

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 1.106
LX2761 Description

[**]

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 1.111
LX4211 Description

Product Identification: LX4211

Chemical Name: (2S,3R,4R,5S,6R)-2-(4-chloro-3-(4-ethoxybenzyl)phenyl)-6-(methylthio)tetrahydro-2H-pyran-3,4,5-triol

CAS Number: 1018899-04-1

Synonym(s): LP-802034

Formula Weight: 424.94

Molecular Weight: 424.94

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 2.4

Transferred Materials

Documents in the dataroom as of the Execution Date

Material Lexicon Know-How newly available between the Execution Date and the Effective Date that satisfies the criteria set forth in sentence 2 of Section 2.4.1.

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 3.1.2
Initial Development Plan

T1DM
List of On-going LX4211 Type 1 Studies -- Conducted by Lexicon
	
						
	Study Number
	Protocol Title
	Pt Population
	Study Design
	# of Subjects Planned
	Study Status

	[**]
	[**]
	[**]
	[**]
	[**]
	[**]

[Two (2) pages redacted]

T2DM

Initial Phase 3 Development Plan for T2DM - conducted by Sanofi
	
									
	 
	Study Design 
	Background Therapy
(Rescue)
	N 
Total/
arm 
	Arms
	Core Treatment period
Double-bl.
	eGFR
mL/min/ 1.73 m2
	Long-term Extension:
Double-blind
	Comments
Related Decision Points

	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]

[Two (2) pages redacted]

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

The Positive Results of studies [**] shall constitute Decision Points according to section 3.1.3 of the Agreement.

	
											
	Costs in k$
	 
	2016
	2017
	2018
	2019
	2020
	2021
	2022
	2023
	Total

	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]

	TOTAL Phase 3 T2DM Program
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]
	[**]

[One (1) page redacted]

Permitted Subcontracts for T2DM:  [**]

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 3.1.7
Development Reporting 
		
	(i)
	Filings and acceptance of filings for Regulatory Approval of the Licensed Products in any Major Market in the Territory

		
	(ii)
	Regulatory Approvals in the Major Markets in the Territory

		
	(iii)
	Initiation and completion of patient enrollment for clinical studies of Licensed Products

		
	(iv)
	Completion of clinical studies of Licensed Products and top line results thereof

		
	(v)
	Development milestone achievements 

		
	(vi)
	Announcements of publications

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 4.8.2
(Co-)Promotion Agreement Key Terms

-Promotional activities by both parties:
		
	•
	Target audience definition and quantification

		
	•
	Minimum sales force size [**]

		
	•
	Maximum Lexicon sales force size

		
	•
	Minimum and target number of calls per year per target

		
	•
	Commercialization plan definition

		
	•
	Lexicon may not [**]without the prior written consent of Sanofi.

		
	•
	Either party could decide to promote or engage in Commercialization activities outside of the T1DM Commercialization Plan subject to proper training, alignment with Commercialization Plan and compliance with Applicable Law. Those activities would be at such party's own expense and not subject to cost sharing.

		
	•
	Both parties' Specialist Efforts included in the T1D Commercialization Plan would be subject to the same ground rules (e.g., [**]).

-Medical affairs:   Unless otherwise agreed, Lexicon employees will constitute a reasonable portion of Medical Affairs FTEs.
-Obligations of Lexicon:
		
	•
	Lexicon would provide no less than [**] FTEs and would have the option to provide up to [**] of Specialist Efforts included in the T1DM Commercialization Plan (and thus subject to cost sharing).

		
	•
	Lexicon would have the option to provide up to [**] of Medical Affairs FTEs included in the T1DM Commercialization Plan (and thus subject to cost sharing).

		
	•
	Delivery of [**]

		
	•
	Maximum number of products to be detailed during a call is [**]

		
	•
	Sales Force Training

		
	•
	Governance/Committees:

Coordination mechanism between Sanofi and Lexicon teams
		
	•
	Compliance, including compliance as required by any applicable corporate integrity agreement of Sanofi then in effect that is applicable to Lexicon as a result of its activities hereunder

-Other:
		
	•
	Specialty sales force on a non-exclusive basis (i.e., Sanofi may also promote to specialists, including mirroring).

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 9.6
Press Release

[Attached]

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

PRESS RELEASE

                        
Sanofi and Lexicon Pharmaceuticals to Collaborate on Sotagliflozin, an Investigational New Oral Medicine for People with Diabetes

Paris and The Woodlands, TX - November 6, 2015 - Sanofi (EURONEXT: SAN and NYSE: SNY) and Lexicon Pharmaceuticals, Inc. (NASDAQ: LXRX) announced today that they have entered into a collaboration and license agreement for the development and commercialization of sotagliflozin, an investigational new oral dual inhibitor of sodium-glucose cotransporters 1 and 2 (SGLT-1 and SGLT-2), which could be a potential treatment option for people with diabetes. 

“This agreement with Lexicon reinforces our commitment to helping people living with diabetes,” said Pascale Witz, Executive Vice President, Sanofi, who will lead the Global Diabetes and Cardiovascular Care Business Unit in the company's new organizational structure. “Adding sotagliflozin to our portfolio, which includes medicines at virtually every stage of the treatment pathway, highlights our focus on providing a large and diverse set of therapeutic options for people with this disease.”

The developmental medicine sotagliflozin (LX4211) is currently being studied in two pivotal Phase 3 trials in type 1 diabetes, which are expected to report top-line results during the second half of 2016. Phase 3 trials in type 2 diabetes are expected to begin in 2016. Sotagliflozin has previously shown encouraging results in exploratory (Phase 2) studies, including reduction of blood sugar (HbA1c), improvement in glycemic variability and reduced meal-time insulin dose compared with placebo in type 1 diabetics. Phase 2 studies exploring treatment in people with type 2 diabetes, including those with renal impairment, showed lowering of blood sugar (HbA1c), weight loss and blood pressure improvements. No increase in hypoglycemic events was seen with sotagliflozin compared to background therapy in the Phase 2 program. The adverse event profile in the Phase 2 program was similar to other products in this class and reflective of the urinary glucose excretion associated with sotagliflozin’s inhibition of SGLT-2.

These results indicate that sotagliflozin could have the potential to become an important option among oral anti-diabetic medicines and provide a strong rationale for the further investigation of this compound as a treatment for people with diabetes. 

“Lexicon firmly believes in the potential of sotagliflozin for patients living with diabetes. It has been our strategy to focus our resources on the development of sotagliflozin for type 1 diabetes and to pursue a strategic partnership with respect to type 2 diabetes only if it would strengthen stakeholder value under a fully integrated diabetes program. We believe this arrangement with Sanofi achieves that objective,” said Lexicon President and Chief Executive Officer Lonnel Coats. “Sanofi's patient-centric focus in diabetes, and its rich history of innovation in diabetes, make it an exceedingly attractive partner which is well positioned to unlock the full potential of sotagliflozin for patients living with diabetes. Also consistent with our strategy, Lexicon will continue to lead the development of sotagliflozin for type 1 diabetes and have rights to participate in the commercialization of sotagliflozin for type 1 diabetes in the United States.”

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Under the terms of the agreement, Lexicon will receive an upfront payment of $300 million and is eligible to receive development, regulatory and sales milestone payments of up to $1.4 billion.  Lexicon is also entitled to tiered, escalating double digit percentage royalties on net sales of sotagliflozin.  

Sanofi obtains an exclusive worldwide license to develop, manufacture and commercialize sotagliflozin. Lexicon will continue to be responsible for all clinical development activities relating to type 1 diabetes and will retain an exclusive option to co-promote and have a significant role, in collaboration with Sanofi, in the commercialization of sotagliflozin for the treatment of type 1 diabetes in the United States.  Sanofi will be responsible for all clinical development and commercialization activities of sotagliflozin for the treatment of type 2 diabetes worldwide and will be solely responsible for the commercialization of sotagliflozin for the treatment of type 1 diabetes outside the United States.  Lexicon will share in the funding of a portion of the planned type 2 diabetes development costs over the next three years, up to an aggregate of $100 million.
The agreement is subject to customary filing and review under the Hart-Scott-Rodino Antitrust Improvements Act.  
The investigational agent described above is currently under clinical development and its safety and efficacy have not been evaluated by any regulatory authority.

About Sanofi
Sanofi, a global healthcare leader, discovers, develops and distributes therapeutic solutions focused on patients' needs. Sanofi has core strengths in the field of healthcare with seven growth platforms: diabetes solutions, human vaccines, innovative drugs, consumer healthcare, emerging markets, animal health and the new Genzyme. Sanofi is listed in Paris (EURONEXT: SAN) and in New York (NYSE: SNY).

About Lexicon 
Lexicon is a fully integrated biopharmaceutical company that is applying a unique approach to gene science, based on Nobel Prize-winning technology, to discover and develop precise medicines for patients with serious, chronic conditions. Through its Genome5000TM program, Lexicon scientists have studied the role and function of nearly 5,000 genes over the last 20 years and have identified more than 100 protein targets with therapeutic potential in a range of diseases. Through the precise targeting of these proteins, Lexicon is pioneering the discovery and development of innovative medicines to safely and effectively treat disease. Lexicon has a pipeline of promising drug candidates in clinical and pre-clinical development in oncology, diabetes and metabolism. For additional information please visit www.lexpharma.com.

Forward Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are statements that are not historical facts. These statements include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and expectations with respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Forward-looking statements are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "plans" and similar expressions. Although Sanofi's and Lexicon’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Sanofi and Lexicon, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include among other things, the uncertainties inherent in research and development, including the timing of clinical trials, the uncertain predictive nature of clinical trials with respect to subsequent clinical trials, future clinical data and analysis, including post marketing, decisions by regulatory authorities, such as the FDA or the EMA, regarding whether and when to approve any drug, device or biological application that may be filed for any such product candidates as well as their decisions regarding labelling and other matters that could affect the availability or commercial potential of such product candidates, the absence of guarantee that the product candidates if approved will be commercially successful, the future approval and commercial success of therapeutic alternatives, Sanofi’s and Lexicon’s ability to benefit from external growth opportunities, trends in exchange rates and prevailing interest rates, the impact of cost containment policies and subsequent changes thereto, as well as those risks and uncertainties discussed or identified in the public filings with the SEC and the AMF made by Sanofi and with the SEC made by Lexicon, including those listed under "Risk Factors" and "Cautionary Statement Regarding Forward-Looking Statements" in Sanofi's annual report on Form 20-F and in Lexicon’s annual report on Form 10-K for 

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

the year ended December 31, 2014. Other than as required by applicable law, Sanofi and Lexicon do not undertake any obligation to update or revise any forward-looking information or statements.

Contacts:
	
		
	Sanofi
	 

	Media Relations 
Jack Cox 
Tel.: + (33) 1 53 77 45 02
jack.cox@sanofi.com
	Investor Relations 
Sébastien Martel 
Tel.: + (33) 1 53 77 45 45
ir@sanofi.com

	Global Diabetes Communications 
	U.S. Diabetes Communications

	Philip McNamara
Tel.: +1 908 981 5497
philip.mcnamara@sanofi.com
	Susan Brooks
Tel.: +1 908 981 6566
susan.brooks@sanofi.com

	 
	 

	Lexicon Pharmaceuticals, Inc.
	 

	Media Relations 
Mariann Caprino
Tel.: +1 917 242 1087
m.caprino@togorun.com

	Investor Relations 
Chas Schultz
Tel.: + 1 281 863 3421
cschultz@lexpharma.com

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 9.9
Form 8-K

[Attached]

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

__________________

FORM 8-K
__________________

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):    November ___, 2015

Lexicon Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)

	
			
	Delaware
	000-30111
	76-0474169

	(State or other jurisdiction of
incorporation or organization)
	(Commission File Number)  
	(I.R.S. Employer
Identification Number)

8800 Technology Forest Place
The Woodlands, Texas 77381
(Address of principal executive
offices and Zip Code)

(281) 863-3000
(Registrant’s telephone number,
including area code)

Check the appropriate box below if the Form 8‐K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
 ̈    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 ̈    Soliciting material pursuant to Rule 14a‐12 under the Exchange Act (17 CFR 240.14a‐12)
 ̈    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d‐2(b))
 ̈    Pre-commencement communications pursuant to Rule 13e‐4(c) under the Exchange Act
(17 CFR 240.13e‐4(c))

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

		
	Item 1.01
	Entry into a Material Definitive Agreement.

On November ___, 2015, we entered into a Collaboration and License Agreement (the “Agreement”) with Sanofi for the worldwide development and commercialization of our diabetes drug candidate sotagliflozin.
Under the Agreement, we granted Sanofi an exclusive, worldwide, royalty-bearing right and license under our patent rights and know-how to develop, manufacture and commercialize sotagliflozin.  Subject to specified exceptions, neither party may (a) perform clinical development activities relating to any other compound which inhibits sodium-glucose cotransporters type 1 or type 2 or (b) commercialize any such compounds in the United States, countries of the European Union and certain other specified countries, in each case during the royalty terms applicable in such countries.  Among the specified exceptions is a right we retained to pursue the development of our LX2761 drug candidate, with respect to which we granted Sanofi certain rights of first negotiation specified in the Agreement.
Under the Agreement, Sanofi will pay us an upfront payment of $300 million.  In addition, we are eligible to receive from Sanofi (a) up to an aggregate of $430 million upon the achievement of specified development and regulatory milestones and (b) up to an aggregate of $990 million upon the achievement of specified sales milestones.  We are also entitled to tiered, escalating royalties ranging from low double digit percentages to forty percent of net sales of sotagliflozin, based on indication and territory, with royalties for the higher band of such range attributable to net sales for type 1 diabetes in the United States, and subject in each case to customary royalty reduction provisions.  Royalties payable with respect to net sales of sotagliflozin for type 1 diabetes in the United States will also be reduced in the event we do not exercise our co-promotion option described below.
We will continue to be responsible for all clinical development activities relating to type 1 diabetes and will retain an exclusive option to co-promote and have a significant role, in collaboration with Sanofi, in the commercialization of sotagliflozin for the treatment of type 1 diabetes in the United States.  If we exercise our co-promotion option, we will fund forty percent of the commercialization costs relating to such co-promotion activities.  Sanofi will be responsible for all clinical development and commercialization of sotagliflozin for the treatment of type 2 diabetes worldwide and will be solely responsible for the commercialization of sotagliflozin for the treatment of type 1 diabetes outside the United States.  We will share in the funding of a portion of the planned type 2 diabetes development costs over the next three years, up to an aggregate of $100 million.  Sanofi will book sales worldwide in all indications.
The parties are responsible for using commercially reasonable efforts to perform their development and commercialization obligations pursuant to mutually approved development and commercialization plans.
The parties’ activities under the Agreement are governed by a joint steering committee and certain other governance committees which reflect equal or other appropriate representation from both parties.  If the applicable governance committee is not able to make a decision by consensus and the parties are not able to resolve the issue through escalation to specified senior executive officers of the parties, then Sanofi will have final decision-making authority, subject to limitations specified in the Agreement.
The Agreement will expire upon the expiration of all applicable royalty terms for all licensed products in all countries.  The royalty term for each licensed product in each country is the period commencing on the effective date of the Agreement and ending on the latest of expiration of specified patent coverage, expiration of specified regulatory exclusivity and 10 years following the first commercial sale in the applicable country.  Either party may terminate the Agreement in the event of an uncured material breach by the other party.  Prior to completion of the core development activities for type 2 diabetes specified in the development plan, Sanofi may terminate the Agreement on a country-by-country and licensed product-by-licensed product basis, in the event of (a) notification of a material safety issue relating to the licensed product or the class of sodium-glucose cotransporters type 1 or type 2 inhibitors resulting in a recommendation or requirement that we or Sanofi cease development, (b) failure to achieve positive results with respect to certain clinical trial results, (c) the occurrence of specified fundamental adverse events or (d) the exploitation of the 

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

licensed product infringing third party intellectual property rights in specified major markets and Sanofi is unable to obtain a license to such third party intellectual property rights.
The effectiveness of the Agreement is contingent upon satisfaction of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
We issued a press release announcing the Agreement on November 6, 2015, a copy of which is attached to this current report on Form 8-K as Exhibit 99.1.
The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, which we expect to file as an exhibit to our annual report on Form 10-K for the year ending December 31, 2015.

		
	Item 9.01
	Financial Statements and Exhibits 

(d)    Exhibits 

	
			
	Exhibit No.
	Description

	99.1
	-
	Press Release of Lexicon Pharmaceuticals, Inc. dated November 6, 2015

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 

	
				
	 
	Lexicon Pharmaceuticals, Inc.

	 
	 
	 
	 

	 
	 
	 
	 

	Date:  November 6, 2015
	By:
	 

	 
	 
	Brian T. Crum

	 
	 
	Vice President and General Counsel

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Index to Exhibits

	
			
	Exhibit No.
	Description

	99.1
	-
	Press Release of Lexicon Pharmaceuticals, Inc. dated November 6, 2015

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

Schedule 10.2.2
Existing Patents
	
							
	Case Reference
	Country
	Internal Title
	Current Status
	Filing
	Publication Number
	Grant Number

	LEX-1000-AR-NP
	Argentina
	SGLT2 Inhibitors
	Publication of application
	28 Sep 2007
	AR063047A1
	 

	LEX-1000-AT-EPT
	Austria
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-AT-ETD
	Austria
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-AU-PCT
	Australia
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2007304971

	LEX-1000-BE-EPT
	Belgium
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-BE-ETD
	Belgium
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-BR-PCT
	Brazil
	SGLT2 Inhibitors
	Publication of application
	27 Sep 2007
	2232
	 

	LEX-1000-CA-PCT
	Canada
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2,664,688

	LEX-1000-CH-EPT
	Switzerland
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-CH-ETD
	Switzerland
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-CN-DIV
	China
	SGLT2 Inhibitors
	Publication of application
	14 Mar 2013
	CN 103254119A
	 

	LEX-1000-CN-NP
	China
	SGLT2 Inhibitors
	Grant
	02 Apr 2008
	CN101343296A
	ZL200810090073.9

	LEX-1000-CZ-EPT
	Czech Republic
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-CZ-ETD
	Czech Republic
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-DE-EPT
	Germany
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	602007012292.9

	LEX-1000-DE-ETD
	Germany
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-DK-EPT
	Denmark
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-DK-ETD
	Denmark
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-EA-EAT
	Eurasian Procedure
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	016511

	LEX-1000-EP-EPT
	European Procedure (Patents)
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-EP-ETD
	European Procedure (Patents)
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2308841
	2308841

	LEX-1000-ES-EPT
	Spain
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-ES-ETD
	Spain
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-FR-EPT
	France
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-FR-ETD
	France
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-GB-EPT
	United Kingdom
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-GB-ETD
	United Kingdom
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-GR-EPT
	Greece
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	3074740

	LEX-1000-GR-ETD
	Greece
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	3083670

	LEX-1000-HK-FPD
	Hong Kong
	SGLT2 Inhibitors
	Publication of application
	04 Sep 2013
	1183020A
	 

	LEX-1000-HK-FPR
	Hong Kong
	SGLT2 Inhibitors
	Grant
	19 Mar 2009
	1124863A
	HK1124863

	LEX-1000-HU-EPT
	Hungary
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-HU-ETD
	Hungary
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-IE-EPT
	Ireland
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

	
							
	LEX-1000-IE-ETD
	Ireland
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-IL-PCT
	Israel
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	197836

	LEX-1000-IN-PCT
	India
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	258913

	LEX-1000-IT-EPT
	Italy
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-IT-ETD
	Italy
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-JP-PCD
	Japan
	SGLT2 Inhibitors
	Grant
	20 Nov 2012
	2013-079243
	5701845

	LEX-1000-JP-PCD[2]
	Japan
	SGLT2 Inhibitors
	Publication of application
	17 Feb 2015
	2015-120736
	 

	LEX-1000-JP-PCT
	Japan
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2010-504998
	5283625

	LEX-1000-KR-PCT
	South Korea / Republic of Korea
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	10-1492277

	LEX-1000-MX-PCT
	Mexico
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	287903

	LEX-1000-NL-EPT
	Netherlands
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-NL-ETD
	Netherlands
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-NO-PCT
	Norway
	SGLT2 Inhibitors
	Local filing
	27 Sep 2007
	 
	 

	LEX-1000-NZ-PCT
	New Zealand
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	575811
	575811

	LEX-1000-PL-EPT
	Poland
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-PL-ETD
	Poland
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-PT-EPT
	Portugal
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-PT-ETD
	Portugal
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-RO-EPT
	Romania
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-RO-ETD
	Romania
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-RU-EAT
	Russian Federation
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	016511

	LEX-1000-SE-EPT
	Sweden
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	2089361

	LEX-1000-SE-ETD
	Sweden
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2308841

	LEX-1000-SG-PCT
	Singapore
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	151038

	LEX-1000-TR-EPT
	Turkey
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	2089361
	TR 2011 02757 T4

	LEX-1000-TR-ETD
	Turkey
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	TR 2014 05126 T4

	LEX-1000-TW-NP
	Taiwan
	SGLT2 Inhibitors
	Grant
	19 Sep 2007
	200826929
	I499414

	LEX-1000-UA-PCT
	Ukraine
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	98123

	LEX-1000-US-CNT
	United States Of America
	SGLT2 Inhibitors
	Grant
	18 Aug 2010
	US 2010/0311673 A1
	8,476,413

	LEX-1000-US-CNT[2]
	United States Of America
	SGLT2 Inhibitors
	Publication of application
	25 Jun 2013
	US 2014/0135277 A1
	 

	LEX-1000-US-NP
	United States Of America
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	US-2008-0113922-A1
	7,781,577

	LEX-1000-US-NP[2]
	United States Of America
	SGLT2 Inhibitors
	Grant
	04 Mar 2008
	US-2008-0221164-A1
	7,846,945

	LEX-1000-ZA-PCT
	South Africa
	SGLT2 Inhibitors
	Grant
	27 Sep 2007
	 
	2009/02231

	LEX-1017-AR-NP
	Argentina
	Large Scale Process for LX4211
	Publication of application
	25 Jul 2008
	AR067701 A1
	 

	LEX-1017-AT-EPT
	Austria
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	E530558
	2183263

	LEX-1017-AU-PCD
	Australia
	Large Scale Process for LX4211
	Filing
	12 Jun 2013
	 
	 

	LEX-1017-AU-PCT
	Australia
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	2008279424

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

	
							
	LEX-1017-BE-EPT
	Belgium
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-BR-PCT
	Brazil
	Large Scale Process for LX4211
	Local filing
	17 Jul 2008
	 
	 

	LEX-1017-CA-PCT
	Canada
	Large Scale Process for LX4211
	Local filing
	17 Jul 2008
	 
	 

	LEX-1017-CH-EPT
	Switzerland
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-CN-PCT
	China
	Large Scale Process for LX4211
	Publication of application
	17 Jul 2008
	CN 101801989A
	 

	LEX-1017-CZ-EPT
	Czech Republic
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-DE-EPT
	Germany
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	602008010937.2

	LEX-1017-DK-EPT
	Denmark
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-EA-EAT
	Eurasian Procedure
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	017411

	LEX-1017-EP-EPT
	European Procedure (Patents)
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-ES-EPT
	Spain
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-FR-EPT
	France
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-GB-EPT
	United Kingdom
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-GR-EPT
	Greece
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	3076926

	LEX-1017-HK-FPR
	Hong Kong
	Large Scale Process for LX4211
	Filing
	12 Nov 2010
	 
	 

	LEX-1017-HU-EPT
	Hungary
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-IE-EPT
	Ireland
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-IL-PCT
	Israel
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	203209

	LEX-1017-IN-PCT
	India
	Large Scale Process for LX4211
	Publication of application
	17 Jul 2008
	30/2010
	 

	LEX-1017-IT-EPT
	Italy
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-JP-PCD
	Japan
	Large Scale Process for LX4211
	Grant
	28 Aug 2013
	2014-001230
	5764174

	LEX-1017-JP-PCT
	Japan
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2010-534661
	5653213

	LEX-1017-KR-PCT
	South Korea / Republic of Korea
	Large Scale Process for LX4211
	Local filing
	17 Jul 2008
	 
	 

	LEX-1017-MX-PCT
	Mexico
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	296552

	LEX-1017-NL-EPT
	Netherlands
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

	
							
	LEX-1017-NZ-PCT
	New Zealand
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	582536

	LEX-1017-PL-EPT
	Poland
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-PT-EPT
	Portugal
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-RO-EPT
	Romania
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-RU-EAT
	Russian Federation
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	017411

	LEX-1017-SE-EPT
	Sweden
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	2183263

	LEX-1017-SG-PCT
	Singapore
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	158399

	LEX-1017-TR-EPT
	Turkey
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	2183263
	TR 2011 12632 T4

	LEX-1017-TW-DIV
	Taiwan
	Large Scale Process for LX4211
	Publication of application
	16 Aug 2013
	201350473
	 

	LEX-1017-TW-NP
	Taiwan
	Large Scale Process for LX4211
	Grant
	21 Jul 2008
	200914434
	I419886

	LEX-1017-UA-PCT
	Ukraine
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	107175

	LEX-1017-US-CNT
	United States Of America
	Large Scale Process for LX4211
	Grant
	11 Aug 2011
	US-2012-0095198-A1
	8,293,878

	LEX-1017-US-NP
	United States Of America
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	US-2009-0030198-A1
	8,026,347

	LEX-1017-WO-PCT
	International Procedure
	Large Scale Process for LX4211
	Expiry date
	17 Jul 2008
	WO2009/014970
	 

	LEX-1017-ZA-PCT
	South Africa
	Large Scale Process for LX4211
	Grant
	17 Jul 2008
	 
	2010/00219

	LEX-1287-AR-NP
	Argentina
	Solid Anhydrous Forms of LX4211
	Publication of application
	15 Jul 2009
	AR072807 A1
	 

	LEX-1287-AU-PCT
	Australia
	Solid Anhydrous Forms of LX4211
	Grant
	15 Jul 2009
	 
	2009270973

	LEX-1287-BR-PCT
	Brazil
	Solid Anhydrous Forms of LX4211
	Local filing
	15 Jul 2009
	 
	 

	LEX-1287-CA-PCT
	Canada
	Solid Anhydrous Forms of LX4211
	Local filing
	15 Jul 2009
	 
	 

	LEX-1287-CN-PCT
	China
	Solid Anhydrous Forms of LX4211
	Publication of application
	15 Jul 2009
	CN 102112483A
	 

	LEX-1287-EP-ETD
	European Procedure (Patents)
	Solid Anhydrous Forms of LX4211
	Publication of application
	18 Feb 2011
	2332947
	 

	LEX-1287-HK-FPR
	Hong Kong
	Solid Anhydrous Forms of LX4211
	Publication of application
	22 Jul 2011
	1153480A
	 

	LEX-1287-IL-PCT
	Israel
	Solid Anhydrous Forms of LX4211
	Publication of application
	15 Jul 2009
	 
	 

	LEX-1287-IN-PCT
	India
	Solid Anhydrous Forms of LX4211
	Publication of application
	15 Jul 2009
	2264
	 

	LEX-1287-JP-PCD
	Japan
	Solid Anhydrous Forms of LX4211
	Filing
	30 Sep 2015
	 
	 

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

	
							
	LEX-1287-KR-PCT
	South Korea / Republic of Korea
	Solid Anhydrous Forms of LX4211
	Local Filing
	15 Jul 2009
	 
	 

	LEX-1287-MX-PCT
	Mexico
	Solid Anhydrous Forms of LX4211
	Grant
	15 Jul 2009
	 
	329600

	LEX-1287-NZ-PCT
	New Zealand
	Solid Anhydrous Forms of LX4211
	Grant
	15 Jul 2009
	 
	590184

	LEX-1287-RU-PCT
	Russian Federation
	Solid Anhydrous Forms of LX4211
	Grant
	15 Jul 2009
	 
	2505543

	LEX-1287-SG-PCD
	Singapore
	Solid Anhydrous Forms of LX4211
	Publication of application
	18 Oct 2012
	185317
	 

	LEX-1287-TH-NP
	Thailand
	Solid Anhydrous Forms of LX4211
	Publication of application
	09 Jul 2009
	122363
	 

	LEX-1287-TW-NP
	Taiwan
	Solid Anhydrous Forms of LX4211
	Grant
	01 Jul 2009
	201006808
	I472521

	LEX-1287-UA-PCT
	Ukraine
	Solid Anhydrous Forms of LX4211
	Grant
	15 Jul 2009
	 
	106048

	LEX-1287-US-CNT
	United States Of America
	Solid Anhydrous Forms of LX4211
	Grant
	22 Jun 2012
	US 2013/0165395 A1
	9,067,962

	LEX-1287-US-NP
	United States Of America
	Solid Anhydrous Forms of LX4211
	Grant
	15 Jul 2009
	US-2010-0016422-A1
	8,217,156

	LEX-1287-ZA-PCT
	South Africa
	Solid Anhydrous Forms of LX4211
	Grant
	15 Jul 2009
	 
	2011/00175

	LEX-1309-AR-NP
	Argentina
	Methods of Using Dual SGLT1/2 Inhibitors
	Publication of application
	02 Mar 2011
	AR 080444 A1
	 

	LEX-1309-AU-PCT
	Australia
	Methods of Using Dual SGLT1/2 Inhibitors
	Local filing
	01 Mar 2011
	 
	 

	LEX-1309-BR-PCT
	Brazil
	Methods of Using Dual SGLT1/2 Inhibitors
	Local filing
	01 Mar 2011
	 
	 

	LEX-1309-CA-PCT
	Canada
	Methods of Using Dual SGLT1/2 Inhibitors
	Local filing
	01 Mar 2011
	 
	 

	LEX-1309-EP-EPT
	European Procedure (Patents)
	Methods of Using Dual SGLT1/2 Inhibitors
	Publication of application
	01 Mar 2011
	2542236
	 

	LEX-1309-IN-PCT
	India
	Methods of Using Dual SGLT1/2 Inhibitors
	Local filing
	01 Mar 2011
	 
	 

	LEX-1309-JP-PCT
	Japan
	Methods of Using Dual SGLT1/2 Inhibitors
	Publication of application
	01 Mar 2011
	2013-521293
	 

	LEX-1309-KR-PCT
	South Korea / Republic of Korea
	Methods of Using Dual SGLT1/2 Inhibitors
	Local filing
	01 Mar 2011
	 
	 

	LEX-1309-MX-PCT
	Mexico
	Methods of Using Dual SGLT1/2 Inhibitors
	Local filing
	01 Mar 2011
	 
	 

	LEX-1309-TW-NP
	Taiwan
	Methods of Using Dual SGLT1/2 Inhibitors
	Publication of application
	14 Feb 2011
	201130486
	 

	LEX-1309-US-CNT
	United States Of America
	Methods of Using Dual SGLT1/2 Inhibitors
	Publication of application
	10 Jun 2013
	US 2014/0018308 A1
	 

	LEX-1309-US-CNT[2]
	United States Of America
	Methods of Using Dual SGLT1/2 Inhibitors
	Filing
	06 Oct 2015
	 
	 

	LEX-1321-AR-NP
	Argentina
	Solid Dosage Forms of LX4211
	Publication of application
	04 Jan 2012
	AR084781 A1
	 

	LEX-1321-AU-PCT
	Australia
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

Confidential materials omitted and filed separately
with the Securities and Exchange Commission.
Asterisks denote omissions.

	
							
	LEX-1321-BR-PCT
	Brazil
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-CA-PCT
	Canada
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-EP-EPT
	European Procedure (Patents)
	Solid Dosage Forms of LX4211
	Publication of application
	03 Jan 2012
	2661256
	 

	LEX-1321-IL-PCT
	Israel
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-IN-PCT
	India
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-JP-PCT
	Japan
	Solid Dosage Forms of LX4211
	Publication of application
	03 Jan 2012
	2014-501780
	 

	LEX-1321-KR-PCT
	South Korea / Republic of Korea
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-MX-PCT
	Mexico
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-NZ-PCT
	New Zealand
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-RU-PCT
	Russian Federation
	Solid Dosage Forms of LX4211
	Publication of application
	03 Jan 2012
	 
	 

	LEX-1321-SG-PCT
	Singapore
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-TH-PCT
	Thailand
	Solid Dosage Forms of LX4211
	Local filing
	03 Jan 2012
	 
	 

	LEX-1321-TW-NP
	Taiwan
	Solid Dosage Forms of LX4211
	Publication of application
	02 Jan 2012
	201309345
	 

	LEX-1321-US-CNT
	United States Of America
	Solid Dosage Forms of LX4211
	Publication of application
	30 May 2014
	US 2015/0111840 A1
	 

	LEX-1321-WO-PCT
	International Procedure
	Solid Dosage Forms of LX4211
	Publication of application
	03 Jan 2012
	WO 2012/094293
	 

	LEX-1321-ZA-PCT
	South Africa
	Solid Dosage Forms of LX4211
	Grant
	03 Jan 2012
	 
	2013/04694

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00259-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00259-of-00352.parquet"}]]