Document:

Exhibit 10.1

 

 

 

COMMON UNIT PURCHASE AGREEMENT

 

by and among

 

ANTERO MIDSTREAM PARTNERS LP

 

and

 

THE PURCHASERS NAMED ON SCHEDULE A HERETO

 

 

 

 

TABLE OF CONTENTS

 

	
ARTICLE I
    
	
 
    
	
DEFINITIONS
    
	
 
    	
 
    	
 
    	
 
    
	
Section 1.1
    	
Definitions
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
AGREEMENT   TO SELL AND PURCHASE
    
	
 
    	
 
    	
 
    	
 
    
	
Section 2.1
    	
Sale and Purchase
    	
 
    	
6
    
	
Section 2.2
    	
Closing
    	
 
    	
6
    
	
Section 2.3
    	
Mutual Conditions
    	
 
    	
6
    
	
Section 2.4
    	
Each Purchaser’s   Conditions
    	
 
    	
7
    
	
Section 2.5
    	
The Partnership’s   Conditions
    	
 
    	
7
    
	
Section 2.6
    	
Partnership Deliveries
    	
 
    	
8
    
	
Section 2.7
    	
Purchaser Deliveries
    	
 
    	
9
    
	
Section 2.8
    	
Independent Nature of   Purchasers’ Obligations and Rights
    	
 
    	
9
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
REPRESENTATIONS   AND WARRANTIES OF THE PARTNERSHIP
    
	
 
    	
 
    	
 
    	
 
    
	
Section 3.1
    	
Formation and   Qualification of the Partnership Entities
    	
 
    	
10
    
	
Section 3.2
    	
Purchased Units;   Capitalization
    	
 
    	
10
    
	
Section 3.3
    	
No Conflict
    	
 
    	
12
    
	
Section 3.4
    	
No Default
    	
 
    	
12
    
	
Section 3.5
    	
Authority
    	
 
    	
12
    
	
Section 3.6
    	
No Consents
    	
 
    	
13
    
	
Section 3.7
    	
Authorization,   Execution and Delivery of the Common Unit Purchase Agreement
    	
 
    	
13
    
	
Section 3.8
    	
Authorization,   Execution, Delivery and Enforceability of Certain Agreements
    	
 
    	
13
    
	
Section 3.9
    	
Contribution Agreement
    	
 
    	
13
    
	
Section 3.10
    	
Authorization of Contribution   Equity Consideration
    	
 
    	
14
    
	
Section 3.11
    	
Valid Issuance; No   Options or Preemptive Rights of Common Units
    	
 
    	
14
    
	
Section 3.12
    	
No Registration Rights
    	
 
    	
14
    
	
Section 3.13
    	
Periodic Reports
    	
 
    	
15
    
	
Section 3.14
    	
Financial Statements
    	
 
    	
15
    
	
Section 3.15
    	
Independent Registered   Public Accounting Firm
    	
 
    	
15
    
	
Section 3.16
    	
Litigation
    	
 
    	
15
    
	
Section 3.17
    	
No Material Adverse   Changes
    	
 
    	
15
    
	
Section 3.18
    	
Title to Properties
    	
 
    	
16
    
	
Section 3.19
    	
Rights of Way
    	
 
    	
16
    
	
Section 3.20
    	
License and Permits
    	
 
    	
16
    

 

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Section 3.21
    	
Intellectual Property
    	
 
    	
16
    
	
Section 3.22
    	
Insurance
    	
 
    	
16
    
	
Section 3.23
    	
No Labor Dispute; No   Notice of Labor Law Violations
    	
 
    	
17
    
	
Section 3.24
    	
Environmental   Compliance
    	
 
    	
17
    
	
Section 3.25
    	
Tax Returns
    	
 
    	
17
    
	
Section 3.26
    	
No Employment Law   Violations
    	
 
    	
17
    
	
Section 3.27
    	
No Unlawful Payments
    	
 
    	
18
    
	
Section 3.28
    	
Compliance with Money   Laundering Laws
    	
 
    	
18
    
	
Section 3.29
    	
OFAC
    	
 
    	
18
    
	
Section 3.30
    	
Certain Fees
    	
 
    	
18
    
	
Section 3.31
    	
No Side Agreements
    	
 
    	
19
    
	
Section 3.32
    	
No Registration
    	
 
    	
19
    
	
Section 3.33
    	
No Integration
    	
 
    	
19
    
	
Section 3.34
    	
MLP Status
    	
 
    	
19
    
	
Section 3.35
    	
Qualifying Income of   Contributed Assets
    	
 
    	
19
    
	
Section 3.36
    	
Investment Company
    	
 
    	
19
    
	
Section 3.37
    	
Disclosure Controls
    	
 
    	
19
    
	
Section 3.38
    	
Accounting Controls
    	
 
    	
20
    
	
Section 3.39
    	
Placement Agent   Reliance
    	
 
    	
20
    
	
Section 3.40
    	
Legal Sufficiency of   the Contribution Agreement
    	
 
    	
20
    
	
Section 3.41
    	
Absence of Price   Manipulation
    	
 
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
REPRESENTATIONS   AND WARRANTIES OF THE PURCHASERS
    
	
 
    	
 
    	
 
    	
 
    
	
Section 4.1
    	
Existence
    	
 
    	
21
    
	
Section 4.2
    	
Authorization,   Enforceability
    	
 
    	
21
    
	
Section 4.3
    	
No Breach
    	
 
    	
21
    
	
Section 4.4
    	
Certain Fees
    	
 
    	
21
    
	
Section 4.5
    	
No Side Agreements
    	
 
    	
22
    
	
Section 4.6
    	
Investment
    	
 
    	
22
    
	
Section 4.7
    	
Nature of Purchaser
    	
 
    	
22
    
	
Section 4.8
    	
Restricted Securities
    	
 
    	
22
    
	
Section 4.9
    	
Legend
    	
 
    	
22
    
	
Section 4.10
    	
Company Information
    	
 
    	
23
    
	
Section 4.11
    	
Short Selling
    	
 
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    
	
COVENANTS
    
	
 
    	
 
    	
 
    	
 
    
	
Section 5.1
    	
Taking of Necessary   Action
    	
 
    	
23
    
	
Section 5.2
    	
Other Actions
    	
 
    	
24
    
	
Section 5.3
    	
Contribution   Transaction
    	
 
    	
24
    
	
Section 5.4
    	
Expenses
    	
 
    	
24
    

 

ii

 

	
ARTICLE VI
    
	
 
    
	
INDEMNIFICATION
    
	
 
    	
 
    	
 
    	
 
    
	
Section 6.1
    	
Indemnification by the   Partnership
    	
 
    	
24
    
	
Section 6.2
    	
Indemnification by   Purchasers
    	
 
    	
25
    
	
Section 6.3
    	
Indemnification   Procedure
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    	
 
    
	
Section 7.1
    	
Interpretation
    	
 
    	
26
    
	
Section 7.2
    	
Survival of Provisions
    	
 
    	
27
    
	
Section 7.3
    	
No Waiver;   Modifications in Writing
    	
 
    	
27
    
	
Section 7.4
    	
Binding Effect;   Assignment
    	
 
    	
27
    
	
Section 7.5
    	
Confidentiality
    	
 
    	
28
    
	
Section 7.6
    	
Communications
    	
 
    	
28
    
	
Section 7.7
    	
Removal of Legend
    	
 
    	
28
    
	
Section 7.8
    	
Entire Agreement
    	
 
    	
29
    
	
Section 7.9
    	
Governing Law
    	
 
    	
29
    
	
Section 7.10
    	
Execution in   Counterparts
    	
 
    	
29
    
	
Section 7.11
    	
Termination
    	
 
    	
30
    
	
Section 7.12
    	
Recapitalization,   Exchanges, Etc. Affecting the Common Units
    	
 
    	
30
    
	
 
    	
 
    
	
Schedule A —
    	
List of Purchasers and   Commitment Amounts
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Exhibit A —
    	
Form of   Registration Rights Agreement
    	
 
    	
 
    
	
Exhibit B —
    	
Form of Opinion of   Vinson & Elkins L.L.P.
    	
 
    	
 
    
					

 

iii

 

COMMON UNIT PURCHASE AGREEMENT

 

This COMMON UNIT PURCHASE AGREEMENT, dated as of September 17, 2015 (this “Agreement”), is by and among ANTERO MIDSTREAM PARTNERS LP, a Delaware limited partnership (the “Partnership”), and each of the purchasers listed on Schedule A hereof (each a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, the Partnership, Antero Treatment LLC, a Delaware limited liability company and wholly-owned subsidiary of the Partnership (“Antero Treatment”) and Antero Resources Corporation, a Delaware corporation (“Antero”), intend to enter into to the Contribution Agreement (as defined below), pursuant to which Antero will, on the terms and subject to the conditions set forth in the Contribution Agreement, contribute (i) the Treatment Assets (as defined below) to Antero Treatment and (ii) 100% of the outstanding limited liability company interests in Antero Water (as defined below) to the Partnership, in exchange for aggregate consideration of $1.050 billion, consisting of cash, assumed debt and Common Units (the “Unit Consideration”); and

 

WHEREAS, to fund a portion of the purchase price for the Contribution (as defined below), the Partnership desires to sell to the Purchasers, and the Purchasers desire to purchase from the Partnership, certain Common Units (as defined below), in accordance with the provisions of this Agreement; and

 

WHEREAS, the Partnership and the Purchasers will enter into a registration rights agreement (the “Registration Rights Agreement”), substantially in the form attached hereto as Exhibit A, pursuant to which the Partnership will provide the Purchasers with certain registration rights with respect to the Common Units acquired pursuant hereto.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Partnership and each of the Purchasers, severally and not jointly, hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                               Definitions.  As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Aggregate Purchase Price” means the product of (i) the Common Unit Price multiplied by (ii) the aggregate number of Purchased Units purchased by the Purchasers.

 

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“Agreement” has the meaning set forth in the introductory paragraph.

 

“Antero” has the meaning set forth in the recitals.

 

“Antero Treatment” has the meaning set forth in the recitals.

 

“Antero Treatment LLC Agreement” has the meaning specified in Section 3.2(h).

 

“Antero Water” means Antero Water LLC, a Delaware limited liability company.

 

“Antero Water LLC Agreement” has the meaning specified in Section 3.2(i).

 

“Business Day” means a day other than (i) a Saturday or Sunday or (ii) any day on which banks located in New York, New York, U.S.A. are authorized or obligated to close.

 

“Closing” has the meaning specified in Section 2.2.

 

“Closing Date” has the meaning specified in Section 2.2.

 

“Code” has the meaning specified in Section 3.26.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Unit Price” has the meaning specified in Section 2.1(b).

 

“Common Units” means common units representing limited partnership interests in the Partnership.

 

“Consent” has the meaning specified in Section 3.6.

 

“Contribution” means, collectively, the contribution, conveyance, transfer and assignment pursuant to the Contribution Agreement by Antero of (i) 100% of the equity interests in Antero Water to the Partnership and (ii) the Treatment Assets to Antero Treatment.

 

“Contribution Agreement” means the Contribution, Conveyance and Assumption Agreement, dated as of September 17, 2015, by and among the Partnership, Antero Treatment and Antero.

 

“Delaware LLC Act” means the Delaware Limited Liability Company Act.

 

“Delaware LP Act” means the Delaware Revised Uniform Limited Partnership Act.

 

“Enforceability Exceptions” has the meaning specified in Section 3.7.

 

“Environmental Laws” has the meaning specified in Section 3.24.

 

“ERISA” has the meaning specified in Section 3.26.

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

 

“Existing Registration Rights Agreement” means the Registration Rights Agreement, dated November 10, 2014, between the Partnership and Antero.

 

“Fundamental Representations” has the meaning specified in Section 7.2.

 

“General Partner” means Antero Resources Midstream Management LLC, a Delaware limited liability company.

 

“General Partner Interest” has the meaning specified in Section 3.2(d).

 

“Governmental Authority” means, with respect to a particular Person, any country, state, county, city and political subdivision in which such Person or such Person’s property is located or that exercises valid jurisdiction over any such Person or such Person’s property, and any court, agency, department, commission, board, bureau or instrumentality of any of them and any monetary authority that exercises valid jurisdiction over any such Person or such Person’s property.  Unless otherwise specified, all references to Governmental Authority herein with respect to the Partnership mean a Governmental Authority having jurisdiction over the Partnership, its Subsidiaries or any of their respective properties or assets.

 

“Incentive Distribution Rights” means all of the incentive distribution rights representing limited partner interests in the Partnership.

 

“Investment Company Act” has the meaning specified in Section 3.36.

 

“Law” means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation.

 

“Lien” means any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.  For the purpose of this Agreement, a Person shall be deemed to be the owner of any property that it has acquired or holds subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the property has been retained by or vested in some other Person in a transaction intended to create a financing.

 

“Material Adverse Effect” has the meaning specified in Section 3.1.

 

“Money Laundering Laws” has the meaning specified in Section 3.28.

 

“NYSE” means The New York Stock Exchange, Inc.

 

“OFAC” has the meaning specified in Section 3.29.

 

3

 

“Operating Company” means Antero Midstream LLC, a Delaware limited liability company.

 

“Operating Company LLC Agreement” means the Limited Liability Company Agreement of the Operating Company dated as of January 16, 2014.

 

“Operative Documents” means, collectively, this Agreement and the Registration Rights Agreement and any amendments, supplements, continuations or modifications thereto.

 

“Organizational Documents” has the meaning specified in Section 3.11.

 

“Partnership” has the meaning set forth in the introductory paragraph.

 

“Partnership Agreement” means the Agreement of Limited Partnership of the Partnership dated as of November 10, 2014.

 

“Partnership Entities” and each a “Partnership Entity” means the Partnership, the General Partner, the Operating Company and Antero Treatment and, after giving effect to the Contribution, Antero Water.

 

“Partnership Related Parties” has the meaning specified in Section 6.2.

 

“Permits” has the meaning specified in Section 3.20.

 

“Person” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization, association, government agency or political subdivision thereof or other form of entity.

 

“Placement Agent” means Barclays Capital Inc.

 

“Placement Agent Engagement Letter” means that certain Placement Agent Engagement Letter, dated as of September 14, 2015, between the Partnership and the Placement Agent.

 

“Purchase Price” means, with respect to a particular Purchaser, the dollar amount set forth opposite such Purchaser’s name in the column titled “Purchase Price” set forth on Schedule A hereto, as adjusted in accordance with Section 7.12, if applicable; provided that in no event shall the Purchase Price applicable to such Purchaser be increased without the prior written consent of such Purchaser.

 

“Purchased Units” means, with respect to a particular Purchaser, the number of Common Units (rounded, if necessary, to the nearest whole number) equal to the quotient of (i) the Purchase Price applicable to such Purchaser divided by (ii) the Common Unit Price.

 

“Purchaser” and “Purchasers” have the meanings set forth in the introductory paragraph.

 

“Purchaser Related Parties” has the meaning specified in Section 6.1.

 

“Registration Rights Agreement” has the meaning set forth in the recitals hereto.

 

4

 

“Registration Statement” has the meaning set forth in the Registration Rights Agreement.

 

“Representatives” of any Person means the Affiliates, officers, directors, managers, employees, agents, counsel, accountants, investment bankers and other representatives of such Person.

 

“Revolving Credit Facility” means the Credit Agreement, dated as of February 28, 2014, among the Operating Company, J.P. Morgan Chase Bank, N.A., as administrative agent, and the guarantors and lenders party thereto, as amended.

 

“rights-of-way” has the meaning specified in Section 3.19.

 

“Sanctions” has the meaning specified in Section 3.29.

 

“SEC Reports” means reports and statements filed by the Partnership under the Exchange Act and statements filed by the Partnership under the Securities Act (in the form that became effective), including all amendments, exhibits and schedules thereto.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder.

 

“Short Sales” means, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not against the box, and forward sale contracts, options, puts, calls, short sales, “put equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements, and sales and other transactions through non-U.S. broker dealers or foreign regulated brokers.

 

“Sponsor Units” has the meaning specified in Section 3.2(f).

 

“Subordinated Units” has the meaning set forth in the Partnership Agreement.

 

“Subsidiary” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.

 

“Treatment Assets” has the meaning given such term in the Contribution Agreement.

 

5

 

“Unit Consideration” has the meaning set forth in the recitals hereto.

 

“Walled Off Person” has the meaning specified in Section 4.12.

 

“Water Assets” has the meaning given to such term in the Contribution Agreement.

 

ARTICLE II

 

AGREEMENT TO SELL AND PURCHASE

 

Section 2.1                               Sale and Purchase.

 

(a)                                 Subject to the terms and conditions hereof, the Partnership hereby agrees to issue and sell to each Purchaser and each Purchaser hereby agrees, severally and not jointly, to purchase from the Partnership, its respective Purchased Units, and each Purchaser agrees, severally and not jointly, to pay the Partnership the Common Unit Price for each Purchased Unit as set forth in paragraph (b) below.

 

(b)                                 The amount per Common Unit each Purchaser will pay to the Partnership to purchase the Purchased Units (the “Common Unit Price”) hereunder shall be $18.84.  If the Closing Date is after the record date for the distribution to the Partnership’s holders of Common Units with respect to the quarter ending September 30, 2015, the Common Unit Price shall be reduced by an amount equal to such per unit distribution and Schedule A hereto shall be updated accordingly.

 

Section 2.2                               Closing.  Subject to the terms and conditions hereof, the consummation of the purchase and sale of the Purchased Units hereunder (the “Closing”) shall take place at the offices of Vinson & Elkins L.L.P., 1001 Fannin Street, Suite 2500 Houston, Texas 77002, or such other location as mutually agreed by the parties, and upon the first Business Day following the satisfaction or waiver of the conditions set forth in Sections 2.3, 2.4 and 2.5 (other than those conditions that are by their terms to be satisfied at the Closing) (the date of such closing, the “Closing Date”).  The parties agree that the Closing may occur via delivery of facsimiles or photocopies of the Operative Documents and the closing deliverables contemplated hereby and thereby.  Unless otherwise provided herein, all proceedings to be taken and all documents to be executed and delivered by all parties at the Closing will be deemed to have been taken and executed simultaneously, and no proceedings will be deemed to have been taken or documents executed or delivered until all have been taken, executed or delivered.

 

Section 2.3                               Mutual Conditions.  The respective obligations of each party to consummate the purchase and issuance and sale of the Purchased Units shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by a party on behalf of itself in writing, in whole or in part, to the extent permitted by applicable Law):

 

(a)                                 No Law shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Authority of competent jurisdiction that temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the transactions contemplated hereby or makes the transactions contemplated hereby illegal;

 

6

 

(b)                                 There shall not be pending any suit, action or proceeding by any Governmental Authority seeking to restrain, preclude, enjoin or prohibit the transactions contemplated by this Agreement; and

 

(c)                                  The closing of the Contribution shall have occurred, or shall occur concurrently with the Closing, in which case all conditions set forth in Article VII of the Contribution Agreement shall have been satisfied in all material respects or the fulfillment of any such conditions shall have been waived, except for those conditions which, by their nature, will be satisfied concurrently with the Closing.

 

Section 2.4                               Each Purchaser’s Conditions.  The obligation of each Purchaser to consummate the purchase of its Purchased Units shall be subject to the satisfaction on or prior to the Closing Date of each of the following conditions (any or all of which may be waived by a particular Purchaser on behalf of itself in writing with respect to its Purchased Units, in whole or in part, to the extent permitted by applicable Law):

 

(a)                                 The Partnership shall have performed and complied with the covenants and agreements contained in this Agreement that are required to be performed and complied with by the Partnership on or prior to the Closing Date;

 

(b)                                 (i) The (x) Fundamental Representations and (y) representations and warranties of the Partnership contained in this Agreement that are qualified by materiality or a Material Adverse Effect shall be true and correct when made and as of the Closing Date and (ii) all other representations and warranties of the Partnership shall be true and correct in all material respects when made and as of the Closing Date, in each case as though made at and as of the Closing Date (except that representations and warranties made as of a specific date shall be required to be true and correct as of such date only);

 

(c)                                  The NYSE shall have authorized, upon official notice of issuance, the listing of the Purchased Units;

 

(d)                                 No notice of delisting from the NYSE shall have been received by the Partnership with respect to the Common Units;

 

(e)                                  The Common Units shall not have been suspended by the Commission or the NYSE from trading on the NYSE nor shall suspension by the Commission or the NYSE have been threatened in writing by the Commission or the NYSE;

 

(f)                                   No Material Adverse Effect shall have occurred and be continuing;

 

(g)                                  The Partnership shall have received an Aggregate Purchase Price of not less than $150 million; and

 

(h)                                 The Partnership shall have delivered, or caused to be delivered, to the Purchasers at the Closing, the Partnership’s closing deliveries described in Section 2.6.

 

Section 2.5                               The Partnership’s Conditions.  The obligation of the Partnership to consummate the issuance and sale of the Purchased Units to a Purchaser shall be

 

7

 

subject to the satisfaction on or prior to the Closing Date of each of the following conditions with respect to such Purchaser (any or all of which may be waived by the Partnership in writing, in whole or in part, to the extent permitted by applicable Law):

 

(a)                                 (i) The representations and warranties of such Purchaser contained in this Agreement that are qualified by materiality shall be true and correct when made and as of the Closing Date and (ii) all other representations and warranties of such Purchaser shall be true and correct in all material respects as of the Closing Date (except that representations of such Purchaser made as of a specific date shall be required to be true and correct as of such date only); and

 

(b)                                 Such Purchaser shall have delivered, or caused to be delivered, to the Partnership at the Closing, such Purchaser’s closing deliveries described in Section 2.7.

 

Section 2.6                               Partnership Deliveries.  At the Closing, subject to the terms and conditions hereof, the Partnership will deliver, or cause to be delivered, to each Purchaser:

 

(a)                                 evidence of the Purchased Units credited to book-entry accounts maintained by the transfer agent of the Partnership, bearing the legend or restrictive notation set forth in Section 4.9, free and clear of all Liens, other than transfer restrictions under the Partnership Agreement and applicable federal and state securities laws;

 

(b)                                 the Registration Rights Agreement in the form attached to this Agreement as Exhibit A, which shall have been duly executed by the Partnership;

 

(c)                                  A certificate of the Secretary of State of the State of Delaware, dated a recent date, to the effect that each of the General Partner, the Partnership, the Operating Company, Antero Treatment and Antero Water is in good standing;

 

(d)                                 An opinion addressed to the Purchasers from Vinson & Elkins L.L.P., legal counsel to the Partnership, dated as of the Closing, in the form and substance attached hereto as Exhibit B;

 

(e)                                  A certificate, dated the Closing Date and signed by each of the Chief Financial Officer and the Chief Administrative Officer of the General Partner, on behalf of the Partnership, in their capacities as such, stating that:

 

(i)                                     The Partnership has performed and complied with the covenants and agreements contained in this Agreement that are required to be performed and complied with by the Partnership on or prior to the Closing Date; and

 

(ii)                                  The representations and warranties of the Partnership contained in this Agreement that are qualified by materiality or Material Adverse Effect are true and correct as of the Closing Date and all other representations and warranties of the Partnership are, individually and in the aggregate, true and correct in all material respects as of the Closing Date (except that representations and warranties made as of a specific date shall be required to be true and correct as of such date only);

 

8

 

(f)                                   A certificate of the Secretary or Assistant Secretary of the General Partner, on behalf of the Partnership, certifying as to (1) the Amended and Restated Certificate of Limited Partnership of the Partnership and the Partnership Agreement, (2) board resolutions authorizing the execution and delivery of the Operative Documents and the consummation of the transactions contemplated thereby, including the issuance of the Purchased Units, and (3) the incumbency of the officers authorized to execute the Operative Documents, setting forth the name and title and bearing the signatures of such officers; and

 

(g)                                  A receipt, dated the Closing Date, executed by the Partnership to the effect that the Partnership has received the Aggregate Purchase Price with respect to the Purchased Units issued and sold to the Purchasers.

 

Section 2.7                               Purchaser Deliveries.  At the Closing, subject to the terms and conditions hereof, each Purchaser will deliver, or cause to be delivered, to the Partnership:

 

(a)                                 Payment to the Partnership of the Purchase Price applicable to such Purchaser by wire transfer of immediately available funds to an account designated by the Partnership in writing at least two Business Days prior to the Closing Date; provided that such delivery shall be required only after delivery of the Purchased Units as set forth in Section 2.6(a); and

 

(b)                                 The Registration Rights Agreement in the form attached to this Agreement as Exhibit A, which shall have been duly executed by such Purchaser.

 

Section 2.8                               Independent Nature of Purchasers’ Obligations and Rights.  The obligations of each Purchaser under any Operative Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Operative Document. The failure or waiver of performance under any Operative Document by any Purchaser does not excuse performance by any other Purchaser or by the Partnership with respect to the other Purchasers.  It is expressly understood and agreed that each provision contained in the Operative Documents is between the Partnership and a Purchaser, solely, and not between the Partnership and the Purchasers collectively and not between and among the Purchasers. Nothing contained herein or in any other Operative Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Purchasers are in any way acting in concert or as a group for purposes of Section 13(d) of the Exchange Act or otherwise with respect to such obligations or the transactions contemplated by the Operative Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Operative Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIP

 

The Partnership represents and warrants to each Purchaser as follows:

 

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Section 3.1                               Formation and Qualification of the Partnership Entities.  Each of the Partnership Entities has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing in each jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, and has all power and authority necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to be so qualified, in good standing or have such power or authority would not, individually or in the aggregate, (A) have a material adverse effect on the business, properties, management, financial position or results of operations of the Partnership Entities taken as a whole; (B) materially impair the ability of any of the Partnership Entities to consummate the Contribution or to perform their respective obligations under this Agreement or the other Operative Documents (each of clause (A) and (B), a “Material Adverse Effect”); or (C) subject the limited partners of the Partnership to any material liability or disability.  Each of the Partnership Entities has all power and authority necessary to own or hold its properties and to conduct the business in which it is engaged.  The Partnership does not own or control, directly or indirectly, any corporation, association or other entity other than the Operating Company and Antero Treatment and, after giving effect to the Contribution, Antero Water.

 

Section 3.2                               Purchased Units; Capitalization.

 

(a)                                 On the Closing Date, the Purchased Units shall have those rights, preferences, privileges and restrictions governing the Common Units as set forth in the Partnership Agreement.

 

(b)                                 General Partner. The General Partner has, and at the Closing Date will have, full limited liability company power and authority to serve as general partner of the Partnership.  The General Partner is the sole general partner of the Partnership.

 

(c)                                  Common Units Held. As of the date hereof, the issued and outstanding partnership interests of the Partnership consist of (i) 29,940,957 Common Units and 75,940,957 Subordinated Units and the Incentive Distribution Rights, which are the only limited partner interests of the Partnership issued and outstanding (other than limited partner interests issued under the Partnership’s Long-Term Incentive Plan), and (ii) the General Partner Interest;  all of such Common Units have been duly authorized and validly issued pursuant to the Partnership Agreement and are fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).

 

(d)                                 Ownership of the General Partner Interest in the Partnership. The General Partner is, and on the Closing Date will be, the sole general partner of the Partnership, with a noneconomic general partner interest in the Partnership (the “General Partner Interest”); such General Partner Interest has been duly authorized and validly issued in accordance with the Partnership Agreement; and the General Partner owns such General Partner Interest free and clear of all Liens (except for (i) restrictions on transferability contained in the Partnership Agreement and (ii) Liens created or arising under the Delaware LP Act).

 

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(e)                                  Ownership of the Incentive Distribution Rights. The General Partner owns, and on the Closing Date will own, all of the Incentive Distribution Rights; the Incentive Distribution Rights and the limited partner interests represented thereby have been duly authorized and validly issued in accordance with the Partnership Agreement and are fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act); and the General Partner owns such Incentive Distribution Rights free and clear of all Liens (except for (i) restrictions on transferability contained in the Partnership Agreement and (ii) Liens created or arising under the Delaware LP Act).

 

(f)                                   Ownership of the Sponsor Units. On the Closing Date, and after giving effect to the Contribution and the other transactions contemplated by the Contribution Agreement, Antero will own 40,929,378 Common Units and 75,940,957 Subordinated Units (collectively, the “Sponsor Units”); the Sponsor Units and the limited partner interests represented thereby have been duly authorized and validly issued in accordance with the Partnership Agreement and are fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act); and Antero owns such Sponsor Units free and clear of all Liens (except for (i) restrictions on transferability contained in the Partnership Agreement, (ii) Liens created or arising under the Delaware LP Act and (iii) Liens created or arising under Antero’s revolving credit facility).

 

(g)                                  Ownership of Operating Company. The Partnership owns, and on the Closing Date will own, 100% of the limited liability company interests in the Operating Company; such limited liability company interests have been duly authorized and validly issued in accordance with the Operating Company LLC Agreement and are fully paid (to the extent required under the Operating Company LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and such limited liability company interests are owned free and clear of all Liens (except for (i) restrictions on transferability contained in the Operating Company LLC Agreement, (ii) Liens created or arising under the Delaware LLC Act and (iii) Liens created or arising under the Revolving Credit Facility).

 

(h)                                 Ownership of Antero Treatment. The Partnership owns, and on the Closing Date will own, 100% of the limited liability company interests in Antero Treatment; such limited liability company interests have been duly authorized and validly issued in accordance with the limited liability company agreement of Antero Treatment (the “Antero Treatment LLC Agreement”)  and are fully paid (to the extent required under the Antero Treatment LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and such limited liability company interests are owned free and clear of all Liens (except for (i) restrictions on transferability contained in the Antero Treatment LLC Agreement, (ii) Liens created or arising under the Delaware LLC Act and (iii) Liens created or arising under the Revolving Credit Facility).

 

(i)                                     Ownership of Antero Water.  On the Closing Date, after giving effect to the Contribution, the Partnership will own 100% of the limited liability company interests in Antero Water; such limited liability company interests will have been duly authorized and validly issued in accordance with the limited liability company agreement of Antero Water (the “Antero Water

 

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LLC Agreement”) and will be fully paid (to the extent required under the Antero Water LLC Agreement) and nonassessable (except to the extent such nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and such limited liability company interests will be owned free and clear of all Liens (except for (i) restrictions on transferability contained in the Antero Water LLC Agreement, (ii) Liens created or arising under the Delaware LLC Act and (iii) Liens created or arising under the Revolving Credit Facility).

 

(j)                                    No Other Subsidiaries. On the Closing Date, and after giving effect to the Contribution, the General Partner will not own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity, other than the Partnership, the Operating Company, Antero Treatment and Antero Water.  On the Closing Date, after giving effect to the Contribution, the Partnership will not own, directly or indirectly, any equity or long-term debt securities of any corporation, partnership, limited liability company, joint venture, association or other entity, other than the Operating Company, Antero Treatment and Antero Water.

 

Section 3.3                               No Conflicts.  The execution, delivery and performance by the Partnership Entities of this Agreement and each of the other Operative Documents to which they are a party, the issuance and sale of the Purchased Units, the consummation of the Contribution and any other transactions contemplated by this Agreement and the other Operative Documents and the application of the proceeds from the sale of the Purchased Units will not (i) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of any of the Partnership Entities pursuant to, any indenture, mortgage, deed of trust, loan agreement, license, lease or other agreement or instrument to which any of the Partnership Entities is a party or by which any of the Partnership Entities is bound or to which any of the property, right or assets of any of the Partnership Entities is subject; (ii) result in any violation of the provisions of the Organizational Documents of any of the Partnership Entities; or (iii) result in any violation of any law or statute or any judgment, order, decree, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and (iii) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect.

 

Section 3.4                               No Defaults.  None of the Partnership Entities is (i) in violation of its Organizational Documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which any of the Partnership Entities is a party or by which any of the Partnership Entities is bound or to which any of the property or assets of any of the Partnership Entities is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority; except, in the case of clauses (ii) and (iii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect.

 

Section 3.5                               Authority.  The Partnership has full right, power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  Each of the Partnership Entities has full right, power and authority to execute and deliver each of the other

 

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Operative Documents to which such Partnership Entity is a party and to perform its obligations thereunder.  The Partnership has all requisite limited partnership power and authority to issue, sell and deliver the Purchased Units, in accordance with and upon the terms and conditions set forth in this Agreement and the Partnership Agreement. On the Closing Date, all limited partnership or limited liability company action, as the case may be, required to be taken by the General Partner or the Partnership for the authorization, issuance, sale and delivery of the Purchased Units, the execution and delivery of the Operative Documents and the consummation of the transactions contemplated hereby, shall have been validly taken.

 

Section 3.6                               No Consents.  No consent, approval, authorization or order of, or filing, registration or qualification (“Consent”) of or with any court or arbitrator or governmental or regulatory authority is required for (i) the execution, delivery and performance by any of the Partnership Entities of any of the Operative Documents; (ii) the issuance and sale of the Purchased Units; (iii) the consummation of the Contribution or any other transactions contemplated by this Agreement, the Contribution Agreement or the other Operative Documents; or (iv) the application of the proceeds from the sale of the Purchased Units, except (A) such as have been, or prior to the Closing Date will be, obtained or made, and (B) for the registration of the Purchased Units under the Securities Act and Consents as may be required under the Exchange Act, applicable state securities laws, and the rules of the Financial Industry Regulatory Authority, Inc. in connection with the purchase and sale of the Purchased Units by the Purchasers, and (C) for such consents that, if not obtained, have not or would not, individually or in the aggregate, have a Material Adverse Effect.

 

Section 3.7                               Authorization, Execution and Delivery of the Common Unit Purchase Agreement.  This Agreement has been duly authorized and validly executed and delivered by or on behalf of the Partnership and constitutes a valid and legally binding agreement of the Partnership, enforceable against the Partnership in accordance with its term; provided, that the enforceability thereof may be limited by (A) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles (whether considered in a proceeding at law or in equity) relating to enforceability and (B) public policy, applicable law relating to fiduciary duties and indemnification and an implied covenant of good faith and fair dealing (collectively, the “Enforceability Exceptions”).

 

Section 3.8                               Authorization, Execution, Delivery and Enforceability of Certain Agreements.  On the Closing Date, each of the Operative Documents will have been duly authorized, executed and delivered by the Partnership Entities party thereto and will be a valid and legally binding agreement of such Partnership Entity, enforceable against such Partnership Entity in accordance with its terms, subject to the Enforceability Exceptions.

 

Section 3.9                               Contribution Agreement.

 

(a)                                 On the Closing Date, the Contribution Agreement will have been duly authorized, executed and delivered by (i) the Partnership and Antero Treatment and (ii) to the knowledge of the Partnership, Antero. Assuming the due authorization of the parties thereto other than the Partnership and Antero Treatment, the Contribution Agreement will constitute a valid and legally

 

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binding agreement of the Partnership and Antero Treatment, enforceable against the Partnership and Antero Treatment in accordance with its terms, subject to the Enforceability Exceptions.

 

(b)                                 Prior to the execution and delivery hereof by the Purchasers, the Partnership has provided the Purchasers with, or made available to the Purchasers, a copy of the Contribution Agreement (other than exhibits and schedules, except to the extent they will be filed with the Commission within four business days of the date hereof) that is complete in all material respects.

 

Section 3.10                        Authorization of Contribution Equity Consideration.  The Unit Consideration to be issued by the Partnership pursuant to the Contribution Agreement, and the limited partner interests represented thereby, have been duly authorized and, when issued and delivered in accordance with the terms of the Partnership Agreement and the Contribution Agreement as consideration therefor as provided therein, will be fully paid (to the extent required under the Partnership Agreement) and non-assessable (except as such non-assessability may be affected by Section 17-303, 17-607 or 17-804 of the Delaware LP Act).

 

Section 3.11                        Valid Issuance; No Options or Preemptive Rights of Common Units.  The Purchased Units to be issued and sold by the Partnership and the limited partner interests represented thereby have been duly authorized in accordance with the Partnership Agreement and, when issued and delivered to the Purchasers against payment therefor in accordance with the terms hereof, will be validly issued, fully paid (to the extent required under the Partnership Agreement) and non-assessable (except as such nonassessability may be affected by matters described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).  Except as provided in the Operative Documents and the Partnership Agreement, there are no options, warrants, preemptive rights, rights of first refusal or other rights to subscribe for or to purchase, or any restriction upon the voting or transfer of, any equity securities of any of the Partnership Entities pursuant to any of their certificate of limited partnership, formation or incorporation, agreement of limited partnership, limited liability company agreement, bylaws or any other organizational documents (the “Organizational Documents”).  Except as provided for in the Partnership Agreement, the Registration Rights Agreement and the Existing Registration Rights Agreement, neither the filing of the Registration Statement pursuant to the Registration Rights Agreement nor the offering or sale of the Common Units as contemplated by this Agreement gives rise to any rights for or relating to the registration of any Common Units or other securities of the Partnership.

 

Section 3.12                        No Registration Rights.  Except as contemplated by this Agreement and the Registration Rights Agreement or pursuant to the Partnership Agreement or the Existing Registration Rights Agreement, there are no contracts, agreements or understandings between any of the Partnership and any Person granting such Person the right to require the Partnership to file a registration statement under the Securities Act with respect to any securities of the Partnership owned or to be owned by such person or to require the Partnership to include such securities in the Registration Statement or in any securities registered or to be registered pursuant to any registration statement filed by or required to be filed by the Partnership under the Securities Act.

 

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Section 3.13                        Periodic Reports.  The SEC Reports have been filed with the Commission on a timely basis.  The SEC Reports, including, without limitation, any audited or unaudited financial statements and any notes thereto or schedules included therein, at the time filed (or in the case of registration statements, solely on the dates of effectiveness) (except to the extent corrected by a subsequent SEC Report) (a) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act and the Securities Act, as the case may be.

 

Section 3.14                        Financial Statements.  The historical financial statements of the Partnership (including the related notes and supporting schedules) included in the SEC Reports comply as to form in all material respects with the requirements of Regulation S-X under the Securities Act and present fairly in all material respects the financial condition, results of operations and cash flows of the entities purported to be shown thereby at the dates and for the periods indicated and have been prepared in conformity with accounting principles generally accepted in the United States applied on a consistent basis throughout the periods involved.

 

Section 3.15                        Independent Registered Public Accounting Firm.  KPMG LLP, which has certified certain financial statements of the Partnership and its subsidiaries is an independent public accounting firm with respect to the Partnership and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act.

 

Section 3.16                        Litigation.  There are no legal, governmental or regulatory investigations, actions, suits or proceedings pending to which any of the Partnership Entities is or may be a party or to which any property, right or asset of the Partnership Entities is or may be the subject that, individually or in the aggregate, if determined adversely to the Partnership Entities, could reasonably be expected to have a Material Adverse Effect; and to the knowledge of the Partnership Entities, no such investigations, actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or by others.

 

Section 3.17                        No Material Adverse Changes.  Since the date of the most recent audited financial statements included in the SEC Reports, (i) there has not been any change in the equity or long-term debt of the Partnership Entities, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Partnership Entities on any class of equity interests, or any material adverse change, or any development that would reasonably be expected to result in a material adverse change, in or affecting the business, properties, management, financial position or results of operations of the Partnership Entities taken as a whole; (ii) none of the Partnership Entities has entered into any transaction or agreement that is material to the Partnership Entities taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Partnership Entities taken as a whole; (iii) none of the Partnership Entities has sustained any material loss or interference with its business or operation from fire, explosion, flood or other calamity, or from any labor disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or regulatory authority; and (iv) none of the Partnership Entities has issued or granted any securities; except in each case as

 

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otherwise disclosed in the SEC Reports and except as contemplated by the Operative Documents.

 

Section 3.18                        Title to Properties. Except with respect to rights-of-way (as defined below), which are the subject of Section 3.19, each of the Partnership Entities has good and marketable title to, or valid rights to lease or otherwise use, all items of real property and personal property that are material to the respective businesses of the Partnership Entities, in each case free and clear of all Liens except those that (i) do not materially interfere with the use made and proposed to be made of such property by the Partnership Entities or (ii) could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

 

Section 3.19                        Rights of Way.  Each of the Partnership Entities, directly or indirectly, has such consents, easements, rights-of-way, permits or licenses from each person (collectively, “rights-of-way”) as are necessary to conduct its business in the manner described in the SEC Reports, if any, except for (i) qualifications, reservations and encumbrances with respect thereto that would not have a Material Adverse Effect and (ii) such rights-of-way that, if not obtained, would not have, individually or in the aggregate, a Material Adverse Effect; each of the Partnership Entities has fulfilled and performed, in all material respects, its obligations with respect to such rights-of-way and no event has occurred that allows, or after notice or lapse of time would allow, revocation or termination thereof or would result in any impairment of the rights of the holder of any such rights-of-way, except for such revocations, terminations and impairments that, individually or in the aggregate, would not have a Material Adverse Effect; and none of such rights-of-way contains any restriction that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

 

Section 3.20                        License and Permits.  Except with respect to permits related to Environmental Law (as defined below), which are the subject of Section 3.24, each of the Partnership Entities possesses all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities (“Permits”) that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the SEC Reports, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and none of the Partnership Entities has received notice of any revocation or modification of any such Permits or has any reason to believe that any such Permits will not be renewed in the ordinary course.

 

Section 3.21                        Intellectual Property.  Each of the Partnership Entities own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses, except as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

 

Section 3.22                        Insurance.  Each of the Partnership Entities has insurance covering their respective properties, operations, personnel and businesses, which insurance is in reasonable amounts and insures against such losses and risks as are reasonably adequate to

 

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protect the Partnership Entities and their respective businesses; and none of the Partnership Entities has (i) received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (ii) any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business.

 

Section 3.23                        No Labor Dispute; No Notice of Labor Law Violations.  No labor disturbance by, or dispute with, the employees of the Partnership Entities exists or, to the knowledge of each of the Partnership Entities, is contemplated or threatened, and the Partnership is not aware of any existing or imminent labor disturbance by, or dispute with, the employees of the Partnership Entities, except as could not reasonably be expected to have a Material Adverse Effect.

 

Section 3.24                        Environmental Compliance.  (i) The Partnership Entities (x) are and, during the relevant time periods specified in all applicable statutes of limitations, have been in compliance with all applicable federal, state, local and foreign laws, rules, regulations, requirements, decisions and orders relating to the protection of human health or safety (to the extent such human health or safety protection is related to exposure to hazardous or toxic substances or wastes, pollutants or contaminants), the environment, natural resources, hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”), (y) have received and are in compliance with all permits, licenses, certificates or other authorizations or approvals required of them under applicable Environmental Laws to conduct their respective businesses and (z) have not received any written notice of any actual or potential liability under or relating to any Environmental Laws, including for the investigation or remediation of any disposal or release of hazardous or toxic substances or wastes, pollutants or contaminants, and have no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) there are no costs or liabilities associated with Environmental Laws of or relating to the Partnership Entities, except in the case of each of (i) and (ii) above, for any such failure to comply, or failure to receive required permits, licenses or approvals, or cost or liability, as would not, individually or in the aggregate, have a Material Adverse Effect; and (iii) there are no proceedings that are pending or, to the knowledge of the Partnership Entities, threatened against the Partnership Entities under any Environmental Laws in which a governmental authority is also a party, other than such proceedings regarding which it is reasonably believed no monetary sanctions of $100,000 or more will be imposed.

 

Section 3.25                        Tax Returns.  Each of the Partnership Entities has paid all federal, state, local and foreign taxes and filed all tax returns required to be paid or filed through the date hereof, and except as would not, individually or in the aggregate, have a Material Adverse Effect, there is no tax deficiency that has been, or could reasonably be expected to be, asserted against the Partnership Entities or any of their respective properties or assets.

 

Section 3.26                        No Employment Law Violations.  Each employee benefit plan, within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained, administered or contributed to by the Partnership or any of its affiliates for employees or former employees of the Partnership and its affiliates has been maintained in compliance in all material respects with its terms and the

 

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requirements of any applicable statutes, orders, rules and regulations, including, but not limited to, ERISA and the Internal Revenue Code of 1986, as amended (the “Code”); no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any such plan excluding transactions effected pursuant to a statutory or administrative exemption, and transactions which, individually or in the aggregate, would not have a Material Adverse Effect, and no such plan is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA; and neither the Partnership nor any of its subsidiaries has any reasonable expectation of incurring any liabilities under Title IV of ERISA.

 

Section 3.27                        No Unlawful Payments.  None of the Partnership Entities nor, to the knowledge of the Partnership Entities, any director, officer, agent, employee or other person associated with or acting on behalf of the Partnership Entities, has (i) used its funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977; (iv) violated or is in violation of any provision of the Bribery Act 2010 of the United Kingdom; or (v) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment.

 

Section 3.28                        Compliance with Money Laundering Laws.  The operations of the Partnership Entities are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Partnership Entities with respect to the Money Laundering Laws is pending or, to the knowledge of the Partnership Entities, threatened.

 

Section 3.29                        OFAC.  None of the Partnership Entities nor, to the actual knowledge of the Partnership Entities, any director, officer, agent, employee or affiliate of the Partnership Entities is currently the subject or the target of any sanctions (“Sanctions”) administered or enforced by the U.S. Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Partnership will not directly or indirectly use the proceeds of the offering of the Common Units hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity (i) to fund any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions or (ii) in any other manner that will result in a violation by any person (including any person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.

 

Section 3.30                        Certain Fees.  Other than as described in the Placement Agent Engagement Letter, none of the Partnership Entities is a party to any contract, agreement or understanding with any person (other than this Agreement) that would give rise to a valid claim against any of them or the Purchasers for a brokerage commission, finders’ fee or like payment in connection with the offering and sale of the Purchased Units.  The Partnership agrees that it

 

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will indemnify and hold harmless each Purchaser from and against any and all claims, demands or liabilities for broker’s, finder’s, placement or other similar fees or commissions incurred by the Partnership in connection with the purchase of the Purchased Units or the consummation of the transactions contemplated by this Agreement.

 

Section 3.31                        No Side Agreements.  There are no agreements by, among or between the Partnership or any of its Affiliates, on the one hand, and any Purchaser or any of their Affiliates, on the other hand, with respect to the transactions contemplated hereby other than the Operative Documents nor promises or inducements for future transactions between or among any of such parties.

 

Section 3.32                        No Registration.  Assuming the accuracy of the representations and warranties of the Purchaser contained in Section 4.6 and Section 4.7, the issuance and sale of the Purchased Units pursuant to this Agreement is exempt from registration requirements of the Securities Act, and neither the Partnership nor, to the knowledge of the Partnership, any authorized Representative acting on its behalf has taken or will take any action hereafter that would cause the loss of such exemption.

 

Section 3.33                        No Integration.  The Partnership has not, directly or through any agent, issued, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act), that is or will be integrated with the issuance and sale of the Purchased Units contemplated by this Agreement pursuant to the Securities Act, the rules and regulations thereunder or the interpretations thereof by the Commission.

 

Section 3.34                        MLP Status.  The Partnership is, and has been since November 10, 2014, properly treated as a partnership for United States federal income tax purposes, and 90% or more of the combined gross income of the Partnership for the most recent four complete calendar quarters ending before the Closing Date for which the necessary financial information is available are from sources treated as “qualifying income” within the meaning of Section 7704(d) of the Internal Revenue Code of 1986, as amended.

 

Section 3.35                        Qualifying Income of Contributed Assets.  The Partnership expects that at least 90% of the combined gross income of the Partnership, Antero Water, Antero Treatment and the operations conducted with the Water Assets in 2015 after the closing date of the transactions contemplated by the Contribution Agreement will be “qualifying income” within the meaning of Section 7704(d) of the Internal Revenue Code of 1986, as amended.

 

Section 3.36                        Investment Company.  None of the Partnership Entities is and, as of the Closing Date after giving effect to the offer and sale of the Purchased Units and the application of the proceeds therefrom, none of them will be, (i) an “investment company” or a company “controlled” by an “investment company” within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder (collectively, the “Investment Company Act”) or (ii) a “business development company” (as defined in Section 2(a)(48) of the Investment Company Act).

 

Section 3.37                        Disclosure Controls.  The Partnership Entities maintain an effective system of disclosure controls and procedures (as defined in Rule 13a-15(e) of the

 

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Exchange Act) that is designed to ensure that information required to be disclosed by the Partnership Entities in reports that the Partnership files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Partnership’s management, including the principal executive officer(s) and principal financial officer(s) of the General Partner, as appropriate to allow timely decisions regarding required disclosure to be made.  As of the date of the Partnership’s most recent audited financial statements included in an SEC Report, the Partnership’s disclosure controls and procedures were effective in all material respects to perform the functions for which they were established.

 

Section 3.38                        Accounting Controls.  The Partnership Entities maintain systems of “internal control over financial reporting” (as such term is defined in Rule 15d-15(f) of the Exchange Act) that complies with the requirements of the Exchange Act and that has been designed by, or under the supervision of, the General Partner’s principal executive officer(s) and principal financial officer(s), to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States, including, but not limited to, internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of the Partnership’s consolidated financial statements in conformity with U.S. generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) interactive data in eXtensible Business Reporting Language is prepared in accordance with the Commission’s rules and guidelines applicable thereto. As of the date of the most recent balance sheet of the Partnership and its consolidated subsidiaries reviewed or audited by KPMG LLP, there were no material weaknesses or significant deficiencies in the internal controls of the Partnership Entities.

 

Section 3.39                        Placement Agent Reliance. The Partnership acknowledges that the Placement Agent may rely upon the representations and warranties made by the Partnership to each Purchaser in this Agreement.

 

Section 3.40                        Legal Sufficiency of the Contribution Agreement. The Contribution Agreement is legally sufficient to transfer or convey to the Partnership (i) all of the transferor’s right, title and interest in and to the Water Assets and (ii) all of the ownership interests, assets and rights in and to the Water Assets purported to be transferred thereby, subject to the conditions, reservations, encumbrances and limitations contained in the Contribution Agreement.  The Partnership, upon consummation of the transactions contemplated by the Contribution Agreement, will directly or indirectly succeed in all material respects to the Water Assets.

 

Section 3.41                        Absence of Price Manipulation. Neither the Partnership nor, to the knowledge of the Partnership, any of its Affiliates or its or their respective directors or officers, has taken, or will take, directly or indirectly, any action designed to, or that might

 

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reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Units to facilitate the sale or resale of the Purchased Units in violation of Regulation M under the Exchange Act.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

 

Each Purchaser, severally and not jointly, hereby represents and warrants to the Partnership that:

 

Section 4.1                               Existence.  Such Purchaser is duly organized and validly existing and in good standing under the Laws of its jurisdiction of organization, with all requisite power and authority to own, lease, use and operate its properties and to conduct its business as currently conducted, except where the failure to have such power or authority would not prevent the consummation of the transactions contemplated by this Agreement and the Registration Rights Agreement.

 

Section 4.2                               Authorization, Enforceability.  Such Purchaser has all necessary corporate, limited liability company or partnership power and authority to execute, deliver and perform its obligations under this Agreement and the Registration Rights Agreement and to consummate the transactions contemplated thereby, and the execution, delivery and performance by such Purchaser of this Agreement and the Registration Rights Agreement has been duly authorized by all necessary action on the part of such Purchaser; and this Agreement and the Registration Rights Agreement constitute the legal, valid and binding obligations of such Purchaser, enforceable in accordance with their terms, subject to the Enforceability Exceptions.

 

Section 4.3                               No Breach.  The execution, delivery and performance of this Agreement and the Registration Rights Agreement by such Purchaser and the consummation by such Purchaser of the transactions contemplated hereby and thereby will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any material agreement to which such Purchaser is a party or by which such Purchaser is bound or to which any of the property or assets of such Purchaser is subject, (b) conflict with or result in any violation of the provisions of the Organizational Documents of such Purchaser, or (c) violate any statute, order, rule or regulation of any court or governmental agency or body having jurisdiction over such Purchaser or the property or assets of such Purchaser, except in the cases of clauses (a) and (c), for such conflicts, breaches, violations or defaults as would not prevent the consummation of the transactions contemplated by this Agreement and the Registration Rights Agreement.

 

Section 4.4                               Certain Fees.  No fees or commissions are or will be payable by such Purchaser to brokers, finders, or investment bankers with respect to the purchase of any of the Purchased Units or the consummation of the transaction contemplated by this Agreement.  Such Purchaser agrees that it will indemnify and hold harmless the Partnership from and against any and all claims, demands, or liabilities for broker’s, finder’s, placement, or other similar fees or commissions incurred by such Purchaser in connection with the purchase of the Purchased Units or the consummation of the transactions contemplated by this Agreement.

 

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Section 4.5                               No Side Agreements.  There are no other agreements by, among or between such Purchaser and any of its Affiliates, on the one hand, and the Partnership or any of its Affiliates, on the other hand, with respect to the transactions contemplated hereby other than the Operative Documents nor promises or inducements for future transactions between or among any of such parties.

 

Section 4.6                               Investment.  The Purchased Units are being acquired for such Purchaser’s own account, the account of its Affiliates, or the accounts of clients for whom such Purchaser exercises discretionary investment authority (all of whom such Purchaser hereby represents and warrants are “accredited investors” within the meaning of Rule 501(a) of Regulation D promulgated by the Commission pursuant to the Securities Act), not as a nominee or agent, and with no present intention of distributing the Purchased Units or any part thereof, and such Purchaser has no present intention of selling or granting any participation in or otherwise distributing the same in any transaction in violation of the securities laws of the United States or any state, without prejudice, however, to such Purchaser’s right at all times to sell or otherwise dispose of all or any part of the Purchased Units under a registration statement under the Securities Act and applicable state securities laws or under an exemption from such registration available thereunder (including, without limitation, if available, Rule 144 promulgated thereunder).  If such Purchaser should in the future decide to dispose of any of the Purchased Units, the Purchaser understands and agrees (a) that it may do so only in compliance with the Securities Act and applicable state securities law, as then in effect, including a sale contemplated by any registration statement pursuant to which such securities are being offered, or pursuant to an exemption from the Securities Act, and (b) that stop-transfer instructions to that effect will be in effect with respect to such securities.

 

Section 4.7                               Nature of Purchaser.  Such Purchaser represents and warrants to, and covenants and agrees with, the Partnership that, (a) it is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated by the Commission pursuant to the Securities Act and (b) by reason of its business and financial experience it has such knowledge, sophistication and experience in making similar investments and in business and financial matters generally so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Units, is able to bear the economic risk of such investment and, at the present time, would be able to afford a complete loss of such investment.

 

Section 4.8                               Restricted Securities.  Such Purchaser understands that the Purchased Units are characterized as “restricted securities” under the federal securities Laws inasmuch as they are being acquired from the Partnership in a transaction not involving a public offering and that under such Laws and applicable regulations such securities may not be resold absent registration under the Securities Act or an exemption therefrom.  In this connection, such Purchaser represents that it is knowledgeable with respect to Rule 144 of the Commission promulgated under the Securities Act.

 

Section 4.9                               Legend.  Such Purchaser understands that the book entry evidencing the Purchased Units will bear the legend required by the Partnership Agreement as well as a legend substantively consistent with the following legend:  “These securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).  These securities may not be sold or offered for sale except pursuant to an effective registration

 

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statement under the Securities Act or pursuant to an exemption from registration thereunder, in each case in accordance with all applicable securities laws of the states or other jurisdictions, and in the case of a transaction exempt from registration, such securities may only be transferred if the transfer agent for such securities has received documentation satisfactory to it that such transaction does not require registration under the Securities Act.”

 

Section 4.10                        Company Information.  Purchaser acknowledges and agrees that the Company has provided or made available to such Purchaser (through EDGAR, the Company’s website or otherwise) all SEC Reports, as well as all press releases or investor presentations issued by the Company through the date of this Agreement that are included in a filing by the Company on Form 8-K or clearly posted on the Company’s website.

 

Section 4.11                        Short Selling.  Such Purchaser represents that it has not entered into any Short Sales of the Common Units owned by it since the time it first began discussions with the Partnership or the Placement Agent about the transactions contemplated by this Agreement; provided, however, subject to such Purchaser’s compliance with its obligations under the U.S. federal securities laws and its internal policies, the above shall not apply, in the case of a Purchaser that is a large multi-unit investment or commercial banking organization, to activities in the normal course of trading units of such Purchaser; provided, further, that subject to such Purchaser’s compliance with its obligations under the U.S. federal securities laws and its internal policies: (a) such Purchaser, for purposes hereof, shall not be deemed to include any employees, subsidiaries or Affiliates that are effectively walled off by appropriate “Chinese Wall” information barriers approved by such Purchaser’s legal or compliance department (and thus have not been privy to any information concerning this transaction) (a “Walled Off Person”) and (b) the foregoing representations in this paragraph shall not apply to any transaction by or on behalf of such Purchaser that was effected by a Walled Off Person in the ordinary course of trading without the advice or participation of such Purchaser or receipt of confidential or other information regarding this transaction provided by such Purchaser to such entity.

 

ARTICLE V

 

COVENANTS

 

Section 5.1                               Taking of Necessary Action.  Each of the parties hereto shall use its commercially reasonable efforts promptly to take or cause to be taken all action and promptly to do or cause to be done all things necessary, proper or advisable under applicable Law and regulations to consummate and make effective the transactions contemplated by this Agreement.  Without limiting the foregoing, the Partnership and each Purchaser shall use its commercially reasonable efforts to make all filings and obtain all Consents of Governmental Authorities that may be necessary or, in the reasonable opinion of the other parties, as the case may be, advisable for the consummation of the transactions contemplated by the Operative Documents. The Partnership shall promptly and accurately respond, and shall use its commercially reasonable efforts to cause its transfer agent to respond, to reasonable requests for information (which is otherwise not publicly available) made by a Purchaser or its auditors relating to the actual holdings of such Purchaser or its accounts; provided, that the Partnership shall not be obligated to provide any such information that could reasonably result in a violation of applicable Law or conflict with the Partnership’s insider trading policy or a confidentiality

 

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obligation of the Partnership.  The Partnership shall use its commercially reasonable efforts to cause its transfer agent to reasonably cooperate with each Purchaser to ensure that the Purchased Units are validly and effectively issued to such Purchaser and that such Purchaser’s ownership of the Purchased Units following the Closing is accurately reflected on the appropriate books and records of the Partnership’s transfer agent.

 

Section 5.2                               Other Actions.  The Partnership shall file prior to the Closing a supplemental listing application with the NYSE to list the Purchased Units.

 

Section 5.3                               Contribution Transaction.  The Partnership will distribute to Antero an amount equal to the net proceeds of this offering as additional cash consideration and will reduce the Unit Consideration by a number equal to the number of Common Units issued in this offering.  If the transactions contemplated by the Contribution Agreement are not closed on the same Business Day as the Closing, the Partnership shall return to each Purchaser its Purchase Price within two Business Days of receipt thereof and each Purchaser shall promptly return its Purchased Units to the Partnership.

 

Section 5.4                               Expenses.  The Partnership shall pay up to $75,000 of legal fees of Andrews Kurth LLP, counsel to the Purchasers, incurred in connection with the negotiation, execution, delivery and performance of this Agreement and Registration Rights Agreement and the transactions contemplated hereby and thereby, provided that any request for such payment is accompanied by a satisfactory written invoice for such expenses. If any action at law or equity is necessary to enforce or interpret the terms of any Operative Document, the prevailing party shall be entitled to reasonable attorney’s fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled. Any legal fees of Andrews Kurth LLP in excess of $75,000 shall be paid pro rata by all the Purchasers in proportion to the number of Purchased Units purchased by each.

 

ARTICLE VI

 

INDEMNIFICATION

 

Section 6.1                               Indemnification by the Partnership.  The Partnership agrees to indemnify each Purchaser and its Representatives (collectively, “Purchaser Related Parties”) from, and hold each of them harmless against, any and all actions, suits, proceedings (including any investigations, litigation or inquiries), demands, and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all costs, losses, liabilities, damages, or expenses of any kind or nature whatsoever, including, without limitation, the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them as a result of, arising out of, or in any way related to the breach of any of the representations, warranties or covenants of the Partnership contained herein, provided that such claim for indemnification relating to a breach of the representations or warranties is made prior to the expiration of the survival period for such representations or warranties; and provided further, that no Purchaser Related Party shall be entitled to recover special, consequential (including lost profits) or punitive damages.

 

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Notwithstanding anything to the contrary, consequential damages shall not be deemed to include diminution in value of the Purchased Units, which is specifically included in damages covered by Purchaser Related Parties’ indemnification above.

 

Section 6.2                               Indemnification by Purchasers.  Each Purchaser agrees, severally and not jointly, to indemnify the Partnership, the General Partner and their respective Representatives (collectively, “Partnership Related Parties”) from, and hold each of them harmless against, any and all actions, suits, proceedings (including any investigations, litigation or inquiries), demands, and causes of action, and, in connection therewith, and promptly upon demand, pay or reimburse each of them for all costs, losses, liabilities, damages, or expenses of any kind or nature whatsoever, including, without limitation, the reasonable fees and disbursements of counsel and all other reasonable expenses incurred in connection with investigating, defending or preparing to defend any such matter that may be incurred by them or asserted against or involve any of them as a result of, arising out of, or in any way related to the breach of any of the representations, warranties or covenants of such Purchaser contained herein, provided that such claim for indemnification relating to a breach of the representations and warranties is made prior to the expiration of such representations and warranties; and provided further, that no Partnership Related Party shall be entitled to recover special, consequential (including lost profits or diminution in value) or punitive damages.

 

Section 6.3                               Indemnification Procedure.  Promptly after receipt by an indemnified party under this Article VI of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Article VI, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under Sections 6.1 or 6.2 of this Article VI except to the extent it has been materially prejudiced (through the forfeiture of substantive rights and defenses) by such failure and, provided, further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an indemnified party otherwise than under this Article VI. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Article VI for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that the indemnified party shall have the right to employ counsel to represent jointly the indemnified party and those other indemnified parties and their respective directors, officers, employees and controlling persons who may be subject to liability arising out of any claim in respect of which indemnity may be sought under this Article VI if (i) the indemnified party and the indemnifying party shall have so mutually agreed; (ii) the indemnifying party has failed within a reasonable time to retain counsel reasonably satisfactory to the indemnified party; (iii) the indemnified party and its directors, officers, employees and controlling persons shall have reasonably concluded that there may be legal

 

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defenses available to them that are different from or in addition to those available to the indemnifying party; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the indemnified parties or their respective directors, officers, employees or controlling persons, on the one hand, and the indemnifying party, on the other hand, and representation of both sets of parties by the same counsel would be inappropriate due to actual or potential differing interests between them, and in any such event the fees and expenses of such separate counsel shall be paid by the indemnifying party. No indemnifying party shall (x) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding and does not include a statement as to, or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party, or (y) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment for the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel to the extent required by Sections 6.1 and 6.2 hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request or disputed in good faith the indemnified party’s entitlement to such reimbursement prior to the date of such settlement.

 

ARTICLE VII

 

MISCELLANEOUS

 

Section 7.1                               Interpretation.  Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to.” Whenever any party has an obligation under the Operative Documents, the expense of complying with that obligation shall be an expense of such party unless otherwise specified. Whenever any determination, consent, or approval is to be made or given by any Purchaser, such action shall be in such Purchaser’s sole discretion unless otherwise specified in this Agreement.  If any provision in the Operative Documents is held to be illegal, invalid, not binding, or unenforceable, such provision shall be fully severable and the Operative Documents shall be construed and enforced as if such illegal, invalid, not binding, or unenforceable provision had

 

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never comprised a part of the Operative Documents, and the remaining provisions shall remain in full force and effect. The Operative Documents have been reviewed and negotiated by sophisticated parties with access to legal counsel and shall not be construed against the drafter.

 

Section 7.2          Survival of Provisions.  The representations and warranties set forth in Sections 3.1, 3.2, 3.5, 3.7, 3.8, 3.9, 3.30, 3.32, 3.39 and 3.40 (collectively, the “Fundamental Representations”) shall survive indefinitely, Sections 3.10, 3.11, 3.12, 3.19, 3.20, 3.21, 3.22, 3.23, 3.24, 3.25, 3.26, 3.27, 3.28, 3.29, 4.4, 4.5, 4.7, 4.8 and 4.9 hereunder shall survive the execution and delivery of this Agreement for two years, and the other representations and warranties set forth herein shall survive for a period of twelve (12) months following the Closing Date regardless of any investigation made by or on behalf of the Partnership or any Purchaser.  The covenants made in this Agreement shall survive the Closing of the transactions described herein and remain operative and in full force and effect regardless of acceptance of any of the Purchased Units and payment therefor and repayment, conversion, exercise or repurchase thereof.  All indemnification obligations of the Partnership and the Purchasers pursuant to this Agreement and the provisions of Article VI shall remain operative and in full force and effect unless such obligations are expressly terminated in a writing by the parties, regardless of any purported general termination of this Agreement.

 

Section 7.3          No Waiver; Modifications in Writing.

 

(a)           Delay.  No failure or delay on the part of any party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise.

 

(b)           Specific Waiver.  Except as otherwise provided herein, no amendment, waiver, consent, modification, or termination of any provision of this Agreement or any other Operative Document shall be effective unless signed by each of the parties hereto or thereto affected by such amendment, waiver, consent, modification, or termination.  Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Partnership from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Partnership in any case shall entitle the Partnership to any other or further notice or demand in similar or other circumstances.

 

Section 7.4          Binding Effect; Assignment.

 

(a)           Binding Effect.  This Agreement shall be binding upon the Partnership, the Purchasers, and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns.

 

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(b)           Assignment of Rights.  All or any portion of the rights and obligations of any Purchaser under this Agreement may be transferred by such Purchaser to any Affiliate of such Purchaser without the consent of the Partnership.  No portion of the rights and obligations of any Purchaser under this Agreement may be transferred by such Purchaser to a non-Affiliate without the written consent of the Partnership (which consent shall not be unreasonably withheld by the Partnership).

 

Section 7.5          Confidentiality.  Notwithstanding anything herein to the contrary, to the extent that any Purchaser has executed or is otherwise bound by a confidentiality agreement in favor of the Partnership, such Purchaser shall continue to be bound by such confidentiality agreement in accordance with the terms thereof.

 

Section 7.6          Communications.  All notices and demands provided for hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, telecopy, air courier guaranteeing overnight delivery or personal delivery to the following addresses:

 

(a)           If to any Purchaser, to the respective address listed on Schedule A to the Registration Rights Agreement; and

 

(b)           If to the Partnership:

 

Antero Midstream Partners LP

1615 Wynkoop Street

Denver, Colorado 80202

Attention:  Glen C. Warren, Jr.

Facsimile: (303) 357-7315

 

with a copy to:

 

Vinson & Elkins L.L.P.

1001 Fannin Street

Suite 2500

Houston, Texas 77002

Attention: W. Matthew Strock

Facsimile: (713) 615-5650

 

or to such other address as the Partnership or such Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; at the time of transmittal, if sent via electronic mail; upon actual receipt if sent by certified mail, return receipt requested, or regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery.

 

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Section 7.7          Removal of Legend.

 

(a)           The Partnership, at its sole cost, shall remove the legend described in Section 4.9 (or instruct its transfer agent to so remove such legend) from the certificates evidencing Purchased Units issued and sold to each Purchaser pursuant to this Agreement if (i) such Purchased Units are sold pursuant to an effective registration statement under the Securities Act, (ii) such Purchased Units are sold or transferred pursuant to Rule 144 (if the transferor is not an Affiliate of the Partnership), or (iii) such Purchased Units are eligible for sale under Rule 144, without the requirement for the Partnership to be in compliance with the current public information required under Rule 144(c)(1) (or Rule 144(i)(2), if applicable) as to such securities and without volume or manner-of-sale restrictions.  Each Purchaser agrees to provide the Partnership, its counsel and/or the transfer agent with evidence reasonably requested by it in order to cause the removal of the legend described in Section 4.9, including, as may be appropriate, any information the Partnership deems necessary to determine that the legend is no longer required under the Securities Act or applicable state laws, including a certification that the holder is not an Affiliate of the Partnership (and a covenant to inform the Partnership if it should thereafter become an Affiliate and to consent to exchange its certificates for certificates bearing an appropriate restrictive legend) and regarding the length of time the Purchased Units have been held.  Any fees (with respect to the transfer agent, Partnership counsel or otherwise) associated with the issuance of any legal opinion required by the Partnership’s transfer agent or the removal of such legend shall be borne by the Partnership.  If a legend is no longer required pursuant to the foregoing, the Partnership will use commercially reasonable efforts to, no later than three (3) Business Days following the delivery by a Purchaser to the Partnership or the transfer agent (with notice to the Partnership) of a legended certificate or instrument representing Purchased Units (endorsed or with stock powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or transfer) and any representation letter or certification as may be requested by the Partnership, deliver or cause to be delivered to such Purchaser a certificate or instrument (as the case may be) representing such Purchased Units that is free from all restrictive legends.

 

Section 7.8          Entire Agreement.  This Agreement, the other Operative Documents and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties or undertakings, other than those set forth or referred to herein or the other Operative Documents with respect to the rights granted by the Partnership or any of its Affiliates or any Purchaser or any of its Affiliates set forth herein or therein.  This Agreement, the other Operative Documents and the other agreements and documents referred to herein or therein supersede all prior agreements and understandings between the parties with respect to such subject matter.

 

Section 7.9          Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to conflict of laws principles (other than Section 5-1401 of the General Obligations Law).

 

Section 7.10        Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. In the event

 

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that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

Section 7.11        Termination.

 

(a)           Notwithstanding anything herein to the contrary, this Agreement may be terminated at any time at or prior to the Closing by any Purchaser (with respect to such Purchaser only), upon a breach in any material respect by the Partnership of any covenant or agreement set forth in this Agreement.

 

(b)           Notwithstanding anything herein to the contrary, this Agreement shall automatically terminate at any time at or prior to the Closing

 

(i)        if a statute, rule, order, decree or regulation shall have been enacted or promulgated, or if any action shall have been taken by any Governmental Authority of competent jurisdiction that permanently restrains, permanently precludes, permanently enjoins or otherwise permanently prohibits the consummation of the transactions contemplated by this Agreement or makes the transactions contemplated by this Agreement illegal;

 

(ii)       upon the termination of the Contribution Agreement; or

 

(iii)      if the Closing shall not have occurred by September 25, 2015.

 

(c)           In the event of the termination of this Agreement as provided in this Section 7.11, this Agreement shall forthwith become null and void.  In the event of such termination, there shall be no liability on the part of any party hereto, except as set forth in Section 5.3 and Article VI of this Agreement.

 

Section 7.12        Recapitalization, Exchanges, Etc. Affecting the Common Units.  The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all equity interests of the Partnership or any successor or assign of the Partnership (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange for or in substitution of, the Common Units, and shall be appropriately adjusted for combinations, unit splits, recapitalizations and the like occurring after the date of this Agreement and prior to the Closing.

 

[Signature pages follow.]

 

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

 

	
 
    	
ANTERO MIDSTREAM PARTNERS LP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
ANTERO RESOURCES   MIDSTREAM MANAGEMENT LLC
    
	
 
    	
 
    	
(its General Partner)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alvyn A. Schopp
    
	
 
    	
 
    	
Name:
    	
Alvyn A. Schopp
    
	
 
    	
 
    	
Title:
    	
Chief Administrative   Officer, Regional
    
	
 
    	
 
    	
 
    	
Vice President and   Treasurer
    

 

Signature Page to Common Unit Purchase Agreement

 

 

	
 
    	
AT MLP FUND, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chris Linder
    
	
 
    	
 
    	
Name: 
    	
Chris Linder
    
	
 
    	
 
    	
Title:
    	
Senior Vice President
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CENTER COAST MLP & INFRASTRUCTURE FUND
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Billy Branch
    
	
 
    	
 
    	
Name: 
    	
Billy Branch
    
	
 
    	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
CLEARBRIDGE ENERGY MLP FUND INC.
    
	
 
    	
 
    
	
 
    	
By: 
    	
ClearBridge   Investments, LLC, as discretionary manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Terrence J. Murphy
    
	
 
    	
 
    	
Name: 
    	
Terrance J. Murphy
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CLEARBRIDGE ENERGY MLP TOTAL RETURN FUND INC.
    
	
 
    	
 
    
	
 
    	
By: 
    	
ClearBridge   Investments, LLC, as discretionary manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Terrance J. Murphy
    
	
 
    	
 
    	
Name: 
    	
Terrance J. Murphy
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    

 

 

	
 
    	
CLEARBRIDGE AMERICAN ENERGY MLP FUND INC.
    
	
 
    	
 
    
	
 
    	
By: 
    	
ClearBridge   Investments, LLC, as discretionary manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Terrance J. Murphy
    
	
 
    	
 
    	
Name: 
    	
Terrance J. Murphy
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COHEN & STEERS INFRASTRUCTURE   FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Becker
    
	
 
    	
 
    	
Name: 
    	
Robert Becker
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COHEN & STEERS MLP INCOME AND ENERGY   OPPORTUNITY FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Becker
    
	
 
    	
 
    	
Name: 
    	
Robert Becker
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COHEN & STEERS GLOBAL INFRASTRUCTURE FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Becker
    
	
 
    	
 
    	
Name: 
    	
Robert Becker
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

 

	
 
    	
COHEN & STEERS MLP & ENERGY   OPPORTUNITY FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Becker
    
	
 
    	
 
    	
Name: 
    	
Robert Becker
    
	
 
    	
 
    	
Title:
    	
Vice President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TEACHER’S RETIREMENT SYSTEM OF OKLAHOMA
    
	
 
    	
 
    
	
 
    	
By: 
    	
Cushing Asset   Management, LP, its investment adviser
    
	
 
    	
 
    
	
 
    	
By: 
    	
Swank Capital, LLC, its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Becker
    
	
 
    	
 
    	
Name: 
    	
Jerry V. Swank
    
	
 
    	
 
    	
Title:
    	
Managing Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
CUSHING/SALI MLP ALPHA TOTAL RETURN INSURANCE   FUND SERIES OF SALI MULTI-SERIES FUND, LP
    
	
 
    	
 
    
	
 
    	
By: 
    	
Cushing Asset   Management, LP, its investment adviser
    
	
 
    	
 
    
	
 
    	
By: 
    	
Swank Capital, LLC, its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jerry V. Swank
    
	
 
    	
 
    	
Name: 
    	
Jerry V. Swank
    
	
 
    	
 
    	
Title:
    	
Managing Member
    

 

 

	
 
    	
GOLDMAN SACHS MLP ENERGY INFRASTRUCTURE FUND
    
	
 
    	
 
    
	
 
    	
By: 
    	
Goldman Sachs Asset   Management, L.P., its Investment Adviser
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ken Topping
    
	
 
    	
 
    	
Name: 
    	
Ken Topping
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SELECT 40 FUND
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Brian D. Watson
    
	
 
    	
 
    	
Name: 
    	
Brian D. Watson
    
	
 
    	
 
    	
Title:
    	
Portfolio Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SALIENT MLP FUND, L.P.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Salient Capital   Advisors, LLC, its Investment Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory A. Reid
    
	
 
    	
 
    	
Name: 
    	
Gregory A. Reid
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SALIENT MLP & ENERGY INFRASTRUCTURE   FUND II
    
	
 
    	
 
    
	
 
    	
By: 
    	
Salient Capital   Advisors, LLC, its Investment Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory A. Reid
    
	
 
    	
 
    	
Name: 
    	
Gregory A. Reid
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

 

	
 
    	
SALIENT MLP TOTAL RETURN FUND, L.P.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Salient Capital   Advisors, LLC, its Investment Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory A. Reid
    
	
 
    	
 
    	
Name: 
    	
Gregory A. Reid
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
COMMONWEALTH OF PENNSYLVANIA PUBLIC SCHOOL   RETIREMENT SYSTEM
    
	
 
    	
 
    
	
 
    	
By: 
    	
Salient Capital   Advisors, LLC, its Investment Manager
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gregory A. Reid
    
	
 
    	
 
    	
Name: 
    	
Gregory A. Reid
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TINICUM L.P.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Tinicum Lantern III,   LLC, its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gabriel Yuen
    
	
 
    	
 
    	
Name: 
    	
Gabriel Yuen
    
	
 
    	
 
    	
Title:
    	
Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TINICUM EMPLOYEES L.P.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Tinicum Lantern III,   LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gabriel Yuen
    
	
 
    	
 
    	
Name: 
    	
Gabriel Yuen
    
	
 
    	
 
    	
Title:
    	
Member
    

 

 

	
 
    	
TINICUM PARALLEL L.P.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Tinicum Lantern III,   LLC, its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gabriel Yuen
    
	
 
    	
 
    	
Name: 
    	
Gabriel Yuen
    
	
 
    	
 
    	
Title:
    	
Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TTE CP1 HP MORNING, L.P.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Tinicum Lantern III,   LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gabriel Yuen
    
	
 
    	
 
    	
Name: 
    	
Gabriel Yuen
    
	
 
    	
 
    	
Title:
    	
Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TORTOISE ENERGY INFRASTRUCTURE CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Mick
    
	
 
    	
 
    	
Name: 
    	
James Mick
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TORTOISE POWER AND ENERGY INFRASTRUCTURE   FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Mick
    
	
 
    	
 
    	
Name: 
    	
James Mick
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

 

	
 
    	
TORTOISE MLP FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Mick
    
	
 
    	
 
    	
Name: 
    	
James Mick
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TORTOISE PIPELINE & ENERGY   FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Mick
    
	
 
    	
 
    	
Name: 
    	
James Mick
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TORTOISE ENERGY INDEPENDENCE FUND, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Mick
    
	
 
    	
 
    	
Name: 
    	
James Mick
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TORTOISE MLP & PIPELINE FUND
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Mick
    
	
 
    	
 
    	
Name: 
    	
James Mick
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
TORTOISE VIP MLP & PIPELINE PORTFOLIO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Mick
    
	
 
    	
 
    	
Name: 
    	
James Mick
    
	
 
    	
 
    	
Title:
    	
Managing Director
    

 

 

	
 
    	
ZP ENERGY FUND, L.P.
    
	
 
    	
 
    
	
 
    	
By: 
    	
ZP Energy GP, LLC, its   general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stuart J. Zimmer 
    
	
 
    	
 
    	
Name: 
    	
Stuart J. Zimmer
    
	
 
    	
 
    	
Title:
    	
Sole Member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ZP MASTER UTILITY FUND, LTD.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Zimmer Partners, LP,   its Investment Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stuart J. Zimmer
    
	
 
    	
 
    	
Name: 
    	
Stuart J. Zimmer
    
	
 
    	
 
    	
Title:
    	
CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
P ZIMMER LTD.
    
	
 
    	
 
    
	
 
    	
By: 
    	
Zimmer Partners, LP,   its Investment Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Stuart J. Zimmer
    
	
 
    	
 
    	
Name: 
    	
Stuart J. Zimmer
    
	
 
    	
 
    	
Title:
    	
CEO
    
					

 

 

Schedule A — List of Purchasers and Commitment Amounts

 

	
Purchaser
    	
 
    	
Purchased Units
    	
 
    	
Commitment Amount
    	
 
    
	
AT MLP FUND, LLC
    	
 
    	
796,000
    	
 
    	
$
    	
14,996,640.00
    	
 
    
	
Center Coast   MLP & Infrastructure Fund
    	
 
    	
398,000
    	
 
    	
$
    	
7,498,320.00
    	
 
    
	
ClearBridge   Energy MLP Fund Inc.
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ClearBridge   Energy MLP Total Return Fund Inc.
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ClearBridge   American Energy MLP Fund Inc.
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Subtotal
    	
 
    	
928,500
    	
 
    	
$
    	
17,492,940.00
    	
 
    
	
Cohen &   Steers Infrastructure Fund, Inc.
    	
 
    	
576,300
    	
 
    	
$
    	
10,857,492.00
    	
 
    
	
Cohen &   Steers MLP Income and Energy Opportunity Fund, Inc.
    	
 
    	
143,700
    	
 
    	
$
    	
2,707,308.00
    	
 
    
	
Cohen &   Steers Global Infrastructure Fund, Inc.
    	
 
    	
58,100
    	
 
    	
$
    	
1,094,604.00
    	
 
    
	
Cohen &   Steers MLP & Energy Opportunity Fund, Inc.
    	
 
    	
17,900
    	
 
    	
$
    	
337,236.00
    	
 
    
	
Teacher’s   Retirement System of Oklahoma
    	
 
    	
325,000
    	
 
    	
$
    	
6,123,000.00
    	
 
    
	
Cushing/Sali MLP   Alpha Total Return Insurance Fund Series of Sali Multi-Series Fund,   LP
    	
 
    	
45,000
    	
 
    	
$
    	
847,800.00
    	
 
    
	
Goldman Sachs   MLP Energy Infrastructure Fund
    	
 
    	
1,592,000
    	
 
    	
$
    	
29,993,280.00
    	
 
    
	
Oppenheimer   SteelPath Inc. - Select 40 Fund
    	
 
    	
1,250,000
    	
 
    	
$
    	
23,550,000.00
    	
 
    
	
Salient MLP   Fund, L.P.
    	
 
    	
67,625
    	
 
    	
$
    	
1,274,055.00
    	
 
    
	
Salient   MLP & Energy Infrastructure Fund II
    	
 
    	
279,792
    	
 
    	
$
    	
5,271,281.28
    	
 
    
	
Salient MLP   Total Return Fund, L.P.
    	
 
    	
169,321
    	
 
    	
$
    	
3,190,007.64
    	
 
    
	
Commonwealth of   Pennsylvania Public School Employees’ Retirement System
    	
 
    	
199,262
    	
 
    	
$
    	
3,754,096.08
    	
 
    
	
Tinicum L.P.
    	
 
    	
1,259,587
    	
 
    	
$
    	
23,730,619.08
    	
 
    
	
TTE CP1 HP   Morning, L.P.
    	
 
    	
159,525
    	
 
    	
$
    	
3,005,451.00
    	
 
    
	
Tinicum   Employees L.P.
    	
 
    	
29,190
    	
 
    	
$
    	
549,939.60
    	
 
    
	
Tinicum Parallel   L.P.
    	
 
    	
11,198
    	
 
    	
$
    	
210,970.32
    	
 
    
	
Tortoise Energy   Infrastructure Corporation
    	
 
    	
831,336
    	
 
    	
$
    	
15,662,370.24
    	
 
    
	
Tortoise MLP   Fund Inc.
    	
 
    	
428,930
    	
 
    	
$
    	
8,081,041.20
    	
 
    
	
Tortoise Power   and Energy Infrastructure Fund, Inc.
    	
 
    	
28,210
    	
 
    	
$
    	
531,476.40
    	
 
    
	
Tortoise Energy   Independence Fund, Inc.
    	
 
    	
37,454
    	
 
    	
$
    	
705,633.36
    	
 
    
	
Tortoise   MLP & Pipeline Fund
    	
 
    	
223,951
    	
 
    	
$
    	
4,219,236.84
    	
 
    
	
Tortoise   Pipeline & Energy Fund, Inc.
    	
 
    	
41,789
    	
 
    	
$
    	
787,304.76
    	
 
    
	
Tortoise VIP   MLP & Pipeline Portfolio
    	
 
    	
330
    	
 
    	
$
    	
6,217.20
    	
 
    
	
ZP Energy Fund,   L.P.
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
ZP Master   Utility Fund, LTD
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
P Zimmer, LTD
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Subtotal
    	
 
    	
3,000,000
    	
 
    	
$
    	
56,520,000.00
    	
 
    
	
Total
    	
 
    	
12,898,000
    	
 
    	
$
    	
242,998,320.00
    	
 
    

 

Schedule A to Common Unit Purchase Agreement

 

 

Exhibit A

 

FORM OF

 

REGISTRATION RIGHTS AGREEMENT

 

BY AND AMONG

 

ANTERO MIDSTREAM PARTNERS LP

 

AND

 

THE PURCHASERS NAMED ON SCHEDULE A HERETO

 

Exhibit A to Common Unit Purchase Agreement

 

 

TABLE OF CONTENTS

 

	
ARTICLE I   DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
Section 1.02
    	
Registrable Securities
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE II   REGISTRATION RIGHTS
    	
3
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Registration
    	
3
    
	
Section 2.02
    	
Piggyback Rights
    	
5
    
	
Section 2.03
    	
Delay Rights
    	
7
    
	
Section 2.04
    	
Underwritten Offerings
    	
8
    
	
Section 2.05
    	
Sale Procedures
    	
8
    
	
Section 2.06
    	
Cooperation by Holders
    	
12
    
	
Section 2.07
    	
Restrictions on Public   Sale by Holders of Registrable Securities
    	
12
    
	
Section 2.08
    	
Expenses
    	
12
    
	
Section 2.09
    	
Indemnification
    	
13
    
	
Section 2.10
    	
Rule 144 Reporting
    	
15
    
	
Section 2.11
    	
Transfer or Assignment   of Registration Rights
    	
15
    
	
Section 2.12
    	
Limitation on   Subsequent Registration Rights
    	
16
    
	
 
    	
 
    	
 
    
	
ARTICLE III   MISCELLANEOUS
    	
16
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Communications
    	
16
    
	
Section 3.02
    	
Successor and Assigns
    	
17
    
	
Section 3.03
    	
Assignment of Rights
    	
17
    
	
Section 3.04
    	
Recapitalization,   Exchanges, Etc. Affecting the Units
    	
17
    
	
Section 3.05
    	
Aggregation of   Registrable Securities
    	
17
    
	
Section 3.06
    	
Specific Performance
    	
17
    
	
Section 3.07
    	
Counterparts
    	
17
    
	
Section 3.08
    	
Headings
    	
17
    
	
Section 3.09
    	
Governing Law
    	
17
    
	
Section 3.10
    	
Severability of   Provisions
    	
18
    
	
Section 3.11
    	
Entire Agreement
    	
18
    
	
Section 3.12
    	
Amendment
    	
18
    
	
Section 3.13
    	
No Presumption
    	
18
    
	
Section 3.14
    	
Obligations Limited to   Parties to Agreement
    	
18
    
	
Section 3.15
    	
Independent Nature of   Purchaser’s Obligations
    	
18
    
	
Section 3.16
    	
Interpretation
    	
19
    

 

Schedule A — Purchaser List; Notice and Contact Information; Opt-Out Election

 

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of September [  ], 2015, by and among Antero Midstream Partners LP, a Delaware limited partnership (the “Partnership”), and each of the Persons set forth on Schedule A to this Agreement (each, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, this Agreement is made and entered into in connection with the Closing of the issuance and sale of the Purchased Units pursuant to the Common Unit Purchase Agreement, dated as of September 17, 2015, by and among the Partnership and the Purchasers (the “Common Unit Purchase Agreement”); and

 

WHEREAS, the Partnership has agreed to provide the registration and other rights set forth in this Agreement for the benefit of the Purchasers pursuant to the Common Unit Purchase Agreement.

 

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.01                             Definitions.  Capitalized terms used herein without definition shall have the meanings given to them in the Common Unit Purchase Agreement.  The terms set forth below are used herein as so defined:

 

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

 

“Aggregate Purchase Price” means the product of (i) the Common Unit Price multiplied by (ii) the aggregate number of Purchased Units purchased by the Purchasers.

 

“Agreement” has the meaning specified therefor in the introductory paragraph of this Agreement.

 

“Commission” means the U.S. Securities and Exchange Commission.

 

“Common Unit Price” has the meaning given to such term in the Common Unit Purchase Agreement.

 

“Common Unit Purchase Agreement” has the meaning specified therefor in the recitals of this Agreement.

 

1

 

“Effectiveness Period” has the meaning specified therefor in Section 2.01(a) of this Agreement.

 

“General Partner” means Antero Resources Midstream Management LLC, a Delaware limited liability company.

 

“Holder” means the record holder of any Registrable Securities.

 

“Included Registrable Securities” has the meaning specified therefor in Section 2.02(a) of this Agreement.

 

“Liquidated Damages” has the meaning specified therefor in Section 2.01(b) of this Agreement.

 

“Liquidated Damages Multiplier” means, with respect to a particular Purchaser, (i) the product of the Common Unit Price multiplied by (ii) the number of Purchased Units purchased by such Purchaser that may not be disposed of without restriction and without the need for current public information pursuant to any section of Rule 144 (or any similar provision then in effect) under the Securities Act.

 

“Losses” has the meaning specified therefor in Section 2.09(a) of this Agreement.

 

“Managing Underwriter” means, with respect to any Underwritten Offering, the book-running lead manager or managers of such Underwritten Offering.

 

“Opt-Out Notice” has the meaning specified therefor in Section 2.02(a) of this Agreement.

 

“Parity Securities” has the meaning specified therefor in Section 2.02(b) of this Agreement.

 

“Partnership” has the meaning specified therefor in the introductory paragraph of this Agreement.

 

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

 

“Purchased Units” has the meaning given to such term in the Common Unit Purchase Agreement.

 

“Purchaser” and “Purchasers” have the meanings specified therefor in the introductory paragraph of this Agreement.

 

“Registrable Securities” means (i) the Common Units comprising the Purchased Units and (ii) any Common Units issued as Liquidated Damages pursuant to Section 2.01(b) of this Agreement, in each case, as subject to exchange, substitution or adjustment pursuant to Section

 

2

 

3.04 of this Agreement, all of which Registrable Securities are subject to the rights provided herein until such rights terminate pursuant to the provisions hereof.

 

“Registration Expenses” has the meaning specified therefor in Section 2.08(b) of this Agreement.

 

“Registration Statement” has the meaning specified therefor in Section 2.01(a) of this Agreement.

 

“Selling Expenses” has the meaning specified therefor in Section 2.08(b) of this Agreement.

 

“Selling Holder” means a Holder who is selling Registrable Securities pursuant to a registration statement.

 

“Selling Holder Indemnified Persons” has the meaning specified therefor in Section 2.09(a) of this Agreement.

 

“Underwritten Offering” means an offering (including an offering pursuant to a Registration Statement) in which Common Units are sold to an underwriter on a firm commitment basis for reoffering to the public or an offering that is a “bought deal” with one or more investment banks.

 

Section 1.02                             Registrable Securities.  Any Registrable Security will cease to be a Registrable Security (a) when a registration statement covering such Registrable Security becomes or has been declared effective by the Commission and such Registrable Security has been sold or disposed of pursuant to such effective registration statement; (b) when such Registrable Security has been disposed of pursuant to any section of Rule 144 (or any similar provision then in effect) under the Securities Act; (c) when such Registrable Security is held by the Partnership or one of its subsidiaries or Affiliates; (d) when such Registrable Security has been sold or disposed of in a private transaction in which the transferor’s rights under this Agreement are not assigned to the transferee of such securities pursuant to Section 2.11 hereof or (e) when such Registrable Security becomes eligible for resale without restriction and without the need for current public information pursuant to any section of Rule 144 (or any similar provision then in effect) under the Securities Act.

 

ARTICLE II
 REGISTRATION RIGHTS

 

Section 2.01                             Registration.

 

(a)                                 Effectiveness Deadline.  Following the date hereof, but no later than 30 days following the Closing Date, the Partnership shall prepare and file a registration statement under the Securities Act to permit the public resale of Registrable Securities then outstanding from time to time as permitted by Rule 415 (or any similar provision then in effect) under the Securities Act with respect to all of the Registrable Securities (the “Registration Statement”). The Registration Statement filed pursuant to this Section 2.01(a) shall be on such appropriate registration form or forms of the Commission as shall be selected by the Partnership so long as it

 

3

 

permits the continuous offering of the Registrable Securities pursuant to Rule 415 (or any similar provision then in effect) under the Securities Act at then-prevailing market prices.  The Partnership shall use its commercially reasonable efforts to cause the Registration Statement to become effective on or as soon as practicable after the filing thereof. Any Registration Statement shall provide for the resale pursuant to any method or combination of methods legally available to, and requested by, the Holders of any and all Registrable Securities covered by such Registration Statement.  The Partnership shall use its commercially reasonable efforts to cause the Registration Statement filed pursuant to this Section 2.01(a) to be effective, supplemented and amended to the extent necessary to ensure that it is available for the resale of all Registrable Securities by the Holders until all Registrable Securities covered by such Registration Statement have ceased to be Registrable Securities (the “Effectiveness Period”).  The Registration Statement when effective (including the documents incorporated therein by reference) will comply as to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained in such Registration Statement or documents incorporated therein by reference, in the light of the circumstances under which a statement is made).  As soon as practicable following the date that the Registration Statement becomes effective, but in any event within two (2) Business Days of such date, the Partnership shall provide the Holders with written notice of the effectiveness of the Registration Statement.

 

(b)                                 Failure to Go Effective.   If the Registration Statement required by Section 2.01(a) is not declared effective within 90 days after the Closing Date, then each Purchaser shall be entitled to a payment (with respect to the Purchased Units of each such Purchaser), as liquidated damages and not as a penalty, of 0.25% of the Liquidated Damages Multiplier per 30-day period, that shall accrue daily, for the first 30 days following the 90th day, increasing by an additional 0.25% of the Liquidated Damages Multiplier per 30-day period, that shall accrue daily, for each subsequent 30 days, up to a maximum of 1.00% of the Liquidated Damages Multiplier per 30-day period (the “Liquidated Damages”). The Liquidated Damages payable pursuant to the immediately preceding sentence shall be payable within ten (10) Business Days after the end of each such 30-day period.  Notwithstanding anything to the contrary contained herein, in no event shall the aggregate of all Liquidated Damages payable by the Partnership hereunder exceed 5.00% of the Aggregate Purchase Price.  Any Liquidated Damages shall be paid to each Purchaser in immediately available funds; provided, however, if the Partnership certifies that it is unable to pay Liquidated Damages in cash because such payment would result in a breach of or constitute a default under a credit facility or other debt instrument, then the Partnership shall pay such Liquidated Damages using as much cash as is permitted without causing a breach of or default under such credit facility or other debt instrument and shall pay the balance of any such Liquidated Damages in kind in the form of the issuance of additional Common Units. Upon any issuance of Common Units as Liquidated Damages, the Partnership shall promptly (i) prepare and file an amendment to the Registration Statement prior to its effectiveness adding such Common Units to such Registration Statement as additional Registrable Securities and (ii) prepare and file a supplemental listing application with the NYSE (or such other national securities exchange on which the Common Units are then-listed and traded) to list such additional Common Units. The determination of the number of Common Units to be issued as Liquidated Damages shall be equal to quotient of (i) the dollar amount of the balance of such Liquidated Damages due to each such Purchaser divided by (ii) the volume-weighted average

 

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trading price of the Common Units on the NYSE, or any other national securities exchange on which the Common Units are then-traded, for the ten (10) trading days ending on the first trading day immediately preceding the date on which the Liquidated Damages payment is due, less a discount to such average closing price of 2.00%.  The payment of Liquidated Damages to a Purchaser shall cease at the earlier of (i) the Registration Statement becoming effective or (ii) when such Purchaser no longer holds Registrable Securities, assuming that each Holder is not an Affiliate of the Partnership, and any payment of Liquidated Damages shall be prorated for any period of less than 30 days in which the payment of Liquidated Damages ceases.  If the Partnership is unable to cause a Registration Statement to go effective within 90 days after the Closing Date as a result of an acquisition, merger, reorganization, disposition or other similar transaction, then the Partnership may request a waiver of the Liquidated Damages, and each Purchaser may individually grant or withhold its consent to such request in its discretion.

 

(c)                                  Termination of Purchaser’s Rights. A Purchaser’s rights (and any transferee’s rights pursuant to Section 2.11 of this Agreement) under this Section 2.01 shall terminate upon the termination of the Effectiveness Period.

 

Section 2.02                             Piggyback Rights.

 

(a)                                 Participation.  If the Partnership proposes to file (i) a shelf registration statement other than the Registration Statement contemplated by Section 2.01(a), (ii) a prospectus supplement to an effective shelf registration statement, other than the Registration Statement contemplated by Section 2.01(a) of this Agreement and Holders may be included without the filing of a post-effective amendment thereto, or (iii) a registration statement, other than a shelf registration statement, in each case, for the sale of Common Units in an Underwritten Offering for its own account and/or another Person, then as soon as practicable following the engagement of counsel by the Partnership to prepare the documents to be used in connection with an Underwritten Offering, the Partnership shall give notice (including, but not limited to, notification by electronic mail) of such proposed Underwritten Offering to each Holder (together with its Affiliates) holding at least $15 million of the then-outstanding Registrable Securities (based on the Common Unit Price) and such notice shall offer such Holders the opportunity to include in such Underwritten Offering such number of Registrable Securities (the “Included Registrable Securities”) as each such Holder may request in writing; provided, however, that if the Partnership has been advised by the Managing Underwriter that the inclusion of Registrable Securities for sale for the benefit of the Holders will have an adverse effect on the price, timing or distribution of the Common Units in the Underwritten Offering, then (A) if no Registrable Securities can be included in the Underwritten Offering in the opinion of the Managing Underwriter, the Partnership shall not be required to offer such opportunity to the Holders or (B) if any Registrable Securities can be included in the Underwritten Offering in the opinion of the Managing Underwriter, then the amount of Registrable Securities to be offered for the accounts of Holders shall be determined based on the provisions of Section 2.02(b).  Any notice required to be provided in this Section 2.02(a) to Holders shall be provided on a Business Day pursuant to Section 3.01 hereof and receipt of such notice shall be confirmed by the Holder.  Each such Holder shall then have two (2) Business Days (or one (1) Business Day in connection with any overnight or bought Underwritten Offering) after notice has been delivered to request in writing the inclusion of Registrable Securities in the Underwritten Offering.  If no written request for inclusion from a Holder is received within the specified time, each such Holder shall have no

 

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further right to participate in such Underwritten Offering.  If, at any time after giving written notice of its intention to undertake an Underwritten Offering and prior to the closing of such Underwritten Offering, the Partnership shall determine for any reason not to undertake or to delay such Underwritten Offering, the Partnership may, at its election, give written notice of such determination to the Selling Holders and, (x) in the case of a determination not to undertake such Underwritten Offering, shall be relieved of its obligation to sell any Included Registrable Securities in connection with such terminated Underwritten Offering, and (y) in the case of a determination to delay such Underwritten Offering, shall be permitted to delay offering any Included Registrable Securities for the same period as the delay in the Underwritten Offering.  Any Selling Holder shall have the right to withdraw such Selling Holder’s request for inclusion of such Selling Holder’s Registrable Securities in such Underwritten Offering by giving written notice to the Partnership of such withdrawal at or prior to the time of pricing of such Underwritten Offering.  Any Holder may deliver written notice (an “Opt-Out Notice”) to the Partnership requesting that such Holder not receive notice from the Partnership of any proposed Underwritten Offering; provided, however, that such Holder may later revoke any such Opt-Out Notice in writing.  Following receipt of an Opt-Out Notice from a Holder (unless subsequently revoked), the Partnership shall not be required to deliver any notice to such Holder pursuant to this Section 2.02(a) and such Holder shall no longer be entitled to participate in Underwritten Offerings by the Partnership pursuant to this Section 2.02(a).  The Holders indicated on Schedule A hereto as having opted out shall each be deemed to have delivered an Opt-Out Notice as of the date hereof.

 

(b)                                 Priority.  If the Managing Underwriter or Underwriters of any proposed Underwritten Offering advises the Partnership that the total amount of Registrable Securities that the Selling Holders and any other Persons intend to include in such offering exceeds the number that can be sold in such offering without being likely to have an adverse effect on the price, timing or distribution of the Common Units offered or the market for the Common Units, then the Common Units to be included in such Underwritten Offering shall include the number of Registrable Securities that such Managing Underwriter or Underwriters advises the Partnership can be sold without having such adverse effect, with such number to be allocated (i) first, to the Partnership and (ii) second, pro rata among the Selling Holders who have requested participation in such Underwritten Offering and any other holder of securities of the Partnership having rights of registration that are neither expressly senior nor subordinated to the Registrable Securities (the “Parity Securities”).  The pro rata allocations for each Selling Holder who has requested participation in such Underwritten Offering shall be the product of (a) the aggregate number of Registrable Securities proposed to be sold in such Underwritten Offering multiplied by (b) the fraction derived by dividing (x) the number of Registrable Securities owned on the Closing Date by such Selling Holder by (y) the aggregate number of Registrable Securities owned on the Closing Date by all Selling Holders plus the aggregate number of Parity Securities owned on the Closing Date by all holders of Parity Securities that are participating in the Underwritten Offering.

 

(c)                                  Termination of Piggyback Registration Rights.  Each Holder’s rights under this Section 2.02 shall terminate upon such Holder (together with its Affiliates) ceasing to hold at least $15 million of Registrable Securities (based on the Common Unit Price).  Each Holder shall notify the Partnership in writing when such Holder holds less than $15 million of Registrable Securities (based on the Common Unit Price).

 

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Section 2.03                             Delay Rights.

 

Notwithstanding anything to the contrary contained herein, the Partnership may, upon written notice to any Selling Holder whose Registrable Securities are included in the Registration Statement or other registration statement contemplated by this Agreement, suspend such Selling Holder’s use of any prospectus which is a part of the Registration Statement or other registration statement contemplated by this Agreement (in which event the Selling Holder shall discontinue sales of the Registrable Securities pursuant to the Registration Statement or such other registration statement but may settle any previously made sales of Registrable Securities) if (i) the Partnership is pursuing an acquisition, merger, reorganization, disposition, financing or other similar transaction and the Partnership determines in good faith that the Partnership’s ability to pursue or consummate such a transaction would be materially adversely affected by any required disclosure of such transaction in the Registration Statement or such other registration statement or (ii) the Partnership has experienced some other material non-public event, the disclosure of which at such time, in the good faith judgment of the Partnership, would materially adversely affect the Partnership; provided, however, in no event shall the Selling Holders be suspended from selling Registrable Securities pursuant to the Registration Statement or such other registration statement for a period that exceeds an aggregate of 60 days in any 180-day period or 105 days in any 365-day period, in each case, exclusive of days covered by any lock-up agreement executed by a Selling Holder in connection with any Underwritten Offering.  Upon disclosure of such information or the termination of the condition described above, the Partnership shall provide prompt notice to the Selling Holders whose Registrable Securities are included in the Registration Statement or other registration statement contemplated by this Agreement, and shall promptly terminate any suspension of sales it has put into effect and shall take such other reasonable actions to permit registered sales of Registrable Securities as contemplated in this Agreement.

 

If (i) the Selling Holders shall be prohibited from selling their Registrable Securities under the Registration Statement or other registration statement contemplated by this Agreement as a result of a suspension pursuant to the immediately preceding paragraph in excess of the periods permitted therein or (ii) the Registration Statement or other registration statement contemplated by this Agreement is filed and declared effective but, during the Effectiveness Period, shall thereafter cease to be effective or fail to be usable for its intended purpose without being succeeded within 30 Business Days by a post-effective amendment thereto, a supplement to the prospectus or a report filed with the Commission pursuant to Section 13(a), 13(c), 14 or l5(d) of the Exchange Act, then, until the suspension is lifted or a post-effective amendment, supplement or report is filed with the Commission, but not including any day on which a suspension is lifted or such amendment, supplement or report is filed and declared effective, if applicable, the Partnership shall pay the Selling Holders an amount equal to the Liquidated Damages, following the earlier of (x) the date on which the suspension period exceeded the permitted period and (y) the thirty-first (31st) Business Day after the Registration Statement or other registration statement contemplated by this Agreement ceased to be effective or failed to be useable for its intended purposes, as liquidated damages and not as a penalty (for purposes of calculating Liquidated Damages, the date in (x) or (y) above shall be deemed the “90th day,” as used in the definition of Liquidated Damages).  For purposes of this paragraph, a suspension shall be deemed lifted on the date that notice that the suspension has been terminated is delivered to the Selling Holders.  Liquidated Damages pursuant to this paragraph shall cease to accrue

 

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upon the Purchased Units held of record by such Holder becoming eligible for resale without restriction and without the need for current public information under any section of Rule 144 (or any similar provision then in effect) under the Securities Act, assuming that such Holder is not an Affiliate of the Partnership, and any payment of Liquidated Damages shall be prorated for any period of less than 30 days in which the payment of Liquidated Damages ceases.

 

Section 2.04                             Underwritten Offerings.

 

(a)                                 General Procedures.  In connection with any Underwritten Offering under this Agreement, the Partnership shall be entitled to select the Managing Underwriter or Underwriters.  In connection with an Underwritten Offering contemplated by this Agreement in which a Selling Holder participates, each Selling Holder and the Partnership shall be obligated to enter into an underwriting agreement that contains such representations, covenants, indemnities and other rights and obligations as are customary in underwriting agreements for firm commitment offerings of securities.  No Selling Holder may participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable Securities on the basis provided in such underwriting agreement and completes and executes all questionnaires, powers of attorney, indemnities and other documents reasonably required under the terms of such underwriting agreement.  Each Selling Holder may, at its option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Partnership to and for the benefit of such underwriters also be made to and for such Selling Holder’s benefit and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement also be conditions precedent to its obligations.  No Selling Holder shall be required to make any representations or warranties to or agreements with the Partnership or the underwriters other than representations, warranties or agreements regarding such Selling Holder, its authority to enter into such underwriting agreement and to sell, and its ownership of, the securities being registered on its behalf, its intended method of distribution and any other representation required by Law.  If any Selling Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw therefrom by notice to the Partnership and the Managing Underwriter; provided, however, that such withdrawal must be made up to and including the time of pricing of such Underwritten Offering.  No such withdrawal or abandonment shall affect the Partnership’s obligation to pay Registration Expenses.  The Partnership’s management may but shall not be required to participate in a roadshow or similar marketing effort in connection with any Underwritten Offering.

 

(b)                                 No Demand Rights.  Notwithstanding any other provision of this Agreement, no Holder shall be entitled to any “demand” rights or similar rights that would require the Partnership to effect an Underwritten Offering solely on behalf of the Holders.

 

Section 2.05                             Sale Procedures.  In connection with its obligations under this Article II, the Partnership will, as expeditiously as possible:

 

(a)                                 prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus and any prospectus supplement used in connection therewith as may be necessary to keep the Registration Statement effective for the Effectiveness Period and as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement;

 

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(b)                                 if a prospectus or prospectus supplement will be used in connection with the marketing of an Underwritten Offering from the Registration Statement and the Managing Underwriter at any time shall notify the Partnership in writing that, in the sole judgment of such Managing Underwriter, inclusion of detailed information to be used in such prospectus or prospectus supplement is of material importance to the success of the Underwritten Offering of such Registrable Securities, the Partnership shall use its commercially reasonable efforts to include such information in such prospectus or prospectus supplement;

 

(c)                                  furnish to each Selling Holder (i) as far in advance as reasonably practicable before filing the Registration Statement or any other registration statement contemplated by this Agreement or any supplement or amendment thereto, upon request, copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein to the extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity to object to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make the corrections reasonably requested by such Selling Holder with respect to such information prior to filing the Registration Statement or such other registration statement or supplement or amendment thereto, and (ii) such number of copies of the Registration Statement or such other registration statement and the prospectus and any prospectus supplement included therein and any supplements and amendments thereto as such Selling Holder may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such Registration Statement or other registration statement;

 

(d)                                 if applicable, use its commercially reasonable efforts to register or qualify the Registrable Securities covered by the Registration Statement or any other registration statement contemplated by this Agreement under the securities or blue sky laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the Managing Underwriter, shall reasonably request; provided, however, that the Partnership will not be required to qualify generally to transact business in any jurisdiction where it is not then required to so qualify or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject;

 

(e)                                  promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered by any of them under the Securities Act, of (i) the filing of the Registration Statement or any other registration statement contemplated by this Agreement or any prospectus or prospectus supplement to be used in connection therewith, or any amendment or supplement thereto, and, with respect to such Registration Statement or any such other registration statement or any post-effective amendment thereto, when the same has become effective; and (ii) the receipt of any written comments from the Commission with respect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to the Registration Statement or any such other registration statement or any prospectus or prospectus supplement thereto;

 

(f)                                   promptly notify each Selling Holder of (i) the happening of any event as a result of which the prospectus or prospectus supplement contained in the Registration Statement or any other registration statement contemplated by this Agreement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or

 

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necessary to make the statements therein not misleading (in the case of any prospectus or prospectus supplement contained therein, in the light of the circumstances under which such statement is made); (ii) the issuance or express threat of issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or any other registration statement contemplated by this Agreement, or the initiation of any proceedings for that purpose; or (iii) the receipt by the Partnership of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction.  Following the provision of such notice, the Partnership agrees, subject to Section 2.03 of this Agreement, to as promptly as practicable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus or prospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing and to take such other commercially reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;

 

(g)                                  upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and all transmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering of Registrable Securities;

 

(h)                                 in the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel for the Partnership dated the date of the closing under the underwriting agreement and (ii) a “comfort” letter, dated the pricing date of such Underwritten Offering and a letter of like kind dated the date of the closing under the underwriting agreement, in each case, signed by the independent public accountants who have certified the Partnership’s financial statements included or incorporated by reference into the applicable registration statement, and each of the opinion and the “comfort” letter shall be in customary form and covering substantially the same matters with respect to such registration statement (and the prospectus and any prospectus supplement included therein) as have been customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to the underwriters in Underwritten Offerings of securities by the Partnership and such other matters as such underwriters and Selling Holders may reasonably request;

 

(i)                                     otherwise use its commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

 

(j)                                    make available to the appropriate representatives of the Managing Underwriter and Selling Holders access to such information and Partnership personnel as is reasonable and customary to enable such parties to establish a due diligence defense under the Securities Act; provided, that the Partnership need not disclose any non-public information to any such representative unless and until such representative has entered into a confidentiality agreement with the Partnership;

 

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(k)                                 cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange or nationally recognized quotation system on which similar securities issued by the Partnership are then listed;

 

(l)                                     use its commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Partnership to enable the Selling Holders to consummate the disposition of such Registrable Securities;

 

(m)                             provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than the effective date of such registration statement;

 

(n)                                 enter into customary agreements and take such other actions as are reasonably requested by the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition of such Registrable Securities; and

 

(o)                                 if requested by a Selling Holder, (i) incorporate in a prospectus or prospectus supplement or post-effective amendment to the Registration Statement or any other registration statement contemplated by this Agreement such information as such Selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities, including information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering of the Registrable Securities to be sold in such offering and (ii) make all required filings of such prospectus or prospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectus or prospectus supplement or post-effective amendment.

 

The Partnership shall not name a Holder as an underwriter as defined in Section 2(a)(11) of the Securities Act in any registration statement without such Holder’s consent. If the staff of the Commission requires the Partnership to name any Holder as an underwriter as defined in Section 2(a)(11) of the Securities Act, or the Partnership deems it advisable, on the advice of counsel, to so name any Holder, and such Holder does not consent thereto, then such Holder’s Registrable Securities shall not be included on the Registration Statement (or any other registration statement contemplated by this Agreement), such Holder shall no longer be entitled to receive Liquidated Damages under this Agreement with respect thereto, the Partnership shall have no further obligations hereunder with respect to Registrable Securities held by such Holder and such Holder shall be deemed to have terminated this Agreement with respect to such Holder.

 

Each Selling Holder, upon receipt of notice from the Partnership of the happening of any event of the kind described in subsection (f) of this Section 2.05, shall forthwith discontinue offers and sales of the Registrable Securities by means of a prospectus or prospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus or prospectus supplement contemplated by subsection (f) of this Section 2.05 or until it is advised in writing by the Partnership that the use of the prospectus or prospectus supplement may be resumed and has received copies of any additional or supplemental filings incorporated by reference in the prospectus or prospectus supplement, and, if so directed by the Partnership, such Selling Holder will, or will request the Managing Underwriter(s), if any, to deliver to the Partnership (at the Partnership’s expense) all copies in their possession or control, other than

 

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permanent file copies then in such Selling Holder’s possession, of the prospectus or prospectus supplement covering such Registrable Securities current at the time of receipt of such notice.

 

Section 2.06                             Cooperation by Holders.  The Partnership shall have no obligation to include in the Registration Statement, or in an Underwritten Offering pursuant to Section 2.02(a), Registrable Securities of a Holder who has failed to timely furnish such information that the Partnership determines, after consultation with its counsel, is reasonably required in order for the registration statement or prospectus or prospectus supplement, as applicable, to comply with the Securities Act.

 

Section 2.07                             Restrictions on Public Sale by Holders of Registrable Securities.  Each Holder of Registrable Securities agrees, if requested by the underwriters of an Underwritten Offering, to enter into a customary letter agreement with such underwriters providing such Holder will not effect any public sale or distribution of Registrable Securities during the 60 calendar day period beginning on the date of a prospectus or prospectus supplement filed with the Commission with respect to the pricing of any Underwritten Offering, provided that (i) the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by the underwriters on the Partnership or the officers, directors or any other Affiliate of the Partnership on whom a restriction is imposed and (ii) the restrictions set forth in this Section 2.07 shall not apply to any Registrable Securities that are included in such Underwritten Offering by such Holder. In addition, this Section 2.07 shall not apply to any Holder that is not entitled to participate in such Underwritten Offering, whether because such Holder delivered an Opt-Out Notice prior to receiving notice of the Underwritten Offering or because such Holder holds less than $15 million of the then-outstanding Registrable Securities.

 

Section 2.08                             Expenses.

 

(a)                                 Expenses.  The Partnership will pay all reasonable Registration Expenses as determined in good faith, including, in the case of an Underwritten Offering, whether or not any sale is made pursuant to such Underwritten Offering.  Each Selling Holder shall pay its pro rata share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder.  In addition, except as otherwise provided in Section 2.09 hereof, the Partnership shall not be responsible for professional fees incurred by Holders in connection with the exercise of such Holders’ rights hereunder.

 

(b)                                 Certain Definitions.  “Registration Expenses” means all expenses incident to the Partnership’s performance under or compliance with this Agreement to effect the registration of Registrable Securities on the Registration Statement pursuant to Section 2.01(a) or an Underwritten Offering covered under this Agreement, and the disposition of such Registrable Securities, including, without limitation, all registration, filing, securities exchange listing and NYSE fees, all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry Regulatory Authority, fees of transfer agents and registrars, all word processing, duplicating and printing expenses, any transfer taxes and the fees and disbursements of counsel and independent public accountants for the Partnership, including the expenses of any special audits or “comfort” letters required by or incident to such performance and compliance.  “Selling Expenses” means all underwriting fees,

 

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discounts and selling commissions or similar fees or arrangements allocable to the sale of the Registrable Securities.

 

Section 2.09                             Indemnification.

 

(a)                                 By the Partnership.  In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Partnership will indemnify and hold harmless each Selling Holder thereunder, its directors, officers, employees and agents and each Person, if any, who controls such Selling Holder within the meaning of the Securities Act and the Exchange Act, and its directors, officers, employees or agents (collectively, the “Selling Holder Indemnified Persons”), against any losses, claims, damages, expenses or liabilities (including reasonable attorneys’ fees and expenses) (collectively, “Losses”), joint or several, to which such Selling Holder Indemnified Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact (in the case of any prospectus or prospectus supplement, in the light of the circumstances under which such statement is made) contained in the Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, preliminary prospectus supplement, free writing prospectus or final prospectus or prospectus supplement contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus or prospectus supplement, in the light of the circumstances under which they were made) not misleading, and will reimburse each such Selling Holder Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss or actions or proceedings; provided, however, that the Partnership will not be liable in any such case if and to the extent that any such Loss arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Selling Holder Indemnified Person in writing specifically for use in the Registration Statement or such other registration statement contemplated by this Agreement, any preliminary prospectus, preliminary prospectus supplement, free writing prospectus, or final prospectus or prospectus supplement contained therein, or any amendment or supplement thereof.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Selling Holder Indemnified Person, and shall survive the transfer of such securities by such Selling Holder.

 

(b)                                 By Each Selling Holder.  Each Selling Holder agrees severally and not jointly to indemnify and hold harmless the Partnership, the General Partner, its directors, officers, employees and agents and each Person, if any, who controls the Partnership within the meaning of the Securities Act or of the Exchange Act, and its directors, officers, employees and agents, to the same extent as the foregoing indemnity from the Partnership to the Selling Holders, but only with respect to information regarding such Selling Holder furnished in writing by or on behalf of such Selling Holder expressly for inclusion in the Registration Statement or any other registration statement contemplated by this Agreement, any preliminary prospectus, preliminary prospectus supplement, free writing prospectus or final prospectus or prospectus supplement contained therein, or any amendment or supplement thereof; provided, however, that the liability of each Selling Holder shall not be greater in amount than the dollar amount of the proceeds (net

 

13

 

of any Selling Expenses) received by such Selling Holder from the sale of the Registrable Securities giving rise to such indemnification.

 

(c)                                  Notice.  Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability that it may have to any indemnified party other than under this Section 2.09.  In any action brought against any indemnified party, it shall notify the indemnifying party of the commencement thereof.  The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified party and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 2.09 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation and of liaison with counsel so selected; provided, however, that, (i) if the indemnifying party has failed to assume the defense or employ counsel reasonably acceptable to the indemnified party or (ii) if the defendants in any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have concluded that there may be reasonable defenses available to the indemnified party that are different from or additional to those available to the indemnifying party, or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, then the indemnified party shall have the right to select a separate counsel and to assume such legal defense and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred.  Notwithstanding any other provision of this Agreement, no indemnifying party shall settle any action brought against any indemnified party with respect to which such indemnified party is entitled to indemnification hereunder without the consent of the indemnified party, unless the settlement thereof imposes no liability or obligation on, and includes a complete and unconditional release from all liability of, the indemnified party.

 

(d)                                 Contribution.  If the indemnification provided for in this Section 2.09 is held by a court or government agency of competent jurisdiction to be unavailable to any indemnified party or is insufficient to hold them harmless in respect of any Losses, then each such indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of such indemnified party on the other in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations; provided, however, that in no event shall such Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable Securities giving rise to such indemnification.  The relative fault of the indemnifying party on the one hand and the indemnified party on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact has been made by, or relates to, information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to

 

14

 

correct or prevent such statement or omission.  The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were to be determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to herein.  The amount paid by an indemnified party as a result of the Losses referred to in the first sentence of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by such indemnified party in connection with investigating or defending any Loss that is the subject of this paragraph.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who is not guilty of such fraudulent misrepresentation.

 

(e)                                  Other Indemnification.  The provisions of this Section 2.09 shall be in addition to any other rights to indemnification or contribution that an indemnified party may have pursuant to law, equity, contract or otherwise.

 

Section 2.10                             Rule 144 Reporting.  With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Registrable Securities to the public without registration, the Partnership agrees to:

 

(a)                                 use its commercially reasonable efforts to make and keep public information regarding the Partnership available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times from and after the date hereof;

 

(b)                                 use its commercially reasonable efforts to file with the Commission in a timely manner all reports and other documents required of the Partnership under the Securities Act and the Exchange Act at all times from and after the date hereof; and

 

(c)                                  so long as a Holder owns any Registrable Securities, furnish (i) to the extent accurate, forthwith upon request, a written statement of the Partnership that it has complied with the reporting requirements of Rule 144 under the Securities Act, and (ii) unless otherwise available via EDGAR, to such Holder forthwith upon request a copy of the most recent annual or quarterly report of the Partnership, and such other reports and documents so filed as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sell any such securities without registration.

 

Solely for purposes of this Section 2.10, the term “Registrable Securities” shall be read without regard to the limitation set forth in Section 1.02(e).

 

Section 2.11                             Transfer or Assignment of Registration Rights.  The rights to cause the Partnership to register Registrable Securities granted to the Purchasers by the Partnership under this Article II may be transferred or assigned by any Purchaser to one or more transferees or assignees of Registrable Securities; provided, however, that (a) unless the transferee or assignee is an Affiliate of, and after such transfer or assignment continues to be an Affiliate of, such Purchaser, the amount of Registrable Securities transferred or assigned to such transferee or assignee shall represent at least $15 million of Registrable Securities (based on the Common Unit Price), (b) the Partnership is given written notice prior to any said transfer or assignment, stating the name and address of each such transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned, (c) each such

 

15

 

transferee or assignee assumes in writing responsibility for its portion of the obligations of such Purchaser under this Agreement and (d) the transferor or assignor is not relieved of any obligations or liabilities hereunder arising out of events occurring prior to such transfer.

 

Section 2.12                             Limitation on Subsequent Registration Rights.  From and after the date hereof, the Partnership shall not, without the prior written consent of the Holders of a majority of the Registrable Securities, enter into any agreement with any current or future holder of any securities of the Partnership that would allow such current or future holder to require the Partnership to include securities in any registration statement filed by the Partnership on a basis other than pari passu with, or expressly subordinate to the rights of, the Holders of Registrable Securities hereunder.

 

ARTICLE III
 MISCELLANEOUS

 

Section 3.01                             Communications.  All notices and other communications provided for or permitted hereunder shall be made in writing by facsimile, electronic mail, courier service or personal delivery:

 

(a)                                 if to a Purchaser, to the respective address listed on Schedule A hereof;

 

(b)                                 if to a transferee of a Purchaser, to such Holder at the address provided pursuant to Section 2.11 above; and

 

(c)                                  if to the Partnership:

 

Antero Midstream Partners LP
 1615 Wynkoop Street

Denver, Colorado 80202

Attention:  Glen C. Warren, Jr.
 Facsimile: (303) 357-7315)

 

with a copy to:

 

Vinson & Elkins L.L.P.

1001 Fannin Street

Suite 2500

Houston, Texas 77002

Attention: W. Matthew Strock
 Facsimile: (713) 615-5650

 

All such notices and communications shall be deemed to have been received at the time delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or sent via Internet electronic mail; and when actually received, if sent by courier service or any other means.

 

16

 

Section 3.02                             Successor and Assigns.  This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties, including subsequent Holders of Registrable Securities to the extent permitted herein.

 

Section 3.03                             Assignment of Rights.  All or any portion of the rights and obligations of any Purchaser under this Agreement may be transferred or assigned by such Purchaser only in accordance with Section 2.11 hereof.

 

Section 3.04                             Recapitalization, Exchanges, Etc. Affecting the Units.  The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all units of the Partnership or any successor or assign of the Partnership (whether by merger, consolidation, sale of assets or otherwise) that may be issued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for combinations, unit splits, recapitalizations, pro rata distributions of units and the like occurring after the date of this Agreement.

 

Section 3.05                             Aggregation of Registrable Securities .  All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for the purpose of determining the availability of any rights and applicability of any obligations under this Agreement.

 

Section 3.06                             Specific Performance.  Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right to an injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief.  The existence of this right will not preclude any such Person from pursuing any other rights and remedies at law or in equity that such Person may have.

 

Section 3.07                             Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

Section 3.08                             Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

Section 3.09                             Governing Law.  THIS AGREEMENT WILL BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.

 

17

 

Section 3.10                             Severability of Provisions.  Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

 

Section 3.11                             Entire Agreement.  This Agreement, the Common Unit Purchase Agreement and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, warranties, representations or undertakings, other than those set forth or referred to herein with respect to the rights granted by the Partnership set forth herein.  This Agreement and the Common Unit Purchase Agreement supersede all prior agreements and understandings between the parties with respect to such subject matter.

 

Section 3.12                             Amendment.  This Agreement may be amended only by means of a written amendment signed by the Partnership and the Holders of a majority of the then outstanding Registrable Securities; provided, however, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without the consent of such Holder.

 

Section 3.13                             No Presumption.  If any claim is made by a party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden of proof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party or its counsel.

 

Section 3.14                             Obligations Limited to Parties to Agreement.  Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Purchasers (and their permitted transferees and assignees) and the Partnership shall have any obligation hereunder and that, notwithstanding that one or more of the Purchasers may be a corporation, partnership or limited liability company, no recourse under this Agreement or under any documents or instruments delivered in connection herewith or therewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Purchasers or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the Purchasers or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for any obligations of the Purchasers under this Agreement or any documents or instruments delivered in connection herewith or therewith or for any claim based on, in respect of or by reason of such obligation or its creation, except in each case for any transferee or assignee of a Purchaser hereunder..

 

Section 3.15                             Independent Nature of Purchaser’s Obligations.  The obligations of each Purchaser (and their permitted transferees and assignees) under this Agreement are several and

 

18

 

not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement. Nothing contained herein, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose..

 

Section 3.16                             Interpretation.  Article and Section references to this Agreement, unless otherwise specified.  All references to instruments, documents, contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended, supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including but not limited to.” Whenever any determination, consent or approval is to be made or given by a Holder under this Agreement, such action shall be in such Holder’s sole discretion unless otherwise specified.

 

[Signature pages to follow]

 

19

 

IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.

 

	
 
    	
ANTERO   MIDSTREAM PARTNERS LP
    
	
 
    	
 
    
	
 
    	
By:   
    	
ANTERO   RESOURCES MIDSTREAM MANAGEMENT LLC
    
	
 
    	
 
    	
(its   General Partner)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to Registration Rights Agreement

 

 

	
 
    	
[PURCHASER]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

Signature Page to Registration Rights Agreement

 

 

Schedule A

 

Purchaser Name; Notice and Contact Information; Opt-Out Election

 

	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Opt-Out Election per
    
	
 
    	
 
    	
Notice and Contact 
    	
 
    	
 
    	
 
    	
Section 2.02(a)
    
	
 
    	
 
    	
Information
    	
 
    	
Tax I.D. Number
    	
 
    	
[Please indicate “Yes-
    
	
Purchaser Name
    	
 
    	
[Please provide address,
    	
 
    	
[Please provide for
    	
 
    	
Opt Out” or “No-Not
    
	
[Please list each fund]
    	
 
    	
phone and email]
    	
 
    	
each fund]
    	
 
    	
Opting Out”]
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

Schedule A to Registration Rights Agreement

 

 

Exhibit B — Form of Opinion of Vinson & Elkins L.L.P.

 

Based on the foregoing, and subject to the qualifications and limitations set forth herein, we are of the opinion that:

 

i.                  Each of the Partnership Entities has been duly formed and is validly existing as a limited partnership or limited liability company, as applicable, in good standing under the laws of the State of Delaware, with all limited partnership or limited liability company, as the case may be, power and authority necessary to (A) conduct its business as described in the SEC Reports, and (B) enter into and perform its obligations under this Agreement, the Contribution Agreement and each of the other Operative Documents to which it is a party;

 

ii.               Each of the Partnership Entities is duly qualified to do business as a foreign limited liability company or limited partnership, as applicable, in good standing in all jurisdictions listed on Annex A hereto;

 

iii.            The General Partner is the sole general partner of the Partnership and owns a noneconomic general partner interest in the Partnership; the General Partner Interest has been duly authorized and validly issued in accordance with the Partnership Agreement, is fully paid (to the extent required under the Partnership Agreement) and conforms in all material respects to the description thereof contained in the SEC Reports; and the General Partner Interest is owned free and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the General Partner as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Partnership Agreement and (B) Liens created by or arising under the Delaware LP Act;

 

iv.           As of the date hereof, immediately after the offer, issuance and sale of the Purchased Units to the Purchasers in accordance with this Agreement and after giving effect to the Contribution and the other transactions contemplated by the Contribution Agreement, the issued and outstanding limited partner interests in the Partnership (other than limited partner interests issued under the Partnership’s Long-Term Incentive Plan) consist of (1) the 116,870,335 Sponsor Units (consisting of 40,929,378 Common Units and 75,940,957 Subordinated Units) held by Antero, (2) 58,922,054 Common Units held by investors other than Antero (including the 12,898,000 Purchased Units issued and sold pursuant to the Purchasers pursuant to this Agreement), and (3) the Incentive Distribution Rights issued to the General Partner; and such limited partner interests conform in all material respects to the descriptions thereof contained in the SEC Reports; the equity holders of the Partnership have no preemptive rights with respect to the Common Units under federal law, the Delaware LP Act or any other instrument to which the Partnership is a party; and, except as set forth in the SEC Reports, no options, warrants or preemptive or other rights to purchase, agreements or other obligations to issue, or

 

Exhibit B to Common Unit Purchase Agreement

 

 

rights to convert any obligations into or exchange any securities of or ownership interests in the Partnership are outstanding;

 

v.              The General Partner owns all of the Incentive Distribution Rights, and Antero owns all of the Sponsor Units; the Incentive Distribution Rights and the Sponsor Units, and the limited partner interests represented thereby, have been duly authorized and validly issued in accordance with the Partnership Agreement and are fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act); and the Incentive Distribution Rights and the Sponsor Units are owned free and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the General Partner or Antero, as applicable, as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Partnership Agreement, (B) Liens created by or arising under the Delaware LP Act and (C) pledges of equity interests in connection with Antero’s revolving credit facility;

 

vi.           The Purchased Units to be issued and sold by the Partnership, and the limited partner interests represented thereby, have been duly authorized for issuance and sale to each Purchaser in accordance with this Agreement and the Partnership Agreement and, when issued and delivered to the Purchasers against payment therefor in accordance with the terms of this Agreement, will be validly issued, fully paid (to the extent required under the Partnership Agreement) and nonassessable (except as such nonassessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware LP Act);

 

vii.        The Partnership is the sole member of the Operating Company and owns 100% of the limited liability company interests in the Operating Company; such limited liability company interests have been duly authorized and validly issued in accordance with the Operating Company LLC Agreement and are fully paid (to the extent required under the Operating Company LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and such limited liability company interests are owned free and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the Partnership as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Operating Company LLC Agreement, (B) Liens created by or arising under the Delaware LLC Act and (C) pledges of equity interests in connection with the Revolving Credit Facility;

 

viii.     The Partnership is the sole member of Antero Treatment and owns 100% of the limited liability company interests in Antero Treatment; such limited liability company interests have been duly authorized and validly issued in accordance with the Antero Treatment LLC Agreement and are fully paid (to the extent

 

 

required under the Antero Treatment LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and such limited liability company interests are owned free and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the Partnership as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Antero Treatment LLC Agreement, (B) Liens created by or arising under the Delaware LLC Act and (C) pledges of equity interests in connection with the Revolving Credit Facility;

 

ix.           After giving effect to the Contribution, the Partnership will be the sole member of Antero Water and will own 100% of the limited liability company interests in Antero Water; such limited liability company interests have been duly authorized and validly issued in accordance with the Antero Water LLC Agreement and are fully paid (to the extent required under the Antero Water LLC Agreement) and nonassessable (except as such nonassessability may be affected by Sections 18-607 and 18-804 of the Delaware LLC Act); and, after giving effect to the Contribution, such limited liability company interests will be owned by the Partnership free and clear of any Liens (1) in respect of which a financing statement under the Uniform Commercial Code of the State of Delaware naming the Partnership as debtor is on file in the office of the Delaware Secretary of State or (2) otherwise known to us, without independent investigation, other than (A) restrictions on transferability contained in the Antero Water LLC Agreement, (B) Liens created by or arising under the Delaware LLC Act and (C) pledges of equity interests in connection with the Revolving Credit Facility;

 

x.              Each of the Contribution Agreement, this Agreement and the Registration Rights Agreement has been duly authorized, executed and delivered by the Partnership Entities party thereto; the Contribution Agreement and, assuming the due authorization, execution and delivery by the Purchasers, the Registration Rights Agreement constitute valid and legally binding agreements of the Partnership Entities party thereto, enforceable against the Partnership Entities party thereto in accordance with their terms, subject to the Enforceability Exceptions;

 

xi.           The Contribution Agreement is in a form legally sufficient as between the parties thereto to transfer or convey to the Partnership all of Antero’s right, title and interest in and to the Water Assets and the limited liability company interests in Antero Water, subject to the conditions, reservations, encumbrances and limitations described therein;

 

xii.        The offering, issuance and sale of the Purchased Units, the execution, delivery and performance of the Contribution Agreement, this Agreement and the other Operative Documents by the Partnership Entities party thereto, the consummation of the Contribution or any other transactions contemplated by this Agreement or the other Operative Documents and the application of the proceeds from the sale of the Purchased Units, in each case, do not and will not result in a breach or

 

 

violation of any of the terms and provisions of, or constitute a default under, or result in the imposition of any Lien upon any property or assets of the Partnership Entities pursuant to (1) the Organizational Documents of any of the Partnership Entities, (2) the Delaware LLC Act, the Delaware LP Act or applicable U.S. federal law or any order, judgment, decree or injunction known to us of any U.S. federal or Delaware court or governmental agency or body having jurisdiction over the Partnership Entities or any of their properties in a proceeding in which any of them or their respective properties is a party or (3) any agreement or instrument filed as an exhibit to the SEC Reports; except in the case of clauses (2) and (3) for such breaches, violations, defaults and Liens as would not, individually or in the aggregate, have a Material Adverse Effect, it being understood with respect to clause (2) above, we express no opinion as to the application of any state securities or Blue Sky laws or federal or state antifraud laws, rules or regulations;

 

xiii.     No consent, approval, authorization or order of, or filing with, any person (including any governmental agency or body or any court) is required to be obtained or made by any of the Partnership Entities in connection with the Contribution or the execution, delivery and performance by the Partnership Entities of the Contribution Agreement, this Agreement and the other Operative Documents, except (A) for the approvals required by the Commission in connection with the Partnership’s obligations under the Registration Rights Agreement, (B) such as have been obtained or made, or (C) such as may be required under federal or state securities laws or by the FINRA rules, in each case except where the failure to obtain such consent, approval, authorization or order of, or filing with, would not reasonably be expected to materially impair the ability of the Partnership Parties to consummate the Contribution or the transactions contemplated by the Contribution Agreement, this Agreement or the other Operative Documents;

 

xiv.    Assuming the accuracy of the representations and warranties of each of the Purchasers and the Partnership contained in this Agreement, the sale and issuance of the Purchased Units by the Partnership to the Purchasers solely in the manner contemplated by this Agreement are exempt from the registration requirements of the Securities Act; provided, that, we will express no opinion as to any subsequent sale or resale; and

 

xv.       None of the Partnership Entities is now and, after giving effect to the issuance and sale of the Purchased Units by the Partnership and the application of the proceeds therefrom, none of the Partnership Entities will be required to register as an “investment company” within the meaning of the Investment Company Act.EXHIBIT 4.1

 

EXECUTION COPY

 

INDENTURE

 

 

FEBRUARY 10, 2009

 

 

Among

 

Novartis Capital Corporation

as Issuer

 

Novartis Securities Investment Ltd.

as Issuer

 

Novartis Finance S.A.

as Issuer

 

Novartis AG

as Guarantor

 

and

 

HSBC Bank USA, National Association

as Trustee

 

 

Allen & Overy LLP

 

 

CONTENTS

 

	
Clause
    	
 
    	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    	
 
    
	
1.
    	
Definitions and   Incorporation by Reference
    	
2
    
	
 
    	
1.1
    	
Definitions
    	
2
    
	
 
    	
1.2
    	
Incorporation by Reference   of Trust Indenture Act
    	
5
    
	
 
    	
1.3
    	
Rules of Construction
    	
5
    
	
2.
    	
The Securities
    	
5
    
	
 
    	
2.1
    	
Form of Securities
    	
5
    
	
 
    	
2.2
    	
Execution, Authentication,   Delivery and Dating
    	
6
    
	
 
    	
2.3
    	
Amount Unlimited; Issuable   in Series
    	
7
    
	
 
    	
2.4
    	
Denominations
    	
9
    
	
 
    	
2.5
    	
Registrar and Paying Agent;   Agents Generally
    	
9
    
	
 
    	
2.6
    	
Paying Agent to Hold Money   in Trust
    	
10
    
	
 
    	
2.7
    	
Transfer and Exchange
    	
11
    
	
 
    	
2.8
    	
Replacement Securities
    	
13
    
	
 
    	
2.9
    	
Outstanding Securities
    	
14
    
	
 
    	
2.10
    	
Temporary Securities
    	
14
    
	
 
    	
2.11
    	
Cancellation
    	
15
    
	
 
    	
2.12
    	
Persons Deemed Owners
    	
15
    
	
 
    	
2.13
    	
Payment of Interest;   Defaulted Interest
    	
15
    
	
 
    	
2.14
    	
Computation of Interest
    	
16
    
	
 
    	
2.15
    	
Series May Include   Tranches
    	
16
    
	
 
    	
2.16
    	
CUSIP and CINS Numbers
    	
16
    
	
3.
    	
Redemption
    	
16
    
	
 
    	
3.1
    	
Applicability of Article
    	
16
    
	
 
    	
3.2
    	
Notice of Redemption;   Partial Redemptions
    	
17
    
	
 
    	
3.3
    	
Payment of Securities Called   for Redemption
    	
18
    
	
 
    	
3.4
    	
Exclusion of Certain   Securities from Eligibility for Selection for Redemption
    	
19
    
	
 
    	
3.5
    	
Mandatory and Optional   Sinking Funds
    	
19
    
	
4.
    	
Covenants
    	
21
    
	
 
    	
4.1
    	
Payment of Securities
    	
21
    
	
 
    	
4.2
    	
Maintenance of Office or   Agency
    	
22
    
	
 
    	
4.3
    	
Certificate to Trustee
    	
22
    
	
 
    	
4.4
    	
Limitation on Liens
    	
22
    
	
 
    	
4.5
    	
Payment of Additional   Amounts
    	
23
    
	
 
    	
4.6
    	
Waiver of Certain Covenants
    	
24
    
	
 
    	
4.7
    	
Calculation of Original   Issue Discount
    	
25
    
	
 
    	
4.8
    	
Reports by the Company and   the Guarantor
    	
25
    
	
5.
    	
Consolidation, Merger, Sale,   Lease or Conveyance
    	
26
    
	
 
    	
5.1
    	
When the Company   May Merge, Etc.
    	
26
    
	
 
    	
5.2
    	
Successor Company   Substituted
    	
26
    
	
 
    	
5.3
    	
When the Guarantor   May Merge, Etc.
    	
27
    
	
 
    	
5.4
    	
Successor Guarantor   Substituted
    	
27
    
	
6.
    	
The Guarantee
    	
28
    
	
 
    	
6.1
    	
Guarantee
    	
28
    
	
7.
    	
Default and Remedies
    	
29
    
	
 
    	
7.1
    	
Events of Default
    	
29
    

 

 

	
 
    	
7.2
    	
Acceleration
    	
31
    
	
 
    	
7.3
    	
Other Remedies
    	
33
    
	
 
    	
7.4
    	
Waiver of Past Defaults
    	
33
    
	
 
    	
7.5
    	
Control by Majority
    	
33
    
	
 
    	
7.6
    	
Limitation on Suits
    	
33
    
	
 
    	
7.7
    	
Rights of Holder to Receive   Payment
    	
34
    
	
 
    	
7.8
    	
Collection Suit by Trustee
    	
34
    
	
 
    	
7.9
    	
Trustee May File Proofs   of Claim
    	
34
    
	
 
    	
7.10
    	
Application of Proceeds
    	
35
    
	
 
    	
7.11
    	
Restoration of Rights and   Remedies
    	
35
    
	
 
    	
7.12
    	
Undertaking for Costs
    	
36
    
	
 
    	
7.13
    	
Rights and Remedies   Cumulative
    	
36
    
	
 
    	
7.14
    	
Delay or Omission Not Waiver
    	
36
    
	
8.
    	
Trustee
    	
36
    
	
 
    	
8.1
    	
General
    	
36
    
	
 
    	
8.2
    	
Certain Rights of Trustee
    	
37
    
	
 
    	
8.3
    	
Individual Rights of Trustee
    	
38
    
	
 
    	
8.4
    	
Trustee’s Disclaimer
    	
38
    
	
 
    	
8.5
    	
Notice of Default
    	
39
    
	
 
    	
8.6
    	
Reports by Trustee to   Holders
    	
39
    
	
 
    	
8.7
    	
Compensation and Indemnity
    	
39
    
	
 
    	
8.8
    	
Replacement of Trustee
    	
40
    
	
 
    	
8.9
    	
Successor Trustee by   Merger, Etc.
    	
41
    
	
 
    	
8.10
    	
Eligibility
    	
41
    
	
 
    	
8.11
    	
Money Held in Trust
    	
41
    
	
 
    	
8.12
    	
Conflicting Interests
    	
41
    
	
 
    	
8.13
    	
Communication by Holders   with Other Holders
    	
41
    
	
9.
    	
Discharge of Indenture;   Defeasance
    	
42
    
	
 
    	
9.1
    	
Discharge; Defeasance within   One Year of Payment
    	
42
    
	
 
    	
9.2
    	
Defeasance
    	
42
    
	
 
    	
9.3
    	
Covenant Defeasance
    	
43
    
	
 
    	
9.4
    	
Application of Trust Money
    	
44
    
	
 
    	
9.5
    	
Repayment to Company and   Guarantor
    	
45
    
	
10.
    	
Amendments, Supplements and   Waivers
    	
45
    
	
 
    	
10.1
    	
Without Consent of Holders
    	
45
    
	
 
    	
10.2
    	
With Consent of Holders
    	
46
    
	
 
    	
10.3
    	
Revocation and Effect of   Consent
    	
47
    
	
 
    	
10.4
    	
Notation on or Exchange of   Securities
    	
48
    
	
 
    	
10.5
    	
Trustee to Sign   Amendments, Etc.
    	
48
    
	
 
    	
10.6
    	
Conformity with Trust   Indenture Act
    	
48
    
	
11.
    	
Miscellaneous
    	
48
    
	
 
    	
11.1
    	
Trust Indenture Act of 1939
    	
48
    
	
 
    	
11.2
    	
Notices
    	
48
    
	
 
    	
11.3
    	
Certificate and Opinion as   to Conditions Precedent
    	
50
    
	
 
    	
11.4
    	
Statements Required in   Certificate or Opinion
    	
50
    
	
 
    	
11.5
    	
Evidence of Ownership
    	
51
    
	
 
    	
11.6
    	
Rules by Trustee,   Paying Agent or Registrar
    	
51
    
	
 
    	
11.7
    	
Payment Date other than a Business   Day
    	
51
    
	
 
    	
11.8
    	
Governing Law; Waiver of   Jury Trial
    	
51
    

 

 

	
 
    	
11.9
    	
No Adverse Interpretation of   Other Agreements
    	
51
    
	
 
    	
11.10
    	
Successors
    	
51
    
	
 
    	
11.11
    	
Duplicate Originals
    	
51
    
	
 
    	
11.12
    	
Separability
    	
52
    
	
 
    	
11.13
    	
Table of Contents, Headings, Etc.
    	
52
    
	
 
    	
11.14
    	
Incorporators, Stockholders,   Officers and Directors of Company Exempt from Individual Liability
    	
52
    
	
 
    	
11.15
    	
Judgment Currency
    	
52
    

 

 

CROSS-REFERENCE TABLE

 

	
Trust Indenture Act Section
    	
 
    	
Indenture Section
    
	
 
    	
 
    	
 
    
	
310(a)(1)
    	
 
    	
8.10
    
	
(a)(2)
    	
 
    	
8.10
    
	
(a)(3)
    	
 
    	
Not Applicable
    
	
(a)(4)
    	
 
    	
Not Applicable
    
	
(a)(5)
    	
 
    	
8.10
    
	
(b)
    	
 
    	
8.3, 8.12
    
	
(c)
    	
 
    	
Not Applicable
    
	
311(a)
    	
 
    	
8.3
    
	
(b)
    	
 
    	
8.3
    
	
(c)
    	
 
    	
Not Applicable
    
	
312(a)
    	
 
    	
2.5
    
	
(b)
    	
 
    	
8.13
    
	
(c)
    	
 
    	
8.13
    
	
313(a)
    	
 
    	
8.6
    
	
(b)(1)
    	
 
    	
Not Applicable
    
	
(b)(2)
    	
 
    	
8.6
    
	
(c)
    	
 
    	
8.6
    
	
(d)
    	
 
    	
8.6
    
	
314(a)(1)
    	
 
    	
4.8
    
	
(a)(2)
    	
 
    	
4.8
    
	
(a)(3)
    	
 
    	
4.8
    
	
(a)(4)
    	
 
    	
4.3
    
	
(b)
    	
 
    	
Not Applicable
    
	
(c)(1)
    	
 
    	
11.3
    
	
(c)(2)
    	
 
    	
11.3
    
	
(c)(3)
    	
 
    	
Not Applicable
    
	
(d)
    	
 
    	
Not Applicable
    
	
(e)
    	
 
    	
11.4
    
	
315(a)(1)
    	
 
    	
8.1
    
	
(a)(2)
    	
 
    	
8.2
    
	
(b)
    	
 
    	
8.5
    
	
(c)
    	
 
    	
8.1
    
	
(d)
    	
 
    	
8.1
    
	
(e)
    	
 
    	
7.2
    
	
316(a)(1)(A)
    	
 
    	
7.5
    
	
(a)(1)(B)
    	
 
    	
7.4
    
	
(a)(2)
    	
 
    	
Not Applicable
    
	
(a)(last sentence)
    	
 
    	
2.9
    
	
(b)
    	
 
    	
7.7
    
	
(c)
    	
 
    	
Not Applicable
    
	
317(a)(1)
    	
 
    	
7.8
    
	
(a)(2)
    	
 
    	
7.9
    
	
(b)
    	
 
    	
2.6
    
	
318(a)
    	
 
    	
1.2
    

 

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture.

 

Section 318(c) of the Trust Indenture Act provides that the provisions of Sections 310 to and including 317 of the Trust Indenture Act are a part of and govern every qualified indenture, whether or not physically contained therein.

 

 

INDENTURE dated as of February 10, 2009

 

AMONG:

 

(1)                                 Novartis Capital Corporation, a corporation organized under the laws of the State of Delaware;

 

(2)                                 Novartis Securities Investment Ltd.,  a limited liability company organized under the laws of Bermuda;

 

(3)                                 Novartis Finance S.A.,  a public limited liability company (société anonyme) incorporated under the laws of the Grand-Duchy of Luxembourg, having its registered office at 20, rue Eugène Ruppert, L-2453 Luxembourg, and registered with the Luxembourg trade and companies register under number B. 141.096;

 

(4)                                 Novartis AG, a stock corporation (Aktiengesellschaft) incorporated under the laws of Switzerland, as guarantor (the Guarantor); and

 

(5)                                 HSBC Bank USA, National Association, a national banking association duly organized and existing under the laws of the United States of America, as trustee (the Trustee).

 

RECITALS:

 

WHEREAS:

 

(A)                               Each of Novartis Capital Corporation, Novartis Securities Investment Ltd. and Novartis Finance S.A. has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its debt securities (the Securities), which are to be issued in one or more series up to such principal amount or amounts as may from time to time be authorized in accordance with the terms of this Indenture;

 

(B)                               The Guarantor has duly authorized the execution and delivery of this Indenture to provide for its guarantee of the Securities; and

 

(C)                               All things necessary to make this Indenture a valid agreement of Novartis Capital Corporation, Novartis Securities Investment Ltd., Novartis Finance S.A. and the Guarantor, in accordance with its terms, have been done;

 

(D)                               For the purpose of this Indenture, the Company means either Novartis Capital Corporation, Novartis Securities Investment Ltd. or Novartis Finance S.A., as the case may be, in its capacity as issuer of the Securities.

 

NOW, THEREFORE:

 

In consideration of the premises and the purchase of the Securities by the holders thereof, the parties hereto mutually covenant and agree for the equal and proportionate benefit of the respective holders from time to time of the Securities or of any and all series thereof as follows:

 

1

 

1.                                      DEFINITIONS AND INCORPORATION BY REFERENCE

 

1.1                               Definitions

 

Additional Amounts has the meaning specified in Section 4.5.

 

Agent means any Registrar, Paying Agent, transfer agent or Authenticating Agent.

 

Authenticating Agent has the meaning specified in Section 2.2.

 

Board Resolution means one or more resolutions of the board of directors of the Company, the Guarantor or any authorized committee of the Company or the Guarantor, certified by the secretary or an assistant secretary of the Company or the Guarantor, as the case may be, to have been duly adopted and to be in full force and effect on the date of certification, and delivered to the Trustee.

 

Business Day means, with respect to any Security, unless otherwise specified, any day that is not a Saturday, a Sunday or a day on which banking institutions are authorized or required by law, regulation or executive order to be closed, in the City of New York, in Luxembourg, Luxembourg, in Zurich, Switzerland or the city (or in any of the cities, if more than one) in which amounts are payable, as specified in the form of such Security.

 

Commission 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 Indenture 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.

 

Company means each party named as such in the recitals of this Indenture until a successor replaces such party pursuant to Article 5 of this Indenture, and thereafter means the successor.

 

Corporate Trust Office means the principal office of the Trustee in the Borough of Manhattan, The City of New York, New York at which at any particular time its corporate trust business shall be administered which office as of the date hereof is located at 452 Fifth Avenue, New York, New York 10018, Attention: Corporate Trust and Loan Agency.

 

Default means any event that is, or after notice or passage of time or both would be, an Event of Default.

 

Depositary means, with respect to the Securities of any series issuable or issued in the form of one or more Global Securities, the Person designated as Depositary by the Company pursuant to Sections 2.3 and 2.5 until a successor Depositary shall have become such pursuant to the applicable provisions of this Indenture, and thereafter Depositary shall mean or include each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, Depositary as used with respect to the Securities of any such series shall mean the Depositary with respect to the Global Securities of that series.

 

Dollar and $ mean a U.S. Dollar or other equivalent unit in such coin or currency of the United States of America as at the time shall be the legal tender for the payment of public and private debts.

 

Event of Default has the meaning specified in Section 7.1.

 

2

 

Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder by the Commission.

 

Global Security means a Security evidencing all or a part of a series of Securities, issued to the Depositary for such series in accordance with Section 2.2, and bearing the legend prescribed in Section 2.2.

 

Guarantee means the guarantee of the Guarantor as endorsed on each Security authenticated and delivered pursuant to this Indenture and shall include the guarantee of the Guarantor set forth in Section 6.1 of this Indenture and shall include all other obligations and covenants of the Guarantor contained in this Indenture and any Securities.

 

Guarantor means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to Article 5 of this Indenture and thereafter means the successor.

 

Holder means the registered holder of any Security.

 

Indebtedness means any indebtedness for monies borrowed or raised including, without limitation, any debenture, note, bond or like security.

 

Indenture means this Indenture as originally executed or as it may be amended or supplemented from time to time by one or more indentures supplemental to this Indenture entered into pursuant to the applicable provisions of this Indenture and shall include the forms and terms of the Securities of each series established as contemplated pursuant to Sections 2.1 and 2.3.

 

Liens has the meaning specified in Section 4.4.

 

Luxembourg means the Grand-Duchy of Luxembourg.

 

Officer means, with respect to the Company and the Guarantor, any director or officer thereof, including the Company Secretary.

 

Officer’s Certificate means a certificate executed by any Officer of the Company or of the Guarantor, as the case may be, complying with Section 11.4 and delivered to the Trustee.  Each such certificate shall comply with Section 314 of the Trust Indenture Act and include (except as otherwise expressly provided in this Indenture) the statements provided in Section 11.4.

 

Opinion of Counsel means a written opinion signed by legal counsel, who may be an employee of or counsel to the Company or to the Guarantor, or to both, satisfactory to the Trustee and complying with Section 11.4.  Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the statements provided in Section 11.4, if and to the extent required thereby.

 

Original Issue Discount Security means any Security that 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 7.2.

 

Paying Agent has the meaning specified in Section 2.5.

 

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, if any, thereon, the stated

 

3

 

maturity or maturities thereof and the redemption provisions, if any, with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities.

 

Person means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

Principal of a Security means the principal amount of, and, unless the context indicates otherwise, includes any premium payable on, such Security.

 

Record Date has the meaning specified in Section 2.13.

 

Registrar has the meaning specified in Section 2.5.

 

Relevant Indebtedness means any loan or other indebtedness in the form of, or represented or evidenced by, bonds, debentures, notes or other securities that are or are capable of being quoted, listed or traded on any stock exchange or in any securities market or over-the-counter market.

 

Relevant Taxing Jurisdiction has the meaning specified in Section 4.5.

 

Responsible Officer, when used with respect to the Trustee, means any vice president, any assistant vice president, any assistant secretary, any assistant treasurer, any trust officer, any assistant trust officer or any other officer of the Trustee, in each case, located in the Corporate Trust and Loan Agency office of the Trustee, and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

 

Securities means any of the securities, as defined in the first paragraph of the recitals hereof, that are authenticated and delivered under this Indenture and, unless the context indicates otherwise, shall include any coupon appertaining thereto.

 

Security Register has the meaning specified in Section 2.5.

 

Subsidiary means an entity a majority of the interests or a majority of the outstanding voting stock of which is owned, directly or indirectly, by the Guarantor or by one or more other Subsidiaries of the Guarantor.  For the purposes of this definition, Voting Stock means stock having 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.

 

Trust Indenture Act means the Trust Indenture Act of 1939, as it may be amended from time to time.

 

Trustee means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of Article 8 and thereafter means such successor.

 

U.S. Government Obligations means securities that are (a) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (b) obligations of an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, and shall also include a depositary receipt issued by a bank or trust company as custodian with respect to any such U.S. Government Obligation or a specific payment of interest on or principal of any such U.S. Government Obligation

 

4

 

held by such custodian for the account of the holder of a depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the U.S. Government Obligation or the specific payment of interest on or principal of the U.S. Government Obligation evidenced by such depositary receipt.

 

Yield to Maturity means, as the context may require, the yield to maturity (a) on a series of Securities or (b) if the Securities of a series are issuable from time to time, on a Security of such series, calculated at the time of issuance of such series in the case of clause (a) or at the time of issuance of such Security of such series in the case of clause (b), or, if applicable, at the most recent redetermination of interest on such series or on such Security, and calculated in accordance with the constant interest method or such other accepted financial practice as is specified in the terms of such Security.

 

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.  All terms used in this Indenture that are defined by the Trust Indenture Act, defined by reference in the Trust Indenture Act to another statute or defined by a rule of the Commission and not otherwise defined herein have the meanings assigned to them therein.  If any provision of this Indenture limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control.

 

1.3                               Rules of Construction

 

Unless the context otherwise requires:

 

(a)                                 an accounting term not otherwise defined has the meaning assigned to it in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board or such other generally accepted accounting principles under which the Guarantor may in the future prepare its financial statements;

 

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

 

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

 

(d)                                 all references to Sections or Articles refer to Sections or Articles of this Indenture unless otherwise indicated.

 

2.                                      THE SECURITIES

 

2.1                              Form of Securities

 

The Securities of each series shall be substantially in such form or forms (not inconsistent with this Indenture) as shall be established by or pursuant to one or more Board Resolutions of the Company 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 imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law, or with any rules of any

 

5

 

securities exchange or usage, all as may be determined by the Officers executing such Securities as evidenced by their execution of the Securities.

 

2.2                               Execution, Authentication, Delivery and Dating

 

The Securities shall be executed by an Officer of the Company by facsimile or manual signature; and the Guarantees with respect to the Securities shall be executed by an Officer of the Guarantor by facsimile or manual signature.  If an Officer whose signature is on a Security or the Guarantee no longer holds that office at the time the Security or the Guarantee is authenticated, the Security or the Guarantee, as the case may be, shall nevertheless be valid.

 

The Trustee may appoint an authenticating agent acceptable to the Company (the Authenticating Agent) to authenticate Securities.  The Authenticating Agent may authenticate Securities whenever the Trustee may do so.  Each reference in this Indenture to authentication by the Trustee includes authentication by such Authenticating Agent.

 

A Security shall not be valid until the Trustee or Authenticating Agent manually signs the certificate of authentication on the Security.  The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

 

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, with the Guarantee of the Guarantor endorsed thereon, to the Trustee for authentication, together with a written request for the authentication and delivery of such Securities and the applicable documents referred to below in this Section 2.2, and the Trustee shall thereupon authenticate and deliver such Securities.  In authenticating such Securities, the Trustee shall be entitled to receive and shall be fully protected in relying upon:

 

(a)                                 any Board Resolution of the Company and/or executed supplemental indenture referred to in Sections 2.1 and 2.3 by or pursuant to which the forms and terms of the Securities of that series were established;

 

(b)                                 an Officer’s Certificate of the Company and an Officer’s Certificate of the Guarantor certifying as to the forms and terms of the Securities of that series and the Guarantee thereof and stating that the form or forms and terms of such Securities have been, or will be when established in accordance with such procedures as shall be referred to therein, established in compliance with this Indenture; and

 

(c)                                  an Opinion of Counsel to the Company and the Guarantor substantially to the effect that the Securities of that series and the Guarantee thereof have been duly authorized and, when executed and authenticated, or in the case of the Guarantee, when the Securities on which the Guarantee shall have been endorsed shall have been authenticated, in accordance with the provisions of the Indenture and delivered to and duly paid for by the purchasers thereof on the date of such opinion, will be entitled to the benefits of the Indenture and will be valid and binding obligations of the Company and the Guarantor, respectively, enforceable against the Company and the Guarantor, respectively, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, receivership, moratorium and other similar laws affecting creditors’ rights generally, general principles of equity, and such other matters as shall be specified therein.

 

6

 

Notwithstanding the provisions of the preceding paragraph, if not all Securities of any series are to be issued at one time, it shall not be necessary to deliver an Officer’s Certificate or an Opinion of Counsel otherwise required pursuant to the preceding two paragraphs at the time of issuance of each Security of such series, but such certificate and opinion, with appropriate modifications to cover such future issuances, shall be delivered at or before the time of issuance of the first Security of such series.

 

Each Security shall be dated the date of its authentication.

 

If the Company shall establish pursuant to Section 2.3 that the Securities of a series or a portion thereof are to be issued in the form of one or more Global Securities, then the Company shall execute, and the Trustee shall authenticate and deliver, one or more Global Securities, having a Guarantee executed by the Guarantor endorsed thereon, that (a) shall represent and shall be denominated in an amount equal to the aggregate principal amount of all of the Securities of such series issued in such form and not yet canceled, (b) shall be registered in the name of the Depositary for such Global Security or Securities or the nominee of such Depositary, (c) shall be delivered by the Trustee to such Depositary or its custodian or pursuant to such Depositary’s instructions, and (d) shall bear a legend substantially to the following effect:

 

“Unless and until it is exchanged in whole or in part for Securities in definitive registered form, this Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.”

 

2.3                               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 of the Company or one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series, any or all of the following, as applicable:

 

(a)                                 the title of the Securities of the series, which shall distinguish the Securities of that series from the Securities of all other series;

 

(b)                                 the aggregate principal amount of the Securities of the series to be authenticated and delivered under this Indenture and any limitation on the ability of the Company to increase such aggregate principal amount after the initial issuance of the Securities of that series (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for, or in lieu of, or upon redemption of, other Securities of that series pursuant hereto);

 

(c)                                  the date or dates on which the Principal of the Securities of the series shall be payable;

 

(d)                                 the percentage of the aggregate principal amount of the Securities of the series at which the Securities shall be issued and whether the Securities will be Original Issue Discount Securities and any special tax considerations relating thereto;

 

(e)                                  (i)                                     the rate or rates (which may be fixed or variable) per annum at which the Securities of the series shall bear interest, if any;

 

7

 

(ii)                                  the date or dates from which such interest shall accrue, on which such interest shall be payable and on which a record shall be taken for the determination of Holders to whom interest is payable; and/or

 

(iii)                               the method by which such rate or rates or date or dates shall be determined;

 

(f)                                   if other than as provided in Section 4.2, the place or places where (i) the Principal of, interest on and any Additional Amounts in respect of Securities of the series shall be payable, (ii) any Securities of the series may be surrendered for transfer or exchange, and (iii) notices or demands to or upon the Company and the Guarantor in respect of the Securities of the series and this Indenture may be served;

 

(g)                                  the right, if any, of the Company to redeem Securities of the series, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions upon which Securities of that series may be so redeemed, pursuant to any sinking fund or otherwise;

 

(h)                                 the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any mandatory redemption, sinking fund or analogous provisions or at the option of a Holder thereof and the price or prices at which and the period or periods within which and any of the terms and conditions upon which Securities of that series shall be redeemed, purchased or repaid, 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)                                    if other than the entire 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;

 

(k)                                 if other than Dollars, the currency or currencies in which payment of the Principal of or interest on or any Additional Amounts in respect of Securities of the series shall be payable or in which Securities of that series shall be denominated, and any other terms and conditions relating thereto;

 

(l)                                     if other than the currency in which the Securities of the series are denominated, the currency in which payment of the Principal of or interest on the Securities of the series shall be payable or if the amount of payments of Principal of and/or interest on the Securities of that series may be determined with reference to an index based on a currency other than that in which the Securities of the series are denominated, the manner in which such amounts shall be determined;

 

(m)                             if payment of the Principal of and interest on the Securities of the series shall be payable in currency or currencies other than Dollars, the manner in which any such currency shall be valued against other currencies in which any other Securities shall be payable;

 

(n)                                 whether and under what circumstances the Company will pay Additional Amounts on the Securities of the series in respect of any tax, assessment or governmental charge withheld or deducted and, if so, whether the Company will have the option to redeem such Securities rather than pay such Additional Amounts;

 

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(o)                                 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 that 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;

 

(p)                                 any trustees, depositaries, Authenticating Agents, Paying Agents, transfer agents or the Registrar or any other Agents with respect to the Securities of the series;

 

(q)                                 provisions, if any, for the defeasance of the Securities of the series (including provisions permitting defeasance of less than all Securities of the series), which provisions may be in addition to, in substitution for, or in modification of (or any combination of the foregoing) the provisions of Article 9;

 

(r)                                    if the Securities of the series are issuable in whole or in part as one or more Global Securities, the identity of the Depositary for such Global Security or Securities;

 

(s)                                   any deletions from, modifications of or additions to the Events of Default or covenants with respect to the Securities of the series; and

 

(t)                                    any other terms of the Securities 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 date and denomination, except in the case of any Periodic Offering and except as may otherwise be provided by or pursuant to the Board Resolution referred to above or as set forth in any indenture supplemental hereto.  All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or pursuant to such Board Resolution or in any such indenture supplemental hereto, and any forms and terms of Securities to be issued from time to time may be completed and established from time to time prior to the issuance thereof by procedures described in such Board Resolution or supplemental indenture.  Unless otherwise provided, a series of Securities may be re-opened, without the consent of the Holders, for issuances of additional Securities of such series.

 

2.4                               Denominations

 

The Securities of each series shall be issuable in denominations established as contemplated by Section 2.3.  With respect to Securities of any series denominated in Dollars, in the absence of any such provisions with respect to Securities of such series, Securities of such series, other than Securities issued in global form (which may be of any denomination), shall be issuable in denominations of $1,000 and any integral multiple thereof.

 

The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner as the Officer of the Company executing the same may determine, as evidenced by his or her execution thereof.

 

2.5                               Registrar and Paying Agent; Agents Generally

 

The Company shall maintain an office or agency where Securities may be presented for registration, registration of transfer or exchange (the Registrar) and the Company and the Guarantor shall maintain an office or agency where Securities may be presented for payment or where, in the case of the

 

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Guarantor, Securities may be presented for payment under the Guarantees endorsed thereon (the Paying Agent), which in each case shall be in the Borough of Manhattan, The City of New York.  The Company shall cause the Registrar to keep a register of the Securities and of their registration, transfer and exchange and the name and address of each of the Holders (the Security Register).  The Company and the Guarantor may have one or more additional Paying Agents or transfer agents with respect to any series.

 

The Company shall enter into an appropriate agency agreement with any Agent that is not a party to this Indenture.  The agreement shall implement the provisions of this Indenture and the Trust Indenture Act that relate to such Agent.  The Company shall give prompt written notice to the Trustee of the name and address of any Agent and any change in the name or address of an Agent.  If the Company fails to maintain a Registrar or if the Company or the Guarantor fails to maintain a Paying Agent, the Trustee shall act as Registrar and Paying Agent.  The Company or the Guarantor may remove any Agent appointed by it upon written notice to such Agent and the Trustee; provided that no such removal shall become effective until (a) the acceptance of an appointment by a successor Agent to such Agent as evidenced by an appropriate agency agreement entered into by the Company or the Guarantor and such successor Agent and delivered to the Trustee or (b) notification to the Trustee that the Trustee shall serve as such Agent until the appointment of a successor Agent in accordance with clause (a) of this proviso.  The Company, the Guarantor or any affiliate of the Company or the Guarantor may act as Paying Agent or Registrar; provided that neither the Company, the Guarantor nor any such affiliate shall act as Paying Agent in connection with the defeasance of the Securities or the discharge of this Indenture under Article 9.

 

The Company initially appoints the Trustee as Registrar and Authenticating Agent, and the Company and the Guarantor initially appoint the Trustee as Paying Agent.  If, at any time, the Trustee is not the Registrar, the Registrar shall make available to the Trustee ten days prior to each interest payment date and at such other times as the Trustee may reasonably request the names and addresses of the Holders as they appear in the Security Register.  The Company initially appoints DTC as Depositary for the Global Securities.

 

In the case of Global Securities issued by Novartis Finance S.A., the Company must keep an up-to-date version of the register of the Securities in registered form pursuant to article 84 of the Luxembourg act dated August 10, 1915 on commercial companies, as amended.  In the case of a discrepancy between the register kept at the Registrar’s office (or any Agent’s office where a register is being kept) and the register kept at the Company’s registered office, the register kept at the Company’s registered office shall prevail for Luxembourg law purposes.  Certificates representing Global Securities in registered form may be issued by the Company but they do not constitute conclusive evidence.  Ownership of the Global Securities issued in registered form by the Company passes solely upon the registration of the transfer in the register of the holders of the Global Securities held at the Company’s registered office.

 

Subject to applicable laws and regulations, the Registrar undertakes to make an up-to-date, complete and accurate copy of the register available, at all reasonable times during office hours, to the Company, the Paying Agent or any person authorized by any of them or the Holder of any Securities in registered form for inspection and for the taking of copies or extracts.

 

2.6                               Paying Agent to Hold Money in Trust

 

Not later than 10:00 a.m., New York City time, on each due date of any Principal of or interest on any Securities, the Company shall deposit with the Paying Agent money in immediately available funds sufficient to pay such Principal or interest.  The Company shall require each Paying Agent other than the

 

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Trustee to agree in writing that such Paying Agent shall hold in trust for the benefit of the Holders of such Securities or the Trustee all money held by the Paying Agent for the payment of Principal of and interest on such Securities and shall promptly notify the Trustee in writing of any default in making any such payment.  The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, upon written request to a Paying Agent, require such Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed.  Upon doing so, the Paying Agent shall have no further liability for the money so paid over to the Trustee.  If the Company, the Guarantor or any affiliate of the Company or the Guarantor acts as Paying Agent, it will, on or before each due date of any Principal of or interest on any Securities, segregate and hold in a separate trust fund for the benefit of the Holders thereof a sum of money sufficient to pay such Principal or interest so becoming due until such sum of money shall be paid to such Holders or otherwise disposed of as provided in this Indenture, and will promptly notify the Trustee in writing of its action or failure to act as required by this Section 2.6.

 

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

 

Neither the Trustee nor any Agent shall have any responsibility for any actions taken or not taken by the Depositary.

 

2.7                               Transfer and Exchange

 

Upon surrender for registration of transfer of any Security of any series at any agency of the Company maintained for such purpose in accordance with Section 2.5, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of the same series, of any authorized denominations and of a like aggregate principal amount.

 

At the option of the Holder thereof, Securities of any series (other than a Global Security, except as set forth below) may be exchanged for a Security or Securities of such series and tenor having authorized denominations and an equal aggregate principal amount, upon surrender of such Securities to be exchanged at the agency of the Company maintained for such purpose in accordance with Section 2.5.  Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities, having a Guarantee executed by the Guarantor endorsed thereon, that the Holder making the exchange is entitled to receive.

 

All Securities presented for registration of transfer, exchange, redemption or payment shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company, the Guarantor and the Trustee duly executed by the Holder or his or her attorney duly authorized in writing.

 

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 exchange or registration of transfer of Securities.  No service charge shall be made for any such transaction.

 

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Notwithstanding any other provision of this Section 2.7, unless and until it is exchanged in whole or in part for Securities in definitive registered form, 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.

 

If at any time the Depositary for any Global Securities of any series notifies the Company that it is unwilling or unable to continue as Depositary for such Global Securities or if at any time the Depositary for such Global Securities shall no longer be eligible under applicable law to act as Depositary, the Company shall appoint a successor Depositary eligible under applicable law with respect to such Global Securities.  If:

 

(a)                                 a successor Depositary eligible under applicable law for such Global Securities is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility;

 

(b)                                 an Event of Default has occurred and is continuing and the beneficial owners representing a majority in principal amount of the applicable series of Securities represented by such Global Securities advise the Depositary to cease acting as depositary for such Global Securities; or

 

(c)                                  the Company, in its sole discretion, determines at any time that any Securities of any series issued or issuable in the form of one or more Global Securities shall no longer be represented by such Global Securities;

 

then the Company will execute, and the Trustee, upon receipt of the Company’s order for the authentication and delivery of definitive Securities of such series and tenor, will authenticate and make available for delivery Securities of such series and tenor, in any authorized denominations, in an aggregate principal amount equal to the principal amount of such Global Securities, having a Guarantee executed by the Guarantor endorsed thereon, in exchange for such Global Securities.

 

Any time the Securities of any series are not in the form of Global Securities pursuant to the preceding paragraph, the Company agrees to supply the Trustee with a reasonable supply of certificated Securities, having a Guarantee executed by the Guarantor endorsed thereon, without the legend required by Section 2.2 and the Trustee agrees to hold such Securities in safekeeping until authenticated and delivered pursuant to the terms of this Indenture.

 

If established by the Company pursuant to Section 2.3 with respect to any 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 form on such terms as are acceptable to the Company and such Depositary.  Thereupon, the Company shall execute, and the Trustee shall authenticate and deliver, without service charge:

 

(i)                                     to the Person specified by such Depositary new Securities of the same series and tenor, having a Guarantee executed by the Guarantor endorsed thereon, 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

 

(ii)                                  to such Depositary a new Global Security, having a Guarantee executed by the Guarantor endorsed thereon, in a denomination equal to the difference, if any, between the principal

 

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amount of the surrendered Global Security and the aggregate principal amount of Securities authenticated and delivered pursuant to clause (i) above.

 

Securities issued in exchange for a Global Security, having a Guarantee executed by the Guarantor endorsed thereon, pursuant to this Section 2.7 shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee or an agent of the Company or the Trustee in writing.  The Trustee or such agent shall deliver such Securities to or as directed in writing by the Persons in whose names such Securities are so registered.

 

All Securities (including the Guarantee endorsed thereon) issued upon any transfer or exchange of Securities shall be valid obligations of the Company and the Guarantor, evidencing the same debt, and entitled to the same benefits under this Indenture and the Guarantee endorsed thereon, as the Securities surrendered upon such transfer or exchange.

 

The Registrar shall not be required (a) to issue, register the transfer of or exchange Securities of any series if such Securities may be among those selected for redemption during a period beginning 15 days before the selection of Securities to be redeemed and ending on the day of mailing of the relevant notice of redemption, (b) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any Security to be redeemed in part, the portion thereof not to be redeemed, or (c) to issue, register the transfer of or exchange any Security that has been surrendered for repayment at the option of the Holder, except the portion, if any, of such Security not to be so repaid.

 

2.8                               Replacement Securities

 

If a defaced or mutilated Security of any series is surrendered to the Trustee or if a Holder claims that its Security of any series has been lost, destroyed or wrongfully taken and presents to the Trustee, the Company, the Guarantor and any Agent evidence to their satisfaction of the loss, destruction or wrongful taking of such Security, the Company shall issue and the Trustee shall authenticate a replacement Security of such series and tenor and principal amount, having a Guarantee executed by the Guarantor endorsed thereon, bearing a number not contemporaneously outstanding.  An indemnity bond must be furnished that is sufficient in the judgment of the Trustee, the Company and the Guarantor to protect the Trustee, the Company, the Guarantor and any Agent from any loss that any of them may suffer if a Security is replaced.  The Company may charge such Holder for its expenses and the expenses of the Trustee (including without limitation attorneys’ fees and expenses) in replacing a Security.  In case any such mutilated, defaced, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company and the Guarantor in their discretion may pay such Security instead of issuing a new Security (with the Guarantee endorsed thereon) in replacement thereof.

 

Every replacement Security (including the Guarantee endorsed thereon) is an additional obligation of the Company and the Guarantor and shall be entitled to the benefits of this Indenture equally and proportionately with any and all other Securities of such series and the Guarantee endorsed thereon duly authenticated and delivered hereunder.

 

To the extent permitted by law, the foregoing provisions of this Section 2.8 are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Securities.

 

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2.9                               Outstanding Securities

 

Securities outstanding at any time are all Securities that have been authenticated by the Trustee except for those Securities it has canceled, those Securities delivered to it for cancellation, those paid pursuant to Section 2.8 and those Securities described in this Section 2.9 as not outstanding.

 

If a Security is replaced pursuant to Section 2.8, it ceases to be outstanding unless and until the Trustee, the Company and the Guarantor receive proof satisfactory to them that the replaced Security is held by a holder in due course.

 

If the Paying Agent (other than the Company, the Guarantor or an affiliate of the Company or the Guarantor) holds on the maturity date or any redemption date or date for repurchase of the Securities money sufficient to pay Securities payable or to be redeemed or repurchased on such date, then on and after such date such Securities shall cease to be outstanding and interest on them shall cease to accrue.

 

A Security does not cease to be outstanding because the Company, the Guarantor or one of the affiliates of the Company or the Guarantor holds such Security, provided, however, that, in determining whether the Holders of the requisite principal amount of the outstanding Securities shall have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company, the Guarantor or any affiliate of the Company or the Guarantor 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 as to which a Responsible Officer of the Trustee has received written notice to be so owned shall be so disregarded.  Any Securities so owned which are pledged by the Company, the Guarantor, or any affiliate of the Company or the Guarantor, as security for loans or other obligations, otherwise than to another such affiliate of the Company or the Guarantor, shall be deemed to be outstanding, if the pledgee is entitled pursuant to the terms of its pledge agreement and is free to exercise in its discretion the right to vote such securities, uncontrolled by the Company, the Guarantor or any such affiliate.

 

2.10                        Temporary Securities

 

Until definitive Securities of any series are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities of such series, having the Guarantee of the Guarantor endorsed thereon.  Temporary Securities of any series shall be substantially in the form of definitive Securities of such series, but may have insertions, substitutions, omissions and other variations determined to be appropriate by the Officers of the Company and the Guarantor executing the temporary Securities or the Guarantee endorsed thereon, as evidenced by their execution of such temporary Securities or Guarantee, as applicable.  If temporary Securities of any series are issued, the Company will cause definitive Securities of such series, having the Guarantee of the Guarantor endorsed thereon to be prepared without unreasonable delay.  After the preparation of definitive Securities of any series, the temporary Securities of such series shall be exchangeable for definitive Securities of such series and tenor upon surrender of such temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 4.2, 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 make available for delivery in exchange therefor a like principal amount of definitive Securities of such series and tenor and authorized denominations, having a Guarantee executed by the Guarantor endorsed thereon.  Until so exchanged, the temporary Securities of any series shall be entitled to the same benefits under this Indenture as definitive Securities of such series.

 

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2.11                        Cancellation

 

The Company or the Guarantor at any time may deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder, which the Company or the Guarantor may have acquired in any manner whatsoever, and may deliver to the Trustee for cancellation any Securities previously authenticated hereunder which the Company has not issued and sold.  The Registrar, any transfer agent and the Paying Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange or payment.  The Trustee shall cancel all Securities surrendered for transfer, exchange, payment or cancellation and shall deliver such canceled Securities to the Company or the Guarantor, as applicable.  The Company may not issue new Securities to replace Securities it has paid in full or delivered to the Trustee for cancellation, except as expressly permitted by this Indenture.

 

2.12                        Persons Deemed Owners

 

Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee 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 (subject to Section 2.13) interest on such Security and for all other purposes whatsoever, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.

 

None of the Company, the Trustee, any Paying Agent or the Security Registrar 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.

 

Notwithstanding the foregoing, with respect to any Global Security, nothing herein shall prevent the Company, the Trustee, or any agent of the Company or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by any Depositary, as a Holder, with respect to such Global Security or impair, as between such depositary and owners of beneficial interests in such Global Security, the operation of customary practices governing the exercise of the rights of such Depositary (or its nominee) as Holder of such Global Security.

 

2.13                        Payment of Interest; Defaulted Interest

 

(a)                                 The Securities of each series shall bear interest, if any, from the date, and such interest shall be payable on the dates, established as contemplated by Section 2.3.  The person in whose name any Security of any series is registered at the close of business on any Record Date applicable to a particular series with respect to any interest payment date for such series shall be entitled to receive the interest, if any, payable on such interest payment date notwithstanding any transfer or exchange of such Security subsequent to the Record Date and prior to such interest payment date, except if and to the extent the Company shall default in the payment of the interest due on such interest payment date for such series, in which case the provisions of Section 2.13(b) shall apply.  The term Record Date as used with respect to any interest payment date (except a date for payment of defaulted interest) for the Securities of any series shall mean the date specified as such in the terms of the Securities of such series established as contemplated by Section 2.3, or, if no such date is so established, the 15th day next preceding such interest payment date, whether or not such Record Date is a Business Day.

 

(b)                                 If the Company defaults in a payment of interest on the Securities, it shall pay, or shall deposit with the Paying Agent money in immediately available funds sufficient to pay, the defaulted interest plus (to the

 

15

 

extent lawful) any interest payable on the defaulted interest (as may be specified in the terms thereof, established pursuant to Section 2.3) to the Persons who are Holders on a subsequent special record date, which shall mean the 15th day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day.  At least 15 days before such special record date, the Company shall mail to each Holder and to the Trustee a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

 

2.14                        Computation of Interest

 

Except as otherwise specified pursuant to Section 2.3 for Securities of any series, interest on the Securities of each series shall be computed on the basis of a 360-day year of twelve 30-day months.

 

2.15                        Series May Include Tranches

 

A series of Securities may include one or more tranches of Securities, including Securities issued in a Periodic Offering.  The Securities of different tranches may have one or more different terms, including authentication dates and public offering prices, but all the Securities within each such tranche shall have identical terms, including authentication date and public offering price.  Notwithstanding any other provision of this Indenture, with respect to Sections 2.2 (other than the fourth paragraph thereof) through 2.4, 2.7, 2.8, 2.10, 3.1 through 3.5, 4.2, 7.1 through 7.14, 9.1 through 9.5 and 10.2, if any series of Securities includes more than one tranche, all provisions of such Sections applicable to any series of Securities shall be deemed equally applicable to each tranche of any series of Securities in the same manner as though originally designated a series unless otherwise provided with respect to such series or tranche pursuant to Section 2.3.  In particular, and without limiting the scope of the next preceding sentence, any of the provisions of such Sections which provide for or permit action to be taken with respect to a series of Securities shall also be deemed to provide for and permit such action to be taken instead only with respect to Securities of one or more tranches within that series (and such provisions shall be deemed satisfied thereby), even if no comparable action is taken with respect to Securities in the remaining tranches of that series.

 

2.16                        CUSIP and CINS Numbers

 

The Company in issuing the Securities may use CUSIP and CINS numbers (if then generally in use), and the Trustee shall use CUSIP numbers or CINS numbers, as the case may be, in notices of redemption or exchange as a convenience to Holders and no representation shall be made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or exchange.

 

3.                                      REDEMPTION

 

3.1                               Applicability of Article

 

Securities of any series that are redeemable before their maturity shall be redeemable in accordance with their terms and (except as otherwise specified as contemplated by Section 2.3 for Securities of any series) in accordance with this Article 3.  The provisions of this Article 3 shall be applicable to the Securities of any series, in whole but not in part, if, with respect to such series:

 

(a)                                 the Company determines that, as a result of any change in or amendment to the laws or any regulations or rulings promulgated thereunder of a Relevant Taxing Jurisdiction, or any change in the application or official interpretation of such laws, regulations or rulings, or any change in the application or official interpretation of, or any execution of or amendment to, any treaty or

 

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treaties affecting taxation to which any such jurisdiction is a party, which change, execution or amendment becomes effective on or after the issue date or such other date specified in the Securities of such series:

 

(i)                                     the Company would be required to pay Additional Amounts (as defined in Section 4.5) with respect to such series of Securities on the next succeeding interest payment date and the payment of such Additional Amounts cannot be avoided by the use of reasonable measures available to the Company or the Guarantor; or

 

(ii)                                  withholding tax has been or would be required to be withheld with respect to interest income received or receivable by the Company directly from the Guarantor (or any affiliate) and such withholding tax obligation cannot be avoided by the use of reasonable measures available to the Company or the Guarantor (or any affiliate); or

 

(b)                                 the Company determines, based upon an opinion of independent counsel selected by the Company that, as a result of any action taken by any legislative body of, taxing authority of, or any action brought in a court of competent jurisdiction in, a Relevant Taxing Jurisdiction (whether or not such action was taken or brought with respect to the Company or the Guarantor), which action is taken or brought on or after the issue date or such other date specified in the Securities of such series, there is a substantial probability that the circumstances described in subsection (a) above would exist; provided, however, that no such notice of redemption may be given earlier than 90 days prior to the earliest date on which the Company would be obligated to pay such Additional Amounts.  The Company or the Guarantor will also pay to each Holder, or make available for payment to each such Holder, on the redemption date any Additional Amounts resulting from the payment of such redemption price.

 

3.2                               Notice of Redemption; Partial Redemptions

 

Prior to the delivery of any notice of redemption, the Company or the Guarantor will deliver to the Trustee an Officer’s Certificate stating that the Company is entitled to effect a redemption and setting forth a statement of facts showing that the conditions precedent of the right so to redeem have occurred.  Any notice of redemption will be irrevocable once the Company delivers it to the Trustee.

 

Notice of redemption to the Holders of Securities of any series to be redeemed as a whole or in part at the option of the Company shall be given by mailing notice of such redemption by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to such Holders of Securities of such series at their last addresses as they shall appear upon the Security Register of the Company.  Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Holder receives the notice.  Failure to give notice by mail, or any defect in the notice to the Holder of any Security of a series designated for redemption as a whole or in part, shall not affect the validity of the proceedings for the redemption of any other Security of such series.

 

The notice of redemption to each such Holder shall state:

 

(a)                                 the principal amount of each Security of such series held by such Holder to be redeemed;

 

(b)                                 the CUSIP or CINS numbers, as the case may be, of the Securities to be redeemed;

 

(c)                                  the date fixed for redemption;

 

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(d)                                 the redemption price;

 

(e)                                  the place or places of payment;

 

(f)                                   that payment will be made upon presentation and surrender of such Securities;

 

(g)                                  that such redemption is pursuant to the mandatory or optional sinking fund, or both, if such be the case;

 

(h)                                 that interest accrued to the date fixed for redemption will be paid as specified in such notice; and

 

(i)                                     that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue.

 

In case any Security of a series is to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Security, a new Security or Securities of such series and tenor in principal amount equal to the unredeemed portion thereof will be issued.

 

The notice of redemption of Securities of any series to be redeemed at the option of the Company shall be given by the Company or, at the Company’s written request delivered at least 15 days before the date such notice is to be given (unless a shorter period shall be acceptable to the Trustee), by the Trustee in the name and at the expense of the Company.

 

On or before 10:00 a.m., New York City time, on the redemption date specified in the notice of redemption given as provided in this Section 3.2, the Company will deposit with the Trustee or with one or more Paying Agents (or, if the Company is acting as its own Paying Agent, set aside, segregate and hold in trust as provided in Section 2.6) an amount of money sufficient to redeem on the redemption date all the Securities of such series so called for redemption at the appropriate redemption price, together with accrued interest to the date fixed for redemption.  If all of the outstanding Securities of a series are to be redeemed, the Company will deliver to the Trustee at least 45 days prior to the redemption date an Officer’s Certificate stating that all such Securities are to be redeemed.

 

If less than all the outstanding Securities of a series are to be redeemed, the Company will deliver to the Trustee at least 45 days prior to the redemption date an Officer’s Certificate stating the aggregate principal amount of such Securities to be redeemed.  If less than all the Securities of a series are to be redeemed, the Trustee shall select, pro rata, by lot or in such manner as it and the Company shall deem appropriate and fair, Securities of such series to be redeemed in whole or in part.  Securities may be redeemed in part in multiples equal to the minimum authorized denomination for Securities of such series or any multiple thereof.  The Trustee shall promptly notify the Company and the Guarantor in writing of the Securities of such series selected for redemption and, in the case of any Securities of such series selected for partial redemption, the principal amount thereof to be redeemed.  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 Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security which has been or is to be redeemed.

 

3.3                               Payment of Securities Called for Redemption

 

If notice of redemption has been given as above provided, the Securities or portions of Securities specified in such notice shall become due and payable on the date and at the place stated in such notice

 

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at the applicable redemption price, together with interest accrued to the date fixed for redemption, and on and after such date (unless the Company shall default in the payment of such Securities at the redemption price, together with interest accrued to such date) interest on the Securities or portions of Securities so called for redemption shall cease to accrue and, except as provided in Sections 8.11 and 9.4, such Securities shall cease from and after the date fixed for redemption to be entitled to any benefit under this Indenture, and the Holders thereof shall have no right in respect of such Securities except the right to receive the redemption price thereof and unpaid interest to the date fixed for redemption.

 

On presentation and surrender of such Securities at a place of payment specified in the notice of redemption, such Securities shall be paid and redeemed by the Company at the applicable redemption price, together with interest accrued thereon to the redemption date; provided that payment of interest becoming due on or prior to the redemption date shall be payable to the Holders of such Securities registered as such on the relevant Record Date subject to the terms and provisions of Sections 2.5 and 2.13 hereof.  If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the Principal shall, until paid or duly provided for, bear interest from the date fixed for redemption at the rate of interest or Yield to Maturity (in the case of an Original Issue Discount Security) borne by such Security.

 

Upon presentation of any Security of any series redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to or on the order of the Holder thereof, at the expense of the Company, a new Security or Securities of such series and tenor, each having a Guarantee executed by the Guarantor endorsed thereon, of authorized denominations, in principal amount equal to the unredeemed portion of the Security so presented.

 

3.4                               Exclusion of Certain Securities from Eligibility for Selection for Redemption

 

Securities shall be excluded from eligibility for selection for redemption if they are identified by registration and certificate number in a written statement signed by an Officer of the Company and delivered to the Trustee at least 60 days prior to the last date on which notice of redemption may be given as being owned of record and beneficially, and not pledged or hypothecated, by either (a) the Company, (b) the Guarantor or (c) an entity specifically identified in such written statement as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or the Guarantor.

 

3.5                               Mandatory and Optional Sinking Funds

 

The minimum amount of any sinking fund payment provided for by the terms of the 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 the Securities of any series is herein referred to as an optional sinking fund payment.  The date on which a sinking fund payment is to be made is herein referred to as the sinking fund payment date.

 

In lieu of making all or any part of any mandatory sinking fund payment with respect to any series of Securities in cash, the Company may at its option (a) deliver to the Trustee Securities of such series theretofore purchased or otherwise acquired (except through a mandatory sinking fund payment) by the Company or receive credit for Securities of such series (not previously so credited) theretofore purchased or otherwise acquired (except as aforesaid) by the Company and delivered to the Trustee for cancellation pursuant to Section 2.11, (b) receive credit for optional sinking fund payments (not previously so credited) made pursuant to this Section 3.5, or (c) receive credit for Securities of such series (not previously so credited) redeemed by the Company through any optional sinking fund

 

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payment.  Securities so delivered or credited shall be received or credited by the Trustee at the sinking fund redemption price specified in such Securities.

 

On or before the 60th day next preceding each sinking fund payment date for any series, or such shorter period as shall be acceptable to the Trustee, the Company will deliver to the Trustee an Officer’s Certificate (a) specifying the portion of the mandatory sinking fund payment to be satisfied by payment of cash and the portion to be satisfied by credit of specified Securities of such series and the basis for such credit, (b) stating that none of the specified Securities of such series has theretofore been so credited, (c) stating that no Defaults in the payment of interest or Events of Default with respect to such series have occurred (which have not been waived or cured) and are continuing and (d) stating whether or not the Company intends to exercise its right to make an optional sinking fund payment with respect to such series and, if so, specifying the amount of such optional sinking fund payment which the Company intends to pay on or before the next succeeding sinking fund payment date.  Any Securities of such series to be credited and required to be delivered to the Trustee in order for the Company to be entitled to credit therefor as aforesaid that have not theretofore been delivered to the Trustee shall be delivered for cancellation pursuant to Section 2.11 to the Trustee with such Officer’s Certificate (or reasonably promptly thereafter if acceptable to the Trustee).  Such Officer’s Certificate shall be irrevocable and, upon its receipt by the Trustee, the Company shall become unconditionally obligated to make all the cash payments or delivery of Securities therein referred to, if any, on or before the next succeeding sinking fund payment date.  Failure of the Company, on or before any such 60th day, to deliver such Officer’s Certificate and Securities specified in this paragraph, if any, shall not constitute a default but shall constitute, on and as of such date, the irrevocable election of the Company (i) that the mandatory sinking fund payment for such series due on the next succeeding sinking fund payment date shall be paid entirely in cash without the option to deliver or credit Securities of such series in respect thereof and (ii) that the Company will make no optional sinking fund payment with respect to such series as provided in this Section 3.5.

 

If the sinking fund payment or payments (mandatory or optional or both) to be made in cash on the next succeeding sinking fund payment date plus any unused balance of any preceding sinking fund payments made in cash shall exceed $50,000 (or a lesser sum if the Company shall so request with respect to the Securities of any series), such cash shall be applied on the next succeeding sinking fund payment date to the redemption of Securities of such series at the sinking fund redemption price thereof together with accrued interest thereon to the date fixed for redemption.  If such amount shall be $50,000 (or such lesser sum) or less and the Company makes no such request then it shall be carried over until a sum in excess of $50,000 (or such lesser sum) is available.  The Trustee shall select, in the manner provided in Section 3.2, for redemption on such sinking fund payment date a sufficient principal amount of Securities of such series to absorb said cash, as nearly as may be, and shall (if requested in writing by the Company) inform the Company of the serial numbers of the Securities of such series (or portions thereof) so selected.  Securities shall be excluded from eligibility for redemption under this Section 3.5 if they are identified by registration and certificate number in an Officer’s Certificate delivered to the Trustee at least 60 days prior to the sinking fund payment date as being owned of record and beneficially, and not pledged or hypothecated, by either (a) the Company, (b) the Guarantor or (c) an entity specifically identified in such Officer’s Certificate as directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or the Guarantor.  The Trustee, in the name and at the expense of the Company (or the Company, if it shall so request the Trustee in writing) shall cause notice of redemption of the Securities of such series to be given in substantially the manner provided in Section 3.2 (and with the effect provided in Section 3.3) for the redemption of Securities of such series in part at the option of the Company.  The amount of any sinking fund payments not so applied or allocated to the redemption of Securities of such series shall be added to the next cash sinking fund payment for such series and, together with such payment, shall be applied in

 

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accordance with the provisions of this Section 3.5.  Any and all sinking fund moneys held on the stated maturity date of the Securities of any particular series (or earlier, if such maturity is accelerated), which are not held for the payment or redemption of particular Securities of such series shall be applied, together with other moneys, if necessary, sufficient for the purpose, to the payment of the Principal of, and interest on, the Securities of such series at maturity.

 

On or before 10:00 a.m., New York City time, on each sinking fund payment date, the Company shall pay to the Trustee in cash or shall otherwise provide for the payment of all interest accrued to the date fixed for redemption on Securities to be redeemed on the next following sinking fund payment date.  The Trustee shall not redeem or cause to be redeemed any Securities of a series with sinking fund moneys or mail any notice of redemption of Securities of such series by operation of the sinking fund during the continuance of a Default in payment of interest on such Securities or of any Event of Default except that, where the mailing of notice of redemption of any Securities shall theretofore have been made, the Trustee shall redeem or cause to be redeemed such Securities, provided that it shall have received from the Company a sum sufficient for such redemption.  Except as aforesaid, any moneys in the sinking fund for such series at the time when any such Default or Event of Default shall occur, and any moneys thereafter paid into the sinking fund, shall, during the continuance of such default or Event of Default, be deemed to have been collected under Article 7 and held for the payment of all such Securities.  In case such Event of Default shall have been waived as provided in Section 7.4 or the Default cured on or before the 60th day preceding the sinking fund payment date in any year, such moneys shall thereafter be applied on the next succeeding sinking fund payment date in accordance with this Section 3.5 to the redemption of such Securities.

 

4.                                      COVENANTS

 

4.1                               Payment of Securities

 

The Company shall pay the Principal of and interest on and any Additional Amounts payable in respect of the Securities by 10:00 a.m. on the dates and in the manner provided in the Securities and this Indenture.  The interest on Securities (together with any additional amounts payable pursuant to the terms of such Securities) shall be payable only to the Holders thereof and at the option of the Company may be paid by mailing checks for such interest payable to or upon the written order of such Holders at their last addresses as they appear on the Security Register.

 

Notwithstanding any provisions of this Indenture and the Securities of any series to the contrary, if the Company and a Holder of any Security so agree or if expressly provided pursuant to Section 2.3, payments of interest on, and any portion of the Principal of, such Holder’s Security (other than interest payable at maturity or on any redemption or repayment date or the final payment of Principal on such Security) shall be made by the Paying Agent, upon receipt from the Company of immediately available funds by 11:00 a.m., New York City time (or such other time as may be agreed to between the Company and the Paying Agent), directly to the Holder of such Security (by Federal funds wire transfer or otherwise) if the Holder has delivered written instructions to the Trustee 15 days prior to such payment date requesting that such payment will be so made and designating the bank account to which such payments shall be so made and in the case of payments of Principal surrenders the same to the Trustee in exchange for a Security or Securities aggregating the same principal amount as the unredeemed principal amount of the Securities surrendered.  The Trustee shall be entitled to rely on the last instruction delivered by the Holder pursuant to this Section 4.1 unless a new instruction is delivered 15 days prior to a payment date.  The Company will indemnify and hold each of the Trustee and any Paying Agent harmless against any loss, liability or expense (including attorneys’ fees) resulting from any act or

 

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omission to act on the part of the Company or any such Holder in connection with any such agreement or from making any payment in accordance with any such agreement.

 

The Company shall pay interest on overdue Principal, and interest on overdue installments of interest, to the extent lawful, at the rate per annum specified in the Securities.

 

4.2                               Maintenance of Office or Agency

 

The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served; and the Guarantor will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented for payment under the Guarantees endorsed thereon and where notices and demands to or upon the Guarantor in respect of the Guarantee and this Indenture may be served.  The Company and the Guarantor hereby initially designate the Corporate Trust Office of the Trustee, located in the Borough of Manhattan, The City of New York, as such office or agency of the Company and the Guarantor.  The Company and the Guarantor 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 or the Guarantor 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 address of the Trustee set forth in Section 11.2.

 

The Company and the Guarantor may also from time to time designate one or more other offices or agencies where the Securities of any series may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve either the Company or the Guarantor of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York  for such purposes.  The Company or the Guarantor, as applicable, 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.

 

4.3                               Certificate to Trustee

 

Each of the Company and the Guarantor will furnish to the Trustee annually, within 120 days after the end of each fiscal year (which is December 31), a brief certificate (which need not contain the statements required by Section 11.4) from its principal executive, financial or accounting officer as to his or her knowledge of the compliance of the Company or the Guarantor, as the case may be, with all conditions and covenants under this Indenture (such compliance to be determined without regard to any period of grace or requirement of notice provided under this Indenture) and, in the event of any default specifying such default and the nature and status thereof of which such person may have knowledge.

 

4.4                               Limitation on Liens

 

So long as any Securities are outstanding, neither the Company nor the Guarantor shall create or have outstanding any mortgage, pledge, lien, charge or other security interest (collectively, Liens) upon the whole or any part of its assets, present or future (including any uncalled capital), in order to secure any existing or future Relevant Indebtedness or to secure any guarantee or indemnity in respect thereof without in any such case at the same time securing the Securities equally and ratably with such Relevant Indebtedness (or any guarantee or indemnity in respect thereof) or creating such other security as shall be approved by the Company and/or the Guarantor (as the case may be) and by the Holders of a majority in Principal (or, if any Securities are Original Issue Discount Securities, such portion of the Principal as

 

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may then be accelerated under Section 7.2) of the outstanding Securities of all series affected (all such series voting as one class).

 

Such restrictions on Liens shall not apply to:

 

(a)                                 Liens arising by operation of law; or

 

(b)                                 Liens on the assets of any Person existing at the time such Person is merged with or into or amalgamated or consolidated with the Guarantor.

 

4.5                               Payment of Additional Amounts

 

All payments of Principal and interest in respect of the Securities shall be free and clear of and without withholding or deduction for  or on account of any and all present or future taxes, duties, assessments or governmental charges of any nature imposed, levied collected, withheld or assessed by or on behalf of (a) the government of Switzerland or of any political subdivision of Switzerland or by any authority or agency therein or thereof having the power to tax, (b) the government of the jurisdiction of organization of the Company or of any political subdivision or territory or possession of such jurisdiction or by any authority or agency therein or thereof having the power to tax or (c) the government of any jurisdiction from or through which a payment on a Security or Guarantee is made or any political subdivision or territory or possession of such jurisdiction or by any authority or agency therein or thereof having power to tax (each jurisdiction listed in clauses (a), (b) and (c), a Relevant Taxing Jurisdiction and all such taxes, duties, assessments or governmental charges collectively, Taxes), except to the extent such Taxes are required to be withheld or deducted by law or by the interpretation or administration thereof.  If either the Company or the Guarantor is so required to withhold or deduct any amount for or on account of Taxes from any payment made in respect of the Securities, the Company or the Guarantor, as the case may be, shall pay such additional amounts (Additional Amounts) as may be necessary such that the net amount received by each Holder (including such Additional Amounts) after such withholding or deduction shall not be less than the amount such Holder would have received if the Taxes had not been withheld or deducted; provided that no Additional Amounts will be payable with respect to Taxes:

 

(a)                                 that would not have been imposed but for the existence of any present or former connection between such Holder or beneficial owner of the Securities (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such Holder or beneficial owner, if such Holder or beneficial owner is an estate, trust, partnership or corporation) and a Relevant Taxing Jurisdiction, including, without limitation, such Holder or beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or treated as a resident thereof or domiciled thereof or a national thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein;

 

(b)                                 that are estate, inheritance, gift, sales, transfer, personal property, wealth or similar taxes, duties, assessments or other governmental charges;

 

(c)                                  that are payable other than by withholding from payments of Principal of or interest on the Securities;

 

(d)                                 that would not have been imposed but for the failure of the applicable recipient of such payment to make a declaration of non-residence or other similar claim for exemption to the relevant tax authority or comply with any certification, identification, information, documentation or other

 

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reporting requirement to the extent such compliance is required by applicable law or administrative practice or an applicable treaty as a precondition to exemption from, or reduction in, the rate of deduction or withholding of such Taxes;

 

(e)                                  that are imposed on a payment to an individual or a residual entity and are required to be made pursuant to (i) the European Council Directive 2003/48/EC (or any amendment thereof) on the taxation of savings income in the form of interest payments (the EU Savings Directive) or the agreement of October 26, 2004 entered into by the EU and Switzerland on the taxation of savings income by way of a withholding tax system and voluntary declaration in the case of transactions between parties in the EU member states and Switzerland (the Agreement), or any law implementing or complying with, or introduced in order to conform to, the EU Savings Directive or the Agreement, or (ii) the Luxembourg law of December 23, 2005 relating to interest payments made or ascribed to or for the benefit of an individual beneficial owner tax resident in Luxembourg (as amended);

 

(f)                                   that would not have been imposed but for the presentation of a Security (where presentation is required) for payment on a date more than 30 days after the date on which such payment first became due and payable or the date on which payment thereof was duly provided for, whichever occurred later;

 

(g)                                  to the extent the amount of Taxes could have been reduced if presentation for payment of the relevant Securities had been made to a paying agent other than the paying agent to which the presentation was made; or

 

(h)                                 any combination of the foregoing clauses (a) through (g);

 

nor shall Additional Amounts be paid with respect to any payment of the Principal of or interest on any Security to any such Holder who is a fiduciary or a partnership or a beneficial owner who is other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or a beneficial owner would not have been entitled to such Additional Amounts had it been the Holder of the Security.

 

The Company shall maintain, in respect of Securities of each series outstanding, at least one Paying Agent located outside Switzerland.  In the event that a Paying Agent with respect to Securities of a particular series is maintained in any member state of the European Union, the Company shall maintain a Paying Agent in at least one member state that will not be obliged to withhold or deduct taxes pursuant to the EU Savings Directive.

 

4.6                               Waiver of Certain Covenants

 

The Company or the Guarantor may omit in any particular instance with respect to any series of Securities to comply with any term, provision or condition set forth in Section 4.2 or Section 4.4 if before or after the time for such compliance the Holders of at least a majority in principal amount of all outstanding Securities of such series either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company or the Guarantor and the duties of the Trustee in respect of any such term, provision or condition shall remain in full force and effect.

 

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4.7                               Calculation of Original Issue Discount

 

The Company shall direct the Trustee to prepare and file any form required to be submitted by the Company with the Internal Revenue Service and the Holders of the Securities relating to original issue discount, including, without limitation, Form 1099-OID and Form 8281 or any successor forms.  The Company shall provide to the Trustee on a timely basis (and in no case later than 30 days before the relevant filing date), such information as the Trustee reasonably requests to enable the Trustee to complete such forms.  The Company shall sign any forms prepared by the Trustee to the extent the Company is required to sign such forms and the Trustee shall file such forms in a timely manner with the appropriate persons following receipt thereof from the Company.

 

4.8                               Reports by the Company and the Guarantor

 

The Company and the Guarantor shall:

 

(a)                                 file with the Trustee, within 15 days after the Company or the Guarantor, as the case may be, is required to file the same with the Commission, 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 Commission may from time to time by rules and regulations prescribe) which the Company or the Guarantor may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company or the Guarantor is not required to file information, documents or reports pursuant to either of such Sections, then it will file with the Trustee, in accordance with rules and regulations prescribed from time to time by the Commission, 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; provided that if the Company or the Guarantor fails to file with the Trustee an annual report on Form 20-F by February 15 of each year, the Trustee agrees that, on or about that date and without incurring any liability for itself for the timely filing thereof, it may inform that Company or the Guarantor, as the case may be, that the filing has not been received;

 

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

 

(c)                                  transmit or cause to be transmitted by mail to the Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, such summaries of any information, documents and reports required to be filed by the Company or the Guarantor, as the case may be, pursuant to paragraphs (a) and (b) of this Section 4.8 as may be required by rules and regulations prescribed from time to time by the Commission; and the Trustee hereby agrees, solely for the convenience of the Company or the Guarantor, as the case may be, that it shall, on behalf of and at the expense of the Company, transmit any such documents or reports that it receives from either of the Company or the Guarantor under this Section 4.8 to the Holders.

 

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5.                                      CONSOLIDATION, MERGER, SALE, LEASE OR CONVEYANCE

 

5.1                               When the Company May Merge, Etc.

 

The Company shall not consolidate with, merge with or into, or sell, lease, convey or otherwise dispose of all or substantially all of its property and assets to (as an entirety or substantially as an entirety in one transaction or a series of related transactions), any Person (other than with or into the Guarantor) or permit any Person to merge with or into the Company unless:

 

(a)                                 either (i) the Company shall be the continuing Person or (ii) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or that acquired or leased such property and assets of the Company shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of the Company on all of the Securities and under this Indenture;

 

(b)                                 the continuing Person is organized and validly existing under the laws of the jurisdiction of organization of the Company or Switzerland or is organized and validly existing under the laws of a jurisdiction that is a member country of the Organization for Economic Co-operation and Development (or any successor thereto) and, if such continuing Person is not organized and validly existing under the laws of the jurisdiction of organization of the Company or Switzerland, such continuing Person shall agree in such supplemental indenture to be bound by a covenant comparable to that described in Section 4.5 with respect to taxes imposed in the continuing Person’s jurisdiction of organization, and such continuing Person shall benefit from a redemption option comparable to that described in Article 3 in the event of changes in taxes in such jurisdiction after the date of such consolidation, merger or sale, in each case in form and substance satisfactory to the Trustee;

 

(c)                                  the Company shall have delivered to the Trustee an Officer’s Certificate, and, if the Company shall not be the continuing Person, an Opinion of Counsel, in each case stating that such consolidation, merger or transfer and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with and that such supplemental indenture constitutes the legal, valid and binding obligation of the Company or such successor enforceable against such Person in accordance with its terms, subject to customary exceptions; and

 

(d)                                 the Company shall have delivered to the Trustee an Officer’s Certificate to the effect that immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

 

5.2                               Successor Company Substituted

 

Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the property and assets of the Company in accordance with Section 5.1 of this Indenture, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, lease, conveyance 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.

 

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5.3                               When the Guarantor May Merge, Etc.

 

The Guarantor shall not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets to (as an entirety or substantially as an entirety in one transaction or a series of related transactions), any Person (other than with or into the Company) or permit any Person to merge with or into the Guarantor unless:

 

(a)                                 either (i) the Guarantor shall be the continuing Person or (ii) the Person (if other than the Guarantor) formed by such consolidation or into which the Guarantor is merged or that acquired or leased such property and assets of the Guarantor shall expressly assume, by a supplemental indenture, executed and delivered to the Company and to the Trustee, all of the obligations of the Guarantor on the Guarantee and under this Indenture;

 

(b)                                 the continuing Person is organized and validly existing under the laws of the United States or Switzerland or is organized and validly existing under the laws of a jurisdiction that is a member country of the Organization for Economic Co-operation and Development (or any successor thereto) and, if such continuing Person is not organized and validly existing under the laws of the United States or Switzerland, such continuing Person shall agree in such supplemental indenture to be bound by a covenant comparable to that described in Section 4.5 with respect to taxes imposed in the continuing Person’s jurisdiction of organization, and such continuing Person shall benefit from a redemption option comparable to that described in Article 3 in the event of changes in taxes in such jurisdiction after the date of such consolidation, merger or sale, in each case in form and substance satisfactory to the Trustee;

 

(c)                                  the Guarantor shall have delivered to the Trustee an Officer’s Certificate, and, if the Guarantor shall not be the continuing Person, an Opinion of Counsel, in each case stating that such consolidation, merger or transfer and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with and that such supplemental indenture constitutes the legal, valid and binding obligation of the Guarantor or such successor enforceable against such Person in accordance with its terms, subject to customary exceptions; and

 

(d)                                 the Guarantor shall have delivered to the Trustee an Officer’s Certificate to the effect that immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

 

5.4                               Successor Guarantor Substituted

 

Upon any consolidation or merger, or any sale, lease, conveyance or other disposition of all or substantially all of the property and assets of the Guarantor in accordance with Section 5.3 of this Indenture, the successor Person formed by such consolidation or into which the Guarantor is merged or to which such sale, lease, conveyance or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Guarantor herein.

 

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6.                                      THE GUARANTEE

 

6.1                               Guarantee

 

The Guarantor by its execution of this Indenture hereby agrees with each Holder of the Securities authenticated and delivered by the Trustee, and with the Trustee, on behalf of each such Holder, to be unconditionally bound by the terms and provisions of the Guarantee with respect to such Securities and authorizes the Trustee to confirm such Guarantee to the Holder of each such Security by its execution and delivery of each such Security, with such Guarantee endorsed thereon, authenticated and delivered by the Trustee.

 

The Guarantee to be endorsed on the Securities shall be in substantially the form set forth below:

 

“GUARANTEE OF NOVARTIS AG

 

For value received, Novartis AG, a stock corporation (Aktiengesellschaft) incorporated under the laws of Switzerland, having its principal executive offices at Lichtstrasse 35, CH-4056, Basel, Switzerland (the Guarantor, which term includes any Person as a successor Guarantor under the Indenture referred to in the Security upon which this Guarantee is endorsed), hereby fully and unconditionally guarantees to the Holder of the Security upon which this Guarantee is endorsed and to the Trustee on behalf of each such Holder the due and punctual payment of the Principal of, interest on and any Additional Amounts payable in respect of such Security and the due and punctual payment of the sinking fund or analogous payments referred to therein, if any, when and as the same shall become due and payable, whether on the stated maturity date, by declaration of acceleration, call for redemption or otherwise, according to the terms thereof and of the Indenture referred to therein.  In case of the failure of [Novartis Capital Corporation, a corporation organized under the laws of the State of Delaware][Novartis Securities Investment Ltd., a limited liability company organized under the laws of Bermuda][Novartis Finance S.A., a public limited liability company (société anonyme) incorporated under the laws of the Grand-Duchy of Luxembourg] (the Company, which term includes any successor Person under such Indenture), to punctually make any such payment of Principal, interest or Additional Amounts or any such sinking fund or analogous payment, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether on the stated maturity date or by declaration of acceleration, call for redemption or otherwise, and as if such payment were made by the Company.

 

The indebtedness evidenced by this Guarantee is ranked equally and pari passu with all other unsecured and unsubordinated indebtedness of the Guarantor.

 

The Guarantor hereby agrees that its obligations hereunder shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of such Security or such Indenture, any failure to enforce the provisions of such Security or such Indenture, or any waiver, modification or indulgence granted to the Company with respect thereto, by the Holder of such Security or the Trustee or any other circumstance that may otherwise constitute a legal or equitable discharge of a guarantor; provided, however, that, notwithstanding the foregoing, no such waiver, modification or indulgence shall, without the consent of the Guarantor, increase the Principal of such Security, or increase the interest rate thereon, or alter the stated maturity date thereof, or increase the Principal of any Original Issue Discount Security that would be due and payable upon a declaration of acceleration of the maturity thereof pursuant to Article 7 of such Indenture.  The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or

 

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notice with respect to such Security or the indebtedness evidenced thereby or with respect to any sinking fund or analogous payment required under such Security and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the Principal of, interest on and Additional Amounts payable in respect of such Security.  This Guarantee is a guarantee of payment and not of collection.

 

The Guarantor shall be subrogated to all rights of the Holder of such Security and the Trustee against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon such right of subrogation until the Principal of, interest on and Additional Amounts payable in respect of all Securities of the same series issued under such Indenture shall have been paid in full.

 

No reference herein to such Indenture and no provision of such Indenture shall alter or impair the guarantees of the Guarantor, which are absolute and unconditional, of the due and punctual payment of the Principal of, interest on and Additional Amounts payable in respect of, and any sinking fund or analogous payments with respect to, the Security upon which this Guarantee is endorsed.

 

This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication of such Security shall have been manually executed by or on behalf of the Trustee under such Indenture.

 

All terms used in this Guarantee that are defined in such Indenture shall have the meanings assigned to them in such Indenture.

 

This Guarantee shall be governed by and construed in accordance with the laws of the State of New York.

 

IN WITNESS whereof, the Guarantor has caused this Guarantee to be duly executed this          th day of               .

 

Novartis AG,

 

as the Guarantor

 

	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title: “
    	
 
    

 

7.                                      DEFAULT AND REMEDIES

 

7.1                               Events of Default

 

An Event of Default shall mean any one of the following events with respect to the Securities of a series:

 

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(a)                                 default in the payment of all or any part of the Principal of any Security of such series when the same becomes due and payable at maturity, upon acceleration, redemption or mandatory repurchase, including as a sinking fund installment, or otherwise, and such default continues for more than two Business Days;

 

(b)                                 default in the payment of any interest on or any Additional Amounts payable in respect of any Security of such series when the same becomes due and payable, and such default continues for a period of 30 days;

 

(c)                                  default or breach of any other covenant or agreement of the Company or the Guarantor in this Indenture with respect to any Security of such series (other than a covenant or agreement a default in whose performance or whose breach is specifically dealt with elsewhere in this Section 7.1), and such default or breach continues for a period of 90 days after there has been given to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the Holders of 25% or more in aggregate principal amount of the Securities of such 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;

 

(d)                                 (i) any Indebtedness of, or guaranteed by, the Company or the Guarantor is not paid at its stated maturity or (as the case may be) within any originally applicable grace period; or (ii) any such Indebtedness, or guarantee, of the Company or the Guarantor (as the case may be) becomes due and payable prior to its stated maturity by reason of an event of default (howsoever described); provided that (x) the amount of Indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above individually or in the aggregate exceeds $150,000,000 (or its equivalent in any other currency or currencies); and (y) there shall not be deemed to be a default (i) where the Company or the Guarantor in good faith claims a right of set-off or otherwise contests its obligations to pay or (ii) if such acceleration is annulled or such payment or repayment is made within 10 days after there has been given to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the Holders of 25% or more in aggregate principal amount of the Securities of such 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;

 

(e)                                  an encumbrancer or a receiver or a person with similar functions appointed for execution (in Switzerland a Sachwalter or Konkursverwalter and in Luxembourg, a commissaire, juge-commissaire, liquidateur or curateur) taking possession of the whole or any substantial part of the assets or undertaking of the Company or the Guarantor or a distress, execution or other process being levied or enforced upon or sued out against a substantial part of the property or assets of the Company or the Guarantor and not being paid, discharged, removed or stayed within 30 days;

 

(f)                                   the Company or the Guarantor stopping payment or ceasing business (except in each case in circumstances previously approved by the Holders of a majority in Principal (or, if any Securities are Original Issue Discount Securities, such portion of the Principal of the Securities of the relevant series as may then be accelerated under Section 7.2) of the outstanding Securities of all series affected (all such series voting as one class);

 

(g)                                  the Company becoming bankrupt or insolvent or entering into a moratorium or making a general assignment for the benefit of its creditors including, in relation to Novartis Finance S.A., bankruptcy (faillite), insolvency, its voluntary or judicial liquidation (liquidation volontaire ou

 

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judiciaire), reprieve from payment (sursis de paiement), controlled management (gestion contrôlée), and composition with creditors (concordat préventif de faillite);

 

(h)                                 the Guarantor becoming bankrupt or insolvent (or is obliged to notify the court of its financial situation in accordance with Article 725 (2) of the Swiss Code of Obligations) or entering into a moratorium (Stundung) or making arrangements with its creditors (Nachlassvertrag);

 

(i)                                     an order being made or a resolution passed for the winding-up or dissolution of the Company or the Guarantor except a winding-up or dissolution, the terms of such winding-up or dissolution having previously been approved by the Holders of a majority in Principal (or, if any Securities are Original Issue Discount Securities, such portion of the Principal of the Securities of the relevant series as may then be accelerated under Section 7.2) of the outstanding Securities of all series affected (all such series voting as one class);

 

(j)                                    if the Guarantee with respect to the relevant series of Securities ceases to be, or is claimed by the Guarantor not to be, in full force and effect; or

 

(k)                                 any other Event of Default established pursuant to Section 2.3 with respect to the Securities of such series occurs.

 

7.2                               Acceleration

 

(a)                                 If an Event of Default described in Section 7.1(a) or (b) with respect to the Securities of any series then outstanding occurs and is continuing, then, and in each and every such case, except for any series of Securities the Principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate Principal of the Securities of any such affected series then outstanding hereunder (each such series treated as a separate class) by notice in writing to the Company and to the Guarantor (and to the Trustee if given by Holders) may declare the entire Principal (or, if the Securities of any such series are Original Issue Discount Securities, such portion of the Principal as may be specified in the terms of such series established pursuant to Section 2.3) of all Securities of such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.

 

(b)                                 If an Event of Default described in Section 7.1(c) or (k) with respect to the Securities of one or more but not all series then outstanding occurs and is continuing, then, and in each and every such case, except for any series of Securities the Principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate Principal (or, if the Securities of any such series are Original Issue Discount Securities, the amount thereof that may be accelerated under this Section 7.2) of the Securities of all such affected series then outstanding hereunder (treated as a single class) by notice in writing to the Company and to the Guarantor (and to the Trustee if given by Holders) may declare the entire Principal (or, if the Securities of any such series are Original Issue Discount Securities, such portion of the Principal as may be specified in the terms of such series established pursuant to Section 2.3) of all Securities of all such affected series, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.

 

(c)                                  If an Event of Default described in Section 7.1(d), or in Section 7.1(c) or (k) with respect to the Securities of all series then outstanding, occurs and is continuing, then, and in each and every such case, except for any series of Securities the Principal of which shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate Principal (or, if the Securities of any

 

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outstanding series are Original Issue Discount Securities, the amount thereof that may be accelerated under this Section 7.2) of all Securities of any series then outstanding hereunder (treated as a single class) by notice in writing to the Company and to the Guarantor (and to the Trustee if given by Holders) may declare the entire Principal (or, if the Securities of any such series are Original Issue Discount Securities, such portion of the Principal as may be specified in the terms of such series established pursuant to Section 2.3) of all Securities of any series then outstanding, and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.

 

(d)                                 If an Event of Default described in Section 7.1(e) through (j) occurs and is continuing, then the Principal (or, if any Securities are Original Issue Discount Securities, such portion of the Principal as may be specified in the terms thereof established pursuant to Section 2.3) of all the Securities then outstanding and interest accrued thereon, if any, shall be and become immediately due and payable, without any notice or other action by any Holder or the Trustee, to the full extent permitted by applicable law.

 

The foregoing provisions, however, are subject to the condition that if, at any time after the Principal (or, if the Securities are Original Issue Discount Securities, such portion of the Principal as may be specified in the terms thereof established pursuant to Section 2.3) of the Securities of any series (or of all the Securities, as the case may be) shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Company or the Guarantor shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Securities of each such series (or of all the Securities, as the case may be) and the Principal of any and all Securities of each such series (or of all the Securities, as the case may be) that shall have become due otherwise than by acceleration (with interest upon such Principal and, to the extent that payment of such interest is enforceable under applicable law, on overdue installments of interest, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of each such series to the date of such payment or deposit) and such amount as shall be sufficient to cover all amounts owing to the Trustee under Section 8.7, and if any and all Events of Default under this Indenture, other than the non-payment of the Principal of Securities that shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein, then and in every such case the Holders of a majority in aggregate principal amount of all the then outstanding Securities of all such series that have been accelerated (voting as a single class), by written notice to the Company, to the Guarantor and to the Trustee, may waive all defaults with respect to all such series (or with respect to all the Securities, as the case may be) and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

 

For all purposes under this Indenture, if a portion of the Principal of any Original Issue Discount Securities shall have been accelerated and declared due and payable pursuant to the provisions hereof, then, from and after such declaration, unless such declaration has been rescinded and annulled, the Principal of such Original Issue Discount Securities shall be deemed, for all purposes hereunder, to be such portion of the Principal thereof as shall be due and payable as a result of such acceleration, and payment of such portion of the Principal thereof as shall be due and payable as a result of such acceleration, together with interest, if any, thereon and all other amounts owing thereunder, shall constitute payment in full of such Original Issue Discount Securities.

 

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7.3                               Other Remedies

 

If a payment default or an Event of Default with respect to the Securities of any series occurs and is continuing, the Trustee may pursue, in its own name or as trustee of an express trust, any available remedy by proceeding at law or in equity to collect the payment of Principal of and interest on the Securities of such series or to enforce the performance of any provision of the Securities of such series or this Indenture.

 

The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding.

 

7.4                               Waiver of Past Defaults

 

Subject to Sections 7.2, 7.7 and 10.2, the Holders of at least a majority in principal amount (or, if the Securities are Original Issue Discount Securities, the amount thereof that may be accelerated under Section 7.2) of the outstanding Securities of all series affected (voting as a single class), by notice to the Trustee, may waive an existing Default or Event of Default with respect to the Securities of such series and its consequences, except a Default in the payment of Principal of or interest on any Security as specified in Section 7.1(a) or (b) or in respect of a covenant or provision of this Indenture that cannot be modified or amended without the consent of the Holder of each outstanding Security affected.  Upon any such waiver, such Default shall cease to exist, and any Event of Default with respect to the Securities of such series 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 Event of Default or impair any right consequent thereto.

 

7.5                               Control by Majority

 

Subject to Sections 8.1 and 8.2(e), the Holders of at least a majority in aggregate principal amount (or, if any Securities are Original Issue Discount Securities, the amount thereof that may be accelerated under Section 7.2) of the outstanding Securities of all series affected (voting as a single class) may 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 by this Indenture; provided, that the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the giving of such direction; and provided further, that the Trustee may take any other action it deems proper that is not inconsistent with any directions received from Holders of Securities pursuant to this Section 7.5.

 

7.6                               Limitation on Suits

 

No Holder of any Security of any series may institute any proceeding, judicial or otherwise, with respect to this Indenture or the Securities of such series, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

 

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

 

(b)                                 the Holders of at least 25% in aggregate principal amount of outstanding Securities of all such series affected 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;

 

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(c)                                  such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to the Trustee against any costs, liabilities or expenses 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)                                  during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Securities of all such affected series have not given the Trustee a direction that is inconsistent with such written request.

 

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

 

7.7                               Rights of Holder to Receive Payment

 

Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of Principal of, interest on or Additional Amounts payable in respect of such Holder’s Security on or after the respective due dates expressed on such Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

 

7.8                               Collection Suit by Trustee

 

If an Event of Default with respect to the Securities of any series in payment of Principal or interest specified in Section 7.1(a) or (b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company and the Guarantor for the whole amount (or such portion thereof as specified in the terms established pursuant to Section 2.3 of Original Issue Discount Securities) of Principal of, and accrued interest remaining unpaid on, together with interest on overdue Principal of, and, to the extent that payment of such interest is lawful, interest on overdue installments of interest on, the Securities of such series, in each case at the rate or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, and such further amount as shall be sufficient to cover all amounts owing the Trustee under Section 8.7.

 

7.9                               Trustee May File Proofs of Claim

 

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for amounts due the Trustee under Section 8.7) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), the Guarantor, the creditors of the Company or the Guarantor, or the property of the Company or the Guarantor and shall be entitled and empowered to collect and receive any moneys, securities or other property payable or deliverable upon conversion or exchange of the Securities or upon 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, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it under Section 8.7.  Nothing herein contained shall be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Securities, the Guarantee or the rights of any Holder under the Securities or the Guarantee, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

 

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7.10                        Application of Proceeds

 

Any moneys collected by the Trustee pursuant to this Article 7 in respect of the Securities of any series shall be applied in the following order at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of Principal, interest or Additional Amounts, if any, upon presentation of the several Securities in respect of which moneys have been collected and noting thereon the payment, or issuing Securities of such series and tenor in reduced principal amounts in exchange for the presented Securities of such series and tenor if only partially paid, or upon surrender thereof if fully paid:

 

(a)                                 To the payment of all amounts due the Trustee under Section 8.7 applicable to the Securities of such series in respect of which moneys have been collected;

 

(b)                                 In case the Principal of the Securities of such series in respect of which moneys have been collected shall not have become and be then due and payable, to the payment of interest on and Additional Amounts, if any, in respect of the Securities of such series in default in the order of the maturity of the installments of such interest and Additional Amounts, if any, with interest (to the extent that such interest has been collected by the Trustee) upon the overdue installments of interest and Additional Amounts, if any, at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in such Securities, such payments to be made ratably to the persons entitled thereto, without discrimination or preference;

 

(c)                                  In case the Principal of the Securities of such series in respect of which moneys have been collected shall have become and shall be then due and payable, to the payment of the whole amount then owing and unpaid upon all the Securities of such series for Principal, interest and Additional Amounts, if any, with interest upon the overdue Principal, and (to the extent that such interest has been collected by the Trustee) upon overdue installments of interest at the same rate as the rate of interest or Yield to Maturity (in the case of Original Issue Discount Securities) specified in the Securities of such series; and in case such moneys shall be insufficient to pay in full the whole amount so due and unpaid upon the Securities of such series, then to the payment of such Principal and interest or Yield to Maturity, without preference or priority of Principal over interest or Yield to Maturity, or of interest or Yield to Maturity over Principal, or of any installment of interest over any other installment of interest, or of any Security of such series over any other Security of such series, ratably to the aggregate of such Principal and accrued and unpaid interest or Yield to Maturity; and

 

(d)                                 To the payment of the remainder, if any, to the Company, or to the extent the Trustee collects any amount pursuant to the Guarantee, the Guarantor, or any other person lawfully entitled thereto.

 

7.11                        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 Guarantor, the Trustee and the Holders shall be restored to their former positions hereunder and thereafter all rights and remedies of the Company, the Guarantor, Trustee and the Holders shall continue as though no such proceeding had been instituted.

 

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7.12                        Undertaking for Costs

 

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, in either case in respect to the Securities of any series, a court may require any party litigant in such suit (other than the Trustee) to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant (other than the Trustee) in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 7.12 does not apply to a suit by a Holder pursuant to Section 7.7 or a suit by Holders of more than 10% in principal amount of the outstanding Securities of such series.

 

7.13                        Rights and Remedies Cumulative

 

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Securities in Section 2.8, 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.

 

7.14                        Delay or Omission Not Waiver

 

No delay or omission of the Trustee or of any Holder 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 7 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.

 

8.                                      TRUSTEE

 

8.1                               General

 

The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act and as set forth herein.  Notwithstanding the foregoing, 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.  Whether or not 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 Article 8.  The Trustee, prior to the occurrence of an Event of Default of which a Responsible Officer of the Trustee has actual knowledge and after the curing of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee.  If an Event of Default to the actual knowledge of a Responsible Officer of the Trustee has occurred and is continuing, the Trustee shall exercise 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 person would exercise or use under the circumstances in the conduct of his or her own affairs.

 

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8.2                               Certain Rights of Trustee

 

Subject to Sections 315(a) through (d) of the Trust Indenture Act:

 

(a)                                 the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any Officer’s Certificate, Opinion of Counsel, 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 person or persons.  The Trustee need not investigate any fact or matter stated in the 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, following reasonable notice, to make reasonable examination of the books, records and premises of the Company or the Guarantor, as the case may be, personally or by agent or attorney at the sole cost of the Company or the Guarantor, as the case may be, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation;

 

(b)                                 before the Trustee acts or refrains from acting, it may require an Officer’s Certificate and/or an Opinion of Counsel, which shall conform to Section 11.4.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.  Subject to Section 8.1, whenever in the administration of the trusts of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officer’s Certificate delivered to the Trustee, and such certificate, in the absence of negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof;

 

(c)                                  the Trustee may act through its attorneys, agents, custodians and nominees not regularly in its employ and shall not be responsible for the misconduct or negligence of any agent, attorney, custodian and nominee appointed with due care; provided that the Trustee shall be required to terminate any such agent, attorney, custodian or nominee if it has actual knowledge of any failure by such Person to perform its delegated duties;

 

(d)                                 any request, direction, order or demand of the Company or the Guarantor mentioned herein shall be sufficiently evidenced by an Officer’s Certificate (unless other evidence in respect thereof be herein specifically prescribed), and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the secretary or an assistant secretary of the Company or the Guarantor, as the case may be;

 

(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, order or direction of any of the Holders, unless such Holders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities that might be incurred by it in compliance with such request, order or direction;

 

(f)                                   the Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the direction of the Holders in accordance with Section 7.5 relating to the time,

 

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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;

 

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

 

(h)                                 subject to the other provisions of this Section 8.2, prior to the occurrence of an Event of Default hereunder and after the curing or waiving of all Events of Default, the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, Officer’s Certificate, Opinion of Counsel, Board Resolution, statement, instrument, opinion, report, notice, request, consent, order, approval, appraisal, bond, debenture, note, coupon, security, or other paper or document unless requested in writing so to do by the Holders of not less than a majority in aggregate principal amount of the Securities of all series affected then outstanding;

 

(i)                                     the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder; and

 

(j)                                    the Trustee may request that the Company and the Guarantor 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.

 

8.3                               Individual Rights of Trustee

 

The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company and the Guarantor with the same rights it would have if it were not the Trustee.  Any Agent may do the same with like rights.  However, the Trustee is subject to Sections 310(b) and 311 of the Trust Indenture Act.

 

8.4                               Trustee’s Disclaimer

 

The recitals contained herein and in the Securities (except the Trustee’s certificate of authentication) shall be taken as statements of the Company or the Guarantor and not of the Trustee, and the Trustee assumes no responsibility for the correctness of the same.  Neither the Trustee nor any of its agents makes any representation as to the validity or adequacy of this Indenture, the Securities or the Guarantees, except that the Trustee represents that it is duly authorized to execute and deliver this Indenture, authenticate Securities and perform its obligations hereunder and that the statements made by it in a Statement of Eligibility on Form T-1 supplied to the Company are true and accurate.  Neither the Trustee nor any of its agents shall be accountable for the Company’s or the Guarantor’s use or application of the proceeds from the Securities or for moneys paid over to the Company or the Guarantor pursuant to the Indenture.

 

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8.5                               Notice of Default

 

If any Default with respect to the Securities of any series occurs and is continuing and if such Default is known to a Responsible Officer of the Trustee, the Trustee shall give to each Holder of Securities of such series notice of such Default within 90 days after it occurs in the manner and to the extent provided in Section 313(c) of the Trust Indenture Act, unless such Default shall have been cured or waived before the mailing or publication of such notice; provided, however, that, except in the case of a Default in the payment of the Principal of, interest on or any Additional Amounts with respect to any Security of such Series, or in the payment of any sinking fund installment with respect to Securities of such series, the Trustee shall be fully protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or responsible officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Holders; and provided further that in the case of any default or breach of the character specified in Section 7.1(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.

 

8.6                               Reports by Trustee to Holders

 

(a)                                 Within 60 days after each March 1, beginning with March 1, 2009, the Trustee shall mail to each Holder as and to the extent provided in Trust Indenture Act Section 313(c) a brief report dated as of such March 1, if required by Trust Indenture Act Section 313(a).

 

(b)                                 The Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Security Register, a brief report with respect to the character and amount of any advances (and if the Trustee elects so to state, the circumstances surrounding the making thereof) made by the Trustee (as such) since the date of the last report transmitted pursuant to Subsection (a) of this Section 8.6 (or if no such report has yet been so transmitted, since the date of execution of this Indenture) for the reimbursement of which it claims or may claim a lien or charge, prior to that of the Securities, on property or funds held or collected by it as Trustee and which it has not previously reported pursuant to this Subsection, if such advances remaining unpaid at any time aggregate 10% or more of the principal amount of the Securities of such series outstanding at such time, such report to be transmitted within 90 days after such time.

 

A copy of each such report made pursuant to this Section 8.6 shall, at the time of such transmission to the Holders, be filed by the Trustee with each stock exchange upon which any Securities are listed, with the Commission and with the Company.  The Company will promptly notify the Trustee when any Securities are listed on any exchange or delisted therefrom.

 

8.7                               Compensation and Indemnity

 

The Company, or failing which, the Guarantor, shall pay to the Trustee such compensation as shall be agreed upon in writing from time to time for its services.  The compensation of the Trustee shall not be limited by any law on compensation of a trustee of an express trust.  The Company, or failing which, the Guarantor, shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses, disbursements and advances incurred or made by the Trustee (including the reasonable expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith.

 

The Company, or failing which, the Guarantor, shall indemnify the Trustee for, and hold it harmless against, any loss, liability, claim, damage or expense, including taxes (other than income taxes), incurred by it without negligence or bad faith on its part arising out of or in connection with the acceptance or

 

39

 

administration of this Indenture and the Securities or the issuance of the Securities or a series thereof or the trusts hereunder and the performance of its duties under this Indenture and the Securities, including the costs and expenses of defending itself against or investigating any claim asserted by any Person or liability in connection with the exercise or performance of any of its powers or duties under this Indenture and the Securities or in connection with enforcing the provisions of this Section 8.7.

 

The obligations of the Company and the Guarantor under this Section 8.7 to compensate and indemnify the Trustee and each predecessor Trustee and to pay or reimburse the Trustee and each predecessor Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or the rejection or termination of this Indenture under bankruptcy, insolvency or similar law or the earlier resignation or removal of the Trustee.  Such additional indebtedness shall be a senior claim to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities, and the Securities are hereby subordinated to such senior claim.  If the Trustee renders services and incurs expenses following an Event of Default under Section 7.1(g) or (h) hereof, the parties hereto and the Holders by their acceptance of the Securities hereby agree that such expenses are intended to constitute expenses of administration under any bankruptcy, insolvency or similar law.

 

8.8                               Replacement of Trustee

 

A resignation or removal of the Trustee as Trustee with respect to the Securities of any series and appointment of a successor Trustee as Trustee with respect to the Securities of any series shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 8.8.

 

The Trustee may resign as Trustee with respect to the Securities of any series at any time by so notifying the Company and the Guarantor in writing.  The Holders of a majority in principal amount of the outstanding Securities of any series may remove the Trustee as Trustee with respect to the Securities of such series by so notifying the Trustee in writing and may appoint a successor Trustee with respect thereto with the consent of the Company.  The Company may remove the Trustee as Trustee with respect to the Securities of any series if: (a) the Trustee is no longer eligible under Section 8.10 of this Indenture; (b) the Trustee is adjudged a bankrupt or insolvent; (c) a receiver or other public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting.

 

If the Trustee resigns or is removed as Trustee with respect to the Securities of any series, or if a vacancy exists in the office of Trustee with respect to the Securities of any series for any reason, the Company shall promptly appoint a successor Trustee with respect thereto.  Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the outstanding Securities of such series may appoint a successor Trustee in respect of such Securities to replace the successor Trustee appointed by the Company.  If the successor Trustee with respect to the Securities of any series does not deliver its written acceptance required by the next succeeding paragraph of this Section 8.8 within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company’s expense), the Company or the Holders of a majority in principal amount of the outstanding Securities of such series may petition any court of competent jurisdiction for the appointment of a successor Trustee with respect thereto.

 

A successor Trustee with respect to the Securities of any series shall deliver a written acceptance of its appointment to the retiring Trustee, to the Company and to the Guarantor.  Immediately after the delivery of such written acceptance, subject to the lien provided for in Section 8.7 and subject to the payment of any and all amounts then due and owing to the retiring Trustee, (a) the retiring Trustee shall

 

40

 

transfer all property held by it as Trustee in respect of the Securities of such series to the successor Trustee, (b) the resignation or removal of the retiring Trustee in respect of the Securities of such series shall become effective and (c) the successor Trustee shall have all the rights, powers and duties of the Trustee in respect of the Securities of such series under this Indenture.  A successor Trustee shall mail notice of its succession to each Holder of Securities of such series.

 

Upon request of any such successor Trustee, the Company and the Guarantor 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 the preceding paragraph.

 

The Company shall give notice of any resignation and any removal of the Trustee with respect to the Securities of any series and each appointment of a successor Trustee in respect of the Securities of such series to all Holders of Securities of such series.  Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.  Notwithstanding replacement of the Trustee with respect to the Securities of any series pursuant to this Section 8.8, the Company’s and the Guarantor’s obligations under Section 8.7 shall continue for the benefit of the retiring Trustee.

 

8.9                               Successor Trustee by Merger, Etc.

 

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act shall be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee herein; provided that such successor Trustee shall be otherwise qualified and eligible under this Article 8.

 

8.10                        Eligibility

 

This Indenture shall always have a Trustee who satisfies the requirements of Trust Indenture Act Section 310(a).  The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.

 

8.11                        Money Held in Trust

 

The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company.  Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law and except for money held in trust under Article 9 of this Indenture.

 

8.12                        Conflicting Interests

 

If the Trustee has or shall acquire a conflicting interest within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture.

 

8.13                        Communication by Holders with Other Holders

 

Holders may communicate pursuant to Section 312(b) of the Trust Indenture Act with other Holders with respect to their rights under this Indenture or the Securities.  The Company, the Guarantor, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the Trust Indenture Act with respect to such communications.

 

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9.                                      DISCHARGE OF INDENTURE; DEFEASANCE

 

9.1                               Discharge; Defeasance within One Year of Payment

 

Except as otherwise provided in this Section 9.1, the Company or the Guarantor may terminate the obligations of the Company and the Guarantor under the Securities of any series, the Guarantee and this Indenture with respect to Securities of such series if:

 

(a)                                 all Securities of such series previously authenticated and delivered (other than destroyed, lost or wrongfully taken Securities of such series that have been replaced or paid or Securities of such series that are paid pursuant to Section 4.1 or Securities of such series for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company or the Guarantor, as provided in Section 9.5) have been delivered to the Trustee for cancellation and the Company (or the Guarantor pursuant to the Guarantee) has paid all sums payable by it hereunder; or

 

(b)                                 (i)            the Securities of such series mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption;

 

(ii)           the Company or the Guarantor irrevocably deposits in trust with the Trustee, as trust funds solely for the benefit of the Holders of such Securities for that purpose, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee), without consideration of any reinvestment, to pay the Principal of and interest on the Securities of such series to maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder; and

 

(iii)          the Company delivers to the Trustee an Officer’s Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture with respect to the Securities of such series have been complied with.

 

With respect to the foregoing clause (a), only the Company’s and the Guarantor’s obligations under Section 8.7 in respect of the Securities of such series shall survive.  With respect to the foregoing clause (b), only the obligations of the Company and the Guarantor in Sections 2.2 through 2.12, 4.2, 8.7, 8.8, 9.4 and 9.5, as applicable, in respect of the Securities of such series and the Guarantee thereof shall survive until such Securities of such series are no longer outstanding.  Thereafter, only the obligations of the Company and the Guarantor in Sections 8.7, 9.4 and 9.5, as applicable, in respect of the Securities of such series and the Guarantee thereof shall survive.  After any such irrevocable deposit, the Trustee upon written request shall acknowledge in writing the discharge of the obligations of the Company and the Guarantor under the Securities of such series, the Guarantee thereof and this Indenture with respect to the Securities of such series except for those surviving obligations specified above.

 

9.2                               Defeasance

 

Except as provided below, the Company will be deemed to have paid, and the Company and the Guarantor will be discharged from any and all obligations in respect of, the Securities of any series and the Guarantee thereof, and the provisions of this Indenture will no longer be in effect with respect to the

 

42

 

Securities of such series and the Guarantee thereof (and the Trustee, at the expense of the Company and the Guarantor, shall execute proper instruments acknowledging the same), provided that the following conditions shall have been satisfied:

 

(a)                                 the Company or the Guarantor has irrevocably deposited in trust with the Trustee as trust funds solely for the benefit of the Holders of the Securities of such series, for payment of the Principal of, interest on and any Additional Amounts payable in respect of the Securities of such series, money or U.S. Government Obligations or a combination thereof sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, to pay and discharge the Principal of, interest on and any Additional Amounts payable in respect of the outstanding Securities of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the Trustee), as the case may be;

 

(b)                                 such deposit will not result in a breach or violation of, or constitute a Default under, this Indenture or any other material agreement or instrument to which the Company or the Guarantor, as the case may be, is a party or by which it is bound;

 

(c)                                  no Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit;

 

(d)                                 the Company shall have delivered to the Trustee either (i) a ruling directed to the Trustee received from the Internal Revenue Service to the effect that the Holders of the Securities of such series will not recognize income, gain or loss for federal income tax purposes as a result of such discharge under this Section 9.2 and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred or (ii) an Opinion of Counsel to the same effect as the ruling described in clause (i) above; and

 

(e)                                  the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the defeasance contemplated by this Section 9.2 of the Securities of such series have been complied with.

 

The obligations of the Company and the Guarantor in Sections 2.2 through 2.12, 4.2, 8.7, 8.8, 9.4 and 9.5, as applicable, with respect to the Securities of such series and the Guarantee thereof shall survive until such Securities are no longer outstanding.  Thereafter, only the obligations of the Company and the Guarantor in Sections 8.7 and 9.5, as applicable, shall survive.

 

The defeasance of obligations in respect of Securities of any series by the Company and the Guarantor under this Section 9.2 shall be effective notwithstanding any prior covenant defeasance in respect of Securities of such series by the Company or the Guarantor under Section 9.3.

 

9.3                               Covenant Defeasance

 

The Company and the Guarantor may omit to comply with the covenants in Sections 4.3, 4.4, 4.5, 5.1 and 5.3 and any other covenant relating to such series provided for in a Board Resolution or supplemental indenture pursuant to Section 2.3 that may by its terms be defeased pursuant to this Section

 

43

 

9.3, and such omission shall be deemed not to be an Event of Default under Section 7.1(c) or (g), with respect to the outstanding Securities of a series if:

 

(a)                                 the Company or the Guarantor has irrevocably deposited in trust with the Trustee as trust funds solely for the benefit of the Holders of the Securities of such series, for payment of the Principal of, interest on and any Additional Amounts payable in respect of the Securities of such series, money or U.S. Government Obligations or a combination thereof in an amount sufficient (unless such funds consist solely of money, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee) without consideration of any reinvestment and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, to pay and discharge the Principal of, interest on and any Additional Amounts payable in respect of the outstanding Securities of such series to maturity or earlier redemption (irrevocably provided for under arrangements satisfactory to the Trustee), as the case may be;

 

(b)                                 such deposit will not result in a breach or violation of, or constitute a Default under, this Indenture or any other material agreement or instrument to which the Company or the Guarantor, as the case may be, is a party or by which it is bound;

 

(c)                                  no Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit;

 

(d)                                 the Company shall have delivered to the Trustee either (i) a ruling directed to the Trustee received from the Internal Revenue Service to the effect that such Holders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and covenant defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred or (ii) an Opinion of Counsel to the same effect as the ruling described in clause (i) above; and

 

(e)                                  the Company has delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the covenant defeasance contemplated by this Section 9.3 of the Securities of such series have been complied with.

 

9.4                               Application of Trust Money

 

Subject to Section 9.5, the Trustee or Paying Agent shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 9.1, 9.2 or 9.3, as the case may be, in respect of the Securities of any series and shall apply the deposited money and the proceeds from deposited U.S. Government Obligations in accordance with the Securities of such series and this Indenture to the payment of Principal of, interest on and any Additional Amounts payable in respect of the Securities of such series; but such money need not be segregated from other funds except to the extent required by law.  The Company, and failing which, the Guarantor, agrees to pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 9.1, 9.2 or 9.3 or the Principal or 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 outstanding Securities.

 

44

 

9.5                               Repayment to Company and Guarantor

 

Subject to Sections 8.7, 9.1, 9.2 and 9.3, the Trustee and the Paying Agent shall promptly pay to the Company or to the Guarantor, as the case may be, upon request set forth in an Officer’s Certificate any money originally paid by a party making such request held by them at any time and not required to make payments hereunder and thereupon shall be relieved from all liability with respect to such money.  The Trustee and the Paying Agent shall pay to the Company or to the Guarantor, as the case may be, upon written request any money originally paid by a party making such request held by them and required to make payments hereunder that

 

(a)                                 remains unclaimed for two years; or

 

(b)                                 in the opinion of a nationally recognized firm of independent public accountants, expressed in a written certification thereof delivered to the Trustee and Paying Agent, are in excess of the amount that would then be required to be deposited to effect defeasance or covenant defeasance, as the case may be, in accordance with this Article 9.

 

After payment to the Company or to the Guarantor, Holders entitled to such money must look to the Company or to the Guarantor, as the case may be, for payment as general creditors unless an applicable law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease.

 

10.                               AMENDMENTS, SUPPLEMENTS AND WAIVERS

 

10.1                        Without Consent of Holders

 

The Company, the Guarantor and the Trustee may amend or supplement this Indenture, the Guarantee or the Securities of any series without notice to or the consent of any Holder:

 

(a)                                 to cure any ambiguity, defect or inconsistency in this Indenture; provided that such amendments or supplements shall not materially and adversely affect the interests of the Holders;

 

(b)                                 to comply with Sections 5.1 and 5.3;

 

(c)                                  to comply with any requirements of the Commission in connection with the qualification of this Indenture under the Trust Indenture Act;

 

(d)                                 to evidence and provide for the acceptance of appointment hereunder with respect to the Securities of any or all series by a successor Trustee;

 

(e)                                  to establish the form or forms or terms of Securities of any series or of the coupons appertaining to such Securities as permitted by Section 2.3;

 

(f)                                   to provide for uncertificated Securities and to make all appropriate changes for such purpose;

 

(g)                                  to provide for a further guarantee from a third party on outstanding Securities of any series and the Securities of any series that may be issued under this Indenture;

 

(h)                                 to change or eliminate any provision of this Indenture; provided that any such change or elimination shall become effective only when there are no outstanding Securities of any series

 

45

 

created prior to the execution of such supplemental indenture that is entitled to the benefit of such provision;

 

(i)                                     to supplement any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the defeasance and discharge of any series of Securities pursuant to Sections 9.1, 9.2 and 9.3, provided that any such action shall not adversely affect the interests of the Holders of such or any other series of Securities in any material respect; or

 

(j)                                    to make any change that does not materially and adversely affect the rights of any Holder.

 

10.2                        With Consent of Holders

 

Subject to Sections 7.4 and 7.7, without prior notice to any Holders, the Company, the Guarantor and the Trustee may amend this Indenture, the Guarantee and the Securities of any series with the written consent of the Holders of a majority in Principal (or, if any Securities are Original Issue Discount Securities, such portion of the Principal as may then be accelerated under Section 7.2) of the outstanding Securities of all series affected by such amendment (all such series voting as one class), and the Holders of a majority in Principal (or, if any Securities are Original Issue Discount Securities, such portion of the Principal as may then be accelerated under Section 7.2) of the outstanding Securities of all series affected thereby (all such series voting as one class) by written notice to the Trustee may waive future compliance by the Company and the Guarantor with any provision of this Indenture, the Guarantee or the Securities of such series.

 

Notwithstanding the provisions of this Section 10.2, without the consent of each Holder affected thereby, an amendment or waiver, including a waiver pursuant to Section 7.4, may not:

 

(a)                                 extend the stated maturity of the Principal of, or any sinking fund obligation or any installment of interest on, such Holder’s Security, or reduce the Principal thereof, the rate of interest thereon (including any amount in respect of original issue discount), or the Additional Amounts payable in respect thereof or adversely affect the rights of such Holder under any mandatory redemption or repurchase provision or any right of redemption or repurchase at the option of such Holder, or reduce the amount of the Principal of an Original Issue Discount Security that would be due and payable upon an acceleration of the maturity thereof pursuant to Section 7.2 or the amount thereof provable in bankruptcy, insolvency or similar proceeding, or change any place of payment where, or the currency in which, any Principal, interest thereon or Additional Amounts payable in respect thereof is payable, modify any right to convert or exchange such Holder’s Security for another security to the detriment of the Holder, or impair the right to institute suit for the enforcement of any such payment on or after the due date therefor;

 

(b)                                 reduce the percentage in principal amount of outstanding Securities of the relevant series the consent of whose Holders is required for any such supplemental indenture, or for any waiver of compliance with certain provisions of this Indenture or certain Defaults and their consequences provided for in this Indenture, provided however, that this clause shall not be deemed to require the consent of any Holder with respect to changes in the references to “the Trustee” and concomitant changes in this Section 10.2;

 

(c)                                  waive a Default in the payment of Principal of or interest on any Security of such Holder; or

 

46

 

(d)                                 modify any of the provisions of this Section 10.2, except to increase any such percentage 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.

 

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

 

It shall not be necessary for the consent of any Holder under this Section 10.2 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

 

After an amendment, supplement or waiver under this Section 10.2 becomes effective, the Company shall give to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver.  The Company will mail supplemental indentures to Holders upon request.  Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver.

 

The provisions of articles 86 to 94-8 of the Luxemburg act dated August 10, 1985 on commercial companies, as amended, shall not apply to the Securities of any series issued by Novartis Finance S.A.

 

10.3                        Revocation and Effect of Consent

 

Until an amendment or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the Security of the consenting Holder, even if notation of the consent is not made on any Security.  However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of its Security.  Such revocation shall be effective only if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective.  An amendment, supplement or waiver shall become effective with respect to any Securities affected thereby on receipt by the Trustee of written consents from the requisite Holders of outstanding Securities affected thereby.

 

The Company may, but shall not be obligated to, fix a record date (which may be not less than 10 nor more than 60 days prior to the solicitation of consents) for the purpose of determining the Holders of the Securities of any series affected entitled to consent to any amendment, supplement or waiver.  If a record date is fixed, then, notwithstanding the immediately preceding paragraph, those Persons who were such Holders at such record date (or their duly designated proxies) and only those Persons shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such Persons continue to be such Holders after such record date.  No such consent shall be valid or effective for more than 90 days after such record date.  After an amendment, supplement or waiver becomes effective with respect to the Securities of any series affected thereby, it shall bind every Holder of such Securities unless it is of the type described in any of clauses (a) through (d) of Section 10.2.  In case of an amendment or waiver of the type described in clauses (a) through (d) of Section 10.2, the amendment or waiver shall bind each such Holder who has consented to it and every subsequent Holder of a Security that evidences the same indebtedness as the Security of the consenting Holder.

 

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10.4                        Notation on or Exchange of Securities

 

If an amendment, supplement or waiver changes the terms of any Security, the Trustee may require the Holder thereof to deliver it to the Trustee.  The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder and the Trustee may place an appropriate notation on any Security of such series thereafter authenticated.  Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security of the same series and tenor that reflects the changed terms.

 

10.5                        Trustee to Sign Amendments, Etc.

 

The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article 10 is authorized or permitted by this Indenture, stating that all requisite consents have been obtained or that no consents are required and stating that such supplemental indenture constitutes the legal, valid and binding obligation of the Company and the Guarantor, enforceable against the Company and the Guarantor in accordance with its terms, subject to customary exceptions.  Subject to the preceding sentence, the Trustee shall sign such amendment, supplement or waiver if the same does not adversely affect the rights of the Trustee.  The Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

10.6                        Conformity with Trust Indenture Act

 

Every supplemental indenture executed pursuant to this Article 10 shall conform to the requirements of the Trust Indenture Act as then in effect.

 

11.                               MISCELLANEOUS

 

11.1                        Trust Indenture Act of 1939

 

This Indenture shall incorporate and be governed by the provisions of the Trust Indenture Act that are required to be part of and to govern indentures qualified under the Trust Indenture Act.

 

11.2                        Notices

 

Any notice or communication shall be sufficiently given if written and (a) if delivered in person, when received or (b) if mailed by first class mail, five days after mailing, or (c) as between any two of the Company, the Guarantor and the Trustee if sent by facsimile transmission, when transmission is confirmed, in each case addressed as follows:

 

if to the Company, as applicable, either to:

 

Novartis Capital Corporation

608 Fifth Avenue

New York, New York 10020

 

	
Telephone No.:
    	
+1 212 307 1122
    
	
Facsimile No.:
    	
+1 212 957 8367
    
	
Attention:
    	
Company Secretary
    

 

48

 

or

 

Novartis Securities Investment Ltd.

131 Front Street

Hamilton, HM 12, Bermuda

 

	
Telephone No.:
    	
+1 441 296 8025
    
	
Facsimile No.:
    	
+1 441 296 5083
    
	
Attention:
    	
Chairman of the Board of Directors
    

 

or

 

Novartis Finance S.A.

20, rue Eugène Ruppert

L-2453 Luxembourg, Luxembourg

 

	
Telephone No.:
    	
+352 26 29 42 01
    
	
Facsimile No.:
    	
+352 26 29 42 30
    
	
Attention:
    	
Chairman of the Board of Directors
    

 

in each case with a copy to the Guarantor at the address indicated below

 

if to the Guarantor:

 

Novartis AG

Lichtstrasse 35

4056 Basel, Switzerland

 

	
Telephone No.:
    	
+41 61 324 1111
    
	
Facsimile No.:
    	
+41 61 324 7826
    
	
Attention:
    	
Group General Counsel
    

 

if to the Trustee:

 

HSBC Bank USA, National Association

452 Fifth Avenue

New York, New York 10018

 

	
Telephone No.:
    	
+1 212 525 1363
    
	
Facsimile No.:
    	
+1 212 525 1300
    
	
Attention:
    	
Corporate Trust and Loan Agency
    

 

The Company, the Guarantor or the Trustee by written notice to the other may designate additional or different addresses for subsequent notices or communications.

 

49

 

Any notice or communication shall be sufficiently given to Holders of Securities by mailing to such Holders at their addresses as they shall appear on the Security Register.  Notice mailed shall be sufficiently given if so mailed within the time prescribed.  Copies of any such communication or notice to a Holder shall also be mailed to the Trustee and each Agent at the same time.

 

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.  Except as otherwise provided in this Indenture, if a notice or communication is mailed in the manner provided in this Section 11.2, it is duly given, whether or not the addressee receives it.

 

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 notice as herein contemplated, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder.

 

11.3                        Certificate and Opinion as to Conditions Precedent

 

Upon any request or application by the Company or the Guarantor to the Trustee to take any action under this Indenture, the Company or the Guarantor, as the case may be, shall furnish to the Trustee:

 

(a)                                 an Officer’s Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

 

(b)                                 an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

 

11.4                        Statements Required in Certificate or Opinion

 

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

 

(a)                                 a statement that each person 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 statement or opinion contained in such certificate or opinion is based;

 

(c)                                  a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

 

(d)                                 a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with; provided, however, that, with respect to matters of fact, an Opinion of Counsel may rely on an Officer’s Certificate or certificates of public officials.

 

50

 

11.5                        Evidence of Ownership

 

The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor, or the Trustee may deem and treat the person in whose name any Security shall be registered upon the Security Register for such series as the absolute owner of such Security (whether or not such Security shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the Principal of and, subject to the provisions of this Indenture, interest on such Security and for all other purposes; and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by any notice to the contrary.

 

11.6                        Rules by Trustee, Paying Agent or Registrar

 

The Trustee may make reasonable rules for action by or at a meeting of Holders.  The Paying Agent or Registrar may make reasonable rules for its functions.

 

11.7                        Payment Date other than a Business Day

 

If any date for payment of Principal or interest on any Security shall not be a Business Day at any place of payment, then payment of Principal of or interest on such Security, as the case may be, need not be made on such date, but may be made on the next succeeding Business Day at any place of payment with the same force and effect as if made on such date and no interest shall accrue in respect of such payment for the period from and after such date.

 

11.8                        Governing Law; Waiver of Jury Trial

 

The laws of the State of New York shall govern this Indenture, the Guarantee and the Securities.  Each of the Company, the Guarantor and the Trustee hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Indenture, the Securities or the transactions contemplated hereby.

 

11.9                        No Adverse Interpretation of Other Agreements

 

This Indenture may not be used to interpret another indenture or loan or debt agreement of the Company, the Guarantor or any Subsidiary of the Company or the Guarantor.  Any such indenture or agreement may not be used to interpret this Indenture.

 

11.10                 Successors

 

All agreements of the Company and the Guarantor in this Indenture, the Guarantee and the Securities shall bind its successors.  All agreements of the Trustee in this Indenture shall bind its successors.

 

11.11                 Duplicate Originals

 

The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.

 

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11.12                 Separability

 

In case any provision in this Indenture or in the Securities 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.

 

11.13                 Table of Contents, Headings, Etc.

 

The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms and provisions hereof.

 

11.14                 Incorporators, Stockholders, Officers and Directors of Company Exempt from Individual Liability

 

No recourse under or upon any obligation, covenant or agreement contained in this Indenture or any indenture supplemental hereto, or in any Security or any coupons appertaining thereto, or because of any indebtedness evidenced thereby, shall be had against any incorporator, as such, or against any past, present or future stockholder, officer, director or employee, as such, of the Company, of the Guarantor or of any successor, either directly or through the Company, the Guarantor or any successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of the Securities and the coupons appertaining thereto by the holders thereof and as part of the consideration for the issue of the Securities and the coupons appertaining thereto.

 

11.15                 Judgment Currency

 

The Company and the Guarantor severally agree, to the fullest extent that they 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 Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the day on which final unappealable judgment is entered, unless such day is not a Business Day in The City of New York, 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 Trustee could purchase in The City of New York the Required Currency with the Judgment Currency on the Business Day in The City of New York preceding the day on which a final unappealable judgment is entered and (b) their 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 (whether or not entered in accordance with subsection (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.

 

IN WITNESS whereof, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above.

 

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SIGNATORIES

 

	
Novartis   Capital Corporation,
    
	
as Issuer
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Meryl Zausner
    	
 
    
	
 
    	
Name: Meryl Zausner
    	
 
    
	
 
    	
Title: Chief Executive Officer
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Novartis   Securities Investment Ltd.,
    
	
as Issuer
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Emil Bock
    	
 
    
	
 
    	
Name: Emil Bock
    	
 
    
	
 
    	
Title: Member of the Board of Directors
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Novartis   Finance S.A.,
    
	
as Issuer
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Arthur William Deller
    	
 
    
	
 
    	
Name: Arthur William Deller
    	
 
    
	
 
    	
Title: Director
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Felix Senn
    	
 
    
	
 
    	
Name: Felix Senn
    	
 
    
	
 
    	
Title: Authorized Signatory
    	
 
    
				

 

Indenture Signature Page 1

 

 

	
Novartis   AG,
    
	
as Guarantor
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Dr. Thomas Werlen
    	
 
    
	
 
    	
Name: Dr. Thomas Werlen
    	
 
    
	
 
    	
Title: Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Felix Senn
    	
 
    
	
 
    	
Name: Felix Senn
    	
 
    
	
 
    	
Title: Authorized Signatory
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
HSBC   Bank USA, National Association,
    
	
as Trustee
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/ Vivian Ly
    	
 
    
	
 
    	
Name: Vivian Ly
    	
 
    
	
 
    	
Title: Assistant Vice President
    	
 
    

 

Indenture Signature Page 2

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