Document:

SUPPLEMENTAL INDENTURE

 Exhibit 4.2 
 Execution Version 
 GMX RESOURCES INC. 

 as Issuer 
 THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. 
 as Trustee

  
  
 FIRST SUPPLEMENTAL INDENTURE 
 Dated as of October 28, 2009 
 to 
 Indenture 
 Dated as of October 28, 2009 
  
  
 4.50%
Convertible Senior Notes due 2015 

 TABLE OF CONTENTS 
  
  
  

					
	 	  	 	  	PAGE
	ARTICLE 1
	DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
			
	SECTION 1.01.	  	Scope of Supplemental Indenture.	  	2
	SECTION 1.02.	  	Definitions.	  	2
	SECTION 1.03.	  	References to Interest.	  	11
	
	ARTICLE 2
	THE NOTES
			
	SECTION 2.01.	  	Title and Terms; Payments.	  	11
	SECTION 2.02.	  	Book-Entry Provisions for Global Notes.	  	12
	SECTION 2.03.	  	Reporting Requirement.	  	13
	SECTION 2.04.	  	Repurchase and Cancellation.	  	13
	
	ARTICLE 3
	FUNDAMENTAL CHANGES AND REPURCHASES THEREUPON
			
	SECTION 3.01.	  	Repurchase at Option of Holders Upon a Fundamental Change.	  	13
	SECTION 3.02.	  	Effect of Fundamental Change Repurchase Notice.	  	15
	SECTION 3.03.	  	Withdrawal of Fundamental Change Repurchase Notice.	  	16
	SECTION 3.04.	  	Deposit of Fundamental Change Repurchase Price.	  	16
	SECTION 3.05.	  	Notes Repurchased in Whole or in Part.	  	17
	SECTION 3.06.	  	Covenant to Comply With Applicable Laws Upon Repurchase of Notes.	  	17
	SECTION 3.07.	  	Repayment to the Company.	  	17
	
	ARTICLE 4
	CONVERSION
			
	SECTION 4.01.	  	Right to Convert.	  	17
	SECTION 4.02.	  	Conversion Procedures.	  	19
	SECTION 4.03.	  	Settlement Upon Conversion.	  	21
	SECTION 4.04.	  	Adjustment of Conversion Rate.	  	23
	SECTION 4.05.	  	Adjustments of Average Prices.	  	32
	SECTION 4.06.	  	Adjustments Upon Certain Fundamental Changes.	  	32
	SECTION 4.07.	  	Effect of Recapitalization, Reclassification, Consolidation, Merger or Sale.	  	34
	SECTION 4.08.	  	Taxes on Shares Issued.	  	35
	SECTION 4.09.	  	Reservation of Shares; Shares to be Fully Paid; Compliance With Governmental Requirements; Listing of Common Stock.	  	36
	SECTION 4.10.	  	Responsibility of Trustee.	  	36

					
	SECTION 4.11.	  	Notice to Holders Prior to Certain Actions.	  	37
	SECTION 4.12.	  	Shareholder Rights Plan.	  	37
	SECTION 4.13.	  	Company Determination Final.	  	38
	
	ARTICLE 5
	EVENTS OF DEFAULT; REMEDIES
			
	SECTION 5.01.	  	Events of Default.	  	38
	SECTION 5.02.	  	Acceleration of Maturity; Rescission and Annulment.	  	40
	SECTION 5.03.	  	Collection of Indebtedness and Suits for Enforcement by Trustee.	  	40
	SECTION 5.04.	  	Trustee May File Proofs of Claim.	  	41
	SECTION 5.05.	  	Application of Money Collected.	  	41
	SECTION 5.06.	  	Limitation on Suits.	  	41
	SECTION 5.07.	  	Unconditional Right of Holders to Receive Payment.	  	42
	SECTION 5.08.	  	Restoration of Rights and Remedies.	  	42
	SECTION 5.09.	  	Rights and Remedies Cumulative.	  	42
	SECTION 5.10.	  	Delay or Omission Not Waiver.	  	43
	SECTION 5.11.	  	Control by Holders.	  	43
	SECTION 5.12.	  	Waiver of Past Defaults.	  	43
	SECTION 5.13.	  	Undertaking for Costs.	  	43
	SECTION 5.14.	  	Waiver of Stay or Extension Laws.	  	44
	SECTION 5.15.	  	Violation of Certain Covenants.	  	44
	SECTION 5.16.	  	Notice of Default.	  	44
	SECTION 5.17.	  	Alternative Remedy for Failure to Comply with Reporting Obligations in the Indenture and Trust Indenture Act.	  	44
	
	ARTICLE 6
	SATISFACTION AND DISCHARGE
			
	SECTION 6.01.	  	Satisfaction and Discharge of the Supplemental Indenture.	  	45
	SECTION 6.02.	  	Deposited Monies to Be Held in Trust by Trustee.	  	46
	SECTION 6.03.	  	Paying Agent to Repay Monies Held.	  	46
	SECTION 6.04.	  	Return of Unclaimed Monies.	  	46
	SECTION 6.05.	  	Reinstatement.	  	46
	
	ARTICLE 7
	SUPPLEMENTAL INDENTURES
			
	SECTION 7.01.	  	Supplemental Indentures Without Consent of Holders.	  	47
	SECTION 7.02.	  	Supplemental Indentures With Consent of Holders.	  	48
	SECTION 7.03.	  	Notice to Holders of Supplemental Indentures.	  	49
	
	ARTICLE 8
	CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
			
	SECTION 8.01.	  	Company May Consolidate, etc., Only on Certain Terms.	  	49

					
	ARTICLE 9
	REDEMPTION
			
	SECTION 9.01.	  	Notice to Trustee.	  	50
	SECTION 9.02.	  	Redemption Notice.	  	50
	SECTION 9.03.	  	Effect of Redemption Notice.	  	51
	SECTION 9.04.	  	Deposit of Redemption Price.	  	51
	SECTION 9.05.	  	Repayment to the Company.	  	52
	
	ARTICLE 10
	MISCELLANEOUS
			
	SECTION 10.01.	  	Governing Law.	  	52
	SECTION 10.02.	  	Legal Holidays.	  	52
	SECTION 10.03.	  	No Security Interest Created.	  	52
	SECTION 10.04.	  	Trust Indenture Act.	  	52
	SECTION 10.05.	  	Benefits of Supplemental Indenture.	  	52
	SECTION 10.06.	  	Calculations.	  	52
	SECTION 10.07.	  	Effect of Headings and Table of Contents.	  	53
	SECTION 10.08.	  	Successors and Assigns.	  	53
	SECTION 10.09.	  	Execution in Counterparts.	  	53
	SECTION 10.10.	  	Separability Clause.	  	53
	SECTION 10.11.	  	Ratification of Original Indenture.	  	53
	SECTION 10.12.	  	The Trustee.	  	53
	SECTION 10.13.	  	Corporate Obligation.	  	53
	SECTION 10.14.	  	No Adverse Interpretation of other Agreements.	  	53
	
	EXHIBIT
	Schedule A  Make-Whole Table	  	A-1
	Schedule B  Form of Note	  	B-1

 FIRST SUPPLEMENTAL INDENTURE (this “Supplemental Indenture”), dated as of
October 28, 2009, between GMX Resources Inc., an Oklahoma corporation (the “Company”), and The Bank of New York Mellon Trust Company, N.A, (the “Trustee”) as trustee under the Indenture dated as of
October 28, 2009, between the Company and the Trustee (as amended or supplemented from time to time in accordance with the terms thereof, the “Original Indenture”). 
 RECITALS OF THE COMPANY 
 WHEREAS, the Company
executed and delivered the Original Indenture to the Trustee to provide, among other things, for the issuance, from time to time, of the Company’s unsecured Securities, in an unlimited aggregate principal amount, in one or more series to be
established by the Company under, and authenticated and delivered as provided in, the Original Indenture; 
 WHEREAS,
Section 9.01(g) of the Original Indenture provides for the Company and the Trustee to enter into an indenture supplemental to the Original Indenture to establish the form and terms of Securities of any series as contemplated by Sections 2.01
and 3.01 of the Original Indenture; 
 WHEREAS, the Board of Directors has duly adopted resolutions authorizing the Company to
execute and deliver this Supplemental Indenture; 
 WHEREAS, pursuant to the terms of the Original Indenture, the Company
desires to establish a new series of its Securities to be known as its “4.50% Convertible Senior Notes due 2015” (the “Notes”), the form and substance of such Notes and the terms, provisions and conditions thereof to be
set forth as provided in the Original Indenture and this Supplemental Indenture; 
 WHEREAS, the Form of Note, the certificate
of authentication to be borne by each Note and the Form of Conversion Notice, Form of Fundamental Change Repurchase Notice and Form of Assignment and Transfer contemplated under the terms of the Notes are to be substantially in the forms hereinafter
provided; and 
 WHEREAS, the Company has requested that the Trustee execute and deliver this Supplemental Indenture, and all
requirements necessary to make (i) this Supplemental Indenture a valid instrument in accordance with its terms, and (ii) the Notes, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the
Company, in each case, have been performed, and the execution and delivery of this Supplemental Indenture have been duly authorized in all respects. 

 NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH, for and in consideration of the
premises and the purchases of the Notes by the Holders thereof, it is mutually agreed, for the benefit of the Company and the equal and proportionate benefit of all Holders of the Notes, as follows: 
 ARTICLE 1 
 DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 
 SECTION 1.01. Scope of Supplemental
Indenture. The changes, modifications and supplements to the Original Indenture effected by this Supplemental Indenture shall be applicable only with respect to, and shall only govern the terms of, the Notes, which may be issued from time to
time, and shall not apply to any other Securities that may be issued under the Original Indenture unless a supplemental indenture with respect to such other Securities specifically incorporates such changes, modifications and supplements. The
provisions of this Supplemental Indenture shall supersede any corresponding or conflicting provisions in the Original Indenture. 
 SECTION 1.02. Definitions. For all purposes of the Indenture, except as otherwise expressly provided or unless the context otherwise requires: 
 (i) the terms defined in this Article 1 shall have the meanings assigned to them in this Article 1 and include the plural as
well as the singular; 
 (ii) all words, terms and phrases defined in the Original Indenture (but not otherwise
defined herein) shall have the same meanings as in the Original Indenture; 
 (iii) all other terms used herein
that are defined in the Trust Indenture Act, either directly or by reference therein, shall have the meanings assigned to them in the Trust Indenture Act; 
 (iv) all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with generally accepted accounting principles, and, except as otherwise herein expressly
provided, the term “generally accepted accounting principles” with respect to any computation required or permitted hereunder shall mean such accounting principles as are generally accepted at the date of this instrument; and 

(v) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to
this Supplemental Indenture as a whole and not to any particular Article, Section or other subdivision. 
 “Additional
Interest” has the meaning specified in Section 5.17. 
 “Additional Notes” has the meaning
specified in Section 2.01. 
 “Additional Shares” has the meaning specified in Section 4.06(a).

 “Applicable Conversion Rate” shall mean the Conversion Rate in effect at any given time. 
 “Bid Solicitation Agent” means the Trustee or an independent nationally recognized securities dealer selected by the
Company to solicit market bid quotations for the Notes, which shall in no event be an Affiliate of the Company. The Bid Solicitation Agent shall initially be the Trustee. 
  

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 “Business Day” means, solely for purposes of this Supplemental Indenture,
any day other than a Saturday, a Sunday or a day on which the Federal Reserve Bank of New York is authorized or required by law or executive order to close or to be closed. 
 “Capital Stock” means any and all shares, interests, participations, rights or other equivalents (however designated) of
corporate stock and limited liability company interests and, with respect to partnerships, partnership interests (whether general or limited) and any other interest or participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership. 
 “Cash Settlement” has the meaning
specified in Section 4.03(a). 
 “Clause A Distribution” has the meaning specified in
Section 4.04(c). 
 “Clause B Distribution” has the meaning specified in Section 4.04(c). 

“Clause C Distribution” has the meaning specified in Section 4.04(c). 
 “close of business” means 5:00 p.m. (New York City time). 
 “Combination Settlement” has the meaning specified in Section 4.03(a). 
 “Common Equity” of any Person means Capital Stock of such Person that is generally entitled (a) to vote in the
election of directors of such Person or (b) if such Person is not a corporation, to vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management or policies of such Person.

 “Common Stock” means the shares of common stock, par value $0.001 per share, of the Company as they exist on
the date of this Supplemental Indenture or any other shares of Capital Stock of the Company into which the Common Stock shall be reclassified or changed or, in the event of a merger, consolidation or other similar transaction involving the Company
that is otherwise permitted hereunder in which the Company is not the surviving corporation, the common stock, Common Equity interests, ordinary shares or depositary shares or other certificates representing Common Equity interests of such surviving
corporation or its direct or indirect parent corporation. 
 “Company” has the meaning set forth in the first
paragraph of this Supplemental Indenture. 
 “Continuing Director” means a director who either was a member of
the Board of Directors on October 22, 2009, or who becomes a member of the Board of Directors subsequent to such date and whose election, appointment or nomination for election by the Company’s shareholders is duly approved by a majority
of the Continuing Directors on the Board of Directors at the time of such approval, either by a specific vote or by approval of the proxy statement issued by the Company on behalf of the entire Board of Directors in which such individual is named as
nominee for director. Solely for purposes of this definition, the phrase “or any duly authorized committee of that board” in the definition of “Board of Directors” shall be disregarded. 
  

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 “Conversion Agent” means the Trustee or such other office or agency
designated by the Company where Notes may be presented for conversion. The Trustee shall initially be the Conversion Agent. 
 “Conversion Date” has the meaning specified in Section 4.02(b). 
 “Conversion
Notice” has the meaning specified in Section 4.02(b). 
 “Conversion Obligation” has the meaning
specified in Section 4.01(a). 
 “Conversion Price” means, in respect of each Note, as of any date,
$1,000, divided by the Applicable Conversion Rate as of such date. 
 “Conversion Rate” means,
initially, 53.3333 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustment as set forth herein. 
 “Custodian” means the Trustee, as custodian with respect to the Notes (so long as the Notes constitute Global Notes), or any successor entity. 
 “Daily Conversion Value” means, for each of the 20 consecutive Trading Days during the relevant Observation Period, 5% of the product of (a) the Applicable Conversion Rate and
(b) the Daily VWAP of the Common Stock on such Trading Day. 
 “Daily Measurement Value” means the
Specified Dollar Amount (if any), divided by 20. 
 “Daily Settlement Amount” for each of the 20
consecutive Trading Days during the relevant Observation Period, shall consist of: 
 (a) cash equal to the
lesser of (i) the Daily Measurement Value and (ii) the Daily Conversion Value, and 
 (b) if the Daily
Conversion Value exceeds the Daily Measurement Value, a number of shares of Common Stock equal to (i) the difference between the Daily Conversion Value and the Daily Measurement Value, divided by (ii) the Daily VWAP for such Trading
Day. 
 “Daily VWAP” means, for each of the 20 consecutive Trading Days during the applicable Observation
Period, the per share volume-weighted average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page “GMXR <equity> AQR” (or its equivalent successor if such page is not available) in respect of the period
from the scheduled open of trading until the scheduled close of trading of the primary trading session on such Trading Day (or if such volume-weighted average price is unavailable, the market value of one share of Common Stock on such Trading Day
determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained for this purpose by the Company). The “Daily VWAP” shall be determined without regard to after hours trading
or any other trading outside of the regular trading session trading hours. 
  

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 “Effective Date” has the meaning specified in Section 4.06(b).

 “Event of Default” has the meaning specified in Section 5.01. 
 “Ex-Dividend Date” has the meaning specified in Section 4.04(h). 
 “Fair Market Value” means the amount which a willing buyer would pay a willing seller in an arm’s length transaction.

 “Form of Assignment and Transfer” shall mean the “Form of Assignment and Transfer” attached as
Attachment 3 to the Form of Note attached hereto as Schedule B. 
 “Form of Conversion Notice” shall mean the
“Form of Conversion Notice” attached as Attachment 1 to the Form of Note attached hereto as Schedule B. 
 “Form of Fundamental Change Repurchase Notice” shall mean the “Form of Fundamental Change Repurchase Notice” attached as Attachment 2 to the Form of Note attached hereto as Schedule B. 
 “Fundamental Change” shall be deemed to have occurred at the time after the Notes are originally issued if any of the
following events occurs: 
 (a) a “person” or “group” within the meaning of
Section 13(d) of the Exchange Act other than the Company, its Subsidiaries and its and their employee benefit plans, has become the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the
Company’s Common Equity representing more than 50% of the voting power of the Company’s Common Equity and (x) such person or group files a Schedule 13D, Schedule 13G, Schedule TO or any other schedule, form or report under the
Exchange Act disclosing such beneficial ownership or (y) the Company otherwise knows or has reason to know of any such person or group, in any case, other than pursuant to a transaction that would otherwise be subject to clause (b) below
but for the proviso thereto; 
 (b) consummation of (A) any recapitalization, reclassification or
change of the Common Stock (other than changes resulting from a subdivision or combination) as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets or (B) any share
exchange, consolidation or merger of the Company pursuant to which the Common Stock will be converted into cash, securities or other property or any sale, lease or other transfer in one transaction or a series of transactions of all or substantially
all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any Person other than one of the Company’s Subsidiaries; provided, however, that any such share exchange, consolidation or merger will not be
a Fundamental Change if holders of the Company’s Common Equity immediately prior to such transaction collectively own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or
transferee or the parent thereof immediately after such transaction; 
  

 5 

 (c) Continuing Directors cease to constitute at least a majority of the
Company’s Board of Directors; 
 (d) the Company’s shareholders approve any plan or proposal for the
liquidation or dissolution of the Company; or 
 (e) the Common Stock (or other common stock or depositary shares
or receipts in respect thereof into which the Notes are then convertible) ceases to be listed or quoted on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any of their respective successors),
except as a result of a merger to which the Company is a party or a tender offer or exchange offer for the Common Stock or depositary shares or receipts in respect thereof or other common stock or depositary shares or receipts in respect thereof
into which the Notes are then convertible. 
 A transaction or event described in clause (b) above will not constitute a
Fundamental Change, however, if 90% of the consideration received or to be received by the Company’s common shareholders, excluding cash payments for fractional shares, in connection with the transaction or transactions consists of Publicly
Traded Securities and, as a result of such transaction or event, the Notes become convertible into such consideration, as described in Section 4.07 hereof. Solely for purposes of clause (c) of the definition of “Fundamental Change,”
the phrase “or any duly authorized committee of that board” in the definition of “Board of Directors” shall be disregarded. 
 “Fundamental Change Company Notice” has the meaning specified in Section 3.01(b). 
 “Fundamental Change Repurchase Date” has the meaning specified in Section 3.01(a). 
 “Fundamental Change Repurchase Notice” has the meaning specified in Section 3.01(a)(i). 
 “Fundamental Change Repurchase Price” has the meaning specified in Section 3.01(a). 
 “Global Note” means any Note that is a Global Security. 
 “Holder” or “Noteholder” means a Person in whose name a Note is registered in the Security Register. 
 “Indebtedness” means: 
 (i) all of the
Company’s indebtedness, obligations and other liabilities, contingent or otherwise, (A) for borrowed money, including overdrafts, foreign exchange contracts, currency exchange agreements, interest rate protection agreements and any loans
or advances from banks, whether or not evidenced by notes or similar instruments, or (B) evidenced by credit or loan agreements, bonds, debentures, notes or similar instruments, whether or not the recourse of the lender is to the whole of the
assets of the Company or to only a portion thereof, other than any account payable or other accrued current liability or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services; 
  

 6 

 (ii) all of the Company’s reimbursement obligations and other
liabilities, contingent or otherwise, with respect to letters of credit, bank guarantees or bankers’ acceptances; 
 (iii) all of the Company’s obligations and liabilities, contingent or otherwise, in respect of leases required, in conformity with generally accepted accounting principles, to be accounted for as capitalized lease obligations on the
Company’s balance sheet; 
 (iv) all of the Company’s obligations and other liabilities, contingent or
otherwise, under any lease or related document, including a purchase agreement, conditional sale or other title retention agreement, in connection with the lease of real property or improvements thereon (or any personal property included as part of
any such lease) which provides that the Company is contractually obligated to purchase or cause a third party to purchase the leased property or pay an agreed upon residual value of the leased property, including the Company’s obligations under
such lease or related document to purchase or cause a third party to purchase such leased property or pay an agreed upon residual value of the leased property to the lessor; 
 (v) all of the Company’s obligations, contingent or otherwise, with respect to an interest rate or other swap, cap,
floor or collar agreement or hedge agreement, forward contract or other similar instrument or agreement or foreign currency hedge, exchange, purchase or similar instrument or agreement; 
 (vi) all of the Company’s direct or indirect guaranties or similar agreements by us in respect of, and all of the
Company’s obligations or liabilities to purchase or otherwise acquire or otherwise assure a creditor against loss in respect of, indebtedness, obligations or liabilities of another Person of the kinds described in clauses (i) through
(v) above; and 
 (vii) any and all deferrals, renewals, extensions, refinancings and refundings of, or
amendments, modifications or supplements to, any indebtedness, obligation or liability of the kinds described in clauses (i) through (vi) above. 
 “Indenture” means the Original Indenture, as originally executed and as supplemented from time to time by one or more indentures supplemental thereto, including this Supplemental
Indenture, entered into pursuant to the applicable provisions of the Indenture, including, for all purposes of this instrument and any such supplemental indenture, the provisions of the Trust Indenture Act that are deemed to be a part of and govern
the Original Indenture and this Supplemental Indenture. 
 “Initial Notes” has the meaning specified in
Section 2.01. 
 “interest” means, when used with reference to the Notes, any interest payable under the
terms of the Notes, including Additional Interest, if any. 
  

 7 

 “Interest Payment Date” means, with respect to the payment of interest on
the Notes, each May 1 and November 1 of each year. 
 “Issue Date” means the first date the Notes are
originally issued as set forth on the face of such Note under this Supplemental Indenture. 
 “Last Reported Sale
Price” of the Common Stock, on any date means, the closing sale price per share (or, if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the
average ask prices) on that date as reported in composite transactions for the principal United States national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a United States
national or regional securities exchange on the relevant date, the “Last Reported Sale Price” shall be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by the Pink OTC
Market Inc. or similar organization. If the Common Stock is not so quoted, the “Last Reported Sale Price” shall be the average of the mid-point of the last bid and ask prices for the Common Stock on the relevant date from each of at
least three nationally recognized independent investment banking firms selected by the Company for this purpose. 
 “Make-Whole Fundamental Change” shall have the meaning specified in Section 4.06(a). 
 “Market Disruption Event” means (i) a failure by the primary United States national or regional securities exchange or market on which the Common Stock is listed or admitted for trading to open for trading during its
regular trading session or (ii) the occurrence or existence prior to 1:00 p.m., New York City time, on any Scheduled Trading Day for Common Stock for more than one half-hour period in the aggregate during regular trading hours of any suspension
or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options, contracts or future contracts relating to the Common Stock. 

“Measurement Period” has the meaning specified in Section 4.01(a)(ii). 
 “Merger Event” has the meaning specified in Section 4.07(a). 
 “Note” or “Notes” has the meaning specified in the fourth paragraph of the recitals of this Supplemental
Indenture, and shall include any Additional Notes issued pursuant to Section 2.01. 
 “Notice of Default”
has the meaning specified in Section 5.01(g). 
 “Observation Period” with respect to any Note surrendered
for conversion means: 
 (i) except as set forth in clause (ii) of this definition, if the relevant Conversion Date occurs
on or after February 1, 2015, the 20 consecutive Trading Days beginning on, and including, the 22nd Scheduled Trading Day immediately preceding May 1, 2015; 
  

 8 

 (ii) if the relevant Conversion Date occurs on or after the date of issuance of a Redemption
Notice, but prior to the relevant Redemption Date, the 20 consecutive Trading Day period beginning on, and including, the 22nd Scheduled Trading Day immediately preceding such Redemption Date; and 
 (iii) in all other instances, the 20 consecutive Trading Day period beginning on, and including, the third Trading Day immediately following
the relevant Conversion Date. 
 “Officer” means the Chairman of the Board, the Vice Chairman, the Chief
Executive Officer, the President, any Executive Vice President, any Senior Vice President, any Vice President, the Treasurer or the Secretary or any Assistant Treasurer or Assistant Secretary of the Company. 
 “open of business” means 9:00 a.m. (New York City time). 
 “Original Indenture” has the meaning specified in the first paragraph of this Supplemental Indenture. 
 “Paying Agent” has the meaning set forth in the Original Indenture, which shall initially be the Trustee, and shall be the
Person authorized by the Company to pay the principal amount of, interest on, Fundamental Change Repurchase Price of, or Redemption Price of, any Notes on behalf of the Company. 
 “Physical Notes” means permanent certificated Notes in registered form issued in denominations of $1,000 principal amount
and multiples thereof. 
 “Physical Settlement” has the meaning specified in Section 4.03(a). 

“Place of Payment” means, for purposes of the Notes, New York, New York. 
 “Publicly Traded Securities” means, in respect of a transaction or transactions described in clause (b) of the
definition of Fundamental Change, shares of common stock that are traded on any of The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or any or their respective successors) or will be so traded or quoted when
issued or exchanged in connection with such transaction or event. 
 “record date” has the meaning specified in
Section 4.04(i). 
 “Redemption Date” when used with respect to any Note to be redeemed, means the date
fixed for such redemption by or pursuant to the Indenture. 
 “Redemption Notice” has the meaning specified in
Section 9.02. 
 “Redemption Price” means the price at which the Notes may be redeemed, as set forth in
Section 9.01. 
 “Reference Property” has the meaning specified in Section 4.07(a). 
  

 9 

 “Regular Record Date” means, with respect to the payment of interest on the
Notes, the April 15 (whether or not a Business Day) immediately preceding an Interest Payment Date on May 1 and the October 15 (whether or not a Business Day) immediately preceding an Interest Payment Date on November 1.

 “Scheduled Trading Day” means a day that is scheduled to be a Trading Day on the primary United States
national or regional securities exchange or market on which the Common Stock is listed or admitted for trading. If the Common Stock is not so listed or admitted for trading, “Scheduled Trading Day” shall mean a Business Day. 
 “Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder. 
 “Settlement Method” means, with respect to any conversion of Notes,
Physical Settlement, Cash Settlement or Combination Settlement, as elected (or deemed to have been elected) by the Company. 
 “Significant Subsidiary” means a “significant subsidiary” as defined in Rule 1-02(w) of Regulation S-X under the Securities Act. 
 “Specified Dollar Amount” means the dollar amount per $1,000 principal amount of converted Notes as specified in the notice specifying the Company’s chosen Settlement Method.

 “Spin-Off” has the meaning specified in Section 4.04(c). 
 “Stated Maturity” means, with respect to any Note and the payment of the principal amount thereof, May 1, 2015.

 “Stock Price” has the meaning specified in Section 4.06(b). 
 “Successor Company” has the meaning specified in Section 8.01(a). 
 “Supplemental Indenture” has the meaning specified in the first paragraph hereof. 
 “Trading Day” means, except as provided in Section 4.03(g) hereof, a day on which (i) trading in the Common Stock
generally occurs on The NASDAQ Global Select Market or, if the Common Stock is not then listed on The NASDAQ Global Select Market, on the principal other United States national or regional securities exchange on which the Common Stock is then listed
or, if the Common Stock is not then listed on a United States national or regional securities exchange, on the principal other market on which the Common Stock is then traded, and (ii) a Last Reported Sale Price for the Common Stock is
available on such securities exchange or market; provided that if the Common Stock (or other security for which a closing sale price must be determined) is not so listed or traded, “Trading Day” means a Business Day.

 “Trading Price” of the Notes on any date of determination means the average of the secondary market bid
quotations obtained by the Bid Solicitation Agent for $1,000,000 principal amount of the Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers the Company
selects;

  

 10 

 
provided that, if three such bids cannot reasonably be obtained by the Bid Solicitation Agent but two such bids are obtained, then the average of the two bids shall be used, and if only
one such bid can reasonably be obtained by the Bid Solicitation Agent, that one bid shall be used. If the Bid Solicitation Agent cannot reasonably obtain at least one bid for $1,000,000 principal amount of the Notes from a nationally recognized
securities dealer, then the Trading Price per $1,000 principal amount of Notes shall be deemed to be less than 98% of the product of the Last Reported Sale Price of the Common Stock and the Applicable Conversion Rate. If the Company does not
instruct the Bid Solicitation Agent to obtain bids when required pursuant to Section 4.01(a)(ii), the Trading Price per $1,000 principal amount of Notes will be deemed to be less than 98% of the product of the Last Reported Sale Price of the
Common Stock and the Applicable Conversion Rate on each day the Company fails to do so. 
 “Trigger Event” has
the meaning specified in Section 4.04(c). 
 “Trustee” has the meaning set forth in the first paragraph of
this Supplemental Indenture. 
 “Underwriters” means Credit Suisse Securities (USA) LLC, Jefferies &
Company, Inc. and Capital One Southcoast, Inc. 
 “unit of Reference Property” has the meaning specified in
Section 4.07(a). 
 “Valuation Period” has the meaning specified in Section 4.04(c). 
 SECTION 1.03. References to Interest. Any reference to interest on, or in respect of, any Note in the Indenture shall be deemed
to include Additional Interest if in such context, Additional Interest is, was or would be payable pursuant to Section 5.17. Any express mention of the payment of Additional Interest in any provision hereof shall not be construed as excluding
Additional Interest in those provisions hereof where such express mention is not made. 
 ARTICLE 2 
 THE NOTES 
 SECTION 2.01. Title and Terms; Payments. There is hereby established a series of Securities designated the “4.50% Convertible Senior Notes due 2015” initially limited in aggregate principal amount to $86,250,000, which
amount shall be as set forth in a Company Order for the authentication and delivery of Notes pursuant to Section 3.03 of the Original Indenture. 
 The principal amount of Notes then Outstanding shall be payable at the Stated Maturity. Interest on the Notes shall accrue at a rate of 4.50% per annum, from October 28, 2009 or from the most
recent date on which interest has been paid or duly provided for, until the principal thereof is paid or made available for payment. Interest shall be payable on each Interest Payment Date, beginning on May 1, 2010, to the Person in whose name
a Note is registered on the Security Register at the close of business on the Regular Record Date immediately preceding the applicable Interest Payment Date. 
 The Company may, without the consent of the Holders of the Notes, hereafter issue additional Notes (“Additional Notes”) under the Indenture with the same terms and with the

  

 11 

 
same CUSIP numbers as the Notes issued on the date of this Supplemental Indenture (the “Initial Notes”) in an unlimited aggregate principal amount; provided that such
Additional Notes must be part of the same issue as the Initial Notes for federal income tax purposes. Any such Additional Notes shall constitute a single series together with the Initial Notes for all purposes hereunder, including, without
limitation, for purposes of any waivers, supplements or amendments to the Indenture requiring the approval of Holders of the Notes and any offers to purchase the Notes. 
 The Form of Note shall be substantially as set forth in Schedule B and the Form of Conversion Notice, the Form of Fundamental Change Repurchase Notice and the Form of Assignment and Transfer shall be
substantially as set forth in Attachments 1, 2 and 3, respectively, to Schedule B, each of which is incorporated into and shall be deemed a part of this Supplemental Indenture, and in each case with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted by the Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined to be necessary or appropriate by the Officers of the Company executing such Notes, as evidenced by their execution of the Notes. 
 The Company shall pay the principal of and interest on any Global Note in immediately available funds to the Depositary or its nominee, as
the case may be, as the registered Holder of such Global Note. The Company shall pay the principal of and interest on any Physical Notes at the office or agency designated by the Company for that purpose by check mailed to the Holders of these
Notes, unless a Holder timely requests to have such amounts paid by wire transfer in accordance with the final three sentences of this paragraph, in which case the Company shall instead pay such principal of and interest on any Physical Notes by
wire transfer in accordance with the transfer instructions provided in such request. The Company has initially designated the Trustee as its Paying Agent and Security Registrar in respect of the Notes and its agency in New York, New York as a place
where Notes may be presented for payment or for registration of transfer. The Company may, however, change the Paying Agent or Security Registrar for the Notes without prior notice to the Holders thereof, and the Company may act as Paying Agent or
Security Registrar for the Notes. Payments on any Physical Notes having an aggregate principal amount of more than $5,000,000 shall be payable, if the Holder of such Physical Notes so requests in accordance with the two immediately succeeding
sentences, by wire transfer of immediately available funds to an account specified by the Holder within the United States. To request payment by wire transfer, the Holder must give appropriate transfer instructions to the Trustee or other Paying
Agent (if not the Trustee) at least 15 Business Days before the requested wire payment is due and, in the case of any interest payments, the instructions must be given by the Person who is shown on the Trustee’s records as the Holder of the
Physical Note on the applicable Regular Record Date. All applications for payment by wire transfer shall be made no later than the applicable Regular Record Date and shall remain in effect unless and until new instructions are given in the manner
described in the immediately preceding sentence. 
 SECTION 2.02. Book-Entry Provisions for Global Notes. The Notes
initially shall be issued in the form of one or more Global Notes without interest coupons (i) registered in the name of Cede & Co., as nominee of the Depositary and (ii) delivered to the Trustee as custodian for the Depositary.

  

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 SECTION 2.03. Reporting Requirement. For purposes of the Notes, the period
within which the Company is required to perform its delivery obligation as set forth in Section 7.04 of the Original Indenture, shall be reduced from 30 days to 15 days. 
 SECTION 2.04. Repurchase and Cancellation. To the extent permitted by law, the Company may repurchase Notes in open-market
purchases or negotiated transactions without giving prior notice to Holders. The Company shall surrender any Notes repurchased by the Company to the Trustee for cancellation in accordance with Section 3.09 of the Original Indenture and any such
Notes repurchased by the Company shall be retired and no longer Outstanding. Any Notes surrendered for cancellation by the Company shall not be reissued or resold. 
 ARTICLE 3 
 FUNDAMENTAL CHANGES AND REPURCHASES THEREUPON 

SECTION 3.01. Repurchase at Option of Holders Upon a Fundamental Change. (a) If a Fundamental Change occurs at any time prior
to the Stated Maturity, then each Holder of Notes shall have the right, at such Holder’s option, to require the Company to repurchase for cash any or all of such Holder’s Notes, or any portion of the principal amount thereof, that is equal
to $1,000 or an integral multiple of $1,000, on a date (the “Fundamental Change Repurchase Date”) specified by the Company that is not less than 20 calendar days or more than 45 calendar days following the date of the Fundamental
Change Company Notice, at a repurchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but excluding, the Fundamental Change Repurchase Date (the “Fundamental Change Repurchase
Price”), unless the Fundamental Change Repurchase Date is after a Regular Record Date but on or prior to the Interest Payment Date to which such Regular Record Date relates, in which case the Company shall instead pay the full amount of
accrued and unpaid interest on the Interest Payment Date to the Holders of record on such Regular Record Date, and the Fundamental Change Repurchase Price shall be equal to 100% of the principal amount of the Notes to be repurchased pursuant to this
Article 3. 
 Purchases of Notes under this Section 3.01 shall be made, at the option of the Holder thereof, upon:

 (i) delivery to the Trustee (or other Paying Agent appointed by the Company) by a Holder, on or before the
close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, subject to extension to comply with applicable law, of a duly completed notice (the “Fundamental Change Repurchase Notice”) in the
form set forth in Attachment 2 to the Form of Note attached hereto as Schedule B specifying: 
 (A) in the case
of Physical Notes, the certificate numbers of the Notes to be delivered for repurchase; 
 (B) the portion of the
principal amount of Notes to be repurchased, which must be $1,000 or a multiple thereof; and 
  

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 (C) that the Notes are to be repurchased by the Company pursuant to the
applicable provisions of the Notes and the Indenture; and 
 (ii) delivery or book-entry transfer of the Notes to
the Trustee (or other Paying Agent appointed by the Company) (together with all necessary endorsements) at any time prior to the close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date, subject to extension
to comply with applicable law, at the applicable Corporate Trust Office of the Trustee (or other Paying Agent appointed by the Company), such delivery being a condition to receipt by the Holder of the Fundamental Change Repurchase Price therefor;
provided that (x) such Fundamental Change Repurchase Price shall be so paid pursuant to this Section 3.01 only if the Notes so delivered to the Trustee (or other Paying Agent appointed by the Company) shall conform in all respects
to the description thereof in the related Fundamental Change Repurchase Notice and (y) in the case of Global Notes, the Fundamental Change Repurchase Notice must comply with appropriate procedures of the Depositary. 
 Any repurchase by the Company contemplated pursuant to the provisions of this Section 3.01 shall be consummated by the delivery of the
consideration to be received by the Holder on the later of (i) the Fundamental Change Repurchase Date or (ii) the time of the book-entry transfer or delivery of the Notes (as specified in Section 3.02 hereof). 
 Notwithstanding anything herein to the contrary, any Holder delivering to the Trustee (or other Paying Agent appointed by the Company) the
Fundamental Change Repurchase Notice contemplated by this Section 3.01 shall have the right to withdraw, in whole or in part, such Fundamental Change Repurchase Notice at any time prior to the close of business on the Business Day immediately
preceding the Fundamental Change Repurchase Date by delivery of a written notice of withdrawal to the Trustee (or other Paying Agent appointed by the Company) in accordance with Section 3.03 below. 
 The Trustee (or other Paying Agent appointed by the Company) shall promptly notify the Company of the receipt by it of any Fundamental
Change Repurchase Notice or written notice of withdrawal thereof. 
 (b) On or before the 20th calendar day after the occurrence
of a Fundamental Change, the Company shall provide to all Holders of the Notes and the Trustee and Paying Agent (in the case of a Paying Agent other than the Trustee) a notice (the “Fundamental Change Company Notice”) of the
occurrence of such Fundamental Change and of the repurchase right at the option of the Holders arising as a result thereof. Such notice shall be sent by first class mail or in the case of Global Notes, in accordance with the procedures of the
Depositary for providing notices. Simultaneously with providing such Fundamental Change Company Notice, the Company shall publish a notice containing the information included therein on the Company’s website or through such other public medium
as the Company may use at such time. 
 Each Fundamental Change Company Notice shall specify: 
 (i) the events causing a Fundamental Change; 
 (ii) the date of the Fundamental Change; 
  

 14 

 (iii) the last date on which a Holder of Notes may exercise the repurchase
right pursuant to this Article 3; 
 (iv) the Fundamental Change Repurchase Price; 
 (v) the Fundamental Change Repurchase Date; 
 (vi) the name and address of the Paying Agent and the Conversion Agent, if applicable; 
 (vii) if applicable, the Applicable Conversion Rate and any adjustments to the Applicable Conversion Rate; 
 (viii) if applicable, that the Notes with respect to which a Fundamental Change Repurchase Notice has been delivered by a
Holder may be converted only if the Holder withdraws the Fundamental Change Repurchase Notice in accordance with Section 3.03; and 
 (ix) the procedures that Holders must follow to require the Company to repurchase their Notes. 
 No failure of the Company to give the foregoing notices and no defect therein shall limit the Noteholders’ repurchase rights or affect the validity of the proceedings for the repurchase of the Notes
pursuant to this Section 3.01. 
 (c) There shall be no repurchase of any Notes pursuant to this Section 3.01 if the
principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to such date (except in the case of an acceleration resulting from a Default by the Company in the payment of the Fundamental Change
Repurchase Price with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Notes (i) with respect to which a Fundamental Change Repurchase Notice has been withdrawn in compliance with this
Supplemental Indenture, or (ii) held by it during the continuance of an acceleration of the Notes (other than an acceleration resulting from a Default by the Company in the payment of the Fundamental Change Repurchase Price with respect to such
Notes) in which case, upon such return, the Fundamental Change Repurchase Notice with respect thereto shall be deemed to have been withdrawn. 
 SECTION 3.02. Effect of Fundamental Change Repurchase Notice. Upon receipt by the Paying Agent of the Fundamental Change Repurchase Notice specified in Section 3.01(a), the Holder of the
Note in respect of which such Fundamental Change Repurchase Notice was given shall (unless such Fundamental Change Repurchase Notice is withdrawn in accordance with Section 3.03) thereafter be entitled to receive solely the Fundamental Change
Repurchase Price in cash with respect to such Note. Such Fundamental Change Repurchase Price shall be paid to such Holder on the later of (x) the Fundamental Change Repurchase Date with respect to such Note (provided the conditions in
Section 3.01(a) have been satisfied) and (y) the time of book-entry transfer or delivery of such Note to the Paying Agent by the Holder thereof in the manner required by Section 3.01. 
  

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 SECTION 3.03. Withdrawal of Fundamental Change Repurchase Notice. (a) A
Fundamental Change Repurchase Notice may be withdrawn (in whole or in part) by means of a written notice of withdrawal delivered to the Paying Agent in accordance with the Fundamental Change Company Notice at any time prior to the close of business
on the Business Day immediately preceding the Fundamental Change Repurchase Date, specifying: 
 (i) the
principal amount of the Notes with respect to which such notice of withdrawal is being submitted; 
 (ii) in the
case of Physical Notes, the certificate numbers of the withdrawn Notes; and 
 (iii) the principal amount of such
Notes that remains subject to the original Fundamental Change Repurchase Notice, which portion must be in principal amounts of $1,000 or an integral multiple of $1,000; 
 provided, however, that in the case of Global Notes, the notice must comply with appropriate procedures of the Depositary. 
 The Paying Agent will promptly return to the respective Holders thereof any Physical Notes with respect to which a Fundamental Change
Repurchase Notice has been withdrawn in compliance with the provisions of this Section 3.03. 
 SECTION 3.04.
Deposit of Fundamental Change Repurchase Price. Prior to 11:00 a.m. (New York City time) on the Fundamental Change Repurchase Date, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an
Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 10.03 of the Original Indenture) an amount of money (in immediately available funds if deposited on such Business Day)
sufficient to pay the Fundamental Change Repurchase Price of and, if the Fundamental Change Repurchase Date occurs after a Regular Record Date and on or prior to the Interest Payment Date to which such Regular Record Date relates, accrued and unpaid
interest on, all the Notes or portions thereof that are to be repurchased as of the Fundamental Change Repurchase Date. The Company shall promptly notify the Trustee in writing of the amount of any deposits of cash made pursuant to this
Section 3.04. If the Paying Agent holds cash sufficient to pay the Fundamental Change Repurchase Price of, plus any such interest on, the Notes for which a Fundamental Change Repurchase Notice has been submitted and not withdrawn in accordance
with this Supplemental Indenture as of 11:00 a.m. New York City time on the Fundamental Change Repurchase Date, then as of such Fundamental Change Repurchase Date, (a) such Notes will cease to be Outstanding and interest will cease to accrue
thereon (whether or not book-entry transfer of such Notes is made or such Notes are delivered to the Paying Agent) and (b) all other rights of the Holders in respect thereof will terminate (other than the right to receive the Fundamental Change
Repurchase Price and, if the Fundamental Change Repurchase Date occurs after a Regular Record Date and on or prior to the Interest Payment Date to which such Regular Record Date relates, accrued and unpaid interest on such Notes, in the case of the
Fundamental Change Repurchase Price, upon delivery or book-entry transfer of such Notes). 
  

 16 

 SECTION 3.05. Notes Repurchased in Whole or in Part. Any Note that is to be
repurchased, whether in whole or in part, shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires in the case of Physical Notes, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Note,
without service charge, a new Note or Notes, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Note so surrendered that is not
repurchased. 
 SECTION 3.06. Covenant to Comply With Applicable Laws Upon Repurchase of Notes. In connection with
any repurchase of Notes under Section 3.01, the Company shall, in each case if required, (i) comply with Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act that may then be applicable, (ii) file a Schedule
TO or any other required schedule under the Exchange Act and (iii) otherwise comply with all federal and state securities laws, in each case, so as to permit the rights and obligations under Section 3.01 to be exercised in the time and in
the manner specified in Section 3.01. 
 SECTION 3.07. Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company any cash that remains unclaimed, together with interest, if any, thereon, held by them for the payment of the Fundamental Change Repurchase Price; provided that to the extent that the aggregate amount of cash
deposited by the Company pursuant to Section 3.04 exceeds the aggregate Fundamental Change Repurchase Price of, and any accrued and unpaid interest on, the Notes or portions thereof that the Company is obligated to repurchase as of the
Fundamental Change Repurchase Date, then as soon as practicable following the Fundamental Change Repurchase Date, the Trustee or the Paying Agent, as the case may be, shall return any such excess to the Company. 
 ARTICLE 4 
 CONVERSION 
 SECTION 4.01. Right to Convert. 
 (a) Subject to and upon compliance with the provisions of this Article 4, each Holder of Notes shall have the right, at such Holder’s
option, to convert the principal amount of any such Notes, or any portion of such principal amount that is $1,000 or an integral multiple thereof, at the Applicable Conversion Rate (subject to the settlement provisions set forth in
Section 4.03, the “Conversion Obligation”), (x) prior to the close of business on the Business Day immediately preceding February 1, 2015, but only upon the satisfaction of one or more of the conditions set forth in
clauses (i) through (v) below and only during the periods described therein and (y) on or after February 1, 2015 through the close of business on the Business Day immediately preceding the Stated Maturity irrespective of the
conditions set forth below: 
 (i) Prior to the close of business on the Business Day immediately preceding
February 1, 2015, a Holder may surrender all or a portion of its Notes for conversion during any fiscal quarter (and only during such fiscal quarter) commencing after January 1, 2010, if the Last Reported Sale Price of the Common Stock for
at least 20 Trading

  

 17 

 
Days during the period of 30 consecutive Trading Days ending on the last Trading Day of the immediately preceding fiscal quarter is greater than or equal to 130% of the applicable Conversion
Price in effect on each such Trading Day. 
 (ii) Prior to the close of business on the Business Day immediately
preceding February 1, 2015, a Holder of Notes may surrender its Notes for conversion during the five Business-Day period after any five consecutive Trading-Day period (the “Measurement Period”) in which the Trading Price per
$1,000 principal amount of Notes, as determined following a request by a Holder of the Notes in accordance with the procedures set forth in this Section 4.01(a)(ii), for each Trading Day of such Measurement Period was less than 98% of the
product of the Last Reported Sale Price of the Common Stock and the Applicable Conversion Rate. The Bid Solicitation Agent shall have no obligation to determine the Trading Price of the Notes in accordance with this Section 4.01(a)(ii) unless
requested by the Company, and the Company shall have no obligation to make such request unless a Holder provides the Company with reasonable evidence that the Trading Price per $1,000 principal amount of Notes would be less than 98% of the product
of the Last Reported Sale Price of the Common Stock and the Applicable Conversion Rate. At the time of receiving such evidence, the Company shall instruct the Bid Solicitation Agent to determine the Trading Price of the Notes beginning on the next
Trading Day and on each successive Trading Day until the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Applicable Conversion Rate. If the
Trading Price condition has been met the Company shall so notify the Holders of the Notes in the manner provided in Section 1.07 of the Original Indenture, the Trustee and the Conversion Agent. If, at any time after the Trading Price condition
has been met, the Trading Price per $1,000 principal amount of Notes is greater than or equal to 98% of the product of the Last Reported Sale Price of the Common Stock and the Applicable Conversion Rate for such date, the Company shall so notify the
Holders of the Notes in the manner provided in Section 1.07 of the Original Indenture, the Trustee and the Conversion Agent. 
 (iii) If, prior to the close of business on the Business Day immediately preceding February 1, 2015, the Company elects to: 
 (A) issue to all or substantially all holders of Common Stock certain rights (in the case of rights issued under a
shareholder rights agreement, only following the distribution of separate certificates evidencing such rights) entitling them to purchase, for a period of not more than 60 calendar days after the announcement date of such issuance to subscribe for
or purchase, shares of Common Stock at a price per share less than the average of the Last Reported Sale Prices of Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement of
such issuance; or 
 (B) distribute to all or substantially all holders of Common Stock the Company’s
assets, debt securities or rights to purchase securities of the Company, which distribution has a per share Fair Market Value, as reasonably determined

  

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by the Company’s Board of Directors, exceeding 10% of the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the date of announcement for such
distribution, 
 then, in either case, the Company shall notify the Holders of the Notes, in the manner provided in
Section 1.07 of the Original Indenture, at least 30 Scheduled Trading Days prior to the Ex-Dividend Date for such issuance or distribution. Once the Company has given such notice, Holders may surrender their Notes for conversion at any time
until the earlier of (x) the close of business on the Business Day immediately prior to such Ex-Dividend Date and (y) the Company’s announcement that such issuance or distribution will not take place, even if the Notes are not
otherwise convertible at such time. 
 (iv) If, prior to the close of business on the Business Day immediately
preceding February 1, 2015, a transaction or event that constitutes a Fundamental Change or a Make-Whole Fundamental Change occurs, regardless of whether a Holder has the right to require the Company to repurchase the Notes pursuant to Article
3 hereof, or if the Company is a party to a consolidation, merger, binding share exchange, or transfer or lease of all or substantially all of the Company’s assets, pursuant to which the Common Stock would be converted into cash, securities or
other assets, Holders may surrender Notes for conversion at any time from or after the date that is 30 Scheduled Trading Days prior to the anticipated effective date of the transaction until 35 Trading Days after the actual effective date of such
transaction or, if such transaction also constitutes a Fundamental Change, until the close of business on the Business Day immediately preceding the related Fundamental Change Repurchase Date. The Company shall notify Holders and the Trustee, in the
manner provided in Section 1.07 of the Original Indenture as promptly as practicable following the date the Company publicly announces such transaction, but in no event less than 30 Scheduled Trading Days prior to the anticipated effective date
of such transaction. 
 (v) If the Company calls the Notes for redemption, Holders may convert their Notes during
the period from, and including, the date of the Redemption Notice to the close of business on the Business Day prior to the Redemption Date, even if the Notes are not otherwise convertible at such time, after which time the Holder’s right to
convert shall expire (unless the Company defaults in the payment of the Redemption Price, in which case a Holder of Notes may convert such Notes until the Redemption Price has been paid or duly provided for). 
 (b) Notes may not be converted after the close of business on the Business Day immediately preceding May 1, 2015. 
 SECTION 4.02. Conversion Procedures. (a) Each Note shall be convertible at the office of the Conversion Agent and, in the case
of a Global Note, in accordance with the procedures of the Depositary. 
 (b) In order to exercise the conversion privilege with
respect to a beneficial interest in a Global Note, the Holder must complete the appropriate instruction form for conversion

  

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pursuant to the Depositary’s book-entry conversion program, furnish appropriate endorsements and transfer documents if required by the Company or the Trustee or Conversion Agent, and pay the
funds, if any, required by Section 4.03(e) and any transfer taxes, if required, pursuant to Section 4.08, and the Trustee or Conversion Agent must be informed of the conversion in accordance with the customary practice of the Depositary.
In order to exercise the conversion privilege with respect to any Physical Notes, the Holder of any such Notes to be converted, in whole or in part, shall: 
 (i) complete and manually sign the conversion notice provided on the back of the Note (the “Conversion Notice”) or a facsimile of the Conversion Notice; 
 (ii) deliver the Conversion Notice, which is irrevocable, and the Note to the Conversion Agent; 
 (iii) if required, furnish appropriate endorsements and transfer documents, 
 (iv) if required, pay all transfer or similar taxes as set forth in Section 4.08; and 
 (v) if required, make any payment required under Section 4.03(e). 
 The date on which the Holder satisfies all of the applicable requirements set forth above shall be the “Conversion Date.”
The Trustee will, as promptly as possible, and in any event within two (2) Business Days, provide the Company with notice of any conversion exercises by Holders of which a Responsible Officer becomes aware. 
 (c) Each Conversion Notice shall state the name or names (with address or addresses) in which any certificate or certificates for shares of
Common Stock which shall be issuable on such conversion shall be issued. All such Notes surrendered for conversion shall, unless the shares of Common Stock issuable on conversion are to be issued in the same name as the registration of such Notes,
be duly endorsed by, or be accompanied by instruments of transfer in form satisfactory to the Company duly executed by, the Holder or its duly authorized attorney. 
 (d) In case any Notes of a denomination greater than $1,000 shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of the Notes
so surrendered, without charge to such Holder, new Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Notes. 
 Each conversion shall be deemed to have been effected as to any such Notes (or portion thereof) surrendered for conversion on the relevant
Conversion Date; provided, however, that the Person in whose name any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall become the holder of record of such shares of Common Stock as of the
close of business on the relevant Conversion Date (in the case of Physical Settlement) or the last Trading Day of the relevant Observation Period (in the case of Combination Settlement), as the case may be. 
 (e) Upon the conversion of a beneficial interest in Global Notes, the Trustee (or other Conversion Agent appointed by the Company) shall
make a notation on such Global Notes as to

  

 20 

 
the reduction in the principal amount represented thereby. The Company shall notify the Trustee in writing of any conversions of Notes effected through any Conversion Agent other than the
Trustee. 
 (f) Notwithstanding the foregoing, a Note in respect of which a Holder has delivered a Fundamental Change Repurchase
Notice exercising such Holder’s option to require the Company to repurchase such Note may be converted only if such Fundamental Change Repurchase Notice is withdrawn in accordance with Article 3 hereof prior to the close of business on the
Business Day prior to the relevant Fundamental Change Repurchase Date. 
 SECTION 4.03. Settlement Upon Conversion.
(a) Subject to Section 4.02 and Section 4.06, upon any conversion of any Note, the Company may choose to pay or deliver, as the case may be, (i) solely cash (“Cash Settlement”), (ii) solely shares of its Common
Stock, together with cash, if applicable, in lieu of any fractional share of Common Stock (“Physical Settlement”) or (iii) a combination of cash and shares of its Common Stock, together with cash, if applicable, in lieu of any
fractional share of Common Stock (“Combination Settlement”). Subject to Section 4.03(h), the Company shall pay or deliver, as the case may be, to converting Holders, in respect of each $1,000 principal amount of Notes being
converted, the consideration due upon conversion as described below in Section 4.03(b) on (i) the third Business Day immediately following the relevant Conversion Date, if the Company elects Physical Settlement, and (ii) on the third
Business Day immediately following the last Trading Day of the relevant Observation Period, in the case of any other Settlement Method. 
 (b) The amount of cash and/or the number of shares of Common Stock due upon conversion of the Notes shall be computed as follows: 
 (i) if the Company elects to satisfy its Conversion Obligation by Physical Settlement, the Company shall deliver to the
converting Holder a number of shares of Common Stock equal to the product of (x) the aggregate principal amount of Notes to be converted, divided by $1,000 and (y) the Applicable Conversion Rate; 
 (ii) if the Company elects to satisfy its Conversion Obligation by Cash Settlement, the Company shall pay to the converting
Holder in respect of each $1,000 principal amount of Notes being converted cash in an amount equal to the sum of the Daily Conversion Values for each of the 20 consecutive Trading Days during the relevant Observation Period; and 
 (iii) if the Company elects (or is deemed to have elected) to satisfy its Conversion Obligation by Combination Settlement,
the Company shall pay or deliver, as the case may be, to the converting Holder in respect of each $1,000 principal amount of Notes being converted, an amount of cash and shares of Common Stock equal to the sum of the Daily Settlement Amounts for
each of the 20 consecutive Trading Days during the relevant Observation Period. 
 (c) The same Settlement Method shall be used
in each of the following cases: 
 (i) all conversions occurring on or after February 1, 2015, and all
conversions occurring on or after the date of issuance of a Redemption Notice and prior to the related Redemption Date; and 
  

 21 

 (ii) all conversions occurring on the same Conversion Date prior to
February 1, 2015 (except, if the Company elects to redeem the Notes, during the period after the date of issuance of a Redemption Notice and prior to the related Redemption Date). 
 provided however, that except as described in (i) and (ii) above, the Company shall not have any obligation to elect the
same Settlement Method with respect to conversions occurring on different Trading Days. If the Company elects a Settlement Method, the Company will inform Holders so converting through the Trustee of such Settlement Method selected no later than the
second Trading Day immediately following the related Conversion Date (or, in the case of any Conversion Date occurring on or after (x) the date of issuance of a Redemption Notice and prior to the related Redemption Date, in such Redemption
Notice or (y) February 1, 2015, no later than February 1, 2015). If the Company does not timely elect a Settlement Method, it shall no longer have the right to elect Cash Settlement or Physical Settlement, and it shall be deemed to
have elected Combination Settlement in respect of its Conversion Obligation, and the Specified Dollar Amount shall be equal to $1,000. If the Company elects Combination Settlement, but does not indicate a Specified Dollar Amount, the Specified
Dollar Amount shall be deemed to be $1,000. It is the Company’s current intent and policy to settle conversion through Combination Settlement with a Specified Dollar Amount of $1,000. 
 (d) Subject to clause (e) below, upon conversion, Holders shall not receive any separate cash payment for accrued and unpaid interest,
if any. 
 (e) If Notes are converted after the close of business on a Regular Record Date for the payment of interest, Holders
of such Notes at the close of business on such Regular Record Date will receive the full amount of interest payable on such Notes on the corresponding Interest Payment Date notwithstanding the conversion. Notes surrendered for conversion during the
period from the close of business on any Regular Record Date to the open of business on the immediately following Interest Payment Date, must be accompanied by funds equal to the full amount of interest, if any, payable on the Notes so converted;
provided that no such payment need be made (i) for conversions following the Regular Record Date immediately preceding the Stated Maturity; (ii) if the Company has specified a Redemption Date that is after a Regular Record Date and
on or prior to the Business Day immediately following the corresponding Interest Payment Date; (iii) if the Company has specified a Fundamental Change Repurchase Date that is after a Regular Record Date and on or prior to the Business Day
immediately following the corresponding Interest Payment Date or; (iv) to the extent of any Defaulted Interest, if any overdue interest exists at the time of conversion with respect to such Note. 
 (f) The Company shall not issue fractional shares of Common Stock upon conversion of Notes. If multiple Notes shall be surrendered for
conversion at one time by the same Holder, the number of full shares of Common Stock which shall be issuable upon conversion shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of Common Stock

  

 22 

 
would be issuable upon the conversion of any Notes, the Company shall make payment therefor in cash in lieu of fractional shares of Common Stock based on the Daily VWAP of the Common Stock on the
relevant Conversion Date (in the case of Physical Settlement) or based on the Daily VWAP on the last Trading Day of the relevant Observation Period (in the case of Combination Settlement). 
 (g) Solely for purposes of determining the consideration due upon conversion under this Section 4.03, and notwithstanding the
definition of “Trading Day” contained in Section 1.01, “Trading Day” means a day on which (i) there is no Market Disruption Event and (ii) trading in the Common Stock generally occurs on The NASDAQ Global
Select Market or, if the Common Stock is not then listed on The NASDAQ Global Select Market, on the principal other United States national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then
listed on a United States national or regional securities exchange, on the principal other market on which the Common Stock is then traded. If the Common Stock (or other security for which a Daily VWAP must be determined) is not so listed or quoted,
“Trading Day” means a Business Day. 
 (h) Upon surrender of Notes for conversion in connection with a Make-Whole
Fundamental Change, the Company shall, at its option, satisfy its Conversion Obligation by Physical Settlement, Cash Settlement or Combination Settlement in accordance with this Section 4.03. However, if the consideration paid for the Common Stock
in any Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change is composed entirely of cash, for any conversion of Notes following the Effective Date of such Make-Whole Fundamental Change, the amount of
cash due upon conversion of the Notes shall be calculated based solely on the Stock Price for such Make-Whole Fundamental Change (in lieu of the Daily VWAP), and the relevant Conversion Obligation per $1,000 principal amount of Notes shall be equal
to the Applicable Conversion Rate (including any adjustment as described in Section 4.06 hereof), multiplied by such Stock Price. In such event, the consideration due upon conversion shall be determined and paid to Holders solely in cash on
the third Business Day following the relevant Conversion Date. 
 SECTION 4.04. Adjustment of Conversion Rate. The
Conversion Rate shall be adjusted from time to time by the Company if any of the following events occurs, except that the Company shall not make any adjustment to the Conversion Rate if Holders of Notes participate (other than in the case of a share
split or share combination), at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Notes, in any of the transactions described in this Section 4.04 without having to convert their Notes as
if such Holders held a number of shares of Common Stock equal to the Applicable Conversion Rate, multiplied by the principal amount (expressed in thousands) of Notes held by such Holder. 
 (a) If the Company exclusively issues shares of its Common Stock as a dividend or distribution on shares of Common Stock, or if the Company
effects a share split or share combination, then the Conversion Rate shall be adjusted based on the following formula: 
  

											
	CR1	  	=	  	CR0	  	x	  	   OS0  
	  	
	  	  	  	  	OS1	  	

  

 23 

 where, 
  

					
	 CR0
	  	=	  	the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date of such dividend or distribution, or immediately prior to the open of business on
the effective date of such share split or share combination, as applicable;
			
	 CR1
	  	=	  	the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date or effective date;
			
	 OS0
	  	=	  	the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date or effective date; and
			
	 OS1
	  	=	  	the number of shares of Common Stock outstanding immediately after giving effect to such dividend, distribution, share split or share combination.

 Any adjustment made under this Section 4.04(a) shall become effective immediately after
the open of business on the Ex-Dividend Date for such dividend or distribution, or immediately after the open of business on the effective date for such share split or share combination. If any dividend or distribution of the type described in this
clause (a) is declared but not so paid or made, or any share split or combination of the type described in this clause (a) is announced but the outstanding shares of Common Stock are not split or combined, as the case may be, the
Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors determines not to pay such dividend or distribution, or not to split or combine the outstanding shares of Common Stock, as the case may be, to the
Conversion Rate that would then be in effect if such dividend, distribution, share split or share combination had not been declared or announced. 
 (b) If the Company issues to all or substantially all holders of the Common Stock any rights, options or warrants entitling them for a period of not more than 60 calendar days after the announcement date
of such issuance to subscribe for or purchase shares of Common Stock, at a price per share less than the average of the Last Reported Sale Prices of Common Stock for the 10 consecutive Trading-Day period ending on the Trading Day immediately
preceding the date of announcement of such issuance, the Conversion Rate shall be increased based on the following formula: 
  

											
	CR1	  	=	  	CR0	  	 x
  
	  	   OS0 + X  
	  	
	  	  	  	  	OS0 + Y	  	

 where, 
  

					
	CR0	  	=	  	the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such issuance;
			
	CR1	  	=	  	the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;

  

 24 

					
	 OS0
	  	=	  	the number of shares of Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date;
			
	 X
	  	=	  	the total number of shares of Common Stock issuable pursuant to such rights, options or warrants; and
			
	 Y
	  	=	  	the number of shares of Common Stock equal to the aggregate price payable to exercise such rights, options or warrants divided by the average of the Last Reported Sale
Prices of the Common Stock over the 10 consecutive Trading-Day period ending on the Trading Day immediately preceding the date of announcement of the issuance of such rights, options or warrants.

 Any increase made under this Section 4.04(b) shall be made successively whenever any such
rights, options or warrants are issued and shall become effective immediately after the open of business on the Ex-Dividend Date for such issuance. To the extent that shares of Common Stock are not delivered after the expiration of such rights,
options or warrants, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect had the increase with respect to the issuance of such rights, options or warrants been made on the basis of delivery of only the number
of shares of Common Stock actually delivered. If such rights, options or warrants are not so issued, the Conversion Rate shall be decreased to the Conversion Rate that would then be in effect if such Ex-Dividend Date for such issuance had not
occurred. 
 In determining whether any rights, options or warrants entitle the holders to subscribe for or purchase shares of
Common Stock at less than such average of the Last Reported Sale Prices of the Common Stock for the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the date of announcement for such issuance, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such
consideration, if other than cash, to be determined by the Board of Directors. 
 (c) If the Company distributes shares of any
class of Capital Stock of the Company, evidences of its Indebtedness, other assets or property of the Company or rights, options or warrants to acquire the Company’s Capital Stock or other securities to all or substantially all holders of the
Common Stock, excluding: 
 (i) dividends, distributions, rights, options or warrants as to which an adjustment
was effected pursuant to Section 4.04(a) or Section 4.04(b) above; 
 (ii) dividends or distributions
paid exclusively in cash; and 
 (iii) Spin-Offs as to which provisions set forth below in this
Section 4.04(c) shall apply; 
  

 25 

 then the Conversion Rate shall be increased based on the following formula: 
  

											
	CR1	  	=	  	CR0	  	 x
  
	  	   SP0   
	  	
	  	  	  	  	SP0 - FMV	  	

 where, 
  

					
	 CR0
	  	=	  	the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution;
			
	 CR1
	  	=	  	the Conversion Rate in effect immediately after the open of business on such Ex-Dividend Date;
			
	 SP0
	  	=	  	the average of the Last Reported Sale Prices of the Common Stock over the 10 consecutive Trading-Day period ending on the Trading Day immediately preceding the Ex-Dividend Date
for such distribution; and
			
	 FMV
	  	=	  	the Fair Market Value (as determined by the Board of Directors) of the shares of Capital Stock, evidences of Indebtedness, assets, property, rights, options or warrants
distributed with respect to each outstanding share of the Common Stock on the Ex-Dividend Date for such distribution.

 If the Board of Directors determines the “FMV” (as defined above)
of any distribution for purposes of this Section 4.04(c) by reference to the actual or when-issued trading market for any securities, it shall in doing so consider the prices in such market over the same period used in computing the Last
Reported Sale Prices of the Common Stock over the 10 consecutive Trading Day period ending on the Trading Day immediately preceding the Ex-Dividend Date for such distribution. Notwithstanding the foregoing, if “FMV” (as defined above) is
equal to or greater than “SP0” (as defined above),
in lieu of the foregoing increase, each Holder of Notes shall receive, in respect of each $1,000 principal amount thereof, at the same time and upon the same terms as holders of the Common Stock, the amount and kind of the Company’s Capital
Stock, evidences of Indebtedness, other assets or property of the Company or rights, options or warrants to acquire the Company’s Capital Stock or other securities that such Holder would have received if such Holder owned a number of shares of
Common Stock equal to the Conversion Rate in effect on the Ex-Dividend Date for the distribution. 
 Any increase made under the
above portion of this Section 4.04(c) shall become effective immediately after the open of business on the Ex-Dividend Date for such distribution. If such distribution is not so paid or made, the Conversion Rate shall be decreased to be the
Conversion Rate that would then be in effect if such distribution had not been declared. 
 With respect to an adjustment
pursuant to this Section 4.04(c) where there has been a payment of a dividend or other distribution on the Common Stock of shares of Capital Stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other
business unit of the Company (a “Spin-Off”), the Conversion Rate shall be increased based on the following formula: 
  

											
	CR1	  	=	  	CR0	  	 x
  
	  	   FMV0 + MP0  
	  	
	  	  	  	  	MP0	  	

  

 26 

 where, 
  

					
	 CR0
	  	=	  	the Conversion Rate in effect immediately prior to the end of the Valuation Period;
			
	 CR1
	  	=	  	the Conversion Rate in effect immediately after the end of the Valuation Period;
			
	 FMV0
	  	=	  	the average of the Last Reported Sale Prices of the Capital Stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock
(determined for purposes of the definition of Last Reported Sale Price as if such Capital Stock or similar equity interest were Common Stock) over the first 10 consecutive Trading Day period after, and including, the Ex-Dividend Date of the Spin-Off
(the “Valuation Period”); and
			
	 MP0
	  	=	  	the average of the Last Reported Sale Prices of Common Stock over the Valuation Period.

 The adjustment to the Conversion Rate under the preceding paragraph shall occur on the last day
of the Valuation Period; provided that in respect of any conversion during the Valuation Period, references above to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including the
Ex-Dividend Date of such Spin-Off to, but excluding, the Conversion Date in determining the Applicable Conversion Rate. 
 For
the purposes of this Section 4.04(c) (and subject in all respects to Section 4.12), rights, options or warrants distributed by the Company to all holders of its Common Stock entitling them to subscribe for or purchase shares of the
Company’s Capital Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events (a “Trigger Event”): (1) are deemed to be transferred with
such shares of Common Stock; (2) are not exercisable; and (3) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 4.04(c), (and no adjustment to the
Conversion Rate under this Section 4.04(c) will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options or warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required)
to the Conversion Rate shall be made under this Section 4.04(c). If any such right, option or warrant, including any such existing rights, options or warrants distributed prior to the date of this Supplemental Indenture, are subject to events, upon
the occurrence of which such rights, options or warrants become exercisable to purchase different securities, evidences of Indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of
distribution and Ex-Dividend Date of such deemed distribution (in which case the original rights, options or warrants shall be deemed to terminate and expire on such date without exercise by any of the holders). In addition, in the event of any
distribution or deemed distribution of rights, options or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of

  

 27 

 
calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 4.04(c) was made, (1) in the case of any such rights, options or warrants which shall
all have been redeemed or purchased without exercise by any Holders thereof, upon such final redemption or repurchase (x) the Conversion Rate shall be readjusted as if such rights, options or warrants had not been issued and (y) the
Conversion Rate shall then again be readjusted to give effect to such distribution, deemed distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or purchase price received by
holders of Common Stock with respect to such rights, options or warrants (assuming each such holder had retained such rights, options or warrants), made to all holders of Common Stock as of the date of such redemption or purchase, and (2) in
the case of such rights, options or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued. 
 For purposes of this Section 4.04(c) and subsections (a) and (b) of this Section 4.04, any dividend or distribution to
which this Section 4.04(c) applies which also includes one or both of: 
  

	 	(A)	a dividend or distribution of shares of Common Stock to which Section 4.04(a) applies (the “Clause A Distribution”); 

  

	 	(B)	a dividend or distribution of rights, options or warrants to which Section 4.04(b) applies (the “Clause B Distribution”),

 then (1) such dividend or distribution, other than the Clause A Distribution and the Clause B
Distribution, shall be deemed to be a dividend or distribution to which this Section 4.04(c) applies (the “Clause C Distribution”) and any Conversion Rate adjustment required by this Section 4.04(c) with respect thereto
shall then be made, and (2) the Clause A Distribution and Clause B Distribution shall be deemed to immediately follow the Clause C Distribution and any Conversion Rate adjustment required by Section 4.04(a) and Section 4.04(b) with
respect thereto shall then be made, except that, if determined by the Company, (I) the “Ex-Dividend Date” of the Clause A Distribution and the Clause B Distribution shall be deemed to be the Ex-Dividend Date of the Clause C
Distribution and (II) any shares of Common Stock included in the Clause A Distribution or Clause B Distribution shall be deemed not to be “outstanding immediately prior to the open of business on such Ex-Dividend Date or such effective
date” within the meaning of Section 4.04(a) or “outstanding immediately prior to the open of business on such Ex-Dividend Date” within the meaning of Section 4.04(b). 
 (d) If any cash dividend or distribution is made to all, or substantially all, holders of the outstanding Common Stock, the Conversion Rate
shall be adjusted based on the following formula: 
  

											
	CR1	  	=	  	CR0	  	 x
  
	  	 SP0
	  	
	  	  	  	  	   SP0 – C  
	  	

 where, 
  

					
	 CR0
	  	=	  	the Conversion Rate in effect immediately prior to the open of business on the Ex-Dividend Date for such dividend or distribution;

  

 28 

					
	 CR1
	  	=	  	the Conversion Rate in effect immediately after the open of business on the Ex-Dividend Date for such dividend or distribution;
			
	 SP0
	  	=	  	the Last Reported Sale Price of the Common Stock on the Trading Day immediately preceding the Ex-Dividend Date for such dividend or distribution; and
			
	 C
	  	=	  	the amount in cash per share the Company distributes to holders of the Common Stock.

 If “C” (as defined above) is equal to or greater than “SP
0” (as defined above), in lieu of the foregoing
increase, each Holder shall receive, for each $1,000 principal amount of Notes, at the same time and upon the same terms as holders of shares of Common Stock, the amount of cash that such Holder would have received if such Holder owned a number of
shares of Common Stock equal to the Conversion Rate on the Ex-Dividend Date for such cash dividend or distribution. Such increase shall become effective immediately after the open of business on the Ex-Dividend Date for such dividend or
distribution. If such dividend or distribution is not so paid, the Conversion Rate shall be decreased to be the Conversion Rate that would then be in effect if such dividend or distribution had not been declared. 
 (e) If the Company or any of its Subsidiaries make a payment in respect of a tender offer or exchange offer for Common Stock to the extent
that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the Last Reported Sale Price of Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer, the Conversion Rate shall be increased based on the following formula: 
  

											
	CR1	  	=	  	CR0	  	 x
  
	  	     AC + (SP1 x OS1)    
	  	
	  	  	  	  	OS0 x SP1	  	

 where, 
  

					
	CR0	  	=	  	the Conversion Rate in effect immediately prior to the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange
offer expires;
			
	CR1	  	=	  	the Conversion Rate in effect immediately after the close of business on the 10th Trading Day immediately following, and including, the Trading Day next succeeding the date such tender or exchange
offer expires;
			
	AC	  	=	  	the aggregate value of all cash and any other consideration (as determined by the Board of Directors) paid or payable for shares purchased in such tender or exchange
offer;
			
	OS0	  	=	  	the number of shares of Common Stock outstanding immediately prior to the date such tender or exchange offer expires (prior to giving effect to the purchase of all shares
accepted for purchase or exchange in such tender offer or exchange offer);

  

 29 

					
	OS1	  	=	    	the number of shares of Common Stock outstanding immediately after the date such tender or exchange offer expires (after giving effect to the purchase of all shares accepted for
purchase or exchange in such tender or exchange offer); and
			
	SP1	  	=	    	the average of the Last Reported Sale Prices of Common Stock over the 10 consecutive Trading-Day period commencing on the Trading Day next succeeding the date such tender or
exchange offer expires.

 The adjustment to the Conversion Rate under this Section 4.04(e) shall occur
at the close of business on the 10th Trading Day
immediately following, and including, the Trading Day next succeeding the date such tender or exchange offer expires; provided that in respect of any conversion within 10 Trading Days immediately following, and including, the expiration date
of any tender or exchange offer, references in this Section 4.04(e) with respect to 10 Trading Days shall be deemed replaced with such lesser number of Trading Days as have elapsed from, and including, the expiration date of such tender or
exchange offer to, but excluding, the Conversion Date in determining the Applicable Conversion Rate. 
 If the Company or one of
its Subsidiaries is obligated to purchase shares of Common Stock pursuant to any such tender or exchange offer, but the Company or such Subsidiary is permanently prevented by applicable law from effecting any such purchases or all such purchases are
rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate that would then be in effect if such tender or exchange offer had not been made. 
 (f) If any distribution or transaction described in clauses (a) to (e) above has not yet resulted in an adjustment to the Applicable Conversion Rate on the Conversion Date, and the shares of
Common Stock Holders shall receive on settlement of the relevant conversion are not entitled to participate in the relevant distribution or transaction (because they were not held on a related record date or otherwise), then the Company shall adjust
the number of shares it delivers to Holders to reflect the relevant distribution or transaction. 
 (g) Notwithstanding anything
to the contrary in this Article 4, if a Conversion Rate adjustment becomes effective on any Ex-Dividend Date as described above, and a Holder that has converted its Notes on or after such Ex-Dividend Date and on or prior to the related record date
would be treated as the record holder of shares of Common Stock as of the related Conversion Date as described in Section 4.03 based on an adjusted Conversion Rate for such Ex-Dividend Date, then, notwithstanding the foregoing Conversion Rate
adjustment provisions, the Conversion Rate adjustment relating to such Ex-Dividend Date will not be made for such converting Holder. Instead, such Holder will be treated as if such Holder were the record owner of the shares of Common Stock on an
unadjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment. 
 (h)
“Ex-Dividend Date” shall mean the first date on which the shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in
question. 
 (i) For purposes of this Section 4.04, “record date” shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of Common Stock have

  

 30 

 
the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or
other property, the date fixed for determination of shareholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). 
 (j) The Company from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least 20
Business Days, the increase is irrevocable during the period and the Board of Directors shall have made a determination that such increase would be in the best interests of the Company, which determination shall be conclusive. Whenever the
Conversion Rate is increased pursuant to this Section 4.04(j), the Company shall mail to Holders of record of the Notes a notice of the increase at least 15 days prior to the date the increased Conversion Rate takes effect, and such notice
shall state the increased Conversion Rate and the period during which it will be in effect. 
 (k) The Company may make such
increases in the Conversion Rate, in addition to any adjustments required by Sections 4.04(a), 4.04(b), 4.04(c), 4.04(d), 4.04(e) or 4.04(j), as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of
Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of shares (or rights to acquire shares) or from any event treated as such for income tax purposes. 
 (l) All calculations under this Article 4 shall be made by the Company and shall be made to the nearest cent (including, in the case of any
adjustment to the Conversion Rate, the resulting adjustment to the Conversion Price) or to the nearest one-ten-thousandth of a share (with one-half of a cent or five one-hundred-thousandths rounded upward), as the case may be. No adjustment shall be
required to be made for the Company’s issuance of shares of Common Stock or any securities convertible into or exchangeable for shares of Common Stock or rights to purchase shares of Common Stock or such convertible or exchangeable securities,
other than as provided in this Section 4.04 and in Section 4.12. 
 (m) Whenever the Conversion Rate is adjusted as
herein provided, the Company shall promptly file with the Trustee and any Conversion Agent an Officers’ Certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such
adjustment. Unless and until a Responsible Officer of the Trustee shall have received such Officers’ Certificate, the Trustee shall not be deemed to have knowledge of any adjustment of the Conversion Rate and may assume without inquiry that the
last Conversion Rate of which it has knowledge is still in effect. Promptly after delivery of such certificate, the Company shall prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the date on
which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to each Holder of the Notes. Failure to deliver such notice shall not affect the legality or validity of any such adjustment. 
 (n) For purposes of this Section 4.04, the number of shares of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company so long as the Company does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company, but shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. 
  

 31 

 (o) Notwithstanding the foregoing, if the application of the foregoing formulas would result
in a decrease in the Conversion Rate, no adjustment to the Conversion Rate shall be made (other than as a result of a share split or a share combination). 
 (p) Notwithstanding anything to the contrary in this Article 4, no adjustment to the Conversion Rate shall be made: 
 (i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of
dividends or interest payable on the Company’s securities and the investment of additional optional amounts in shares of Common Stock under any plan; 
 (ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed
by the Company or any of its Subsidiaries; 
 (iii) upon the issuance of any shares of Common Stock pursuant to
any option, warrant, right or exercisable, exchangeable or convertible security not described in clause (ii) of this Section 4.04(p) and outstanding as of the date the Notes were first issued; 
 (iv) for a change in the par value of the Common Stock; or 
 (v) for accrued and unpaid interest on the Notes, if any. 
 (q) No adjustment to the Conversion Rate shall be required unless the adjustment would require an increase or decrease of at least 1% of the
Conversion Rate. If an adjustment is not made because the adjustment does not change the Conversion Rate by at least 1%, then such adjustment will be carried forward and taken into account in any future adjustment. Notwithstanding the foregoing,
(i) upon any conversion of Notes (solely with respect to the Notes to be converted), (ii) on every one-year anniversary from the Issue Date of the Notes and (iii) on May 1, 2015, the Company shall give effect to all adjustments
that the Company has otherwise deferred pursuant to the immediately preceding sentence, and those adjustments will no longer be carried forward and taken into account in any future adjustment. 
 SECTION 4.05. Adjustments of Average Prices. Whenever any provision of the Indenture requires the Company to calculate the Last
Reported Sale Prices, the Daily VWAPs, the Daily Conversion Values or the Daily Settlement Amounts over a span of multiple days (including an Observation Period and the Stock Price for purposes of a Make-Whole Fundamental Change), the Company shall
make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date of the event occurs, at any time during the
period when the Last Reported Sale Prices, the Daily VWAPs, the Daily Conversion Values or the Daily Settlement Amounts are to be calculated. 
 SECTION 4.06. Adjustments Upon Certain Fundamental Changes. (a) If (i) a Fundamental Change (determined after giving effect to any exceptions to or exclusions from such definition, but
without regard to the proviso in clause (b) of the definition thereof) occurs or (ii) the Company calls the Notes for redemption pursuant to Article 9 (either event, a

  

 32 

 
“Make-Whole Fundamental Change”), and a Holder elects to convert its Notes in connection with such Make-Whole Fundamental Change, the Company shall, under certain
circumstances, increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional shares of Common Stock (the “Additional Shares”) as described below. A conversion of Notes shall be deemed for these
purposes to be “in connection with” a Make-Whole Fundamental Change described in clause (i) above if the Conversion Notice is received by the Conversion Agent from, and including, the Effective Date of the Make-Whole Fundamental
Change up to, and including, the Business Day immediately prior to the related Fundamental Change Repurchase Date (or, in the case of a Make-Whole Fundamental Change that would have been a Fundamental Change but for the proviso in clause
(b) of the definition thereof, the 35th Trading Day immediately following the Effective Date of such Make-Whole Fundamental Change). A conversion of Notes shall be deemed for these purposes to be “in connection with” a Make-Whole
Fundamental Change described in clause (ii) above if the Conversion Notice is received by the Conversion Agent from, and including, the date of issuance of a Redemption Notice pursuant to Article 9 up to, but excluding, the relevant Redemption
Date. The Company shall notify Holders of the Effective Date of any Make-Whole Fundamental Change and issue a press release announcing such Effective Date no later than five Business Days after such Effective Date. 
 (b) The number of Additional Shares, if any by which the Conversion Rate will be increased shall be determined by reference to the table
attached as Schedule A hereto, based on the date on which the Make-Whole Fundamental Change occurs or becomes effective (the “Effective Date”) and the price (the “Stock Price”) paid (or deemed paid) per share
of the Common Stock in the Make-Whole Fundamental Change. If the holders of the Common Stock receive only cash in any Make-Whole Fundamental Change described in clause (b) of the definition of Fundamental Change, the Stock Price shall be the
cash amount paid per share. Otherwise, the Stock Price shall be the average of the Last Reported Sale Prices of Common Stock over the five Trading-Day period ending on, and including, the Trading Day immediately preceding the Effective Date of the
Make-Whole Fundamental Change. In connection with a Make-Whole Fundamental Change triggered by a redemption of the Notes pursuant to Article 9, the Effective Date of such Make-Whole Fundamental Change shall be the date on which the Company issues
the relevant Redemption Notice. 
 (c) The Stock Prices set forth in the column headings of the table in Schedule A
hereto shall be adjusted as of any date on which the Conversion Rate of the Notes is otherwise adjusted pursuant to Section 4.04. The adjusted Stock Prices shall equal the Stock Prices applicable immediately prior to such adjustment,
multiplied by a fraction, the numerator of which is the Conversion Rate immediately prior to such adjustment giving rise to the Stock Price adjustment and the denominator of which is the Conversion Rate as so adjusted. The number of
Additional Shares set forth in such table shall be adjusted in the same manner and at the same time as the Conversion Rate as set forth in Section 4.04. 
 (d) The table in Schedule A hereto sets forth the Effective Date and the number of Additional Shares to be added to the Conversion Rate per $1,000 principal amount of Notes for various Stock Prices
and Effective Dates. 
  

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 The exact Stock Prices and Effective Dates may not be set forth in the table in Schedule
A, in which case: 
 (i) If the Stock Price is between two Stock Prices in the table or the Effective Date is
between two Effective Dates in the table, the number of Additional Shares shall be determined by a straight-line interpolation between the number of Additional Shares set forth for the higher and lower Stock Prices and the earlier and the later
Effective Dates, as applicable, based on a 365-day year. 
 (ii) If the Stock Price is greater than $100.00 per
share (subject to adjustment in the same manner as the Stock Prices set forth in the column headings of the table in Schedule A pursuant to clause (c)), no Additional Shares shall be added to the Conversion Rate. 
 (iii) If the Stock Price is less than $15.00 per share (subject to adjustment in the same manner as the Stock Prices as set
forth in the column headings of the table in Schedule A pursuant to clause (c)), no Additional Shares shall be added to the Conversion Rate. 
 Notwithstanding the foregoing, in no event shall the total number of shares of Common Stock issuable upon conversion exceed 66.6667 shares of Common Stock per $1,000 principal amount of Notes, subject to adjustments in the same manner as
the Conversion Rate as set forth in Section 4.04. 
 SECTION 4.07. Effect of Recapitalization, Reclassification,
Consolidation, Merger or Sale. (a) In the case of: 
 (i) any recapitalization, reclassification or change of
the Common Stock (other than changes resulting from a subdivision or combination); 
 (ii) any consolidation,
merger or combination involving the Company; 
 (iii) any sale, lease or other transfer to a third party of the
consolidated assets of the Company and its Subsidiaries substantially as an entirety; or 
 (iv) any statutory
share exchange; 
 in each case as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other
property or assets (including cash or any combination thereof) (any such event, a “Merger Event”), then, at and after the effective time of such Merger Event, the right to convert each $1,000 principal amount of Notes shall be
changed into a right to convert such principal amount of Notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock
equal to the Conversation Rate prior to such Merger Event would have owned or been entitled to receive (the “Reference Property”, with each “unit of Reference Property” meaning the type and amount of Reference
Property that a holder of one share of Common Stock is entitled to receive) and, prior to or at the effective time of such Merger Event, the Company or the successor or purchasing Person, as the case may be, shall execute with the Trustee a
supplemental indenture (which shall comply with the Trust Indenture Act as in force at

  

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the date of execution of such supplemental indenture) providing for such change in the right to convert each $1,000 principal amount of Notes; provided, however, that at and after
the effective time of the Merger Event (i) the Company shall continue to have the right to determine the form of consideration to be paid and delivered, as the case may be, upon conversion of the Notes in accordance with Section 4.03 and
(ii) (x) any amount payable in cash upon conversion of the Notes in accordance with Section 4.03 shall continue to be payable in cash, (y) any shares of Common Stock that the Company would have been required to deliver upon
conversion of the Notes in accordance with Section 4.03 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Common Stock would have been entitled to receive in such Merger Event
and (z) the Daily VWAP shall be calculated based on the value of a unit of Reference Property. 
 If, as a result of the
Merger Event, each share of Common Stock is converted into the right to receive more than a single type of consideration (determined based in part upon any form of holder election), then (x) the Reference Property into which the Notes will be
convertible will be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make such an election, and (y) the unit of Reference Property for purposes of the
foregoing paragraph shall refer to the consideration referred to in clause (x) attributable to one share of Common Stock. The Company shall notify Holders, the Trustee and the Conversion Agent (if other than the Trustee) of such weighted
average as soon as practicable after such determination is made. 
 The Company shall not become a party to any such Merger
Event unless its terms are consistent with this Section 4.07. Such supplemental indenture described in the second immediately preceding paragraph shall provide for adjustments which shall be as nearly equivalent to the adjustments provided for
in this Article 4 in the judgment of the Board of Directors or the board of directors of the successor Person. If, in the case of any such Merger Event, the Reference Property receivable thereupon by a holder of Common Stock includes shares of
stock, securities or other property or assets (including cash or any combination thereof) of a Person other than the successor or purchasing Person, as the case may be, in such Merger Event, then such supplemental indenture shall also be executed by
such other Person. 
 (b) The Company shall cause notice of the execution of such supplemental indenture to be mailed to each
Holder, at the address of such Holder as it appears on the register of the Notes maintained by the Registrar, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental
indenture. The above provisions of this Section 4.07 shall similarly apply to successive Merger Events. 
 SECTION 4.08. Taxes on Shares Issued. Any issue of stock certificates on conversions of Notes shall be made without charge to the converting Holder for any documentary, stamp or any similar issue or transfer tax in respect of
the issue thereof, and the Company shall pay any and all documentary, stamp or similar issue or transfer taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Notes pursuant hereto. The Company
shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in any name other than that of the Holder of any Notes converted, and the Company shall
not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid. 
  

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 SECTION 4.09. Reservation of Shares; Shares to be Fully Paid; Compliance With
Governmental Requirements; Listing of Common Stock. The Company shall provide, free from preemptive rights, out of its authorized but unissued shares or shares held in treasury, sufficient shares of Common Stock to satisfy conversion of the
Notes from time to time as such Notes are presented for conversion (assuming that, at the time of the computation of such number of shares or securities, all such Notes would be converted by a single Holder and Physical Settlement is applicable).

 Before taking any action that would cause an adjustment increasing the Conversion Rate to an amount that would cause the
Conversion Price to be reduced below the then par value, if any, of the shares of Common Stock issuable upon conversion of the Notes, the Company shall take all corporate action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such adjusted Conversion Price. 
 The Company covenants
that all shares of Common Stock that may be issued upon conversion of Notes shall be newly issued shares or treasury shares, shall be duly authorized, validly issued, fully paid and non-assessable and shall be free from preemptive rights and free
from any tax, lien or charge (other than those created by the Holder). 
 The Company shall list or cause to have quoted any
shares of Common Stock to be issued upon conversion of Notes on each national securities exchange or over-the-counter or other domestic market on which the Common Stock is then listed or quoted. 
 SECTION 4.10. Responsibility of Trustee. The Trustee and any other Conversion Agent shall not at any time be under any duty or
responsibility to any Noteholder to determine the Conversion Rate or whether any facts exist which may require any adjustment of the Conversion Rate, or with respect to the nature or extent or calculation of any such adjustment when made, or with
respect to the method(s) employed (or herein or in any supplemental indenture provided to be employed) in making the same. The Trustee and any other Conversion Agent shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which may at any time be issued or delivered upon the conversion of any Notes; and the Trustee and any other Conversion Agent make no representations with respect thereto.
Neither the Trustee nor any Conversion Agent shall be responsible for any failure of the Company to issue, transfer or deliver any shares of Common Stock or stock certificates or other securities or property or cash upon the surrender of any Notes
for the purpose of conversion or to comply with any of the duties, responsibilities or covenants of the Company contained in this Article 4. Without limiting the generality of the foregoing, neither the Trustee nor any Conversion Agent shall have
any responsibility to determine the correctness of any provisions contained in any supplemental indenture entered into pursuant to Section 4.07 relating either to the kind or amount of shares of stock or securities or property (including cash
or any combination thereof) receivable by Holders upon the conversion of their Notes after any event referred to in Section 4.07 or to any adjustment to be made with respect thereto, but, subject to the provisions of Section 6.01 of the
Original Indenture, may

  

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accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, the Officers’ Certificate (which the Company shall be obligated to file with
the Trustee prior to the execution of any such supplemental indenture) with respect thereto. 
 SECTION 4.11. Notice to
Holders Prior to Certain Actions. Unless a notice has been provided under Section 4.01(a)(iii) or Section 4.01(a)(iv), as applicable, in case: 
 (a) the Company shall declare a dividend (or any other distribution) on its Common Stock that would require an adjustment in the Conversion Rate pursuant to Section 4.04; or 
 (b) the Company shall authorize the granting to the holders of all or substantially all of its Common Stock of rights, options or warrants
to subscribe for or purchase any share of any class or any other rights, options or warrants that would require an adjustment in the Conversion Rate pursuant to Section 4.04; or 
 (c) of any reclassification or reorganization of the Common Stock of the Company (other than a subdivision or combination of its outstanding
Common Stock, or a change in par value, or from par value to no par value, or from no par value to par value), or of any consolidation or merger to which the Company is a party and for which approval of any shareholders of the Company is required,
or of the sale, lease or transfer of all or substantially all of the assets of the Company or any of its Subsidiaries; or 
 (d)
of the voluntary or involuntary dissolution, liquidation or winding up of the Company or any of its Subsidiaries; 
 then, in each case, the
Company shall cause to be filed with the Trustee and the Conversion Agent and to be mailed to each Noteholder at such Holder’s address appearing in the Security Register, as promptly as practicable but in any event at least 30 days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights, options or warrants, or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, lease, transfer, dissolution, liquidation or winding up
is expected to become effective or occur, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding up. 
 SECTION 4.12. Shareholder Rights Plan. Each share of
Common Stock, if any, issued upon conversion of Notes pursuant to this Article 4 shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such
legends, if any, in each case as may be provided by the terms of any shareholder rights plan adopted by the Company and in effect upon conversion of such Notes, as the same may be amended from time to time. If prior to any conversion, however, such
rights have separated from the shares of Common Stock in accordance with the provisions of the

  

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applicable shareholder rights agreement, the Conversion Rate shall be adjusted at the time of separation as if the Company distributed to all holders of the Common Stock, shares of the
Company’s Capital Stock, evidences of Indebtedness, assets, property, rights, options or warrants as described in Section 4.04(c), subject to readjustment in the event of the expiration, termination or redemption of such rights.

 SECTION 4.13. Company Determination Final. Any determination that the Company or the Board of Directors must make
pursuant to this Article 4 shall be conclusive if made in good faith, absent manifest error. 
 ARTICLE 5 
 EVENTS OF DEFAULT; REMEDIES 
 SECTION 5.01. Events of Default. Article Five of the Original Indenture shall not apply to the Notes. Instead, the events of default provisions set forth in this Article 5 shall, with respect
to the Notes, supersede in their entirety Article Five of the Original Indenture, and all references in the Original Indenture to Article Five thereof and events of default provisions therein, as the case may be, shall, with respect to the Notes, be
deemed to be references to this Article 5 and events of default provisions set forth in this Article 5, respectively. Each of the following events shall be an “Event of Default” wherever used herein with respect to the Notes:

 (a) default in the payment of the principal amount on any Note when due at the Stated Maturity, upon redemption, repurchase,
declaration of acceleration or otherwise; 
 (b) default in the payment of any interest (including Additional Interest, if any)
on any Notes when due and payable and such failure continues for a period of 30 days past the applicable due date; 
 (c)
failure by the Company to provide the Fundamental Change Company Notice or notice of a specified corporate transaction required pursuant to Section 3.01(b) or Section 4.01(a)(iii) or 4.01(a)(iv), in each case when due; 
 (d) failure by the Company’s to comply with its obligation to convert the Notes in accordance with Article 4 hereof upon exercise of
any Holder’s conversion right; 
 (e) failure by the Company to pay the Fundamental Change Repurchase Price pursuant to
Section 3.01(a) when due; 
 (f) failure by the Company to comply with its obligations under Article 8; 
 (g) failure by the Company to perform or observe any covenant of the Company in the Indenture, and such failure (other than a covenant a
default in whose performance or whose breach is elsewhere in this Section 5.01 specifically dealt with) continues for a period of 30 days after there has been given, by registered or certified mail, to the Company from the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Outstanding Notes a written notice, in each case received by the Company (and the Trustee, if applicable), specifying such default and requiring it to be
remedied and stating that such notice is a “Notice of Default” hereunder; provided, however, that the Company shall have 60 days after

  

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receipt of such notice to remedy any failure to comply with its obligations to deliver to the Trustee any documents or reports that the Company is required to file with the Commission pursuant to
Section 2.03 of this Supplemental Indenture and Section 7.04 of the Original Indenture; 
 (h) default by the Company
or any Significant Subsidiary of the Company with respect to any mortgage, agreement or other instrument under which there may be outstanding, or by which there may be secured or evidenced, any Indebtedness for money borrowed in excess of $10
million in the aggregate of the Company and/or any Significant Subsidiary of the Company, whether such Indebtedness now exists or shall hereafter be created (i) resulting in such Indebtedness becoming or being declared due and payable or
(ii) constituting a failure to pay the principal or interest of any such debt when due and payable at its stated maturity, upon required repurchase, upon declaration or otherwise; 
 (i) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company or any
Significant Subsidiary of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law, (ii) a decree or order adjudging the Company or any Significant
Subsidiary of the Company as bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the under any applicable federal or state law or
(iii) appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any Significant Subsidiary of the Company of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; 
 (j) the commencement by the Company or by any Significant Subsidiary of the Company of a voluntary case or proceeding under any applicable
federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by it to the entry of a decree or order for relief in respect of the Company or
of any Significant Subsidiary of the Company in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable federal or state law, or the consent by it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any Significant Subsidiary of the Company or of any substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or by any Significant Subsidiary of the Company in
furtherance of any such action; or 
 (k) a final judgment for the payment of $10 million or more (excluding any amounts covered
by insurance) rendered against the Company or any Significant Subsidiary of the Company, which judgment is not discharged or stayed within 60 days after (i) the date on which the right to appeal thereof has expired if no such appeal has
commenced, or (ii) the date on which all rights to appeal have been extinguished. 
  

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 The foregoing shall constitute Events of Default whatever the reason for any such Event of
Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. 
 SECTION 5.02. Acceleration of Maturity; Rescission and Annulment. (a) Subject to Section 5.17, if an Event of Default
(other than those specified in Sections 5.01(i) and 5.01(j) solely with respect to the Company) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than 25% in aggregate principal amount of the Outstanding
Notes may (and the Trustee upon request of such Holders shall) declare the principal plus any accrued and unpaid interest on, all the Outstanding Notes to be immediately due and payable, by a notice in writing to the Company (and to the Trustee if
given by Holders), and upon any such declaration such principal amount plus any accrued and unpaid interest shall become immediately due and payable. 
 Notwithstanding the foregoing, in the case of an Event of Default specified in Section 5.01(i) or Section 5.01(j) solely with respect to the Company, the principal amount plus any accrued and
unpaid interest on all Outstanding Notes will ipso facto become immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. 
 (b) At any time after such a declaration of acceleration has been made, the Holders of a majority in aggregate principal amount of the
Outstanding Notes, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences (other than with respect to an Event of Default under Sections 5.01(a), 5.01(b), 5.01(d), 5.01(e) or an Event of Default
in respect of any covenant that cannot be amended without the consent of each Holder affected under Section 7.02) if: 
 (i) such rescission and annulment will not conflict with any judgment or decree of a court of competent jurisdiction; and 
 (ii) all Events of Default, other than the non-payment of the principal amount plus accrued and unpaid interest on Notes that
have become due solely by such declaration of acceleration, have been cured or waived as provided in Section 5.12. 
 No
such rescission shall affect any subsequent default or impair any right consequent thereon. 
 SECTION 5.03. Collection
of Indebtedness and Suits for Enforcement by Trustee. The Company covenants that if a Default is made in the payment of the principal amount plus accrued and unpaid interest at the Maturity thereof or in the payment of the Redemption Price or
Fundamental Change Repurchase Price in respect of any Note, the Company will, upon demand of the Trustee, pay to it, for the benefit of the Holders of such Notes, the whole amount then due and payable on such Notes, and, in addition thereto, such
further amounts required pursuant to Section 5.07. 
 If an Event of Default occurs and is continuing, the Trustee may, but
shall not be obligated to, pursue any available remedy to collect the payment of the principal amount plus accrued but unpaid interest on the Notes or to enforce the performance of any provision of the

  

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Notes or the Indenture. The Trustee may maintain a proceeding even if the Trustee does not possess any of the Notes or does not produce any of the Notes in the proceeding. A delay or omission by
the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of, or acquiescence in, the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative. 
 SECTION 5.04. Trustee May File Proofs of Claim. In case of any judicial
proceeding relative to the Company (or any other obligor upon the Notes), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the
Trust Indenture Act in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, 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 it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other
amounts due the Trustee under Section 6.07 of the Original Indenture. 
 No provision of the Indenture shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding. 
 SECTION 5.05. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money to Holders, upon presentation of the Notes and the
notation thereon of the payment if only partially paid and upon surrender thereof if fully paid: 
 FIRST: To the
payment of all amounts due the Trustee under Section 6.07 of the Original Indenture; 
 SECOND: To the
payment of the amounts then due and unpaid on the Notes for the principal amount, Redemption Price, Fundamental Change Repurchase Price or interest, as the case may be, in respect of which or for the benefit of which such money has been collected,
ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes; and 
 THIRD: To the payment of the remainder, if any, to the Company or any other Person lawfully entitled thereto. 
 SECTION 5.06. Limitation on Suits. No Holder of any Note shall have any right to institute any proceeding, judicial or otherwise, with respect to the Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder (other than in the case of a Default specified in Section 5.01(a) or 5.01(b)), unless: 
 (i) such Holder has previously given written notice to the Trustee of a continuing Default; 
  

 41 

 (ii) the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request to the Trustee to pursue such remedy in its own name as Trustee hereunder; 
 (iii) no direction, in the opinion of the Trustee, inconsistent with such written request has been given to the Trustee by the Holders of a majority in aggregate principal amount of the Outstanding Notes;

 (iv) such Holder or Holders have provided to the Trustee security or indemnity reasonably satisfactory to the
Trustee against the expenses, losses and liabilities to be incurred in compliance with such request; and 
 (v)
the Trustee for 60 days after its receipt of such notice, request and provision of adequate security or indemnity has failed to institute any such proceeding; 
 it being understood and intended that no one or more Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of the Indenture to affect, disturb or
prejudice the rights of any other Holders, or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under the Indenture, except in the manner herein provided and for the equal and ratable benefit of all
the Holders. 
 SECTION 5.07. Unconditional Right of Holders to Receive Payment. Notwithstanding any other provision
of the Indenture, the right of any Holder to receive payment of the principal amount, Redemption Price, Fundamental Change Repurchase Price or accrued and unpaid interest in respect of the Notes held by such Holder, on or after the respective due
dates expressed in the Notes or any Redemption Price or Fundamental Change Repurchase Date, as applicable, and to convert the Notes in accordance with Article 4, or to bring suit for the enforcement of any such payment on or after such respective
dates or the right to convert, shall not be impaired or affected adversely without the consent of such Holder. 
 SECTION 5.08. Restoration of Rights and Remedies. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under the 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 Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. 
 SECTION 5.09. Rights and Remedies Cumulative. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in the last paragraph of
Section 3.06 of the Original Indenture, 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 shall not prevent the concurrent assertion
or employment of any other appropriate right or remedy. 
  

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 SECTION 5.10. Delay or Omission Not Waiver. No delay or omission of the Trustee
or of any Holder of any Note 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 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. 
 SECTION 5.11. Control by Holders. The Holders of a majority in principal amount of the Outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee, provided that: 
 (i) such direction shall not be in conflict with any rule of law or with the Indenture; and 
 (ii) the Trustee may refuse to follow any such direction that the Trustee determines is unduly prejudicial to the rights of
any other Holder or that would involve the Trustee in personal liability. 
 SECTION 5.12. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of the Outstanding Notes may on behalf of the Holders of all the Notes waive any past Default hereunder and its consequences, except a Default: 
 (i) described in Section 5.01(a), 5.01(b), 5.01(d) or 5.01(e); or 
 (ii) in respect of a covenant or provision hereof which under Article 7 cannot be modified or amended without the consent of
the Holder of each Outstanding Note affected. 
 Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose of the Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. 
 When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent
right. This Section 5.12 shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) is hereby expressly excluded from the Indenture, as permitted by the Trust Indenture Act. 
 SECTION 5.13. Undertaking for Costs. In any suit for the enforcement of any right or remedy under the Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee, in either case in respect of the Notes, a court may require any party litigant in such suit to file an undertaking to pay the costs of the suit, and the court may assess
reasonable costs, including reasonable attorney’s fees and expenses, against any party litigant in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant; but the provisions of this
Section 5.13 shall not apply to any suit instituted by the Company, to any

  

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suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% in principal amount of the Outstanding Notes, or to any suit
instituted by any Holder for the enforcement of the payment of the principal amount on any Note on or after Maturity of such Note, the Redemption Price or the Fundamental Change Repurchase Price. 
 SECTION 5.14. Waiver of Stay or Extension Laws. The Company covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal
of or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of the Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such
law had been enacted. 
 SECTION 5.15. Violation of Certain Covenants. A violation of Section 3.06 or any other
covenant or agreement in the Indenture that expressly provides that a violation of such covenant or agreement shall not constitute an Event of Default may only be enforced by the Trustee by instituting a legal proceeding against the Company for
enforcement of such covenant or agreement. 
 SECTION 5.16. Notice of Default. If a Default or Event of Default
under the Indenture occurs and is continuing and is known to the Trustee, the Trustee shall give notice of such Default or Event of Default to each Holder of the Notes within 90 days after it occurs. The Trustee may withhold notice to the Holders of
the Notes of any Event of Default, except defaults in payment of principal of or interest on the Notes, if and so long as a committee of the trust officers of the Trustee in good faith determines that the withholding of such notice is in the
interest of the Holders of the Notes. 
 SECTION 5.17. Alternative Remedy for Failure to Comply with Reporting
Obligations in the Indenture and Trust Indenture Act. Notwithstanding anything to the contrary in the Indenture, to the extent elected by the Company in its sole discretion, the sole remedy for an Event of Default described in
Section 5.01(g) above relating to the failure to comply with Section 7.04 of the Original Indenture as modified by Section 2.03 of this Supplemental Indenture or the failure to comply with the requirements of Section 314(a)(1) of
the Trust Indenture Act will for the first 60 days after the occurrence of such an Event of Default consist exclusively of the right to receive additional interest on the Notes at a rate equal to 0.25% per annum of the principal amount of the
Notes (the “Additional Interest”). This Additional Interest will be payable in the same manner and on the same dates as the stated interest payable on the Notes. The Additional Interest will accrue on all Outstanding Notes from and
including the date on which an Event of Default relating to the failure to comply with Section 7.04 of the Original Indenture as modified by Section 2.03 of this Supplemental Indenture or the failure to comply with Section 314(a)(1)
of the Trust Indenture Act first occurs to, but not including, the 61st day thereafter (or such earlier date on which the Event of Default relating to the failure to comply with Section 7.04 of the Original Indenture as modified by
Section 2.03 of this Supplemental

  

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Indenture or the failure to comply with Section 314(a)(1) of the Trust Indenture Act shall have been cured or waived). On such 61st day (or earlier, if the Event of Default relating to the
failure to comply with Section 7.04 of the Original Indenture as modified by Section 2.03 of this Supplemental Indenture or the failure to comply with Section 314(a)(1) of the Trust Indenture Act is cured or waived prior to such 61st
day), such Additional Interest will cease to accrue and, if the Event of Default relating to the failure to comply with Section 7.04 of the Original Indenture as modified by Section 2.03 of this Supplemental Indenture or the failure to
comply with Section 314(a)(1) of the Trust Indenture Act has not been cured or waived prior to such 61st day, the Notes will be subject to acceleration as provided in Section 5.02 hereof. The provisions of this paragraph shall not affect
the rights of Holders of Notes in the event of the occurrence of any other Event of Default. In the event the Company does not timely elect to pay the Additional Interest upon an Event of Default relating to the failure to comply with
Section 7.04 of the Original Indenture as modified by Section 2.03 of this Supplemental Indenture or the failure to comply with Section 314(a)(1) of the Trust Indenture Act in accordance with this paragraph, the Notes shall be subject
to acceleration as provided in Section 5.02 hereof. To make such election, the Company must notify the Holders, the Trustee and the Paying Agent of such election on or prior to the date such failure to comply with Section 7.04 of the
Original Indenture as modified by Section 2.03 of this Supplemental Indenture or the failure to comply with Section 314(a)(1) of the Trust Indenture Act becomes an Event of Default. 
 ARTICLE 6 
 SATISFACTION AND DISCHARGE

 SECTION 6.01. Satisfaction and Discharge of the Supplemental Indenture. Articles Four and Thirteen of the
Original Indenture shall not apply to the Notes. Instead, the satisfaction and discharge provisions set forth in this Article 6 shall, with respect to the Notes, supersede in their entirety Articles Four and Thirteen of the Original Indenture, and
all references in the Original Indenture to Articles Four and Thirteen thereof and satisfaction and discharge provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Article 6 and the satisfaction
and discharge provisions set forth in this Article 6, respectively. When (a) the Company shall deliver to the Registrar for cancellation all Notes theretofore authenticated (other than any Notes that have been destroyed, lost or stolen and in
lieu of or in substitution for which other Notes shall have been authenticated and delivered) and not theretofore canceled, or (b) all the Notes not theretofore canceled or delivered to the Trustee for cancellation shall have become due and
payable (whether at the Stated Maturity, on any Redemption Date or Fundamental Change Repurchase Date, upon conversion or otherwise) and the Company shall deposit with the Trustee, in trust, or deliver to the Holders, as applicable, cash or cash
and/or shares of Common Stock, solely to satisfy outstanding conversions, as applicable, sufficient to pay all amounts due (and shares of Common Stock deliverable following conversion, if applicable) on all of such Notes (other than any Notes that
shall have been mutilated, destroyed, lost or stolen and in lieu of or in substitution for which other Notes shall have been authenticated and delivered) not theretofore canceled or delivered to the Trustee for cancellation, including principal and
interest due, accompanied, except in the event the Notes are due and payable solely in cash at the Stated Maturity of the Notes or upon an earlier Redemption Date or Fundamental Change Repurchase Date, by a verification report as to the sufficiency
of the deposited amount from an independent certified accountant or other financial professional reasonably satisfactory to the Trustee (which may include any of the Underwriters), and if the

  

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Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Supplemental Indenture shall cease to be of further effect (except as to (i) rights
hereunder of Holders of the Notes to receive all amounts owing upon the Notes and the other rights, duties and obligations of Holders of the Notes, as beneficiaries hereof with respect to the amounts, if any, so deposited with the Trustee and
(ii) the rights, obligations and immunities of the Trustee hereunder), and the Trustee, on written demand of the Company accompanied by an Officers’ Certificate and an Opinion of Counsel as required by Section 1.03 of the Original
Indenture and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Supplemental Indenture; the Company, however, hereby agrees to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee, including the fees and expenses of its counsel, and to compensate the Trustee for any services thereafter reasonably and properly rendered by the Trustee in connection with this
Supplemental Indenture or the Notes. 
 SECTION 6.02. Deposited Monies to Be Held in Trust by Trustee. Subject to
Section 6.04, all monies and shares of Common Stock, if any, deposited with the Trustee pursuant to Section 6.01 shall be held in trust for the sole benefit of the Holders of the Notes, and such monies and shares of Common Stock shall be
applied by the Trustee to the payment, either directly or through any Paying Agent (including the Company if acting as its own Paying Agent), to the Holders of the particular Notes for the payment, settlement or redemption of which such monies or
shares of Common Stock have been deposited with the Trustee, of all sums or amounts due and to become due thereon for principal and interest, if any. 
 SECTION 6.03. Paying Agent to Repay Monies Held. Upon the satisfaction and discharge of the Indenture, all monies and shares of Common Stock, if any, then held by any Paying Agent (if other
than the Trustee) shall, upon written request of the Company, be repaid to it or paid to the Trustee, and thereupon such Paying Agent shall be released from all further liability with respect to such monies and shares of Common Stock. 
 SECTION 6.04. Return of Unclaimed Monies. Subject to the requirements of applicable law, any monies and shares of Common Stock
deposited with or paid to the Trustee for payment of the principal of or interest, if any, on the Notes and not applied but remaining unclaimed by the Holders of the Notes for two years after the date upon which the principal of or interest, if any,
on such Notes, as the case may be, shall have become due and payable, shall be repaid to the Company by the Trustee on demand, and all liability of the Trustee shall thereupon cease with respect to such monies and shares of Common Stock; and the
Holder of any of the Notes shall thereafter look only to the Company for any payment or delivery that such Holder of the Notes may be entitled to collect unless an applicable abandoned property law designates another Person. 
 SECTION 6.05. Reinstatement. If the Trustee or the Paying Agent is unable to apply any money or shares of Common Stock in
accordance with Section 6.02 by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s obligations under the Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section 6.01 until such time as the Trustee or the Paying Agent is permitted to apply all such money and shares of Common Stock in accordance with Section 6.02;
provided, however, that if the Company makes

  

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any payment of interest on, principal of or payment or delivery in respect of any Note following the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders
of such Notes to receive such payment from the money or shares of Common Stock, if any, held by the Trustee or Paying Agent. 
 ARTICLE 7 
 SUPPLEMENTAL INDENTURES 
 SECTION 7.01. Supplemental Indentures Without Consent of Holders. Section 9.01 of the Original Indenture shall not apply to
the Notes. Instead, the provisions set forth in this Section 7.01 shall, with respect to the Notes, supersede in their entirety Section 9.01 of the Original Indenture, and all references in the Original Indenture to Section 9.01
thereof and provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Section 7.01 and provisions set forth in this Section 7.01, respectively. The Company and the Trustee may modify or
amend the Indenture or the Notes without the consent of any Noteholder to: 
 (i) add guarantees with respect to
the Notes or secure the Notes; 
 (ii) evidence the assumption of the Company’s obligations to the Holders
of Notes by a Successor Company relating to consolidations, mergers and sales of assets pursuant to Article 8 or Section 4.07 hereof; 
 (iii) surrender any right or power herein conferred upon the Company; 
 (iv) add covenants or Events of Default for the benefit of the Holders of the Notes; 
 (v) cure any
ambiguity or to correct or supplement any provision herein which may be inconsistent with any other provision herein and that does not adversely affect the Holders of the Notes; 
 (vi) modify or amend the Indenture to such extent as shall be necessary to effect the qualifications of the Indenture or any
supplemental indenture under the Trust Indenture Act as then in effect; 
 (vii) establish the forms or terms of
the Notes (substantially in the form of Schedule B); 
 (viii) evidence the acceptance of appointment by a
successor trustee; 
 (ix) conform, as necessary, the Indenture and the form or terms of the Notes to the section
entitled “Description of Notes” as set forth in the preliminary prospectus supplement related to the Notes dated October 22, 2009, as supplemented by the related pricing term sheet; or 
  

 47 

 (x) make other changes to the Indenture or forms or terms of the Notes so
long as no such change individually or in the aggregate with all other such changes has or will have a material adverse effect on the interests of the Holders of the Notes. 
 SECTION 7.02. Supplemental Indentures With Consent of Holders. Section 9.02 of the Original Indenture shall not apply to
the Notes. Instead, the provisions set forth in this Section 7.02 shall, with respect to the Notes, supersede in their entirety Section 9.02 of the Original Indenture, and all references in the Original Indenture to Section 9.02
thereof and provisions therein, as the case may be, shall, with respect to the Notes, be deemed to be references to this Section 7.02 and provisions set forth in this Section 7.02, respectively. Except as provided below in this
Section 7.02 and in Section 7.01, the Indenture or the Notes may be amended, modified or supplemented, and noncompliance in any particular instance with any provision of the Indenture or the Notes may be waived, in each case with the
written consent of the Holders of at least a majority of the principal amount of the Notes at the time Outstanding. Without the written consent or the affirmative vote of each Holder of Outstanding Notes affected thereby, an amendment, supplement or
waiver under this Section 7.02 may not: 
 (i) reduce the principal amount of or change the Stated Maturity
of any Note; 
 (ii) reduce the rate of accrual for, or extend the time for payment of interest on any Note;

 (iii) reduce the Redemption Price or Fundamental Change Repurchase Price or change the time at which or
circumstances under which the Notes may or shall be redeemed or repurchased; 
 (iv) impair the right of any
Holder to institute suit for the enforcement of any payment on or with respect to any Note; 
 (v) change the
currency in which any Note is payable; 
 (vi) impair the right of the Holders of the Notes to convert any Note
as provided in Article 4 or reduce the amount of cash, the number of shares of Common Stock or any other property receivable upon conversion, except as otherwise permitted pursuant to Article 8 or Section 4.07 hereof; 
 (vii) reduce the quorum or voting requirements under the Indenture; 
 (viii) change the Company’s obligation to maintain an office or agency in the places and for the purposes specified in
the Indenture; 
 (ix) amend or modify any of the provisions of this Section 7.02; or 
 (x) reduce the percentage of the aggregate principal amount of the Outstanding Notes the consent of whose Holders is required
for any such supplemental indenture entered into in accordance with this Section 7.02 or the consent of whose Holders is required for any waiver provided for in the Indenture. 
  

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 It shall not be necessary for any Act of Holders under this Section 7.02 to approve the
particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. 
 SECTION 7.03. Notice to Holders of Supplemental Indentures. The Company shall cause notice of the execution of any supplemental indenture to be mailed to each Noteholder, at his address appearing on the Security Register
provided for in the Indenture, within 20 days after execution thereof. Failure to deliver such notice, or any defect in such notice, shall not affect the legality or validity of such supplemental indenture. 
 ARTICLE 8 
 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE 
 SECTION 8.01. Company May Consolidate, etc.,
Only on Certain Terms. In addition to the provisions set forth under Article Eight of the Original Indenture, the Company shall not consolidate with or merge with or into any other Person or convey, transfer or lease all or substantially all its
assets to another Person, unless: 
 (a) the resulting, surviving or transferee Person (if not the Company) (the
“Successor Company”) shall be a corporation organized and existing under (i) the laws of the United States of America, any state thereof or the District of Columbia, or (ii) any other jurisdiction so long as the Successor
Company agrees to submit to service of process in any state in the United States of America or the District of Columbia and, in the case of clause (ii) above, the Successor Company provides a full and unconditional indemnity and provision for
additional amounts required to be withheld from payments or deliveries to Holders or beneficial owners of the Notes under applicable United States or foreign laws, rules, regulations or authorities, and any other incremental tax liabilities or costs
of such Holders or beneficial owners as a result of such merger or other transaction, and in each case the Successor Company (if not the Company) will expressly assume, by a supplemental indenture, executed and delivered to the Trustee, in form
reasonably satisfactory to the Trustee, all of the Company’s obligations under the Notes and the Indenture; 
 (b)
immediately after giving effect to such transaction, no Default shall have occurred and be continuing; 
 (c) the Company shall
have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and, if a supplemental indenture is required in connection with such transaction, such supplemental
indenture, comply with the Indenture; and 
 (d) the Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that the Holders or beneficial owners of the Notes will not recognize income, gain or loss for United States federal income tax purposes as a result of such transaction and will be subject to United States federal income tax in the same
amount, in the same manner and at the same times as would have been the case if the transaction had not occurred, except where any of the foregoing are subject to the indemnification provided for in Section 8.01(a) above. 
  

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 For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the
properties and assets of one or more Subsidiaries (other than to the Company or another Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially all of the properties and assets of the Company and its
Subsidiaries, taken as a whole, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. 
 The Successor Company formed by such consolidation or into which the Company is merged or the Successor Company to which such conveyance, transfer, lease or other disposition is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under the Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of a conveyance, transfer or lease of
all or substantially all the Company’s assets (in which case the Company will not be discharged from the obligation to pay the principal amount of and interest on the Notes) and except for obligations, if any, that the Company may have under a
supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Notes. Subject to Section 9.03 of the Original Indenture, the Company, the Trustee and the Successor Company shall enter into
a supplemental indenture to evidence the succession and substitution of such Successor Company and such discharge and release of the Company. 
 ARTICLE 9 
 REDEMPTION 
 SECTION 9.01. Notice to Trustee. Article Eleven of the Original Indenture shall not apply to the Notes. Instead, the redemption
provisions set forth in this Article 9 shall, with respect to the Notes, supersede in their entirety Article Eleven of the Original Indenture, and all references in the Original Indenture to Article Eleven thereof and redemption provisions therein,
as the case may be, shall, with respect to the Notes, be deemed to be references to this Article 9 and redemption provisions set forth in this Article 9, respectively. The Company may not redeem the Notes prior to November 1, 2012. On or after
November 1, 2012 and prior to the Stated Maturity, the Company may redeem for cash all, but not less than all, of the Notes if the Last Reported Sale Price of the Company’s Common Stock equals or exceeds 130% of the Conversion Price then
in effect for 20 or more Trading Days in a period of 30 consecutive Trading Days ending on the Trading Day immediately prior to the date of the Redemption Notice, at 100% of the principal amount of the Notes to be redeemed plus any accrued and
unpaid interest, to, but excluding, the Redemption Date (the “Redemption Price”), unless the Redemption Date falls after a Regular Record Date but on or prior to the immediately succeeding Interest Payment Date, in which case the
Company shall instead pay the full amount of accrued and unpaid interest to the Holder of the Notes as of such Regular Record Date, and the Redemption Price will be equal to 100% of the principal amount of the Notes to be redeemed. No Notes may be
redeemed if the principal amount of the Notes has been accelerated, and such acceleration has not been rescinded, on or prior to the Redemption Date (except in the case of an acceleration resulting from a default by the Company in the payment of the
Redemption Price with respect to such Notes). 
 SECTION 9.02. Redemption Notice. Not more than 45 calendar days but
not less than 30 calendar days prior to the Redemption Date, the Company shall notify mail a notice of redemption (the “Redemption Notice”) by first-class mail to the Trustee, the Paying Agent and each Holder of Notes to be redeemed
at such Holder’s address set forth in the Security Register. 
  

 50 

 The notice shall identify the Notes to be redeemed and shall state: 
 (a) the Redemption Date (which must be a Business Day); 
 (b) the Redemption Price; 
 (c) the Applicable Conversion Rate (including any
Additional Shares pursuant to Section 4.06(a)) if a Holder converts its Notes in connection with the Company’s election to redeem the Notes. 
 (d) the name and address of the Paying Agent; 
 (e) that Notes must be surrendered
to the Paying Agent to collect the Redemption Price; 
 (f) that, unless the Company defaults in making such redemption payment
or the Paying Agent is prohibited from making such payment pursuant to the terms of the Indenture, interest on Notes shall cease to accrue on and after the Redemption Date; 
 (g) the paragraph of the Notes and/or provision of the Indenture pursuant to which the Notes are being redeemed; 
 (h) the CUSIP or ISIN number, if any, printed on the Notes; and 
 (i) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed
on the Notes. 
 At the Company’s request, the Trustee shall give the Redemption Notice as provided to it in the
Company’s name and at the Company’s expense. In such event, the Company shall provide the Trustee with the information required by this Section. 
 SECTION 9.03. Effect of Redemption Notice. Once Redemption Notice is mailed, all Notes shall become due and payable on the Redemption Date and at the Redemption Price stated in the notice.
Upon surrender to the Paying Agent, such Notes shall be paid at the Redemption Price stated in the notice. 
 Failure to give
notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. 
 SECTION 9.04. Deposit of Redemption Price. Prior to 11:00 a.m. (New York City time) on the Redemption Date, the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate
of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 10.03 of the Original Indenture) an amount of money (in immediately available funds if deposited on such Business Day) sufficient to pay
the Redemption Price of, and if the Redemption Date falls after a Regular

  

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Record Date but on or prior to the immediately succeeding Interest Payment Date, accrued and unpaid interest on, all Notes as of the Redemption Date, other than Notes called for redemption that
have been delivered by the Company to the Trustee for cancellation. 
 SECTION 9.05. Repayment to the Company. The
Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed, together with interest, if any, thereon, held by them for the payment of the Redemption Price of all Notes upon redemption of the Notes; provided that
to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 9.04 exceeds the aggregate Redemption Price of all Notes Outstanding, then as soon as practicable following the Redemption Date, the Trustee or the
Paying Agent, as the case may be, shall return any such excess to the Company. 
 ARTICLE 10 
 MISCELLANEOUS 
 SECTION 10.01. Governing Law. THIS SUPPLEMENTAL INDENTURE AND EACH OF THE NOTES, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS SUPPLEMENTAL INDENTURE AND EACH OF THE NOTES, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). 
 SECTION 10.02. Legal Holidays. All references in Section 1.14 of the Original Indenture to “Redemption Date” shall, for purposes of the Notes, be deemed to include references to “Fundamental Change Repurchase
Date.” 
 SECTION 10.03. No Security Interest Created. Nothing in this Supplemental Indenture or in the Notes,
expressed or implied, shall be construed to constitute a security interest under the Uniform Commercial Code or similar legislation, as now or hereafter enacted and in effect, in any jurisdiction. 
 SECTION 10.04. Trust Indenture Act. This Supplemental Indenture will be subject to, and governed by, the provisions of the Trust
Indenture Act that are required to be part of this Supplemental Indenture and shall, to the extent applicable, be governed by such provisions. 
 SECTION 10.05. Benefits of Supplemental Indenture. Nothing in this Supplemental Indenture or in the Notes, express or implied, shall give to any Person, any benefit or any legal or equitable
right, remedy or claim under this Supplemental Indenture, other than the parties hereto and their successors hereunder, any Authenticating Agent, Paying Agent, Conversion Agent, Bid Solicitation Agent or Security Registrar and the Holders.

 SECTION 10.06. Calculations. Except as otherwise provided in this Supplemental Indenture, the Company shall be
responsible for making all calculations called for under the Notes. These calculations include, but are not limited to, determinations of the Last Reported Sale Prices and Daily VWAP of the Common Stock, accrued interest payable on the Notes and the
Conversion Rate. The Company shall make all these calculations in good faith and, absent

  

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manifest error, the Company’s calculations shall be final and binding on Holders of Notes. The Company shall provide a schedule of its calculations to each of the Trustee and the Conversion
Agent (if other than the Trustee), and each of the Trustee and Conversion Agent (if other than the Trustee) is entitled to rely conclusively upon the accuracy of the Company’s calculations without independent verification. The Trustee will
forward the Company’s calculations to any Holder of Notes upon the request of that Holder at the sole cost and expense of the Company. 
 SECTION 10.07. Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction
hereof. 
 SECTION 10.08. Successors and Assigns. All covenants and agreements in this Supplemental Indenture by the
Company shall bind its successors and assigns, whether or not so expressed. All agreements of the Trustee in this Supplemental Indenture will bind its successor. 
 SECTION 10.09. Execution in Counterparts. This Supplemental Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument. 
 SECTION 10.10. Separability Clause. In case any provision in this
Supplemental Indenture or in any Note 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. 
 SECTION 10.11. Ratification of Original Indenture. The Original Indenture, as supplemented by this Supplemental Indenture, is in
all respects ratified and confirmed, and this Supplemental Indenture shall be deemed part of the Original Indenture in the manner and to the extent herein and therein provided. For the avoidance of doubt, each of the Company and each Holder of the
Notes, by its acceptance of such Notes, acknowledges and agrees that all of the rights, privileges, protections, immunities and benefits afforded to the Trustee under the Original Indenture are deemed to be incorporated herein, and shall be
enforceable by the Trustee hereunder, as if set forth herein in full. 
 SECTION 10.12. The Trustee. The recitals in
this Supplemental Indenture are made by the Company only and not the Trustee, and all of the provisions contained in the Original Indenture in respect of the rights, privileges, immunities, powers and duties of the Trustee shall be applicable in
respect of the Notes and of this Supplemental Indenture as fully and with like effect as set forth in full herein. 
 SECTION 10.13. Corporate Obligation. No recourse may be taken, directly or indirectly, against any incorporator, subscriber to the Capital Stock, shareholder, officer, director, employee or Affiliate of the Company or the
Trustee or of any predecessor or successor of the Company or the Trustee with respect to the Company’s obligations on the Notes or the obligations of the Company or the Trustee under this Supplemental Indenture or any certificate or other
writing delivered in connection herewith. Each Holder by accepting any of the Notes, waives and releases all such liability, to the extent permitted by law. 
 SECTION 10.14. No Adverse Interpretation of other Agreements. This Supplemental Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its
Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Supplemental Indenture. 
  

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 [Remainder of the page intentionally left blank] 
  

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

			
	GMX RESOURCES INC.
		
	By:	 	       /s/ James A. Merrill

			
	Name:	 	James A. Merrill
	Title:	 	Chief Financial Officer

 [Trustee Signature Follows] 

			
	 THE BANK OF NEW YORK MELLON TRUST
 COMPANY, N.A., as Trustee

			
		
	By:	 	 /s/ Geraldine Creswell

	Name:	 	Geraldine Creswell
	Title:	 	Vice President

 SCHEDULE A 
 Make-Whole Table 
 The following table sets forth the number
of Additional Shares to be added to the Conversion Rate per $1,000 principal amount of Notes for each Stock Price and Effective Date set forth below pursuant to Section 4.06 of this Supplemental Indenture: 
  

																																											
	  	  	Stock Price
															
	 Effective Date
	  	$	15.00	  	$	18.75	  	$	20.00	  	$	22.50	  	$	25.00	  	$	30.00	  	$	35.00	  	$	40.00	  	$	50.00	  	$	60.00	  	$	70.00	  	$	80.00	  	$	90.00	  	$	100.00
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
															
	 October 28, 2009
	  	 	13.3334	  	 	10.0239	  	 	9.0039	  	 	7.4201	  	 	6.2577	  	 	4.6825	  	 	3.6724	  	 	2.9710	  	 	2.0592	  	 	1.4917	  	 	1.1060	  	 	0.8295	  	 	0.6244	  	 	0.4688
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
															
	 May 1, 2010
	  	 	13.3334	  	 	9.7342	  	 	8.6991	  	 	7.1077	  	 	5.9548	  	 	4.4175	  	 	3.4492	  	 	2.7850	  	 	1.9296	  	 	1.3997	  	 	1.0393	  	 	0.7804	  	 	0.5878	  	 	0.4412
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
															
	 May 1, 2011
	  	 	13.3334	  	 	9.0942	  	 	8.0151	  	 	6.3956	  	 	5.2599	  	 	3.8089	  	 	2.9382	  	 	2.3607	  	 	1.6358	  	 	1.1922	  	 	0.8899	  	 	0.6712	  	 	0.5072	  	 	0.3814
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
															
	 May 1, 2012
	  	 	13.3334	  	 	8.2745	  	 	7.1297	  	 	5.4675	  	 	4.3562	  	 	3.0269	  	 	2.2897	  	 	1.8268	  	 	1.2682	  	 	0.9316	  	 	0.7012	  	 	0.5326	  	 	0.4046	  	 	0.3052
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
															
	 May 1, 2013
	  	 	13.3334	  	 	7.0964	  	 	5.8639	  	 	4.1635	  	 	3.1133	  	 	1.9954	  	 	1.4606	  	 	1.1562	  	 	0.8090	  	 	0.6011	  	 	0.4568	  	 	0.3495	  	 	0.2668	  	 	0.2015
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
															
	 May 1, 2014
	  	 	13.3334	  	 	5.1616	  	 	3.8318	  	 	2.1854	  	 	1.3446	  	 	0.6878	  	 	0.4817	  	 	0.3870	  	 	0.2789	  	 	0.2097	  	 	0.1603	  	 	0.1232	  	 	0.0944	  	 	0.0714
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 
															
	 May 1, 2015
	  	 	13.3334	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000	  	 	0.0000
	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 	  	 	 

  

 A-1 

 SCHEDULE B 
 [FORM OF FACE OF GLOBAL NOTE] 
 [UNLESS THIS NOTE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 
 THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A NOTE REGISTERED, AND NO
TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.] 
  

 B-1 

 GMX RESOURCES INC. 
  

			
	 No.
	  	$

 4.50% Convertible Senior Note due 2015 
 CUSIP No.: 38011M AJ7 
 ISIN Number: US38011MAJ71 
 GMX Resources Inc., an Oklahoma corporation promises to pay to
[Cede & Co., or its registered assigns]1, the
principal sum of                      Dollars, [as revised by the Schedule of Increases and Decreases in Global Note attached hereto,]2 on May 1, 2015. 
 Interest Payment Dates: May 1 and November 1. 
 Regular Record Dates: April 15 and October 15. 
 Reference is made to
the further provisions of this Note set forth on the reverse hereof, including, without limitation, provisions giving the Holder of this Note the right, under certain circumstances, to convert this Note into cash, shares of Common Stock or a
combination of cash and shares of Common Stock, at the Company’s election on the terms and subject to the limitations referred to on the reverse hereof and as more fully specified in the Indenture. Such further provisions shall for all purposes
have the same effect as though fully set forth at this place. 
 This Note shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been manually signed by the Trustee or a duly authorized authenticating agent under the Indenture. 
  

	1	 Use bracketed language for a Global Note. 

  

	2	 Use bracketed language for a Global Note. 

  

 B-2 

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

			
	GMX RESOURCES INC.
		
	 By:
	 	  

		 	 Name:

		 	 Title:

  

			
	Attest:
		
	By:	 	  

		 	Name:
		 	Title:

  

 B-3 

 TRUSTEE’S CERTIFICATE OF AUTHENTICATION 
 This Note is one of the Notes described in the within-named Indenture. 
  

			
	 THE BANK OF NEW YORK MELLON TRUST
 COMPANY, N.A., as Trustee

		
	By:	 	  

		 	Authorized Signatory

  

 B-4 

 [FORM OF REVERSE OF NOTE] 
 GMX RESOURCES INC. 
 4.50% Convertible Senior
Note due 2015 
  

	1.	Interest 

 (a) GMX
RESOURCES INC., an Oklahoma corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the “Company”), promises to pay interest on the principal amount of this
Note at the rate of 4.50% per annum. The Company will pay interest semiannually on May 1 and November 1 of each year commencing on May 1, 2010. Interest on the Note will accrue from the most recent date on which interest has been
paid or duly provided for, if no interest has been paid, from October 28, 2009. Interest will be computed on the basis of a 360-day year of twelve 30-day months. If a payment date is not a Business Day, payment will be made on the next
succeeding Business Day, and no additional interest will accrue in respect of such payment by virtue of the payment being made on such later date. 
 (b) The Company may elect to pay Additional Interest on this Note as a remedy for an Event of Default relating to a failure to file with the Trustee reports required under the Exchange Act pursuant to the
terms of the Indenture and the Trust Indenture Act. 
 (c) Except as otherwise specifically set forth, all references herein to
“interest” include Additional Interest that the Company elects to pay in connection with a failure to file reports required under the Exchange Act pursuant to the terms of the Indenture and the Trust Indenture Act. 
  

	2.	Paying Agent, Security Registrar and Conversion Agent 

 Initially, The Bank of New York Mellon Trust Company, N.A., a national banking association (the “Trustee”), will act as Paying Agent, Security Registrar and Conversion Agent. The Company
may appoint and change any Paying Agent, Security Registrar or co-registrar or Conversion Agent without notice. The Company or any of its domestically incorporated wholly owned Subsidiaries may act as Paying Agent, Security Registrar or
co-registrar, or Conversion Agent. 
  

	3.	Supplemental Indenture 

 The Company issued the Notes under an Indenture dated as of October 28, 2009 (the “Original Indenture”), between the Company and the Trustee as supplemented by the First Supplemental Indenture dated as of
October 28, 2009 (herein called the “Supplemental Indenture” and the Original Indenture, as supplemented by the Supplemental Indenture, the “Indenture”). The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 as in effect on the date of the Indenture (the “Trust Indenture Act”). Terms defined in the Indenture and not defined herein have the
meanings ascribed thereto in the Indenture. The Notes are subject to all such terms, and Noteholders are referred to the Indenture and the Trust Indenture Act for a statement of those terms. 
  

 B-5 

 This Note is one of the Notes referred to in the Indenture issued in an initial aggregate
principal amount of $86,250,000. Additional Notes may be issued in accordance with the Indenture. 
  

	4.	Conversion 

 Subject to
and in compliance with the provisions of the Indenture (i) on or prior to the close of business on the Business Day immediately preceding February 1, 2015, upon the occurrence of certain events specified in the Indenture and (ii) on
or after February 1, 2015 until the close of business on the Business Day immediately preceding the Stated Maturity of this Note, the Holder hereof has the right, at its option, to convert each $1,000 principal amount of this Note into cash,
shares of Common Stock, or a combination of cash and shares of Common Stock, at the Company’s election, determined as set forth in the Indenture, based on an initial Conversion Rate of 53.3333 shares of Common Stock per $1,000 principal amount
of Notes, as the same may be adjusted pursuant to the terms of the Indenture. 
  

	5.	Optional Redemption 

 Prior to November 1, 2012, the Notes will not be redeemable. On or after November 1, 2012 and prior to the Stated Maturity, the Company may redeem for cash at a price equal to the Redemption Price all, but not less than all, of
the Notes if the Last Reported Sale Price of the Common Stock equals or exceeds 130% of the Conversion Price then in effect for 20 or more Trading Days in a period of 30 consecutive Trading Days ending on the Trading Day immediately prior to the
date of the Redemption Notice. 
  

	6.	Repurchases upon Fundamental Change 

 Upon the occurrence of a Fundamental Change, the Holder shall have the right, at such Holder’s option, to require the Company to repurchase for cash at a price equal to the Repurchase Price all of
such Holder’s Notes or any portion thereof (in principal amounts of $1,000 or integral multiples thereof) on the Fundamental Change Repurchase Date. 
  

	7.	Denominations, Transfer, Exchange 

 The Notes are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Noteholder may transfer or exchange Notes in accordance with the Indenture. Upon any transfer or exchange, the Security Registrar
and the Trustee may require a Noteholder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note
selected for redemption or surrendered for conversion. 
  

	8.	Persons Deemed Owners 

 The registered Holder of this Note may be treated as the owner of it for all purposes. 
  

 B-6 

	9.	Defaults and Remedies 

 If
an Event of Default (other than an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Outstanding
Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. If an Event of Default relating to certain events of bankruptcy, insolvency or reorganization of the Company occurs, the principal of and
interest on all the Notes will become immediately due and payable without any declaration or other act on the part of the Trustee or any Noteholder. 
  

	10.	No Recourse Against Others 

 No recourse may be taken, directly or indirectly, against any incorporator, subscriber to the Capital Stock, shareholder, officer, director, employee or Affiliate of the Company or the Trustee or of any predecessor or successor of the
Company or the Trustee with respect to the Company’s obligations on the Notes or the obligations of the Company or the Trustee under this Supplemental Indenture or any certificate or other writing delivered in connection herewith. Each Holder
by accepting any of the Notes, waives and releases all such liability, to the extent permitted by law. 
  

	11.	Authentication 

 This Note
shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Note. 
  

	12.	Abbreviations 

 Customary
abbreviations may be used in the name of a Noteholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian),
and U/G/M/A (=Uniform Gift to Minors Act). 
  

	13.	GOVERNING LAW 

 THIS NOTE
AND ANY CLAIM CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS NOTES, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISIONS THEREOF). 
  

	14.	CUSIP and ISIN Numbers 

 Pursuant to a recommendation promulgated by the Committee on Uniform Securities Identification Procedures, the Company has caused CUSIP and ISIN numbers to be printed on the Notes and has directed the Trustee to use CUSIP and ISIN numbers
in notices of redemption as a convenience to Noteholders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon. 
  

 B-7 

 The Company will furnish to any Holder of Notes upon written request and without charge
to the Holder a copy of the Indenture which has in it the text of this Note. 
 In the case of any conflict between this
Note and the Indenture, the provisions of the Indenture shall control. 
  

 B-8 

 SCHEDULE OF INCREASES AND DECREASES IN GLOBAL NOTE3 
 GMX RESOURCES INC. 
 4.50% Convertible Senior
Notes due 2015 
 The initial principal amount of this Global Note is EIGHTY-SIX MILLION, TWO HUNDRED AND FIFTY THOUSAND DOLLARS
($86,250,000). The following exchanges, purchases or conversions of a part of this Global Note have been made: 
  

									
	 Date of
 Exchange
	  	 Amount of decrease in
 principal amount of this
 Global Note
	  	 Amount of increase in
 principal amount of this
 Global Note
	  	 Principal amount of this
 Global Note following such
 decrease or increase
	  	 Signature of
 authorized
signatory
 of Trustee or
 Custodian

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

	  
	  	  
	  	  
	  	  
	  	  

  

	3	 For Global Notes only. 

  

 B-9 

 ATTACHMENT 1 
 [FORM OF CONVERSION NOTICE] 
  

	To:	GMX Resources Inc. 

 The
undersigned registered owner of this Note hereby irrevocably exercises the option to convert this Note, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, into cash, shares of Common Stock or a combination of
cash and shares of Common Stock, at the Company’s election, in accordance with the terms of the Indenture referred to in this Note, and directs that cash payable and/or the shares, if any, issuable and deliverable upon such conversion, or for
fractional shares and any Notes representing any unconverted principal amount hereof, be issued and delivered to the registered Holder hereof unless a different name has been indicated below. Subject to certain exceptions set forth in the Indenture,
if this notice is being delivered on a date after the close of business on a Regular Record Date and prior to the open of business on the related Interest Payment Date, this notice is accompanied by payment of an amount equal to the interest payable
on such Interest Payment Date of the principal of this Note to be converted. Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Indenture. If any shares of Common Stock are to be issued in the name of
a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect hereto as set forth in Section 4.08 of the Supplemental Indenture. Any amount required to be paid by the undersigned on account of interest
accompanies this Note. 
 Dated:                                 
  

	
	  

	
	  

	Signature(s)
	
	Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Security Registrar, which requirements include membership or
participation in the Note Transfer Agent Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Security Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
	
	  

	Signature Guarantee

  

 B-10 

 Fill in the registration of shares of Common Stock, if any, if to be issued, and Notes, if
any, to be delivered, and the Person to whom cash, if any, and payment for fractional shares, if any, is to be made, if, other than to and in the name of the registered Holder: 
 Please print name and address 
  

	
	  

	(Name)
	
	  

	(Street Address)
	
	  

	(City, State and Zip Code)
	
	Principal amount to be converted (if less than all, must be $1,000 or whole multiples thereof):
	
	 $

	
	 Social Security or other Taxpayer
 Identifying Number

	
	  

 NOTICE: The signature on this Conversion Notice must correspond with the name as written upon the
face of the Notes in every particular without alteration or enlargement or any change whatever. 
  

 B-11 

 ATTACHMENT 2 
 [FORM OF FUNDAMENTAL CHANGE REPURCHASE NOTICE] 
  

	To:	GMX Resources Inc. 

 The undersigned
registered owner of this Note hereby acknowledges receipt of a notice from GMX Resources Inc. (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and specifying the Fundamental Change
Repurchase Date and requests and instructs the Company to pay to the registered holder hereof in accordance with the applicable provisions of this Note and the Indenture referred to in this Note (1) the entire principal amount of this Note, or
the portion thereof (that is $1,000 principal amount or an integral multiple thereof) below designated, and (2) if such Fundamental Change Repurchase Date does not fall during the period after a Regular Record Date and on or prior to the
corresponding Interest Payment Date, accrued and unpaid interest thereon to, but excluding, such Fundamental Change Repurchase Date. 
 In the
case of Physical Notes, the certificate numbers of the Notes to be repurchased are as set forth below: 
 Dated:
                                 
  

	
	Signature(s)
	
	  

	Social Security or Other Taxpayer Identification Number
	
	principal amount to be repaid (if less than all): $                ,000
	
	NOTICE: The signature on the Fundamental Change Repurchase Notice must correspond with the name as written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.

  

 B-12 

 ATTACHMENT 3 
 [FORM OF ASSIGNMENT AND TRANSFER] 
 For value received
                                      
           hereby sell(s), assign(s) and transfer(s) unto
                                         
        (Please insert social security or Taxpayer Identification Number of assignee) the within Note, and hereby irrevocably constitutes and appoints
                                         
    attorney to transfer the said Note on the books of the Company, with full power of substitution in the premises. 
 Dated:
                                 
  

	
	  

	
	  

	Signature(s)
	
	 Signature(s) must be guaranteed
 by an institution which is a member of one of the following recognized signature Guarantee Programs:

	
	(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion Program (SEMP)
or (iv) another guarantee program acceptable to the Trustee.
	
	  

	
	  

	Signature Guarantee

  

 B-13Agreement and Plan of Merger

 Exhibit 10.1 
  
  
  
  
  
 AGREEMENT AND PLAN OF MERGER 
 by and among: 
 LIGAND PHARMACEUTICALS
INCORPORATED, 
 a Delaware corporation; 
 MOONSTONE ACQUISITION, INC., 
 a Delaware corporation; 
 METABASIS THERAPEUTICS,
INC.,  
 a Delaware corporation; and 
 DAVID F. HALE, 
 as
Stockholders’ Representative 
  
  
 Dated as of October 26, 2009 
  
  
  
  
  
  
  

					
	 ARTICLE I CERTAIN DEFINITIONS
	  	2
		
	 ARTICLE II THE MERGER; EFFECTIVE TIME
	  	9
			
	       Section 2.01
	 	Merger of Merger Sub into the Company.	  	9
			
	      Section 2.02	 	Effect of the Merger.	  	9
			
	       Section 2.03
	 	Effective Time	  	9
			
	       Section 2.04
	 	Closing	  	10
			
	       Section 2.05
	 	Certificate of Incorporation and Bylaws; Officers and Directors.	  	10
			
	       Section 2.06
	 	Conversion of Company Shares.	  	10
			
	       Section 2.07
	 	Closing of the Company’s Transfer Books.	  	10
			
	       Section 2.08
	 	Exchange of Certificates.	  	11
			
	       Section 2.09
	 	Company Stock Options; Company Warrants.	  	12
			
	       Section 2.10
	 	Dissenting Shares	  	12
		
	 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
	  	13
			
	       Section 3.01
	 	Organization, Standing and Corporate Power.	  	13
			
	       Section 3.02
	 	Capitalization.	  	14
			
	       Section 3.03
	 	Authority; Non-contravention; Voting Requirements.	  	14
			
	       Section 3.04
	 	Governmental Approvals.	  	15
			
	       Section 3.05
	 	Company SEC Documents; Financial Statements.	  	15
			
	       Section 3.06
	 	Legal Proceedings.	  	17
			
	       Section 3.07
	 	Compliance With Legal Requirements; Governmental Authorizations; FDA Laws.	  	17
			
	       Section 3.08
	 	Information Supplied.	  	17
			
	       Section 3.09
	 	Tax Matters.	  	18
			
	       Section 3.10
	 	Employee Benefits and Labor Matters.	  	19
			
	       Section 3.11
	 	Contracts.	  	20
			
	       Section 3.12
	 	Environmental Matters.	  	21
			
	       Section 3.13
	 	Intellectual Property.	  	21
			
	       Section 3.14
	 	Insurance.	  	22
			
	       Section 3.15
	 	Certain Business Relationships with Affiliates.	  	22
			
	       Section 3.16
	 	Opinion of Financial Advisor.	  	22
			
	       Section 3.17
	 	Brokers and Other Advisors.	  	22
			
	       Section 3.18
	 	Section 203 of the DGCL Not Applicable; State Takeover Statutes.	  	22
			
	       Section 3.19
	 	No Other Representations or Warranties.	  	22
			
	       Section 3.20
	 	No Reliance.	  	23
		
	 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
	  	23
			
	       Section 4.01
	 	Organization and Standing.	  	23
			
	       Section 4.02
	 	Authority; Non-contravention.	  	23
			
	       Section 4.03
	 	Ownership and Operations of Merger Sub.	  	24
			
	       Section 4.04
	 	Governmental Approvals.	  	24
			
	       Section 4.05
	 	Parent SEC Documents; Financial Statements.	  	24
			
	       Section 4.06
	 	Legal Proceedings.	  	25

					
			
	       Section 4.07
	 	Compliance With Legal Requirements.	  	26
			
	       Section 4.08
	 	Information Supplied.	  	26
			
	       Section 4.09
	 	Tax Matters.	  	26
			
	       Section 4.10
	 	Brokers and Other Advisors.	  	27
			
	       Section 4.11
	 	Ownership of Company Shares.	  	27
			
	       Section 4.12
	 	Available Funds.	  	27
			
	       Section 4.13
	 	No Other Representations or Warranties.	  	27
			
	       Section 4.14
	 	No Reliance.	  	27
		
	 ARTICLE V COVENANTS
	  	27
			
	       Section 5.01
	 	Interim Operations of the Company.	  	27
			
	       Section 5.02
	 	Interim Operations of Parent.	  	29
			
	       Section 5.03
	 	No Solicitation.	  	30
			
	       Section 5.04
	 	Company Board Recommendation.	  	31
			
	       Section 5.05
	 	Registration Statement; Proxy Statement; Special Meeting.	  	32
			
	       Section 5.06
	 	Filings; Other Action.	  	33
			
	       Section 5.07
	 	Access.	  	34
			
	       Section 5.08
	 	Publicity.	  	35
			
	       Section 5.09
	 	Employee Benefits.	  	35
			
	       Section 5.10
	 	Indemnification; Directors’ and Officers’ Insurance.	  	36
			
	       Section 5.11
	 	Section 16 Matters.	  	37
			
	       Section 5.12
	 	Plan of Reorganization.	  	37
			
	       Section 5.13
	 	Consultants.	  	37
			
	       Section 5.14
	 	Efforts to Satisfy Closing Conditions.	  	38
			
	       Section 5.15
	 	Guaranteed Funding.	  	38
			
	       Section 5.16
	 	Stockholders’ Representative.	  	39
		
	 ARTICLE VI CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE MERGER
	  	42
			
	       Section 6.01
	 	Conditions to Obligations of Each Party Under This Agreement.	  	42
			
	       Section 6.02
	 	Additional Conditions to Obligations of Parent and Merger Sub.	  	42
			
	       Section 6.03
	 	Additional Conditions to Obligations of the Company.	  	43
			
	       Section 6.04
	 	Estoppel.	  	43
		
	 ARTICLE VII TERMINATION
	  	43
			
	       Section 7.01
	 	Termination.	  	43
			
	       Section 7.02
	 	Effect of Termination.	  	45
			
	       Section 7.03
	 	Termination Fee.	  	45
		
	 ARTICLE VIII MISCELLANEOUS PROVISIONS
	  	46
			
	       Section 8.01
	 	Amendment.	  	46
			
	       Section 8.02
	 	Waiver.	  	46
			
	       Section 8.03
	 	No Survival of Representations and Warranties.	  	46
			
	       Section 8.04
	 	Entire Agreement; Counterparts.	  	46

					
			
	       Section 8.05
	 	Applicable Legal Requirements; Jurisdiction; Waiver of Jury Trial.	  	46
			
	       Section 8.06
	 	Payment of Expenses.	  	47
			
	       Section 8.07
	 	Transfer Taxes.	  	47
			
	       Section 8.08
	 	Assignability; No Third Party Rights.	  	47
			
	       Section 8.09
	 	Notices.	  	48
			
	       Section 8.10
	 	Severability.	  	49
			
	       Section 8.11
	 	Obligation of Parent.	  	49
			
	       Section 8.12
	 	Specific Performance.	  	49
			
	       Section 8.13
	 	Remedies.	  	49
			
	       Section 8.14
	 	Construction.	  	49
			
	       Section 8.15
	 	Further Action	  	50

 Exhibits 

	
	
	 EXHIBIT A:  Roche CVR Agreement

	
	 EXHIBIT B:  TR Beta CVR Agreement

	
	 EXHIBIT C:  Glucagon CVR Agreement

	
	 EXHIBIT D:  General CVR Agreement

	
	 EXHIBIT E:  List of Potential Consultants

 INDEX OF DEFINED TERMS (NOT OTHERWISE 
 DEFINED IN ARTICLE I) 
  

			
	Agreement Preamble	  	FDA Laws Section 3.07(b)
	Appraisal Rights Section 2.10	  	Filed Company SEC Documents Article III Preamble
	Bankruptcy and Equity Exception Section 3.03(a)	  	Filed Parent SEC Documents Article IV Preamble
	Certificate of Merger Section 2.03	  	Funding Extension Section 5.15(d)
	Closing Section 2.04	  	Funding Objection Notice Section 5.15(f)
	Closing Date Section 2.04	  	IRS Section 3.10(a)
	Company Preamble	  	Merger Recitals
	Company Board Recitals	  	Merger Consideration Section 2.06(a)(iii)
	Company Change in Recommendation Section 5.04(b)	  	Merger Sub Preamble
	Company Charter Documents Section 3.01(c)	  	Non-Budgeted Capital Expenditure Section 5.01(a)(15)
	Company Contracts Section 3.11(a)	  	Notice of Recommendation Change Section 5.04(c)
	Company Disclosure Letter Article III Preamble	  	Outside Date Section 7.01(c)
	Company Financial Statements Section 3.05(b)	  	Parent Preamble
	Company Pension Plan Section 3.10(a)	  	Parent Financial Statements Section 4.05(b)
	Company Plan Section 3.10(a)	  	Parent SEC Documents Section 4.05(a)
	Company Recommendation Section 3.03(b)	  	Proxy Statement Section 5.05(a)
	Company SEC Documents Section 3.05(a)	  	Registration Statement Section 5.05(a)
	Company Share Section 3.02(a)	  	Representatives Section 5.03(a)
	Company Stock Certificate Section 2.07	  	Sarbanes-Oxley Act Section 3.05(a)
	Company Stockholder Approval Section 3.03(a)	  	Securities Act Section 3.01(b)
	Competitor of Parent Section 5.16(d)	  	Stockholders’ Representative Preamble
	Confidentiality Agreement Section 5.03(a)	  	Summary Report Section 5.15(f)
	Consulting Committee Section 5.13(a)	  	Surviving Corporation Section 2.01
	D&O Insurance Policy Section 5.10(c)	  	Transactions Recitals
	DGCL Recitals	  	Transfer Taxes Section 8.07
	Dissenting Shares Section 2.10	  	Voting Agreements Recitals
	Effective Time Section 2.03	  	
	Environmental Laws Section 3.12(a)	  	
	Exchange Agent Section 2.08(a)	  	

 AGREEMENT AND PLAN OF MERGER 
 THIS AGREEMENT AND PLAN OF
MERGER (“Agreement”) is made and entered into as of October 26, 2009, by and among LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation
(“Parent”); MOONSTONE ACQUISITION, INC., a Delaware corporation and a wholly-owned Subsidiary of Parent (“Merger Sub”); METABASIS
THERAPEUTICS, INC., a Delaware corporation (the “Company”); and DAVID F. HALE as Stockholders’ Representative (the “Stockholders’
Representative”). Capitalized terms used but not otherwise defined in this Agreement shall have the meanings given to them in Article I. 
 RECITALS 
 WHEREAS, the respective boards of directors of
each of Parent, Merger Sub and the Company have approved the acquisition of the Company by Parent upon the terms and subject to the conditions set forth in this Agreement; 
 WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Merger Sub shall merge with and into the Company (the
“Merger”) and each Company Share that is issued and outstanding immediately before the Effective Time (other than Dissenting Shares) will be canceled and converted into the right to receive the Merger Consideration, all upon the
terms and subject to the conditions set forth herein; 
 WHEREAS, the board of directors of the Company (the “Company
Board”) has, upon the terms and subject to the conditions set forth herein, unanimously and duly adopted resolutions (i) determining that the transactions contemplated by this Agreement, including the Merger (collectively, the
“Transactions”), are advisable and in the best interests of the Company and its stockholders, (ii) approving this Agreement and the Transactions in accordance with the Delaware General Corporation Law (the
“DGCL”), (iii) directing that this Agreement be submitted to the stockholders of the Company for adoption, and (iv) recommending that the stockholders of the Company adopt this Agreement and approve the Transactions;

 WHEREAS, the boards of directors of Parent and of Merger Sub have, upon the terms and subject to the conditions set forth
herein, unanimously and duly approved and declared advisable this Agreement and the Transactions, and Parent, in its capacity as the sole stockholder of Merger Sub, has adopted this Agreement, in each case, in accordance with the DGCL; 

WHEREAS, as an inducement to Parent’s willingness to enter into this Agreement, simultaneously with the execution of this Agreement,
Parent and certain stockholders of the Company owning in the aggregate approximately 28% of the Outstanding Company Shares have executed and delivered to the Company voting agreements (the “Voting Agreements”); 
 WHEREAS, for U.S. federal income tax purposes, it is intended that the Merger not qualify as a tax-free reorganization within the meaning of
Section 368(a) of the Code and the Treasury Regulations promulgated thereunder; and 
 WHEREAS, Parent, Merger Sub and the
Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the other transactions contemplated by this Agreement and also to prescribe certain conditions to the Merger as specified herein;

  

 1 

 NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows: 
 ARTICLE I 
 CERTAIN DEFINITIONS 
 For purposes of the Agreement: 
 “Acquisition Proposal” shall mean any unsolicited, bona fide offer or proposal (other than an offer or proposal made or submitted by Parent or Merger Sub or any of their Affiliates)
relating to a possible Acquisition Transaction. 
 “Acquisition Transaction” shall mean any transaction or
series of related transactions (other than the transactions contemplated by this Agreement) involving or resulting in: (i) any acquisition or purchase by any Person or “group” (as defined in or under Section 13(d) of the Exchange
Act), directly or indirectly, of more than 20% of the total outstanding voting securities of the Company, or any tender offer or exchange offer that, if consummated, would result in the Person or “group” (as defined in or under
Section 13(d) of the Exchange Act) making such offer beneficially owning more than 20% of the total outstanding voting securities of the Company; (ii) any merger, consolidation, share exchange, business combination, acquisition of
securities, recapitalization, tender offer, exchange offer or other similar transaction involving the Company pursuant to which the stockholders of the Company immediately before the consummation of such transaction would hold less than 80% of the
equity interests in the surviving or resulting entity of such transaction immediately after consummation thereof; or (iii) any sale (other than the sale of laboratory equipment), lease, exchange, transfer, license, acquisition or disposition of
assets (other than the ‘7133 Program) constituting more than 10% of the assets of the Company (measured by either book or fair market value thereof) or the net revenues or net income of the Company and the Company Subsidiaries taken as a whole.

 “Actual Net Cash Amount” shall mean the Net Cash Amount calculated as of the Determination Date and set
forth in a certificate delivered by an executive officer of the Company to Parent on the first Business Day following the Determination Date. 
 “Adjusted Reference Amount” shall mean the Reference Amount (i) plus the amount, if any, by which the Actual Net Cash Amount exceeds the Target Net Cash Amount or (ii) minus the
amount, if any, by which the Target Net Cash Amount exceeds the Actual Net Cash Amount. 
 “Affiliate” shall
mean a Person who is related to another Person such that such Person directly or indirectly controls, is directly or indirectly controlled by or is directly or indirectly under common control with such other Person. 
 “Business Day” shall mean any day other than a Saturday, Sunday or a day on which the banks in New York, New York or San
Diego, California are authorized by applicable Legal Requirement or executive order to be closed. 
 “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to time. 
 “Company Equity Plans” shall
mean the Metabasis Therapeutics, Inc. Amended and Restated 2001 Equity Incentive Plan, the Company ESPP, and the Metabasis Therapeutics, Inc. 2004 Non-Employee Directors Stock Option Plan, in each case, as amended from time to time. 
 “Company ESPP” shall mean the Company’s 2004 Employee Stock Purchase Plan, as amended from time to time. 

“Company Intellectual Property” shall mean the Intellectual Property, IP Licenses and Software held for use or used in
the business of the Company or any Company Subsidiary as presently conducted. 
  

 2 

 “Company Material Adverse Effect” shall mean, in reference to any fact,
circumstance, event, change or occurrence, any such fact, circumstance, event, change or occurrence that, individually or in the aggregate with all other facts, circumstances, events, changes or occurrences, has or would reasonably be expected to
have a material adverse effect on the results of operations or financial condition of the Company and the Company Subsidiaries, taken as a whole, other than changes, events, occurrences or effects arising out of, resulting from or attributable to
(i) changes in conditions in the United States or global economy or capital or financial markets generally, including changes in interest or exchange rates, (ii) conditions (or changes therein) in any industry or industries in which the
Company and the Company Subsidiaries operate, (iii) any change in Legal Requirements or GAAP or interpretation of any of the foregoing, (iv) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war,
sabotage or terrorism threatened or underway as of the date of this Agreement, (v) storms, earthquakes or other natural disasters, (vi) any action taken by the Company or any Company Subsidiary as contemplated or permitted by this
Agreement or with Parent’s consent, (vii) the initiation of any litigation by any stockholder of the Company relating to this Agreement or the Merger, (viii) any decline in the market price, or change in trading volume, of the capital
stock of the Company or any failure of the Company to meet revenue or earnings projections, either published by the Company or any third party (provided that this exception shall not prevent or otherwise affect a determination that any
changes, state of facts, circumstances, events or effects underlying a change described in this clause (viii) has resulted in, or contributed to, a Company Material Adverse Effect), (ix) any adverse changes, developments, circumstances,
events or occurrences relating to the Company’s ongoing research programs to the extent resulting from an action by Parent or any of its Affiliates, (x) the determination by, or the delay of a determination by, the FDA, or any panel or
advisory body empowered or appointed thereby, with respect to the approval, non-approval or disapproval of any products similar to or competitive with the Company’s product candidates, (xi) the results of any clinical trial of one or more
products or product candidates of any Person other than the Company, (xii) the entry or threatened entry into the market of a generic version of one or more product candidates of the Company or (xiii) the negotiation, execution,
announcement or performance of this Agreement or the consummation of the Transactions, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, collaborators or employees;
except, in the case of the foregoing clauses (i), (ii), (iii), (iv) and (v), to the extent that any such condition has a materially disproportionate adverse effect on the Company and the Company Subsidiaries, taken as a whole,
relative to other companies of comparable size to the Company and the Company Subsidiaries operating in industry or industries in which the Company and the Company Subsidiaries operate. 
 “Company Options” shall mean options to purchase Company Shares from the Company, whether granted by the Company pursuant
to the Company Equity Plans or otherwise. 
 “Company Programs” shall mean the drug development programs which
were formerly drug development programs of the Company before the Effective Time. 
 “Company Subsidiary” shall
mean a Subsidiary of the Company. 
 “Company Warrants” shall mean all warrants issued by the Company to
purchase Company Shares. 
 “Confidentiality and Exclusivity Agreement” shall mean the Confidentiality and
Exclusivity Agreement dated October 9, 2009, and as thereafter extended/amended, between Parent and the Company. 
 “Contract” shall mean any loan or credit agreement, bond, debenture, note, mortgage, indenture, guarantee, lease or other contract, commitment, agreement, instrument, arrangement, understanding, obligation, undertaking or
license (each, including all amendments thereto). 
 “Copyrights” shall mean all registered and unregistered
copyrights (including those in Software) and registrations and applications to register the same. 
 “CVR
Agreements” shall mean, collectively, the Roche CVR Agreement, the TR Beta CVR Agreement, the Glucagon CVR Agreement and the General CVR Agreement. 
  

 3 

 “CVRs” shall mean, collectively, the Roche CVRs, the TR Beta CVRs, the
Glucagon CVRs and the General CVRs. 
 “Determination Date” shall mean the 3rd Trading Day preceding the date
of the Special Meeting. 
 “Encumbrance” shall mean, with respect to any property or asset, any mortgage,
easement, lien, pledge (including any negative pledge), security interest or other encumbrance of any nature whatsoever in respect of such property or asset. 
 “Entity” shall mean any corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company
(including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization or entity (including any Governmental Entity). 
 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. 
 “Exchange” shall mean The NASDAQ Global Market of The NASDAQ Stock Market LLC. 
 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
 “Executive” shall mean any executive officer of the Company. 
 “FDA” shall mean the United States Food and Drug Administration. 
 “FTE” shall mean the full time equivalent effort of one scientist with either a B.Sc., M.S. or Ph.D. or equivalent degree
consisting of 1,875 hours per year of scientific work. 
 “Fund Distribution Date” shall have the meaning set
forth in the General CVR Agreement. 
 “Funding” shall mean the sum of (i) 100% of reasonable
out-of-pocket expenses paid to third parties by Parent or the Surviving Corporation for goods or services actually provided after the Effective Time, or which is an account payable of Parent or the Surviving Corporation for goods or services
actually provided after the Effective Time, in each case which relates directly to the research and development of drug development programs which were formerly drug development programs of the Company before the Effective Time (including, without
limitation, equipment, supplies, outsource firms, patent attorneys, filing fees, etc.) and (ii) $350,000 per FTE (plus a proportional amount per fractional FTE) working on or directly related to and in support of such programs. For purposes of
clarity, “Funding” shall not include any fees or expenses incurred by any party hereto in connection with the execution of this Agreement or the consummation of the Transactions. 
 “GAAP” shall mean United States generally accepted accounting principles. 
 “General CVR” shall mean a right having the terms and conditions set forth in the General CVR Agreement to be issued in
accordance with Section 2.06 in respect of each Outstanding Company Share. 
 “General CVR
Agreement” shall mean the agreement governing the terms and conditions of the General CVRs substantially in the form attached hereto as Exhibit D. 
 “General Program” shall have the meaning set forth in the General CVR Agreement. 
 “Glucagon CVR” shall mean a right having the terms and conditions set forth in the Glucagon CVR Agreement to be issued in accordance with Section 2.06 in respect of each
Outstanding Company Share. 
 “Glucagon CVR Agreement” shall mean the agreement governing the terms and
conditions of the Glucagon CVRs substantially in the form attached hereto as Exhibit C. 
  

 4 

 “Glucagon Program” shall have the meaning set forth in the Glucagon CVR
Agreement. 
 “Governmental Authorization” shall mean any permit, license, registration, qualification,
certificate, clearance, variance, waiver, exemption, certificate of occupancy, exception, franchise, entitlement, consent, confirmation, order, approval or authorization granted by any Governmental Entity. 
 “Governmental Entity” shall mean any federal, state or local government or body or any agency, authority, subdivision or
instrumentality of any of the foregoing, including any court, tribunal, department, bureau, administrative agency, commission or board, or any quasi-governmental or private body duly exercising any regulatory, taxing, inspecting or other
governmental authority. 
 “Indebtedness” shall mean (i) indebtedness for borrowed money, including
indebtedness evidenced by a note, bond, debenture or similar instrument, or (ii) obligations in respect of outstanding letters of credit, acceptances and similar obligations created for the account of such Person. 
 “Indemnified Leader” shall mean each individual who is or was an officer or director of the Company, or its Subsidiaries,
at any time on or before the Effective Time. 
 “Indemnified Party” shall mean each individual who is or
was an officer, director, employee or agent of the Company, or its Subsidiaries, at any time on or before the Effective Time who is or was entitled to indemnification pursuant to the DGCL, the Company Charter Documents or any Contract with such
Person.  
 “Intellectual Property” shall mean all U.S. and foreign (i) Trademarks,
(ii) Patents, (iii) Copyrights, (iv) Trade Secrets and (v) databases and compilations, including any and all electronic data and electronic collections of data. 
 “IP Licenses” shall mean any license or sublicense rights in or to any Intellectual Property. 
 “Knowledge of Parent” shall mean the actual knowledge of John Higgins, John Sharp or Charles Berkman. 
 “Knowledge of the Company” shall mean the actual knowledge of Mark Erion, Tran Nguyen or Barry Gumbiner. 
 “Legal Proceeding” shall mean any claim (presented formally to a judicial or quasi-judicial Governmental Entity), lawsuit,
court action, suit, arbitration or other judicial or administrative proceeding. 
 “Legal Prohibition” shall
mean any final, permanent Legal Requirement that is in effect and that prevents or prohibits consummation of the Transactions. 
 “Legal Requirement” shall mean any federal, state or local law, statute, code, ordinance, regulation, code, order, judgment, writ, injunction, decision, ruling or decree promulgated by any Governmental Entity. 

“Net Cash Amount” shall mean, as of the applicable date, an amount equal to (i) the sum of all cash (including any
payments received by the Company from the exercise of Company Options or Company Warrants), cash equivalents, marketable securities and accounts receivable (net of accounts receivable reserves established as required by GAAP) held by the Company and
the Company Subsidiaries (but excluding any Roche Program Consideration and ‘7133 Program Consideration); plus (ii) all fees and expenses actually incurred by the Company in connection with any ‘7133 Program Transaction
which is consummated before the Effective Time; minus (iii) the sum of (A) any amount payable by the Company or the Surviving Corporation after the Determination Date for the out-of-pocket transaction fees and expenses of the
Company to its legal and financial advisors and accountants in connection with this Agreement and the Transactions, (B) any amount payable by the Company or the Surviving Corporation after the Determination Date for expenses incurred by the
Company in connection with the preparation, filing, printing and mailing of the Proxy Statement and the solicitation of

  

 5 

 
proxies for use at the Special Meeting, (C) except as otherwise covered in subclause (D) below, all severance payments, stay bonuses and performance bonuses payable to all employees,
consultants and directors of the Company and the Company Subsidiaries assuming that the service relationship of all such employees, consultants and directors with the Company and the Company Subsidiaries is terminated as of the Closing Date, even if
such service relationship in fact does continue after the Closing Date, (D) all severance payments, stay bonuses and performance bonuses remaining payable at the Closing Date to all employees, consultants and directors of the Company and the
Company Subsidiaries whose service relationship with the Company and the Company Subsidiaries is terminated on or before the Closing Date, (E) the salary, employer-tax and benefits cost of the continuation of employment of any Company
employees, as a result of the advance-notice requirements of their respective employment agreements, beyond the Closing Date until their actual termination date, if before the Determination Date Parent requests the Company to terminate such
employees, (F) if the Company has not before the Effective Time purchased a “tail” prepaid policy on the D&O Insurance Policy as contemplated by the second sentence of Section 5.10(c) below, $360,000, and (G) to
the extent not included in any other subclause of this clause (iii), all accounts payable, notes payable, lease payables and other capital-item liabilities and other liabilities (other than (x) non-cash items, (y) any contingent payments
payable by the Company to ARE-SD Region No. 24, LLC or its Affiliates or (z) any contingent severance payments payable to the employees that were terminated in the Company’s May 2009 reduction in force) of the Company and the Company
Subsidiaries; provided that all such amounts shall be determined in a manner consistent with the manner in which such items were determined by the Company in the most recent balance sheet included in the Company Financial Statements.

 “Outstanding Company Shares” shall mean the Company Shares issued and outstanding immediately before the
Effective Time (not including, for purposes of calculating the allocation of the Merger Consideration, any Company Shares to be cancelled pursuant to Section 2.06(i) and (ii)). 
 “Parent Material Adverse Effect” shall mean, in reference to any fact, circumstance, event, change or occurrence, any such
fact, circumstance, event, change or occurrence that, individually or in the aggregate with all other facts, circumstances, events, changes or occurrences, has or would reasonably be expected to have a material adverse effect on the results of
operations or financial condition of Parent and the Parent Subsidiaries, taken as a whole, other than changes, events, occurrences or effects arising out of, resulting from or attributable to (i) changes in conditions in the United States or
global economy or capital or financial markets generally, including changes in interest or exchange rates, (ii) conditions (or changes therein) in any industry or industries in which Parent and the Parent Subsidiaries operate, (iii) any
change in Legal Requirements or GAAP or interpretation of any of the foregoing, (iv) acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of this
Agreement, (v) storms, earthquakes or other natural disasters, (vi) the initiation of any litigation by any stockholder of Parent relating to this Agreement or the Merger, (vii) any decline in the market price, or change in trading
volume, of the capital stock of Parent or any failure of Parent to meet revenue or earnings projections, either published by Parent or any third party (provided that this exception shall not prevent or otherwise affect a determination that
any changes, state of facts, circumstances, events or effects underlying a change described in this clause (vii) has resulted in, or contributed to, a Parent Material Adverse Effect), (viii) the negotiation, execution, announcement or
performance of this Agreement or the consummation of the Transactions, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners, collaborators or employees, (ix) any action taken
by Parent or any Parent Subsidiary as contemplated or permitted by this Agreement or with the Company’s consent, (x) the determination by, or the delay of a determination by, the FDA, or any panel or advisory body empowered or appointed
thereby, with respect to the approval, non-approval or disapproval of any products similar to or competitive with Parent’s product candidates, (xi) the results of any clinical trial of one or more products or product candidates of any
Person other than Parent, or (xii) the entry or threatened entry into the market of a generic version of one or more product candidates of Parent, except, in the case of the foregoing clauses (i), (ii), (iii), (iv) and (v), to
the extent that any such condition has a materially disproportionate adverse effect on Parent and the Parent Subsidiaries, taken as a whole, relative to other companies of comparable size to Parent and the Parent Subsidiaries operating in such
industry or industries. 
  

 6 

 “Parent Subsidiary” shall mean a Subsidiary of Parent. 
 “Partner Value” shall mean the sum of any upfront Proceeds and any milestone Proceeds, but specifically excluding any
royalty Proceeds. 
 “Patents” shall mean all patents and pending patent applications, invention disclosure
statements, and any and all divisions, continuations, continuations-in-part, reissues, reexaminations and extensions thereof, any counterparts claiming priority therefrom and like statutory rights. 
 “Permitted Encumbrances” shall mean: (i) Encumbrances for Taxes not yet due and payable or for Taxes that are being
contested in good faith by appropriate proceedings; (ii) Encumbrances or imperfections of title resulting from or otherwise relating to any of the contracts referred to in the Company Disclosure Letter, to the extent the Company Disclosure
Letter expressly identifies such Encumbrance or imperfection of title (or such is obvious on the face of the contract); (iii) Encumbrances or imperfections of title relating to liabilities expressly reflected in the financial statements
(including any related notes) contained in the Company SEC Documents; (iv) Encumbrances arising from or otherwise relating to transfer restrictions under the Securities Act and the securities laws of the various states of the United States or
foreign jurisdictions; and (v) mechanics’, materialmen’s and similar statutory liens arising or incurred in the ordinary course of business for amounts not overdue. 
 “Person” shall mean any individual or Entity. 
 “Proceeds” shall mean all cash and the cash equivalent of all non-cash proceeds, where the cash equivalent of such non-cash
proceeds is determined by an independent appraiser selected by the Board of Directors of Parent in good faith. The determination made by such appraiser shall be final and binding upon all persons. Future streams of cash shall not be considered to be
non-cash proceeds, but the actual cash payments thereunder shall be treated as cash proceeds if, as and when received. 
 “Reference Amount” shall mean $3,207,500 less $150,000 to be deposited at or before Closing in the Stockholders’ Representative Fund. 
 “Roche Agreement” shall mean that certain Collaboration and License Agreement, effective as of August 7, 2008, by and
among Hoffmann-La Roche Inc., Roche Palo Alto LLC, F. Hoffmann-La Roche Ltd. and the Company, as amended from time to time. 
 “Roche CVR” shall mean a right having the terms and conditions set forth in the Roche CVR Agreement to be issued in accordance with Section 2.06 in respect of each Outstanding Company Share. 
 “Roche CVR Agreement” shall mean the agreement governing the terms and conditions of the Roche CVRs substantially in the
form attached hereto as Exhibit A. 
 “Roche Program Consideration” shall mean a cash amount equal to
the aggregate Proceeds actually received by the Company on or after the date hereof and before the Effective Time in connection with a Roche Milestone Payment Event, a Roche Purchase Payment Event and/or a Roche Royalty Payment Event (each as
defined in the Roche CVR Agreement). 
 “SEC” shall mean the United States Securities and Exchange Commission.

 “Securities Act” shall mean the Securities Act of 1933, as amended. 
 “ ‘7133 Licensing Event” shall have the meaning set forth in the General CVR Agreement. 
  

 7 

 “ ‘7133 Licensing Option Event” shall have the meaning set forth in
the General CVR Agreement. 
 “ ‘7133 Program” shall mean the Company’s active program for the
development of a HepDirect prodrug of AraCMP for the treatment of hepatocellular carcinoma, including all related Intellectual Property and other related rights of the Company, and any and all clinical and non-clinical data compiled by the Company,
in each case arising from the Company’s operation of such program. 
 “ ‘7133 Program Consideration”
shall mean a cash amount equal to the aggregate Proceeds actually received by the Company on or after the date hereof and before the Effective Time in connection with a ‘7133 Licensing Event, a ‘7133 Licensing Option Event, a ‘7133
Sale Event and/or a ‘7133 Sale Option Event. 
 “ ‘7133 Program Transaction” shall mean any
transaction to which the Company is a party entered into before the Effective Time that results in a ‘7133 Licensing Event, ‘7133 Licensing Option Event, a ‘7133 Sale Event and/or a ‘7133 Sale Option Event. 
 “ ‘7133 Sale Event” shall have the meaning set forth in the General CVR Agreement. 
 “ ‘7133 Sale Option Event” shall have the meaning set forth in the General CVR Agreement. 
 “Software” means all computer programs, including any and all software implementations of algorithms, models and
methodologies whether in source code or object code form, and all documentation, including user manuals and training materials, related to any of the foregoing. 
 “Special Meeting” shall mean a special meeting of the stockholders of the Company held for the purpose of considering and taking action upon this Agreement and the Merger. 

 “Stockholders’ Representative Fund” shall mean the account set up for the benefit of the
Stockholders’ Representative for the reimbursement of fees and expenses pursuant to Section 5.16(e) hereof. 
 “Subsidiary” shall mean an Entity that is related to another Entity such that such other Entity directly or indirectly owns, beneficially or of record: (i) an amount of voting securities or other interests in such
Entity that is sufficient to enable such other Entity to elect at least a majority of the members of such Entity’s board of directors or comparable governing body; or (ii) more than 50% of the outstanding equity interests issued by such
Entity. 
 “Superior Proposal” shall mean any unsolicited, bona fide written offer made by a third party
unaffiliated with the Company to directly or indirectly acquire (by way of merger, tender or exchange offer or otherwise) greater than 95% of the Company’s assets or greater than 95% of the outstanding Company Shares (other than Company Shares
already held by such third party) that the Company Board shall have determined in good faith (after consultation with the Company’s outside legal counsel and financial advisor, and after taking into account, among other things, the financial,
legal and regulatory aspects of such offer (including any financing required and the availability thereof), as well as any revisions to the terms hereof proposed by Parent pursuant to Section 5.04(c)), is more favorable from a financial
point of view to the stockholders of the Company than the terms of the Merger (taking into account any revisions to the terms hereof proposed by Parent pursuant to Section 5.04(c) and is reasonably capable of being consummated on the
terms proposed. 
 “Target Net Cash Amount” shall mean zero. 
 “Tax” or “Taxes” shall mean (i) all federal, state, local or foreign taxes, including all net income,
gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes or other taxes any kind whatsoever, and (ii) all interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental Entity in connection with any item described in clause (i). 
  

 8 

 “Tax Returns” shall mean any return, report, claim for refund, estimate,
information return or statement or other similar document relating to or required to be filed with any Governmental Entity with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof. 
 “Termination Fee” shall mean $400,000; provided, however, for purposes of Section 7.03(a)
“Termination Fee” shall mean $250,000. 
 “TR Beta CVR” shall mean a right having the terms and
conditions set forth in the TR Beta CVR Agreement to be issued in accordance with Section 2.06 in respect of each Outstanding Company Share. 
 “TR Beta CVR Agreement” shall mean the agreement governing the terms and conditions of the TR Beta CVRs substantially in the form attached hereto as Exhibit B. 
 “TR Beta Program” shall mean the Company’s active program for the development of a thyroid receptor beta agonist for
the treatment of hyperlipidemia, including all related Intellectual Property and other related rights of the Company, and any and all clinical and non-clinical data compiled by the Company, in each case arising from the Company’s operation of
such program. 
 “Trade Secrets” shall mean confidential technology, know-how, plans, data, designs, protocols,
plans, strains, molecules, works of authorship, inventions, processes, formulae, algorithms, models and methodologies, and trade secrets as defined in applicable state law. 
 “Trademarks” shall mean all registered and unregistered trademarks, service marks, trade names, Internet domain names,
designs, logos and slogans, together with goodwill, registrations and applications relating to the foregoing. 
 “Trading Day” shall mean any day on which securities are traded on the Exchange. 
 ARTICLE II

 THE MERGER; EFFECTIVE TIME 
 Section 2.01 Merger of Merger Sub into the Company. 
 Upon the terms and
subject to the conditions set forth in this Agreement and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company, and the separate existence of Merger Sub shall cease. The Company will continue as
the surviving corporation in the Merger (the “Surviving Corporation”). 
 Section 2.02 Effect of the Merger.

 The Merger shall have the effects set forth in this Agreement and in the applicable provisions of the DGCL, including,
without limitation Section 259 of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall
vest in the Surviving Corporation and all the debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation. 
 Section 2.03 Effective Time 
 Subject to the provisions of this
Agreement, Parent, Merger Sub and the Company will cause a properly executed certificate of merger conforming to the requirements of the DGCL (the “Certificate of Merger”) to be filed with the Secretary of State of the State of
Delaware on the Closing Date. The Merger shall become effective at the time the Certificate of Merger is filed with the Secretary of State of the State of Delaware, or at such later time as is agreed to in writing by the parties hereto and specified
in the Certificate of Merger (the time at which the Merger becomes effective being referred to in this Agreement as the “Effective Time”). 
  

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 Section 2.04 Closing 
 The closing of the Transactions (the “Closing”) will take place at 10:00 a.m. (San Diego time) on the date (the
“Closing Date”) that is the second Business Day after the satisfaction or waiver (if such waiver is permitted and effective under applicable Legal Requirements) of the latest to be satisfied or waived of the conditions set forth in
Article VI (excluding conditions that, by their terms, are to be satisfied on the Closing Date), unless another time or date is agreed to in writing by the parties. The Closing shall be held at the offices of Stradling Yocca
Carlson & Rauth located at 4365 Executive Drive, Suite 1500, San Diego, CA 92121, unless another place is agreed to in writing by the parties. 
 Section 2.05 Certificate of Incorporation and Bylaws; Officers and Directors. 
 Unless otherwise jointly determined by Parent and the Company before the Effective Time: 
 (a) Subject to
Section 5.10(a), (i) the certificate of incorporation of the Company as in effect immediately before the Effective Time shall be the certificate of incorporation of the Surviving Corporation, until thereafter changed or amended as
provided therein or by applicable Legal Requirements, and (ii) the bylaws of the Company as in effect immediately before the Effective Time shall be the bylaws of the Surviving Corporation, until thereafter changed or amended as provided
therein or by applicable Legal Requirements. 
 (b) The directors and officers of Merger Sub immediately before the Effective
Time shall be the initial directors and officers, respectively, of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and Bylaws of the Surviving Corporation. 
 Section 2.06 Conversion of Company Shares. 
 (a) At the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any stockholder of the Company or of Merger Sub: 
 (i) any Company Shares then held by the Company or any wholly-owned Company Subsidiary (or held in the Company’s
treasury) shall cease to exist, and no consideration shall be paid in exchange therefor; 
 (ii) any Company
Shares then held by Parent, Merger Sub or any other wholly-owned Parent Subsidiary shall cease to exist, and no consideration shall be paid in exchange therefor; 
 (iii) except as provided in clauses (i) and (ii) above, each issued and outstanding Company Share (other than
Dissenting Shares) shall be converted into the right to receive (A) an amount in cash equal to the Adjusted Reference Amount divided by the total number of Outstanding Company Shares, (B) one Roche CVR (C) one TR Beta CVR,
(D) one Glucagon CVR, and (E) one General CVR (collectively, the “Merger Consideration”); and 
 (iv) each share of Merger Sub then outstanding shall be converted into one share of the common stock of the Surviving Corporation, such that immediately after the Effective Time Parent shall, as the
former holder of all the shares of Merger Sub, own a number of shares of the common stock of the Surviving Corporation equal to the number (immediately before the Effective Time) of Outstanding Common Shares. 
 Section 2.07 Closing of the Company’s Transfer Books. 
 At the Effective Time: (a) all Company Shares outstanding immediately before the Effective Time shall cease to exist as provided in Section 2.06 and all holders of certificates
representing Company Shares that were outstanding immediately before the Effective Time shall cease to have any rights as stockholders of the Company except the right to receive the Merger Consideration therefor; and (b) the stock transfer
books of the Company shall be closed with respect to all Company Shares. No further transfer of any such Company Shares shall be made on such stock transfer books after the Effective Time. If, after the Effective Time, a valid certificate previously
representing any Company Shares (a “Company Stock Certificate”) is presented to the Exchange Agent, the Surviving Corporation or Parent, such Company Stock Certificate shall be canceled and, if it represents Outstanding Company
Shares, shall be exchanged as provided in Section 2.08. 
  

 10 

 Section 2.08 Exchange of Certificates. 
 (a) Before the Effective Time: (i) Parent shall select a bank or trust company (reasonably acceptable to the Company) to act as exchange
agent with respect to the payment of the Merger Consideration (the “Exchange Agent”); and (ii) Parent shall deposit with the Exchange Agent the cash component of the Merger Consideration, sufficient to enable the Exchange Agent
to make the cash component payments pursuant to Section 2.06 to the holders of Outstanding Company Shares. Such cash amount deposited with the Exchange Agent shall, pending its disbursement to such holders, be invested by the Exchange
Agent in (i) direct obligations of the United States of America, (ii) obligations for which the full faith and credit of the United States of America is pledged to provide for the payment of principal and interest, or (iii) money
market funds investing solely in a combination of the foregoing. Any interest and other income resulting from such investments shall be the property of, and shall be paid to, Parent. Parent shall promptly replace any funds deposited with the
Exchange Agent lost through any investment made pursuant to this paragraph. 
 (b) Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each Person who was, immediately before the Effective Time, a holder of record of Company Shares a form of letter of transmittal and instructions for use in effecting the surrender of Company Stock
Certificates representing such Company Shares in exchange for payment of the Merger Consideration therefor. Parent shall ensure that, upon surrender to the Exchange Agent of each such Company Stock Certificate, together with a properly completed and
executed (and, if necessary, signature-guaranteed) letter of transmittal, the holder of such Company Stock Certificate (or, under the circumstances described in Section 2.08(f), the transferee of the Company Shares represented by such
Company Stock Certificate) shall promptly receive in exchange therefor the Merger Consideration (including the CVRs and any payment distributed between the Effective Time and the time of such surrender on CVRs of that type), without interest.

 (c) On or after the one year anniversary of the Effective Time, Parent or the Surviving Corporation shall be entitled to
cause the Exchange Agent to deliver to Parent or the Surviving Corporation any funds made available by Parent to the Exchange Agent which have not been disbursed to holders of Company Shares, and thereafter such holders shall be entitled to look
only to Parent and the Surviving Corporation with respect to the Merger Consideration payable and issuable upon surrender of their Company Shares. 
 (d) Neither the Exchange Agent, Parent nor the Surviving Corporation shall be liable to any holder of Company Shares for any amount properly paid to a public official pursuant to any applicable abandoned
property or escheat Legal Requirements. If any Company Stock Certificates shall not have been surrendered on the day immediately before the day that such property is required to be delivered to any public official pursuant to any applicable
abandoned property, escheat or similar Legal Requirement, any such Merger Consideration in respect thereof shall, to the extent permitted by applicable Legal Requirements, become the property of Parent, free and clear of all claims or interest of
any Person previously entitled thereto. 
 (e) If any Company Stock Certificate shall have been lost, stolen or destroyed, then,
upon the making of an affidavit of that fact by the Person claiming such Company Stock Certificate to be lost, stolen or destroyed in a form reasonably satisfactory to Parent (together with an indemnity in form reasonably satisfactory to Parent
against any claim that may be made against the Exchange Agent or Parent or otherwise with respect to such certificate and, if required by Parent, the posting by such Person of a bond in such reasonable amount as Parent may direct to support such
indemnity), Parent shall cause the Exchange Agent to pay in exchange for such lost, stolen or destroyed Company Stock Certificate the Merger Consideration. 
 (f) In the event of a transfer of ownership of Company Shares which is not registered in the transfer records of the Company, the Merger Consideration may be paid and issued with respect to such Company
Shares to a transferee of such Company Shares if the Company Stock Certificate representing such Company Shares is presented to the Exchange Agent, accompanied by all documents reasonably required by the Exchange Agent to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes relating to such transfer have been paid. 
  

 11 

 (g) The Surviving Corporation or Parent shall bear and pay all charges and expenses,
including those of the Exchange Agent, incurred in connection with the exchange of the Company Shares. 
 (h) Parent, the
Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to the Merger or this Agreement to any holder of Company Shares, such amounts as Parent, the Surviving
Corporation or the Exchange Agent are required to deduct and withhold under the Code with respect to the making of such payment. To the extent that amounts are so withheld and paid over to the appropriate Tax authority or other Governmental Entity
by Parent, the Surviving Corporation or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Company Shares, in respect of whom such deduction and withholding was made by
Parent, the Surviving Corporation or the Exchange Agent. 
 Section 2.09 Company Stock Options; Company Warrants. 
 (a) By operation of the Company Equity Plans, all outstanding Company Options, whether or not then vested, will become fully vested and
exercisable on the Closing Date. The Company Board, by operation of existing agreements or by resolution, will take all requisite actions such that immediately before the Effective Time (i) each holder of outstanding Company Options shall be
entitled to exercise in full all Company Options held by such holder by paying the exercise price therefor in exchange for the Company Shares in accordance with the applicable Company Equity Plan, and (ii) all outstanding Company Options not
exercised pursuant to clause (i) of this Section 2.09(a) shall be terminated and canceled without any payment or liability on the part of the Company. 
 (b) Unless any outstanding Company Warrant shall otherwise terminate automatically in connection with the Transactions, between the date of this Agreement and the Effective Time, the Company shall use
reasonable best efforts to enter into agreements with the holders of the outstanding Company Warrants to terminate and cancel all such Company Warrants, effective immediately before the Effective Time, without any payment or liability on the part of
the Company; provided that the ability of the Company to terminate and cancel all such Company Warrants shall not limit in any way Parent’s obligation to consummate the Merger and the Transactions. 
 (c) If any Company Warrant remains outstanding after the Effective Time and the holder thereof exercises such Company Warrant before its
expiration date, then Parent shall issue and pay in respect of each exercised Company Warrant in exchange for the payment of the applicable exercise price, on a per-exercised-share basis, equivalent consideration to the Merger Consideration (or the
proceeds thereof) as is paid (if and when) in respect of each issued and outstanding Company Share, immediately before the Effective Time, on or after the date that such Company Warrant is exercised. 
 (d) As soon as practicable following the date of this Agreement, the Company Board (or, if appropriate, any committee thereof administering
the Company ESPP) shall adopt such resolutions or take such other actions as may be required with respect to the Company ESPP as are necessary to provide that no new offering period shall begin under the Company ESPP after the date of this Agreement
and that the Company ESPP shall terminate, effective immediately before the Effective Time. 
 Section 2.10 Dissenting Shares

 Notwithstanding anything in this Agreement to the contrary, any Company Share issued and outstanding immediately before
the Effective Time held by a holder who is entitled to demand and properly demands appraisal of such Company Shares (the “Dissenting Shares”), pursuant to, and who complies in all respects with, Section 262 of the DGCL (the
“Appraisal Rights”), shall not be converted into the right to receive the Merger Consideration, but instead shall be converted into the right to receive such consideration as may be due such holder pursuant to Section 262 of
the DGCL unless such holder fails to perfect, withdraws or otherwise loses such holder’s right to such payment or appraisal. From and after the Effective Time, a holder of Dissenting

  

 12 

 
Shares shall not have and shall not be entitled to exercise any of the voting rights or other rights of a stockholder of the Company or the Surviving Corporation. If, after the Effective Time,
such holder fails to perfect, withdraws or otherwise loses any such Appraisal Rights, each such share of such holder shall no longer be considered a Dissenting Share and shall be deemed to have converted as of the Effective Time into the right to
receive the Merger Consideration in accordance with Section 2.06(iii). The Company shall give prompt notice to Parent of any demands received by the Company for appraisal of Company Shares, withdrawals of such demands and any other
instruments served pursuant to the DGCL received by the Company, and Parent shall have the right to control all negotiations and proceedings with respect to such demands. Before the Effective Time, the Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to, or settle or offer to settle, any such demands or agree to do or commit to do any of the foregoing. 
 ARTICLE III 
 REPRESENTATIONS AND WARRANTIES OF
THE COMPANY 
 The Company hereby represents and warrants to Parent and Merger Sub that except as set forth in the letter
delivered by the Company to Parent immediately before the execution of this Agreement (the “Company Disclosure Letter”) or the Company SEC Documents either filed with or furnished to the SEC before the date of this Agreement (the
“Filed Company SEC Documents”) (it being understood that any matter set forth in the Company Disclosure Letter or in such Filed Company SEC Documents shall be deemed disclosed with respect to any Section of this
Article III to which the matter relates, to the extent the relevance of such matter to such Section is reasonably apparent): 
 Section 3.01 Organization, Standing and Corporate Power. 
 (a) The Company is a corporation duly organized,
validly existing and in good standing under the Legal Requirements of the State of Delaware and has all requisite corporate power and authority necessary to own or lease all of its properties and assets and to carry on its business as it is now
being conducted. The Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased or
held under license by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, impair in any material respect the ability of the Company to perform its obligations hereunder or prevent or materially delay consummation of the Transactions. 
 (b) Each Company Subsidiary is a corporation or other organization duly organized, validly existing and in good standing under the Legal
Requirements of the jurisdiction of its organization. Each Company Subsidiary is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased or held under license by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Section 3.01(b) of the Company Disclosure Letter sets forth a true and complete list of each Company Subsidiary and the jurisdiction of organization of each Company
Subsidiary. All the outstanding shares of capital stock of, or other equity interests in, each Company Subsidiary are duly authorized, have been validly issued, are fully paid, non-assessable and free of preemptive rights, and are owned directly or
indirectly by the Company free and clear of all Encumbrances, except for such transfer restrictions of general applicability as may be provided under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the
“Securities Act”) and other applicable securities laws and rules and regulations promulgated thereunder. 
 (c)
The Company has delivered to Parent complete and correct copies of the certificate of incorporation and bylaws (or other comparable organizational documents) of the Company and each Company Subsidiary, in each case as amended through the date of
this Agreement (the “Company Charter Documents”). The Company has

  

 13 

 
made available to Parent and its representatives true and complete copies of the minutes (or, in the case of minutes that have not yet been finalized, a brief summary of the meeting, including in
each case a summary of any resolutions adopted by the Company Board) of all meetings of the stockholders, the Company Board and each committee of the Company Board held since January 1, 2007 and equivalent documents of each Company Subsidiary.
1 
 Section 3.02 Capitalization. 
 (a) The authorized capital stock of the Company consists of:
(i) 100,000,000 shares of common stock, par value $0.001 per share (each, a “Company Share” and, collectively, the “Company Shares”) and (ii) 5,000,000 shares of Preferred Stock, par value $0.001 per
share. At the close of business on October 23, 2009, (i) 35,157,359 Company Shares were issued and outstanding (and 20,941 Company Shares were issued and held by the Company in its treasury), (ii) an aggregate of 8,446,670 Company
Shares were reserved for issuance under the Company Equity Plans (of which 3,928,143 Company Shares were subject to outstanding Company Options granted under the Company Equity Plans), (iii) no Company Shares were subject to outstanding Company
Options granted other than under the Company Equity Plans, (iv) no person has made or has the right to make a contribution to the Company ESPP for the current Company ESPP offering period, (v) 3,363,556 Company Shares were subject to
outstanding Company Warrants and (vi) no shares of Company Preferred Stock were issued or outstanding. All Company Shares, and Company Shares reserved for issuance upon exercise of the Company Options or the Company Warrants, have been duly
authorized and are, or upon issuance in accordance with the terms of the Company Options will be, validly issued, fully paid, non-assessable and free of preemptive rights. Section 3.02(a) of the Company Disclosure Letter sets
forth a correct and complete list, as of October 23, 2009, of: (i) the outstanding Company Options, the number of Company Shares underlying such Company Options and the holders, exercise prices and expiration dates thereof and
(ii) the outstanding Company Warrants, the number of Company Shares underlying such Company Warrants and the holders, exercise prices and expiration dates thereof. Since January 1, 2009, the Company has not issued, or reserved for
issuance, any shares of its capital stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock, other than pursuant to the Company Options and Company Warrants referred to above that are outstanding
as of the date of this Agreement. 
 (b) There are no outstanding contractual obligations of the Company or any Company
Subsidiary (i) restricting the transfer of, (ii) affecting the voting rights of, (iii) requiring the issuance, sale, repurchase, redemption or disposition of, or containing any right of first refusal with respect to,
(iv) requiring the registration for sale of, or (v) granting any preemptive or anti-dilutive right with respect to, any Company Shares or any capital stock of the Company or any Company Subsidiary, except pursuant to the Company Options,
the Company Warrants and the Voting Agreements. There are no bonds, debentures, notes or other indebtedness or liabilities of the Company or any Company Subsidiary having the right to vote (or convertible into or exchangeable for securities having
the right to vote) on any matters on which the stockholders of the Company or any Company Subsidiary may vote. 
 Section 3.03
Authority; Non-contravention; Voting Requirements. 
 (a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and the CVR Agreements and, subject to obtaining the approval of the holders of the Company Shares of the adoption of this Agreement as contemplated by Section 5.05 (the “Company Stockholder
Approval”), to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement and the CVR Agreements, and the consummation by it of the Transactions, have been
duly authorized and approved by the Company Board, and except for obtaining the Company Stockholder Approval, no other corporate action on the part of the Company or any stockholder of the Company is necessary to authorize the execution, delivery
and performance by the Company of this Agreement and the CVR 
  

	1	The Company will provide all minutes relating to the strategic process undertaken by the Company upon signing of this Agreement. 

  

 14 

 
Agreements and the consummation by it of the Transactions. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery hereof by the
other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other similar Legal Requirements of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether
considered in a proceeding at law or in equity (the “Bankruptcy and Equity Exception”). 
 (b) The Company
Board has, upon the terms and subject to the conditions set forth in this Agreement, unanimously duly adopted resolutions (i) determining that the Transactions are advisable and in the best interests of the Company and its stockholders,
(ii) approving this Agreement and the Transactions, including the Merger, in accordance with the DGCL, (iii) directing that this Agreement be submitted to the stockholders of the Company for adoption, and (iv) recommending that the
stockholders of the Company adopt this Agreement and approve the Transactions (the “Company Recommendation”). 
 (c) Neither the execution and delivery of this Agreement nor the CVR Agreements by the Company nor the consummation by the Company of the Transactions, nor compliance by the Company with any of the terms or provisions hereof, will
(i) conflict with or violate any provision of the Company Charter Documents or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.04 and the Company Stockholder Approval are obtained and the
filings referred to in Section 3.04 are made, (x) violate any Legal Requirement applicable to the Company or any Company Subsidiary or (y) violate or constitute a default under any Company Contract, except, in the case of
clause (ii), for such violations or defaults as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, impair in any material respect the ability of the Company to perform its obligations
hereunder or the ability of Parent to enjoy in all material respects the intended benefit of the Transactions or prevent or materially delay consummation of the Transactions. 
 (d) The affirmative vote (in person or by proxy) of the holders of a majority of the issued and outstanding Company Shares in favor of the
adoption of this Agreement is the only vote or approval of the holders of any class or series of capital stock of the Company which is necessary to adopt this Agreement and approve the Merger. 
 Section 3.04 Governmental Approvals. 
 Except for (i) the filing with the SEC of the Proxy Statement in definitive form, and other filings required under, and compliance with other applicable requirements of, the Exchange Act and the
rules of the NASDAQ Capital Market, (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, and (iii) any compliance with the “blue sky” laws of various states, no
consents or approvals of, or filings, declarations or registrations with, any Governmental Entity are necessary for the execution and delivery of this Agreement and the CVR Agreements by the Company and the consummation by the Company of the
Transactions, other than such consents, approvals, filings, declarations or registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, impair in
any material respect the ability of the Company to perform its obligations hereunder or the ability of Parent to enjoy in all material respects the intended benefit of the Transactions or prevent or materially delay consummation of the Transactions.

 Section 3.05 Company SEC Documents; Financial Statements. 
 (a) The Company has filed all required registration statements, prospectuses, forms, reports and proxy statements with the SEC, together with
all certifications required pursuant to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), from and after January 1, 2006 (collectively, the “Company SEC Documents”). As of their respective effective
dates (in the case of Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates (in the case of all

  

 15 

 
other Company SEC Documents), or if amended or supplemented, as of the date of the last such amendment or supplement, and giving effect to any amendments or supplements thereto filed before the
date of this Agreement, the Company SEC Documents complied in all material respects with the requirements of the Exchange Act and the Securities Act, as the case may be, applicable to such Company SEC Documents, and none of the Company SEC Documents
as of such respective dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were
made, not misleading. 
 (b) The consolidated financial statements of the Company included in the Company SEC Documents (the
“Company Financial Statements”) have been prepared in accordance with GAAP (except, in the case of unaudited interim statements, as indicated in the notes thereto) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of the Company and the consolidated Company Subsidiaries as of the dates thereof and the consolidated results of their operations
and cash flows for the periods then ended (subject, in the case of unaudited interim statements, to normal year-end audit adjustments). 
 (c) Neither the Company nor any Company Subsidiary has any liabilities of any nature (whether accrued, absolute, determined, determinable, fixed or contingent) which (i) would be required to be
reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP, except liabilities (A) reflected or reserved against in the consolidated balance sheet included in its Quarterly Report filed on
Form 10-Q for the quarterly period ended June 30, 2009 (including the notes thereto), included in the Company SEC Documents, (B) incurred pursuant to this Agreement or in connection with the Transactions, (C) incurred since
June 30, 2009 in the ordinary course of business, or (D) that have not had, and would not reasonably be expected to have, individually or in the aggregate, a cash expenditure or exposure in excess of $50,000, or (ii) that are not
within subsection (i) but which have had, or would reasonably be expected to have, individually or in the aggregate, a cash expenditure or exposure in excess of $50,000. 
 (d) Since June 30, 2009, except for actions taken in connection with this Agreement and the Transactions, (i) the Company and the
Company Subsidiaries have conducted their businesses in all material respects in the ordinary course, and (ii) there has not been any Company Material Adverse Effect or any change, event, development, condition, occurrence or effect that has
had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. 
 (e) The
Company and the Company Subsidiaries have designed and maintain a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. The Company (i) has designed and maintains “disclosure controls and procedures” (as defined in
Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure, and (ii) has disclosed, to the Knowledge
of the Company, based on its most recent evaluation of such disclosure controls and procedures before the date hereof, to the Company’s auditors and the audit committee of the Company Board (and has specified in the Company Disclosure Letter)
(A) any “significant deficiencies” and “material weaknesses” in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s
ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial
reporting. For purposes of this Agreement, the terms “significant deficiency” and “material weakness” shall have the meanings assigned to them by the Public Company Accounting Oversight Board in Auditing Standard No. 2, as
in effect on the date hereof. 
  

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 Section 3.06 Legal Proceedings. 
 As of the date hereof, there is no pending or, to the Knowledge of the Company, threatened Legal Proceeding against or relating to the
Company or any Company Subsidiary, nor is there any injunction, order, judgment, ruling or decree imposed upon the Company or any Company Subsidiary, in each case, by or before any Governmental Entity, that might, individually or in the aggregate,
reasonably be expected to result in a judgment against or ultimately payable by the Company in excess of $50,000 or have a Company Material Adverse Effect, impair in any material respect the ability of the Company to perform its obligations
hereunder or prevent or materially delay consummation of the Transactions. 
 Section 3.07 Compliance With Legal Requirements;
Governmental Authorizations; FDA Laws. 
 (a) The Company and the Company Subsidiaries are in compliance with all Legal
Requirements applicable to the Company or any Company Subsidiary, as applicable, except for such non-compliance as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company and the
Company Subsidiaries hold all Governmental Authorizations necessary for the lawful conduct of their respective businesses, and all such Governmental Authorizations are valid and in full force and effect, except where the failure to hold the
same or of the same to be valid and in full force and effect would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. The Company and the Company Subsidiaries are in compliance with the terms of
all Governmental Authorizations, except for such non-compliance as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. 
 (b) All facilities operated by the Company and the Company Subsidiaries in connection with the operation of their businesses that are
subject to the FDA have been operated in compliance with the Federal Food Drug and Cosmetic Act (21 U.S.C. §§ 301, et seq.) and regulations and guidelines thereunder to the extent applicable, and all similar Legal Requirements applicable
to the operation of the business and operations of the Company and the Company Subsidiaries (collectively, the “FDA Laws”), except for such failures to be in compliance as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. 
 (c) To the Knowledge of the Company, all clinical trials conducted by the
Company have been, and are being, conducted in substantial compliance with the requirements of current good clinical practice and all applicable requirements relating to protection of human subjects contained in Title 21, Parts 50, 54, 56 and 312 of
the United States Code of Federal Regulations. 
 (d) To the Knowledge of the Company, none of the Roche parties to the Roche
Agreement has encountered any significant adverse data or events (as to toxicology or otherwise) with respect to the Roche Agreement drug development program, nor has any of the Roche parties to the Roche Agreement terminated, or discontinued work
under, or expressed an intent to terminate, or to discontinue work under, the Roche Agreement. 
 Section 3.08 Information Supplied.

 (a) The Proxy Statement, and any amendments or supplements thereto, at (i) the time the Registration Statement is
declared effective, (ii) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of the Company, (iii) the time of the Special Meeting, and (iv) the Effective Time, will comply
as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act and other applicable Legal Requirements. 
 (b) The Proxy Statement, and any amendments or supplements thereto, do not, and will not, at (i) the time the Registration Statement is declared effective, (ii) the time the Proxy Statement (or
any amendment thereof or supplement thereto) is first mailed to the stockholders of the Company, (iii) the time of the Special Meeting, or (iv) the Effective Time, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 
  

 17 

 (c) The representations and warranties contained in this Section 3.08 will not
apply to statements or omissions included, or incorporated by reference, in the Proxy Statement based upon information furnished in writing to the Company by Parent or Merger Sub specifically for use therein. 
 (d) The information furnished and to be furnished in writing by the Company to Parent specifically for use in the Registration Statement,
and any amendments or supplements thereto, does not, and will not, at (A) the time the Registration Statement is declared effective, (B) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the
stockholders of the Company, (C) the time of the Special Meeting, or (D) the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were made, not misleading. 
 Section 3.09 Tax Matters. 

 (a)(i) Each of the Company and the Company Subsidiaries has timely filed, or has caused to be timely filed on its behalf
(taking into account any extension of time within which to file), all material Tax Returns required to be filed by it, and all such filed Tax Returns are correct and complete in all material respects; (ii) all Taxes shown to be due on such Tax
Returns have been timely paid; (iii) no deficiency with respect to Taxes has been proposed, asserted or assessed in writing against the Company or any Company Subsidiary which have not been fully paid or adequately reserved in the Company SEC
Documents; and (iv) to the Knowledge of the Company, no audit or other administrative or court proceedings are pending with any Governmental Entity with respect to Taxes of the Company or any Company Subsidiary, and no written notice thereof
has been received. 
 (b) Neither the Company nor any Company Subsidiary is a party to or bound by any material Tax allocation
or sharing agreement (other than any such agreement solely between or among the Company and any of its Subsidiaries). 
 (c) To
the Knowledge of the Company, neither the Company nor any Company Subsidiary (i) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company) or
(ii) has any liability for the Taxes of any Person (other than the Company or any Company Subsidiary) under United States Treasury Regulation Section 1.1502-6 (or any similar provision of any Legal Requirement), as a transferee or
successor, by Contract, or otherwise. 
 (d) There are no liens for Taxes upon any material property or other material assets of
the Company or any Company Subsidiary, except liens for Taxes not yet due and payable and liens for Taxes that are being contested in good faith by appropriate proceedings. 
 (e) All material Taxes required to be withheld, collected or deposited by or with respect to the Company and each of the Company
Subsidiaries have been timely withheld, collected or deposited, as the case may be, and to the extent required, have been paid to the relevant Tax authority or other Governmental Entity, and to the Knowledge of the Company no Taxes so required have
not been so paid. 
 (f) Neither the Company nor any Company Subsidiary is a party to any agreement, contract, arrangement
or plan that has resulted or would result, individually or in the aggregate, in the payment of any “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding provision of state, local or
foreign Tax law). 
 (g) No material deduction by the Company or any Company Subsidiary in respect of any “applicable
employee remuneration” (within the meaning of Section 162(m) of the Code) has been disallowed or is subject to disallowance by reason of Section 162(m) of the Code. 
 (h) Neither the Company nor any Company Subsidiary has been a party to a transaction governed in whole or part by Code Section 355.

  

 18 

 (i) The Company’s Board of Directors has taken into full consideration the likelihood
that the taxable gain or loss of holders of Company Shares as a result of the Merger may be based on “closed transaction” treatment (which might result, depending on the value assigned to the CVRs and individual tax circumstances, in some
holders of Company Shares owing more in income tax in respect of the disposition of their Company Shares in the Merger than their cash portion of the Merger Consideration); the likelihood that the transferability of the CVRs makes “closed
transaction” tax treatment more likely; that Parent may disclose, in the Registration Statement and its prospectus, Parent’s view that it is more likely that the IRS would take the position that the taxable gain or loss of holders of
Company Shares as a result of the Merger would be based on “closed transaction” treatment than that the IRS would take the position that the taxable gain or loss of holders of Company Shares as a result of the Merger would be based on
“open transaction” treatment; that the tax value assigned to the CVRs for the purposes of “closed transaction” tax treatment might differ from the tax value which the Company or any holder of Company Shares might consider to be
appropriate or accurate; and that it might not be possible for holders of CVRs to sell their CVRs for the full tax value assigned to the CVRs for the purposes of “closed transaction” tax treatment. 
 Section 3.10 Employee Benefits and Labor Matters. 
 (a) Section 3.10(a) of the Company Disclosure Letter lists each “employee benefit plan” (as defined in Section 3(3) of ERISA), and any other material employee plan or agreement
maintained by the Company or any Company Subsidiary and with respect to which the Company or any Company Subsidiary would reasonably be expected to have any material liability (each, a “Company Plan”). The Company has made available
to Parent correct and complete copies of (i) each Company Plan (or, in the case of any such Company Plan that is unwritten, descriptions of the material terms thereof), (ii) the most recent annual report on Form 5500 required to be
filed with the Internal Revenue Service (the “IRS”) with respect to each Company Plan (if any such report was required), (iii) the most recent summary plan description for each Company Plan for which such summary plan
description is required and (iv) each material trust agreement and insurance or group annuity Contract relating to any Company Plan. Each Company Plan maintained, contributed to or required to be contributed to by the Company or any Company
Subsidiary has been administered in all material respects in accordance with its terms. The Company, the Company Subsidiaries and all the Company Plans are all in material compliance with the applicable provisions of ERISA, the Code and all other
applicable Legal Requirements. All Company Plans that constitute “employee pension plans” (as defined in Section 3(3) of ERISA) and are intended to be Tax qualified under Section 401(a) of the Code (each, a “Company
Pension Plan”) have received an opinion or determination letter from the IRS and are expressly identified as such in Section 3.10(a) of the Company Disclosure Letter. The Company has made available to Parent a correct and complete copy
of the most recent opinion or determination letter received with respect to each Company Pension Plan maintained, contributed to or required to be contributed to by the Company or any Company Subsidiary, as well as a correct and complete copy of
each pending application for an opinion or a determination letter, if any. Neither the Company nor any Company Subsidiary has contributed or has been obligated to contribute to an “employee benefit plan” subject to Title IV of ERISA, a
“multiemployer plan,” as defined in Section 3(37) of ERISA, or an “employee benefit plan” subject to Sections 4063 or 4064 of ERISA. 
 (b) Neither the Company, nor any Company Subsidiary has any material liability for life, health, medical or other welfare benefits for former employees or beneficiaries or dependents thereof under Company
Plans, other than Company Pension Plans and other than as required by Section 4980B of the Code, Part 6 of Title I of ERISA or other applicable Legal Requirement. 
 (c) There are no pending or, to the Company’s Knowledge, threatened, claims, lawsuits, arbitrations or audits asserted or instituted against any Company Plan, any fiduciary (as defined by
Section 3(21) of ERISA) thereto, the Company, any Company Subsidiary or any employee or administrator thereof in connection with the existence, operation or administration of a Company Plan, other than routine claims for benefits. 

(d) Neither the Company nor any Company Subsidiary is a party to a collective bargaining agreement and no labor union has been certified
to represent any employee of the Company or any Company Subsidiary or, to

  

 19 

 
the Knowledge of the Company, has applied to represent or is attempting to organize so as to represent such employees. 
 (e) Section 3.10(e) of the Company Disclosure Letter lists each material (i) stay or severance or bonus or employment
agreement with directors, officers or employees of or consultants to the Company or any Company Subsidiary; or (ii) stay or severance or bonus program or policy of the Company or any Company Subsidiary with or relating to its employees.

 Section 3.11 Contracts. 
 (a) Except for Contracts filed as exhibits to the Filed Company SEC Documents, Section 3.11(a) of the Company Disclosure Letter sets forth a correct and complete list, and the Company has made
available to Parent correct and complete copies, of all Contracts (including all material amendments, modifications, extensions or renewals with respect thereto, but excluding all names, terms and conditions that have been redacted in compliance
with the terms of each such Contract or with applicable Legal Requirements governing the sharing of information) to which the Company or any Company Subsidiary is a party as of the date of this Agreement (collectively, the “Company
Contracts”): 
 (i) required to be filed as an exhibit to any report of the Company filed pursuant to
the Exchange Act of the type described in Item 601(b) of Regulation S-K promulgated by the SEC; 
 (ii)
that contain a covenant restricting the ability of the Company or any Company Subsidiary to compete in any business or with any Person or in any geographic area; 
 (iii) with any Affiliate of the Company, other than those to which the only parties are the Company and any of the
wholly-owned Company Subsidiaries; 
 (iv) which primarily relates to (A) the granting to the Company or any
Company Subsidiary of any IP License in or to any Company Intellectual Property owned by a third party, with annual license fees of more than $25,000, or (B) the granting by the Company or any Company Subsidiary to a third party of any IP
License in or to any Company Intellectual Property, with annual license fees of more than $25,000, excluding “click-wrap” or “shrink-wrap” agreements, agreements contained in or pertaining to “off-the-shelf” Software,
or the terms of use or service for any web site; 
 (v) relating to any material joint venture, partnership or
other similar arrangement involving co-investment, collaboration or partnering with a third party; 
 (vi) with a
Governmental Entity (other than ordinary course Contracts with Governmental Entities as a customer); 
 (vii)
pursuant to which any Indebtedness of the Company or any Company Subsidiary is outstanding or may be incurred or pursuant to which the Company or any Company Subsidiary has guaranteed any Indebtedness of any other Person (other than the Company or
any Company Subsidiary and excluding Company trade payables arising in the ordinary course of business); 
 (viii) pursuant to which the Company, any Company Subsidiary or any other party thereto has continuing obligations, rights or interests relating to the research, development, clinical trial, distribution, supply, manufacture, marketing or
co-promotion of, or collaboration with respect to, any product or product candidate for which the Company or any Company Subsidiary is currently engaged in research or development, including manufacture or supply services or Contracts with contract
research organizations for clinical trials-related services; and 
 (ix) which are to any extent executory and
relate to (A) the disposition or acquisition of any material assets or properties, other than dispositions or acquisitions in the ordinary course of business, or (B) any merger or other business combination transaction. 
 (b) Each Company Contract is valid and binding on the Company and each Company Subsidiary which is party thereto and, to the Knowledge of
the Company, each other party thereto, subject to the Bankruptcy and Equity Exception, and is in full force and effect, and the Company and each Company Subsidiary has performed

  

 20 

 
all obligations required to be performed by it before the date hereof under each Company Contract and, to the Knowledge of the Company, each other party to each Company Contract has performed all
obligations required to be performed by it before the date hereof under such Company Contract, except for such failures to be in compliance as would not, individually or in the aggregate, reasonably be expected to result in an allegation of material
breach thereof. 
 (c) The Company has not received or enjoyed any benefit, inducement or incentive from any Governmental Entity
which will, as a result of this Agreement or the Transactions or the cessation of the Company’s business operations in the geographic area where they are currently conducted or the termination of all or substantially all Company employees,
result in any clawback, recapture, recoupment, repayment obligation, penalty, Tax or other such liability. 
 Section 3.12 Environmental
Matters. 
 (a) To the Knowledge of the Company, the Company and each Company Subsidiary is in compliance with (i) all
applicable Legal Requirements concerning pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release, control or cleanup of any hazardous materials, substances or wastes, as such requirements are enacted and in effect on the date hereof (“Environmental Laws”),
and (ii) any Governmental Authorizations required under applicable Environmental Laws for the current operations of the Company and each Company Subsidiary. 
 (b) Neither the Company nor any Company Subsidiary has received any written notice or report in the past three years regarding any actual or alleged violation of any applicable Environmental Law or any
liabilities arising under applicable Environmental Laws. The Company has delivered, or made available to Parent, copies of all environmental assessments, reports, audits, studies, analyses or tests possessed by, or reasonably available to, the
Company and Company Subsidiaries pertaining to compliance with, or liability under, any Environmental Laws, in each case relating to the owned or leased real estate or other assets and properties of the Company and the Company Subsidiaries.

 (c) The Company has delivered to Parent complete and accurate copies of all environmental reports or assessments referenced
on Section 3.12(c) of the Company Disclosure Letter and, since the date of such reports or assessments, to the Knowledge of the Company, no facts or conditions have arisen or been discovered which would reasonably be expected to
materially alter or modify such reports or assessments if they were to be updated. 
 Section 3.13 Intellectual Property.

 (a) Section 3.13(a) of the Company Disclosure Letter sets forth as of the date hereof a true, complete and
correct list of all U.S. and foreign (i) Patents; (ii) registered Trademarks; (iii) registered Copyrights; (iv) internet domain registrations and (v) Software (other than standard and duly licensed off-the-shelf Software),
in each case owned or purported to be owned or licensed by the Company or any Company Subsidiary and used or held for use in the conduct of the business of the Company or any Company Subsidiary as of the date of this Agreement. The Company or a
Company Subsidiary is the sole and exclusive assignee (or otherwise the sole and exclusive owner) of all of the Company Intellectual Property set forth in Section 3.13(a) of the Company Disclosure Letter, except for in-licensed
Intellectual Property set forth on such Section 3.13(a) of the Company Disclosure Letter, all of which is licensed by the Company pursuant to valid and subsisting licenses under agreements of which, to the Knowledge of the Company,
neither party is in breach and which neither party has terminated nor expressed an intent to do so. The name of each licensor and the date of the license agreement are set forth next to the respective item of in-licensed Intellectual Property on
such Section 3.13(a) of the Company Disclosure Letter. 
 (b) The Company or the Company Subsidiaries own or possess
appropriate licenses to all Company Intellectual Property. To the Knowledge of the Company, the Company or the Company Subsidiaries have sufficient legal rights to use, sell or license all material Company Intellectual Property. 
  

 21 

 (c) All Trademark registrations, Patents issued and Copyright registrations owned by the
Company or any Company Subsidiary and included in the Company Intellectual Property are subsisting, in full force and effect and have not lapsed, expired or been abandoned, and, to the Knowledge of the Company, are not the subject of any opposition
filed with the United States Patent and Trademark Office or any other Intellectual Property registry, or the subject of any proceeding challenging their validity or enforceability. 
 (d) To the Knowledge of the Company, the conduct of the businesses of the Company and the Company Subsidiaries does not and has not been
alleged to infringe, misappropriate, or otherwise violate (and is not, as a practical matter, blocked by) any Intellectual Property rights of any third party; and no settlement agreements, consents, orders, forbearances to sue or similar obligations
to which the Company or any Company Subsidiary is a party limit or restrict any rights of the Company or any Company Subsidiary in and to any Company Intellectual Property that is owned by the Company or any Company Subsidiary. 
 Section 3.14 Insurance. 
 The Company’s policies or Contracts of insurance are in full force and effect and together constitute an insurance program that is customary for NASDAQ-listed pre-revenue biotechnology companies. There is no material claim pending
under any policies or Contracts of insurance maintained by the Company or any Company Subsidiary as to which coverage has been questioned, denied or disputed by the underwriters of such policies or Contracts. All premiums due and payable to date
under all such policies and Contracts have been paid and the Company and the Company Subsidiaries are otherwise in compliance in all material respects with the terms of such policies and Contracts. 
 Section 3.15 Certain Business Relationships with Affiliates. 
 Except as disclosed in the Filed Company SEC Documents, from and after January 1, 2009 and before the date hereof, no event has occurred, and there has been no transaction, or series of similar
transactions, agreements, arrangements or understandings to which the Company or any Company Subsidiary is a party, that would be required to be reported pursuant to Item 404 of Regulation S-K promulgated by the SEC. 
 Section 3.16 Opinion of Financial Advisor. 
 The Company Board has received the opinion of Merriman Curhan Ford Group, Inc. to the effect that, as of the date of such opinion, and subject to the various assumptions and qualifications set forth
therein, the Merger Consideration is fair to holders of Company Shares from a financial point of view. 
 Section 3.17 Brokers and Other
Advisors. 
 Except for Merriman Curhan Ford Group, Inc., the fees and expenses of which will be paid by the Company, no
broker, investment banker, financial advisor, agent or other Person is entitled to any broker’s, finder’s, financial advisor’s, agent’s or other similar fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of the Company or any Company Subsidiary. 
 Section 3.18 Section 203 of the DGCL Not Applicable;
State Takeover Statutes. 
 Assuming the accuracy of Parent’s representation and warranty contained in
Section 4.11, the Company has taken all necessary actions so that the provisions of Section 203 of the DGCL will not apply to this Agreement or the Merger. To the Knowledge of the Company, no other state takeover statute is
applicable to the Merger. The Company does not have any “poison pill” or similar antitakeover device. 
 Section 3.19 No Other
Representations or Warranties. 
 Except for the representations and warranties made by the Company in this
Article III or in the certificates to be delivered pursuant to Section 6.02(a) and Section 6.02(b), neither Company nor any other Person makes

  

 22 

 
any representation or warranty with respect to the Company or the Company Subsidiaries or their respective businesses, operations, assets, liabilities, condition (financial or otherwise) or
prospects, notwithstanding the delivery or disclosure to Parent or any of its Affiliates or Representatives of any documentation, forecasts or other information with respect to any one or more of the foregoing. 
 Section 3.20 No Reliance. 
 Notwithstanding anything contained in this Agreement to the contrary, the Company acknowledges and agrees that (a) neither Parent or Merger Sub nor any Person on behalf of Parent or Merger Sub is making any representations or
warranties whatsoever, express or implied, beyond those expressly made by Parent or Merger Sub in Article IV or in the certificates to be delivered pursuant to Section 6.03(a) and Section 6.03(b), and (b) the
Company has not been induced by, or relied upon, any representations, warranties or statements (written or oral), whether express or implied, made by any Person, that are not expressly set forth in Article IV or in the certificates to be
delivered pursuant to Section 6.03(a) and Section 6.03(b). Without limiting the generality of the foregoing, the Company acknowledges that no representations or warranties are made with respect to any projections, forecasts,
estimates, budgets or information as to prospects with respect to Parent and its Subsidiaries that may have been made available to the Company or any of its Representatives. 
 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB 
 Parent and Merger Sub hereby jointly and severally represent and warrant to the Company that except
as set forth in the Parent SEC Documents filed with or furnished to the SEC before the date of this Agreement (the “Filed Parent SEC Documents”) (it being understood that any matter set forth in such Filed Parent SEC Documents shall
be deemed disclosed with respect to any Section of this Article IV to which the matter relates, to the extent the relevance of such matter to such Section is reasonably apparent): 
 Section 4.01 Organization and Standing. 
 (a) Parent is a corporation duly organized, validly existing and in good standing under the Legal Requirements of the State of Delaware and Merger Sub is a corporation duly organized, validly existing and
in good standing under the Legal Requirements of the State of Delaware. Each of Parent and Merger Sub has all requisite corporate power and authority necessary to own or lease all of its properties and assets and to carry on its business as it is
now being conducted. Each of Parent and Merger Sub is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and
assets owned or leased or held under license by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have
a Parent Material Adverse Effect, impair in any material respect the ability of Parent or Merger Sub to perform its obligations hereunder or prevent or materially delay consummation of the Transactions. 
 (b) Parent has delivered to the Company complete and correct copies of the certificate of incorporation and bylaws of Parent and Merger Sub,
in each case as amended through the date of this Agreement. 
 Section 4.02 Authority; Non-contravention. 
 (a) Each of Parent and Merger Sub has all necessary corporate power and authority to (as applicable) execute and deliver this Agreement and
the CVR Agreements, to perform their respective obligations hereunder and to consummate the Transactions. The execution, delivery and performance by Parent and Merger Sub of (as applicable) this Agreement and the CVR Agreements, and the consummation
by Parent and Merger Sub of the Transactions, have been duly authorized and approved by their respective boards of directors and adopted by

  

 23 

 
Parent as the sole stockholder of Merger Sub, and no other corporate action on the part of Parent and Merger Sub or any stockholders of Parent is necessary to authorize the execution, delivery
and performance by Parent and Merger Sub of (as applicable) this Agreement and the CVR Agreements and the consummation by them of the Transactions. This Agreement has been duly executed and delivered by Parent and Merger Sub and, assuming due
authorization, execution and delivery hereof by the Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each of them in accordance with its terms, subject to the Bankruptcy and Equity
Exception. 
 (b) Neither the execution and delivery of this Agreement by Parent and Merger Sub, nor the execution and delivery
of the CVR Agreements by Parent, nor the consummation by Parent or Merger Sub of the Transactions, nor compliance by Parent or Merger Sub with any of the terms or provisions hereof, will (i) conflict with or violate any provision of the
certificate of incorporation or bylaws of Parent or Merger Sub or (ii) assuming that the authorizations, consents and approvals referred to in Section 4.04 are obtained and the filings referred to in Section 4.04 are
made, (x) violate any Legal Requirement of any Governmental Entity applicable to Parent or any of its Subsidiaries, or (y) violate or constitute a default under any of the terms, conditions or provisions of any Contract to which Parent,
Merger Sub or any of their respective Subsidiaries is a party, except, in the case of clause (ii), for such violations or defaults as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect,
impair in any material respect the ability of Parent or Merger Sub to perform their obligations hereunder or prevent or materially delay consummation of the Transactions. 
 (c) No vote of the holders of any class or series of Parent’s capital stock or other securities is necessary for the consummation by Parent of the Transactions. 
 Section 4.03 Ownership and Operations of Merger Sub. 
 Parent owns beneficially and of record all of the outstanding shares of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transactions, has engaged in no other business
activities and has conducted its operations only as contemplated hereby. 
 Section 4.04 Governmental Approvals. 
 Except for (i) the filing with the SEC of the Registration Statement and other filings required under, and compliance with other
applicable requirements of, the Exchange Act and the rules of the Exchange, (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, and (iii) any compliance with the
“blue sky” laws of various states, no consents or approvals of, or filings, declarations or registrations with, any Governmental Entity are necessary for the execution, delivery and performance of this Agreement by Parent and Merger Sub,
the execution, delivery and performance of the CVR Agreements by Parent or the consummation by Parent and Merger Sub of the Transactions, other than such other consents, approvals, filings, declarations or registrations that, if not obtained, made
or given, would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect, impair in any material respect the ability of Parent or Merger Sub to perform their obligations hereunder or prevent or
materially delay consummation of the Transactions. 
 Section 4.05 Parent SEC Documents; Financial Statements. 
 (a) Parent has filed all required registration statements, prospectuses, forms, reports and proxy statements with the SEC, together with all
certifications required pursuant to the Sarbanes-Oxley Act, from and after January 1, 2006 (collectively, the “Parent SEC Documents”). As of their respective effective dates (in the case of Parent SEC Documents that are
registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates (in the case of all other Parent SEC Documents), or if amended or supplemented, as of the date of the last such amendment
or supplement, and giving effect to any amendments or supplements thereto filed before the date of this Agreement, the Parent SEC Documents complied in all material

  

 24 

 
respects with the requirements of the Exchange Act and the Securities Act, as the case may be, applicable to such Parent SEC Documents, and none of the Parent SEC Documents as of such respective
dates contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

 (b) The consolidated financial statements of Parent included in the Parent SEC Documents (the “Parent Financial
Statements”) have been prepared in accordance with GAAP (except, in the case of unaudited interim statements, as indicated in the notes thereto) applied on a consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated financial position of Parent and the consolidated Parent Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods
then ended (subject, in the case of unaudited interim statements, to normal year-end audit adjustments). 
 (c) Neither Parent
nor any Parent Subsidiary has any liabilities of any nature (whether accrued, absolute, determined, determinable, fixed or contingent) which would be required to be reflected or reserved against on a consolidated balance sheet of Parent prepared in
accordance with GAAP, except liabilities (i) reflected or reserved against in its consolidated balance sheet included in its Quarterly Report filed on Form 10-Q for the quarterly period ended June 30, 2009 (including the notes
thereto), included in the Parent SEC Documents, (ii) incurred pursuant to this Agreement or in connection with the Transactions, (iii) incurred since June 30, 2009 in the ordinary course of business, or (iv) that have not
had, and would not reasonably be expected to have, individually or in the aggregate, a Parent Material Adverse Effect. 
 (d)
Since June 30, 2009, except for actions taken in connection with this Agreement and the Transactions and the Neurogen Corporation acquisition activities, (i) Parent and the Parent Subsidiaries have conducted their businesses in the
ordinary course, and (ii) there has not been any Parent Material Adverse Effect or any change, event, development, condition, occurrence or effect that has had or would reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect. 
 (e) Parent and the Parent Subsidiaries have designed and maintain a system of internal controls over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with GAAP. Parent (i) has designed and maintains “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by
Parent in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to Parent’s management
as appropriate to allow timely decisions regarding required disclosure, and (ii) to the Knowledge of Parent, has disclosed, based on its most recent evaluation of such disclosure controls and procedures before the date hereof, to Parent’s
auditors and the audit committee of the Board of Directors of Parent (A) any “significant deficiencies” and “material weaknesses” in the design or operation of internal controls over financial reporting that are reasonably
likely to adversely affect in any material respect Parent’s ability to record, process, summarize and report financial information and (B) any fraud, whether or not material, that involves management or other employees who have a
significant role in Parent’s internal controls over financial reporting. 
 Section 4.06 Legal Proceedings. 
 As of the date hereof, there is no pending or, to the Knowledge of Parent, threatened Legal Proceeding against or relating to Parent or any
Parent Subsidiary, nor is there any injunction, order, judgment, ruling or decree imposed upon Parent or any Parent Subsidiary, in each case, by or before any Governmental Entity, that would, individually or in the aggregate, reasonably be expected
to have a Parent Material Adverse Effect, impair in any material respect the ability of Parent or Merger Sub to perform their obligations hereunder or prevent or materially delay consummation of the Transactions). 
  

 25 

 Section 4.07 Compliance With Legal Requirements. 
 Parent and the Parent Subsidiaries are in compliance with all Legal Requirements applicable to Parent or any Parent Subsidiary, as
applicable, except for such non-compliance as would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. Parent and the Parent Subsidiaries hold all Governmental Authorizations necessary for the
lawful conduct of their respective businesses, and all such Governmental Authorizations are valid and in full force and effect, except where the failure to hold the same or of the same to be valid and in full force and effect would not,
individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. Parent and the Parent Subsidiaries are in compliance with the terms of all Governmental Authorizations, except for such non-compliance as would not,
individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. 
 Section 4.08 Information Supplied.

 (a) The Registration Statement, together with any amendments or supplements thereto, at (A) the time the Registration
Statement is declared effective, (B) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of the Company, (C) the time of the Special Meeting, and (D) the Effective Time,
will comply as to form in all material respects with the applicable requirements of the Securities Act, the Exchange Act and other applicable Laws. 
 (b) The Registration Statement and the information provided by Parent or Merger Sub to the Company in writing expressly for inclusion in the Proxy Statement, and any amendments or supplements thereto, do
not, and will not, at (A) the time the Registration Statement is declared effective, (B) the time the Proxy Statement (or any amendment thereof or supplement thereto) is first mailed to the stockholders of the Company, (C) the time of
the Special Meeting, or (D) the Effective Time, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. 
 (c) The representations and warranties contained in this
Section 4.08 will not apply to statements or omissions included in the Registration Statement based upon information furnished in writing to Parent or Merger Sub by the Company specifically for use therein. 
 Section 4.09 Tax Matters. 
 (a) Except for those matters that would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect: (i) each of Parent and the Parent Subsidiaries has timely filed, or has caused to be timely
filed on its behalf (taking into account any extension of time within which to file), all material Tax Returns required to be filed by it, and all such filed Tax Returns are correct and complete in all material respects; (ii) all Taxes shown to
be due on such Tax Returns have been timely paid; (iii) no deficiency with respect to Taxes has been proposed, asserted or assessed in writing against Parent or any Parent Subsidiary which have not been fully paid or adequately reserved in the
Parent SEC Documents; and (iv) to the Knowledge of Parent, no audit or other administrative or court proceedings are pending with any Governmental Entity with respect to Taxes of Parent or any Parent Subsidiary (except for pending audits of
Parent’s 2006 and 2007 federal income tax returns), and no written notice thereof has been received. 
 (b) Neither Parent
nor any Parent Subsidiary is a party to or bound by any material Tax allocation or sharing agreement (other than any such agreement solely between or among Parent and any of the Parent Subsidiaries). 
 (c) To the Knowledge of Parent, neither Parent nor any Parent Subsidiary (i) has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the common parent of which was Parent) or (ii) has any liability for the Taxes of any Person (other than Parent or any Parent Subsidiary) under United States Treasury
Regulation Section 1.1502-6 (or any similar provision of any Legal Requirement), as a transferee or successor, by Contract, or otherwise. 
  

 26 

 (d) There are no liens for Taxes upon any material property or other material assets of
Parent or any Parent Subsidiary, except liens for Taxes not yet due and payable and liens for Taxes that are being contested in good faith by appropriate proceedings. 
 (e) All material Taxes required to be withheld, collected or deposited by or with respect to Parent and each of Parent Subsidiaries have been timely withheld, collected or deposited, as the case may be,
and to the extent required, have been paid to the relevant Tax authority or other Governmental Entity, except for such failure to do any of the foregoing as would not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect. 
 Section 4.10 Brokers and Other Advisors. 
 No broker, investment banker, financial advisor, agent or other Person is entitled to any broker’s, finder’s, financial
advisor’s, agent’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or any Parent Subsidiary. 
 Section 4.11 Ownership of Company Shares. 
 Neither Parent nor any of
its Affiliates beneficially owns (as defined in Rule 13d-3 of the Exchange Act) any Company Shares as of the date hereof. 
 Section 4.12 Available Funds. 
 Parent has, or will have, sufficient funds available to consummate the
Transactions. 
 Section 4.13 No Other Representations or Warranties. 
 Except for the representations and warranties made by Parent in this Article IV or in the certificates to be delivered pursuant
to Section 6.03(a) and Section 6.03(b), neither Parent nor any other Person makes any representation or warranty with respect to Parent or the Parent Subsidiaries or their respective businesses, operations, assets,
liabilities, condition (financial or otherwise) or prospects, notwithstanding the delivery or disclosure to the Company or any of its Affiliates or Representatives of any documentation, forecasts or other information with respect to any one or more
of the foregoing. 
 Section 4.14 No Reliance. 
 Notwithstanding anything contained in this Agreement to the contrary, each of Parent and Merger Sub acknowledges and agrees that (a) neither the Company nor any Person on behalf of the Company is
making any representations or warranties whatsoever, express or implied, beyond those expressly made by the Company in Article III or in the certificates to be delivered pursuant to Section 6.02(a) and
Section 6.02(b), and (b) none of Parent or Merger Sub has been induced by, or relied upon, any representations, warranties or statements (written or oral), whether express or implied, made by any Person, that are not expressly set
forth in Article III or in the certificates to be delivered pursuant to Section 6.02(a) and Section 6.02(b). Without limiting the generality of the foregoing, each of Parent and Merger Sub acknowledges that no
representations or warranties are made with respect to any projections, forecasts, estimates, budgets or information as to prospects with respect to the Company and the Company Subsidiaries that may have been made available to Parent, Merger Sub or
any of their respective Representatives. 
 ARTICLE V 
 COVENANTS 
 Section 5.01 Interim Operations of the Company.

 (a) The Company agrees that, during the period from the date of this Agreement through the earlier of the Effective Time
or the date of termination of this Agreement, except: (i) to the extent Parent shall otherwise

  

 27 

 
consent in writing (which consent shall not be unreasonably withheld, delayed or conditioned); (ii) as set forth in Section 5.01(a) of the Company Disclosure Letter; or
(iii) as expressly required by this Agreement, the Company shall and shall cause each Company Subsidiary to (A) use its reasonable best efforts to (1) conduct their businesses in the ordinary course of business, (2) preserve
intact their present business organizations, (3) maintain satisfactory relations with and keep available the services of their current officers and other key employees and (4) preserve existing relationships with material customers,
lenders, suppliers, distributors and others having material business relationships with the Company or any Company Subsidiary and (B) not: 
 (1) amend the Company Charter Documents or the equivalent organizational documents of any Company Subsidiary; 
 (2) split, combine, subdivide or reclassify any shares of its capital stock; 
 (3) declare, set aside or pay any dividend (whether payable in cash, stock or property) with respect to any shares of its capital stock (except with respect to shares of the capital stock of a Company
Subsidiary that is directly or indirectly wholly owned by the Company); 
 (4) issue, sell, pledge, transfer,
deliver, dispose of or encumber any shares of, or securities convertible or exchangeable for, or options or rights to acquire, any shares of its capital stock, voting securities, phantom stock, phantom stock rights, stock based performance units or
other securities that derive their value by reference to such capital stock or voting securities, other than the issuance of Company Shares upon the exercise of Company Options or Company Warrants; 
 (5) transfer, lease or license to any third party, or subject to an Encumbrance (except for Permitted Encumbrances), any
assets of the Company or any Company Subsidiary (excluding the ‘7133 Program) other than: (i) sales in the ordinary course of business; or (ii) dispositions of obsolete assets; 
 (6) repurchase, redeem or otherwise acquire or offer to repurchase, redeem or otherwise acquire any shares of its capital
stock other than pursuant to the forfeiture provisions applicable to the Company Options or pursuant to the exercise or tax withholding provisions applicable to the Company Options; 
 (7) acquire (whether pursuant to merger, stock or asset purchase or otherwise) or lease (i) any asset or assets, except
for (A) purchases of raw materials, equipment and supplies in the ordinary course of business or (B) capital expenditures (which are subject to Section 5.01(a)(15)), or (ii) any equity interests in any Person or any
business or division of any Person (except for marketable securities acquired by the Company from time to time in connection with its normal cash management activities); 
 (8) incur, issue, repurchase, modify or assume any Indebtedness or guarantee any such Indebtedness; 
 (9) make any loans, advances or capital contributions to, or investments in, any other Person other than (i) loans,
advances or capital contributions to, or investments in, a Company Subsidiary that is directly or indirectly wholly owned by the Company in the ordinary course of business, (ii) advances to employees in respect of travel and other expenses in
the ordinary course of business, and (iii) investments made by the Company in marketable securities in connection with its normal cash management activities; 
 (10) (i) increase benefits under any Company Plan, except as required by applicable Legal Requirements,
(ii) increase or otherwise change the method for funding or insuring benefits under any Company Plan, except as required by applicable Legal Requirements, (iii) (A) establish, adopt, enter into, amend or terminate any Company Plan
that is an “employee benefit plan” as defined in Section 3(3) of ERISA or other any other arrangement that would be an employee benefit plan under ERISA if it were in existence as of the date of this Agreement, except as required by
applicable Legal Requirements, or (B) establish, adopt, enter into, amend or terminate any collective bargaining agreement, Company Plan that is not an employee benefit plan under ERISA or any plan, agreement, program, policy, trust, fund or
other arrangement that would be a Company Plan that is not an employee benefit plan under ERISA if it were in existence as of the date of this Agreement, except in the ordinary course of business or as required by applicable Legal Requirements
(including, without limitation, Section 409A of the Code), (iv) grant any increase in the rates of salaries, compensation or fringe or other benefits payable to any Executive (other

  

 28 

 
than as required by applicable Legal Requirements or pursuant to non-discretionary provisions of Contracts in effect as of the date hereof), (v) grant any increase in the rates of salaries,
compensation or fringe or other benefits payable to any employee, except increases that are required by Legal Requirements or pursuant to non-discretionary provisions of Contracts in effect as of the date hereof, (vi) grant or pay any bonus of
any kind or amount whatsoever to any current or former director or officer or any employee of the Company or any Company Subsidiary (other than pursuant to the non-discretionary provisions of Contracts in effect as of the date of this Agreement) or
(vii) grant or pay any stay or severance or termination pay or increase in any manner the stay or severance or termination pay of any current or former director, officer, employee or consultant of the Company or any Company Subsidiary other
than as required by applicable Legal Requirements or pursuant to non-discretionary provisions of Contracts in effect as of the date hereof; 
 (11) settle or compromise any Legal Proceeding (whether or not commenced before the date of this Agreement), other than settlements or compromises of Legal Proceedings where the amount paid (after giving
effect to insurance proceeds actually received) in settlement or compromise does not exceed the Company’s reserves on its books therefor by more than $10,000, or for any Legal Proceeding for which the Company has not yet reserved, in an amount
therefor that does not exceed $20,000; 
 (12) enter into any new, or amend or prematurely terminate any current,
Company Contract or waive, release or assign any rights or claims under any Company Contract (except (i) in the ordinary course of business or (ii) where the failure to amend or terminate a Company Contract would, in the reasonable
judgment of the Company Board, have a Company Material Adverse Effect); 
 (13) change any of its methods of
accounting or accounting practices in any material respect, other than changes required by GAAP or Legal Requirements; 
 (14) make any material Tax election (except for elections made in the ordinary course of business); 
 (15) make any capital expenditure that is not contemplated by the capital expenditure budget set forth in Section 5.01(a)(15) of the Company Disclosure Letter (a “Non-Budgeted Capital Expenditure”), except that
the Company or any Company Subsidiary: (A) may make any Non-Budgeted Capital Expenditure that does not individually exceed $5,000 in amount; and (B) may make any Non-Budgeted Capital Expenditure that, when added to all other Non-Budgeted
Capital Expenditures made by the Company and the Company Subsidiaries since the date of this Agreement, would not exceed $25,000 in the aggregate; 
 (16) adopt a plan of complete or partial liquidation or dissolution; 
 (17) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article VI not being satisfied on or before the Outside Date; or 
 (18) authorize or enter into any agreement or otherwise make any commitment to do any of the foregoing. 
 (b) Without in any way limiting any party’s rights or obligations under this Agreement, the parties understand and agree that
(i) nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s operations before the Effective Time, and (ii) before the Effective Time, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations. 
 Section 5.02 Interim Operations of Parent. 
 (a) Parent agrees that, during the period from the date of
this Agreement through the earlier of the Effective Time or the date of termination of this Agreement, except: (i) to the extent the Company shall otherwise consent in writing (which consent shall not be unreasonably withheld, delayed or
conditioned); or (ii) as expressly required by this Agreement, Parent shall and shall cause each Parent Subsidiary to (A) use its reasonable best efforts to conduct their businesses in the ordinary course of business or otherwise to an
anticipated advantage, and (B) not: 
 (1) amend its certificate of incorporation; 
  

 29 

 (2) split, combine, subdivide or reclassify any shares of its capital stock;

 (3) declare, set aside or pay any dividend (whether payable in cash, stock or property) with respect to any
shares of its capital stock (except with respect to shares of the capital stock of a Parent Subsidiary that is directly or indirectly wholly owned by Parent); 
 (4) change any of its methods of accounting or accounting practices in any material respect, other than changes required by
GAAP or Legal Requirements; 
 (5) adopt a plan of complete or partial liquidation or dissolution; 
 (6) make any material Tax election (except for elections made in the ordinary course of business); 
 (7) take any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set
forth in Article VI not being satisfied on or before the Outside Date; or 
 (8) authorize or enter into
any agreement or otherwise make any commitment to do any of the foregoing. 
 (b) Without in any way limiting any party’s
rights or obligations under this Agreement, the parties understand and agree that (i) nothing contained in this Agreement shall give the Company, directly or indirectly, the right to control or direct the Parent’s operations, and
(ii) Parent shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations. 
 Section 5.03 No Solicitation. 
 (a) At all times during the period commencing with the execution and
delivery of this Agreement and continuing until the earlier to occur of the termination of this Agreement pursuant to Section 7.01 and the Effective Time, the Company shall not, shall cause all of the Company Subsidiaries not to and
shall not authorize or permit the Company’s and the Company Subsidiaries’ directors, officers, employees, investment bankers, attorneys and other agents or representatives (collectively, “Representatives”) to, directly or
indirectly, (i) solicit, initiate, knowingly encourage or knowingly induce the making, submission or announcement of an Acquisition Proposal; (ii) furnish to any Person any non-public information relating to the Company in response to or
in connection with an Acquisition Proposal (for avoidance of doubt, it being understood that the foregoing shall not prohibit the Company, any Company Subsidiary or any of their respective Representatives from furnishing, in the ordinary course of
business, any non-public information to (A) any actual or potential customer, supplier, distributor, licensor, licensee, partner or other Person to the extent necessary to facilitate any business dealings between the Company and such actual or
potential customer, supplier, distributor, licensor, licensee, partner or other Person that are unrelated to any Acquisition Proposal, or (B) a Governmental Entity); (iii) participate or engage in discussions or negotiations with any
Person with respect to an Acquisition Proposal (for avoidance of doubt, it being understood that the foregoing shall not prohibit the Company, any Company Subsidiary or any of its Representatives from making such Person aware of the restrictions of
this Section 5.03 in response to the receipt of an Acquisition Proposal, nor shall it prohibit the Company from engaging in discussions with its Representatives to the extent reasonably necessary to assist the Company in determining how
to properly respond to such Acquisition Proposal); or (iv) approve, endorse or recommend to the stockholders of the Company any Acquisition Proposal; provided, however, that notwithstanding anything to the contrary contained in
this Agreement, at any time before obtaining the Company Stockholder Approval, the Company may, directly or indirectly through its Representatives, (A) engage or participate in discussions or negotiations with any Person (and may engage or
participate in discussions or negotiations with such Person’s Representatives and potential financing sources) that has made an Acquisition Proposal that the Company Board determines in good faith (after consultation with its outside legal
counsel and financial advisor) constitutes or is reasonably likely to lead to a Superior Proposal, and (B) furnish to any such Person described in clause (A) above (including to such Person’s Representatives and potential financing
sources) any non-public information relating to the Company and the Company Subsidiaries pursuant to a confidentiality agreement (whether executed before or after the date of this Agreement), the terms of which are no less favorable in any material
respect to the Company than those

  

 30 

 
contained in the Confidential Disclosure Agreement, dated March 5, 2009, between Parent and the Company (the “Confidentiality Agreement”); and provided further, that
in the case of any action taken pursuant to clause (A) or clause (B) above, the Company Board shall first have determined in good faith (after consultation with its outside legal counsel) that the failure to take such action is
inconsistent with its fiduciary obligations to the stockholders of the Company under applicable Legal Requirements; and contemporaneously with furnishing any nonpublic information to such Person, the Company furnishes such nonpublic information to
Parent (to the extent such information has not been previously furnished by the Company to Parent). 
 (b) Upon the execution
and delivery of this Agreement, the Company shall immediately cease and cause to be terminated any active discussions with any Person that relate to any Acquisition Proposal. 
 (c) Unless the Company Board shall first have determined in good faith (after consultation with its outside legal counsel) that the failure
to take the following actions is inconsistent with its fiduciary obligations to the stockholders of the Company under applicable Legal Requirements, the Company agrees not to release or permit the release of any Person from, or to waive or permit
the waiver of any provision of, any confidentiality, standstill or similar agreement to which the Company is a party or under which the Company has any rights; provided, however, that the expiration or termination of such agreement or
provision of such agreement by its own terms shall not be considered to be a violation of the foregoing by the Company. 
 Section 5.04
Company Board Recommendation. 
 (a) Subject to Section 5.04(c), the Company Board shall (i) make the
Company Recommendation and (ii) include the Company Recommendation in the Proxy Statement. 
 (b) Subject to
Section 5.04(c), neither the Company Board nor any committee thereof shall (i) withdraw, qualify, modify, change or amend in any manner adverse to Parent or Merger Sub, the Company Recommendation, (ii) approve or recommend any
Acquisition Proposal, (iii) except in connection with a termination of this Agreement pursuant to Section 7.01(f), permit the Company or any Company Subsidiary to enter into any Contract (other than a confidentiality agreement as
contemplated by Section 5.03(a)) with respect to any Acquisition Proposal, or (iv) except in connection with a termination of this Agreement pursuant to Section 7.01(f), resolve or propose to take any action described in
clauses (i) through (iii) (each of the foregoing actions described in clauses (i) through (iii) being referred to as a “Company Change in Recommendation”). 
 (c) Notwithstanding anything to the contrary contained in this Agreement, the Company Board may effect a Company Change in Recommendation at
any time before receipt of the Company Stockholder Approval, if (i) (A) the Company Board has received an Acquisition Proposal (that has not been withdrawn) that constitutes a Superior Proposal, (B) the Company Board determines in
good faith (after consultation with its outside legal counsel and financial advisor and after considering in good faith any counter-offer or proposal made by Parent during the five day period contemplated by clause (D) below) that the failure
to effect a Company Change in Recommendation in light of such Superior Proposal is inconsistent with its fiduciary obligations to the stockholders of the Company under applicable Legal Requirements, (C) at least five days before such Company
Change in Recommendation, the Company shall have provided to Parent a written notice (a “Notice of Recommendation Change”) of its intention to make such Company Change in Recommendation (which notice shall not be deemed to be, in
and of itself, a Company Change in Recommendation), specifying the material terms and conditions of such Superior Proposal, including a copy of such Superior Proposal and identifying the Person making such Superior Proposal, (D) during the five
day period following Parent’s receipt of a Notice of Recommendation Change, the Company shall have given Parent the opportunity to meet with the Company and its Representatives, and at Parent’s request, shall have negotiated in good faith
regarding the terms of possible revisions to the terms of this Agreement, and (E) Parent shall not, within five days following Parent’s receipt of a Notice of Recommendation Change, have made an offer that the Company Board determines in
good faith (after consultation with its outside legal counsel and financial advisor) to be at least as favorable to the stockholders of the Company as such Superior Proposal; or (ii) other than in connection with a Superior Proposal (it being

  

 31 

 
understood and hereby agreed that the Company Board shall not effect a Company Change in Recommendation in connection with a Superior Proposal other than pursuant to the immediately preceding
clause (i) of this Section 5.04(c)), (A) the Company Board determines in good faith (after consultation with its outside legal counsel) that the failure to effect a Company Change in Recommendation is inconsistent with its
fiduciary obligations to the stockholders of the Company under applicable Legal Requirements, (B) at least five days before such Company Change in Recommendation, the Company shall have provided to Parent a Notice of Recommendation Change
of its intention to make such Company Change in Recommendation (which notice shall not be deemed to be, in and of itself a Company Change in Recommendation), specifying in reasonable detail the circumstances for such proposed Company Change in
Recommendation, and (C) during the five day period following Parent’s receipt of a Notice of Recommendation Change, the Company shall have given Parent the opportunity to meet with the Company and its Representatives, and at
Parent’s request, shall have negotiated in good faith regarding the terms of possible revisions to the terms of this Agreement. 
 (d) Nothing in this Agreement shall prohibit the Company Board from (i) taking and disclosing to the stockholders of the Company a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or complying with the
provisions of Rule 14d-9 promulgated under the Exchange Act or (ii) making any disclosures to any stockholder of the Company that the Company Board determines in good faith (after consultation with its outside legal counsel) that the Company
Board is required to make in order to comply with its fiduciary obligations to the stockholders of the Company under applicable Legal Requirements or with any other applicable Legal Requirements. In addition, it is understood and agreed that, for
purposes of this Section 5.04, a factually accurate public statement by the Company that describes the Company’s receipt of an Acquisition Proposal and the operation of this Agreement with respect thereto and contains a
“stop-look-and-listen communication” shall not be deemed a Company Change in Recommendation. 
 (e) Notwithstanding
anything to the contrary contained in this Agreement, (i) the obligation of the Company to call, give notice of, convene and hold the Special Meeting shall not be limited or otherwise affected by the commencement, disclosure, announcement or
submission to it of any Acquisition Proposal or by any Company Change in Recommendation unless the Agreement has been terminated in accordance with Section 7.01, and (ii) the Company shall not submit to the vote of its stockholders
any Acquisition Proposal, unless and until this Agreement is terminated in accordance with its terms. 
 (f) The Company shall
not take any action to exempt any Person (other than Parent, Merger Sub and their respective Affiliates) from the restrictions on “business combinations” contained in Section 203 of the DGCL (or any similar provisions of any other
Legal Requirement) or otherwise cause such restrictions not to apply unless such actions are taken simultaneously with a termination of this Agreement pursuant to Section 7.01(f). 
 Section 5.05 Registration Statement; Proxy Statement; Special Meeting. 
 (a) As promptly as practicable after the execution of this Agreement, the Company shall prepare and file with the SEC a proxy statement
relating to the Special Meeting (together with any amendments thereof or supplements thereto, the “Proxy Statement”), and Parent shall prepare and file with the SEC a registration statement on Form S-4 (together with all amendments
thereto, the “Registration Statement”) in which the Proxy Statement shall be included as a prospectus, in connection with the registration under the Securities Act of the CVRs to be issued to the stockholders of the Company pursuant
to the Merger. Each of Parent and the Company will use all reasonable efforts to respond to any comments made by the SEC with respect to the Proxy Statement, and to cause the Registration Statement to become effective as promptly as practicable.
Before the effective date of the Registration Statement, Parent shall take all or any action required under any applicable federal or state securities laws in connection with the issuance of CVRs in the Merger. Each of Parent and the Company shall
furnish all information concerning it and the holders of its capital stock as the other may reasonably request in connection with such actions and the preparation of the Registration Statement and the Proxy Statement. As promptly as practicable
after the Registration Statement shall have become effective, the Company shall mail the Proxy Statement to its stockholders. The Proxy Statement shall (subject to Section 5.04(c)) include the Company Recommendation. 
  

 32 

 (b) Subject to Section 5.04(c), no amendment or supplement to the Proxy
Statement or the Registration Statement will be made by Parent or the Company without the approval of the other party (which approval shall not be unreasonably withheld, delayed or conditioned). Parent and the Company each will advise the other,
promptly after it receives notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment has been filed, of the issuance of any stop order, the suspension of the qualification of the CVRs issuable in
connection with the Merger for offering or sale in any jurisdiction, or any request by the SEC for amendment of the Proxy Statement or the Registration Statement or comments thereon and responses thereto or requests by the SEC for additional
information. 
 (c) If at any time before the Effective Time, any event or circumstance relating to Parent or any Parent
Subsidiary, or their respective officers or directors, should be discovered by Parent which should be set forth in an amendment or a supplement to the Registration Statement or the Proxy Statement, Parent shall promptly inform the Company. All
documents that Parent is responsible for filing with the SEC in connection with the transactions contemplated herein will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the rules
and regulations thereunder, the Exchange Act and the rules and regulations thereunder, and other applicable Legal Requirements (provided, that Parent shall not be responsible hereunder for the substance of statements or omissions included in
the Registration Statement or Proxy Statement based upon information furnished in writing to Parent by the Company specifically for use therein). 
 (d) If at any time before the Effective Time, any event or circumstance relating to the Company or any Company Subsidiary, or their respective officers or directors, should be discovered by the Company
which should be set forth in an amendment or a supplement to the Registration Statement or the Proxy Statement, the Company shall promptly inform Parent. All documents that the Company is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all material respects with the applicable requirements of the Securities Act and the rules and regulations thereunder, the Exchange Act and the rules and regulations
thereunder, and other applicable Legal Requirements (provided, that the Company shall not be responsible hereunder for the substance of statements or omissions included in the Proxy Statement based upon information furnished in writing to the
Company by Parent or Merger Sub specifically for use therein). 
 (e) The Company, acting through the Company Board, shall
(i) duly set a record date for, call and establish a date for, and give notice of, the Special Meeting (with the record date and meeting date each set for a date as soon as reasonably practicable and in consultation with Parent), and
(ii) convene and hold the Special Meeting as soon as reasonably practicable after the date on which the Registration Statement becomes effective. The Special Meeting shall be scheduled to be held approximately 30 days after the mailing of the
Proxy Statement. Notwithstanding anything to the contrary contained in this Agreement, the Company may adjourn or postpone the Special Meeting (x) to the extent necessary to ensure that any necessary supplement or amendment to the Proxy
Statement is provided to all stockholders of the Company in advance of the vote to be taken at the Special Meeting, or (y) if as of any time the Special Meeting is scheduled (as set forth in the Proxy Statement) there are insufficient Company
Shares represented (either in person or by proxy) to constitute a quorum necessary to conduct the business for which the Special Meeting was called. Parent shall cause all shares of Company Shares owned by Parent, Merger Sub or their Affiliates, if
any, to be voted in favor of adoption of this Agreement and approval of the Transactions. 
 Section 5.06 Filings; Other Action. 

 (a) Each of the Company, Parent and Merger Sub shall: (i) promptly make and effect all registrations, filings and
submissions required to be made or effected by it pursuant to the Exchange Act and other applicable Legal Requirements with respect to the Transactions; and (ii) use its reasonable best efforts to cause to be taken, on a timely basis, all other
actions necessary or appropriate for the purpose of consummating and effectuating the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, each of the Company, Parent and Merger Sub shall promptly provide
all information requested by any Governmental Entity in connection with the Transactions. 
  

 33 

 (b) Without limiting the generality of anything contained in Section 5.06(a) or
Section 5.06(c), each party hereto shall (to the extent permitted by applicable Legal Requirements): (i) give the other parties prompt notice of the making or commencement of any request, inquiry, investigation, action or Legal
Proceeding by or before any Governmental Entity with respect to the Transactions; (ii) keep the other parties informed as to the status of any such request, inquiry, investigation, action or Legal Proceeding; and (iii) promptly inform the
other parties of any communication to or from any Governmental Entity regarding the Transactions. Each party hereto will consult and cooperate with the other parties and will consider in good faith the views of the other parties in connection with
any analysis, appearance, presentation, memorandum, brief, argument, opinion or proposal made or submitted in connection with any such request, inquiry, investigation, action or Legal Proceeding. In addition, except as may be prohibited by any
Governmental Entity or by any Legal Requirement, in connection with any such request, inquiry, investigation, action or Legal Proceeding, each party hereto will permit authorized representatives of the other parties to be present at each meeting or
conference relating to such request, inquiry, investigation, action or Legal Proceeding and to have access to and be consulted in connection with any document, opinion or proposal made or submitted to any Governmental Entity in connection with such
request, inquiry, investigation, action or Legal Proceeding. 
 (c) In furtherance and not in limitation of the covenants of the
parties contained in this Section 5.06, each of the parties hereto shall use its reasonable best efforts to resolve such objections, if any, as may be asserted by a Governmental Entity or other Person with respect to the Transactions.
Without limiting any other provision hereof, Parent and the Company shall each use its reasonable best efforts to (i) avoid the entry of, or to have vacated or terminated, any decree, order or judgment that would restrain, prevent or delay the
consummation of the Transactions on or before the Outside Date, including by defending through litigation on the merits any claim asserted in any court by any Person, and (ii) avoid or eliminate each and every impediment under any Antitrust Law
that may be asserted by any Governmental Entity with respect to the Transactions so as to enable the consummation of the Transactions to occur as soon as reasonably possible (and in any event no later than the Outside Date); except that Parent need
do no such thing that would prevent it from achieving in substantial measure all of the benefits it intended to achieve via the Transactions. 
 (d) For avoidance of doubt, the parties recognize that Parent shall, upon issuance thereof, register the CVRs under the Exchange Act, but Parent shall have no obligation under this Agreement or any of the
CVR Agreements to ever list or include the CVRs, or any of them, on the Exchange or on any other securities exchange or quotation system. 
 Section 5.07 Access. 
 Upon reasonable advance written notice, the Company shall, and shall cause its
Subsidiaries to, afford Parent and its Representatives reasonable access, during normal business hours throughout the period before the Effective Time, to its books and records and, during such period, shall, and shall cause its Subsidiaries to,
furnish promptly to Parent all readily available information concerning its business as Parent may reasonably request (and the Company shall also, upon such request, provide such access to its facilities, personnel and contract parties);
provided, however, that neither the Company nor any of its Subsidiaries shall be required to permit any inspection or other access, or to disclose any information, that in its reasonable judgment would: (a) constitute, or result
in any, disclosure (whether or not to a third party) of any of its Trade Secrets in such a way as would destroy their trade-secret status; (b) result in the disclosure of any Trade Secrets of third parties; (c) violate any of its
obligations to third persons with respect to confidentiality; (d) jeopardize protections afforded it under the attorney-client privilege or the attorney work product doctrine; (e) violate any Legal Requirement; or (f) materially
interfere with the conduct of its business. All information obtained by Parent or its Representatives pursuant to this Section 5.07 shall be treated as “Proprietary Information” for purposes of the Confidentiality Agreement and
“Evaluation Information” for purposes of the Confidentiality and Exclusivity Agreement. 
  

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 Section 5.08 Publicity. 
 The initial press release relating to this Agreement shall be a joint press release issued by the Company and Parent, and thereafter the
parties hereto shall consult with each other and give due consideration to any reasonable additions, deletions or changes suggested by the other party and its counsel before issuing any press releases or otherwise making public statements with
respect to the Transactions and before making any filings with any Governmental Entity with respect to the Transactions to the extent permitted by applicable Legal Requirements; provided, however, that the Company need not consult with
Parent in connection with any press release or public statement to be issued or made with respect to any Acquisition Proposal or with respect to any Company Change in Recommendation. 
 Section 5.09 Employee Benefits. 
 (a) Employment; Severance.

 (i) If and to the extent so requested by Parent in writing before the Determination Date (and with such
exceptions as Parent may designate), the Company shall as of immediately before the Effective Time terminate (and/or provide written notice of termination in accordance with any employment or consulting agreement requiring advance notice of
termination of) the service relationship with the Company and the Company Subsidiaries of all employees, consultants and directors of the Company and the Company Subsidiaries and take all customary ancillary actions in connection with such
termination (including giving them written notice of such termination). 
 (ii) Any such termination of
employment shall be treated as a “termination without cause” or “benefits eligible termination” (or equivalent term) by the Company entitling such employees to full severance payments and benefits under the employment agreements
listed on Section 5.09 of the Company Disclosure Letter, determined on the basis that such termination has occurred in connection with a change in control, as applicable to individual employees. Section 5.09 of the Company Disclosure
Letter sets forth the amounts of the cash severance payments applicable as of the Effective Time to each employee covered by an employment agreement with the Company. Before the Effective Time, the Company Board may in its sole discretion deliver
letters to individual employees setting forth their severance payments and benefits upon termination of employment, on a basis consistent with this Section 5.09. Notwithstanding anything contained herein to the contrary, in no event
shall any officer’s voluntary resignation (as contemplated by this Agreement) affect such Person’s eligibility to receive the severance payments set forth on Section 5.09 of the Company Disclosure Letter or otherwise alter the
classification of the termination of employment as contemplated under this Section 5.09. 
 (iii)
From and after the Effective Time, Parent shall, or shall cause a Parent Subsidiary, the Surviving Corporation or a Subsidiary of the Surviving Corporation, to honor the terms of the employment agreements listed on Section 5.09 of the Company
Disclosure Letter, including, without limitation, the payment of continuing severance payments for the period set forth in such employment agreements. The severance amounts payable under such employment agreements to any Company employee who
continues in the employ of the Surviving Corporation shall be paid to such employee by the Surviving Corporation or Parent on the first Business Day after such employee’s employment with the Surviving Corporation/Parent terminates or as
otherwise required or provided for by the Contracts governing the severance payments. 
 (b) 401(k) Plan. 
 (i) If so requested by Parent in writing, the Company shall before the Effective Time amend the Company’s 401(k) plan to
require, in the event of plan termination, in-kind distribution of any CVRs in a participant’s account, and take all customary ancillary actions in connection with such amendment. 
 (ii) If so requested by Parent in writing, and whether or not such amendment shall have been requested, the Company shall as
of immediately before the Effective Time terminate the Company’s 401(k) plan and take all customary ancillary actions in connection with such termination. 
  

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 (c) Health Care. From and after the Effective Time, Parent shall, or shall cause a
Parent Subsidiary, the Surviving Corporation or a Subsidiary of the Surviving Corporation, to (i) at a minimum, honor in accordance with their terms the obligations of the Company to provide continued medical and dental coverage to employees
and their eligible family members under the terms of the employment agreements listed on Section 5.09 of the Company Disclosure Letter, with the understanding that the Company’s health plans will be terminated and coverage will instead be
provided through Parent’s health plans, and (ii) as and to the extent required by applicable Legal Requirements, continue to provide “COBRA” continuation coverage to former employees of the Company, with the understanding that
the Company’s health plans will be terminated and coverage will instead be provided through Parent’s health plans. 
 (d) This Section 5.9 shall survive the Effective Time and the consummation of the Merger. This Section 5.9 is intended to benefit, and may be enforced by, the employees or former employees entitled to the rights set
forth hereunder and their respective heirs, representatives, successors and assigns, and shall be binding on all successors and assigns of Parent and the Surviving Corporation. 
 Section 5.10 Indemnification; Directors’ and Officers’ Insurance. 
 (a) From and after the Effective Time, Parent will cause the Surviving Corporation and its Subsidiaries to fulfill and honor in all respects the obligations of the Company and the Company Subsidiaries pursuant to (i) each
indemnification agreement in effect on the date of this Agreement between the Company or any of the Company Subsidiaries and any Indemnified Party; (ii) any indemnification provision and any exculpation provision in favor of an Indemnified
Party that is set forth in the certificate of incorporation or bylaws of the Company and the equivalent organizational documents of any Company Subsidiary in effect as of the date of this Agreement and (iii) any other rights to indemnification
now existing in favor of any Indemnified Party under any statute or any express written Contract. The certificate of incorporation and bylaws of the Surviving Corporation shall contain the provisions with respect to indemnification and exculpation
from liability set forth in the Company’s certificate of incorporation and bylaws on the date of this Agreement, and, from and after the Effective Time, such provisions shall not be amended, repealed or otherwise modified in any manner that
could adversely affect the rights thereunder of any Indemnified Party. 
 (b) Without limiting the provisions of
Section 5.10(a), during the period commencing at the Effective Time and ending on the sixth anniversary of the Effective Time, Parent shall indemnify and hold harmless each Indemnified Leader against and from any costs, fees and expenses
(including reasonable attorneys’ fees and investigation expenses), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any Legal Proceeding, arbitration, investigation or inquiry, whether
civil, criminal, administrative or investigative, to the extent such Legal Proceeding, arbitration, investigation or inquiry arises directly or indirectly out of or pertains directly or indirectly to: (i) any action or omission or alleged
action or omission in such Indemnified Leader’s capacity as a director, officer, employee or agent of the Company or any Company Subsidiary or other Affiliates (regardless of whether such action or omission, or alleged action or omission,
occurred before, at or after the Effective Time); or (ii) any of the transactions contemplated by this Agreement; provided, however, that if, at any time before the sixth anniversary of the Effective Time, any Indemnified Leader
delivers to the Company, the Surviving Corporation or Parent, as applicable, a written notice asserting a claim for indemnification under this Section 5.10(b), then the claim asserted in such notice shall survive the sixth anniversary of
the Effective Time until such time as such claim is fully and finally resolved. In the event of any such Legal Proceeding, arbitration, investigation or inquiry: (A) any counsel retained by the Indemnified Leaders with respect to the defense
thereof for any period after the Effective Time must be reasonably satisfactory to Parent; and (B) Parent will pay the reasonable fees and expenses of such counsel, promptly after statements therefor are received; provided that the
individual to whom expenses are advanced provides an undertaking to repay such advances to the extent required by applicable Legal Requirements. The Indemnified Leaders as a group may retain only one law firm (in addition to local counsel) to
represent them with respect to any single action unless counsel for any Indemnified Leader determines in good faith that, under applicable standards of professional conduct, a conflict exists or is reasonably likely to arise on any material

  

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issue between the positions of any two or more Indemnified Leaders. Notwithstanding anything to the contrary contained in this Section 5.10(b) or elsewhere in this Agreement, Parent
agrees that it will not settle or compromise or consent to the entry of any judgment or otherwise seek termination with respect to any Legal Proceeding, arbitration, investigation or inquiry for which indemnification may be sought under this
Agreement unless such settlement, compromise, consent or termination includes an unconditional release of all Indemnified Leaders from all liability arising out of such Legal Proceeding, arbitration, investigation or inquiry. 
 (c) Through the sixth anniversary of the Effective Time, Parent will cause the Surviving Corporation to maintain in effect, for the benefit
of the Company’s directors and officers that are insured under the Company’s current directors’ and officers’ liability insurance policy in effect as of the date of this Agreement (the “D&O Insurance
Policy”), the current level and similar scope of directors’ and officers’ liability insurance coverage as set forth in the D&O Insurance Policy with a carrier selected by Parent; provided, however, that in no
event shall the Surviving Corporation be required pursuant to this Section 5.10(c) to expend in any one year an amount in excess of $60,000, it being understood that if the annual premiums payable for such insurance coverage exceed such
amount, the Surviving Corporation shall be obligated to obtain a policy with what Parent determines in good faith to be the most favorable coverage available for a cost equal to such amount. At any time before the Effective Time, notwithstanding
anything to the contrary set forth in this Agreement, the Company may purchase a customary “tail” prepaid policy on the D&O Insurance Policy covering a period of six years from the Effective Time for a total premium of no more than
$360,000. In the event that the Company shall purchase such a customary “tail” prepaid policy before the Effective Time, Parent will cause the Surviving Corporation to maintain such “tail” policy in full force and effect and
continue to honor its respective obligations thereunder, in lieu of all other obligations of Parent under the first sentence of this Section 5.10(c), for so long as such “tail” policy shall be maintained in full force and
effect. 
 (d) Parent and the Surviving Corporation jointly and severally agree to pay all expenses, including attorneys’
fees, that may be incurred by the Indemnified Parties in successfully enforcing their indemnity rights and other rights provided in this Section 5.10. 
 (e) This Section 5.10 shall survive the Effective Time and the consummation of the Merger. This Section 5.10 is intended to benefit, and may be enforced by, the Indemnified Parties
and their respective heirs, representatives, successors and assigns, and shall be binding on all successors and assigns of Parent and the Surviving Corporation. 
 Section 5.11 Section 16 Matters. 
 Before the Effective Time,
Parent and the Company shall take all such steps as may be required to cause any dispositions of Company Shares (including derivative securities with respect to Company Shares) resulting from the Merger by each individual who is subject to the
reporting requirements of Section 16(a) of the Exchange Act with respect to the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act, including, without limitation, actions in accordance with that certain No-Action Letter
dated January 12, 1999 issued by the SEC regarding such matters. 
 Section 5.12 Plan of Reorganization. 
 The parties agree that the Merger shall not be, and they shall not report the Merger as, a tax-free reorganization within the meaning of
Section 368 of the Code. 
 Section 5.13 Consultants. 
 (a) From and after the date hereof, Parent shall use commercially reasonable efforts to negotiate and agree to terms with as many of the
individuals listed on Exhibit E attached hereto as possible (referred to herein as the “Consulting Committee”), to assist, in the role of consultants, and with such consulting to begin as of the

  

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Effective Time, in Parent’s efforts toward selling or licensing the ‘7133 Program by the sixth-month anniversary of the Effective Time; provided, that Parent shall not be
required to provide more than $40,000 in the aggregate for the compensation of the Consulting Committee. 
 (b) It is understood
that, from and after the Effective Time, Parent’s Board of Directors and management shall have the ultimate authority to lead, direct and approve the sale/license process described in paragraph (a) of this Section 5.13 and to
determine (subject to the obligation to act in good faith and with commercial reasonableness) whether or not to seek, solicit, negotiate or accept any proposed offer to sell or license the ‘7133 Program or any other Program by any deadline (or
ever or at all), and that Parent shall have no liability for decisions, actions and inactions in this regard that are taken in good faith and with commercial reasonableness; provided, that notwithstanding the foregoing, until the sixth-month
anniversary of the Effective Time, Parent shall use commercially reasonable efforts to cause its management to implement any particular proposed sale or license of the ‘7133 Program recommended by the Consulting Committee on terms and
conditions that do not create a commercially unreasonable risk of liability to Parent. 
 Section 5.14 Efforts to Satisfy Closing
Conditions. 
 Each of Parent, Merger Sub and the Company shall use its reasonable best efforts to cause the conditions to
the other party’s obligations to effect the Merger and the other Transactions to be satisfied. Each party hereto, at the reasonable request of the other, shall execute and deliver such other instruments and do and perform such other acts and
things as may be reasonably necessary and consistent with this Agreement to effect the consummation of the Merger and other Transactions contemplated by this Agreement. 
 Section 5.15 Guaranteed Funding. 
 (a) Before the first anniversary of
the Effective Time, Parent shall (i) initiate research, development or commercialization efforts on the Glucagon Program and the TR Beta Program and (ii) incur at least $350,000 in Funding for at least one of the General Programs.

 (b) If Parent does not incur at least $350,000 in Funding for at least one of the General Programs during the first 12 months
following the Effective Time, Parent shall deliver the General Program Funding Shortfall Amount (as defined in the General CVR Agreement) to the Rights Agent pursuant to and for distribution in accordance with the terms of the General CVR Agreement,
unless the Stockholders’ Representative, in its sole discretion, shall have informed Parent in writing that this Section 5.15(b) is negated. Parent shall receive full credit for the amount so delivered against any future First
Funding Shortfall Amount, Funding Shortfall Amount or Extended Funding Shortfall Amount (each as defined in the General CVR Agreement). 
 (c) If Parent does not incur an aggregate of at least $7,000,000 in Funding during the first 30 months following the Effective Time, then Parent shall deliver the First Funding Shortfall Amount to the
Rights Agent pursuant to and for distribution in accordance with the terms of the General CVR Agreement, unless any of the following has occurred, in which case this Section 5.15(c) shall be negated: (i) the Stockholders’
Representative, in its sole discretion, shall have informed Parent in writing that this Section 5.15(c) is negated, (ii) Parent shall provide the Stockholders’ Representative with reasonable written evidence that Parent entered
into a partnering agreement or similar arrangement with another Person to commercialize one of the Company Programs and such agreement has a Partner Value of at least $100,000,000 payable to Parent, or (iii) Parent shall provide the
Stockholders’ Representative with reasonable written evidence that all Funding has ceased on both the TR Beta Program and the Glucagon Program and no future Funding on such programs is contemplated by, or budgeted for, Parent or the Surviving
Corporation. Parent shall receive full credit for the amount so delivered against any future Funding Shortfall Amount or Extended Funding Shortfall Amount. 
  

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 (d) If Parent does not incur an aggregate of at least $8,000,000 in Funding during the first
42 months following the Effective Time, then Parent shall deliver the Funding Shortfall Amount to the Rights Agent pursuant to and for distribution in accordance with the terms of the General CVR Agreement, unless the Stockholders’
Representative, in its sole discretion, shall instruct Parent in writing to extend such 42-month period so that it is a 48-month compliance period (the “Funding Extension”). In the event of a Funding Extension, Parent shall deliver
the Extended Funding Shortfall Amount, if any, to the Rights Agent pursuant to and for distribution in accordance with the terms of the General CVR Agreement. 
 (e) All Funding by Parent shall be done in good faith and with commercial reasonableness; provided, that upon Parent incurring an aggregate of $8,000,000 in Funding, no additional Funding shall be
subject to such standard. 
 (f) Following the Effective Time, on an annual basis, Parent or the Surviving Corporation shall
provide the Stockholders’ Representative with a summary report setting forth (i) an accurate accounting and summary of all Funding incurred by Parent during the preceding 12 month period (including sufficient back-up to allow the
Stockholders’ Representative to understand the general nature and purpose of such Funding payments) and (ii) describing in general the status of the respective Company Programs (each such report, a “Summary Report”).
Subject to Section 5.16(a), if the Stockholders’ Representative disagrees with any of the calculations set forth in a Summary Report and/or whether any payment qualifies as a Funding payment, within 45 calendar days after delivery
of such Summary Report to the Stockholders’ Representative, the Stockholders’ Representative shall deliver a written notice to Parent specifying, with sufficient detail, any objections the Stockholders’ Representative has to such
Summary Report (“Funding Objection Notice”). If the Stockholders’ Representative fails to deliver a Funding Objection Notice within such 45 calendar day period, such Summary Report shall be deemed conclusive determination of
the Funding incurred during the relevant 12-month period. If the Stockholders’ Representative delivers a Funding Objection Notice, Parent and the Stockholders’ Representative shall resolve such dispute pursuant to the resolution procedures
set forth in Section 7.12 of the General CVR Agreement. 
 (g) This Section 5.15 shall survive the Effective
Time and the consummation of the Merger. In addition, Parent’s obligation to provide a Summary Report hereunder shall survive the satisfaction of the Funding obligations and shall continue until such time as each of the CVR Agreements terminate
pursuant to their respective terms; provided, however, upon satisfaction of the Funding obligations hereunder (or, if later, upon the conclusion of the 42-month or, if there has been a Funding Extension, 48-month measuring
period), each Summary Report shall only be required to describe in general the status of the respective Company Programs. 
 Section 5.16 Stockholders’ Representative. 
 (a) Appointment of Stockholders’
Representative. For purposes of (i) negotiating and settling, on behalf of the Company stockholders, any dispute that arises under this Agreement after the Effective Time, (ii) accepting delivery of notices hereunder to the former
Company stockholders after the Effective Time, (iii) reviewing, negotiating and settling matters with respect to the Funding obligations set forth in Section 5.15, (iv) confirming the satisfaction of Parent’s obligations
under the CVR Agreements, including, without limitation, receiving and reviewing the achievement certificates and/or reports to be provided to the Stockholders’ Representative thereunder and (v) negotiating and settling matters with
respect to the amounts to be paid to the holders of CVRs pursuant to the CVR Agreements, the Stockholders’ Representative is hereby appointed, authorized and empowered to be the exclusive representative, agent and attorney-in-fact of the
Company stockholders and holders of CVRs, with full power of substitution, to make all decisions and determinations and to act (or not act) and execute, deliver and receive all agreements, documents, instruments and consents on behalf of and as
agent for such Company stockholders or holders of CVRs at any time in connection with, and that may be necessary or appropriate to accomplish the intent and implement the provisions of this Agreement and the CVR Agreements, and to facilitate the
consummation of the transactions contemplated hereby and thereby; provided, that before the delivery of any Funding Objection Notice or Notice of Objection (as defined in the CVR Agreements) or the

  

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filing of any other litigation or arbitration action or dispute process of any kind by the Stockholders’ Representative, the Stockholders’ Representative shall first obtain the assent
of at least 20% of the then outstanding General CVRs, in the case of a Funding Objection Notice, or at least 20% of the CVRs then outstanding under the applicable CVR Agreement under which such Notice of Objection is to be delivered, in the case of
a Notice of Objection. By executing this Agreement, the Stockholders’ Representative accepts such appointment, authority and power. Without limiting the generality of the foregoing, the Stockholders’ Representative shall have the power to
take any of the following actions on behalf of the former Company stockholders: to give and receive notices, communications and consents under this Agreement and the CVR Agreements on behalf of the former Company stockholders and holders of CVRs; to
negotiate, enter into settlements and compromises of, resolve and comply with orders of courts and other third-party intermediaries with respect to any disputes arising under this Agreement or the CVR Agreements; and to make, execute, acknowledge
and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings, and, in general, to do any and all things and to take any and all action that
the Stockholders’ Representative, in its sole and absolute discretion, may consider necessary or proper or convenient in connection with or to carry out the activities described in this Section 5.16. 
 (b) Authority. The appointment of the Stockholders’ Representative by each stockholder and holder of CVRs by the Company
stockholders’ collective adoption of this Agreement is coupled with an interest and may not be revoked in whole or in part (including, without limitation, upon the death or incapacity of any stockholder). Such appointment shall be binding upon
the heirs, executors, administrators, estates, personal representatives, officers, directors, security holders, successors and assigns of each stockholder. All decisions of the Stockholders’ Representative shall be final and binding on all of
the stockholders and holders of CVRs, and no stockholder or holder of CVRs, shall have the right to object, dissent, protest or otherwise contest the same. Parent shall be entitled to rely upon, without independent investigation, any act, notice,
instruction or communication from the Stockholders’ Representative and any document executed by the Stockholders’ Representative on behalf of any stockholder or holder of CVRs and shall be fully protected in connection with any action or
inaction taken or omitted to be taken in reliance thereon by Parent absent willful misconduct by Parent. The Stockholders’ Representative shall not be responsible for any loss suffered by, or liability of any kind to, the stockholders or
holders of CVRs arising out of any act done or omitted by the Stockholders’ Representative in connection with the acceptance or administration of the Stockholders’ Representative’s duties hereunder, unless such act or omission
involves gross negligence or willful misconduct. 
 (c) Successor Stockholders’ Representative. In the event that
the Stockholders’ Representative dies, becomes unable to perform his or her responsibilities hereunder or resigns from such position, the holders of at least 34% of the then outstanding General CVRs shall be authorized to and shall select
another representative reasonably acceptable to Parent to fill such vacancy and such substituted representative shall be deemed to be the Stockholders’ Representative for all purposes of this Agreement and the CVR Agreements. The
newly-appointed Stockholders’ Representative shall notify Parent, the Surviving Corporation and any other appropriate Person in writing of his or her appointment, provide evidence that the holders of the requisite percentage of the then
outstanding General CVRs approved such appointment and provide appropriate contact information for purposes of this Agreement and the CVR Agreements. Parent shall be entitled to rely upon, without independent investigation, the identity and validity
of such newly-appointed Stockholders’ Representative as set forth in such written notice. 
 In the event that within 30 days after the
Stockholders’ Representative dies, becomes unable to perform his or her responsibilities hereunder or resigns from such position and no successor Stockholders’ Representative reasonably acceptable to Parent has been so selected, the Rights
Agent shall forthwith notify the Person holding the largest quantity of the outstanding General CVRs (and who is not a Competitor of Parent), and Parent and the Surviving Corporation, that such Person is the successor Stockholders’
Representative, and shall Person shall be the successor Stockholders’ Representative hereunder. If such Person notifies the Rights Agent, Parent and the Surviving Corporation in writing that such Person declines to serve, the Rights Agent shall
forthwith notify the Person holding the next-largest quantity of the outstanding General CVRs (and who is not a Competitor of

  

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Parent), and Parent and the Surviving Corporation, that such next-largest-quantity Person is the successor Stockholders’ Representative, and such next-largest-quantity Person shall be the
successor Stockholders’ Representative hereunder. (And so on, to the extent as may be necessary.) 
 (d) Access and
Confidentiality. Subject to prior execution and delivery (to Parent and the Surviving Corporation) by the Stockholders’ Representative of a reasonable and customary confidentiality/nonuse agreement, from and after the Effective Time, Parent
and the Surviving Corporation shall use commercially reasonable efforts to provide the Stockholders’ Representative with reasonable access to information about Parent and the Surviving Corporation (and their respective Subsidiaries) and the
reasonable assistance of the officers and employees of the Surviving Corporation (and their respective Affiliates) upon reasonable prior notice and during normal business hours, for purposes of performing the duties of the Stockholders’
Representative under this Section 5.16. Subject to prior execution and delivery (to Parent and the Surviving Corporation) by the applicable holders of CVRs of a reasonable and customary confidentiality/nonuse agreement, the
Stockholders’ Representative may forward any information and documentation it receives to such particular holders of CVRs for the direct purpose of seeking to obtain the assent of the requisite holders of CVRs before the delivery of a Notice of
Objection or a Funding Objection Notice or the filing of any other litigation or arbitration action or dispute process of any kind. Notwithstanding the foregoing, the Stockholders’ Representative covenants and agrees that in no event shall the
Stockholders’ Representative provide any such information or documentation to any Holder who (i) is a Competitor of Parent or (ii) holds fewer than 1% of the total number of General CVRs. For purposes of this Section 5.16,
a “Competitor of Parent” shall mean a pharmaceutical or biotechnology company engaged primarily in the research, development or commercialization of any product that is directly competitive (with respect to the indication treated by
such product) with any Company Program and expressly excluding any Person that is an institutional investor. 
 (e)
Compensation, Fees and Expenses of Stockholders’ Representative. 
 (i) In consideration of the
Stockholders’ Representative’s obligations hereunder, the Stockholders’ Representative shall be paid, from the Stockholders’ Representative Fund, annual compensation in the amount of $45,000. 
 (ii) The actual and reasonable fees and expenses of the Stockholders’ Representative in performing its obligations
hereunder shall be paid from the Stockholders’ Representative Fund in the sole discretion of the Stockholders’ Representative. The Stockholders’ Representative shall keep, for a period of at least five years following distribution,
reasonable records and an accounting of all distributions made from the Stockholders’ Representative Fund. Upon the Closing, Parent shall wire $150,000 to the account set up for the Stockholders’ Representative Fund pursuant to wire
instructions to be provided at least two Business Days before the Closing Date. Pursuant to the terms of the CVR Agreements, before the payment of any cash consideration to the holders of CVRs, up to 1% of the aggregate amount of cash consideration
payable to the holders of CVRs shall be contributed to the Stockholders’ Representative Fund; provided, that no such additional cash consideration shall be contributed to the Stockholders’ Representative Fund if the available amount
in the Stockholders’ Representative Fund would, together with the contribution, exceed $300,000 at the time of such payment to the holders of the CVRs. Except as expressly set forth herein, Parent and the Surviving Corporation shall have no
obligation to finance or reimburse the Stockholders’ Representative, the Stockholders’ Representative Fund, or the Stockholders’ Representative’s activities. 
 (f) Termination of Duties and Obligations. Subject to the following sentence, the Stockholders’ Representative’s duties and
obligations under this Section 5.16 shall survive the Effective Time indefinitely. Upon the occurrence of the Fund Distribution Date, the Stockholders’ Representative shall be relieved of any and all duties and obligations under
this Agreement or any of the CVR Agreements except under the second sentence of Section 5.16(e)(ii). 
  

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 ARTICLE VI 
 CONDITIONS TO EACH PARTY’S OBLIGATION TO EFFECT THE MERGER 
 Section 6.01 Conditions to Obligations of Each Party Under This Agreement. 
 The respective obligations of
each party to effect the Merger and the other Transactions shall be subject to the satisfaction at or before the Effective Time of the following conditions, any or all of which may be waived, in whole or in part, to the extent permitted by
applicable Legal Requirements: 
 (a) The Registration Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or, to the Knowledge of Parent or the Company, threatened by the
SEC. 
 (b) The Company Stockholder Approval shall have been obtained. 
 (c) No temporary, preliminary or permanent order or injunction shall have been issued by a court of competent jurisdiction and shall be
continuing that prohibits the consummation of the Merger, and no Legal Prohibition shall have been enacted since the date of this Agreement and shall remain in effect. 
 Section 6.02 Additional Conditions to Obligations of Parent and Merger Sub. 
 The obligations of Parent and Merger Sub to effect the Merger and the other transactions contemplated herein are also subject to the following conditions: 
 (a) Each of the representations and warranties of the Company set forth in the Agreement (without giving effect to any “Company Material Adverse Effect” or other materiality qualifications
contained in such representations and warranties) shall be true and correct as of the Effective Time as though made on and as of the Effective Time (except that those representations and warranties which address matters only as of a particular date
need only be true and correct as of such date), except for such inaccuracies, individually or in the aggregate, that would not reasonably be expected to have a Company Material Adverse Effect, and Parent shall have received a certificate of an
executive officer of the Company to that effect. 
 (b) The covenants of the Company contained in the Agreement that are
required to have been performed by the Company before the Effective Time shall have been performed in all material respects, and Parent shall have received a certificate of an executive officer of the Company to that effect and to the effect that
Section 6.02(c), Section 6.02(d), Section 6.02(e) and Section 6.02(f) have been satisfied. 
 (c) Since the date of this Agreement, there shall not have occurred and be continuing any event or development which, individually or in the aggregate, has had or would reasonably be expected to have a
Company Material Adverse Effect. 
 (d) No more than 1,750,000 Outstanding Company Shares shall be eligible to be Dissenting
Shares. 
 (e) The Company shall have delivered to Parent the resignations of each director and officer of the Company and each
Company Subsidiary, as such, each effective as of the Effective Time. 
 (f) The Company shall have obtained consents or
approvals from all parties in the absence of whose consent or approval the consummation of the Merger and the Transactions would violate or constitute a default under any Company Contract, except for such violations or defaults as would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, impair in any material respect the ability of the Company to perform its obligations hereunder or the ability of Parent to enjoy the intended benefit
of the Transactions, or prevent or materially delay consummation of the Transactions; and the Company shall have

  

 42 

 
obtained, made or received all consents or approvals of, or filings, declarations or registrations with, any Governmental Entity necessary for the execution and delivery of this Agreement and the
CVR Agreements by the Company and the consummation by the Company of the Transactions, other than (i) the filing with the SEC of the post-Effective-Time filings required under, and compliance with other applicable requirements of, the Exchange
Act and the rules of the NASDAQ Capital Market, (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware pursuant to the DGCL, and (iii) such consents, approvals, filings, declarations or
registrations that, if not obtained, made or given, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, impair in any material respect the ability of the Company to perform its obligations
hereunder or the ability of Parent to enjoy the intended benefit of the Transactions, or prevent or materially delay consummation of the Transactions. 
 (g) Parent shall have received from the Company (i) a properly executed statement, dated as of the Effective Time, stating under penalties of perjury that the Company is not, and has not been, a
“United States real property holding corporation” as defined in Section 897(c)(2) of the Code during the applicable period described in Section 897(c)(1)(A)(ii) of the Code, in form and substance reasonably acceptable to Parent,
and (ii) proof reasonably satisfactory to Parent that the Company has provided notice of such verification to the Internal Revenue Service in accordance with the provisions of Treasury Regulations Section 1.897-2(h)(2). 
 Section 6.03 Additional Conditions to Obligations of the Company. 
 The obligation of the Company to effect the Merger and the other transactions contemplated herein are also subject to the following conditions: 
 (a) Each of the representations and warranties of Parent and Merger Sub set forth in the Agreement (without giving effect to any “Parent
Material Adverse Effect” or other materiality qualifications contained in such representations and warranties) shall be true and correct as of the Effective Time as though made on and as of the Effective Time (except that those representations
and warranties which address matters only as of a particular date need only be true and correct as of such date), except for such inaccuracies, individually or in the aggregate, that would not reasonably be expected to have a Parent Material Adverse
Effect, and the Company shall have received a certificate of an executive officer of Parent to that effect. 
 (b) The covenants
of Parent and Merger Sub contained in the Agreement that are required to have been performed by Parent and Merger Sub before the Effective Time shall have been performed in all material respects, and the Company shall have received a certificate of
an executive officer of Parent to that effect and to the effect that Section 6.03(c) has been satisfied. 
 (c)
Since the date of this Agreement, there shall not have occurred and be continuing any event or development which, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect. 
 Section 6.04 Estoppel. 
 Notwithstanding anything to the contrary contained herein, no party whose failure to take any action required to fulfill or satisfy any of the conditions set forth in this Article VI may claim failure of such condition as grounds for
termination pursuant to Article VII of this Agreement. 
 ARTICLE VII 
 TERMINATION 
 Section 7.01 Termination. 
 This Agreement may be terminated and the Merger may be abandoned (before or
after the obtaining of the Company Stockholder Approval): 
 (a) by mutual written consent of the Company and Parent at any time
before the Effective Time; 
  

 43 

 (b) by either Parent or the Company if the Company Stockholder Approval shall not have been
obtained by reason of the failure to obtain the required vote at the Special Meeting or at any adjournment thereof; 
 (c) by
Parent or the Company at any time after February 15, 2010 (the “Outside Date”) if the Effective Time shall not have occurred on or before the Outside Date (provided that the right to terminate this Agreement pursuant to
this Section 7.01(c) shall not be available to any party where the failure of such party (or any Affiliate or Representative of such party) to fulfill any obligation under this Agreement or any Voting Agreement has resulted in the
failure of the Effective Time to have occurred on or before the Outside Date; and provided further that if the Registration Statement shall not have been declared effective by the SEC on or before December 11, 2009, then for each day
after December 11, 2009 that the SEC has not declared the Registration Statement to be effective, the Outside Date shall automatically be extended by one day until such date as the SEC declares the Registration Statement to be effective and, if
the last day of such extension is not a Business Day, then until the next Business Day; and provided further, in no event shall the Outside Date be extended beyond February 26, 2010); 
 (d) by Parent or the Company if there shall be any Legal Prohibition in effect preventing the consummation of the Merger; provided,
however, that a party shall not be permitted to terminate this Agreement pursuant to this Section 7.01(d) if the existence of the Legal Prohibition is attributable to the failure of such party (or any Affiliate or Representative
of such party) to perform in any material respect any covenant in this Agreement required to be performed by such party (or any Affiliate or Representative of such party) at or before the Effective Time, and provided, further, that the
party seeking to terminate this Agreement pursuant to this Section 7.01(d) shall have used its reasonable best efforts to prevent such Legal Prohibition and to cause any such Legal Prohibition to be vacated or otherwise rendered of no
effect as soon as possible and in any event by the Outside Date; 
 (e) by Parent if the Company Board shall have made a Company
Change in Recommendation; 
 (f) by the Company if the Company Board authorizes the Company, subject to complying with the terms
of this Agreement, to accept (or to enter into a written agreement for a transaction constituting) a Superior Proposal; provided that immediately before (or contemporaneous with) the termination of this Agreement pursuant to this paragraph,
the Company shall pay to Parent the Termination Fee payable pursuant to Section 7.03(c); 
 (g) by Parent at any
time before the Effective Time if: (i) the representations and warranties of the Company set forth in this Agreement shall not be true and correct on and as of the date of such determination as if made on such date (other than those
representations and warranties that address matters only as of a particular date, which shall be true and correct as of such date), except where the failure of any such representation or warranty to be true and correct (without giving effect to any
Company Material Adverse Effect or other materiality qualifications set forth therein) would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect or impair in any material respect the ability of the
Company to perform its obligations under this Agreement or the ability of Parent to enjoy in all material respects the intended benefit of the Transactions; or (ii) the Company shall have, in any material respect, breached or failed to perform
or comply with any obligation, agreement or covenant required by this Agreement to be performed or complied with by it, which breach or failure (in each case under clauses (i) and (ii)), following written notice thereof from Parent to the
Company, is not cured, or is incapable of being cured, on or before the Outside Date; or 
 (h) by the Company at any time
before the Effective Time if: (i) the representations and warranties of Parent or Merger Sub set forth in this Agreement shall not be true and correct on and as of the date of such determination as if made on such date (other than those
representations and warranties that address matters only as of a particular date, which shall be true and correct as of such date), except where the failure of any such representation or warranty to be true and correct (without giving effect to any
Parent Material Adverse Effect or other materiality qualifications set forth therein) would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect or impair in any material respect the ability of
Parent or

  

 44 

 
Merger Sub to perform their obligations under this Agreement; or (ii) Parent or Merger Sub shall have, in any material respect, breached or failed to perform or comply with any obligation,
agreement or covenant required by this Agreement to be performed or complied with by them, which breach or failure (in each case under clauses (i) and (ii)), following written notice thereof from the Company to Parent, is not cured, or is
incapable of being cured, on or before the Outside Date. 
 Section 7.02 Effect of Termination. 
 In the event of the termination of this Agreement as provided in Section 7.01, written notice thereof shall forthwith be given to
the other party or parties specifying the provision hereof pursuant to which such termination is made and this Agreement shall be of no further force or effect; provided, however, that: (a) Section 5.08, this
Section 7.02, Section 7.03, and Article VIII, and the Confidentiality Agreement and the Confidentiality and Exclusivity Agreement shall survive the termination of this Agreement and shall remain in full force and
effect; and (b) except as provided in Section 7.03, the termination of this Agreement shall not relieve any party from any liability or damage that was the result of fraud or the breach of any representation, warranty or covenant
contained in this Agreement before the date of such termination. 
 Section 7.03 Termination Fee. 
 (a) If: (i) this Agreement is validly terminated by either Parent or the Company pursuant to Section 7.01(b) or
Section 7.01(c); (ii) neither Parent not Merger Sub shall have materially breached any of its representations, warranties or covenants contained in this Agreement; and (iii) at or before the time of any such termination of this
Agreement an Acquisition Proposal shall have been made (and such Acquisition Proposal shall not have been withdrawn before the time of the termination of this Agreement) and within 12 months after the date of termination of this Agreement, the
Company or any Company Subsidiary consummates an Acquisition Transaction (replacing for purposes of this Section 7.03(a), “20%” in the definition thereof with “50%”) or enters into a Contract to consummate an
Acquisition Transaction that is subsequently consummated, then, within two Business Days after such Acquisition Transaction is consummated the Company shall pay the Termination Fee to Parent. 
 (b) If this Agreement is validly terminated by Parent pursuant to Section 7.01(e) or Section 7.01(g), then, within
two Business Days after such termination, the Company shall pay the Termination Fee to Parent. 
 (c) If this Agreement is
validly terminated by the Company pursuant to Section 7.01(f), before (or contemporaneously with) and as a condition to the effectiveness of such termination, the Company shall pay the Termination Fee to Parent. 
 (d) Each of the parties hereto acknowledges that the agreements contained in this Section 7.03 are an integral part of the
transactions contemplated by this Agreement and that the Termination Fee is not a penalty, but rather is liquidated damages in a reasonable amount that will compensate Parent and Merger Sub, as the case may be, in the circumstances in which such
Termination Fee is payable for the efforts and resources expended and opportunities foregone while negotiating this Agreement and in reliance on this Agreement and on the expectation of the consummation of the Transactions, which amount would
otherwise be impossible to calculate with precision. 
 (e) In circumstances under which the Termination Fee is payable and has
been paid, Parent and Merger Sub agree that (i) to the extent they have incurred losses or damages in connection with this Agreement other than as a result of fraud or intentional misconduct, their sole and exclusive remedy against the Company
and any of its directors, officers, Affiliates or Representatives for any breach, loss or damage shall be to receive payment of the Termination Fee to the extent provided in Section 7.03 and (ii) upon payment in full of such
amounts, (x) neither Parent nor Merger Sub shall have any other rights or claims or seek damages against the Company or any of its directors, officers, Affiliates or Representatives under this Agreement or otherwise, whether at law or equity,
in

  

 45 

 
contract, in tort or otherwise, and (y) neither the Company nor any of its directors, officers, Affiliates or Representatives shall have any further liability or obligations relating to or
arising out of this Agreement or the Transactions. 
 ARTICLE VIII 
 MISCELLANEOUS PROVISIONS 
 Section 8.01 Amendment. 
 This Agreement may be amended with the written approval of the respective parties
at any time before the Effective Time; provided, however, that after the Company Stockholder Approval shall have been obtained, no amendment shall be made which by applicable Legal Requirements or any rule of any relevant national
securities exchange requires further approval of the stockholders of the Company, without such further approval. 
 Section 8.02 Waiver.

 (a) No failure on the part of any party to exercise any power, right, privilege or remedy under this Agreement, and no
delay on the part of any party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or
remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. 
 (b) No party
shall be deemed to have waived any claim arising out of this Agreement, or any power, right, privilege or remedy under this Agreement, unless the waiver of such claim, power, right, privilege or remedy is expressly set forth in a written instrument
duly executed and delivered on behalf of such party; and any such waiver shall not be applicable or have any effect except in the specific instance in which it is given. 
 Section 8.03 No Survival of Representations and Warranties. 
 None of
the representations, warranties, covenants and other agreements of the parties contained in this Agreement, or any claim with respect thereto, shall survive the Effective Time, except for (and only to the extent that) those covenants, agreements and
other provisions contained herein that by their terms apply or are to be performed in whole or in part after the Effective Time. 
 Section 8.04 Entire Agreement; Counterparts. 
 This Agreement, the CVR Agreements, the other agreements
referred to herein, the Confidentiality Agreement and the Confidentiality and Exclusivity Agreement constitute the entire agreement of the parties hereto and supersede all prior or contemporaneous agreements and understandings, both written and
oral, among or between any of the parties hereto with respect to the subject matter hereof and thereof. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute one and the same
instrument. 
 Section 8.05 Applicable Legal Requirements; Jurisdiction; Waiver of Jury Trial. 
 (a) This Agreement is made under, and shall be construed and enforced in accordance with, the Legal Requirements of the State of Delaware
applicable to agreements made and to be performed solely therein. The parties hereto agree that any Legal Proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions
contemplated hereby shall be brought in the Court of Chancery of the State of Delaware, and each of the parties hereby irrevocably consents to the jurisdiction of such court (and of the appropriate appellate courts therefrom) in any such Legal
Proceeding and

  

 46 

 
irrevocably waives, to the fullest extent permitted by Legal Requirements, any objection that it may now or hereafter have to the laying of the venue of such Legal Proceeding in any such court or
that any such Legal Proceeding brought in any such court has been brought in an inconvenient forum. Each of the parties hereto agrees that a final judgment in any such Legal Proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by Legal Requirements. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.09. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other manner permitted by Legal Requirements. Each party hereto agrees not to commence any legal proceedings relating to or arising out of this Agreement or the transactions
contemplated hereby in any jurisdiction or courts other than as provided herein. 
 (b) EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS,
(C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.05(b). 
 Section 8.06 Payment of Expenses. 
 Whether or not the Merger is consummated, each party hereto shall pay its own expenses incident to preparing for, entering into and carrying out this Agreement and the Transactions. Nothing contained in
this Agreement shall be deemed to limit the right or ability of any party to this Agreement to pay such expenses, as and when due and payable. 
 Section 8.07 Transfer Taxes. 
 All transfer, documentary, sales, use, stamp, registration and other
substantially similar Taxes and fees (including any penalties and interest) incurred in connection with this Agreement (collectively, “Transfer Taxes”) shall be paid by Parent and Merger Sub when due, and Parent and Merger Sub will,
at their own expense, file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes. 
 Section 8.08
Assignability; No Third Party Rights. 
 Before the Effective Time, neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned, in whole or in part, by operation of a Legal Requirement or otherwise, by any of the parties without the prior written consent of the other parties and any purported assignment without such consent shall
be void. This Agreement shall be binding upon, and shall be enforceable by and inure to the benefit of, the parties hereto and their respective permitted successors and assigns. Notwithstanding anything contained herein to the contrary, Parent shall
not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless the Person formed by such consolidation or into which Purchaser is merged or the Person
that acquires by conveyance or transfer, or that leases, the properties and assets of Purchaser substantially as an entirety shall expressly assume (or assumes by operation of law) (a) payment (if and to the extent required) of all amounts that
may become payable under the CVR Agreements and (b) the performance of every duty and covenant of the CVR Agreements on the part of Parent to

  

 47 

 
be performed or observed; provided, further, Parent shall remain jointly and severally liable for the foregoing obligations after the date of such transfer, lease or similar transaction.
Except (i) for the rights of stockholders and holders of other securities to receive payment in accordance with Article II after the Effective Time, (ii) as set forth in Section 5.09 and Section 5.10 and
(iii) for the right of the Company (but not of the Surviving Corporation), on behalf of its stockholders, to pursue damages in the event of Parent’s or Merger Sub’s breach of this Agreement, nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person, other than the parties hereto, any right, benefit or remedy of any nature. In circumstances in which the stockholders of the Company do not have the right to seek remedies at law or equity,
the obligations of Parent and Merger Sub under this Agreement are material to the Company’s execution of this Agreement and any failure by Parent or Merger Sub to comply with the terms of this Agreement shall enable the Company (but not the
Surviving Corporation) to seek all remedies available at law or equity to it and on behalf of the stockholders. To the extent permitted by applicable Legal Requirements, it is expressly agreed that in no event shall any former stockholders of the
Company (as opposed to the Stockholders’ Representative) or any holders of CVRs (as opposed to the Stockholders’ Representative) have, after the Effective Time, any power or right to commence or join in any Legal Proceeding based on or
arising out of this Agreement or any of the CVR Agreements. 
 Section 8.09 Notices. 
 All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given
or made as follows: (a) if sent by registered or certified mail in the United States return receipt requested, upon receipt; (b) if sent designated for overnight delivery by nationally recognized overnight air courier (such as Federal
Express), upon receipt of proof of delivery; (c) if sent by email before 5:00 p.m. California time, when transmitted; (d) if sent by email after 5:00 p.m. California time, on the following Business Day; and (e) if otherwise actually
personally delivered, when delivered, provided that such notices, requests, demands and other communications are delivered to the address set forth below, or to such other address as any party shall provide by like notice to the other parties
to this Agreement: 
 if to Parent or Merger Sub: 
 Ligand Pharmaceuticals Incorporated 
 10275 Science Center Drive 
 San Diego, CA 92121 
 Attention: John Higgins 
 Email: jhiggins@ligand.com 
 with a copy to: 
 Stradling Yocca Carlson & Rauth 
 4365 Executive Drive, Suite 1500 
 San Diego, CA 92121 
 Attention: Hayden Trubitt, Esq. 
 Email: htrubitt@sycr.com 
 if to the Company: 
 Metabasis Therapeutics, Inc. 
 11119 North Torrey Pines Road 
 La Jolla, CA 92037 
 Attention: David F. Hale 
 Email: dfhale@biopharmaventures.com 
  

 48 

 with a copy to: 
 Cooley Godward Kronish LLP 
 4401 Eastgate Mall 
 San Diego, CA 92121 
 Attention: Jason Kent, Esq. 
 Email: jkent@cooley.com 
 if to the Stockholders’ Representative: 
 David F. Hale 
 1042-B N. El Camino Real 
 Suite 430 
 Encinitas, CA 92024 
 Email: dfhale@biopharmaventures.com 
 Section 8.10 Severability. 
 Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of
the offending term or provision in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the parties hereto agree that the
court making such determination shall have the power to limit the term or provision, to delete specific words or phrases or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified. In the event such court does not exercise the power granted to it in the prior sentence, the parties
hereto agree to negotiate in good faith to replace such invalid or unenforceable term or provision with a valid and enforceable term or provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid or
unenforceable term. 
 Section 8.11 Obligation of Parent. 
 Parent shall ensure that each of Merger Sub and the Surviving Corporation duly performs, satisfies and discharges on a timely basis each of
the covenants, obligations and liabilities of Merger Sub and (after the Effective Time) the Surviving Corporation under this Agreement and the CVR Agreements. 
 Section 8.12 Specific Performance. 
 The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this Agreement were not to be performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof in addition to any
other remedies at law or in equity. Each party agrees to waive any requirement for the posting of, or securing of, a bond in connection with any such remedy. 
 Section 8.13 Remedies. 
 All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may otherwise have at law or in equity, and the exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights
or remedies. 
 Section 8.14 Construction. 
 (a) For purposes of this Agreement, whenever the context requires: the singular number shall include the plural, and vice versa; the masculine gender shall include the feminine and neuter genders; the
feminine gender shall include the masculine and neuter genders; and the neuter gender shall include the masculine and feminine genders. 
  

 49 

 (b) The parties hereto agree that any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the construction or interpretation of this Agreement. 
 (c) As used in this Agreement, the words “include” and “including,” and variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the words “without
limitation.” 
 (d) Except as otherwise indicated, all references in this Agreement to “Articles”
“Sections,” “Annexes,” “Exhibits” and “Schedules” are intended to refer to Articles, Sections, Annexes, Exhibits or Schedules to this Agreement, as the case may be. 
 (e) All references in this Agreement to a document or instrument having been made available to such Party shall be deemed to include the
making available of such document or instrument to any Representative of such Party. 
 (f) All references in this Agreement to
“$” are intended to refer to U.S. dollars. 
 (g) Unless otherwise specifically provided for herein, the term
“or” shall not be deemed to be exclusive. 
 (h) The titles, captions or headings of the Sections and Subsections
herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 
 Section 8.15 Further Action. 
 The parties hereto shall execute and
deliver such certificates and other documents and take such other actions as may be reasonably necessary or appropriate in order to effect and to more perfectly evidence the Merger and the Transactions, including, but not limited to, making filings,
recordings or publications required under the DGCL. Without limitation, if at any time after the Effective Time any further action is necessary to vest in the Surviving Corporation the title to all property or rights of Merger Sub or the Company,
the officers of the Surviving Entity are fully authorized in the name of Merger Sub or the Company, as the case may be, to take, and shall take, any and all such lawful action. 
  

 50 

 IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Stockholders’
Representative have caused this Agreement to be executed as of the date first written above. 
  

			
	 LIGAND PHARMACEUTICALS INCORPORATED

		
	 By:
	 	 /s/ JOHN L. HIGGINS

	 Name:
	 	John L. Higgins
	 Title:
	 	CEO and President
	
	MOONSTONE ACQUISITION, INC.
		
	 By:
	 	 /s/ JOHN L. HIGGINS

	 Name:
	 	John L. Higgins
	 Title:
	 	CEO and President
	
	METABASIS THERAPEUTICS, INC.
		
	 By:
	 	 /s/ MARK D. ERION

	 Name:
	 	Mark D. Erion, Ph.D.
	 Title:
	 	President and Chief Executive Officer
	
	 DAVID F. HALE, as Stockholders’ Representative

		
	 By:
	 	 /s/ DAVID F. HALE

  

 51 

 EXHIBIT A: Roche CVR Agreement 

 EXHIBIT B: TR Beta CVR Agreement 

 EXHIBIT C: Glucagon CVR Agreement 

 EXHIBIT D: General CVR Agreement 

 EXHIBIT E: List of Potential Consultants 
 Edgardo Baracchini 
 David Bullough 
 Glenn Dourado 
 Barry Gumbiner

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