Document:

exv4w2

EXHIBIT 4.2

EXECUTION COPY

 

HEALTH CARE REIT, INC.

and

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

as Trustee

 

SUPPLEMENTAL INDENTURE NO. 1

Dated as of March 15, 2010

 

$342,394,000 Principal Amount

3.00% Convertible Senior Notes due 2029

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	I. DEFINITIONS AND INCORPORATION BY REFERENCE
	 	 	1	 
	 
	 	 	 	 
	1.01 Definitions
	 	 	1	 
	1.02 Other Definitions
	 	 	4	 
	1.03 Incorporation by Reference of the Trust Indenture Act
	 	 	6	 
	 
	 	 	 	 
	II. THE SECURITIES
	 	 	6	 
	 
	 	 	 	 
	2.01 Form and Dating
	 	 	6	 
	2.02 Execution and Authentication
	 	 	7	 
	2.03 Registrar, Paying Agent and Conversion Agent
	 	 	7	 
	2.04 Additional Securities
	 	 	7	 
	2.05 Book-Entry Provisions for And Restrictions on Transfer and Exchange
of Global Securities
	 	 	7	 
	2.06 Ranking
	 	 	8	 
	 
	 	 	 	 
	III. REDEMPTION AND REPURCHASE
	 	 	9	 
	 
	 	 	 	 
	3.01 Redemption and Repurchase
	 	 	9	 
	3.02 Notices to Trustee
	 	 	10	 
	3.03 Selection of Securities to Be Redeemed
	 	 	10	 
	3.04 Notice of Redemption
	 	 	10	 
	3.05 Effect of Notice of Redemption
	 	 	12	 
	3.06 Deposit of Redemption Price
	 	 	12	 
	3.07 Securities Redeemed in Part
	 	 	12	 
	3.08 Purchase of Securities at Option of the Holder
	 	 	12	 
	3.09 Repurchase at Option of Holder Upon a Fundamental Change
	 	 	17	 
	 
	 	 	 	 
	IV. ADDITIONAL COVENANTS
	 	 	23	 
	 
	 	 	 	 
	4.01 SEC Reports
	 	 	23	 
	4.02 Corporate Existence
	 	 	24	 
	4.03 Further Instruments and Acts
	 	 	24	 
	 
	 	 	 	 
	V. DEFAULTS AND REMEDIES
	 	 	24	 
	 
	 	 	 	 
	5.01 Events of Default
	 	 	24	 
	5.02 Acceleration
	 	 	26	 
	5.03 Waiver of Past Defaults
	 	 	26	 
	5.04 Limitation on Suits
	 	 	27	 
	5.05 Rights of Holders to Receive Payments and to Convert Securities

	 	 	27	 
	5.06 Notice of Defaults
	 	 	27	 

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	 	 	Page
	VI. DISCHARGE OF INDENTURE
	 	 	28	 
	 
	 	 	 	 
	6.01 Termination of the Obligations of the Company
	 	 	28	 
	 
	 	 	 	 
	VII. SUPPLEMENTAL INDENTURES
	 	 	28	 
	 
	 	 	 	 
	7.01 Supplemental Indentures Without Consent of Holders
	 	 	28	 
	7.02 Supplemental Indentures With Consent of Holders
	 	 	29	 
	7.03 Revocation and Effect of Consents
	 	 	30	 
	7.04 Notation on or Exchange of Securities
	 	 	30	 
	7.05 Trustee Protected
	 	 	31	 
	 
	 	 	 	 
	VIII. CONVERSION
	 	 	31	 
	 
	 	 	 	 
	8.01 Conversion Privilege; Restrictive Legends
	 	 	31	 
	8.02 Conversion Procedure and Payment Upon Conversion
	 	 	34	 
	8.03 Fractional Shares
	 	 	37	 
	8.04 Taxes on Conversion
	 	 	37	 
	8.05 Company to Provide Stock
	 	 	37	 
	8.06 Adjustment of Conversion Rate
	 	 	37	 
	8.07 No Adjustment
	 	 	44	 
	8.08 Other Adjustments
	 	 	45	 
	8.09 Adjustments for Tax Purposes
	 	 	45	 
	8.10 Notice of Adjustment
	 	 	45	 
	8.11 Notice of Certain Transactions
	 	 	46	 
	8.12 Effect of Reclassifications, Consolidations, Amalgamations,
Statutory Arrangements, Mergers, Binding Share Exchanges or Asset Sales on
Conversion Privilege
	 	 	46	 
	8.13 Trustee’s Disclaimer
	 	 	48	 
	8.14 Rights Distributions Pursuant to Stockholders’ Rights Plans
	 	 	48	 
	8.15 Increased Conversion Rate Applicable to Certain Notes Surrendered in
Connection With Make-Whole Fundamental Changes
	 	 	49	 
	8.16 Ownership Limit
	 	 	52	 
	 
	 	 	 	 
	IX. NO DEFEASANCE OR COVENANT DEFEASANCE
	 	 	52	 
	 
	 	 	 	 
	X. MISCELLANEOUS
	 	 	52	 
	 
	 	 	 	 
	10.01 Governing Law
	 	 	52	 
	10.02 No Adverse Interpretation of Other Agreements
	 	 	52	 
	10.03 Successors
	 	 	52	 
	10.04 Calculations in Respect of the Securities
	 	 	52	 
	10.05 Trustee’s Disclaimer
	 	 	52	 
	 
	 	 	 	 

Exhibit A  —  Form of Global Security

Exhibit B  —  Form of Legend for Global Security

-ii- 

 

     This SUPPLEMENTAL INDENTURE NO. 1 (the “Supplemental Indenture”) is made and entered into as
of March 15, 2010, between HEALTH CARE REIT, INC., a Delaware corporation (the “Company”), and THE
BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, as trustee (the
“Trustee”).

WITNESSETH THAT:

          WHEREAS, the Company and the Trustee have executed and delivered a base indenture, dated as of
March 15, 2010 (as amended, supplemented or otherwise modified from time to time, the “Base
Indenture” and, together with this Supplemental Indenture, as amended, supplemented or otherwise
modified from time to time, the “Indenture”) to provide for the future issuance of the Company’s
senior debt securities to be issued from time to time in one or more series; and

          WHEREAS, pursuant to the terms of the Base Indenture, the Company desires to provide for the
establishment of a series of its Securities, to be known as its 3.00% Convertible Senior Notes due
2029 (the “Securities”), the form and substance of such Securities and the terms, provisions and
conditions thereof to be set forth as provided in the Indenture;

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

I. DEFINITIONS AND INCORPORATION BY REFERENCE

1.01 Definitions. The following definitions supplement, and, to the extent
inconsistent with, replace the definitions in Section 101 of the Base Indenture:

     “Agent” means any Registrar, Paying Agent, Conversion Agent, Bid Solicitation Agent or
co-Registrar or co-agent.

     “Asset Sale Make-Whole Fundamental Change” means a sale, transfer, lease, conveyance or other
disposition of all or substantially all of the property or assets of the Company to any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), including any
group acting for the purpose of acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act.

     “Bid Solicitation Agent” means a Company-appointed agent that performs calculations as set
forth in Section 8.01 hereof.

     “Capital Stock” of any Person means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of such Person and all warrants or options to
acquire such capital stock.

     “Closing Sale Price” on any Trading Day means the price of a share of Common Stock on such
Trading Day, determined (i) on the basis of the closing sale price per share (or if no closing sale
price per share 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 per share) on such Trading Day on
the U.S. principal national or regional securities exchange on which the

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Common Stock is listed; or (ii) if the Common Stock is not listed on a U.S. national or
regional securities exchange, as reported by Pink Sheets LLC or a similar organization. In the
absence of a quotation, the Closing Sale Price shall be the average of the mid-point of the last
bid and ask prices for the Common Stock on the relevant Trading Day from each of at least three
nationally recognized independent investment banking firms selected by the Company for this
purpose.

     “Common Stock” means the common stock, $1.00 par value per share, of the Company, or such
other Capital Stock of the Company into which the Company’s common stock is reclassified or
changed.

     “Common Stock Change Make-Whole Fundamental Change” means any transaction or series of related
transactions (other than a Listed Stock Business Combination), in connection with which (whether by
means of an exchange offer, liquidation, tender offer, consolidation, amalgamation, statutory
arrangement, merger, combination, reclassification, recapitalization, asset sale, lease of assets
or otherwise) the Common Stock is exchanged for, converted into, acquired for or constitutes solely
the right to receive other securities, other property, assets or cash.

     “Conversion Price” means, as of any date of determination, the dollar amount derived by
dividing one thousand dollars ($1,000) by the Conversion Rate in effect on such date.

     “Conversion Rate” means the number of shares of Common Stock issuable upon conversion of a
Security per $1,000 principal amount, which Conversion Rate shall initially be 19.5064 shares of
Common Stock per $1,000 principal amount of Securities, subject to adjustment as provided in
Article VIII hereof.

     “DTC” means The Depository Trust Company, its nominees and successors.

     “Holder” or “Securityholder” means a person in whose name a Security is registered on the
Registrar’s books.

     “Indebtedness” of a person means the principal of, premium, if any, and interest on, and all
other obligations in respect of (a) all indebtedness of such person for borrowed money (including
all indebtedness evidenced by notes, bonds, debentures or other securities), (b) all obligations
incurred by such person in the acquisition (whether by way of purchase, merger, consolidation or
otherwise and whether by such person or another person) of any business, real property or other
assets, (c) all reimbursement obligations of such person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such person, (d) all capital
lease obligations of such person, (e) all net obligations of such person under interest rate swap,
currency exchange or similar agreements of such person, (f) all 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 such person 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 such
person’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

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property to the lessor, (g) guarantees by such person of indebtedness described in clauses (a)
through (f) of another person, and (h) all renewals, extensions, refundings, deferrals,
restructurings, amendments and modifications of any indebtedness, obligation, guarantee or
liability of the kind described in clauses (a) through (g).

     “Issue Date” means March 15, 2010.

     “Make-Whole Fundamental Change” means an Asset Sale Make-Whole Fundamental Change or a Common
Stock Change Make-Whole Fundamental Change that occurs prior to December 1, 2014.

     “Market Disruption Event” means (i) a failure by the primary United States national securities
exchange or market on which the Common Stock is listed or admitted to trading to open for trading
during its regular trading session; or (ii) the occurrence or existence prior to 1:00 p.m. on any
day during which trading in the Common Stock generally occurs on the primary U.S. national
securities exchange or market on which the Common Stock is listed or admitted to trading, for an
aggregate of at least thirty (30) minutes, of any suspension or limitation imposed on trading (by
reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the
Common Stock or in any options, contracts or future contracts relating to the Common Stock.

     “Maturity Date” means December 1, 2029.

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

     “Prospectus” means the final prospectus supplement and the related prospectus of the Company,
dated March 10, 2010, relating to the Securities.

     “Purchase Notice” means a Purchase Notice in the form set forth in the Securities.

     “Redemption Price” means, with respect to a Security to be redeemed by the Company in
accordance with Article III, one hundred percent (100%) of the outstanding principal amount of such
Security to be redeemed.

     “Regular Quarterly Cash Dividend” shall mean any regular quarterly cash dividend paid in a
single quarterly installment or any combination of cash dividends paid in any calendar quarter that
are designated by the Company pursuant to a resolution of the Board as being portions of the
Company’s regular quarterly cash dividend and that are paid in lieu of a single regular quarterly
cash dividend (provided that, in the case of a regular quarterly cash dividend paid in portions,
the aggregate amount of such portions is no greater than the regular quarterly cash dividend paid
in the immediately preceding calendar quarter).

     “Scheduled Trading Day” means, with respect to the Common Stock or any other security, a day
that is scheduled to be a Trading Day on the primary United States national securities exchange or
market on which the Common Stock or the relevant securities are listed or

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admitted for trading. If the Common Stock is not listed or admitted for trading, “Scheduled
Trading Day” means any business day.

     “Securities” means the 3.00% Convertible Senior Notes due 2029 issued by the Company pursuant
to this Indenture.

     “Trading Day” means any day during which: (i) trading in the Common Stock generally occurs;
(ii) there is no Market Disruption Event; and (iii) a closing sale price for the Common Stock is
provided on the New York Stock Exchange or, if the Common Stock is not then listed on the New York
Stock Exchange, on the principal other U.S. national or regional securities exchange on which the
Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or
regional securities exchange, on the principal other market on which the Common Stock is then
traded. If shares of the Common Stock are not listed for trading or quotation on any exchange,
bureau or other organization, “trading day” will mean any business day.

     “Trading Price” means, on any day, the average of the secondary market bid quotations for the
Securities obtained by the Bid Solicitation Agent for five million dollars ($5,000,000) principal
amount of Securities at approximately 4:00 p.m., New York City time, on such day from three (3)
independent, nationally recognized securities dealers selected by the Company; provided, that if
the Bid Solicitation Agent can reasonably obtain only two (2) such bids, then the average of such
two (2) bids shall instead be used; provided further, that if the Bid Solicitation Agent can
reasonably obtain only one (1) such bid, then such bid shall instead be used; provided further,
that if, on a given day, (i) the Bid Solicitation Agent cannot reasonably obtain at least one bid
for five million dollars ($5,000,000) principal amount of Securities from an independent,
nationally recognized securities dealer, or (ii) if, in the reasonable, good faith judgment of the
Board, the bid quotation or quotations that the Bid Solicitation Agent has obtained are not
indicative of the secondary market value of the Securities, then, in each case, the Trading Price
per $1,000 principal amount of Securities on such day shall be deemed to be equal to 97% of the
product of (I) the Conversion Rate in effect on such day and (II) the Closing Sale Price on such
day.

     “Underwriters” means UBS Securities LLC and J.P.Morgan Securities Inc.

     “Underwriting Agreement” means the Underwriting Agreement dated March 10, 2010 among the
Company and the Underwriters.

     “Voting Stock” of any Person means the total outstanding voting power of all classes of the
Capital Stock of such Person entitled to vote generally in the election of directors of such
Person.

1.02 Other Definitions.

	 	 	 	 	 
	               Term	 	Defined in Section
	“Aggregate Amount”
	 	 	8.06	 
	“Applicable Price”
	 	 	8.15	 
	“Bankruptcy Law”
	 	 	5.01	 

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	                         Term	 	Defined in Section
	“BCF Make-Whole Cap”
	 	 	8.15	 
	“Cash Settlement Averaging Period”
	 	 	8.02	 
	“Change in Control”
	 	 	3.09	 
	“Collective Election”
	 	 	8.12	 
	“Conversion Agent”
	 	 	2.03	 
	“Conversion Date”
	 	 	8.02	 
	“Conversion Value”
	 	 	8.01	 
	“Custodian”
	 	 	5.01	 
	“Daily Conversion Value”
	 	 	8.02	 
	“Daily Net Shares”
	 	 	8.02	 
	“Daily Principal Return”
	 	 	8.02	 
	“Effective Date”
	 	 	8.15	 
	“Event of Default”
	 	 	5.01	 
	“Ex Date”
	 	 	8.06	 
	“Expiration Date”
	 	 	8.06	 
	“Expiration Time”
	 	 	8.06	 
	“Fundamental Change”
	 	 	3.09	 
	“Fundamental Change Notice”
	 	 	3.09	 
	“Fundamental Change Repurchase Date”
	 	 	3.09	 
	“Fundamental Change Repurchase Price”
	 	 	3.09	 
	“Fundamental Change Repurchase Right”
	 	 	3.09	 
	“Global Security”
	 	 	2.01	 
	“Listed Stock Business Combination”
	 	 	3.09	 
	“Make-Whole Applicable Increase”
	 	 	8.15	 
	“Make-Whole Conversion Period”
	 	 	8.15	 
	“Make-Whole Consideration”
	 	 	8.15	 
	“Net Shares”
	 	 	8.02	 
	“Notice of Default”
	 	 	5.01	 
	“Note Measurement Period”
	 	 	8.01	 
	“Option Purchase Date”
	 	 	3.08	 
	“Option Purchase Notice”
	 	 	3.08	 
	“Option Purchase Price”
	 	 	3.08	 
	“Paying Agent”
	 	 	2.03	 
	“Physical Securities”
	 	 	2.01	 
	“Principal Return”
	 	 	8.02	 
	“Purchase at Holder’s Option”
	 	 	3.01	 
	“Purchased Shares”
	 	 	8.06	 
	“record date”
	 	 	8.06	 
	“Redemption”
	 	 	3.01	 
	“Reference Property”
	 	 	8.12	 
	“Registrar”
	 	 	2.03	 
	“Relevant Date”
	 	 	8.02	 
	“Repurchase Upon Fundamental Change”
	 	 	3.01	 
	“Spin-Off”
	 	 	8.06	 
	“Termination of Trading”
	 	 	3.09	 
	“Trading Price Condition”
	 	 	8.01	 

-5-

 

	 	 	 	 	 
	                    Term	 	Defined in Section
	“Trigger Event”
	 	 	8.06	 
	“Underlying Shares”
	 	 	8.06	 
	“Volume-Weighted Average Price”
	 	 	8.02	 

1.03 Incorporation by Reference of the Trust Indenture Act.

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

     The following Trust Indenture Act terms used in this Indenture have the following meanings:

     “indenture securities” means the Securities;

     “indenture security holder” means a Securityholder or a Holder;

     “indenture to be qualified” means this Indenture;

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

     “obligor” on the indenture securities means the Company or any successor.

     All other terms used in this Indenture that are defined by the Trust Indenture Act, defined by
the Trust Indenture Act by reference to another statute or defined by Commission rule under the
Trust Indenture Act and not otherwise defined herein have the meanings so assigned to them.

II. THE SECURITIES

2.01 Form and Dating.

     The Securities and the Trustee’s certificate of authentication shall be substantially in the
form set forth in Exhibit A, which is incorporated in and forms a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock exchange rule or
usage. Each Security shall be dated the date of its authentication.

     Securities shall be issued initially in the form of one or more Global Securities,
substantially in the form set forth in Exhibit A (the “Global Security”), deposited with the
Trustee, as custodian for DTC, registered in the name of DTC or a nominee thereof, duly executed by
the Company and authenticated by the Trustee as hereinafter provided and bearing the legend set
forth in Exhibit B. The aggregate principal amount of the Global Security may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC, as
hereinafter provided; provided that, subject to Section 2.04 hereof, the aggregate principal amount
of the Global Security or Securities shall not exceed $342,394,000.

     Securities issued in exchange for interests in a Global Security pursuant to Section 2.05
hereof may be issued in the form of permanent certificated Securities in registered form in
substantially the form set forth in Exhibit A (the “Physical Securities”).

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2.02 Execution and Authentication.

     Upon a written order of the Company signed by one Officer of the Company, the Trustee shall
authenticate Securities for original issue in the aggregate principal amount of $342,394,000. The
aggregate principal amount of Securities outstanding at any time may not exceed $342,394,000 except
as provided in Section 2.04 hereof.

2.03 Registrar, Paying Agent and Conversion Agent.

     The Company shall maintain, or shall cause to be maintained, (i) an office or agency in the
Borough of Manhattan, The City of New York, where Securities may be presented for registration of
transfer or for exchange (“Registrar”), (ii) an office or agency in the Borough of Manhattan, The
City of New York, where Securities may be presented for payment (“Paying Agent”) and (iii) an
office or agency in the Borough of Manhattan, The City of New York, where Securities may be
presented for conversion (“Conversion Agent”). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may appoint or change one or more
co-Registrars, one or more additional paying agents and one or more additional conversion agents
without notice and may act in any such capacity on its own behalf. The term “Registrar” includes
any co-Registrar; the term “Paying Agent” includes any additional paying agent; and the term
“Conversion Agent” includes any additional conversion agent.

     The Company shall enter into an appropriate agency agreement with any agent not a party to
this Indenture. The agreement shall implement the provisions of this Indenture that relate to such
agent. The Company shall notify the Trustee of the name and address of any agent not a party to
this Indenture. If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent,
the Trustee shall act as such.

     The Company initially appoints the Trustee as Paying Agent, Bid Solicitation Agent, Registrar
and Conversion Agent.

2.04 Additional Securities.

     The Company may, without the consent of the Holders and notwithstanding Sections 2.01 and 2.02
hereof, reopen the Securities and issue additional Securities hereunder with the same terms and
conditions (except for any difference in the issue price therefor and interest accrued prior to the
date of issuance thereof) and with the same CUSIP number as the Securities initially issued
hereunder, provided that such additional Securities constitute the same issue as the Securities
initially issued hereunder for U.S. federal income tax purposes. The Securities initially issued
hereunder and any such additional Securities would rank equally and ratably and would be treated as
a single series of debt securities for all purposes under the Indenture.

2.05 Book-Entry Provisions for And Restrictions on Transfer and Exchange of Global
Securities.

     (A) The Global Securities initially shall (i) be registered in the name of DTC or the nominee
of DTC, (ii) be delivered to the Trustee as custodian for DTC and (iii) bear the legend as set
forth herein.

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     Members of, or participants in, DTC (“Participants”) shall have no rights under this Indenture
with respect to any Global Security held on their behalf by DTC, or the Trustee as its custodian,
or under the Global Security, and DTC may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the absolute owner of the Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee
or any agent of the Company or the Trustee from giving effect to any written certification, proxy
or other authorization furnished by DTC or impair, as between DTC and Participants, the operation
of customary practices governing the exercise of the rights of a Holder of any Security.

     (B) Transfers of Global Securities shall be limited to transfers in whole, but not in part, to
DTC, its successors or their respective nominees. In addition, Physical Securities shall be
transferred to all beneficial owners, as identified by DTC, in exchange for their beneficial
interests in Global Securities only if (i) DTC notifies the Company that DTC is unwilling or unable
to continue as depositary for any Global Security (or DTC ceases to be a “clearing agency”
registered under Section 17A of the Exchange Act) and a successor Depositary is not appointed by
the Company within ninety (90) days of such notice or cessation or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a written request from DTC to issue
Physical Securities.

     (C) In connection with the transfer of a Global Security in its entirety to beneficial owners
pursuant to Section 2.05(B) hereof, such Global Security shall be deemed to be surrendered to the
Trustee for cancellation, and the Company shall execute, and the Trustee shall upon written
instructions from the Company authenticate and deliver, to each beneficial owner identified by DTC
in exchange for its beneficial interest in such Global Security, an equal aggregate principal
amount of Physical Securities of authorized denominations.

     (D) The Holder of any Global Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants, to take any action
which a Holder is entitled to take under this Indenture or the Securities.

     (E) Notwithstanding any other provisions of this Indenture, but except as provided in Section
2.05(B) hereof, a Global Security may not be transferred except as a whole by DTC to a nominee of
DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any such nominee to a
successor Depositary or a nominee of such successor Depositary.

2.06 Ranking.

     The indebtedness of the Company arising under or in connection with this Indenture and every
outstanding Security issued under this Indenture from time to time (including any additional
Securities issued pursuant to Section 2.04 hereof) constitutes and will constitute a senior
unsecured obligation of the Company, ranking equally with other existing and future senior
unsecured indebtedness of the Company and ranking senior to any existing or future subordinated
indebtedness of the Company.

-8-

 

III. REDEMPTION AND REPURCHASE

3.01 Redemption and Repurchase.

     (A) (i) Redemption of the Securities at the Company’s option, as permitted by this Indenture,
shall be made in accordance with paragraphs 6 and 7 of the Securities (a “Redemption”), (ii)
repurchases at the Holder’s option, as permitted by this Indenture, shall be made in accordance
with paragraph 8 of the Securities (a “Purchase at Holder’s Option”) and (iii) repurchases upon a
Fundamental Change, as permitted by this Indenture, shall be made in accordance with paragraph 9 of
the Securities (a “Repurchase Upon Fundamental Change”), in each case in accordance with the
applicable provisions of this Article III.

     (B) The Company will comply with all federal and state securities laws, and the applicable
laws of any foreign jurisdiction, in connection with any offer to sell or solicitations of offers
to buy Securities pursuant to this Article III.

     (C) The Company shall not have the right to redeem any Securities prior to December 1, 2014,
except to preserve the Company’s status as a real estate investment trust. If, at any time, the
Company determines that it is necessary to redeem the Securities in order to preserve the Company’s
status as a real estate investment trust, the Company may redeem all or any part of the Securities
at a price payable in cash equal to the Redemption Price plus accrued and unpaid interest, if any,
to, but excluding, the Redemption Date. In such case, the Company shall provide the Trustee with
an Officers’ Certificate evidencing that the Board of the Company has, in good faith, made the
determination that it is necessary to redeem the Securities in order to preserve the Company’s
status as a real estate investment trust, on which the Trustee may conclusively rely.

The Company shall have the right, at the Company’s option, at any time, and from time to time, on a
Redemption Date on or after December 1, 2014, to redeem all or any part of the Securities at a
price payable in cash equal to the Redemption Price plus accrued and unpaid interest, if any, to,
but excluding, the Redemption Date.

The Redemption Date must be a Business Day. If the Redemption Date with respect to a Security is
after a Regular Record Date and on or before the related Interest Payment Date, then accrued and
unpaid interest to, but excluding, such Interest Payment Date shall be paid, on such Interest
Payment Date, to the Holder of record of such Security at the close of business on such Regular
Record Date, and the Holder surrendering such Security for Redemption shall not be entitled to any
such interest unless such Holder was also the Holder of record of such Security at the close of
business on such Regular Record Date. The Company will make at least ten (10) semi-annual interest
payments on the Securities prior to or on any Redemption Date, provided that the foregoing shall
not apply in the event of a redemption to preserve the Company’s status as a real estate investment
trust.

     (D) Securities in denominations larger than $1,000 principal amount may be redeemed in part
but only in integral multiples of $1,000 principal amount.

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3.02 Notices to Trustee.

     If the Company elects to redeem Securities pursuant to paragraph 6 of the Securities, it shall
notify the Trustee of the Redemption Date, the applicable provision of this Indenture pursuant to
which the Redemption is to be made and the aggregate principal amount of Securities to be redeemed,
which notice shall be provided to the Trustee by the Company at least fifteen (15) days prior to
the mailing, in accordance with Section 3.04 hereof, of the notice of Redemption (unless a shorter
notice period shall be satisfactory to the Trustee).

3.03 Selection of Securities to Be Redeemed.

     If the Company has elected to redeem less than all the Securities pursuant to paragraph 6 of
the Securities, the Trustee shall, within five (5) Business Days after receiving the notice
specified in Section 3.02 hereof, select the Securities to be redeemed by lot, on a pro rata basis
or in accordance with any other method the Trustee considers fair and appropriate. The Trustee
shall make such selection from Securities then outstanding and not already to be redeemed by virtue
of having been previously called for Redemption. The Trustee may select for Redemption portions of
the principal amount of Securities that have denominations larger than $1,000 principal amount.
Securities and portions of them the Trustee selects for Redemption shall be in amounts of $1,000
principal amount or integral multiples of $1,000 principal amount. The Trustee shall promptly
notify the Company in writing of the Securities selected for Redemption and the principal amount
thereof to be redeemed.

     The Registrar need not register the transfer of or exchange any Securities that have been
selected for Redemption, except the unredeemed portion of the Securities being redeemed in part.

3.04 Notice of Redemption.

     At least thirty (30) days but not more than sixty (60) days before a Redemption Date, the
Company shall mail, or cause to be mailed, by first-class mail a notice of Redemption to each
Holder whose Securities are to be redeemed, at the address of such Holder appearing in the security
register.

     The notice shall identify the Securities and the aggregate principal amount thereof to be
redeemed pursuant to the Redemption and shall state:

     (i) the Redemption Date;

     (ii) the Redemption Price plus accrued and unpaid interest, if any, to, but
excluding, the Redemption Date;

     (iii) the Conversion Rate and the Conversion Price;

     (iv) the names and addresses of the Paying Agent and the Conversion Agent;

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     (v) that the right to convert the Securities called for Redemption will terminate at
the close of business on the last Business Day immediately preceding the Redemption Date,
unless there shall be a Default in the payment of the Redemption Price or accrued and
unpaid interest, if any, payable as herein provided upon Redemption;

     (vi) that Holders who want to convert Securities must satisfy the requirements of
Article VIII hereof;

     (vii) the paragraph of the Securities pursuant to which the Securities are to be
redeemed;

     (viii) that Securities called for Redemption must be surrendered to the Paying Agent
to collect the Redemption Price plus accrued and unpaid interest, if any, payable as
herein provided upon Redemption;

     (ix) that, unless there shall be a Default in the payment of the Redemption Price or
accrued and unpaid interest, if any, payable as herein provided upon Redemption
(including, where the Redemption Date is after a record date for the payment of an
installment of interest and on or before the related interest payment date, the payment,
on such interest payment date, of accrued and unpaid interest to, but excluding, such
interest payment date to the Holder of record at the close of business on such record
date), interest on Securities called for Redemption ceases to accrue on and after the
Redemption Date, except as otherwise provided herein, such Securities will cease to be
convertible after the close of business on the last Business Day immediately preceding the
Redemption Date, and all rights of the Holders of such Securities shall terminate on and
after the Redemption Date, other than the right to receive, upon surrender of such
Securities and in accordance with this Indenture, the amounts due hereunder on such
Securities upon Redemption (and the rights of the Holder(s) of record of such Securities
to receive, on the applicable interest payment date, accrued and unpaid interest in
accordance herewith in the event the Redemption Date is after a record date for the
payment of an installment of interest and on or before the related interest payment date);
and

     (x) the CUSIP number or numbers, as the case may be, of the Securities.

     The right, pursuant to Article VIII hereof, to convert Securities called for Redemption shall
terminate at the close of business on the last Business Day immediately preceding the Redemption
Date, unless there shall be a Default in the payment of the Redemption Price or accrued and unpaid
interest, if any, payable as herein provided upon Redemption.

     At the Company’s request, the Trustee shall mail the notice of Redemption in the Company’s
name and at the Company’s expense; provided, however, that the form and content of such notice
shall be prepared by the Company.

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3.05 Effect of Notice of Redemption.

     Once notice of Redemption is mailed, Securities called for Redemption become due and payable
on the Redemption Date at the consideration set forth herein, and, on and after such Redemption
Date (unless there shall be a Default in the payment of such consideration), except as otherwise
provided herein, such Securities shall cease to bear interest, and all rights of the Holders of
such Securities shall terminate, other than the right to receive such consideration upon surrender
of such Securities to the Paying Agent.

     If any Security shall not be fully and duly paid in accordance herewith upon Redemption, the
principal of, and accrued and unpaid interest on, such Security shall, until paid, bear interest at
the rate borne by such Security on the principal amount of such Security, and such Security shall
continue to be convertible pursuant to Article VIII hereof.

     Notwithstanding anything herein to the contrary, the Company shall not redeem any Securities
on any date if the principal amount of the Securities has been accelerated, and such acceleration
has not been rescinded on or prior to 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
Securities).

3.06 Deposit of Redemption Price.

     Prior to 10:00 A.M., New York City time on the Redemption Date, the Company shall deposit with
a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust)
money, in funds immediately available on the Redemption Date, sufficient to pay the consideration
payable as herein provided upon Redemption on all Securities to be redeemed on that date. The
Paying Agent shall return to the Company, as soon as practicable, any money not required for that
purpose.

3.07 Securities Redeemed in Part.

     Any Security to be submitted for Redemption only in part shall be delivered pursuant to
Section 3.05 hereof (with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or its attorney duly authorized in writing), and the Company shall execute,
and the Trustee shall authenticate and make available for delivery to the Holder of such Security
without service charge, a new Security or Securities, of any authorized denomination as requested
by such Holder, of the same tenor and in aggregate principal amount equal to the portion of such
Security not submitted for Redemption.

     If any Security selected for partial Redemption is converted in part, the principal of such
Security subject to Redemption shall be reduced by the principal amount of such Security that is
converted.

3.08 Purchase of Securities at Option of the Holder.

     (A) At the option of the Holder thereof, Securities (or portions thereof that are integral
multiples of $1,000 in principal amount) shall be purchased by the Company pursuant to

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paragraph 8 of the Securities on December 1, 2014, December 1, 2019 and December 1, 2024
(each, an “Option Purchase Date”), at a purchase price, payable in cash, equal to one hundred
percent (100%) of the principal amount of the Securities (or such portions thereof) to be so
purchased (the “Option Purchase Price”), plus accrued and unpaid interest, if any, to, but
excluding, the applicable Option Purchase Date (provided, that such accrued and unpaid interest
shall be paid to the Holder of record of such Securities at the close of business on the Regular
Record Date immediately preceding such Option Purchase Date), upon:

          (i) delivery to the Company (if it is acting as its own Paying Agent), or to a
Paying Agent designated by the Company for such purpose in the Option Purchase Notice, by
such Holder, at any time from the opening of business on the date that is twenty (20)
Business Days prior to the applicable Option Purchase Date until the close of business on
the Business Day immediately preceding the applicable Option Purchase Date, of a Purchase
Notice, in the form set forth in the Securities or any other form of written notice
substantially similar thereto, in each case, duly completed and signed, with appropriate
signature guarantee, stating:

          (a) the certificate number(s) of the Securities which the Holder will deliver
to be purchased, if such Securities are in certificated form;

          (b) the principal amount of Securities to be purchased, which must be $1,000 or
an integral multiple thereof; and

          (c) that such principal amount of Securities are to be purchased as of the
applicable Option Purchase Date pursuant to the terms and conditions specified in
paragraph 8 of the Securities and in this Indenture; and

          (ii) delivery to the Company (if it is acting as its own Paying Agent), or to a
Paying Agent designated by the Company for such purpose in the Option Purchase Notice, at
any time after delivery of such Purchase Notice, of such Securities (together with all
necessary endorsements), such delivery being a condition to receipt by the Holder of the
Option Purchase Price therefor plus accrued and unpaid interest, if any, payable as
herein provided upon Purchase at Holder’s Option (provided, however, that the Holder of
record of such Securities on the record date immediately preceding such Option Purchase
Date need not surrender such Securities in order to be entitled to receive, on the Option
Purchase Date, the accrued and unpaid interest due thereon).

     If such Securities are held in book-entry form through DTC, the Purchase Notice shall comply
with applicable procedures of DTC.

     Upon such delivery of Securities to the Company (if it is acting as its own Paying Agent) or
such Paying Agent, such Holder shall be entitled to receive from the Company or such Paying Agent,
as the case may be, a nontransferable receipt of deposit evidencing such delivery.

     Notwithstanding anything herein to the contrary, any Holder that has delivered the Purchase
Notice contemplated by this Section 3.08(A) to the Company (if it is acting as its own Paying
Agent) or to a Paying Agent designated by the Company for such purpose in the Option Purchase
Notice shall have the right to withdraw such Purchase Notice by delivery, at any time

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prior to the close of business on the Business Day immediately preceding the applicable Option
Purchase Date, of a written notice of withdrawal to the Company (if acting as its own Paying Agent)
or the Paying Agent, which notice shall contain the information specified in Section 3.08(B)(vii)
hereof.

     The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice
or written notice of withdrawal thereof.

     (B) The Company shall give notice (the “Option Purchase Notice”) on a date not less than
twenty (20) Business Days prior to each Option Purchase Date to each Holder at its address shown in
the register of the Registrar and to each beneficial owner as required by applicable law. Such
notice shall state:

     (i) the Option Purchase Price plus accrued and unpaid interest, if any, to, but
excluding, such Option Purchase Date and the Conversion Rate;

     (ii) the names and addresses of the Paying Agent and the Conversion Agent;

     (iii) that Securities with respect to which a Purchase Notice is given by a Holder
may be converted pursuant to Article VIII hereof only if such Purchase Notice has been
withdrawn in accordance with this Section 3.08 or if there shall be a Default in the
payment of such Option Purchase Price or in accrued and unpaid interest, if any, payable
as herein provided upon Purchase at Holder’s Option;

     (iv) that Securities must be surrendered to the Paying Agent to collect payment of
the Option Purchase Price plus (if such Holder was the Holder of record of the applicable
Security at the close of business on the record date immediately preceding the Option
Purchase Date) accrued and unpaid interest, if any, payable as herein provided upon
Purchase at Holder’s Option;

     (v) that the Option Purchase Price, plus accrued and unpaid interest, if any, to,
but excluding, such Option Purchase Date, for any Security as to which a Purchase Notice
has been given and not withdrawn will be paid as promptly as practicable, but in no event
later than the later of such Option Purchase Date or the time of delivery of the Security
as described in clause (iv) above; provided, however, that such accrued and unpaid
interest shall be paid, on the applicable interest payment date, to the Holder of record
of such Security at the close of business on the record date immediately preceding such
Option Purchase Date;

     (vi) the procedures the Holder must follow to exercise rights under this Section
3.08 (including the name and address of the Paying Agent) and a brief description of
those rights;

     (vii) that a Holder will be entitled to withdraw its election in the Purchase Notice
if the Company (if acting as its own Paying Agent) or the Paying Agent receives, at any
time prior to the close of business on the Business Day immediately preceding the
applicable Option Purchase Date, or such longer period as may be

-14-

 

required by law, a letter or telegram, telex or facsimile transmission (receipt of
which is confirmed and promptly followed by a letter) setting forth (I) the name of such
Holder, (II) a statement that such Holder is withdrawing its election to have Securities
purchased by the Company on such Option Purchase Date pursuant to a Purchase at Holder’s
Option, (III) the certificate number(s) of such Securities to be so withdrawn, if such
Securities are in certificated form, (IV) the principal amount of the Securities of such
Holder to be so withdrawn, which amount must be $1,000 or an integral multiple thereof
and (V) the principal amount, if any, of the Securities of such Holder that remain
subject to the Purchase Notice delivered by such Holder in accordance with this Section
3.08, which amount must be $1,000 or an integral multiple thereof;

     (viii) that, except as otherwise provided herein, on and after the applicable Option
Purchase Date (unless there shall be a Default in the payment of the consideration
payable as herein provided upon a Purchase at Holder’s Option), interest on Securities
subject to Purchase at Holder’s Option will cease to accrue, and all rights of the
Holders of such Securities shall terminate, other than the right to receive, in
accordance herewith, the consideration payable as herein provided upon a Purchase at
Holder’s Option; and

     (ix) the CUSIP number or numbers, as the case may be, of the Securities.

     At the Company’s request, the Trustee shall mail such Option Purchase Notice in the Company’s
name and at the Company’s expense; provided, however, that the form and content of such Option
Purchase Notice shall be prepared by the Company.

     No failure of the Company to give an Option Purchase Notice shall limit any Holder’s right to
exercise its rights to require the Company to purchase such Holder’s Securities pursuant to a
Purchase at Holder’s Option.

     (C) Subject to the provisions of this Section 3.08, the Company shall pay, or cause to be
paid, the Option Purchase Price, plus accrued and unpaid interest, if any, to, but excluding, the
applicable Option Purchase Date, with respect to each Security subject to Purchase at Holder’s
Option to the Holder thereof as promptly as practicable, but in no event later than the later of
the applicable Option Purchase Date and the time such Security (together with all necessary
endorsements) is surrendered to the Paying Agent; provided, however, that such accrued and unpaid
interest shall be paid, on the applicable interest payment date, to the Holder of record of such
Security at the close of business on the record date immediately preceding such Option Purchase
Date.

     (D) Prior to 10:00 A.M., New York City time on the applicable Option Purchase Date, the
Company shall deposit with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust) money, in funds immediately available on the applicable Option
Purchase Date, sufficient to pay the Option Purchase Price, plus accrued and unpaid interest, if
any, to, but excluding, such Option Purchase Date, of all of the Securities that are to be
purchased by the Company on such Option Purchase Date pursuant to a Purchase at Holder’s Option.
The Paying Agent shall return to the Company, as soon as practicable, any money not required for
that purpose.

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     (E) Once the Purchase Notice has been duly delivered in accordance with this Section 3.08, the
Option Purchase Price, plus accrued and unpaid interest, if any, relating to the Securities to be
purchased pursuant to the Purchase at Holder’s Option shall, on the applicable Option Purchase
Date, become due and payable in accordance herewith, and, on and after such date (unless there
shall be a Default in the payment of the consideration payable as herein provided upon a Purchase
at Holder’s Option), except as otherwise herein provided, such Securities shall cease to bear
interest, and all rights of the Holders of such Securities shall terminate, other than the right to
receive, in accordance herewith, such consideration.

     (F) Securities with respect to which a Purchase Notice has been duly delivered in accordance
with this Section 3.08 may be converted pursuant to Article VIII hereof, if otherwise convertible
in accordance with Article VIII hereof, only if such Purchase Notice has been withdrawn in
accordance with this Section 3.08 or if there shall be a Default in the payment of the
consideration payable as herein provided upon a Purchase at Holder’s Option.

     (G) If any Security subject to Purchase at Holder’s Option shall not be paid in accordance
herewith, the principal of, and accrued and unpaid interest on, such Security shall, until paid,
bear interest, payable in cash, at the rate borne by such Security on the principal amount of such
Security, and such Security shall continue to be convertible pursuant to Article VIII hereof.

     (H) Any Security which is to be submitted for Purchase at Holder’s Option only in part shall
be delivered pursuant to this Section 3.08 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or its attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and make available for delivery to the
Holder of such Security without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, of the same tenor and in aggregate principal amount equal
to the portion of such Security not submitted for Purchase at Holder’s Option.

     (I) Notwithstanding anything herein to the contrary, no Securities shall be purchased by the
Company at the option of the Holders on any Option Purchase Date if the principal amount of the
Securities has been accelerated, and such acceleration has not been rescinded, on or prior to such
Option Purchase Date (except in the case of an acceleration resulting from a Default by the Company
in the payment of the Option Purchase Price with respect to such Securities). The Paying Agent
will promptly return to the respective Holders thereof any Securities held by it during the
continuance of such acceleration.

     (J) Notwithstanding anything herein to the contrary, if the option granted to Holders to
require the purchase of the Securities on the applicable Option Purchase Date is determined to
constitute a tender offer, the Company shall comply with all applicable tender offer rules under
the Exchange Act, including Rule 13e-4 and Regulation 14E thereunder, and with all other applicable
laws, and will file a Schedule TO or any other schedules required under the Exchange Act or any
other applicable laws.

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3.09 Repurchase at Option of Holder Upon a Fundamental Change.

     (A) In the event any Fundamental Change (as defined below) shall occur, each Holder of
Securities shall have the right (the “Fundamental Change Repurchase Right”), at such Holder’s
option, to require the Company to repurchase all of such Holder’s Securities (or portions thereof
that are integral multiples of $1,000 in principal amount), on a date selected by the Company (the
“Fundamental Change Repurchase Date”), which Fundamental Change Repurchase Date shall be no later
than thirty five (35) days, nor earlier than twenty (20) days, after the date the Fundamental
Change Notice (as defined below) is mailed in accordance with Section 3.09(B) hereof, at a price,
payable in cash, equal to one hundred percent (100%) of the principal amount of the Securities (or
portions thereof) to be so repurchased (the “Fundamental Change Repurchase Price”), plus accrued
and unpaid interest, if any, to, but excluding, the Fundamental Change Repurchase Date, upon:

     (i) delivery to the Company (if it is acting as its own Paying Agent), or to a
Paying Agent designated by the Company for such purpose in the Fundamental Change Notice,
no later than the close of business on the Business Day immediately preceding the
Fundamental Change Repurchase Date, of a Purchase Notice, in the form set forth in the
Securities or any other form of written notice substantially similar thereto, in each
case, duly completed and signed, with appropriate signature guarantee, stating:

     (a) the certificate number(s) of the Securities which the Holder will deliver
to be repurchased, if such Securities are in certificated form;

     (b) the principal amount of Securities to be repurchased, which must be $1,000
or an integral multiple thereof; and

     (c) that such principal amount of Securities are to be repurchased pursuant to
the terms and conditions specified in paragraph 9 of the Securities and in this
Indenture; and

     (ii) delivery to the Company (if it is acting as its own Paying Agent), or to a
Paying Agent designated by the Company for such purpose in the Fundamental Change Notice,
at any time after the delivery of such Purchase Notice, of such Securities (together with
all necessary endorsements) with respect to which the Fundamental Change Repurchase Right
is being exercised;

provided, however, that if such Fundamental Change Repurchase Date is after a Regular Record Date
for the payment of an installment of interest and on or before the related Interest Payment Date,
then the accrued and unpaid interest, if any, to, but excluding, such Interest Payment Date will be
paid on such Interest Payment Date to the Holder of record of such Securities at the close of
business on such Regular Record Date (without any surrender of such Securities by such Holder), and
the Holder surrendering such Securities for repurchase will not be entitled to any such accrued and
unpaid interest unless such Holder was also the Holder of record of such Securities at the close of
business on such Regular Record Date.

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     If such Securities are held in book-entry form through DTC, the Purchase Notice shall comply
with applicable procedures of DTC.

     Upon such delivery of Securities to the Company (if it is acting as its own Paying Agent) or
such Paying Agent, such Holder shall be entitled to receive from the Company or such Paying Agent,
as the case may be, a nontransferable receipt of deposit evidencing such delivery.

     Notwithstanding anything herein to the contrary, any Holder that has delivered the Purchase
Notice contemplated by this Section 3.09(A) to the Company (if it is acting as its own Paying
Agent) or to a Paying Agent designated by the Company for such purpose in the Fundamental Change
Notice shall have the right to withdraw such Purchase Notice by delivery, at any time prior to the
close of business on the Business Day immediately preceding the Fundamental Change Repurchase Date,
of a written notice of withdrawal to the Company (if acting as its own Paying Agent) or the Paying
Agent, which notice shall contain the information specified in Section 3.09(B)(xi) hereof.

     The Paying Agent shall promptly notify the Company of the receipt by it of any Purchase Notice
or written notice of withdrawal thereof.

     (B) Within twenty (20) Business Days after the occurrence of a Fundamental Change, the Company
shall mail, or cause to be mailed, to all Holders of record of the Securities at their addresses
shown in the register of the Registrar, and to beneficial owners as required by applicable law, a
notice (the “Fundamental Change Notice”) of the occurrence of such Fundamental Change and the
Fundamental Change Repurchase Right arising as a result thereof. The Company shall deliver a copy
of the Fundamental Change Notice to the Trustee and shall cause a copy to be published at the
expense of the Company in The New York Times or The Wall Street Journal or
another newspaper of national circulation.

     Each Fundamental Change Notice shall state:

     (i) the events causing the Fundamental Change;

     (ii) the date of such Fundamental Change;

     (iii) the Fundamental Change Repurchase Date;

     (iv) the date by which the Fundamental Change Repurchase Right must be exercised;

     (v) the Fundamental Change Repurchase Price plus accrued and unpaid interest, if any,
to, but excluding, the Fundamental Change Repurchase Date;

     (vi) the names and addresses of the Paying Agent and the Conversion Agent;

     (vii) a description of the procedures which a Holder must follow to exercise the
Fundamental Change Repurchase Right;

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     (viii) that, in order to exercise the Fundamental Change Repurchase Right, the
Securities must be surrendered for payment of the Fundamental Change Repurchase Price plus
accrued and unpaid interest, if any, payable as herein provided upon Repurchase Upon
Fundamental Change;

     (ix) that the Fundamental Change Repurchase Price, plus accrued and unpaid interest,
if any, to, but excluding, the Fundamental Change Repurchase Date, for any Security as to
which a Purchase Notice has been given and not withdrawn will be paid as promptly as
practicable, but in no event more than the later of such Fundamental Change Repurchase
Date and the time of delivery of the Security (together with all necessary endorsements)
as described in clause (viii) above; provided, however, that if such Fundamental Change
Repurchase Date is after a Regular Record Date for the payment of an installment of
interest and on or before the related Interest Payment Date, then the accrued and unpaid
interest, if any, to, but excluding, such Interest Payment Date will be paid on such
Interest Payment Date to the Holder of record of such Security at the close of business on
such Regular Record Date (without any surrender of such Securities by such Holder), and
the Holder surrendering such Security for repurchase will not be entitled to any such
accrued and unpaid interest unless such Holder was also the Holder of record of such
Security at the close of business on such Regular Record Date;

     (x) that, except as otherwise provided herein, on and after such Fundamental Change
Repurchase Date (unless there shall be a Default in the payment of the consideration
payable as herein provided upon Repurchase Upon Fundamental Change), interest on
Securities subject to Repurchase Upon Fundamental Change will cease to accrue, and all
rights of the Holders of such Securities shall terminate, other than the right to
receive, in accordance herewith, the consideration payable as herein provided upon
Repurchase Upon Fundamental Change;

     (xi) that a Holder will be entitled to withdraw its election in the Purchase Notice
if the Company (if acting as its own Paying Agent), or the Paying Agent receives, prior to
the close of business on the Business Day immediately preceding the Fundamental Change
Repurchase Date, or such longer period as may be required by law, a letter or telegram,
telex or facsimile transmission (receipt of which is confirmed and promptly followed by a
letter) setting forth (I) the name of such Holder, (II) a statement that such Holder is
withdrawing its election to have Securities purchased by the Company on such Fundamental
Change Repurchase Date pursuant to a Repurchase Upon Fundamental Change, (III) the
certificate number(s) of such Securities to be so withdrawn, if such Securities are in
certificated form, (IV) the principal amount of the Securities of such Holder to be so
withdrawn, which amount must be $1,000 or an integral multiple thereof and (V) the
principal amount, if any, of the Securities of such Holder that remain subject to the
Purchase Notice delivered by such Holder in accordance with this Section 3.09, which
amount must be $1,000 or an integral multiple thereof;

     (xii) the Conversion Rate and any adjustments to the Conversion Rate that will result
from such Fundamental Change;

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     (xiii) that Securities with respect to which a Purchase Notice is given by a Holder
may be converted pursuant to Article VIII hereof only if such Purchase Notice has been
withdrawn in accordance with this Section 3.09 or if there shall be a Default in the
payment of the Fundamental Change Repurchase Price or in the accrued and unpaid interest,
if any, payable as herein provided upon Repurchase Upon Fundamental Change; and

     (xiv) the CUSIP number or numbers, as the case may be, of the Securities.

     At the Company’s request, the Trustee shall mail such Fundamental Change Notice in the
Company’s name and at the Company’s expense; provided, however, that the form and content of such
Fundamental Change Notice shall be prepared by the Company.

     No failure of the Company to give a Fundamental Change Notice shall limit any Holder’s right
to exercise a Fundamental Change Repurchase Right.

     (C) Subject to the provisions of this Section 3.09, the Company shall pay, or cause to be
paid, the Fundamental Change Repurchase Price, plus accrued and unpaid interest, if any, to, but
excluding, the Fundamental Change Repurchase Date, with respect to each Security as to which the
Fundamental Change Repurchase Right shall have been exercised to the Holder thereof as promptly as
practicable, but in no event later than the later of the Fundamental Change Repurchase Date and the
time such Security is surrendered to the Paying Agent; provided, however, that if such Fundamental
Change Repurchase Date is after a Regular Record Date for the payment of an installment of interest
and on or before the related Interest Payment Date, then the accrued and unpaid interest, if any,
to, but excluding, such Interest Payment Date will be paid on such Interest Payment Date to the
Holder of record of such Security at the close of business on such Regular Record Date, and the
Holder surrendering such Security for repurchase will not be entitled to any such accrued and
unpaid interest unless such Holder was also the Holder of record of such Security at the close of
business on such Regular Record Date.

     (D) Prior to 10:00 A.M., New York City time on a Fundamental Change Repurchase Date, the
Company shall deposit with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust) money, in funds immediately available on the Fundamental Change
Repurchase Date, sufficient to pay the consideration payable as herein provided upon Repurchase
Upon Fundamental Change for all of the Securities that are to be repurchased by the Company on such
Fundamental Change Repurchase Date pursuant to a Repurchase Upon Fundamental Change. The Paying
Agent shall return to the Company, as soon as practicable, any money not required for that purpose.

     (E) Once the Fundamental Change Notice and the Purchase Notice have been duly given in
accordance with this Section 3.09, the Fundamental Change Repurchase Price, plus accrued and unpaid
interest, if any, relating to the Securities to be repurchased pursuant to a Repurchase Upon
Fundamental Change shall, on the Fundamental Change Repurchase Date, become due and payable in
accordance herewith, and, on and after such date (unless there shall be a Default in the payment of
the consideration payable as herein provided upon Repurchase Upon Fundamental Change), except as
otherwise herein provided, such Securities shall cease to

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bear interest, and all rights of the Holders of such Securities shall terminate, other than
the right to receive, in accordance herewith, such consideration.

     (F) Securities with respect to which a Purchase Notice has been duly delivered in accordance
with this Section 3.09 may be converted pursuant to Article VIII hereof, if otherwise convertible
in accordance with Article VIII hereof, only if such Purchase Notice has been withdrawn in
accordance with this Section 3.09 or if there shall be a Default in the payment of the
consideration payable as herein provided upon Repurchase Upon Fundamental Change.

     (G) If any Security shall not be paid upon surrender thereof for Repurchase Upon Fundamental
Change, the principal of, and accrued and unpaid interest on, such Security shall, until paid, bear
interest, payable in cash, at the rate borne by such Security on the principal amount of such
Security, and such Security shall continue to be convertible pursuant to Article VIII hereof.

     (H) Any Security which is to be submitted for Repurchase Upon Fundamental Change only in part
shall be delivered pursuant to this Section 3.09 (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or its attorney duly authorized in writing), and the
Company shall execute, and the Trustee shall authenticate and make available for delivery to the
Holder of such Security without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, of the same tenor and in aggregate principal amount equal
to the portion of such Security not duly submitted for Repurchase Upon Fundamental Change.

     (I) Notwithstanding anything herein to the contrary, no Securities shall be repurchased by the
Company at the option of the Holders upon a Fundamental Change pursuant to this Section 3.09 if the
principal amount of the Securities has been accelerated, and such acceleration has not been
rescinded, on or prior to the Fundamental Change Repurchase 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 Securities). The Paying Agent will promptly return to the
respective Holders thereof any Securities held by it during the continuance of such acceleration.

     (J) Notwithstanding anything herein to the contrary, if the option granted to Holders to
require the repurchase of the Securities upon the occurrence of a Fundamental Change is determined
to constitute a tender offer, the Company shall comply with all applicable tender offer rules under
the Exchange Act, including Rule 13e-4 and Regulation 14E thereunder, and with all other applicable
laws, and will file a Schedule TO or any other schedules required under the Exchange Act or any
other applicable laws.

     (K) As used herein and in the Securities, a “Fundamental Change” shall be deemed to have
occurred upon the occurrence of either a “Change in Control” or a “Termination of Trading.”

     (i) A “Change in Control” shall be deemed to have occurred at such time as:

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     (a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) is or becomes the “beneficial owner” (as such term is used in
Rule 13d-3 under the Exchange Act), directly or indirectly, of fifty percent (50%)
or more of the Company’s Voting Stock; or

     (b) there occurs a sale, transfer, lease, conveyance or other disposition of
all or substantially all of the property or assets of the Company to any “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
including any group acting for the purpose of acquiring, holding, voting or
disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange
Act (such an event, an “Asset Sale Control Change”); or

     (c) the Company consolidates with, or merges with or into, another person or
any person consolidates with, or merges with or into, the Company, unless either:

     (1) the persons that “beneficially owned” (as such term is used in Rule
13d-3 under the Exchange Act), directly or indirectly, the shares of the
Company’s Voting Stock immediately prior to such consolidation or merger,
“beneficially own,” directly or indirectly, immediately after such
consolidation or merger, shares of the surviving or continuing corporation’s
Voting Stock representing at least a majority of the total outstanding
voting power of all outstanding classes of the Voting Stock of the surviving
or continuing corporation in substantially the same proportion as such
ownership immediately prior to such consolidation or merger; or

     (2) at least ninety percent (90%) of the consideration (other than cash
payments for fractional shares or pursuant to statutory appraisal rights) in
such consolidation or merger consists of common stock and any associated
rights traded on a U.S. national securities exchange (or which will be so
traded when issued or exchanged in connection with such consolidation or
merger), and, as a result of such consolidation or merger, the Securities,
upon conversion, will be convertible solely into such common stock and
associated rights (such a consolidation or merger that satisfies the
conditions set forth in this clause (2), a “Listed Stock Business
Combination”); or

     (d) the following persons cease for any reason to constitute a majority of the
Company’s Board:

     (1) individuals who on the Issue Date constituted the Company’s Board;
and

     (2) any new directors whose election to the Company’s Board or whose
nomination for election by the Company’s stockholders was approved by at
least a majority of the directors of the Company then still

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in office either who were directors of the Company on the Issue Date or
whose election or nomination for election was previously so approved; or

     (e) the Company is liquidated or dissolved or the holders of the Company’s
Capital Stock approve any plan or proposal for the liquidation or dissolution of the
Company.

     (ii) A “Termination of Trading” shall be deemed to occur if the Common Stock of the
Company (or other common stock into which the Securities are then convertible) is no
longer listed for trading on a U.S. national securities exchange.

IV. ADDITIONAL COVENANTS

Holders shall have the benefit of the following covenants, in addition to the covenants of the
Company set forth in Article Ten of the Base Indenture:

4.01 SEC Reports.

     (A) The Company shall deliver to the Trustee, no later than the time such report is required
to be filed with the Commission pursuant to the Exchange Act (including, without limitation, to the
extent applicable, any extension permitted by Rule 12b-25 under the Exchange Act), a copy of each
report the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act; provided, however, that the Company shall not be required to deliver to the Trustee
any material for which the Company has sought and received confidential treatment by the
Commission; provided further, each such report will be deemed to be so delivered to the Trustee if
the Company files such report with the Commission through the Commission’s EDGAR database no later
than the time such report is required to be filed with the Commission pursuant to the Exchange Act
(including, without limitation, to the extent applicable, any extension permitted by Rule 12b-25
under the Exchange Act). In the event the Company is at any time no longer subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the Company shall
continue to provide the Trustee and, upon request, any Holder, within the time period that the
Company would have been required to file such reports with the Commission (including, without
limitation, to the extent applicable, any extension permitted by Rule 12b-25 under the Exchange
Act), annual and quarterly consolidated financial statements substantially equivalent to financial
statements that would have been included in reports filed with the Commission if the Company were
subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the Company’s certified
independent public accountants as such would be required in such reports filed with the Commission
and, in each case, together with a management’s discussion and analysis of financial condition and
results of operations which would be so required. The Company also shall comply with the other
provisions of Trust Indenture Act § 314(a). Delivery of such reports, information and documents to
the Trustee is for informational purposes only, and the Trustee’s receipt thereof shall not
constitute constructive notice of any information contained therein or determinable from
information contained therein, including the Company’s compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely exclusively on an Officers’ Certificates).

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4.02 Corporate Existence.

     Subject to Article Eight of the Base Indenture, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence, rights (charter and
statutory) and franchises; provided, however, that the Company shall not be required to preserve
any such right or franchise if the Board shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company.

4.03 Further Instruments and Acts.

     Upon request of the Trustee, the Company shall execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out more effectively the
purposes of this Indenture.

V. DEFAULTS AND REMEDIES

5.01 Events of Default. 

     An “Event of Default” occurs if:

     (i) the Company fails to pay the principal of, or premium, if any, on, any Security
when the same becomes due and payable, whether at maturity, upon Redemption, on an Option
Purchase Date with respect to a Purchase at Holder’s Option, on a Fundamental Change
Repurchase Date with respect to a Repurchase Upon Fundamental Change or otherwise;

     (ii) the Company fails to pay an installment of interest on any Security when due, if
such failure continues for thirty (30) days after the date when due;

     (iii) the Company fails to satisfy its conversion obligations upon exercise of a
Holder’s conversion rights pursuant hereto;

     (iv) the Company fails to timely provide a Fundamental Change Notice or an Option
Purchase Notice, as required by the provisions of this Indenture, or fails to timely
provide any notice pursuant to, and in accordance with, Section 8.15(D) hereof;

     (v) the Company fails to comply with any other term, covenant or agreement set forth
in the Securities or this Indenture and such failure continues for the period, and after
the notice, specified below;

     (vi) the Company or any of its Subsidiaries defaults in the payment when due, after
the expiration of any applicable grace period, of principal of, or premium, if any, or
interest on, Indebtedness for money borrowed, in the aggregate principal amount then
outstanding of ten million dollars ($10,000,000) or more, which default results in the
acceleration of Indebtedness of the Company or any of its Subsidiaries for money borrowed
in such aggregate principal amount or more so that it becomes due and payable prior to the
date on which it would otherwise become due and payable and such

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default is not cured or waived, or such acceleration is not rescinded, within ten
(10) days after written notice to the Company by the Trustee or to the Company and the
Trustee by Holders of at least twenty five percent (25%) in aggregate principal amount of
the Securities then outstanding, each in accordance with this Indenture;

     (vii) the Company or any of its Subsidiaries fails, within thirty (30) days, to pay,
bond or otherwise discharge any final, non-appealable judgments or orders for the payment
of money the total uninsured amount of which for the Company or any of its Subsidiaries
exceeds ten million dollars ($10,000,000), which are not stayed on appeal;

     (viii) the Company or any of its Significant Subsidiaries, pursuant to, or within the
meaning of, any Bankruptcy Law, insolvency law, or other similar law now or hereafter in
effect or otherwise, either:

     (A) commences a voluntary case,

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

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

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

     (ix) a court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:

     (A) is for relief against the Company or any of its Significant Subsidiaries in
an involuntary case or proceeding, or adjudicates the Company or any of its
Significant Subsidiaries insolvent or bankrupt,

     (B) appoints a Custodian of the Company or any of its Significant Subsidiaries
for all or substantially all of the property of the Company or any such Significant
Subsidiary, as the case may be, or

     (C) orders the winding up or liquidation of the Company or any of its
Significant Subsidiaries,

and, in the case of each of the foregoing clauses (A), (B) and (C) of this Section
5.01(ix), the order or decree remains unstayed and in effect for at least sixty (60)
consecutive days.

     The term “Bankruptcy Law” means Title 11, U.S. Code or any similar U.S. Federal or State law
for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.

     A Default under clause (v) above is not an Event of Default until (I) the Trustee notifies the
Company in writing, or the Holders of at least twenty five percent (25%) in aggregate

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principal amount of the Securities then outstanding notify the Company and the Trustee in
writing, of the Default and (II) the Default is not cured within sixty (60) days after receipt of
such notice. Such notice must specify the Default, demand that it be remedied and state that the
notice is a “Notice of Default.” If the Holders of at least twenty five percent (25%) in aggregate
principal amount of the outstanding Securities request the Trustee to give such notice on their
behalf, the Trustee shall do so. When a Default is cured, it ceases to exist for all purposes
under this Indenture.

5.02 Acceleration.

     If an Event of Default (excluding an Event of Default specified in Section 5.01(viii) or (ix)
hereof with respect to the Company (but including an Event of Default specified in Section
5.01(viii) or (ix) hereof solely with respect to a Significant Subsidiary of the Company)) occurs
and is continuing, the Trustee by written notice to the Company, or the Holders of at least twenty
five percent (25%) in aggregate principal amount of the Securities then outstanding by written
notice to the Company and the Trustee, may declare the Securities to be immediately due and payable
in full. Upon such declaration, the principal of, and any accrued and unpaid interest on, all
Securities shall be due and payable immediately. If an Event of Default specified in Section
5.01(viii) or (ix) hereof with respect to the Company (excluding, for purposes of this sentence, an
Event of Default specified in Section 5.01(viii) or (ix) hereof solely with respect to a
Significant Subsidiary of the Company) occurs, the principal of, and accrued and unpaid interest
on, all the Securities shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in
aggregate principal amount of the Securities then outstanding by written notice to the Trustee may
rescind or annul an acceleration and its consequences if (A) the rescission would not conflict with
any order or decree, (B) all existing Events of Default, except the nonpayment of principal or
interest that has become due solely because of the acceleration, have been cured or waived and (C)
all amounts due to the Trustee under Section 607 of Base the Indenture have been paid.

5.03 Waiver of Past Defaults.

     Subject to Section 508 of the Base Indenture and Section 7.02 hereof, the Holders of a
majority in aggregate principal amount of the Securities then outstanding may, by written notice to
the Trustee, waive any past Default or Event of Default and its consequences, other than (A) a
Default or Event of Default in the payment of the principal of, or premium, if any, or interest on,
any Security, or in the payment of the Redemption Price, the Option Purchase Price or the
Fundamental Change Repurchase Price (or accrued and unpaid interest, if any, payable as herein
provided, upon Redemption, Purchase at Holder’s Option or Repurchase Upon Fundamental Change), (B)
a Default or Event of Default arising from a failure by the Company to convert any Securities in
accordance with this Indenture or (C) any Default or Event of Default in respect of any provision
of this Indenture or the Securities which, under Section 7.02 hereof, cannot be modified or amended
without the consent of the Holder of each outstanding Security affected. When a Default or an
Event of Default is waived, it is cured and ceases to exist for all purposes under this Indenture.
This Section 5.03 shall be in lieu of Trust Indenture Act § 316(a)(1)(B), and, as permitted by the
Trust Indenture Act, Trust Indenture Act § 316(a)(1)(B) is hereby expressly excluded from this
Indenture.

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5.04 Limitation on Suits.

     Except as provided in Section 508 of the Base Indenture and Section 5.05 hereof, a
Securityholder may not institute any proceeding under this Indenture, or for the appointment of a
receiver or a trustee, or for any other remedy under this Indenture unless:

     (i) the Holder gives to the Trustee written notice of a continuing Event of Default;

     (ii) the Holders of at least twenty five percent (25%) in aggregate principal amount
of the Securities then outstanding make a written request to the Trustee to pursue the
remedy;

     (iii) such Holder or Holders offer and, if requested, provide to the Trustee
indemnity reasonably satisfactory to the Trustee against any loss, liability or expense to
or of the Trustee in connection with pursuing such remedy;

     (iv) the Trustee does not comply with the request within sixty (60) days after
receipt of such notice, request and offer of indemnity; and

     (v) during such sixty (60) day period, the Holders of a majority in aggregate
principal amount of the Securities then outstanding do not give the Trustee a direction
inconsistent with the request.

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

5.05 Rights of Holders to Receive Payments and to Convert Securities.

     Notwithstanding any other provision of this Indenture, the right of any Holder to bring suit
for the enforcement of (i) the payment of any amounts due on that Holder’s Securities after the
applicable due date and (ii) the right to convert that Holder’s Securities in accordance with the
Indenture shall not be impaired or affected without the consent of the Holder.

5.06 Notice of Defaults.

     If a Default or Event of Default occurs and is continuing as to which the Trustee has received
notice pursuant to the provisions of the Indenture, or as to which a Responsible Officer of the
Trustee shall have actual knowledge, then the Trustee shall mail to each Holder a notice of the
Default or Event of Default within thirty (30) days after receipt of such notice or after acquiring
such knowledge, as applicable, unless such Default or Event of Default has been cured or waived;
provided, however, that, except in the case of a Default or Event of Default in payment of any
amounts due with respect to any Security, the Trustee may withhold such notice if, and so long as
it in good faith determines that, withholding such notice is in the best interests of Holders.

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VI. DISCHARGE OF INDENTURE

6.01 Termination of the Obligations of the Company.

     This Indenture shall cease to be of further effect if (a) either (i) all outstanding
Securities have been delivered to the Trustee for cancellation or (ii) all outstanding Securities
have become due and payable at their scheduled maturity or upon Purchase at Holder’s Option,
Redemption or Repurchase Upon Fundamental Change, and in either case the Company irrevocably
deposits, prior to the applicable due date, with the Trustee or the Paying Agent (if the Paying
Agent is not the Company or any of its Affiliates) cash, and, if applicable as herein provided and
in accordance herewith, such other consideration, sufficient to pay all amounts due and owing on
all outstanding Securities on the Maturity Date or an Option Purchase Date, Redemption Date or
Fundamental Change Repurchase Date, as the case may be; (b) the Company pays to the Trustee all
other sums payable hereunder by the Company; (c) no Default or Event of Default with respect to the
Securities shall exist on the date of such deposit; (d) such deposit will not result in a breach or
violation of, or constitute a Default or Event of Default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it is bound; and (e) the
Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for herein relating to the satisfaction and
discharge of this Indenture have been complied with; provided, however, that the obligations of the
Company to the Trustee under Section 607 of the Base Indenture, the obligations of the Trustee to
any Authenticating Agent under Section 614 of the Base Indenture, the obligations of the Trustee
under Section 402 and the last paragraph of Section 1003 of the Base Indenture, Sections 515, 1001
and 1002 of the Base Indenture and Sections 2.02, 2.03, 2.04, 2.05, 3.05, 3.08 and 3.09 hereof and
Articles VI and VIII hereof shall survive any discharge of this Indenture until such time as the
Securities have been paid in full and there are no Securities outstanding.

VII. SUPPLEMENTAL INDENTURES

7.01 Supplemental Indentures Without Consent of Holders. 

     In addition to the provisions of Section 901 of the Base Indenture, the Company, with the
consent of the Trustee, may amend or supplement this Indenture or the Securities without notice to
or the consent of any Securityholder:

     (i) to comply with Section 801 of the Base Indenture and Section 8.12 hereof;

     (ii) to secure the obligations of the Company in respect of the Securities; and

     (iii) to make provisions with respect to adjustments to the Conversion Rate as
required by this Indenture or to increase the Conversion Rate in accordance with this
Indenture.

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     In addition, the Company and the Trustee may enter into a supplemental indenture without the
consent of Securityholders to conform the Indenture or the Securities to the description thereof
contained in the Prospectus under the caption “Description of notes.”

7.02 Supplemental Indentures With Consent of Holders.

     The Company, with the consent of the Trustee, may amend or supplement this Indenture or the
Securities without notice to any Securityholder but with the written consent of the Holders of at
least a majority in aggregate principal amount of the outstanding Securities. Subject to Section
508 of the Base Indenture and Sections 5.03 and 5.05 hereof, the Holders of a majority in aggregate
principal amount of the outstanding Securities may, by notice to the Trustee, waive compliance by
the Company with any provision of this Indenture or the Securities without notice to any other
Securityholder and waive any past default or event of default and its consequences, except a
default or event of default:

          (a) in the payment of principal of, or premium, if any, or interest on, any Security or in the
payment of the Redemption Price, Purchase Price or Fundamental Change Repurchase Price;

          (b) arising from the Company’s failure to convert any Security in accordance with Article VIII
of this Indenture; or

          (c) in respect of any provision under this Indenture that cannot be modified or amended
without the consent of the Holders of each outstanding Security affected.

     Notwithstanding anything herein to the contrary, without the consent of each Holder of each
outstanding Security affected, no supplemental indenture shall, in addition to the provisions of
Section 902 of the Base Indenture:

     (a) impair the right to institute suit for the enforcement of any payment on,
or with respect to, or of the conversion of, any Security;

     (b) modify, in a manner adverse to Holders, the provisions with respect to the
right of Holders pursuant to Article III hereof to require the Company to purchase
Securities on an Option Purchase Date or to repurchase Securities upon the
occurrence of a Fundamental Change;

     (c) modify the provisions of Section 2.06 hereof in a manner adverse to
Holders;

     (d) adversely affect the right of Holders to convert Securities in accordance
with Article VIII hereof;

     (e) reduce the percentage in aggregate principal amount of outstanding
Securities whose Holders must consent to a modification to or amendment of any
provision of this Indenture or the Securities;

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     (f) modify the provisions of this Indenture with respect to modification and
waiver (including waiver of a Default or an Event of Default), except to increase
the percentage required for modification or waiver or to provide for the consent of
each affected Holder.

     Promptly after an amendment, supplement or waiver under Section 901 of the Base Indenture and
Section 7.01 hereof or Section 902 of the Base Indenture and this Section 7.02 becomes effective,
the Company shall mail, or cause to be mailed, to Securityholders a notice briefly describing such
amendment, supplement or waiver. Any failure of the Company to mail such notice shall not in any
way impair or affect the validity of such amendment, supplement or waiver.

7.03 Revocation and Effect of Consents.

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

     After an amendment, supplement or waiver becomes effective with respect to the Securities, it
shall bind every Holder unless such amendment, supplement or waiver makes a change that requires,
pursuant to Section 7.02 hereof, the consent of each Holder affected. In that case, the amendment,
supplement or waiver shall bind each Holder of a Security who has consented to it and, provided
that notice of such amendment, supplement or waiver is reflected on a Security that evidences the
same debt as the consenting Holder’s Security, every subsequent Holder of a Security or portion of
a Security that evidences the same debt as the consenting Holder’s Security.

     Nothing in this Section 7.03 shall impair the Company’s rights pursuant to Section 901 of the
Base Indenture and Section 7.01 hereof to amend this Indenture or the Securities without the
consent of any Securityholder in the manner set forth in, and permitted by, such Section 901 and
Section 7.01.

7.04 Notation on or Exchange of Securities.

     If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security as directed and prepared by the Company about the changed terms and return
it to the Holder. Alternatively, if the Company so determines, the Company in exchange for the
Security shall issue and the Trustee shall authenticate a new Security that reflects the changed
terms.

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7.05 Trustee Protected.

     The Trustee shall sign any amendment, supplemental indenture or waiver authorized pursuant to
this Article VII; provided, however, that the Trustee need not sign any amendment, supplement or
waiver authorized pursuant to this Article VII that adversely affects the Trustee’s rights, duties,
liabilities or immunities. The Trustee shall be provided with and may conclusively rely upon an
Opinion of Counsel as to legal matters and an Officers’ Certificate as to factual matters that any
supplemental indenture, amendment or waiver is permitted or authorized pursuant to this Indenture.

VIII. CONVERSION

8.01 Conversion Privilege; Restrictive Legends.

     (A) Subject to the provisions of Article III hereof, the Securities shall be convertible into
cash and, if applicable, shares of Common Stock in accordance with this Article VIII and as set
forth below if any of the following conditions are satisfied:

     (i) Conversion Based on Closing Sale Price of Common Stock. Prior to the Maturity
Date or earlier Redemption, Purchase at Holder’s Option or Repurchase Upon Fundamental
Change, the Securities may be surrendered for conversion into cash and, if applicable,
shares of Common Stock during any calendar quarter after the calendar quarter ending June
30, 2010, if the Closing Sale Price for each of twenty (20) or more Trading Days in a
period of thirty (30) consecutive Trading Days ending on the last Trading Day of the
immediately preceding calendar quarter exceeds one hundred and twenty percent (120%) of
the Conversion Price in effect on the last Trading Day of the immediately preceding
calendar quarter, as determined by the Company. Solely for purposes of determining
whether the Securities shall have become convertible pursuant to this Section 8.01(A)(i),
the Company’s Board shall make appropriate adjustments, in its good faith determination,
to the Closing Sale Prices and/or such Conversion Price used to determine whether the
Securities shall have become convertible pursuant to this Section 8.01(A)(i) to account
for any adjustments to the Conversion Rate which shall have become effective, or any
event requiring an adjustment to the Conversion Rate where the Ex Date of such event
occurs, during the period of thirty (30) consecutive Trading Days ending on the last
Trading Day of the immediately preceding calendar quarter.

     (ii) Conversion Upon Satisfaction of Trading Price Condition. Prior to the Maturity
Date or earlier Redemption, Purchase at Holder’s Option or Repurchase Upon Fundamental
Change, the Securities may be surrendered for conversion into cash and, if applicable,
shares of Common Stock during the five (5) consecutive Business Days immediately after
any five (5) consecutive Trading Day period (such five (5) consecutive Trading Day
period, the “Note Measurement Period”) in which the average Trading Price per $1,000
principal amount of the Securities was equal to or less than ninety seven percent (97%)
of the average Conversion Value during the Note Measurement Period (such condition, the
“Trading Price Condition”). The Bid

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Solicitation Agent shall not have any obligation to determine the Trading Price
unless the Company has requested such determination, and the Company shall have no
obligation to make such request unless a Holder of at least one million dollars
($1,000,000) in aggregate principal amount of the Securities provides the Company with
reasonable evidence that the Trading Price per $1,000 principal amount of the Securities
would be equal to or less than ninety seven percent (97%) of the product of the Closing
Sale Price and the Conversion Rate. Upon receipt of such evidence, the Company shall
instruct the Bid Solicitation Agent to determine the Trading Price per $1,000 principal
amount of the Securities for each of the five (5) successive Trading Days immediately
after the Company receives such evidence and on each Trading Day thereafter until the
first Trading Day on which the Trading Price Condition is no longer satisfied. For
purposes of this paragraph, the “Conversion Value” per $1,000 principal amount of
Securities, on a given Trading Day, means the product of the Closing Sale Price on such
Trading Day and the Conversion Rate in effect on such Trading Day.

     (iii) Conversion Based on Redemption. A Security, or portion of a Security, which
has been called for Redemption pursuant to paragraph 6 of the Securities may be
surrendered for conversion into cash and, if applicable, shares of Common Stock;
provided, however, that such Security or portion thereof may be surrendered for
conversion pursuant to this paragraph only until the close of business on the Business
Day immediately preceding the Redemption Date.

     (iv) Conversion Upon Certain Distributions. If the Company takes any action, or
becomes aware of any event, that would require an adjustment to the Conversion Rate
pursuant to Sections 8.06(b), 8.06(c), 8.06(d) (other than by reason of the distribution
of Regular Quarterly Cash Dividends) or 8.06(e) hereof, the Securities may, prior to the
Maturity Date or earlier Redemption, Purchase at Holder’s Option or Repurchase Upon
Fundamental Change, be surrendered for conversion into cash and, if applicable, shares of
Common Stock beginning on the date the Company mails the notice to the Holders as
provided in Section 8.11 hereof (or, if earlier, the date the Company is required to mail
such notice) and at any time thereafter until the close of business on the Business Day
immediately preceding the Ex Date (as defined in Section 8.06(g) hereof) of the
applicable transaction or until the Company announces that such transaction will not take
place.

     (v) Conversion Upon Occurrence of Certain Corporate Transactions. If either:

     (a) a Fundamental Change or a Make-Whole Fundamental Change occurs; or

     (b) the Company is a party to a consolidation, amalgamation, statutory
arrangement, merger or binding share exchange pursuant to which the Common Stock
would be converted into or exchanged for, or would constitute solely the right to
receive, cash, securities or other property,

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then, in each case, the Securities may, prior to the Maturity Date or earlier Redemption,
Purchase at Holder’s Option or Repurchase Upon Fundamental Change, be surrendered for
conversion into cash and, if applicable, shares of Common Stock at any time during the
period that begins on, and includes, the date that is thirty (30) calendar days prior to
the date originally announced by the Company as the anticipated effective date of such
transaction (which anticipated effective date the Company shall disclose, in good faith,
in the written notice and public announcement referred to in Section 8.01(C) hereof) and
ends on, and includes, the date that is thirty (30) calendar days after the actual
effective date of such transaction; provided, however, that if such transaction is a
Make-Whole Fundamental Change, then the Securities may also be surrendered for conversion
into cash and, if applicable, shares of Common Stock at any time during the Make-Whole
Conversion Period applicable to such Make-Whole Fundamental Change; provided, further,
that if such transaction is a Fundamental Change, then the Securities may also be
surrendered for conversion into cash and, if applicable, shares of Common Stock at any
time until, and including, the Fundamental Change Repurchase Date applicable to such
Fundamental Change.

     (vi) Conversion during specified periods. The Securities may be surrendered for
conversion into cash and, if applicable, shares of Common Stock at any time from, and
including, November 1, 2014 to, and including, December 1, 2014 and at any time from, and
including, November 1, 2029 until the close of business of the business day immediately
preceding December 1, 2029 or earlier Redemption, Purchase at Holder’s Option or
Repurchase Upon Fundamental Change.

Notwithstanding anything herein to the contrary, no Security may be converted after the close of
business on the Business Day immediately preceding the Maturity Date.

     (B) The initial Conversion Rate shall be 19.5064 shares of Common Stock per $1,000 principal
amount of Securities. The Conversion Rate shall be subject to adjustment in accordance with
Sections 8.06 through 8.15 hereof.

     (C) Whenever any event described in Section 8.01 hereof shall occur which shall cause the
Securities to become convertible as provided in this Article VIII, the Company shall promptly
deliver written notice of the convertibility of the Securities to the Trustee and each Holder and
shall, as soon practicable, but in no event later than the open of business on the first Business
Day the Securities shall become convertible as provided in this Article VIII as a result of such
event (or, in the case of a Fundamental Change or a Make-Whole Fundamental Change or a
consolidation, amalgamation, statutory arrangement, merger or binding share exchange to which the
Company is a party and pursuant to which the Common Stock would be converted into or exchanged for,
or would constitute solely the right to receive, cash, securities or other property, no later than
the thirtieth (30th) calendar day prior to the date originally announced by the Company as the
anticipated effective date of such transaction), publicly announce, through a reputable national
newswire service, and publish on the Company’s website, that the Securities have become
convertible. Such written notice and public announcement shall include:

     (i) a description of such event;

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     (ii) a description of the periods during which the Securities shall be convertible
as provided in this Article VIII as a result of such event;

     (iii) the anticipated effective date and the Ex Date of such event, if applicable;
and

     (iv) the procedures Holders must follow to convert their notes in accordance with
this Article VIII, including the name and address of the Conversion Agent.

               If the Company shall fail to make such public announcement on or before the open of business
on the first date the Securities shall become convertible as provided in this Article VIII as a
result of such event, then (1) the Securities shall remain convertible for an additional Business
Day for each Business Day, on or after such first date the Securities become convertible, that the
Company shall fail to make such public announcement (an “Extension Period”); and (2) if the event
causing the Securities to become convertible shall be a Make-Whole Fundamental Change, then the
increased Conversion Rate applicable, pursuant to Section 8.15 hereof, to Securities surrendered
within the time periods specified in Section 8.15 hereof shall continue to apply to Securities
surrendered for conversion during any such Extension Period.

     (D) A Holder may convert a portion of the principal amount of a Security if such portion is
$1,000 principal amount or an integral multiple of $1,000 principal amount. Provisions of this
Indenture that apply to conversion of all of a Security also apply to conversion of a portion of
such Security.

8.02 Conversion Procedure and Payment Upon Conversion.

     (A) To convert a Security, a Holder must satisfy the requirements of paragraph 10 of the
Securities, and the Securities must be convertible pursuant to Section 8.01 hereof. Upon
conversion of a Holder’s Security, the Company shall deliver, through the Conversion Agent, the
following to such Holder:

     (i) a principal amount (the “Principal Return”) in cash equal to the sum of the
Daily Principal Returns for each Trading Day in the Cash Settlement Averaging Period for
such conversion; and

     (ii) if the sum of the Daily Net Shares for each Trading Day in the Cash Settlement
Averaging Period for such conversion is greater than or equal to one (1), a certificate
for a number of shares of Common Stock (the “Net Shares”) equal to such sum; provided,
however, that the Company shall not issue fractional shares of Common Stock and shall
instead deliver cash (in addition to any other consideration payable upon such
conversion) in an amount equal to the value of such fraction computed on the basis of the
Volume-Weighted Average Price per share of Common Stock on the last Trading Day in the
applicable Cash Settlement Averaging Period.

             The Company shall deliver such Principal Return and, if applicable, such Net Shares as soon as
practicable following the Business Day (the “Conversion Date”) on which

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such Holder satisfies all the requirements for such conversion specified in paragraph 10 of the
Securities, but in no event more than three (3) Business Days after the last Trading Day in the
Cash Settlement Averaging Period applicable to such conversion; provided, however, that any
Make-Whole Consideration payable pursuant to Section 8.15 hereof shall be delivered by the Company
within the time period specified in Section 8.15 hereof.

     (B) “Cash Settlement Averaging Period” shall mean, with respect to a Security that is tendered
for conversion in accordance with this Article VIII, the twenty (20) consecutive Trading-Day period
that begins on, and includes, the third (3rd) Trading Day after the Conversion Date for such
Security; provided, however, that if such Conversion Date is on or after the twenty third (23rd)
Scheduled Trading Day prior to the Maturity Date, then the Cash Settlement Averaging Period with
respect to such conversion shall be deemed to be the twenty (20) consecutive Trading-Day period
that begins on and includes the twentieth (20th) Scheduled Trading Day prior to the Maturity Date.

          “Daily Principal Return” shall mean, with respect to a Trading Day, the lesser of fifty
dollars ($50.00) and the Daily Conversion Value for such Trading Day.

          “Daily Conversion Value” shall mean, with respect to a Trading Day, one-twentieth (1/20th) of
the product of (i) the Conversion Rate in effect on such Trading Day and (ii) the Volume-Weighted
Average Price per share of Common Stock on such Trading Day.

          “Daily Net Shares” shall mean, with respect to a Trading Day, an amount equal to the
following: (i) if the Daily Conversion Value for such Trading Day is equal to or lesser than fifty
dollars ($50.00), then the Daily Net Shares with respect to such Trading Day shall mean an amount
equal to zero (0); and (ii) if the Daily Conversion Value for such Trading Day exceeds fifty
dollars ($50.00), then the Daily Net Shares with respect to such Trading Day shall mean a fraction
(a) whose numerator is the excess of such Daily Conversion Value over fifty dollars ($50.00) and
(b) whose denominator is the Volume-Weighted Average Price per share of Common Stock on such
Trading Day.

          “Volume-Weighted Average Price” per share of Common Stock on any Trading Day means the
volume-weighted average price per share of the Common Stock on the New York Stock Exchange or, if
the Common Stock is not listed on the New York Stock Exchange, on the principal exchange or
over-the-counter market on which the Common Stock is then listed or traded, from 9:30 a.m. to 4:00
p.m., New York City time, on such Trading Day, as displayed by Bloomberg (or any successor service)
or, if such price is not available, the market value per share of Common Stock on such Trading Day
as determined by an independent nationally recognized investment banking firm retained for this
purpose by the Company.

     (C) With respect to a conversion of a Security pursuant hereto, at and after the close of
business on the last Trading Day (the “Relevant Date”) of the Cash Settlement Averaging Period
applicable to such conversion, the person in whose name any certificate representing any Net Shares
issuable upon such conversion is registered shall be treated as a stockholder of record of the
Company; provided, however, that if any such Net Shares constitute Make-Whole Consideration, then
the Relevant Date with respect to such Net Shares that constitute Make-Whole Consideration shall
instead be deemed to be the later of (1) the last Trading Day of the

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Cash Settlement Averaging Period applicable to such conversion and (2) the Effective Date of
the applicable Make-Whole Fundamental Change. On and after the Conversion Date with respect to a
conversion of a Security pursuant hereto, all rights of the Holder of such Security shall
terminate, other than the right to receive the consideration deliverable upon conversion of such
Security as provided herein. A Holder of a Security is not entitled, as such, to any rights of a
holder of Common Stock until, if such Holder converts such Security and is entitled pursuant hereto
to receive Net Shares in respect of such conversion, the close of business on the Relevant Date or
respective Relevant Dates, as the case may be, with respect to such conversion.

     (D) Except as provided in the Securities or in this Article VIII, no payment or adjustment
will be made for accrued interest on a converted Security or for dividends on any Common Stock
issued on or prior to conversion, and accrued interest will be deemed to be paid by the
consideration paid to the Holder upon conversion. Such accrued interest shall be deemed to be paid
in full rather than cancelled, extinguished or forfeited. If any Holder surrenders a Security for
conversion after the close of business on the record date for the payment of an installment of
interest and prior to the related interest payment date, then, notwithstanding such conversion, the
interest payable with respect to such Security on such interest payment date shall be paid on such
interest payment date to the Holder of record of such Security at the close of business on such
record date; provided, however, that such Security, when surrendered for conversion, must be
accompanied by payment in cash to the Conversion Agent on behalf of the Company of an amount equal
to the interest payable on such interest payment date on the portion so converted; provided
further, however, that such payment to the Conversion Agent described in the immediately preceding
proviso in respect of a Security surrendered for conversion shall not be required with respect to a
Security that (i) is surrendered for conversion after the record date immediately preceding the
Maturity Date, (ii) has been called for Redemption pursuant to Section 3.04 hereof and paragraphs 6
and 7 of the Securities or (iii) is surrendered for conversion after a record date for the payment
of an installment of interest and on or before the related interest payment date, where, pursuant
to Section 3.09 hereof, the Company has specified, with respect to a Fundamental Change, a
Fundamental Change Repurchase Date that is after such record date and on or before such interest
payment date; provided further, that, if the Company shall have, prior to the Conversion Date with
respect to a Security, defaulted in a payment of interest on such Security, then in no event shall
the Holder of such Security who surrenders such Security for conversion be required to pay such
defaulted interest or the interest that shall have accrued on such defaulted interest pursuant to
Section 307 of the Base Indenture or otherwise (it being understood that nothing in this Section
8.02(D) shall affect the Company’s obligations under Section 307 of the Base Indenture).

     (E) If a Holder converts more than one Security at the same time, the number of full shares of
Common Stock issuable upon such conversion, if any, shall be based on the total principal amount of
all Securities converted.

     (F) Upon surrender of a Security that is converted in part, the Trustee shall authenticate for
the Holder a new Security equal in principal amount to the unconverted portion of the Security
surrendered.

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     (G) If the last day on which a Security may be converted is not a Business Day in a
place where a Conversion Agent is located, the Security may be surrendered to that Conversion Agent
on the next succeeding Business Day.

8.03 Fractional Shares.

The Company will not issue fractional shares of Common Stock upon conversion of Securities and
instead will deliver a check in an amount equal to the value of such fraction computed on the basis
of the Closing Sale Price on the Trading Day immediately before the Conversion Date.

8.04 Taxes on Conversion.

     If a Holder converts its Security, the Company shall pay any documentary, stamp or similar
issue or transfer tax or duty due on the issue, if any, of shares of Common Stock upon the
conversion. However, such Holder shall pay any such tax or duty which is due because such shares
are issued in a name other than such Holder’s name. The Conversion Agent may refuse to deliver a
certificate representing the shares of Common Stock to be issued in a name other than such Holder’s
name until the Conversion Agent receives a sum sufficient to pay any tax or duty which will be due
because such shares are to be issued in a name other than such Holder’s name. Nothing herein shall
preclude any tax withholding required by law or regulation.

8.05 Company to Provide Stock.

     The Company shall at all times reserve out of its authorized but unissued Common Stock or
Common Stock held in its treasury enough shares of Common Stock to permit the conversion, in
accordance herewith, of all of the Securities. The shares of Common Stock, if any, due upon
conversion of a Global Security shall be delivered by the Company in accordance with DTC’s
customary practices.

     All shares of Common Stock which may be issued upon conversion of the Securities shall be
validly issued, fully paid and non-assessable and shall be free of preemptive or similar rights and
free of any lien or adverse claim.

     The Company shall comply with all securities laws regulating the offer and delivery of shares
of Common Stock upon conversion of Securities and shall list such shares on each national
securities exchange or automated quotation system on which the Common Stock is listed.

8.06 Adjustment of Conversion Rate.

     The Conversion Rate shall be subject to adjustment from time to time as follows:

     (a) In case the Company shall (1) pay a dividend in shares of Common Stock to
all holders of Common Stock, (2) make a distribution in shares of Common Stock to
all holders of Common Stock, (3) subdivide the outstanding shares of Common Stock
into a greater number of shares of Common Stock or (4) combine the outstanding
shares of Common Stock into a smaller number of shares of Common Stock, the
Conversion Rate shall be adjusted by multiplying the

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Conversion Rate in effect immediately prior to close of business on the Ex Date
or effective date, as applicable, of such dividend, distribution, subdivision or
combination, by the number of shares of Common Stock that a person who owns only one
share of Common Stock immediately before such Ex Date or effective date, as
applicable, of such dividend, distribution, subdivision or combination and who is
entitled to participate in such dividend, distribution, subdivision or combination
would own immediately after giving effect to such dividend, distribution,
subdivision or combination (without giving effect to any arrangement pursuant to
such dividend, distribution, subdivision or combination not to issue fractional
shares of Common Stock). Any adjustment made pursuant to this Section 8.06(a)
hereof shall become effective immediately after such Ex Date, in the case of a
dividend or distribution, and shall become effective immediately after such
effective date, in the case of a subdivision or combination.

     (b) In case the Company shall issue rights or warrants to all or substantially
all holders of Common Stock, entitling them, for a period expiring not more than
sixty (60) days immediately following the record date for the determination of
holders of Common Stock entitled to receive such rights or warrants, to subscribe
for or purchase shares of Common Stock (or securities convertible into or
exchangeable or exercisable for Common Stock), at a price per share (or having a
conversion, exchange or exercise price per share) that is less than the current
market price (as determined pursuant to Section 8.06(g) hereof) per share of Common
Stock on the record date for the determination of holders of Common Stock entitled
to receive such rights or warrants, the Conversion Rate shall be increased by
multiplying the Conversion Rate in effect immediately prior to the Ex Date
corresponding to such record date by a fraction of which (A) the numerator shall be
the sum of (I) the number of shares of Common Stock outstanding immediately prior to
the open of business on such Ex Date and (II) the aggregate number of shares (the
“Underlying Shares”) of Common Stock underlying all such issued rights or warrants
(whether by exercise, conversion, exchange or otherwise), and (B) the denominator
shall be the sum of (I) number of shares of Common Stock outstanding immediately
prior to the open of business on such Ex Date and (II) the number of shares of
Common Stock which the aggregate exercise, conversion, exchange or other price at
which the Underlying Shares may be subscribed for or purchased pursuant to such
rights or warrants would purchase at such current market price per share of Common
Stock; provided, however, no adjustment shall be made pursuant to this Section
8.06(b) solely by reason of a distribution of rights pursuant to a stockholders’
rights plan, provided the Company has complied with the provisions of Section 8.14
hereof with respect to such stockholders’ rights plan and distribution. Such
increase shall become effective immediately prior to the open of business on such Ex
Date. In no event shall the Conversion Rate be decreased pursuant to this Section
8.06(b).

     (c) Except as set forth in the immediately following paragraph, in case the
Company shall dividend or distribute to all or substantially all holders of Common
Stock shares of Capital Stock of the Company or any existing or future Subsidiary
(other than Common Stock), evidences of Indebtedness or other assets

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(other than dividends or distributions requiring an adjustment to the
Conversion Rate in accordance with Sections 8.06(d) or 8.06(e) hereof), or shall
dividend or distribute to all or substantially all holders of Common Stock rights or
warrants to subscribe for or purchase securities (other than dividends or
distributions of rights or warrants requiring an adjustment to the Conversion Rate
in accordance with Section 8.06(b) hereof), then in each such case the Conversion
Rate shall be increased by multiplying the Conversion Rate in effect immediately
prior to the open of business on the Ex Date corresponding to the record date for
the determination of stockholders entitled to such dividend or distribution by a
fraction of which (A) the numerator shall be the current market price per share of
Common Stock (as determined pursuant to Section 8.06(g) hereof) on such record date
and (B) the denominator shall be an amount equal to (I) such current market price
per share of Common Stock less (II) the fair market value (as determined in good
faith by the Board, whose determination shall be conclusive and described in a Board
Resolution), on such Ex Date, of the portion of the shares of Capital Stock,
evidences of Indebtedness, assets, rights and warrants to be dividended or
distributed applicable to one share of Common Stock, such increase to become
effective immediately prior to the open of business on such Ex Date; provided
however, that if such denominator is equal to or less than zero, then, in lieu of
the foregoing adjustment to the Conversion Rate, adequate provision shall be made so
that each Holder shall have the right to receive upon conversion of its Securities,
in addition to any consideration otherwise payable as herein provided upon such
conversion, an amount of shares of Capital Stock, evidences of Indebtedness, assets,
rights and/or warrants that such Holder would have received had such Holder
converted all of its Securities on such record date. Notwithstanding the foregoing,
in the event that the Company shall distribute rights or warrants (other than
distributions of rights or warrants requiring an adjustment to the Conversion Rate
in accordance with Section 8.06(b) hereof) (collectively, “Rights”) pro rata to
holders of Common Stock, the Company may, in lieu of making any adjustment pursuant
to this Section 8.06(c), make proper provision so that each Holder of a Security who
converts such Security (or any portion thereof) on or after the record date for such
distribution and prior to the expiration or redemption of the Rights shall be
entitled to receive upon such conversion, in addition to the shares of Common Stock
issuable (and cash, if any, payable) upon such conversion (the “Conversion Shares”),
a number of Rights to be determined as follows: (i) if such conversion occurs on or
prior to the date for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the “Distribution Date”), the same number of
Rights to which a holder of a number of shares of Common Stock equal to the number
of shares of Conversion Shares would be entitled at the time of such conversion in
accordance with the terms and provisions of and applicable to the Rights; and (ii)
if such conversion occurs after the Distribution Date, the same number of Rights to
which a holder of the number of shares of Common Stock into which the principal
amount of the Security so converted was convertible immediately prior to the
Distribution Date would have been entitled on the Distribution Date in accordance
with the terms and provisions of and applicable to the Rights. Any distribution of
rights or warrants pursuant to a

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stockholders’ rights plan complying with the requirements set forth in the
preceding sentence of this paragraph and with Section 8.14 hereof shall not
constitute a distribution of rights or warrants pursuant to this Section 8.06(c).
In no event shall the Conversion Rate be decreased pursuant to this Section 8.06(c).

Notwithstanding anything to the contrary in this Section 8.06(c), if, in a
distribution requiring an adjustment to the Conversion Rate pursuant to the
immediately preceding paragraph, the property distributed by the Company to all
Holders of Common Stock consists solely of Capital Stock, or similar equity
interests in, a Subsidiary or other business unit of the Company, which Capital
Stock or interests are, or will be upon completion of such distribution, listed on a
national securities exchange or quoted on an automated quotation system and closing
sale prices for such Capital Stock or interests are readily available (a
“Spin-Off”), then in lieu of adjusting the Conversion Rate in accordance with the
immediately preceding paragraph, the Conversion Rate shall be increased (subject to
the other terms of this Indenture) by multiplying the Conversion Rate in effect
immediately prior to the opening of business on the thirteenth (13th) Trading Day
following the record date for such distribution by a fraction (I) whose numerator is
the sum of (A) the average of the Closing Sale Prices per share of Common Stock for
the ten (10) consecutive Trading Days commencing on, and including, the third (3rd)
Trading Day after the record date for such distribution and (B) the product of (i)
the average of the Closing Sale Prices per share or unit, as applicable, of such
Capital Stock or interests (determined as if such shares or units were shares of
Common Stock for purposes of the definition of “Closing Sale Price”) for the ten
(10) consecutive Trading Days commencing on, and including, the third (3rd) Trading
Day after the record date for such distribution and (ii) number of shares or units,
as applicable, of such Capital Stock or interests distributed per share of Common
Stock; and (II) whose denominator is the average of the Closing Sale Prices per
share of Common Stock for the ten (10) consecutive Trading Days commencing on, and
including, the third (3rd) Trading Day after the record date for such distribution.
The average Closing Sale Prices referred to in the immediately preceding sentence
shall be subject to appropriate adjustments, in the Company’s good faith
determination, to account for other distributions, stock splits and combinations,
stock dividends, reclassifications and similar events. Each adjustment to the
Conversion Rate made pursuant to this paragraph shall become effective immediately
after the open of business on the thirteenth (13th) Trading Day following the record
date for such distribution.

Rights or warrants distributed by the Company to all holders of Common Stock
entitling the holders thereof 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 (“Trigger
Event”): (i) are deemed to be transferred with such shares of Common Stock; (ii) are
not exercisable; and (iii) are also issued in respect of future issuances of Common
Stock, shall be deemed not to have been distributed for purposes of this Section
8.06 (and no adjustment to the Conversion Rate under this Section 8.06 will be
required) until the occurrence of the earliest Trigger Event, whereupon

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such rights, options and 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 8.06(c). In no event shall the Conversion Rate be decreased
pursuant to this Section 8.06(c).

     (d) In case the Company shall, by dividend or otherwise, at any time make a
distribution of cash (excluding any cash that is distributed as part of a
distribution requiring a Conversion Rate adjustment pursuant to Section 8.06(e)
hereof and excluding Regular Quarterly Cash Dividends, to the extent the aggregate
amount of such Regular Quarterly Cash Dividends in any quarterly period does not
exceed sixty-eight cents ($0.68) per share of Common Stock (the “Reference Dividend
Amount”)) to all or substantially all holders of Common Stock, the Conversion Rate
shall be increased based on the following formula:

CR1
= CR0 x MP0 / (MP0- C)

where

CR0 = the conversion rate in effect immediately prior to the ex-dividend
date for such distribution;

CR1 = the new conversion rate immediately on and after the ex-dividend date
for such distribution;

MP0 = the current market price per share of Common Stock (as determined
pursuant to Section 8.06(g) hereof) on the record date for the distribution;
and

C = the amount in cash per share that the Company distributes to holders of
the Common Stock that exceeds the Reference Dividend Amount (“Excess
Amount”);

The Reference Dividend Amount shall be subject to adjustment in a manner that is
inversely proportional to adjustments to the Conversion Rate; provided, however,
that no adjustments shall be made to the Reference Dividend Amount for any
adjustment made to the Conversion Rate pursuant to this Section 8.06(d).

Notwithstanding anything to the contrary in this Section 8.06(d), if an adjustment
to the Conversion Rate is required to be made as a result of a distribution that is
not a Regular Quarterly Cash Dividend either in whole or in part, the Reference
Dividend Amount shall be deemed to be zero for purposes of determining the
adjustment to the Conversion Rate as a result of such distribution.

The Conversion Rate shall not be adjusted pursuant to this Section 8.06(d) to the
extent, and only to the extent, such adjustment would cause the Conversion Price to
be less than the par value of the Common Stock; provided further that, if the
denominator of such fraction shall be equal to or less than zero, the Conversion

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Rate shall be instead adjusted so that the Conversion Price is equal to the par
value of the Common Stock.

In no event shall the Conversion Rate be decreased pursuant to this Section 8.06(d).
An adjustment to the Conversion Rate pursuant to this Section 8.06(d) shall become
effective immediately prior to the open of business on the Ex Date for the
distribution. To the extent a Regular Quarterly Cash Dividend is paid in multiple
portions and the total of such portions exceeds $0.68, then the Conversion Rate in
respect of such Regular Quarterly Cash Dividend shall first be adjusted under this
Section 8.06(d) in respect of the first portion as a result of which such Regular
Quarterly Cash Dividend exceeds $0.68 (with the Excess Amount for purposes of such
adjustment being the amount by which such portion, when aggregated with all
previously paid portions in respect of such Regular Quarterly Cash Dividend, if any,
exceeds $0.68), and the Conversion Rate shall be further adjusted under this Section
8.06(d) in respect of each subsequent payment, if any, constituting a portion of
such Regular Quarterly Cash Dividend (with the amount of each such subsequent
portion being treated as the Excess Amount for purposes of determining the
adjustment in respect of such portion). Each such adjustment shall become effective
immediately prior to the open of business on the Ex Date in respect of the payment
resulting in such adjustment.

     (e) In case the Company or any Subsidiary shall distribute cash or other
consideration in respect of a tender offer or exchange offer made by the Company or
any Subsidiary for all or any portion of the Common Stock where the sum of the
aggregate amount of such cash distributed and the aggregate fair market value (as
determined in good faith by the Company), as of the Expiration Date (as defined
below), of such other consideration distributed (such sum, the “Aggregate Amount”)
expressed as an amount per share of Common Stock validly tendered or exchanged, and
not withdrawn, pursuant to such tender offer or exchange offer as of the Expiration
Time (as defined below) (such tendered or exchanged shares of Common Stock, the
“Purchased Shares”) exceeds the Closing Sale Price per share of Common Stock on the
first Trading Day after the last date (such last date, the “Expiration Date”) on
which tenders or exchanges could have been made pursuant to such tender offer or
exchange offer (as the same may be amended through the Expiration Date), then the
Conversion Rate shall be increased by multiplying the Conversion Rate in effect
immediately prior to the close of business on first Trading Day after the Expiration
Date by a fraction (A) whose numerator is equal to the sum of (I) the Aggregate
Amount and (II) the product of (a) such Closing Sale Price per share of Common Stock
and (b) an amount equal to (i) the number of shares of Common Stock outstanding as
of the last time (the “Expiration Time”) at which tenders or exchanges could have
been made pursuant to such tender offer or exchange offer (including all Purchased
Shares) less (ii) the Purchased Shares and (B) whose denominator is equal to the
product of (I) the number of shares of Common Stock outstanding as of the Expiration
Time (including all Purchased Shares) and (II) such Closing Sale Price per share of
Common Stock.

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          An increase, if any, to the Conversion Rate pursuant to this Section 8.06(e)
shall become effective immediately prior to the opening of business on the Business
Day following the first Trading Day after the Expiration Date. In the event that
the Company or a Subsidiary is obligated to purchase shares of Common Stock pursuant
to any such tender offer 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, then the Conversion Rate shall again be adjusted to be
the Conversion Rate which would then be in effect if such tender offer or exchange
offer had not been made. If the application of this Section 8.06(e) to any tender
offer or exchange offer would result in a decrease in the Conversion Rate, no
adjustment shall be made for such tender offer or exchange offer under this Section
8.06(e).

     (f) In addition to the foregoing adjustments in subsections (a), (b), (c), (d)
and (e) above, the Company, from time to time and to the extent permitted by law and
the continued listing requirements of the New York Stock Exchange, may increase the
Conversion Rate by any amount for a period of at least twenty (20) days or such
longer period as may be permitted or required by law, if the Board has made a
determination, which determination shall be conclusive, that such increase would be
in the best interests of the Company. Such Conversion Rate increase shall be
irrevocable during such period. The Company shall give written notice to the
Trustee and cause notice of such increase to be mailed to each Holder of Securities
at such Holder’s address as the same appears on the registry books of the Registrar,
at least fifteen (15) days prior to the date on which such increase commences.

     (g) For the purpose of any computation under subsections (a), (b), (c) or (d)
above of this Section 8.06, the “current market price” per share of Common Stock on
any date shall be deemed to be the average of the Closing Sale Prices for the ten
(10) consecutive Trading Days ending on, but excluding, the earlier of such date and
the Ex Date with respect to the issuance or distribution requiring such computation;
provided, however, that such current market price per share of Common Stock shall be
appropriately adjusted by the Company, in its good faith determination, to account
for any adjustment, pursuant hereto, to the Conversion Rate that shall become
effective, or any event requiring, pursuant hereto, an adjustment to the Conversion
Rate where the Ex Date of such event occurs, at any time during the period that
begins on, and includes, the first day of such ten (10) consecutive Trading Days and
ends on, and includes, the date when the adjustment to the Conversion Rate on
account of the event requiring the computation of such current market price becomes
effective.

          The term “Ex Date,” (i) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades the regular way on the
relevant exchange or in the relevant market from which the Closing Sale Price was
obtained without the right to receive such issuance or distribution, (ii) when used
with respect to any subdivision or combination of shares of Common Stock, means the
first date on which the Common Stock trades the

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regular way on such exchange or in such market after the time at which such
subdivision or combination becomes effective, and (iii) when used with respect to
any tender offer or exchange offer means the first date on which the Common Stock
trades the regular way on such exchange or in such market after the expiration time
of such tender offer or exchange offer (as it may be amended or extended). For
purposes of determining the Ex Date with respect to an issuance or distribution
under this Indenture, the Company may conclusively assume (and such assumption shall
be binding upon the Holders) that purchases and sales of the relevant security with
respect to which such issuance or distribution is being made will settle based on
the customary settlement cycle for purchases or sales of such security.

     Unless the context requires otherwise, the term “record date” means, with
respect to any dividend, distribution or other transaction or event in which the
holders of shares of Common Stock have the right to receive any cash, securities or
other property or in which the shares of 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 stockholders entitled to receive such
cash, securities or other property (whether such date is fixed by the Board or by
statute, contract or otherwise).

8.07 No Adjustment.

     Notwithstanding anything herein or in the Securities to the contrary, in no event shall the
Conversion Rate be adjusted pursuant to this Indenture or the Securities to the extent such
adjustment shall reduce the Conversion Price to an amount that is less than the par value per share
of Common Stock.

     No adjustment in the Conversion Rate pursuant to Section 8.06 hereof shall be required until
cumulative adjustments amount to one percent (1%) or more of the Conversion Rate as last adjusted
(or, if never adjusted, the initial Conversion Rate); provided, however, that any adjustments to
the Conversion Rate which by reason of this Section 8.07 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment to the Conversion Rate;
provided further, that at the end of each fiscal year of the Company, beginning with the fiscal
year ending on December 31, 2010, any adjustments to the Conversion Rate that have been, and at
such time remain, deferred pursuant to this Section 8.07 shall be given effect, and such
adjustments, if any, shall no longer be carried forward and taken into account in any subsequent
adjustment to the Conversion Rate; provided further, that if the Company shall mail a notice of
Redemption pursuant to Section 3.04 hereof, or if a Fundamental Change or Make-Whole Fundamental
Change occurs, or if the Securities shall become convertible pursuant to Section 8.01(A)(iv) hereof
or Section 8.01(A)(v) hereof, then, in each case, any adjustments to the Conversion Rate that have
been, and at such time remain, deferred pursuant to this Section 8.07 shall be given effect, and
such adjustments, if any, shall no longer be carried forward and taken into account in any
subsequent adjustment to the Conversion Rate. All calculations under this Article VIII shall be
made to the nearest cent or to the nearest one-millionth of a share, as the case may be.

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     Upon the expiration, termination or redemption of any rights, options or warrants issued by
the Company, and requiring an adjustment to the Conversion Rate in accordance with Section 8.06
hereof, without the exercise of such rights, options or warrants, the Conversion Rate then in
effect shall be adjusted immediately to the Conversion Rate which would have been in effect at the
time of such expiration, termination or redemption had such rights, options or warrants, to the
extent outstanding immediately prior to such expiration, termination or redemption, never been
issued. Notwithstanding anything herein or in the Securities to the contrary, if any rights,
options or warrants issued by the Company, and requiring an adjustment to the Conversion Rate in
accordance with Section 8.06 hereof, are only exercisable upon the occurrence of certain triggering
events, then the Conversion Rate will not be adjusted as provided in Section 8.06 until the
earliest of such triggering event occurs.

     If any dividend or distribution is declared and the Conversion Rate is adjusted pursuant to
Section 8.06 hereof on account of such dividend or distribution, but such dividend or distribution
is thereafter not paid or made, the Conversion Rate shall again be adjusted to the Conversion Rate
which would then be in effect had such dividend or distribution not been declared.

     No adjustment to the Conversion Rate need be made pursuant to Section 8.06 hereof for a
transaction if each Holder is to participate in the transaction, at substantially the same time
that holders of Common Stock participate in such transaction, without conversion as if such Holder
held a number of shares of Common Stock equal to a fraction whose numerator is the product of the
Conversion Rate in effect at the Ex Date or effective date, as applicable, of the transaction
(without giving effect to any adjustment pursuant to Section 8.06 hereof on account of such
transaction) and the aggregate principal amount of Securities held by such Holder and whose
denominator is one thousand (1,000).

8.08 Other Adjustments.

     In the event that, as a result of an adjustment made pursuant to Section 8.06 hereof, the
Holder of any Security thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock other than shares of Common Stock, thereafter the Conversion Rate of such
other shares so receivable upon conversion of any Security shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect
to Common Stock contained in this Article VIII.

8.09 Adjustments for Tax Purposes.

     Except as prohibited by law the Company may (but is not obligated to) make such increases in
the Conversion Rate, in addition to those required by Section 8.06 hereof, as it determines to be
advisable in order that any stock dividend, subdivision of shares, distribution of rights to
purchase stock or securities or distribution of securities convertible into or exchangeable for
stock made by the Company or to its stockholders will not be taxable to the recipients thereof or
in order to diminish any such taxation.

8.10 Notice of Adjustment.

     Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders at the
addresses appearing on the Registrar’s books a notice of the adjustment and file with the

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Trustee an Officers’ Certificate briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence of the correctness of such
adjustment.

8.11 Notice of Certain Transactions.

     In the event that:

     (1) the Company takes any action, or becomes aware of any event, which
would require an adjustment in the Conversion Rate,

     (2) the Company takes any action that would require a supplemental
indenture pursuant to Section 8.12 hereof, or

     (3) there is a dissolution or liquidation of the Company,

the Company shall mail to Holders at the addresses appearing on the Registrar’s books and the
Trustee a written notice stating the proposed record, effective or expiration date, as the case may
be, of any transaction referred to in clause (1), (2) or (3) of this Section 8.11. The Company
shall mail such notice at least twenty (20) calendar days before such date; however, failure to
mail such notice or any defect therein shall not affect the validity of any transaction referred to
in clause (1), (2) or (3) of this Section 8.11.

8.12 Effect of Reclassifications, Consolidations, Amalgamations, Statutory
Arrangements, Mergers, Binding Share Exchanges or Asset Sales on Conversion Privilege.

     If any of the following shall occur, namely: (i) any reclassification or change in the Common
Stock issuable upon conversion of Securities (other than a change only in par value, or from par
value to no par value, or from no par value to par value, or as a result of a subdivision or
combination of Common Stock), (ii) any consolidation, amalgamation, statutory arrangement, merger
or binding share exchange to which the Company is a party other than a merger in which the Company
is the continuing Person and which does not result in any reclassification of, or change (other
than a change in name, or par value, or from par value to no par value, or from no par value to par
value or as a result of a subdivision or combination) in, the Common Stock or (iii) any sale,
transfer, lease, conveyance or other disposition of all or substantially all of the property or
assets of the Company, in each case pursuant to which the Common Stock would be converted into or
exchanged for, or would constitute solely the right to receive, cash, securities or other property,
then the Company or such successor or purchasing Person, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee
providing that, at and after the effective time of such reclassification, change, consolidation,
amalgamation, statutory arrangement, merger, binding share exchange, sale, transfer, lease,
conveyance or disposition, the Holder of each Security then outstanding shall have the right to
convert such Security (if otherwise convertible pursuant to this Article VIII) into the kind and
amount of cash, securities or other property (collectively, “Reference Property”) receivable upon
such reclassification, change, consolidation, amalgamation, statutory arrangement, merger, binding
share exchange, sale, transfer, lease, conveyance or disposition by a holder of a number of shares
of Common Stock equal to a fraction whose denominator is one

-46-

 

thousand (1,000) and whose numerator is the product of the principal amount of such Security
and the Conversion Rate in effect immediately prior to such reclassification, change,
consolidation, amalgamation, statutory arrangement, merger, binding share exchange, sale, transfer,
lease, conveyance or disposition (assuming, if holders of Common Stock shall have the opportunity
to elect the form of consideration to receive pursuant to such reclassification, change,
consolidation, amalgamation, statutory arrangement, merger, binding share exchange, sale, transfer,
lease, conveyance or disposition, that the Collective Election shall have been made with respect to
such election); provided, however, that at and after the effective time of such reclassification,
change, consolidation, amalgamation, statutory arrangement, merger, binding share exchange, sale,
transfer, lease, conveyance or disposition, the Principal Return payable hereunder upon conversion
of such Security shall continue to be payable in cash and the Daily Conversion Value and Daily Net
Shares shall be calculated based on the value of the Reference Property instead of the
Volume-Weighted Average Price per share of Common Stock; provided further, that if any portion of
such Reference Property consists of common stock listed on a national securities exchange or quoted
on an automated quotation system, then the “value” of such portion of such Reference Property shall
be determined on the basis of the Volume Weighted Average Price of such common stock (determined as
if such common stock were Common Stock for purposes of the definition of “Volume Weighted Average
Price” and as if the issuer of such common stock were the Company for purposes of the definition of
“Trading Day”).

     If holders of Common Stock shall have the opportunity to elect the form of consideration to
receive pursuant to such reclassification, change, consolidation, amalgamation, statutory
arrangement, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, then
the Company shall make adequate provision to give Holders, treated as a single class, a reasonable
opportunity to elect (the “Collective Election”) the form of such consideration for purposes of
determining the composition of the Reference Property referred to in the immediately preceding
sentence, and once such election is made, such election shall apply to all Holders after the
effective time of such reclassification, change, consolidation, amalgamation, statutory
arrangement, merger, binding share exchange, sale, transfer, lease, conveyance or disposition.
Such Collective Election shall be determined based on the weighted average of the elections made by
Holders of the Securities who participate in such determination, shall be subject to any
limitations to which all of the holders of Common Stock are subject, such as pro-rata reductions
applicable to any portion of the consideration payable in such reclassification, change,
consolidation, amalgamation, statutory arrangement, merger, binding share exchange, sale, transfer,
lease, conveyance or disposition, and shall be conducted in such a manner as to be completed by the
close of business on the actual effective date of such reclassification, change, consolidation,
amalgamation, statutory arrangement, merger, binding share exchange, sale, transfer, lease,
conveyance or disposition. The Company shall provide notice of the opportunity to determine the
form of such consideration, as well as notice of the determination made by Holders, by issuing a
press release and providing a copy of such notice to the Trustee. The Company shall not become a
party to any reclassification, change, consolidation, amalgamation, statutory arrangement, merger,
binding share exchange, sale, transfer, lease, conveyance or disposition, the terms of which are
inconsistent with this paragraph and the immediately preceding paragraph.

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     The supplemental indenture referred to in the first sentence of this Section 8.12 shall
provide for adjustments of the Conversion Rate which shall be as nearly equivalent as may be
practicable to the adjustments of the Conversion Rate provided for in this Article VIII. The
foregoing, however, shall not in any way affect the right a Holder of a Security may otherwise
have, pursuant to Section 8.06(b) hereof or Section 8.14 hereof, to receive rights or warrants upon
conversion of a Security. If, in the case of any such consolidation, amalgamation, statutory
arrangement, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, the
stock or other securities and property (including cash) receivable thereupon by a holder of Common
Stock includes shares of stock or other securities and property of a Person other than the
successor or purchasing Person, as the case may be, in such consolidation, amalgamation, statutory
arrangement, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, then
such supplemental indenture shall also be executed by such other Person and shall contain such
additional provisions to protect the interests of the Holders of the Securities as the Board in
good faith shall reasonably determine necessary by reason of the foregoing (which determination
shall be described in a Board Resolution). The provisions of this Section 8.12 shall similarly
apply to successive consolidations, amalgamations, statutory arrangements, mergers, binding share
exchanges, sales, transfers, leases, conveyances or dispositions.

     In the event the Company shall execute a supplemental indenture pursuant to this Section 8.12,
the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the
reasons therefor, the kind or amount of shares of stock or securities or property (including cash)
receivable by Holders of the Securities upon the conversion of their Securities after any such
reclassification, change, consolidation, amalgamation, statutory arrangement, merger, binding share
exchange, sale, transfer, lease, conveyance or disposition and any adjustment to be made with
respect thereto.

8.13 Trustee’s Disclaimer.

     The Trustee has no duty to determine when an adjustment under this Article VIII should be
made, how it should be made or what such adjustment should be, but may accept as conclusive
evidence of the correctness of any such adjustment, and shall be protected in relying upon, the
Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee
pursuant to Section 8.10 hereof. The Trustee makes no representation as to the validity or value
of any securities or assets issued upon conversion of Securities, and the Trustee shall not be
responsible for the failure by the Company to comply with any provisions of this Article VIII.

     The Trustee shall not be under any responsibility to determine the correctness of any
provisions contained in any supplemental indenture executed pursuant to Section 8.12 hereof, but
may accept as conclusive evidence of the correctness thereof, and shall be protected in relying
upon, the Officers’ Certificate with respect thereto which the Company is obligated to file with
the Trustee pursuant to Section 8.12 hereof.

8.14 Rights Distributions Pursuant to Stockholders’ Rights Plans.

     Upon conversion of any Security or a portion thereof, the Company shall make provision such
that the Holder thereof shall, to the extent such Holder is to receive shares of Common

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Stock upon such conversion, receive, in addition to, and concurrently with the delivery of,
the consideration otherwise payable hereunder upon such conversion, the rights described in any
stockholders’ rights plan(s) of the Company then in effect; provided, however, that no such
provision need be made if the rights have been separated from the Common Stock prior to the time of
such conversion, but the provisions of Section 8.06(c) hereof shall apply.

8.15 Increased Conversion Rate Applicable to Certain Notes Surrendered in Connection
With Make-Whole Fundamental Changes.

     (A) Notwithstanding anything herein to the contrary, the Conversion Rate applicable to each
Security that is surrendered for conversion, in accordance with this Article VIII, at any time
during the period (the “Make-Whole Conversion Period”) that begins on, and includes, the effective
date of a Make-Whole Fundamental Change and ends on, and includes, the date that is forty (40)
Business Days after the actual effective date of such Make-Whole Fundamental Change (or, if such
Make-Whole Fundamental Change also constitutes a Fundamental Change, the Fundamental Change
Repurchase Date applicable to such Fundamental Change) shall be increased to an amount equal to the
Conversion Rate that would, but for this Section 8.15, otherwise apply to such Security pursuant to
this Article VIII, plus an amount equal to the Make-Whole Applicable Increase; provided, however,
that such increase to the Conversion Rate shall not apply if such Make-Whole Fundamental Change is
announced by the Company but shall not be consummated.

          The additional consideration payable hereunder on account of any Make-Whole Applicable
Increase with respect to a Security surrendered for conversion is herein referred to as the
“Make-Whole Consideration.” For avoidance of doubt, the amount of the Make-Whole Consideration due
upon the conversion of a Security shall be based on the Cash Settlement Averaging Period and
Volume-Weighted Average Prices applicable to such conversion pursuant to Section 8.02 hereof.

          The Make-Whole Consideration due upon a conversion of a Security by a Holder shall be paid as
soon as practicable, but in no event later than third Business Day after the later of (1) the date
such Holder surrenders such Security for such conversion; (2) the last Trading Day in the Cash
Settlement Averaging Period applicable to such conversion; and (3) the Effective Date of the
applicable Make-Whole Fundamental Change.

     (B) As used herein, “Make-Whole Applicable Increase” shall mean, with respect to a Make-Whole
Fundamental Change, the amount, set forth in the following table, which corresponds to the
effective date of such Make-Whole Fundamental Change (the “Effective Date”) and the Applicable
Price of such Make-Whole Fundamental Change:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number of additional shares (per $1,000 principal amount of notes)	 
	 	 	Effective Date	 
	 	 	March 15,	 	 	December 1,	 	 	December 1,	 	 	December	 	 	December	 	 	December 1,	 
	Applicable Price	 	2010	 	 	2010	 	 	2011	 	 	1, 2012	 	 	1, 2013	 	 	2014	 
	$43.63
	 	 	3.4136	 	 	 	3.4136	 	 	 	3.4136	 	 	 	3.4136	 	 	 	3.4136	 	 	 	3.4136	 
	$45.00
	 	 	3.4136	 	 	 	3.4020	 	 	 	3.2095	 	 	 	3.0997	 	 	 	2.9517	 	 	 	2.7158	 
	$50.00
	 	 	2.3196	 	 	 	2.1759	 	 	 	1.9871	 	 	 	1.8338	 	 	 	1.5819	 	 	 	0.4936	 
	$55.00
	 	 	1.4613	 	 	 	1.3443	 	 	 	1.1766	 	 	 	1.0208	 	 	 	0.7619	 	 	 	0.0000	 

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	Number of additional shares (per $1,000 principal amount of notes)	 
	 	 	Effective Date	 
	 	 	March 15,	 	 	December 1,	 	 	December 1,	 	 	December	 	 	December	 	 	December 1,	 
	Applicable Price	 	2010	 	 	2010	 	 	2011	 	 	1, 2012	 	 	1, 2013	 	 	2014	 
	$60.00
	 	 	0.8781	 	 	 	0.7886	 	 	 	0.6517	 	 	 	0.5193	 	 	 	0.3158	 	 	 	0.0000	 
	$65.00
	 	 	0.4908	 	 	 	0.4276	 	 	 	0.3263	 	 	 	0.2313	 	 	 	0.1063	 	 	 	0.0000	 
	$70.00
	 	 	0.2450	 	 	 	0.2064	 	 	 	0.1410	 	 	 	0.0854	 	 	 	0.0261	 	 	 	0.0000	 
	$75.00
	 	 	0.1036	 	 	 	0.0844	 	 	 	0.0494	 	 	 	0.0236	 	 	 	0.0030	 	 	 	0.0000	 
	$80.00
	 	 	0.0338	 	 	 	0.0269	 	 	 	0.0121	 	 	 	0.0032	 	 	 	0.0000	 	 	 	0.0000	 
	$85.00
	 	 	0.0068	 	 	 	0.0052	 	 	 	0.0008	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	$90.00
	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	$95.00
	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	$100.00
	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	$105.00
	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	$110.00
	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	$115.00
	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 
	$120.00
	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 	 	 	0.0000	 

provided, however, that:

     (i) if the actual Applicable Price of such Make-Whole Fundamental Change is between
two (2) prices listed in the table above in the column titled “Applicable Price,” or if
the actual Effective Date of such Make-Whole Fundamental Change is between two dates
listed in the table above in the row immediately below the title “Effective Date,” then
the Make-Whole Applicable Increase for such Make-Whole Fundamental Change shall be
determined by linear interpolation between the Make-Whole Applicable Increases set forth
for such two prices, or for such two dates based on a three hundred and sixty five (365)
day year, as applicable;

     (ii) if the actual Applicable Price of such Make-Whole Fundamental Change is greater
than $120.00 per share (subject to adjustment as provided in Section 8.15(B)(iii)), or if
the actual Applicable Price of such Make-Whole Fundamental Change is less than $43.63 per
share (subject to adjustment as provided in Section 8.15(B)(iii)), then the Make-Whole
Applicable Increase shall be equal to zero (0);

     (iii) if an event occurs that requires, pursuant to this Article VIII (other than
solely pursuant to this Section 8.15), an adjustment to the Conversion Rate, then, on the
date and at the time such adjustment is so required to be made, each price set forth in
the table above under the column titled “Applicable Price” shall be deemed to be adjusted
so that such price, at and after such time, shall be equal to the product of (1) such
price as in effect immediately before such adjustment to such price and (2) a fraction
whose numerator is the Conversion Rate in effect immediately before such adjustment to
the Conversion Rate and whose denominator is the Conversion Rate to be in effect, in
accordance with this Article VIII, immediately after such adjustment to the Conversion
Rate;

     (iv) each Make-Whole Applicable Increase amount set forth in the table above shall
be adjusted in the same manner in which, and for the same events for which, the
Conversion Rate is to be adjusted pursuant to Section 8.06 through Section 8.14 hereof;
and

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     (v) in no event shall the Conversion Rate applicable to any Security be increased
pursuant to this Section 8.15 to the extent, but only to the extent, such increase shall
cause the Conversion Rate applicable to such Security to exceed 22.9200 shares per $1,000
principal amount (the “BCF Make-Whole Cap”); provided, however, that the BCF Make-Whole
Cap shall be adjusted in the same manner in which, and for the same events for which, the
Conversion Rate is to be adjusted pursuant to this Article VIII.

     (C) As used herein, “Applicable Price” shall have the following meaning with respect to a
Make-Whole Fundamental Change: (a) if the consideration (excluding cash payments for fractional
shares or pursuant to statutory appraisal rights) for the Common Stock in such Make-Whole
Fundamental Change consists solely of cash, then the “Applicable Price” with respect to such
Make-Whole Fundamental Change shall be equal to the cash amount paid per share of Common Stock in
such Make-Whole Fundamental Change; and (b) in all other circumstances, the “Applicable Price” with
respect to such Make-Whole Fundamental Change shall be equal to the average of the Closing Sale
Prices per share of Common Stock for the five (5) consecutive Trading Days immediately preceding
the Effective Date of such Make-Whole Fundamental Change, which average shall be appropriately
adjusted by the Company’s Board, in its good faith determination, to account for any adjustment,
pursuant hereto, to the Conversion Rate that shall become effective, or any event requiring,
pursuant hereto, an adjustment to the Conversion Rate where the Ex Date of such event occurs, at
any time during such five (5) consecutive Trading Days.

     (D) At least thirty (30) calendar days before the first anticipated effective date of each
proposed Make-Whole Fundamental Change, the Company shall mail to each Holder written notice of,
and shall publicly announce, through a reputable national newswire service, and publish on the
Company’s website, the anticipated effective date of such proposed Make-Whole Fundamental Change.
Each such notice, announcement and publication shall also state that, in connection with such
Make-Whole Fundamental Change, the Company shall increase, in accordance herewith, the Conversion
Rate applicable to Securities entitled as provided herein to such increase (along with a
description of how such increase shall be calculated and the time periods during which Securities
must be surrendered in order to be entitled to such increase). No later than the third Business
Day after the Effective Date of each Make-Whole Fundamental Change, the Company shall mail written
notice of, and shall publicly announce, through a reputable national newswire service, such
Effective Date and the Make-Whole Applicable Increase applicable to such Make-Whole Fundamental
Change.

     (E) For avoidance of doubt, the provisions of this Section 8.15 shall not affect or diminish
the Company’s obligations, if any, pursuant to Article Ten of the Base Indenture and Article IV
hereof with respect to a Make-Whole Fundamental Change.

     (F) Nothing in this Section 8.15 shall prevent an adjustment to the Conversion Rate pursuant
to Section 8.06 hereof in respect of a Make-Whole Fundamental Change.

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8.16 Ownership Limit. 

Notwithstanding any other provision of this Indenture or the Securities, no Holder shall be
entitled to convert such Securities for shares of Common Stock to the extent that receipt of such
shares would cause such Holder (together with such Holder’s Affiliates) to exceed the applicable
ownership limit contained in the Company’s by-laws (with respect to the Common Stock and the
Company’s preferred stock) and the Company’s certificates of designation (with respect to the
Company’s preferred stock).

IX. NO DEFEASANCE OR COVENANT DEFEASANCE

The defeasance and covenant defeasance provisions of Article Thirteen of the Base Indenture shall
not apply to the Securities.

X. MISCELLANEOUS

10.01 Governing Law.

     The laws of the State of New York, without regard to principles of conflicts of law, shall
govern this Indenture and the Securities.

10.02 No Adverse Interpretation of Other Agreements.

     This 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 Indenture.

10.03 Successors.

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

10.04 Calculations in Respect of the Securities.

     The Company and its agents (including, without limitation, the Bid Solicitation Agent) shall
make all calculations under this Indenture and the Securities in good faith. In the absence of
manifest error, such calculations shall be final and binding on all Holders. The Company shall
provide a copy of such calculations to the Trustee as required hereunder, and, absent such manifest
error, the Trustee shall be entitled to conclusively rely on the accuracy of any such calculation
without independent verification.

10.05 Trustee’s Disclaimer .

     The Trustee makes no representations as to the validity or sufficiency of the Supplemental
Indenture except as to the due authorization, execution and delivery of the Supplemental Indenture
by the Trustee. The recitals and statements herein are deemed to be those of the Company and not
of the Trustee.

-52-

 

[The Remainder of This Page Intentionally Left Blank; Signature Page Follows]

-53-

 

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

	 	 	 	 	 
	 	HEALTH CARE REIT, INC.

 	 
	 	By:  	/s/ Michael A. Crabtree
 	 
	 	 	Name:  	Michael A. Crabtree 	 
	 
	 	 	Title:  	Senior Vice President and Treasurer 	 
	 

 

 

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

 	 
	 	By:  	/s/ Christian J. Pastura
 	 
	 	 	Name:  	Christian J. Pastura 	 
	 
	 	 	Title:  	Senior Associate 	 
	 

-2-

 

EXHIBIT A

[Face of Security]

HEALTH CARE REIT, INC.

Certificate No.                     

[INSERT GLOBAL SECURITY LEGEND AS REQUIRED]

3.00% Convertible Senior Note due 2029

CUSIP No. 42217K AR7

     Health Care REIT, Inc., a Delaware corporation (the “Company”), for value received, hereby
promises to pay to Cede & Co., or its registered assigns, the principal sum of three hundred forty
two million, three hundred ninety four thousand dollars ($342,394,000) on December 1, 2029 and to
pay interest thereon, as provided on the reverse hereof, until the principal and any unpaid and
accrued interest are paid or duly provided for.

     Interest Payment Dates: June 1 and December 1, with the first payment to be made on June 1,
2010.

     Record Dates: May 15 and November 15.

     The provisions on the back of this certificate are incorporated as if set forth on the face
hereof.

     IN WITNESS WHEREOF, Health Care REIT, Inc. has caused this instrument to be duly signed.

	 	 	 	 	 
	 	Health Care REIT, Inc.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Dated: March 15, 2010

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

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

The Bank of New York Trust Mellon Company, N.A., as Trustee

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Authorized Signatory
	 	 

Dated:                                         

A-2

 

[REVERSE OF SECURITY]

HEALTH CARE REIT, INC.

3.00% Convertible Senior Note due 2029

     1. Interest. Health Care REIT, Inc., a Delaware corporation (the “Company”), promises to pay
interest on the principal amount of this Security at the rate per annum shown above. The Company
will pay interest, payable semi-annually in arrears, on June 1 and December 1 of each year, with
the first payment to be made on June 1, 2010. Interest on the Securities will accrue on the
principal amount from, and including, the most recent date to which interest has been paid or
provided for or, if no interest has been paid, from, and including, March 15, 2010, in each case
to, but excluding, the next interest payment date or Maturity Date, as the case may be. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.

     2. Maturity. The Securities will mature on December 1, 2029.

     3. Method of Payment. Except as provided in the Indenture (as defined below), the Company
will pay interest on the Securities to the persons who are Holders of record of Securities at the
close of business on the record date set forth on the face of this Security next preceding the
applicable interest payment date. Holders must surrender Securities to a Paying Agent to collect
the principal amount, Redemption Price, Option Purchase Price or Fundamental Change Repurchase
Price of the Securities, plus, if applicable, accrued and unpaid interest, if any, payable as
herein provided on the Maturity Date or upon Redemption, Purchase at Holder’s Option or Repurchase
Upon Fundamental Change, as the case may be. The Company will pay, in money of the United States
that at the time of payment is legal tender for payment of public and private debts, all amounts
due in cash with respect to the Securities, which amounts shall be paid (A) in the case this
Security is in global form, by wire transfer of immediately available funds to the account
designated by DTC or its nominee; (B) in the case this Security is held, other than global form, by
a Holder of more than five million dollars ($5,000,000) in aggregate principal amount of
Securities, by wire transfer of immediately available funds to the account specified by such Holder
or, if such Holder does not specify an account, by mailing a check to the address of such Holder
set forth in the register of the Registrar; and (C) in the case this Security is held, other than
global form, by a Holder of five million dollars ($5,000,000) or less in aggregate principal amount
of Securities, by mailing a check to the address of such Holder set forth in the register of the
Registrar.

     4. Paying Agent, Registrar, Bid Solicitation Agent and Conversion Agent. Initially, The Bank
of New York Mellon Trust Company, N.A. (the “Trustee”) will act as Paying Agent, Registrar, Bid
Solicitation Agent and Conversion Agent. The Company may change any Paying Agent, Registrar, Bid
Solicitation Agent or Conversion Agent without prior notice.

     5. Indenture. The Company issued the Securities under a base indenture, dated as of March 15,
2010 (the “Base Indenture”) as amended, supplemented or otherwise modified by Supplemental
Indenture No. 1, dated as of March 15, 2010 (the “Supplemental Indenture” and, together with the
Base Indenture, the “Indenture”) between the Company and the Trustee. The

A-3

 

terms of the Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) (the
“Trust Indenture Act”) as amended and in effect from time to time. The Securities are subject to
all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a
statement of such terms. The Securities are general unsecured senior obligations of the Company
limited to $342,394,000 aggregate principal amount, except as otherwise provided in the Indenture
(except for reopening of the Securities pursuant to the Indenture or Securities issued in
substitution for destroyed, mutilated, lost or stolen Securities). Terms used herein without
definition and which are defined in the Indenture have the meanings assigned to them in the
Indenture.

     6. Optional Redemption.

          The Company shall not have the right to redeem any Securities prior to December 1, 2014,
except to preserve the Company’s status as a real estate investment trust. If, at any time, the
Company determines that it is necessary to redeem the Securities in order to preserve the Company’s
status as a real estate investment trust, the Company may redeem all or any part of the Securities
at a price payable in cash equal to the Redemption Price plus accrued and unpaid interest, if any,
to, but excluding, the Redemption Date.

          The Company shall have the right, at the Company’s option, at any time, and from time to time,
on a Redemption Date on or after December 1, 2014, to redeem all or any part of the Securities at a
price payable in cash equal to one hundred percent (100%) of the principal amount of the Securities
to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date.

          Upon surrender to the Paying Agent of a Security subject to Redemption, such Security shall be
paid, to the Holder surrendering such Security, at the Redemption Price plus accrued and unpaid
interest to, but excluding, the Redemption Date, unless the Redemption Date is after a Regular
Record Date for the payment of an installment of interest and on or before the related Interest
Payment Date, in which case accrued and unpaid interest to, but excluding, such Interest Payment
Date will be paid, on such Interest Payment Date, to the Holder of record of such Security at the
close of business on such Regular Record Date, and the Holder surrendering such Security shall not
be entitled to any such interest unless such Holder was also the Holder of record of such Security
at the close of business on such Regular Record Date.

     7. Notice of Redemption. Notice of Redemption will be mailed at least thirty (30) days but
not more than sixty (60) days before the Redemption Date to each Holder of Securities to be
redeemed at its address appearing in the security register. Securities in denominations larger
than $1,000 principal amount may be redeemed in part but only in integral multiples of $1,000
principal amount.

     8. Purchase by the Company at the Option of the Holder. Subject to the terms and conditions
of the Indenture, the Company shall become obligated to purchase, at the option of each Holder, the
Securities held by such Holder on December 1, 2014, December 1, 2019 and December 1, 2024 (each, an
“Option Purchase Date”) at an Option Purchase Price, payable in cash, equal to one hundred percent
(100%) of the principal amount of the Securities to be

A-4

 

purchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable Option
Purchase Date, upon delivery of a Purchase Notice containing the information set forth in the
Indenture, at any time from the opening of business on the date that is twenty (20) Business Days
prior to the applicable Option Purchase Date until the close of business on the Business Day
immediately preceding the applicable Option Purchase Date and upon delivery of the Securities to
the Paying Agent by the Holder as set forth in the Indenture; provided, however, that such accrued
and unpaid interest shall be paid to the Holder of record of such Securities at the close of
business on the Regular Record Date immediately preceding such Option Purchase Date.

     9. Repurchase at Option of Holder Upon a Fundamental Change. Subject to the terms and
conditions of the Indenture, in the event of a Fundamental Change, each Holder of the Securities
shall have the right, at the Holder’s option, to require the Company to repurchase such Holder’s
Securities including any portion thereof which is $1,000 in principal amount or any integral
multiple thereof on a date selected by the Company (the “Fundamental Change Repurchase Date”),
which date is no later than thirty five (35) days, nor earlier than twenty (20) days, after the
date on which notice of such Fundamental Change is mailed in accordance with the Indenture, at a
price payable in cash equal to one hundred percent (100%) of the principal amount of such Security,
plus accrued and unpaid interest to, but excluding, the Fundamental Change Repurchase Date;
provided, however, that if such Fundamental Change Repurchase Date is after a Regular Record Date
for the payment of an installment of interest and on or before the related Interest Payment Date,
then the accrued and unpaid interest, if any, to, but excluding, such Interest Payment Date will be
paid on such Interest Payment Date to the Holder of record of such Securities at the close of
business on such Regular Record Date, and the Holder surrendering such Securities for repurchase
will not be entitled to any such accrued and unpaid interest unless such Holder was also the Holder
of record of such Securities at the close of business on such Regular Record Date.

     10. Conversion.

          The Securities shall be convertible into cash, and if applicable, shares of Common Stock if
and to the extent the conditions therefor specified in the Indenture are satisfied.

          To convert a Security, a Holder must (1) complete and sign the Conversion Notice, with
appropriate signature guarantee, on the back of the Security, (2) surrender the Security to a
Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the
Registrar or Conversion Agent, (4) pay the amount of interest, if any, the Holder must pay in
accordance with the Indenture and (5) pay any tax or duty if required pursuant to the Indenture. A
Holder may convert a portion of a Security if the portion is $1,000 principal amount or an integral
multiple of $1,000 principal amount.

          Notwithstanding anything herein to the contrary, no Security may be converted after the close
of business on the Business Day immediately preceding the Maturity Date.

          Upon conversion of a Security, the Holder thereof shall be entitled to receive the cash and,
if applicable, shares of Common Stock payable upon conversion in accordance with Article VIII of
the Supplemental Indenture.

A-5

 

          The initial Conversion Rate is 19.5064 shares of Common Stock per $1,000 principal amount of
Securities (which results in an effective initial Conversion Price of approximately $51.27 per
share) subject to adjustment in the event of certain circumstances as specified in the Indenture.
The Company will deliver cash in lieu of any fractional shares. On conversion, no payment or
adjustment for any unpaid and accrued interest or additional interest on the Securities will be
made. If a Holder surrenders a Security for conversion after the close of business on the Regular
Record Date for the payment of an installment of interest and prior to the related Interest Payment
Date, such Security, when surrendered for conversion, must be accompanied by payment of an amount
equal to the interest thereon which the registered Holder at the close of business on such Regular
Record Date is to receive; provided, however, that such payment of an amount equal to the interest
described in the immediately preceding sentence in respect of a Security surrendered for conversion
shall not be required with respect to a Security that (i) is surrendered for conversion after the
Regular Record Date immediately preceding the Maturity Date, (ii) has been called for Redemption
pursuant to Section 3.04 of the Supplemental Indenture and paragraphs 6 and 7 herein or (iii) is
surrendered for conversion after a Regular Record Date for the payment of an installment of
interest and on or before the related Interest Payment Date, where, pursuant to Section 3.09 of the
Supplemental Indenture, the Company has specified, with respect to a Fundamental Change, a
Fundamental Change Repurchase Date that is after such Regular Record Date and on or before such
Interest Payment Date; provided further, that, if the Company shall have, prior to the Conversion
Date with respect to a Security, defaulted in a payment of interest on such Security, then in no
event shall the Holder of such Security who surrenders such Security for conversion be required to
pay such defaulted interest or the interest that shall have accrued on such defaulted interest
pursuant to Section 307 of the Base Indenture or otherwise.

          The Conversion Rate applicable to each Security that is surrendered for conversion, in
accordance with the Securities and Article VIII of the Supplemental Indenture, at any time during
the Make-Whole Conversion Period with respect to a Make-Whole Fundamental Change shall be increased
to an amount equal to the Conversion Rate that would, but for Section 8.15 of the Supplemental
Indenture, otherwise apply to such Security pursuant to Article VIII of the Supplemental Indenture,
plus an amount equal to the Make-Whole Applicable Increase; provided, however, that such increase
to the Conversion Rate shall not apply if such Make-Whole Fundamental Change is announced by the
Company but shall not be consummated.

     11. Denominations, Transfer, Exchange. The Securities are in registered form, without
coupons, in denominations of $1,000 principal amount and integral multiples of $1,000 principal
amount. The transfer of Securities may be registered and Securities may be exchanged as provided
in the Indenture, subject to conditions on the registration of transfer while the Securities are
registered as global securities as provided in the Indenture. The Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents. No service charge
shall be made for any such registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or similar governmental charge that may be imposed in
connection with certain transfers or exchanges. The Company or the Trustee, as the case may be,
shall not be required to register the transfer of or exchange any Security (i) during a period
beginning at the opening of business fifteen (15) days before the mailing of a notice of redemption
of the Securities selected for Redemption under Section 3.04 of the Supplemental Indenture and
ending at the close of business on the day

A-6

 

of such mailing or (ii) for a period of fifteen (15) days before selecting, pursuant to
Section 3.03 of the Supplemental Indenture, Securities to be redeemed or (iii) that has been
selected for Redemption or for which a Purchase Notice has been delivered, and not withdrawn, in
accordance with the Indenture, except the unredeemed or unrepurchased portion of Securities being
redeemed or repurchased in part.

     12. Persons Deemed Owners. The registered Holder of a Security may be treated as the owner of
such Security for all purposes.

     13. Consolidation, Merger, Conveyance, Transfer or Lease. The Company shall not consolidate
with or merge with or into any other Person, or sell, transfer, lease, convey, or otherwise dispose
of all or substantially all of its properties and assets to any Person (including pursuant to a
statutory arrangement), whether in a single transaction or series of related transactions unless
(i) such Person assumes by supplemental indenture all the obligations of the Company under the
Securities and the Indenture; (ii) immediately after giving effect to such transaction or series of
transactions, no Default or Event of Default shall exist; and (iii) the Person formed by such
consolidation, the Person with or into which the Company is merged or the Person which leases or
acquires, by sale, transfer, conveyance or otherwise, all or substantially all of the property or
assets of the Company, is a corporation, partnership, limited liability company or trust organized
and existing under the laws of the United States, any state of the United States or the District of
Columbia. The Company shall deliver to the Trustee prior to the consummation of the proposed
transaction an Officers’ Certificate and an Opinion of Counsel, each stating that such proposed
transaction and, if a supplemental indenture is required in connection with such transaction, such
supplemental indenture comply with Article Eight of the Base Indenture and that all conditions
precedent provided for in the Indenture relating to such transaction have been complied with.

     14. Amendments, Supplements and Waivers. Subject to certain exceptions, the Indenture or the
Securities may be amended or supplemented with the consent of the Holders of at least a majority in
aggregate principal amount of the outstanding Securities, and certain existing Defaults or Events
of Default may be waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. The Company, with the consent of the Trustee, may amend
or supplement this Indenture or the Securities without notice to or the consent of any
Securityholder in accordance with Section 901 of the Base Indenture and Section 7.01 of the
Supplemental Indenture.

     15. Defaults and Remedies.

          If an Event of Default (excluding an Event of Default specified in Section 5.01(viii) or (ix)
of the Supplemental Indenture with respect to the Company (but including an Event of Default
specified in Section 5.01(viii) or (ix) of the Supplemental Indenture solely with respect to a
Significant Subsidiary of the Company)) occurs and is continuing, the Trustee by written notice to
the Company or the Holders of at least twenty five percent (25%) in principal amount of the
Securities then outstanding by written notice to the Company and the Trustee may declare the
Securities to be due and payable. Upon such declaration, the principal of, and any premium and
accrued and unpaid interest on, all Securities shall be due and payable immediately. If an Event
of Default specified in Section 5.01(viii) or (ix) of the Supplemental

A-7

 

Indenture with respect to the Company (excluding, for purposes of this sentence, an Event of
Default specified in Section 5.01(viii) or (ix) of the Supplemental Indenture solely with respect
to a Significant Subsidiary of the Company) occurs, the principal of, and premium and accrued and
unpaid interest on, all the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by written notice to the
Trustee may rescind or annul an acceleration and its consequences if (A) the rescission would not
conflict with any order or decree, (B) all existing Events of Default, except the nonpayment of
principal, premium or interest that has become due solely because of the acceleration, have been
cured or waived and (C) all amounts due to the Trustee under Section 607 of the Base Indenture have
been paid.

          Holders may not enforce the Indenture or the Securities except as provided in the Indenture.
The Holders of a majority in aggregate principal amount of the Securities then outstanding may
direct the time, method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to
follow any direction that conflicts with law or the Indenture, is unduly prejudicial to the rights
of other Holders or would involve the Trustee in personal liability unless the Trustee is offered
indemnity reasonably satisfactory to it; provided, that the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction.

          If a Default or Event of Default occurs and is continuing as to which the Trustee has received
written notice pursuant to the provisions of the Indenture, or as to which a Responsible Officer of
the Trustee shall have actual knowledge, the Trustee shall mail to each Holder a notice of the
Default or Event of Default within thirty (30) days after receipt of such notice or after acquiring
such knowledge, as applicable, unless such Default or Event of Default has been cured or waived.
Except in the case of a Default or Event of Default in payment of any amounts due with respect to
any Security, the Trustee may withhold the notice if, and so long as it in good faith determines
that, withholding the notice is in the best interests of Holders. The Company must deliver to the
Trustee an annual compliance certificate.

     16. Trustee Dealings with the Company. The Trustee under the Indenture, or any banking
institution serving as successor Trustee thereunder, in its individual or any other capacity, may
make loans to, accept deposits from, and perform services for, the Company or its Affiliates, and
may otherwise deal with the Company or its Affiliates, as if it were not Trustee.

     17. Authentication. This Security shall not be valid until authenticated by the manual
signature of the Trustee or an authenticating agent in accordance with the Indenture.

     18. Abbreviations. Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entirety), JT TEN (=
joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (Uniform Gifts to Minors Act).

     THE COMPANY WILL FURNISH TO ANY HOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE A COPY OF THE
INDENTURE. REQUESTS MAY BE MADE TO:

A-8

 

Health Care REIT, Inc.

One SeaGate, Suite 1500

Toledo, Ohio, 43604

Attn: General Counsel

A-9

 

[FORM OF ASSIGNMENT]

I or we assign to

PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER

 

 

(please print or type name and address)

      

      

the within Security and all rights thereunder, and hereby irrevocably constitute and appoint

 

Attorney to transfer the Security on the books of the Company with full power of substitution in
the premises.

	 	 	 	 	 	 	 	 	 
	Dated:

	 	 
 

	 	 	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	NOTICE: The signature on this assignment
must correspond with the name as it appears
upon the face of the within Security in every
particular without alteration or enlargement
or any change whatsoever and be guaranteed by
a guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Registrar.

	 	 	 
	Signature Guarantee:

	 	 
	 

	 	 

A-10

 

CONVERSION NOTICE

To convert this Security in accordance with the Indenture, check the box: o

To convert only part of this Security, state the principal amount to be
converted (must be in multiples of $1,000):

$                    

If you want the stock certificate representing the shares of Common Stock, if
any, issuable upon conversion made out in another person’s name, fill in the
form below:

 

(Insert other person’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type other person’s name, address and zip code)

	 	 	 	 	 
	Date:                    

	 	Signature(s):
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	(Sign exactly as your name(s) appear(s) on the other side of this Security)

	 	 	 
	Signature(s) guaranteed by:

	 	 
	 

	 	 
	 

	 	(All signatures must be guaranteed by a guarantor institution
participating in the Securities Transfer Agents Medallion Program or
in such other guarantee program acceptable to the Trustee.)

A-11

 

PURCHASE NOTICE

Certificate No. of Security:                     

     If you want to elect to have this Security purchased by the Company pursuant to Section 3.08
of the Supplemental Indenture, check the box: o

     If you want to elect to have this Security purchased by the Company pursuant to Section 3.09
of the Supplemental Indenture, check the box: o

     If you want to elect to have only part of this Security purchased by the Company pursuant to
Sections 3.08 or 3.09 of the Supplemental Indenture, as applicable, state the principal amount to
be so purchased by the Company:

	 	 	 	 	 
	 

	$  	 
 

	 	 
	 

	 	(in an integral multiple of $1,000)	 	 

	 	 	 	 	 
	Date:                    

	 	Signature(s):
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	(Sign exactly as your name(s) appear(s) on the other side of this Security)
	 
	 	 	 	 
	Signature(s) guaranteed by:

	 	 	 	 
	 	 	 
	 	 	(All signatures must be guaranteed by a
guarantor institution participating in the
Securities Transfer Agents Medallion Program
or in such other guarantee program acceptable
to the Trustee.)

A-12

 

SCHEDULE A

SCHEDULE
OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY1

     The following exchanges of a part of this Global Security for an interest in another Global
Security or for Securities in certificated form, have been made:

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

 

			
	1	 	This is included in Global Securities only.

A-13

 

EXHIBIT B

FORM OF LEGEND FOR GLOBAL SECURITY

     Any Global Security authenticated and delivered hereunder shall bear a legend (which would be
in addition to any other legends required) in substantially the following form:

     THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE
OF A DEPOSITARY OR A SUCCESSOR DEPOSITARY. THIS SECURITY IS NOT EXCHANGEABLE FOR
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

     UNLESS THIS CERTIFICATE 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 CERTIFICATE 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.

     TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.05 OF THE
SUPPLEMENTAL INDENTURE.exv10w37

Exhibit 10.37

CONFIDENTIAL

EXECUTION COPY

AMENDED AND RESTATED

SUBLICENSE AGREEMENT

between

Novartis Pharma AG

and

Vanda Pharmaceuticals Inc.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	0. AMENDMENT AND RESTATEMENT
	 	 	2	 
	 
	1. DEFINITIONS
	 	 	2	 
	 
	2. GRANT
	 	 	12	 
	 
	3. PAYMENTS AND ROYALTIES
	 	 	19	 
	 
	4. COMPULSORY LICENSES AND THIRD PARTY LICENSES
	 	 	28	 
	 
	5. DEVELOPMENT
	 	 	30	 
	 
	6. EXCHANGE OF INFORMATION; ASSIGNMENT OF APPROVALS AND CONFIDENTIALITY
	 	 	38	 
	 
	7. SUPPLY OF COMPOUND AND PRODUCT
	 	 	44	 
	 
	8. PATENT PROSECUTION; MAINTENANCE AND EXTENSION; INFRINGEMENT

	 	 	48	 
	 
	9. STATEMENTS, REMITTANCES AND AUDIT RIGHTS
	 	 	53	 
	 
	10. TERM AND TERMINATION
	 	 	58	 
	 
	11. RIGHTS AND DUTIES UPON TERMINATION
	 	 	63	 
	 
	12. WARRANTIES, INDEMNIFICATIONS AND REPRESENTATIONS
	 	 	65	 
	 
	13. COMPLIANCE WITH LAW
	 	 	72	 
	 
	14. NO PROJECTIONS
	 	 	72	 
	 
	15. FORCE MAJEURE
	 	 	72	 
	 
	16. GOVERNING LAW AND ARBITRATION
	 	 	73	 
	 
	17. SEPARABILITY
	 	 	74	 
	 
	18. ENTIRE AGREEMENT; AMENDMENTS
	 	 	74	 
	 
	19. NOTICES
	 	 	75	 
	 
	20. ASSIGNMENT
	 	 	78	 
	 
	21. FAILURE TO ENFORCE
	 	 	78	 

i

 

	 	 	 	 	 
	 	 	Page
	22. AGENCY
	 	 	78	 
	 
	23. FURTHER ASSURANCES
	 	 	79	 
	 
	24. CAPTIONS
	 	 	79	 
	 
	25. MISCELLANEOUS
	 	 	79	 
	 
	26. HSR FILING
	 	 	80	 
	 
	27. AFFILIATES
	 	 	81	 

ii

 

AMENDED AND RESTATED SUBLICENSE AGREEMENT

     THIS AMENDED AND RESTATED SUBLICENSE AGREEMENT (the “Sublicense Agreement”), entered into as
of the 12th day of October, 2009 (the “Execution Date”), is between Vanda
Pharmaceuticals Inc., a corporation organized and existing under the laws of the State of Delaware
and having its principal office at 9605 Medical Center Drive, Suite 300, Rockville, MD 20850,
United States of America (“Vanda”), and Novartis Pharma AG, a corporation organized under the laws
of Switzerland and having its principal office at Lichtstrasse 35, CH-4056 Basel, Switzerland
(“Novartis”).

WITNESSETH THAT:

     WHEREAS Novartis is the exclusive worldwide licensee of Titan Pharmaceuticals, Inc. (“Titan”)
under the Sublicense Agreement between Novartis and Titan having an effective date of
20th November, 1997, and as amended by three amendments between such parties dated
November 30, 1998, April 10, 2001, and June 4, 2004 (the “Titan Agreement”); and

     WHEREAS Titan is the exclusive worldwide licensee of Aventisub II Inc. (as successor in
interest to Hoechst Marion Roussel Inc.) (“Sanofi-Aventis”) under a Worldwide License Agreement
between Titan and Sanofi-Aventis having an effective date of 31st December, 1996, and as
amended by one amendment between such parties dated April 26, 2004 (the “Sanofi-Aventis
Agreement”); and

     WHEREAS under such Titan Agreement and certain Novartis patents, Novartis has rights with
respect to certain patents and patent applications, identified in Appendix A hereto, and know-how
relating to a compound known as Iloperidone; and

     WHEREAS, Vanda and Novartis previously entered into that certain Sublicense Agreement, dated
June 4, 2004, as amended by two addenda between such parties dated August 24, 2004, and February
16, 2006 (the “Original Agreement”), pursuant to which Vanda obtained certain worldwide exclusive
sublicenses and licenses from Novartis under the Titan Agreement and certain Novartis patents; and

     WHEREAS, the parties now desire to modify their arrangements under the Original Agreement to
provide, among other things, for the relinquishment of the sublicenses and

 

 

licenses granted by Novartis to Vanda under the Original Agreement in the U.S./Canadian
Territory (as defined below), for the grant by Vanda to Novartis of exclusive license rights with
respect to certain Vanda Know-How (as defined below) and Vanda Trademarks (as defined below) and
for the assignment by Vanda to Novartis of the Existing Applications and Approvals (as defined
below) and the Vanda Domain Names, all on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the covenants and obligations expressed herein, and
intending to be legally bound, the parties agree as follows:

0. AMENDMENT AND RESTATEMENT

     Vanda and Novartis hereby agree that, effective as of the Effective Date, the Original
Agreement is hereby amended and restated in its entirety as set forth in this Sublicense Agreement,
and the Original Agreement shall be of no further force or effect from and after the Effective
Date, except as expressly provided herein, provided, that nothing in this Sublicense Agreement
shall affect the rights and obligations of the parties or
Sanofi-Aventis under the Original
Agreement with respect to periods prior to the Effective Date, including without limitation, the
rights of Sanofi-Aventis under Section 5.5 of the Original Agreement, all of which shall survive in
accordance with their terms.

1. DEFINITIONS

     1.1 “Accounting Standards” with respect to Vanda shall mean that Vanda shall maintain records
and books of accounts in accordance with US GAAP (United States Generally Accepted Accounting
Principles) and with respect to Novartis shall mean that Novartis shall maintain records and books
of accounts in accordance with IFRS (International Financial Reporting Standards).

     1.2 “Acquired Compounds or Products” shall have the meaning set forth in Section 12.4.

     1.3 “Acquisition Transaction” shall have the meaning set forth in Section 27.

Page 2

 

     1.4 “Affiliate” shall mean (subject to Section 27) any Person who directly or indirectly
controls or is controlled by or is under common control with a party to this Sublicense Agreement
but only for so long as such control exists. For purposes of this definition, “control” or
“controlled” means ownership directly or through one or more Affiliates, of fifty percent (50%) or
more of the shares of stock entitled to vote for the election of directors, in the case of a
corporation, of fifty percent (50%) or more of the equity interest in the case of any other type of
legal entity, status as a general partner in any partnership, or any other arrangement whereby a
party controls or has the right to control the Board of Directors or equivalent governing body of a
corporation or other entity, or the ability to cause the direction of the management or policies of
a corporation or other entity.

     The parties acknowledge that in the case of certain entities organized under the laws of
certain countries outside of the US, the maximum percentage ownership permitted by law for a
foreign investor may be less than fifty percent (50%), and that in such case such lower percentage
shall be substituted in the preceding sentence, provided that such foreign investor has the
power to direct the management and policies of such entity.

     1.5 “Alliance Manager” shall have the meaning set forth in Appendix E.

     1.6 “Audit Rights Holder” shall have the meaning set forth in Section 9.1.

     1.7 “Audit Team” shall have the meaning set forth in Section 9.1.

     1.8 “Auditee” shall have the meaning set forth in Section 9.1.

     1.9 “Biomarker Patent” shall have the meaning set forth in Section 2.1.

     1.10 “Co-Commercialization Agreement” shall have the meaning set forth in Section 5.12(a).

     1.11 “Combination Product” shall have the meaning set forth in Section 5.10.

     1.12 “Commercially Reasonable Efforts” shall mean efforts and resources customarily used in
the pharmaceutical business for a product of a market potential similar to the market potential of
Product under evaluation, at a similar stage of its product life, taking

Page 3

 

into account the establishment of the product in the marketplace, the competitiveness of the
marketplace, the proprietary position of the product, regulatory status involved, and the
profitability of the product.

     1.13 “Competitive Industry Standard Level” shall mean the level to which the Product shall be
marketed by or on behalf of Vanda, its Affiliates or Sublicensees in the countries of the ROW
Territory where Patents are issued and enforced with at least the same diligence that Vanda would
use in marketing its own products in such countries, in a manner consistent with the effort devoted
by the pharmaceutical industry to products having the same or similar potential value of the
Product in those countries when the Product is launched.

     1.14 “Compound” shall mean the chemical compound known as Iloperidone, whose specific chemical
name is *, including any salts, hydrates, solvates, and/or stereoisomers thereof, and only the
metabolites listed in Appendix B hereto, including any salts, hydrates, solvates and/or
stereoisomers of such metabolites.

     1.15 “Confidential Information” shall have the meaning set forth in Section 6.6.

     1.16 *

     1.17 “Data” shall mean all data and information generated, collected or filed in relation to
research, development and/or manufacturing activities relating to the Compound or Product (in any
formulation), including non-clinical reports, clinical reports, single patient clinical report
forms, data points and the databases, and stability data, chemical data, quality control data and
other information generated under or in connection with clinical studies, including any raw data,
reports and results with respect to any of the foregoing.

     1.18 “Depot Formulation” shall mean any extended-release, injectable formulation of the
Compound.

     1.19 “Depot Trademark” shall have the meaning set forth in Section 2.4(b).

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 4

 

     1.20 “EEA” shall mean the European Economic Area, which consists of the European Union
and Iceland, Liechtenstein and Norway.

     1.21 “Effective Date” of this Sublicense Agreement shall mean the HSR Clearance Date (as
defined in Section 26.3), or if it determined that an HSR Filing is not required, then the
Execution Date.

     1.22 “European Union” shall mean the member states of the European Union, as may exist from
time to time, which as of the date hereof include Austria, Belgium, Bulgaria, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia,
Spain, Sweden and the United Kingdom and all other countries which accede to the European Union
during the term of this Sublicense Agreement.

     1.23 “Exclusive” shall have the meaning specified in Section 2.1 (as applied to Novartis and
its Affiliates) and Section 2.1(c) (as applied to Vanda and its Affiliates).

     1.24 “Existing Applications and Approvals” shall have the meaning set forth in Section 6.2.

     1.25 “FDA” shall mean the United States Food and Drug Administration.

     1.26 “FD&C Act” shall mean the Federal Food, Drug and Cosmetic Act (21 U.S.C. 301ff), as
amended from time to time.

     1.27 “Field” shall mean application to all conditions, disorders and diseases in humans.

     1.28 “Generic Equivalent” shall mean, with respect to any Product, any product with the same
active ingredient(s) and administration route as such Product; provided however that a product with
the same active ingredient(s) and administration route as such Product, that is launched by
Novartis or its Affiliates will not be deemed a Generic Equivalent unless a product with the same
active ingredient(s) and administration route as such Product has been launched by any Person other
than Novartis or its Affiliates.

Page 5

 

     1.29 “Generic Equivalent Presence” shall have the meaning set forth in Section 3.7(a).

     1.30 “HSR Clearance Date” shall have the meaning set forth in Section 26.3.

     1.31 “HSR Conditions” shall have the meaning set forth in Section 26.3.

     1.32 “HSR Filing” shall have the meaning set forth in Section 26.1.

     1.33 “IND” shall mean an Investigational New Drug Application and all amendments and
supplements thereto or equivalent applications in other countries.

     1.34 “JSC” shall have the meaning set forth in Appendix E.

     1.35 “Know-How” shall mean all technical information and know-how: (a) as of the date of the
Original Agreement developed and owned or controlled by Sanofi-Aventis or Titan and their
Affiliates and made available to Novartis, (b) developed and owned or controlled by Novartis and
its Affiliates after the date of the Titan Agreement, and (c) developed and owned or controlled by
Sanofi-Aventis, Titan or Novartis and their respective Affiliates, after the effective date of the
Original Agreement, in each case which relates to the Compound or Product in the Field and which
constitutes a proprietary “trade secret” or other valid intellectual property right under U.S. or
other applicable law which is substantial, secret and identifiable, including, without limitation,
all biological, chemical, pharmacological, toxicological, clinical, regulatory, analytical, quality
control and manufacturing data and any other information (whether technical or commercial) relating
to the Compound or Product, that may be necessary or useful for the development, regulatory
approval, manufacture and commercialization of the Compound or Product in the ROW Territory. For
purposes of clarity, “Know-How” shall exclude any Transaction Counterparty Group Intellectual
Property (as defined below).

     1.36 “Liabilities” shall have the meaning set forth in Section 12.6.

     1.37 “Major Market Country” shall mean each of France, Germany, Italy, Spain and the United
Kingdom.

Page 6

 

     1.38 “NDA” shall mean any and all applications (new drug applications) submitted to the FDA
under Sections 505, 507 or 512 of the FD&C Act and applicable regulations related to the Product,
including without limitation, full NDAs, “paper” NDAs and abbreviated NDAs (ANDAs) and all
amendments and supplements thereto or equivalent applications in the European Union.

     1.39 “NDA Filing” shall have the meaning set forth in Section 3.1(b).

     1.40 “Net Sales” shall mean, with respect to a party hereunder, sales by such party and any
Affiliate or Sublicensee of such party for that Compound or Product sold to Third Parties *.

     *.

          (a) *;

          (b) *;

          (c) *;

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 7

 

          (d) *.

     1.41 “Non-Patent Countries” shall have the meaning set forth in Section 3.5.

     1.42 “Novartis Authorized Entities” shall have the meaning set forth in Section 2.3(b).

     1.43 “Novartis-Patents” shall have the meaning set forth in Section 8.3.

     1.44 “Novartis Trademarks” shall have the meaning set forth in Appendix C.

     1.45 “NVS Patents” shall mean all patents and patent applications in the ROW Territory
including continuations, continuations-in-part, divisions, patents of addition, re-issues,
re-examinations, renewals or extensions thereof, along with supplementary protection certificates
and other administrative protection of any kind in the ROW Territory owned by or licensed to
Novartis or its Affiliates (excluding the Patents licensed or sublicensed to Vanda hereunder) to
the extent that such patents claim the Compound or Product (including

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 8

 

the packagin or labeling thereof), or use, formulations or manufacture thereof, for use
in the Field.

     1.46 “Patents” shall mean all patents and patent applications set forth in Appendix A
(including those set forth in Annex 1 and Annex 2 thereto), including continuations,
continuations-in-part, divisions, patents of addition, reissues, re-examinations, renewals or
extensions thereof, along with supplementary protection certificates and other administrative
protection of any kind owned by or licensed to Novartis or its Affiliates to the extent that such
patents claim the Compound or Product, or use, formulations or manufacture thereof, for use in the
Field, but not any other compound or use outside of the Field disclosed or claimed in those patents
or patent applications. Patents are set forth in Appendix A. Any Patent having claims covering
the Compound or Product or its use formulation and manufacture thereof for use in the Field which
is issued during the term of this Sublicense Agreement in any country of the Territory shall
automatically be deemed as of the date of such issuance to be included in the Patent, as defined
hereunder. For clarity, the preceding sentence refers to Patents issuing from Patents set forth on
Appendix A.

     1.47 “Person” shall mean any natural person, corporation, firm, general partnership, limited
partnership, limited liability company or partnership, proprietorship, other business organization
or entity, trust, union, association or governmental or regulatory authority.

     1.48 “Product” shall mean any bulk or finished pharmaceutical composition containing the
Compound as a pharmaceutically active ingredient for use in the Field, whether as a sole active
ingredient or in combination with another active ingredient, in any formulation including, without
limitation, the oral tablet formulation described in approved NDA # 022192 and any Depot
Formulation(s).

     1.49 “Product Cost” shall have the meaning set forth in Section 7.5.

     1.50 “Product Registration Transfer Date” shall have the meaning set forth in Section 6.2.

     1.51 “Quality Agreement” shall mean that certain Quality Agreement, dated as of July 9, 2009,
by and between Vanda and * with respect to Product

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 9

 

supplied by * to Vanda and that certain Quality Assurance Agreement, dated as of June 25, 2009, by
and between Vanda and * with respect to Compound supplied by * to Vanda.

     1.52 “Receiving Party” shall have the meaning set forth in Section 6.6.

     1.53 “Right of Reference” shall mean the authority to rely upon, and otherwise use, the
results of any pre-clinical or clinical investigation, including all Data, for the purpose of
obtaining approval of any application from the applicable regulatory authority, including the
ability to make available the underlying raw data from such investigation for audit by the
applicable regulatory authority, if necessary.

     1.54 “ROW Territory” shall mean all countries and territories of the world, other than the
U.S./Canadian Territory, provided that any country(ies) outside the U.S./Canadian Territory in
which this Sublicense Agreement is terminated shall be removed from the scope of this definition.

     1.55 “Sanofi-Aventis-Patents” shall have the meaning set forth in Section 8.1.

     1.56 “SEC” shall mean the United States Securities and Exchange Commission.

     1.57 “Sublicensee” shall mean a Third Party (as defined below) to whom a party sublicenses
rights to manufacture and sell (or have manufactured and sold) the Compound under Patents (in the
case of Sublicensees of Vanda) or Vanda Know-How (in the case of Sublicensees of Novartis), but
shall not include any Third Parties to whom rights to manufacture the Compound have not been
granted. Unless such party grants to such Third Party the right to manufacture Compound, the
following Third Parties shall not be considered Sublicensees under this Sublicense Agreement:
agents, distributors, wholesalers, subcontractors, co-marketers, co-promoters, partners or joint
venturers. Sublicensees shall not include compulsory licensees as described in Section 4.1(a).

     1.58 “Supply Agreement” shall have the meaning set forth in Section 7.5.

     1.59 “Territory” shall mean the ROW Territory and the U.S./Canadian Territory.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 10

 

     1.60 “Third Party” shall mean any party other than a party to this Sublicense Agreement,
Sanofi-Aventis, Titan or an Affiliate of any of these.

     1.61 “Transaction Counterparty” shall have the meaning set forth in Section 27.

     1.62 “Transaction Counterparty Group” shall have the meaning set forth in Section 27.

     1.63 “Transaction Counterparty Group Intellectual Property” shall have the meaning set forth
in Section 27.

     1.64 “Transaction Party” shall have the meaning set forth in Section 27.

     1.65 “U.S./Canadian Territory” shall mean (i) the United States of America and its territories
and possessions and (ii) Canada and its territories and possessions.

     1.66 “Vanda Authorized Entities” shall have the meaning set forth in Section 2.3(c).

     1.67 “Vanda Domain Names” shall mean the domain names owned or controlled by Vanda or its
Affiliates related to the research, development, manufacture, import and commercialization of the
Compound and the Product in the U.S./Canadian Territory, including those set forth in Appendix D.

     1.68 “Vanda IP” shall have the meaning set forth in Section 5.5.

     1.69 “Vanda Know-How” shall mean all technical information and know-how owned or controlled by
Vanda (or any of its Affiliates) as of the Effective Date or which comes under Vanda’s (or any of
its Affiliates’) control during the term of this Sublicense Agreement which relates to the Compound
or Product in the Field and which constitutes a valid intellectual property right (other than
patent rights or foreign equivalents) under U.S. or other applicable law, including, without
limitation, biological, chemical, pharmacological, toxicological, clinical, regulatory, analytical,
quality control and manufacturing data and any other information (whether technical or commercial)
relating to the Compound or Product, that may be necessary or useful for the development,
regulatory approval, manufacture and commercialization of the Compound or Product in the
U.S./Canadian Territory. For purposes

Page 11

 

of clarity, “Vanda Know-How” shall exclude any Transaction Counterparty Group Intellectual
Property.

     1.70 “Vanda Patents” shall mean all patents and patent applications in the U.S./Canadian
Territory including continuations, continuations-in-part, divisions, patents of addition,
re-issues, re-examinations, renewals or extensions thereof, along with supplementary protection
certificates and other administrative protection of any kind in the U.S./Canadian Territory owned
by or licensed to Vanda or its Affiliates (excluding the Patents licensed or sublicensed to Vanda
hereunder) to the extent that such patents claim the Compound or Product (including the packaging
and labeling thereof), or use, formulations or manufacture thereof, for use in the Field.

     1.71 “Vanda Trademarks” shall have the meaning set forth in Appendix C.

2. GRANT

     2.1 Novartis hereby grants to Vanda (1) an Exclusive sublicense in the Field under the Patents
licensed to Novartis or its Affiliates and an Exclusive license in the Field under the Patents
(except for the Biomarker Patent) owned by Novartis or its Affiliates (to the extent, but only to
the extent, that such patents or patent applications claim the Compound or Product or the
manufacture, formulation, or use thereof), (2) an Exclusive sublicense and license, as applicable,
in the Field under the Know-How and (3) a non-exclusive license in the Field under the Patent owned
by Novartis covering the biomarker identified in Annex 1 to Appendix A (the “Biomarker Patent”), in
each case, to research, develop, have developed, make, have made, use, import, sell, offer for sale
and have sold the Compound and Product in the ROW Territory, subject to the terms and conditions of
this Sublicense Agreement. For clarity, the foregoing license grant includes the right of Vanda to
(i) make and have made Compound or Product in the U.S./Canadian Territory for sale only in the ROW
Territory, and (ii) research and develop Compounds in the ROW Territory and in the U.S./Canadian
Territory (but, as to Vanda’s right to research and develop Compounds in the U.S./Canadian
Territory, only as necessary for Vanda to develop and commercialize the Compound and Products in
the ROW Territory). For further clarity, the foregoing license grant does not include a sublicense
or license to any rights under any patents or patent applications or know-how which Novartis or its
Affiliates owns or

Page 12

 

which it has licensed to the extent that any of those patents or patent applications or
know-how claim, cover or relate to the development, manufacture, use, import or commercialization
of the Compound and Product in the Field in the U.S./Canadian Territory, which rights are hereby
reserved by Novartis. All rights granted by Novartis to Vanda in this Sublicense Agreement shall
remain subject to the terms and conditions of the Sanofi-Aventis Agreement and the Titan Agreement.
The sublicense and license granted to Vanda by Novartis shall include the right of Vanda to
sublicense its rights under this Sublicense Agreement, but only upon Novartis’, Sanofi-Aventis’ and
Titan’s prior written consent, which consent shall not be unreasonably withheld. Any such
sublicense(s) shall impose upon a Sublicencee(s) of Vanda substantially the same terms and
conditions as Vanda assumes in this Sublicense Agreement. As used in this Sublicense Agreement
with respect to licenses or sublicenses granted by Novartis, the term “Exclusive” shall mean that
neither Novartis, nor its Affiliates shall grant any other license or sublicense to, nor themselves
exploit, the Patents and Know-How with respect to the Compound and Product in the Field in the ROW
Territory (unless otherwise specified herein) and be limited as follows:

          (a) With respect to all geographic areas in the ROW Territory outside of the EEA, such
sublicense and license shall be Exclusive for the duration and validity of the intellectual
property rights constituting the Patents in such geographic areas in the ROW Territory and/or
Know-How.

          (b) With respect to all geographic areas within the EEA, such sublicense and license shall be
Exclusive for the following time periods:

          (i) For each of the countries within the EEA where only Patents (and not Know-How) exist and
are sublicensed or licensed to Vanda hereunder, the period of exclusivity for each such country
shall be limited to the duration of the relevant Patents in such country, provided that “Patents”
for the purposes of the interpretation of this paragraph shall be limited to patents existing, and
patents issuing from patent applications existing, and patents issuing from patent applications
covering inventions existing as of the date of the Titan Agreement;

          (ii) For each of the countries within the EEA where Patents and Know-How exist and are
sublicensed or licensed to Vanda hereunder, the period of exclusivity for each such

Page 13

 

country shall be limited to the duration of the relevant Patents in such country, provided
that “Patents” for purposes of the interpretation of this paragraph shall be limited to patents
existing, and patents issuing from patent applications existing, as of the date of the Titan
Agreement and, provided, further, that if the duration of such Patents is less than ten (10) years
from the date of first marketing of the Product in the EEA but the Know-How continues to be
sublicensed hereunder, the duration of exclusivity shall be for ten (10) years from the date of
first marketing of the Product in the EEA; and

          (iii) For each of the countries within the EEA where Know-How (and not Patents) exists and is
sublicensed or licensed to Vanda hereunder, the period of exclusivity for each such country shall
be limited to ten (10) years from the date of first marketing of the Product in the EEA.
Thereafter, such sublicense or license within the EEA shall be on a non-exclusive basis.

          (c) Vanda hereby grants to Novartis an Exclusive license in the Field under the Vanda Know-How
to research, develop, have developed, make, have made, use, import, sell, offer for sale and have
sold the Compound and Product in the U.S./Canadian Territory, subject to the terms and conditions
of this Sublicense Agreement. For clarity, the foregoing license grant includes the right of
Novartis or its Affiliates to (i) make and have made Compound or Product in the ROW Territory for
sale only in the U.S./Canadian Territory, and (ii) research and develop Compounds in the ROW
Territory and in the U.S./Canadian Territory (but, as to the right to research and develop
Compounds in the ROW Territory, only as necessary for Novartis and its Affiliates to develop and
commercialize the Compound and Products in the U.S./Canadian Territory). For further clarity,
subject to the preceding sentence, the foregoing license grant does not include a license to any
rights under the Vanda Know-How to the extent that any of the Vanda Know-How relates to the
development, manufacture, use, import or commercialization of the Compound or Product in the Field
for the ROW Territory, which rights are hereby reserved for Vanda. For the avoidance of doubt,
Novartis and its Affiliates and licensed Third Parties and Sublicensees shall also be entitled to
utilize the Patents, Know-How and Vanda Know-How in the Field within any country in the ROW
Territory for the research, development and manufacture of the Compound and Product for marketing,
distribution, importing and sale in the U.S./Canadian Territory or within any country of the

Page 14

 

ROW Territory where Vanda’s rights under this Sublicense Agreement have been terminated. The
license granted to Novartis by Vanda shall include the right of Novartis to sublicense its rights
under this Sublicense Agreement, but only upon Vanda’s prior written consent, which consent shall
not be unreasonably withheld. Any such sublicense(s) shall impose upon a Sublicensee(s) of
Novartis substantially the same terms and conditions as Novartis assumes in this Sublicense
Agreement. As used in this Sublicense Agreement, with respect to licenses or sublicenses granted
by Vanda, the term “Exclusive” shall mean that neither Vanda, nor its Affiliates shall grant any
other license to, nor themselves exploit, the Vanda Know-How with respect to the Compound and
Product in the Field in the U.S./Canadian Territory (unless otherwise specified herein).

     2.2 The duration of any sublicense or license granted under Section 2.1 shall be limited to
the duration, on a country-by-country basis, of the intellectual property rights which comprise the
Patents, Vanda Know-How and Know-How, as applicable, with respect to a relevant country, provided
that the termination of any sublicense or license, as applicable, with respect to any country,
shall be without prejudice to the rights or obligations of either party with respect to the other
countries. Notwithstanding the foregoing but subject to Sections 3.4 and 3.5 hereof, Novartis
acknowledges and agrees that Vanda shall have the right to continue to use on a royalty-free,
non-exclusive basis the information which constitutes the Patents and Know-How on a
country-by-country basis in the ROW Territory for the Field after the Patents expire or cease to be
valid or enforceable and/or Know-How has entered into the public domain, as applicable. In
addition, notwithstanding the foregoing, Vanda acknowledges and agrees that Novartis shall have the
right to continue to use on a royalty-free, non-exclusive basis the Vanda Know-How in the
U.S./Canadian Territory for the Field after the Vanda Know-How has entered into the public domain.
For clarity, Vanda Know-How entering into the public domain does not affect any of Novartis’
obligations under Section 3.7.

     2.3 (a) Novartis grants to Vanda a non-exclusive, ROW Territory sublicense to make or use any
analytical reference standards, intermediate or metabolite of the Compound or Product not listed in
Appendix B hereto which may be claimed in Patents in the ROW Territory limited solely to making or
using the Compound or Product. The foregoing sublicense shall include the right to sublicense, but
only upon the prior written consent of each of

Page 15

 

Sanofi-Aventis, Titan and Novartis, which consent shall not be unreasonably withheld. Any
such sublicense shall impose upon the 

Sublicensee(s) substantially the same terms and conditions as
Vanda assumes in this Sublicense Agreement.

          (b) *.

          (c) *.

     2.4 (a) Vanda may, at its option, promote, market and sell the Product in the ROW Territory
under the trademark “FANAPTTM” which has been approved by Sanofi-Aventis, Titan and Novartis. If
Vanda selects another trademark besides “FANAPTTM” for the promotion, marketing and sale of Products
in the ROW Territory, then Vanda will promptly inform Sanofi-Aventis, Titan and Novartis of the
selected and legally screened trademark(s) and each of the three parties will have twenty (20)
business days in which to either approve or reject the selection(s). Subject to the preceding
sentence, Vanda shall be responsible for the selection and registration of such trademark(s) in all
countries of the ROW Territory at its own cost. In the event the sublicense and licenses granted
hereunder are terminated in a

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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particular country in the ROW Territory, other than pursuant to Section 10.2 or as a result of
Vanda’s termination of this Sublicense Agreement for breach pursuant to Section 10.4, and Novartis
exercises the right to promote, market or sell the Product in such country in the ROW Territory
then upon Novartis’ request (a) Vanda shall grant to Novartis or its designee(s) a trademark
license, on terms and conditions substantially similar to those set forth in Appendix C with
respect to the Vanda Trademarks licensed thereunder, at a royalty to be negotiated in good faith
(which royalty shall not be less than * percent (*%) and no more than * percent (*%) on Net Sales
of the Product by Novartis and/or its designees) at such time to use the trademark used by Vanda in
connection with promoting, marketing or selling the Product in such country or (b) Novartis or its
designee(s) shall select and register at Novartis’ cost a trademark of its own in connection with
the marketing of the Product in such country, provided such Novartis trademark is not in any way
confusingly similar to the Vanda Trademark used in such country. Novartis shall use the trademark
that it has chosen as a trademark (rather than a Vanda Trademark) in promoting, marketing or
selling the Product in any country that is a member of a free trade union or other economic
grouping (e.g., the European Union, EEA, NAFTA, ASEAN and ANDEAN Pact countries) where Vanda is
promoting, marketing or selling the Product under a Vanda Trademark. For the avoidance of doubt,
the foregoing shall not in any way restrict Novartis from being able to use the trademark “FANAPTTM”
in the U.S./Canadian Territory in accordance with and subject to the terms of this Agreement,
including Appendix C.

          (b) The parties acknowledge and agree that Products sold within the United States will be sold
only under the Vanda trademark “FANAPTTM”. The terms and conditions associated with Novartis’ right
to use the Vanda trademark “FANAPTTM” and certain other Vanda Trademarks pursuant to this Sublicense
Agreement and the exclusive licenses granted by Vanda to Novartis with respect to such Vanda
Trademarks are set forth in Appendix C hereto. If Novartis elects to file for and commercialize
any Depot Formulation of the Product in the U.S./Canadian Territory under an alternative trademark
selected by Novartis other than “FANAPTTM” (the “Depot Trademark”), and such Depot Trademark is
approved by Sanofi-Aventis pursuant to Section 2.5 of the Titan Agreement, then Vanda shall have
the option, exercisable at any time upon written notice to Novartis, to obtain a royalty-free,
exclusive license to the Depot Trademark in the ROW Territory and Novartis shall grant such a

 

			
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license in accordance with the terms of Appendix C for use in connection with the commercialization
of the Depot Formulation in the ROW Territory. In addition, promptly following (but in any event
no later than * after the Effective Date), Vanda shall, and shall cause its Affiliates, to transfer
and assign to Novartis (or its designated Affiliates) all Vanda Domain Names. After the Effective
Date, Novartis shall have the right to determine the content of any such sites.

     2.5 If Vanda notifies Novartis in writing that Vanda (and/or its Affiliate(s)) is
not willing or does not have the capability itself or cannot enter into a sublicense or other
agreement (providing the necessary expertise and resources) in country(ies) in the ROW Territory
outside those covered by NAFTA (excluding the U.S./Canadian Territory) and the European Union to:
(a) develop the Compound or Product (as the case may warrant), and (b) manufacture the Compound
and/or market the Product (as the case may warrant) at a Competitive Industry Standard Level at the
date of Product approval in such country(ies), then Novartis shall have the right to terminate the
sublicense and licenses granted to Vanda by this Sublicense Agreement but only with respect to such
country(ies), unless the parties agree in writing to extend such time frame.

     2.6 If the Product is not launched in a Major Market Country at a Competitive
Industry Standard Level by Vanda, its Affiliate and/or Sublicensee within * after the date of
receiving the approvals necessary to commercialize the Product in a Major Market Country, Vanda and
Novartis shall review the progress of launch efforts, it being understood that the parties, at the
request of a party, may review the progress of launch efforts prior to the end of * period, and
Vanda shall keep Novartis and Sanofi-Aventis informed on a regular basis of the status of its
launch efforts after receiving the approvals necessary to commercialize the Product in a Major
Market Country until such time that launch is achieved in a Major Market Country. If launch in a
Major Market Country is not achieved within one (1) year after the date of receiving the approvals
necessary to commercialize the Product in such country(ies) (circumstances shall not include events
of force majeure as defined in Section 15), or in any event within two (2) years after Product
approval then the sublicenses and licenses granted to Vanda by this Sublicense Agreement shall
terminate, but only with respect to the particular country where launch was not achieved within
such one (1) year or two (2) year time

 

			
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frame, as the case may be, unless the parties agree in writing to extend such time frame (the
parties shall discuss in such event, factors including but not limited to the necessity to obtain
approval of Product for its target indication(s)).

     2.7 If a regulatory approval in the European Union which is equivalent to an NDA in the United
States (i.e., Marketing Authorization Application via the Centralized Procedure or marketing
approvals for the member countries of the European Union via the mutual recognition procedure) for
the Product is not obtained within three (3) years of Vanda’s or its Affiliate’s or Sublicensee’s
filing of such equivalent ex-U.S. filing, and such failure is solely due to circumstances within
Vanda’s reasonable control, then the parties shall discuss the reasons and proposed remedies of
such failure in good faith; provided, however, that if the parties are unable to agree on any such
remedies, Novartis shall have the right to terminate the sublicense and licenses granted by this
Sublicense Agreement, but only with respect to the specific country(ies) within the European Union
where such approval was not obtained, unless the parties agree in writing to extend such time
frame. If, however, Novartis determines that such failure is due to circumstances beyond the
reasonable control of Vanda (including without limitation delays on the part of the regulatory
agencies), the three (3) year period shall be extended to take into account such circumstances, the
duration of any such extension to be mutually agreed upon.

3. PAYMENTS AND ROYALTIES

     3.1 The parties acknowledge and agree that, as of the Effective Date of this Sublicense
Agreement, Vanda has satisfied the following payment obligations to Novartis under the Original
Agreement in a timely manner:

          (a) An up-front license fee of Five Hundred Thousand United States Dollars (USD $500,000)
within ten (10) business days of both parties’ execution of the Original Agreement.

          (b) A first development milestone payment of Five Million Dollars (USD $5,000,000) upon the
first NDA Filing (based on a complete regulatory package and for these purposes not to include an
ANDA or “Paper” NDA) for the Product in the Field in the United States (New Drug Application) by
Vanda, its Affiliate or Sublicensee. As used in this Section

Page 19

 

3.1(b), *. The parties acknowledge and agree that the Five Million Dollar payment provided
for herein shall, unless otherwise expressly provided for herein, be non-refundable.

          (c) A second development milestone payment of Twelve Million Dollars (USD $12,000,000) paid by
Vanda to Novartis on obtaining final marketing authorization approval in the United States subject
to Vanda having paid the outstanding amount of Five Million Dollars (USD $5,000,000) prior to the
Execution Date.

     3.2 (a) Unless a party instructs the other party in writing otherwise, all cash payments by
the other party to a party (including, without limitation, up-front payments, milestone payments,
and royalties) shall be made by bank wire transfer as follows:

     For Payments Made to Novartis:

Bank: *

Swift: *

Correspondent Bank for USD: *

USD Account Novartis AG, Basel / Switzerland: *

USD Account Novartis Pharma AG, Basel / Switzerland: *

For Payments Made to Vanda:

*

ABA Routing # *

Account # *

Attn: *

Account Name: *

FFC: *

          (b) At least two (2) business days prior to the planned wire transfer to either of the above
accounts, the party making the payment shall notify the other party of the amount and date the cash
shall be transferred.

          (c) In the event of a late payment hereunder by either party, such party shall pay to the
other party interest based on * as stated in *, on the date such payment is due (or the immediately
preceding business date if such payment date is not a business date) plus * percent (*%) on the
outstanding balance

 

			
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Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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until such balance, including interest, is paid in full to the other party. The acceptance of
such late payment shall act as a waiver of any rights the other party may have hereunder due to a
breach by a party relating solely to such payment being made late.

     3.3 As consideration for the sublicense and licenses granted to Vanda in this Sublicense
Agreement, Vanda shall pay to Novartis, in those countries in the ROW Territory where, and for the
period, Patents claiming a priority date of May 19, 1989 and December 29, 1989 or Patents owned by
Novartis AG or its Affiliates in a particular country in the ROW Territory for which a patent had
been granted validly claiming the Compound or the manufacture, formulation or the use thereof for
use in the Field exist:

          (a) * per cent (*%) royalty on Net Sales of the Product (other than any Depot Formulation of
the Product) by Vanda, its Affiliates and Sublicensees in the ROW Territory in each calendar year;
and

          (b) * percent (*%) royalty on Net Sales of the Depot Formulation of the Product by Vanda, its
Affiliates and Sublicensees in each calendar year; provided, however, that if the parties enter
into a Co-Commercialization Agreement pursuant to Section 5.12, then Vanda’s continuing royalty
obligations, if any, with respect to the sales of any Product by Vanda, its Affiliates or its
Sublicensees in the country(ies) in the ROW Territory which are subject to a Co-Commercialization
Agreement immediately following the effective date of that Co-Commercialization Agreement will be
as expressly set forth therein and the royalty terms in this Section 3.3 with respect to such
country(ies) shall no longer apply to any such sales.

     Notwithstanding anything to the contrary herein, only one royalty payment shall be due with
respect to the same unit of Product regardless of, for example, whether such Product is covered by
more than one valid claim within the Patents or at least one valid claim within the Patents and the
Know-How.

     3.4 (a) In order to spread royalty payments hereunder over a sufficient period of time, in
each of those countries in the ROW Territory where the Patents claiming a priority date of May 19,
1989 and December 29, 1989 or Patents owned by Novartis AG or its Affiliates in a particular
country in the ROW Territory for which a patent had been granted validly claiming

 

			
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Commission.
	 
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Compound or the manufacture, formulation or use hereof for use in the Field have expired,
Vanda’s obligations to pay royalties for use of Patents in such country shall cease, and Vanda
and/or any of its Sublicensees shall pay directly to Sanofi-Aventis a royalty for Know-How not
relating to manufacturing (whether or not such Know-How continues as a valid intellectual property
right or is in the public domain) of * percent (*%) on Vanda’s, its Affiliates’ and any
Sublicensees’ Net Sales of the Product in each such country in a calendar year for a period of *
after the expiration of the final remaining Patent claiming a priority date of May 19, 1989 and
December 29, 1989 or Patents owned by Novartis AG or its Affiliates in each such country. After
the end of such * period, no further royalties arising from sales of the Product in such country
shall be due to Sanofi-Aventis and Novartis, and Vanda shall be entitled to continue to use the
Know-How on a fully-paid, irrevocable basis in accordance with Section 10.2.

          (b) In the event that a Third Party’s generic version of Compound is actively marketed in a
process patent country (that is, any country in which the only protection in relation to processes
for the manufacture of Compound has been obtained and not protection for Compound as a new chemical
entity per se) in the ROW Territory where a Patent(s) has been granted validly claiming Compound or
the manufacture, formulation or use thereof for use in the Field exists, then subject to Sections
3.4(c) and (d) below, the royalty rate that Vanda shall pay to Novartis on Vanda’s or its
Affiliate’s or Sublicensees Net Sales of the Product in that process patent country in a calendar
year shall be * percent (*%) until such Patent(s) expires, provided: (i) Vanda has obtained, or
has made every effort to obtain, the maximum allowable period of exclusivity to which it is
entitled based on the Product’s registration data in that process patent country to the extent such
exclusivity in available; and (ii) the parties in accordance with Article 8 of this Sublicense
Agreement, will implement an appropriate strategy for addressing the commercialization of Compound
by said Third Party. Unless otherwise agreed to by the parties, Vanda shall at its sole cost be
obligated to diligently enforce the Patent(s) in the ROW Territory until there is a binding,
unappealable judicial determination as to whether the manufacture, formulation or use of such
generic version of Compound infringes Patent(s) or until it is demonstrated to the satisfaction of
both Parties that such Patent(s) are not being infringed in such country.

 

			
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          (c) If it is demonstrated to the satisfaction of both Parties or the binding unappealable
judicial determination under Section 3.4(b) holds that Patent(s) are not being infringed in such
process patent country, the royalty rate that Vanda shall pay to Novartis on Vanda’s or its
Affiliate’s or Sublicensee’s Net Sales of Product in that process patent country in a calendar year
shall continue to be * percent (*%) until such Patent(s) expires.

          (d) If the binding, unappealable judicial determination under Section 3.4(b) holds that
Patent(s) are being infringed in such process patent country, Vanda shall take reasonable steps to
have enforced such determination. If as a result, the commercialization of Compound by the Third
Party in that country is discontinued:

          (i) the royalty rate(s) that Vanda shall pay to Novartis on Vanda’s or its Affiliate’s or
Sublicensee’s Net Sales of the Product in that process patent country in a calendar year shall be,
commencing on the later of: (A) the date such binding, unappealable judicial determination is
rendered, and (B) the date (if any) specified in such determination that commercialization of such
Third Party generic version of the Product is to be discontinued, those royalty rates provided for
in Section 3.3 until such Patent(s) expires; and

          (ii) Vanda shall repay to Novartis, within thirty (30) days after the later of: (A) the date
such binding, unappealable judicial determination was rendered, and (B) the date (if any) specified
in such determination that commercialization of such Third Party generic version of the Product is
to be discontinued, an amount equal to the difference between the royalties that Vanda would have
paid to Novartis under Section 3.3, at the * percent (*%) or * percent (*%) rate, as applicable,
and the amount of royalties that Vanda actually paid to Novartis for the period commencing on the
date the royalty rate for that process patent country was reduced to * percent (*%) pursuant to
Section 3.4(b), and ending on the later of: (A) the date such binding, unappealable judicial
determination was rendered, and (B) the date (if any) specified in such determination that
commercialization of such Third Party generic version of the Product is to be discontinued.

          (e) After a Patent(s) in any process patent country expires, Vanda and/or its Sublicensee
shall pay directly to Sanofi-Aventis royalties as provided for in Section 3.4(a).

 

			
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     3.5 As consideration for the sublicenses and licenses granted to Vanda under this
Sublicense Agreement in those countries in the ROW Territory for which (a) a Patent application for
the Compound or Product is pending or (b) no Patent application has been filed or (c) Patents have
been abandoned or been held invalid or unenforceable by a decision of a court or tribunal of
competent jurisdiction from which no appeal is or can be taken (collectively, “Non-Patent
Countries”), Vanda shall pay to Novartis, on a country-by-country basis, a * percent (*%) royalty
for Know-How not relating to manufacturing (whether or not such Know-How continues as a valid
intellectual property right or is in the public domain) on Vanda’s, its Affiliates’ and any
Sublicensees’ Net Sales of the Product in the Non-Patent Countries in a calendar year for a period
of * from the date of the first commercial sale of the Product in each such country by Vanda, its
Affiliates or Sublicensees. After the end of such * period, no further royalties arising from the
sales of the Product in such country shall be due. However, with respect to Section 3.5(a) or (b),
if at any time during or after such * period a Patent for Compound or Product is issued in such
country, subject to Section 3.4, Vanda shall pay to Novartis, from the date the Patent was issued,
the same royalties as provided for in Sections 3.3(a) and (b) above, as applicable. Upon
expiration of Vanda’s obligation to pay a royalty under such Patent, notwithstanding Section 3.4, a
* percent (*%) royalty for Know-How not relating to manufacturing (whether or not such Know-How
continues as a valid intellectual property right or is in the public domain), on Net Sales of the
Product in such country, shall be paid by Vanda and/or any of its Sublicensees directly to
Sanofi-Aventis for a period of * after which Vanda shall be entitled to continue to use the
Know-How on a fully-paid, irrevocable basis in accordance with Section 10.2.

     3.6 As consideration for the rights, interests and licenses granted to Novartis
under this Sublicense Agreement including the assignment of the Vanda Domain Names and Existing
Applications and Approvals by Vanda to Novartis; relinquishment of Vanda’s right to develop, have
developed, make, have made, use, import, sell, offer for sale and have sold the Compound and
Product in the U.S./Canadian Territory (except to the extent retained by Vanda as expressly
provided herein); and the licenses granted by Vanda to Novartis under this Sublicense Agreement
with respect to the Vanda Know-How and Vanda Trademarks, Novartis shall make the following payments
to Vanda:

 

			
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          (a) a one-time non-refundable, up-front fee of Two Hundred Million Dollars (USD
$200,000,000) within * after receipt by Novartis of an original invoice in the form of Appendix I,
which invoice shall be issued no earlier than the Effective Date;

          (b) a development milestone payment of * which shall be payable one time only by Novartis to
Vanda within * after receipt by Novartis of an original invoice in the form of Exhibit L, which
invoice shall be issued no earlier than receipt of *.

     3.7 As consideration for the rights, interests and licenses granted to Novartis under this
Sublicense Agreement, including the assignment of the Vanda Domain Names and Existing Applications
and Approvals by Vanda to Novartis; relinquishment of Vanda’s right to develop, have developed,
make, have made, use, import, sell, offer for sale and have sold the Compound and Product in the
U.S./Canadian Territory (except to the extent retained by Vanda as expressly provided herein); and
the licenses granted by Vanda to Novartis under this Sublicense Agreement with respect to the Vanda
Know-How and Vanda Trademarks, Novartis shall pay to Vanda, in those countries in the U.S./Canadian
Territory where, and for the period, * exist:

          (a) (i) A royalty on Net Sales of Products (solely to the extent the sale of such Product is
covered by any claim of such patent(s)) by Novartis, its Affiliates and Sublicensees in the
U.S./Canadian Territory in each calendar year as follows:

	 	 	 	 	 
	Total Calendar Year Net Sales of Products in the	 	 
	U.S./Canadian Territory	 	Royalty Rate
	Portion of Net Sales which are less than *
	 	 	*	%
	Portion of Net Sales which are greater than or equal to * and
less than *
	 	 	*	%
	Portion of Net Sales which are greater than or equal to * and
less than *
	 	 	*	%
	Portion of Net Sales which are greater than or equal to *
	 	 	*	%

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
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portions.

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     *.

          (ii) The royalties payable by Novartis under Section 3.7(a)(i) with respect to any Product
shall be reduced by * percent (*%) in a country in the U.S./Canadian Territory during a calendar
year (or any portion thereof) if the following is true: *.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
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*.

          (b) Novartis shall also pay to Vanda the following milestone payments:

	 	 	 	 	 
	Net Sales Milestone	 	Milestone payment from Novartis to Vanda
	First calendar year in which Net
Sales of Products in the
U.S./Canadian Territory is
greater than *
	 	 	*	 
	First calendar year in which Net
Sales of Products in the
U.S./Canadian Territory is
greater than *
	 	 	*	 
	First calendar year in which Net
Sales of Products in the
U.S./Canadian Territory is
greater than *
	 	 	*	 

     Novartis shall provide Vanda with written notice of the achievement of each sales milestone
within * after such milestone is achieved. After receipt of such notice, Vanda shall submit an
original invoice to Novartis substantially in the form of Appendix I for the corresponding sales
milestone payment. Novartis shall make the corresponding sales milestone payment within * after
receipt of such original invoice.

     Each milestone shall be paid by Novartis one time only following the first occurrence of the
applicable milestone as set forth under this subsection. In the event that a second milestone

 

			
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Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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becomes due and payable within one calendar year of the preceding milestone (including if more
than one milestone becomes due and payable at the same time), the second milestone shall be paid *.
No additional milestones pursuant to this Section 3.7(b) shall be due for milestones achieved in
connection with the development and commercialization of any Product for any additional indications
or for any compound different from the Compound.

4. COMPULSORY LICENSES AND THIRD PARTY LICENSES

     4.1 (a) In the event that during the term of this Sublicense Agreement a governmental agency
grants or compels Sanofi-Aventis and/or Titan and/or Novartis and/or Vanda to grant a license to
any Third Party for the Compound or Product in any country(ies), it is the intent of the parties
that neither party be placed at a competitive disadvantage as a result of a lower royalty rate
being granted to a Third Party compulsory licensee. Therefore, in the event that Novartis, Titan
or Sanofi-Aventis and/or Vanda is compelled to grant a license to a Third Party in any country,
Novartis, Titan, Vanda and Sanofi-Aventis will meet to discuss in good faith equitable
arrangements, which could include adjustments to royalty rates which are to be paid on Net Sales of
Product in such country, to accomplish the intent of Novartis and Vanda set forth above. In such
discussions, consideration will be given to Novartis’ obligations to Sanofi-Aventis and Titan under
Section 4.1(d) of the Titan Agreement and Section 4.1(a) of the Sanofi-Aventis Agreement.

          (b) If a governmental authority in a country imposes a maximum royalty rate, such that lower
royalty rates than would otherwise apply under this Sublicense Agreement are mandated in such
country, then the royalty rates provided for herein shall be reduced to equal such lower rates for
sales of the Product in such country for the period such lower royalty rate is required by any
governmental authority and shall cease when the applicable royalty payment obligations cease under
this Sublicense Agreement.

     4.2 If, during the term of this Sublicense Agreement, Sanofi-Aventis and Vanda (in the case of
the ROW Territory) or Sanofi-Aventis and Novartis (in the case of the U.S./Canadian Territory)
agree that patent(s) of a Third Party exists in any country in the

 

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applicable territory covering the manufacture, use or sale of the Compound or Product, and if
it should prove, in the reasonable judgment of Vanda and Sanofi-Aventis (in the case of the ROW
Territory) or Sanofi-Aventis and Novartis (in the case of the U.S./Canadian Territory), impractical
or impossible for Vanda or its Affiliates or Sublicensees or Novartis or its Affiliates or
Sublicensees, as applicable, to continue the activity or activities sublicensed or licensed
hereunder in the Field without obtaining a royalty-bearing license from such Third Party under such
patent(s) or if Vanda and Sanofi-Aventis or Novartis and Sanofi-Aventis, as applicable, otherwise
agree it is desirable for Sanofi-Aventis or Novartis or its Affiliates or Sublicensees, as
applicable, to acquire any Third Party patent or license in connection with the development or
manufacture of Compound or Product covered by Patents in the ROW Territory or U.S./Canadian
Territory, as applicable, then in either case the provisions of Section 8.10(c) shall apply.

     4.3 If, after attempting in good faith to resolve the issue relating to licensing Third Party
patents in Section 4.2 between themselves, the applicable parties are unable to agree within ninety
(90) days as to whether it is impracticable or impossible for Vanda, its Affiliates or
Sublicensees, or Novartis or its Affiliates or Sublicensees, as applicable, to continue the
activity or activities sublicensed or licensed hereunder without obtaining a royalty-bearing
license from a Third Party, the issue shall be submitted to a disinterested, competent and
experienced patent attorney reasonably acceptable to both Vanda and Sanofi-Aventis or Novartis and
Vanda, as applicable, for resolution. If the applicable parties cannot agree on the selection of
such patent attorney, then each party shall select a patent attorney and the selected patent
attorneys shall select a mutually acceptable patent attorney who will determine whether such Third
Party rights materially inhibit Vanda’s or Novartis’, as applicable, ability to manufacture,
distribute or sell the Compound or Product. The compensation to, and expense of such patent
attorney shall be borne by the party whose position is not upheld by such patent attorney (that is,
for example, if the patent attorney determines that such Third Party rights do not materially
inhibit Vanda’s or Novartis’, as applicable, ability to manufacture, distribute or sell the
Compound or Product, then the costs of such patent attorney shall be borne by Vanda or Novartis,
respectively).

 Page 29

 

	5.	 	DEVELOPMENT

     5.1 Upon the Effective Date of this Sublicense Agreement, subject to Section 5.12, Vanda shall
have full responsibility, at its own cost and expense, for all activities which are related to
development, safety and required periodic reporting to the appropriate regulatory agencies in the
ROW Territory, marketing, regulatory approvals, price registrations, and other activities required
by Vanda, its Affiliates or its Sublicensee(s) (or their respective agents or distributors) to
obtain appropriate government approvals for, and to commercialize, the Compound and Product in the
ROW Territory. Vanda shall not assume, nor shall Vanda be liable for, any costs or activities
(whether scientific, financial or otherwise) relating to the Compound or Product that were incurred
or undertaken prior to the signing of the Original Agreement (including without limitation any
costs, expenses, damages, losses, fines, penalties or the like that may be awarded or assessed
after the signing of the Original Agreement, but which arise out of events and activities that
occurred prior to the signing of the Original Agreement). Neither Vanda nor any other Person on
Vanda’s behalf shall advertise the Compound or Product, or canvass or solicit orders for Product,
outside the ROW Territory or open branches for the sale of or maintain distribution depots for
Product outside the ROW Territory.

     5.2 Provided that the Affiliates, Sublicensees and other Third Parties agree to substantially
the same terms of confidentiality in Section 6.6 hereof and subject to Novartis’ rights to
co-commercialize the Depot Formulation of the Product under Section 5.12, Vanda may appoint such
Affiliates, Sublicensees(s) and other Third Parties to perform any and all development activities
necessary to obtain government approvals for the Product in the ROW Territory. The appointment of
any Sublicensee shall require *.

     5.3 Vanda shall, in a manner consistent with the effort Vanda devotes to its own products
having the same or similar potential value as Product, exercise its Commercially Reasonable Efforts
and diligence in conducting clinical trials and commercializing the Product alone or in
collaboration with a Third Party or with Novartis in accordance with any Co-Commercialization
Agreement entered into pursuant to Section 5.12 in the ROW Territory, and in undertaking those
investigations and actions required to obtain appropriate

 

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governmental approvals to manufacture the Compound and market the Product in the ROW
Territory. Except as otherwise set forth in a Co-Commercialization Agreement, all such activity
shall be undertaken at Vanda’s expense. At Vanda’s request, Novartis shall arrange with
Sanofi-Aventis to provide assistance or consultation at Vanda’s expense in support of the
development of the Compound or Product, but Sanofi-Aventis in its discretion may limit such
assistance and consultation.

     5.4 The parties further agree that:

          (a) Novartis will be informed by Vanda on a timely and regular basis of the development,
registration and commercialization of the Compound and Product in the ROW Territory, and Novartis
will have an opportunity to regularly meet with Vanda to provide an overview on the status of the
development and registration process in the U.S./Canadian Territory through the Joint Steering
Committee meetings, as described in Appendix E; and

          (b) Vanda shall be solely responsible for the negotiation of contracts with any CROs and other
organizations it desires to work on development activities relating to the Compound and/or Product
and Vanda shall bear all legal and financial responsibility under such contracts.

     5.5 Any future inventions or discoveries or improvements which arise from Vanda’s, its
Affiliates’ or Sublicensees’ work relating to the development and/or manufacture of the Compound
and/or Product shall be owned by Vanda, but shall be licensed to Sanofi-Aventis, Titan and Novartis
at their option on a worldwide, non-exclusive, perpetual basis, at a license fee and/or royalty to
be negotiated at such time. Any inventions or discoveries or improvements arising in areas outside
of the original field, which was defined in the Sanofi-Aventis Agreement and the Titan Agreement,
shall be owned by Vanda, but shall only be licensed to Sanofi-Aventis, at Sanofi-Aventis’ option on
a worldwide, non-exclusive, perpetual basis, at a license fee and/or royalty to be negotiated at
such time. Notwithstanding anything to the contrary in this Sublicense Agreement, in the event
that this Sublicense Agreement expires or terminates, in its entirety or with respect to any
country, (except as a result of material breach of the Sublicense Agreement by Novartis), any
inventions or discoveries or improvements which arise from Vanda’s, its Affiliates’ or
Sublicensees’ work

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relating to development and/or manufacture of the Compound and/or Product (the “Vanda IP”)
shall be disclosed to Sanofi-Aventis and be owned by and become the property of Sanofi-Aventis (or
assignees or successors, as the case may be), but shall be licensed to Titan under Section 2.1(a)
of the Sanofi-Aventis-Agreement and subsequently to Novartis under the Titan Agreement. Vanda
shall promptly undertake any and all actions necessary to effectuate such ownership in and
assignment to Sanofi-Aventis. If the Sublicense Agreement expires or terminates with respect to a
particular country, then the requirements of this Section 5.5 and Sanofi-Aventis’ rights to the
Vanda IP shall be limited to such country. *. Any inventions or discoveries or improvements
covered by any future patent or patent application which arise from Novartis’, its Affiliates’ or
Sublicensees’ work relating to the development and/or manufacture of the Compound and/or Product
shall be owned by Novartis, subject to Sanofi-Aventis’ rights to obtain a license to such
inventions, discoveries or improvements under the applicable provisions of the Titan Agreement, but
shall be licensed to Vanda at its option on a worldwide, non-exclusive, perpetual basis, at a
license fee and/or royalty *.

     5.6 The parties further agree that:

          (a) Upon the Effective Date of this Sublicense Agreement, Novartis shall have full
responsibility, at its own cost and expense, for all activities which are related to development,
safety and required periodic reporting to the appropriate regulatory agencies in the U.S./Canadian
Territory, marketing, regulatory approvals, price registrations, and other activities required by
Novartis, its Affiliates or its Sublicensee(s) (or their respective agents or distributors) to
obtain appropriate government approvals for, and to commercialize, the Compound and Product in the
U.S./Canadian Territory. For each Product to be commercialized in the U.S./Canadian Territory, as
between the parties, Novartis shall be solely responsible for accepting orders for Product from
Third Parties and handling all returns, recalls, order processing, invoicing and collection,
distribution, and inventory and receivables arising from

 

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sales to Third Parties, and Novartis will have the exclusive right to book sales of all
Products in the U.S./Canadian Territory. Neither Novartis nor any Person on Novartis’ behalf shall
advertise the Compound or Product or canvass or solicit orders for Product outside the
U.S./Canadian Territory or open branches for the sale of or maintain distribution depots for
Product outside the U.S./Canadian Territory, except in any country(ies) of the ROW Territory with
respect to which (i) the parties have entered into a Co-Commercialization Agreement or (ii) Vanda’s
rights and obligations under this Sublicense Agreement have terminated. Provided that the
Affiliates, Sublicensees and other Third Parties agree to substantially the same terms of
confidentiality in Section 6.6 hereof, Novartis may appoint such Affiliates, Sublicensees(s) and
other Third Parties to perform any and all development activities necessary to obtain government
approvals for the Product in the U.S./Canadian Territory.

          (b) Novartis shall, in a manner *, exercise its Commercially Reasonable Efforts to develop a
Depot Formulation and to commercialize the Product alone or in collaboration with a Third Party,
and to undertake those investigations and actions required to obtain appropriate regulatory
approvals (to the extent not already obtained and included in the Existing Applications and
Approvals) as needed to manufacture Compound and Product and to commercialize the Product in the
U.S./Canadian Territory. Attached hereto as Appendix H is a draft development plan prepared for
Novartis with respect to development of a Depot Formulation. If Novartis decides to stop its
activities with respect to the development of the Depot Formulation for the U.S./Canadian
Territory, then Novartis shall promptly notify Vanda in writing of such decision. Notwithstanding
the foregoing, Vanda shall be responsible to complete the * studies identified as “ongoing” on
Appendix H. Vanda shall keep Novartis apprised of the status and results of such studies and shall
provide all Data related thereto to Novartis in accordance with Section 6.4(a).

          (c) Vanda will be informed by Novartis on a timely and regular basis of the development,
registration and commercialization of the Compound and Product in the U.S./Canadian Territory
(including any Depot Formulations of the Product). Vanda will have an opportunity to regularly
meet with Novartis to provide an overview on the status of the development and registration process
in the ROW Territory through the Joint Steering

 

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Committee meetings, as described in Appendix E. Without limiting the foregoing, Novartis or
its Sublicensees shall promptly advise Vanda in writing upon the submission and filing for
government regulatory approval to manufacture and market any Products, including any Depot
Formulations of the Product, in the U.S./Canadian Territory.

          (d) Other than the fee expressly provided for in Appendix G for which Novartis assumes full
responsibility, at its own cost and expense, and for which Novartis will reimburse Vanda within *
after receipt of Vanda’s invoice for such amount in the form of Appendix I (such amount not to be
invoiced until after the Effective Date),Novartis shall not assume, nor shall Novartis be liable
for, any costs or activities (whether scientific, financial or otherwise) relating to the Compound
or Product that were incurred or undertaken by or on behalf of Vanda prior to the Effective Date of
this Sublicense Agreement (including without limitation any costs, expenses, damages, losses,
fines, penalties or the like that may be awarded or assessed after the Effective Date of this
Sublicense Agreement, but which arise out of events and activities that occurred prior to the
Effective Date of this Sublicense Agreement).

     5.7 In addition to that which is required under Section 5.4(a), Vanda shall provide to
Novartis regular written reports at least every six (6) months setting forth significant
developments and improvements, including the status and progress of the development and/or
registration activities, that affect the Compound or Product in the ROW Territory.

     5.8 (a) Vanda, or its Sublicensees, shall promptly advise Novartis in writing upon the
submission and filing for government regulatory approval to manufacture and market the Product in
any country in the ROW Territory, and upon the receipt of government regulatory approval to market
the Product, in each case in each country in the ROW Territory, and shall commence marketing the
Product in such country in accordance with Section 5.3.

          (b) Each party shall provide the other party with a draft of each clinical trial protocol for
a clinical trial of the Compound or Product prior to the implementation of such protocol, and the
other party shall have * after receipt to discuss and review each such protocol with such party.
With respect to the creation, modification and implementation of the protocol, the party shall,
after *, provide the other party all final protocols.

 

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          (c) Each party shall provide to the other party, within * of completion of all study
reports for a clinical study, a summary of material results from the study reports relating to the
Compound or Product. For purposes of this Section 5.8(c), a result is considered material if it
(i) is intended for use in any submission to any regulatory or governmental authority, or (ii) will
have any significant effect, whether positive or negative, on the marketing of the Compound or
Product. For avoidance of doubt, this Section 5.8(c) (i) includes, but is not limited to, the
exchange of electronic databases in a mutually agreeable format and (ii) does not limit the
parties’ rights to Data under Section 6.4.

          (d) Each party shall provide the other party a copy of all labeling for the Compound or
Product which is intended to be submitted to any regulatory or governmental authority, and any
modifications thereof, within * after its submission, approval and/or any modifications.

          (e) In addition, each party shall provide the other party, within * of its receipt or
submission, all material correspondence with the EMEA, FDA or an equivalent regulatory or
governmental authority related to the Compound or Product within the ROW Territory or the
U.S./Canadian Territory, as applicable.

     5.9 Intentionally omitted.

     5.10 If at any time during the term hereof a product is developed by Vanda or any of its
Affiliates or Sublicensees, which product contains the Compound and one or more other
pharmaceutically active ingredients for use in the Field (a “Combination Product”), Novartis shall
negotiate in good faith with Titan an amendment to the Titan Agreement, which amendment will
provide, inter alia for how royalties to be paid by Novartis to Titan for Net Sales of such
Combination Product will be calculated and for how long such royalties shall be paid. After such
amendment to the Titan Agreement has been executed by Novartis and Titan, this Sublicense Agreement
shall be similarly amended by Novartis and Vanda to provide for such Combination Product.

     5.11 Subject to Section 5.12, each party shall have the right and responsibility for
establishing and modifying the terms and conditions with respect to the sale of the Products in

 

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the Field in their respective exclusive territories, in each case in accordance with
applicable law, including applicable pricing and reimbursement approvals, including any terms and
conditions relating to or affecting the price at which the Products will be sold, discounts
available to managed care providers, any discount attributable to payments on receivables,
distribution of the Products, and credits, price adjustments, or other discounts and allowances to
be granted or refused.

     5.12 The parties further agree that:

          (a) Subject to Section 5.12(b) below, within * after Vanda’s filing of an application for
marketing approval for a Product in any country(ies) in the ROW Territory, Vanda will give written
notice to Novartis that it has made such filing, and upon the request of Novartis, the parties will
meet to discuss in good faith how, at Novartis’ exclusive option, Novartis can co-commercialize
such Product in such country(ies) of the ROW Territory. In advance of any such meeting, Vanda will
provide Novartis with appropriate information (including, if available at the time of Novartis’
request, but not limited to, commercialization plans, selling and promotional plans, detailing
efforts, target audience and market research data and any other information reasonably requested by
Novartis and reasonably in Vanda’s possession as of the date such request is made) in order that
the parties may discuss a co-commercialization arrangement for the Product in such country(ies).
If the parties agree to proceed with such co-commercialization by Novartis, the parties’ respective
co-commercialization responsibilities in such country(ies) in the ROW Territory will be negotiated
in good faith and set forth in a definitive agreement (“Co-Commercialization Agreement”). During
the term of any Co-Commercialization Agreement, including any such agreement entered into by the
parties following good faith negotiations pursuant to Section 5.12(b), Vanda shall not *. In
addition to Vanda’s and Novartis’ responsibilities, such Co-Commercialization Agreement will
contain other terms regarding the sales and marketing responsibilities of the parties, including
but not limited to, content, production and approval of promotional materials and marketing
activities, sales training, compensation, compliance, regulatory interactions, adverse event
reporting, and

 

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recalls. If Novartis notifies Vanda in writing that it is not interested in exercising the option
to co-commercialize the Product in the applicable country(ies) of the ROW Territory as described
above or if the parties are unable to timely agree to a Co-Commercialization Agreement with respect
to the co-commercialization of the Product in the applicable country(ies) of the ROW Territory
following Novartis’ exercise of the option, then Vanda may enter into negotiations (and a
definitive agreement) regarding the co-commercialization of the Product in such country(ies) of the
ROW Territory with any Persons.

          (b) If Vanda would like to enter into negotiations regarding the co-commercialization of a
Product in any country(ies) in the ROW Territory at any time prior to Vanda’s filing of the first
application for marketing approval for a Product in such country(ies), then Vanda will provide
written notice of such desire to Novartis (along with reasonable information to help Novartis to
make its decision), and if within * following receipt of such notice, Novartis notifies Vanda in
writing that it would like to discuss with Vanda the possibility of co-commercializing the Product
in such country(ies), then Vanda and Novartis will negotiate reasonably and in good faith with each
other on the terms of a Co-Commercialization Agreement. If within such * period, Novartis notifies
Vanda in writing that it is not interested in co-commercializing the Product in such country(ies)
of the ROW Territory or if Novartis fails to notify Vanda in writing of its decision, then Vanda
may enter into negotiations regarding the co-commercialization of the Product in such country(ies)
of the ROW Territory with any Person(s). If Vanda does not enter into a definitive agreement with
any Person(s) regarding the co-commercialization of the Product in such country(ies) of the ROW
Territory prior to Vanda’s filing of the first application for marketing approval for a Product in
such country(ies) of the ROW Territory, then the terms of Section 5.12(a) will continue to apply to
such country(ies). If Vanda does enter into a definitive agreement with any Person(s) regarding
the co-commercialization of the Product in such country(ies) of the ROW Territory prior to Vanda’s
filing of the first application for marketing approval for a Product in the ROW Territory, then
Novartis’ co-commercialization option under Section 5.12(a) with respect to such country(ies) will
no longer apply.

     5.13 Subject to applicable law, Vanda and its Affiliates shall not, and shall not
permit its Sublicensees to distribute, sell and/or export into the U.S./Canadian Territory the
Compound

 

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or the Product or any country in which the sublicenses or licenses granted to Vanda have been
terminated pursuant to this Sublicense Agreement, and Vanda shall use Commercially Reasonable
Efforts to *.

6. EXCHANGE OF INFORMATION; ASSIGNMENT OF APPROVALS AND CONFIDENTIALITY

     6.1 Promptly following the Effective Date, Vanda shall deliver to Novartis all available Vanda
Know-How, documents, information and other Data which is owned or controlled by Vanda and its
Affiliates as of the Effective Date, which may be reasonably expected to assist Novartis in
developing, registering, manufacturing and marketing the Compound and Product in the U.S./Canadian
Territory. After the Effective Date of this Sublicense Agreement, there shall be a * transition
period during which Vanda shall provide, at its own cost, reasonable resources, expertise, and
documents to effectively transfer the Vanda Know-How and development activity in the U.S./Canadian
Territory to Novartis.

     6.2 As of the Effective Date Vanda shall assign, and hereby does assign, to Novartis (or its
designated Affiliate) all regulatory applications and approvals held by or on behalf of Vanda or
any of its Affiliates or otherwise in the name of Vanda or any of its Affiliates (or any of their
respective designees or agents), in each case related to the Compound and/or Product anywhere in
the U.S./Canadian Territory (the “Existing Applications and Approvals”). Novartis and Vanda
acknowledge that on the Effective Date, record title to the Existing Applications and Approvals may
remain with Vanda or its Affiliates, as the case may be, in the U.S./Canadian Territory, and each
shall be transferred to Novartis (or its designated Affiliates) as soon as practical following the
Effective Date (the effective date of each such transfer being

 

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a “Product Registration Transfer Date”). Promptly after the Effective Date and Vanda’s
receipt of the up-front fee referred to in Section 3.6(a) hereof, the parties shall file with the
applicable regulatory authorities in the U.S./Canadian Territory all information required in order
to satisfy all applicable laws and regulatory approvals in order to effect the transfer of each of
the Existing Applications and Approvals from Vanda or its Affiliates to Novartis (or its designated
Affiliate), including the information required pursuant to 21 C.F.R. §314.72, or any successor
regulation or Canadian equivalent thereto, any authorization letters or notices and letters of
acceptance, each in form and substance mutually acceptable to Novartis and Vanda, in each such
party’s reasonable discretion. In addition, Vanda shall promptly file the information required of
a former owner and Novartis shall promptly file the information required of a new owner, in each
case to the extent required by applicable law. Pending transfer of the applicable Existing
Applications and Approvals (and, in the case of any Existing Applications and Approvals which are
not transferable, on a continuing basis), Vanda and its Affiliates hereby grant to Novartis and its
Affiliates and designees an Exclusive Right of Reference to all such Existing Applications and
Approvals (and Vanda’s Data) for all uses in connection with the Compound and Product in the
U.S./Canadian Territory, in each case including the research, development (including obtaining and
maintaining regulatory approvals) and commercialization thereof. The parties also agree to use all
Commercially Reasonable Efforts to take any other actions required by the applicable regulatory
authorities to effect the transfer of each of the Existing Applications and Approvals from Vanda or
its Affiliates to Novartis (or its designated Affiliate).

     6.3 Subject to Section 6.2, Novartis shall be responsible for (a) applying for and maintaining
all required regulatory approvals from the regulatory authorities for the Product within the
U.S./Canadian Territory and (b) preparing any documentation, including INDs and drug approval
applications with respect to the Compound and Product for submission to regulatory authorities in
the U.S./Canadian Territory. As between the parties, Novartis shall have authority for and be
responsible for communicating with, and responding to communications with, the regulatory
authorities in the U.S./Canadian Territory after the Effective Date and during the term of this
Sublicense Agreement relating to the Product. Subject to completion of the transfers of the
Existing Applications and Approvals contemplated

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by Section 6.2, all regulatory approvals for the Compound and Product in the
U.S./Canadian Territory shall be held in the name of, and owned by, Novartis or its Affiliates.

     6.4 (a) Subject to Section 5.12 and except as provided in Section 2.3(a), Vanda
shall have Exclusive use, subject to the terms of this Sublicense Agreement, of all Know-How,
documents, information, Data and material for the development, registration, manufacture and
marketing of the Compound and the Product, including any Depot Formulation of the Product, for use
in the Field in the ROW Territory. In addition, subject to applicable privacy laws, Novartis
hereby grants Vanda and its Affiliates and designees (including, without limitation, its
Sublicensees) an Exclusive Right of Reference to, and a right to access, use, copy, modify, create
derivative works of and/or distribute, all regulatory documentation (including all Existing
Applications and Approvals) and Data owned or controlled by Novartis or its Affiliates for all uses
in connection with (a) the Depot Formulations in the ROW Territory and (b) the Compound and Product
in the ROW Territory, in each case including in connection with the research, development and
commercialization thereof. Upon the request of Vanda during the term of this Sublicense Agreement,
Novartis shall provide Vanda (as soon as reasonably practicable but in no event later than *
following receipt of Vanda’s request) with access to or copies of any and all such Data and
regulatory documentation, at Vanda’s expense. Upon Novartis’ request during the term of this
Sublicense Agreement, Vanda shall deliver to Novartis a copy of all Know-How, Vanda Know-How,
documents, information and Data in its possession relating to the Compound and Product regarding
the use in the Field in a form to be mutually agreed upon, within * after Novartis’ request, it
being understood and agreed that any and all such information and Data will be made available by
Novartis to Titan, upon Titan’s request.

          (b) Novartis shall have Exclusive use, subject to the terms of this Sublicense Agreement, of
all Vanda Know-How, documents, information, Data and material for the development, registration,
manufacture and marketing of the Compound and the Product for use in the Field in the U.S./Canadian
Territory and in any country(ies) deleted from the ROW Territory and to which this Sublicense
Agreement has been terminated pursuant to the terms hereof. In addition, subject to applicable
privacy laws, Vanda hereby grants Novartis and its Affiliates and designees (including, without
limitation, its Sublicensees) an Exclusive Right of

 

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Reference to, and a right to access, use, copy, modify, create derivative works of and/or
distribute, all regulatory documentation and Data owned or controlled by Vanda or its Affiliates
for all uses in connection with (a) the Depot Formulations in the U.S./Canadian Territory and in
any country(ies) deleted from the ROW Territory and to which this Sublicense Agreement has been
terminated pursuant to the terms hereof; and (b) the Compound and Product in the U.S./Canadian
Territory and in any country(ies) deleted from the ROW Territory and to which this Sublicense
Agreement has been terminated pursuant to the terms hereof, in each case including in connection
with the research, development and commercialization thereof.

     6.5 Subject to the confidentiality obligations of this Article 6, without limiting the
obligations under Section 6.4, Vanda shall make available to, and Sanofi-Aventis, Titan and
Novartis shall be able to freely use, know-how and documents, information and other Data relating
to the Compound and/or Product disclosed or generated by Vanda, its Affiliates and Sublicensees and
applications for government approvals, reports on the status and progress of the development of the
Compound or the Product and the like in the U.S./Canadian Territory and in any country(ies) deleted
from the ROW Territory and to which this Sublicense Agreement has been terminated pursuant to the
terms hereof.

     6.6 During the period of time during which a party is obligated to pay royalties hereunder,
irrespective of any termination with respect to a particular country or countries in the ROW
Territory (with respect to Vanda’s obligations under this Section 6.6) or with respect to the
U.S./Canadian Territory (with respect to Novartis’ obligations under this Section 6.6), such party
shall not reveal or disclose to a Third Party or use for any purpose other than to perform its
obligations herein any of the other party’s Confidential Information (as defined below) without
first obtaining the written consent of the other party, except as may be otherwise provided herein,
or for securing essential or desirable authorizations, privileges, licenses, registration or rights
from governmental agencies, or is required to be disclosed to a governmental agency or is necessary
to file or prosecute Patent applications concerning the Compound or Product or to carry out any
litigation concerning the Compound or Product, or to develop and commercialize the Compound and
Product as contemplated hereunder, provided, however, that the party seeking to make a disclosure
of the other party’s Confidential Information notifies the other party in writing in a reasonably
sufficient time frame prior to

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making such disclosure that they intend to make such disclosures and the details thereof, and
the party seeking to make the disclosure seeks confidential treatment where available of such
Confidential Information from such governmental agencies. Each party’s confidentiality obligations
shall not apply to any such information which is or becomes a matter of public knowledge through no
fault of the party receiving such information (the “Receiving Party”), or is already in the
possession of the Receiving Party (other than as a result of a disclosure made hereunder to the
Receiving Party by the other party) as evidenced by written records, or is disclosed to the
Receiving Party by a Third Party having the right to do so, or is subsequently and independently
developed by employees of the Receiving Party or its Affiliates who had no knowledge of the
Confidential Information. The Receiving Party shall take reasonable measures to assure that no
unauthorized use or disclosure is made by others to whom access to such information is granted. As
used herein, “Confidential Information” means, with respect to any disclosures made by Novartis to
Vanda, any confidential or proprietary information of Sanofi-Aventis, Titan or Novartis or their
Affiliates, and with respect to any disclosures made by Vanda to Novartis, any confidential or
proprietary information of Vanda (including, in either case, any such information belonging to any
Third Party which a party discloses to the other party hereunder), including any Know-How, Vanda
Know-How, Data, present or future formulas, research project, work in process, inventions,
procedures, development, scientific, engineering, manufacturing, marketing, business or financial
plan or records, products, sales, suppliers, customers, or investors, whether such confidential or
proprietary information is in oral, written, graphic or electronic form (including all copies in
whole or in part of any of the foregoing) and which derives value from being known to the discloser
or owner.

     6.7 Within * following the Effective Date, the parties shall agree upon and
implement a procedure for the mutual exchange of adverse event reports and safety information
associated with the Product. Details of the operating procedure respecting such adverse event
reports and safety information exchange shall be the subject of a mutually-agreed written
pharmacovigilance agreement between the parties which shall be entered into within such * period.

     6.8 Nothing herein shall be construed as preventing either party from disclosing any
information received from the other party to an Affiliate, Sublicensee, distributor, contractor,

 

			
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agent, consultant, legal counsel or other Third Party involved in the first party’s
research, development, manufacture, use, marketing, import, promotion or sale of the Compound or
Product in its respective territory, provided that such Affiliate or Sublicensee or other Third
Party has undertaken a similar obligation of confidentiality with respect to the Confidential
Information.

     6.9 In the event that a court or other legal or administrative tribunal, directly or through
an appointed master, trustee or receiver, assumes partial or complete control over the assets of
Vanda or Novartis based on the insolvency or bankruptcy of Vanda or Novartis, respectively, Vanda
or Novartis, as applicable, shall promptly notify the court or other tribunal (i) that Confidential
Information received from the other party remains the property of Sanofi-Aventis, Titan or the
other party, or their respective Affiliates, as the case may be, and (ii) of the confidentiality
obligations under this Sublicense Agreement. In addition, as the bankrupt or insolvent party,
Vanda or Novartis shall, to the extent permitted by law and as the case may be, take all steps
reasonably necessary or desirable to maintain the confidentiality of the Confidential Information
of Sanofi-Aventis, Titan or the other party, as the case may be, and to ensure that the court,
other tribunal or appointee maintains such information in confidence in accordance with the terms
of this Sublicense Agreement.

     6.10 No public announcement or other disclosure to a Third Party concerning the existence of
or terms of this Sublicense Agreement shall be made, either directly or indirectly by either party
to this Sublicense Agreement, except as may be legally required, without first obtaining the
approval of the other party, which approval shall not be unreasonably withheld or delayed. The
party desiring to make any such public announcement or other disclosure shall provide the other
party with a written copy of the proposed announcement or disclosure in sufficient time (not less
than *) prior to the proposed release, to allow such other party to comment upon the nature,
content and timing of such announcement or disclosure, prior to the proposed release.

     6.11 (a) Neither party shall submit for written or oral publication any manuscript, abstract,
poster or the like which includes Know-How, Vanda Know-How, Data or other information generated
and/or provided by Novartis or Vanda pursuant to this Sublicense

 

			
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Agreement without first obtaining the prior written consent of the party generating or
providing such information, which consent shall not be unreasonably withheld. The contribution of
each party shall be noted in all publications or presentations by acknowledgment or co-authorship,
if appropriate.

     (b) Furthermore, neither party shall submit for written or oral publication any manuscript,
abstract, poster or the like relating to the Compound or Product, or submit or post any information
relating to the Compound or Product in any clinical trial registry, or make any public announcement
relating to the Compound or Product, in each case without first providing the other party with the
opportunity to comment on the timing and content thereof as follows; provided however that the
foregoing sentence shall not apply to information which is not of a scientific or technical nature
and which is in the public domain. The first party shall provide for review by the other party a
written or electronic copy of (i) the proposed manuscript or clinical trial registry posting not
less than * prior to submission, (ii) the proposed abstract or poster not less than * prior to
submission, and (iii) the proposed public announcement not less than * prior to issuance; such time
periods in regard to proposed clinical trial registry postings and any public announcements may be
shortened to the extent legally required. The first party shall *.

7. SUPPLY OF COMPOUND AND PRODUCT Vanda shall supply Compound and Product to Novartis under
the following conditions:

     (a) Vanda will sell to Novartis and arrange for the transfer to a single site for each of
Compound and Product, as designated by Novartis, at Novartis’ cost, the Compound and Product
ordered by Vanda as of the Execution Date, as set forth on Appendix K. The Compound and Product
will be transferred to Novartis on or around the dates specified in Appendix K for delivery of such
Compound and Product by the applicable vendors. Novartis shall be responsible for all of the costs
of such Compound and Product based on Appendix K, including without limitation, the amounts
previously paid by Vanda for such Compound and Product as specified in the “Paid” column of the
third page of Appendix K. The process for and timing of (i) the reimbursement by Novartis to Vanda
of the amounts paid by Vanda prior to the

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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Execution Date for such Compound and Product and (ii) the reimbursement by Novartis to Vanda
of amounts paid by Vanda for such Compound and Product after the Execution Date and/or assumption
by Novartis of Vanda’s obligations with respect to amounts owed for such Compound and Product after
the Execution Date *. Following the transfer to Novartis of such Compound and Product, Vanda will
invoice Novartis for Vanda’s cost for such Compound and Product, as set forth in Appendix K, and,
subject to Section 7.1(e) Novartis shall pay such invoice within * following the date of such
invoice.

     (b) Subject to Section 7(e), title to, and risk of loss with respect to, all Compound and the
Product supplied by Vanda to Novartis under this Section 7.1 shall pass to Novartis upon the
receipt of such Compound and Product by Novartis or its designee at its point of delivery. Vanda
shall not *.

     (c) Vanda shall provide to Novartis the most recent certificate of analysis, certificate of
compliance and all associated batch records for each shipment of Compound or Product.

     (d) Vanda represents and warrants that the Compound and Product supplied by it to Novartis or
its Affiliates (i) *; (ii) *, (iii) *, (iv) *, and (iv) with regard to the Product, *
(collectively, “Conforming Compound or Product”). Except for the foregoing representations and
warranties, Vanda makes no other representations or warranties with respect to the Compound or
Product supplied by it to Novartis hereunder and, to the maximum extent permitted by law, Vanda
hereby disclaims all other warranties of any kind, whether express, implied or statutory, with
respect thereto.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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     (e) Novartis shall have the right to accept or reject Compound or Product within * after
delivery. For the avoidance of doubt, Novartis shall only be responsible to accept and pay for
Conforming Compound or Product (as defined below).

     7.2 Vanda shall provide information and assistance to Novartis with respect to the Compound
and Product as follows:

     (a) As promptly as practicable after the Effective Date and, in any event, within * after the
Effective Date of this Sublicense Agreement, Vanda shall deliver to Novartis any and all Vanda
Know-How, documentation, Data and other information owned or controlled by Vanda and its
Affiliates, that Novartis may reasonably require for the manufacture of the Compound and Product.
Such information shall include without limitation the specifications for the Compound and Product
and methods of analysis for testing the Compound and Product, including
Chemistry-Manufacturing/Controls (CMC) information amendments and the technology transfer file.

     (b) Vanda shall use Commercially Reasonable Efforts to provide, or cause its Third Party
contractors to provide, to Novartis or its designated Third Party *, to enable Novartis or such
Third Party to proceed with development of commercial-scale manufacturing. If requested by
Novartis or such Third Party, Vanda shall visit, or cause its Third Party contractors to visit, the
designated commercial manufacturing facility, with the limitation of * visits, not to exceed a
total of *, for which Novartis shall bear all the costs of reasonable travel and other
out-of-pocket expenses.

     7.3 Upon expiration or termination of this Sublicense Agreement with respect to the ROW
Territory, except as otherwise permitted under Section 11.2, Vanda shall return to Novartis or
dispose of all unused Compound or Product supplied by Novartis hereunder, if any.

     7.4 From and after the Effective Date, Novartis, itself or through an Affiliate, will have the
right, at its own expense, to manufacture Compound and Product and will have the right, in
accordance with the terms of this Sublicense Agreement, to appoint one or more Third Parties to
manufacture Compound and Product in the U.S./Canadian Territory and in the ROW

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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Territory solely for sale of Product in the U.S./Canadian Territory and to perform any of its
obligations under Section 7.5. For the avoidance of doubt, Novartis shall have the ultimate
decision-making authority over all issues relating to manufacture of Compound and Product for sale
of Product in the U.S./Canadian Territory, including, without limitation, the use of Third Parties
in its manufacturing supply chain and its performance of any of its obligations under Section 7.5.

     7.5 Novartis shall, itself or through an Affiliate or Third Parties, use Commercially
Reasonable Efforts to manufacture and supply to Vanda (or its Affiliates or Sublicensees), at
Vanda’s request, sufficient quantities of Compound and Product (including investigational medicinal
product) in bulk and finished form for (a) research and development of Compound and Product
(including any Depot Formulation) for the ROW Territory and (b) commercialization of Product
(including any oral and/or Depot Formulation thereof) in the ROW Territory. For the avoidance of
doubt, Novartis’ obligations to manufacture and supply the Compound and Product, including the
Depot Formulation, set forth under this Section 7.5 shall be limited to the Compound and Product
developed and commercialized by Novartis and whether to manufacture itself or use Third Party
manufacturers shall be in Novartis’ sole discretion. If such supply is being provided by Third
Parties, then *. If such supply is being provided by Novartis itself, then *. The Compounds and
Products provided by Novartis to Vanda pursuant to this Section 7.5 shall not be marked with any
Novartis Trademarks (as defined in Appendix C), including any of Novartis’ or its Affiliates’
corporate trademarks. For purposes of this Sublicense Agreement, *

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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*. Notwithstanding the foregoing, *. The terms and conditions under which Novartis would
directly supply Vanda with Compound and/or Product shall be set forth in a supply agreement (the
“Supply Agreement”) *.

     7.6 With respect to any supply agreement for Compound and/or the Product between any Third
Party and Novartis, Novartis shall notify Vanda promptly but in any event at least * prior to (a)
the termination by Novartis of any such agreement other than for breach by the Third Party or (b)
the expiration of such supply agreement, or promptly after the termination by such Third Party of
such supply agreement and, if requested by Vanda and the termination is not for the material breach
of such Third Party, *. Novartis shall provide to Vanda the most recent certificate of analysis
for any shipment of Compound or Products. Compound and Product supplied by Novartis pursuant to
this 
Article 7 shall *.

8. PATENT PROSECUTION; MAINTENANCE AND EXTENSION; INFRINGEMENT

     8.1 Sanofi-Aventis shall be responsible for the filing, prosecution (including oppositions)
and maintenance of the Patents excluding Novartis-Patents (hereinafter “Sanofi-Aventis-Patents”) at
Sanofi-Aventis’ expense. For so long as the license grants to Vanda set forth in Article 2 remain
in effect, Sanofi-Aventis agrees to file and prosecute and maintain the Sanofi-Aventis-Patents,
provided that the foregoing is subject to Sanofi-Aventis’ reasonable business judgment. Novartis
shall keep Vanda informed, to the same extent Sanofi-Aventis and/or Titan keep Novartis informed,
of important issues relating to the

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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preparation, filing, prosecution and maintenance of such Sanofi-Aventis-Patent applications and
Sanofi-Aventis-Patents, to the extent applicable to the ROW Territory. Vanda, through Novartis,
shall have the right to comment on Sanofi-Aventis’ preparation, filing, prosecution and maintenance
of Sanofi-Aventis-Patent applications and Sanofi-Aventis-Patents, to the extent applicable to the
ROW Territory, and Sanofi-Aventis shall give due consideration to Vanda’s comments, but
Sanofi-Aventis shall make all decisions regarding the same.

     8.2 If Sanofi-Aventis elects not to seek patent protection in countries listed in
Appendix F or to maintain patent protection on Sanofi-Aventis-Patents listed in Appendix A in any
country in the ROW Territory to the extent that Sanofi-Aventis-Patents claim the Compound or the
Product (or formulations, use or manufacture thereof), Vanda shall have the right, at its option
and at Sanofi-Aventis’ expense, which expense must be approved in advance by Sanofi-Aventis
(approval which shall not be unreasonably withheld), to file, prosecute (including oppositions) and
maintain any such Sanofi-Aventis-Patent applications and Sanofi-Aventis-Patents in Sanofi-Aventis’
name, and any Sanofi-Aventis-Patent issued therefrom shall be owned by Sanofi-Aventis. Novartis
shall advise Vanda of Sanofi-Aventis’ decision not to seek or maintain patent protection in a
reasonably timely manner. In the event that a Sanofi-Aventis-Patent is issued covering the
Compound or Product in any country in the ROW Territory under the conditions of this Section 8.2,
Vanda shall pay directly to Sanofi-Aventis a * percent (*%) royalty on Net Sales of Product in such
country, for a period of five (5) years from the date of such patent issuance in such country, in
recognition of Sanofi-Aventis’ Know-How and manufacturing rights and the right to make and sell the
Compound or Product in such country. Legal fees and expenses, as confirmed by Sanofi-Aventis,
incurred by Vanda shall be deducted from the royalty paid to Sanofi-Aventis.

     8.3 Except for the biomarker Patent listed in Annex 1 to Appendix A with respect to
which Novartis shall be responsible for the filing, prosecution (including oppositions) and
maintenance, Vanda shall be responsible for the filing, prosecution (including oppositions) and
maintenance of the Patents in the ROW Territory owned by Novartis and licensed under Section 2.1
(hereinafter “Novartis-Patents”) at Vanda’s expense. Vanda agrees to file and prosecute and
maintain the Novartis-Patents in the ROW Territory, provided that the foregoing is subject to
Vanda’s reasonable business judgment. Novartis shall have the right to comment

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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on Vanda’s preparation, filing, prosecution and maintenance of Novartis-Patent applications
and Novartis-Patents, and Vanda shall give due consideration to Novartis’ comments. If Vanda
elects not to maintain patent protection on Novartis-Patents in any country, Novartis shall have
the right, at its option, to file, prosecute and maintain any such Novartis-Patent. Vanda shall
have the right but not the obligation to enforce Novartis-Patents in the ROW Territory against
Third Parties at its cost, and if Vanda does not act, Novartis may in its sole discretion take such
enforcement action as Novartis deems necessary.

     8.4 Each of Sanofi-Aventis, Titan, Novartis and Vanda shall make available to the other, its
employees, agents, subcontractors or consultants (including its authorized attorneys) to the extent
reasonably necessary or appropriate to enable the appropriate party to file, prosecute and maintain
patent applications and resulting patents subject to this Sublicense Agreement to the extent that
Patents claim the Compound or Product (or formulations, use or manufacture thereof). Where
appropriate, each of Sanofi-Aventis, Titan, Novartis and Vanda shall sign or cause to have signed
all documents relating to said patent applications or patents at no charge to the other.

     8.5 Novartis shall obtain all assignments or licenses, as applicable from the patent holder of
the Patents in the ROW Territory, to the same extent as Novartis is entitled to receive such
assignments or licenses from Sanofi-Aventis and Titan under the Sanofi-Aventis Agreement as
applicable, to provide Vanda with the same degree of exclusivity in the ROW Territory under the
Patents in the ROW Territory as Novartis is granted by Sanofi-Aventis and Titan under the Titan
Agreement.

     8.6 Promptly after it is notified by Sanofi-Aventis and Titan, Novartis shall notify Vanda in
writing of (a) the issuance of each Sanofi-Aventis-Patent in the ROW Territory, giving the date of
issue and patent number for each patent, and (b) each notice pertaining to any
Sanofi-Aventis-Patent in the ROW Territory which Sanofi-Aventis receives as patent owner pursuant
to any laws or regulations in the ROW Territory now or hereafter in effect which extend the Patent
life. At Sanofi-Aventis’ expense, Sanofi-Aventis, Titan, Novartis and Vanda shall co-operate with
each other in applying for patent term extensions (including Supplementary Protection Certificates
in European Union member states) where applicable in

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any country of the ROW Territory. Sanofi-Aventis shall have full responsibility and authority
in the decisions regarding filing for the foregoing Sanofi-Aventis-Patent extensions at its own
expense although Vanda, through Novartis, shall be consulted and its opinions given due
consideration in such decision-making process. If Sanofi-Aventis elects not to pursue extension of
any Sanofi-Aventis-Patents in the ROW Territory, Vanda shall have the right (but not the
obligation) to apply for such extension in Sanofi-Aventis’ name and at Vanda’s expense, and
Sanofi-Aventis shall reasonably co-operate in the filing and procurement thereof.

     8.7 Except as otherwise expressly provided in this Sublicense Agreement, under no
circumstances shall a party hereto, as a result of this Sublicense Agreement, obtain any ownership
interest in or other right to any technology, Know-How, Vanda Know-How, Patents, pending Patent
applications, products, or biological material of the other party, Titan or Sanofi-Aventis,
including items owned, controlled, discovered, invented or developed by the other party, Titan or
Sanofi-Aventis, or transferred by the other party, Titan or Sanofi-Aventis to that party, at
anytime pursuant to this Sublicense Agreement which is not a direct result of the study, Know-How,
Vanda Know-How and experimentation of the Compound and Product.

     8.8 Each of Vanda, Novartis, Titan and Sanofi-Aventis shall promptly, but in any event no
later than ten (10) business days after receipt of notice of such action, notify the other in
writing of any Patent nullity actions, any declaratory judgment actions or any alleged or
threatened infringement of Patents or misappropriation of intellectual property comprising Patents,
in each case, with respect to the ROW Territory, or if Vanda, Sanofi-Aventis, Titan or Novartis, or
any of their respective Affiliates or Sublicensees, shall be individually named as a defendant in a
legal proceeding in the ROW Territory by a Third Party alleging infringement of a patent or other
intellectual property right of such Third Party as a result of the manufacture, production, use,
development, marketing, selling or distribution of the Compound or Product in the ROW Territory, or
of any information or notification regarding the Patents in the ROW Territory.

     8.9 Sanofi-Aventis shall have the first right to respond to, defend or prosecute any actions,
challenges, infringements, misappropriations or proceedings by a Third Party alleging infringement
described in Section 8.8. In the event Sanofi-Aventis elects to do so, Vanda will

Page 51

 

co-operate with Sanofi-Aventis and its legal counsel, join in such suits as may be brought by
Sanofi-Aventis, and be available at Sanofi-Aventis’ reasonable request to be an expert witness or
otherwise to assist in such proceedings and at Sanofi-Aventis’ expense. Sanofi-Aventis will
co-operate with Vanda and its legal counsel and keep Vanda and its counsel reasonably informed at
all times as to the status of Sanofi-Aventis’ response or defense.

     8.10 In the event that Sanofi-Aventis elects to respond to, defend or prosecute any actions,
challenges, infringements, misappropriations or proceedings by a Third Party claiming infringement
described in Section 8.8 hereof, then: (a) legal fees and other costs and expenses of
Sanofi-Aventis associated with such response or defense shall be paid by Sanofi-Aventis; (b) legal
fees and other costs and expenses associated with such response or defense incurred by Vanda at
Sanofi-Aventis’ request, shall be paid by Sanofi-Aventis; (c) the costs of acquiring Third Party
patents or licenses (other than the costs referenced in Section 8.12) and any settlement, court
award, judgment or other damages shall be paid by Sanofi-Aventis to such Third Parties out of
royalties projected to be received from Vanda (through Titan or Novartis); provided, however,
Sanofi-Aventis shall not be obligated to pay for any patents or licenses for uses of the Compound
or Products not disclosed in the Patents as of the date of the execution of the Sanofi-Aventis
Agreement; and (d) any amounts recovered from Third Parties in connection with such response or
defense shall be applied * percent (*%) to Vanda (through Titan and Novartis), and * percent (*%)
to Sanofi-Aventis, subject first to reimbursement of expenses of Sanofi-Aventis, Novartis, Vanda
and Titan.

     8.11 In the event that Sanofi-Aventis elects not to respond to, defend or prosecute any
actions, challenges, infringements, misappropriations or proceedings by a Third Party alleging
infringement described in Section 8.8 hereof or Sanofi-Aventis abandons any such action, Novartis
shall notify Vanda promptly after receiving notification from Sanofi-Aventis or Titan of such
actions, challenges, infringements, misappropriations, proceeding or Sanofi-Aventis’ decision to
abandon any such action. In such event, Vanda shall have the option to respond, defend or
prosecute such action at Vanda’ sole cost, provided that Sanofi-Aventis shall co-operate with and
provide assistance to Vanda at Sanofi-Aventis’ expense. All amounts recovered from any Third Party
shall be applied *percent (*%) to Vanda and * percent

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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(*%) to Sanofi-Aventis, subject first to reimbursement of expenses of Sanofi-Aventis,
Vanda, Novartis and Titan.

     8.12 In the event that Sanofi-Aventis and Vanda mutually agree that it is desirable for
Sanofi-Aventis to acquire any Third Party patent or license in connection with the development or
manufacture of the Compound or Product covered by the Sanofi-Aventis-Patents in the ROW Territory
then the costs of acquiring such Third Party patent or license shall be paid by Sanofi-Aventis to
such Third Parties out of royalties received from Vanda (either directly or through Titan and
Novartis).

     8.13 Vanda recognizes that Sanofi-Aventis has reserved certain rights in the
Sanofi-Aventis-Patents set forth in Appendix A in the ROW Territory and that there may be a
legitimate dispute between the parties whether a legal action should be brought against a Third
Party which could affect Sanofi-Aventis’ reserved rights under those Sanofi-Aventis-Patents and
Vanda’s sublicense rights under this Sublicense Agreement. In the event that there is a dispute
between Vanda and Sanofi-Aventis regarding whether there is an infringement of
Sanofi-Aventis-Patents by a Third Party and therefore whether a legal action should be initiated,
Vanda and Sanofi-Aventis shall submit the issue to a disinterested, competent and experienced
patent attorney reasonably acceptable to Vanda and Sanofi-Aventis to determine whether or not there
is an infringement and legal actions should be taken. If Vanda and Sanofi-Aventis cannot agree on
the selection of such a patent attorney, then Vanda and Sanofi-Aventis shall each select a patent
attorney and those selected patent attorneys shall select a mutually acceptable patent attorney.
That selected patent attorney shall determine whether or not there is an infringement and legal
action should be taken and then Vanda and Sanofi-Aventis may decide whether or not to initiate a
legal action as described by this Article 8. The compensation to, and expenses of, such patent
attorney shall be borne by the losing party.

	9.	 	STATEMENTS, REMITTANCES AND AUDIT RIGHTS

     9.1
(a) Each party shall keep complete, true and accurate books and records in
accordance with its Accounting Standards in relation to this Sublicense Agreement and each party
will keep such books and records for at least * following the calendar quarter to which they
pertain.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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     (b) Each party (the “Audit Rights Holder”) may, upon written request and at its expense,
cause an internationally-recognized independent accounting firm selected by it (except one to whom
the auditee has a reasonable objection) (the “Audit Team”) to audit during ordinary business hours
the books and records of the other party (“Auditee”) and its Affiliates for a given calendar year
and the correctness of any payments made or required to be made to or by such party during such
calendar year, and any report, data or calculation underlying such payment (or lack thereof),
pursuant to the terms of this Sublicense Agreement. Prior to commencing its work pursuant to this
Sublicense Agreement, the Audit Team shall enter into an appropriate confidentiality agreement with
the Auditee. The Audit Team shall have the right to disclose to the party requesting the audit its
conclusions regarding any payments owed under this Sublicense Agreement, and said party shall treat
such conclusions as Confidential Information pursuant to Section 6 hereto. For the avoidance of
doubt, notwithstanding the foregoing, the Audit Team shall not disclose to the party requesting the
audit any more detailed information than such party would have otherwise been entitled to receive
pursuant to this Sublicense Agreement.

     (c) In respect of each audit of the Auditee’s books and records: (i) the Auditee shall be
audited not more frequently than *; (ii) no records for any given year for an Auditee may be
audited more than *; and (iii) the Audit Rights Holder shall only be entitled to audit books and
records of an Auditee from the * prior to the calendar year in which the audit request is made.

     (d) In order to initiate an audit for a particular calendar year, the Audit Rights Holder must
provide written notice to the Auditee, which notice shall include one or more proposed dates for
the audit and which notice shall be given not less than * prior to the first proposed audit date.
The Auditee will reasonably accommodate the scheduling of such audit. The Auditee shall provide
the Audit Team(s) with full and complete access to the applicable books and records and otherwise
reasonably cooperate with such audit.

     (e) The audit report and basis for any determination by an Audit Team shall be made available
for review and comment by the Auditee, and the Auditee shall have the right, at its expense, to
request a further determination by such Audit Team as to matters which the

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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Auditee disputes (to be completed no more than * after the applicable audit report is provided
to such Auditee and to be limited to the disputed matters). If the parties disagree as to such
further determination, the Audit Rights Holder and the Auditee shall mutually select an
internationally-recognized independent accounting firm that shall make a final determination as to
the remaining matters in dispute, which determination shall be binding upon the parties.

     (f) The Audit Team shall not disclose to the Audit Rights Holder any information relating to
the business of the Auditee except that which should properly have been contained in any report
required hereunder or is otherwise required to be disclosed to such party to verify the payments
required to be made pursuant to the terms of this Sublicense Agreement.

     (g) If any audit shows any under-reporting or underpayment, or overcharging by any party, the
underpaying or overcharging party shall remit such underpayment or reimburse such overcompensation
to the underpaid or overcharged party within * of receiving the final audit report establishing
such obligation and the corresponding original invoice. Further, if the audit for any one or more
calendar years shows an under-reporting or underpayment or an overcharge by the Auditee for that
period in excess of * of the amounts properly determined, the Auditee shall reimburse the Audit
Rights Holder for its out-of-pocket expenses, including the fees and expenses paid by it to the
Audit Team(s), in connection with said audit, which reimbursement shall be made within * of
receiving appropriate invoices and other support for such audit-related costs.

     (h) Sanofi-Aventis shall have the right, at its expense, through a certified public accountant
or like independent person reasonably acceptable to Vanda, and following reasonable notice, to
examine Vanda’s Net Sales records under conditions of confidentiality during regular business hours
during the period of time during which royalties are due and payable by Vanda hereunder and for *
thereafter. Any such examination by Sanofi-Aventis shall not take place more often than once a
year and shall not cover such records for more than the preceding *. Copies of all such
accountant’s reports generated hereunder on behalf of Sanofi-Aventis shall be supplied to Vanda.

     9.2 (a) Within forty-five (45) days after the close of each calendar quarter, Vanda shall
deliver to Novartis a true accounting of all Product sold by Vanda, its Affiliates and

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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Sublicensees during such quarter into the ROW Territory. Vanda shall pay all earned
royalties due with respect to such quarter within * of receipt of an invoice therefor from Novartis
reflecting the royalties shown in such accounting. Such accounting shall show Net Sales of Product
on a country-by-country and product-by-product basis and such other particulars as are reasonably
necessary for accounting of the royalties payable by Vanda to Novartis hereunder.

     (b) Within * after the close of each *, Novartis shall deliver to Vanda a true accounting of
all Product sold by Novartis, its Affiliates and Sublicensees during such * into the U.S./Canadian
Territory. Novartis shall pay all earned royalties due with respect to * within * of receipt of an
invoice therefor from Vanda (in a form substantially similar to that contained in Appendix I)
reflecting the royalties shown in such accounting. Such accounting shall show Net Sales of Product
into the U.S./Canadian Territory on a product-by-product basis and such other particulars as are
reasonably necessary for accounting of the royalties payable by Novartis to Vanda hereunder.

     9.3 Any tax paid or required to be withheld by either party on account of royalties payable by
such party under this Sublicense Agreement shall be indicated on the accounting described in
Section 9.2 hereof and deducted from the amount of royalties otherwise due. Vanda shall secure and
send to Novartis or Sanofi-Aventis, as the case may be, proof of any such taxes withheld and paid
by Vanda, and Novartis shall secure and send to Vanda proof of any such taxes withheld and paid by
Novartis. Any withholding or other tax arising on or following permitted assignment of this
Sublicense Agreement by Vanda or a Sublicensee shall be for the account of and paid by Vanda.

     9.4 Unless otherwise indicated herein, and subject to foreign exchange regulations then
prevailing, to the extent free conversion from local currency to United States dollars is
permitted, all payments and royalties payable under this Sublicense Agreement shall be paid in cash
in U.S. dollars by wire transfer in accordance with Section 3.2 hereof. If governmental
regulations prevent remittances from a foreign country with respect to sales made in that country,
the obligation of Vanda (with respect to sales in such country of the ROW Territory

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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and Novartis with respect to sales in Canada) to pay royalties on sales in that country *.
Novartis or Sanofi-Aventis, as the case may be, shall have the right, upon giving written notice to
Vanda, to *, and Vanda shall have the right, upon giving written notice to Novartis, to *.

     9.5 (a) With respect to royalties payable hereunder by Vanda, royalty payments and Net Sales
shall be calculated on the basis of Vanda’s * standard account of internal sales which represents
the conversion of all local currency sales for * into *. The exchange rate between * and * for the
* royalty payments to Novartis or Sanofi-Aventis (as the case may be) shall be the exchange rates
published in *, or other qualified source mutually acceptable to the parties on * for which the
royalties are being paid. Notwithstanding the foregoing, if there is a difference between any
amount that Vanda pays to Novartis or Sanofi-Aventis (as the case may be) under Sections 3.3, 3.4
or 3.5, and the amount that Novartis is required to pay to Titan under the Titan Agreement (which
difference arises as a result of using the method for calculating royalties that are due and
payable under this Section 9.5, and the method for calculating such royalties under Section 9.5 of
the Titan Agreement), *.

     (b) Payments due hereunder by Novartis to Vanda will be made within the applicable time period
specified in this Sublicense Agreement but only upon receipt of an invoice in substantially the
form of Appendix I. All payments under this Sublicense Agreement shall be payable in *. When
conversion of payments for any foreign

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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currency is required to be undertaken by Novartis, the USD equivalent shall be calculated
using *.

10. TERM AND TERMINATION

     10.1 (a) Vanda will have the right to terminate the sublicense and licenses for the ROW
Territory or on a country-by-country basis for major problems associated with the Product as
reasonably determined by Vanda. Novartis will have the right to terminate the license on a
Product-by-Product basis for the U.S./Canadian Territory or on a country-by-country basis for *
associated with the applicable Product as reasonably determined by Novartis. For this purpose
“major problems” are ones which would substantially negatively impact the applicable Product’s
chances for successful development, registration and/or commercialization in the ROW Territory or
such country or the U.S./Canadian Territory, as applicable; and would include, but not be limited
to, major safety issues, lack of efficacy, unacceptable pharmaceutical properties or extraordinary
unforeseen competitive developments which, in each case, would have the substantial negative impact
referred to above.

          (b) (i) In the event of termination in the entire ROW Territory by Vanda pursuant to Section
10.1(a), Vanda shall, within ninety (90) days of such termination, return to Novartis any and all
information and other Data (including new information and Data) relating to the Compound and
Product, whether generated by or on behalf of Titan, Novartis, Sanofi-Aventis or Vanda, and make no
further use thereof. Additionally, in such event, this Sublicense Agreement shall terminate in its
entirety with respect to the rights and licenses (including the sublicenses and *) granted to Vanda
hereunder and all of the rights under the sublicenses and licenses (including *) granted hereunder
to Vanda shall revert back to Novartis. Notwithstanding the foregoing sentence, the parties’
rights and obligations with respect to the U.S./Canadian Territory, as well as those Sections of
the Sublicense Agreement listed in Section 11.3, shall survive any such termination in accordance
with their terms. Novartis shall retain all up-front license fees and milestone payments it had
received up to the date of termination (including any up-front license fees and milestone payments
paid by Vanda under the Original Agreement) if, and only if, termination was not due to any fraud,
misrepresentations, omissions or falsifications of information with respect to such

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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Know-How, information or other Data owned or controlled by Sanofi-Aventis, Titan, Novartis or
their Affiliates as of the effective date of the Original Agreement in which case, to the extent
that Novartis has for its own part perpetrated a fraud, misrepresentation, omission or
falsification of information with respect to such Know-How, information or other Data owned or
controlled by it, Novartis shall repay to Vanda, within * of such termination, that portion of any
up-front license fee and milestone payments Novartis had received from Vanda up to the date of such
termination. In no event shall Novartis be liable to Vanda for any misrepresentation, omission or
falsification of information owned or controlled by Sanofi-Aventis or Titan or their Affiliates.

          (ii) In the event of termination in the U.S./Canadian Territory or the applicable country in
the U.S./Canadian Territory by Novartis with respect to a Product pursuant to Section 10.1(a),
Novartis shall, within * of such termination, return to Vanda any and all tangible Vanda Know-How
relating to the terminated Product in the U.S./Canadian Territory or the applicable country in the
U.S./Canadian Territory. Additionally, in such event, subject to Section 5.5 of this Sublicense
Agreement(a) this Sublicense Agreement shall terminate in its entirety with respect to the
rights and licenses and * granted to Novartis with respect to Vanda Know-How and Vanda Trademarks
in the U.S./Canadian Territory or the applicable country in the U.S./Canadian Territory hereunder
or relating to the terminated Product and all of the rights under such licenses and * granted
hereunder to Novartis shall revert back to Vanda and (b) Novartis covenants that during the period
that Novartis would be obligated to pay royalties hereunder in the absence of such a termination,
neither Novartis nor its Affiliates or Sublicensees shall sell or offer to sell the terminated
Product in the U.S./Canadian Territory or in the terminated country in the U.S./Canadian Territory,
as applicable. Notwithstanding the foregoing, the parties’ rights and obligation with respect to
the ROW Territory, as well as those Sections of the Sublicense Agreement listed in Section 11.3
shall survive any such termination in accordance with their terms. Vanda shall retain all up-front
license fees and milestone payments it had received up to the date of termination if, and only if,
termination was not due to any fraud, misrepresentations, omissions or falsifications of
information with respect to such Vanda Know-How or Vanda Trademarks, in which case Vanda shall
repay to Novartis, within * of such

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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termination, that portion of any up-front license fee and milestone payments Vanda had
received from Novartis up to the date of such termination.

          (c) Novartis may terminate this Sublicense Agreement in the ROW Territory by giving Vanda *
prior written notice in the event that the time period of more than * elapses between the grant of
first marketing authorization in a Major Market Country and the commercial launch of the Product in
that country. In the event of termination in the entire ROW Territory by Novartis pursuant to this
Section 10.1(c), Vanda shall, within * of such termination, return to Novartis any and all
information and other Data (including new information and Data) relating to the Compound and
Product, whether generated by or on behalf of Titan, Novartis, Sanofi-Aventis or Vanda, and make no
further use thereof. Additionally, in such event, this Sublicense Agreement shall terminate in its
entirety with respect to the rights and licenses (including the sublicenses and *) granted to Vanda
hereunder and all of the rights under the sublicenses and licenses and * granted hereunder to Vanda
shall revert back to Novartis. Notwithstanding the foregoing sentence, the parties’ rights and
obligations with respect to the U.S./Canadian Territory, as well as those Sections of the
Sublicense Agreement listed in Section 11.3, shall survive any such termination in accordance with
their terms. Novartis shall retain all up-front license fees and milestone payments it had
received up to the date of termination (including any up-front license fees and milestone payments
paid by Vanda under the Original Agreement).

     10.2 Unless otherwise terminated, the sublicenses and licenses granted to each party under
this Sublicense Agreement shall expire on a country-by-country basis upon the expiration of their
obligation to pay royalties under this Sublicense Agreement in each such country. Expiration of
such sublicenses and licenses under this provision shall not preclude Vanda, its Affiliates and
Sublicensees from continuing directly or indirectly to manufacture the Compound and market and sell
Product and to use Know-How and have the benefit of the * in any such country in the ROW Territory
in accordance with the terms of this Sublicense Agreement without further royalty payments or
preclude Novartis, its Affiliates and Sublicensees from continuing directly or indirectly to use
the Vanda Know-How and Vanda Trademarks and have the benefit of the * in the U.S./Canadian

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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Territory in accordance with the terms of this Sublicense Agreement without further royalty
payments.

     10.3 In the event there is a change in the control of Vanda, Vanda shall give Novartis thirty
(30) days written notice of such event and that the development and commercialization of Compound
and Product in the ROW Territory will continue per the terms of this Sublicense Agreement.

     10.4 (a) If either party materially defaults in its performance of this Sublicense Agreement
and if such default is not corrected or if the party in default is not exercising reasonably
diligent efforts to cure such default within ninety (90) days after receiving written notice from
the other party with respect to such default, or if such default is not correctable within ninety
(90) days then such other party shall have the right to terminate this Sublicense Agreement at the
end of such period in its entirety by giving written notice to the party in default, provided (i)
in the event Vanda materially defaults in its performance under this Sublicense Agreement with
respect to a particular country in the ROW Territory, then, subject to Section 11.4 hereof,
Novartis’ right to terminate shall be limited to termination of the sublicense and licenses and *
granted hereunder in such country only, and Vanda’s and Novartis’ rights, licenses, * and
obligations with respect to the other countries in the ROW Territory and in the U.S./Canadian
Territory, as applicable, shall remain in full force and effect and (ii) in the event Novartis
materially defaults in its performance under this Sublicense Agreement with respect to a particular
country or countries in the U.S./Canadian Territory, then Vanda’s right to terminate shall be
limited to termination of the licenses and * granted hereunder in such country only or in such
countries, as applicable, and Vanda’s and Novartis’ rights, licenses, * and obligations with
respect to the other countries in the ROW Territory and the other country in the U.S./Canadian
Territory (if any), as applicable, shall remain in full force and effect. Notwithstanding any
termination of the Sublicense Agreement under this Section 10.4 with respect to the ROW Territory
(or any portion thereof) or the U.S./Canadian Territory (or any portion thereof), the parties’
rights and obligations with respect to the non-terminated countr(y)(ies), as well as those Sections
of the Sublicense Agreement listed in Section 11.3, shall survive any such termination in
accordance with their terms.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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          (b) If Novartis materially defaults in its performance of the Titan Agreement, then Vanda
shall have the right but not the obligation to correct or cure such default in the place of
Novartis at Vanda’s own cost and expense within the ninety (90) day period provided for in Section
10.5 of the Titan Agreement without prejudice to any other rights Vanda may have under this
Sublicense Agreement (including the right to recover amounts paid to Novartis), provided that (i)
Vanda notifies Novartis in writing of Vanda’s election to do so, and (ii) Vanda’s correction or
cure of such default does not increase Novartis’ liability under the Titan Agreement or this
Sublicense Agreement.

          (c) It is agreed that a material default by Novartis under the Titan Agreement shall be a
material default by Novartis under this Sublicense Agreement.

     10.5 Subject to applicable bankruptcy laws, either party may terminate this Sublicense
Agreement if, at any time, the other party shall file in any court pursuant to any statute of the
United States or of any individual state or foreign country, a voluntary petition in bankruptcy or
insolvency or for reorganization in bankruptcy or for an arrangement or the appointment of a
receiver or trustee of the party or of its assets, or if the other party shall be served with an
involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be
dismissed within * after the filing thereof, or if the other party shall propose or be a party to
any dissolution, or if the other party shall make an assignment for the benefit of creditors.

          (a) Without limitation, each party’s rights under this Sublicense Agreement shall include
those rights afforded by 11 U.S.C. Section 365(n) of the United States Bankruptcy Code and any
successor thereto (the “Code”). If the bankruptcy trustee of a party as a debtor or
debtor-in-possession rejects this Sublicense Agreement under 11 U.S.C. Section 365(n) of the Code,
the other party may elect to retain its rights licensed (including the *) from such party hereunder
(and any other supplementary agreements hereto) for the duration of this Sublicense Agreement and
avail itself of all rights and remedies to the full extent contemplated by this Sublicense
Agreement and 11 U.S.C. Section 365(n) of the Code, and any other relevant sections of the Code and
other relevant non-bankruptcy law.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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11. RIGHTS AND DUTIES UPON TERMINATION

     11.1 Upon termination of this Sublicense Agreement by Vanda for Novartis’ breach, whether the
Sublicense Agreement is terminated in its entirety or with respect only to the parties’ rights and
obligations in connection with the U.S./Canadian Territory, all of Novartis’ license rights to the
Vanda Know-How and the Vanda Trademarks shall immediately cease.

     11.2 Upon early termination of this Sublicense Agreement with respect to the ROW Territory or
the U.S./Canadian Territory or any portion thereof under Sections 10.1 or 11.6 or due to a breach
hereof by Vanda or Novartis, the party whose territory has been terminated shall notify the other
party of the amount of Product that it, its Affiliates and Sublicensees then have on hand for sale
in each country, the sale of which would, but for the termination, be subject to royalty, and such
party, its Affiliates and Sublicensees shall thereupon be permitted to sell that amount of Product,
provided that such party shall pay the royalty thereon to the other party, or Sanofi-Aventis, as
the case may be, at the time provided for.

     11.3 Expiration or termination of this Sublicense Agreement or termination on a
country-by-country basis shall terminate all outstanding obligations and liabilities between the
parties with respect to the applicable countr(y)(ies) arising from this Sublicense Agreement except
those described in Sections 5.5, 6.6, 6.8, 6.9, 6.10. 6.11, 7.3, 8.9, 8.10, 8.11, 9.1, 10, 11, 12,
14, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 27 and Section 3 of Appendix C which sections shall
survive such termination. In addition, each party shall pay all sums accrued hereunder which are
then due in accordance with the terms hereof except as otherwise defined in this Sublicense
Agreement, and any other provision required to interpret and enforce the parties’ rights and
obligations under this Sublicense Agreement shall also survive, but only to the extent required for
the full observation and performance of the surviving obligations under this Sublicense Agreement.
For the avoidance of doubt, in the event of a termination of this Sublicense Agreement with respect
to the ROW Territory (or any portion thereof) or the U.S./Canadian Territory (or any portion
thereof), the parties’ rights and obligations with respect to the non-terminated country(y)(ies),
those Sections of the Sublicense Agreement shall survive any such termination in accordance with
their terms.

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     11.4 Except as otherwise specifically provided for herein, termination, in whole or in part,
of the Sublicense Agreement in accordance with the provisions hereof shall not limit remedies to
the parties which may be otherwise available in law or equity, arising out of a party’s performance
or nonperformance under this Sublicense Agreement.

     11.5 Subject to Section 11.2 and other express provisions hereof, upon early termination of
this Sublicense Agreement with respect to the ROW Territory in its entirety due to breach hereof by
Vanda or pursuant to Sections 10.1or 11.6, Vanda’s rights in the Compound and Product shall cease,
Vanda, its Affiliates and Sublicensees shall cease manufacture, development, marketing and sale of
the Compound and Product in the ROW Territory, and all originals and copies of Know-How, Data,
results and other information collected and/or generated by Vanda, its Affiliates and Sublicensees
relating to the Compound or Product prior to termination shall be delivered to Novartis within
thirty (30) days thereafter, except for one copy thereof which may be retained in Vanda’s legal or
other appropriately restricted files solely for the purpose of establishing the extent of its
obligations hereunder. Any ex-U.S. equivalent to an IND or other regulatory filing effected prior
to termination shall be assigned by Vanda to Novartis (or its designee(s), which designee may be
Sanofi-Aventis or Titan), at Novartis’ request and expense, if not already assigned to Novartis.
Vanda shall provide to Novartis, within thirty (30) days of Novartis’ request, copies of all
regulatory correspondence, including, but not limited to, any ex-U.S. equivalents to IND
Information Amendments, IND Reports, IND Safety Reports, NDA submission, NDA Postmarketing Reports,
and reports of written/phone contacts to and from regulatory agencies, as well as the safety
database for the Product managed by Vanda.

     11.6 If (a) Vanda is precluded from selling the Product in a particular country in the ROW
Territory by virtue of infringement of Third Party patent rights, or (b) there is a holding of
invalidity or unenforceability of any Patent, from which no further appeal can be taken, that
materially affects Vanda’s ability to commercialize the Product in a particular country in the ROW
Territory, Vanda shall have the right but not the obligation to terminate this Sublicense Agreement
in such country. At Vanda’s option, this Sublicense Agreement may be terminated in its entirety if
the events described in subsection (a) or (b) of this Section 11.6 occur in two of the Major Market
Countries. Within ninety-five (95) days of any such termination, subject to

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the following sentence, Novartis shall repay to Vanda if the Sublicense Agreement has been
terminated in its entirety, that portion of any up-front license fee and milestone payments it has
received from Vanda up to the date of termination. In the event that the Sublicense Agreement is
terminated pursuant to Section 11.6 of the Sublicense Agreement, Novartis shall be obligated to
make the foregoing repayments to Vanda, but only to the extent that it has been repaid its own
up-front license fee and milestone payments due to Novartis under Section 11.6 of the Titan
Agreement. If this Sublicense Agreement has been terminated only with respect to certain
country(ies), the parties shall negotiate in good faith a smaller portion of the upfront license
fee and milestone payments Novartis has received from Vanda up to such date which shall be repaid
to Vanda; provided, however, if the Titan Agreement has been terminated only with respect to such
certain countries under Section 11.6 of the Titan Agreement, Novartis shall be obligated to make
such repayments to Vanda but only to the extent Novartis has been repaid the corresponding portion
of the up-front license fee and milestone payments owed to it pursuant to Section 11.6 of the Titan
Agreement. If the parties are unable to agree on such smaller portions within ninety (90) days,
the issue shall be submitted for determination by arbitration in accordance with Section 16.2.

12. WARRANTIES, INDEMNIFICATIONS AND REPRESENTATIONS

     12.1A. Novartis represents and warrants that *:

          (a) all currently issued or pending patents and patent applications in the ROW Territory owned
or controlled by Sanofi-Aventis or its Affiliates or Sublicensees claiming the Compound or Product
are listed in Appendix A;

          (b) Sanofi-Aventis or Novartis or their respective Affiliates or Sublicensees own or control
the entire right, title and interest in Patents in the ROW Territory and Know-How. If Novartis
becomes aware of any patents or patent applications owned or controlled by Sanofi-Aventis or its
Affiliates or Sublicensees claiming the Compound or Product or manufacture, formulation or use
thereof, not listed in Appendix A and is within the rights granted to Vanda in this Sublicense
Agreement, such patents and patent applications shall be added to Appendix A at no cost to Vanda;

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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          (c) the Titan Agreement is in full force and effect and neither Sanofi-Aventis nor Titan
nor Novartis is in default of any of their obligations thereunder; and

          (d) Novartis has not previously assigned, transferred, conveyed or otherwise encumbered its
right, title and interest in the Patents in the ROW Territory or Know-How.

     12.1B. Vanda represents and warrants that *:

          (a) it or its Affiliates owns or controls the entire right, title and interest to, in each
case free and clear of any liens, all Vanda Know-How, Vanda Trademarks, Vanda Domain Names and
Existing Applications and Approvals;

          (b) neither Vanda nor any of its Affiliates or Sublicensees has transferred ownership of any
Vanda Know-How, Vanda Trademarks, Vanda Domain Names or Existing Approvals to any Person;

          (c) to the best of Vanda’s knowledge, (i) except, with respect to events or occurrences
arising after the Execution Date only, as may be disclosed by Vanda to Novartis prior to the
Effective Date, if at all, no Person has infringed or misappropriated or is infringing or
misappropriating any Vanda Know-How or the Vanda Trademarks; and (ii) neither Vanda nor any of its
Affiliates or Sublicensees has infringed or misappropriated or is infringing or misappropriating,
in connection with the use, exploitation or license of the Vanda Know-How or the Vanda Trademarks,
the intellectual property of any Third Party;

          (d) *;

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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          (e) all negotiations or discussions with any Person other than Novartis with respect to
any license, sale or other transfer or grant of rights with respect to the Vanda Know-How, the
Vanda Trademarks, Vanda Domain Names and Existing Applications and Approvals have been terminated
and there are no letters of intent or similar documents which have any binding effect on Vanda or
any contract, agreement or commitment referring to or relating to any license, sale or other
transfer or grant of rights with respect to the Vanda Know-How, Vanda Trademarks, Vanda Domain
Names and Existing Applications and Approvals to which any of Vanda, its Affiliates or Sublicensees
is a party which has any legally binding effect on Vanda, its Affiliates or Sublicensees.

     12.1C. Each party represents and warrants to the other at the Execution Date and the Effective
Date of this Sublicense Agreement as follows:

          (a) it is a corporation duly organized, validly existing, and in good standing under the laws
of its jurisdiction of formation;

          (b) it has all requisite corporate power and authority to execute, deliver, and perform this
Sublicense Agreement, and has taken all corporate action required by law and its organizational
documents to authorize the execution and delivery of this Sublicense Agreement and the consummation
of the transactions contemplated by this Sublicense Agreement; the execution and delivery of this
Sublicense Agreement by such party and the performance by it of its obligations hereunder have been
duly and validly authorized by all necessary corporate action on the part of such party; this
Sublicense Agreement has been duly executed and delivered by such party;

          (c) this Sublicense Agreement constitutes a valid and binding agreement enforceable against it
in accordance with its terms;

          (d) all consents, approvals and authorizations from all governmental authorities or other
Persons required to be obtained by such party in connection with this Sublicense Agreement and the
transactions contemplated hereby have been obtained, subject to compliance with the HSR Act;

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          (e) the execution and delivery of this Sublicense Agreement and all other instruments and
documents required to be executed pursuant to this Sublicense Agreement, and the consummation of
the transactions contemplated hereby, do not and shall not (i) conflict with or result in a breach
of any provision of its organizational documents, (ii) result in a breach of any other agreement to
which it is a party; or (iii) violate any applicable law; and

          (f) neither it nor its Affiliates, nor their respective stockholders, directors, officers or
employees have retained any broker, finder, or investment banker in connection with the Sublicense
Agreement or the transactions contemplated hereby, except, in the case of Vanda, for those Persons,
the fees and expenses of which shall be paid solely by Vanda.

     12.2 Nothing in this Sublicense Agreement shall be construed as a warranty that the Patents
are valid or enforceable or that their exercise does not infringe any patent rights of Third
Parties. Each party represents and warrants to the other party that it has no present knowledge
(except as disclosed to the other party or as available to the other party from public information)
that (i) the Patents are invalid or unenforceable, (ii) the exercise of Patents infringes any
patent rights of Third Parties, and (iii) Third Party licenses are necessary for the development,
manufacture or commercialization of the Compound or Product. A holding of invalidity or
unenforceability of any Patent, from which no further appeal is or can be taken, shall not affect
any obligation already accrued hereunder, but shall only eliminate future royalties otherwise due
under such Patent from the date such holding becomes final.

     12.3 Each party represents and warrants to the other party that it is not currently debarred,
suspended or otherwise excluded by any U.S. Government agencies from receiving federal contracts.

     12.4 Vanda represents and warrants that during the term of this Sublicense Agreement, neither
it, an Affiliate or a Sublicensee shall license, develop, have developed, manufacture, have
manufactured, sell or have sold any of the following compounds or products classified as an
atypical antipsychotic: *.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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     In the event that Vanda or a Sublicensee undertakes any of the foregoing actions within the
EEA, then Novartis may not terminate this Sublicense Agreement or seek damages or equitable
remedies for such actions, but may at its option by notice to Vanda (i) terminate the Exclusive
nature of the licenses granted pursuant to Article 2 hereof in the EEA, so that all use of Patents
and Know-How in the EEA will thereafter be on a non-exclusive basis at a reduced royalty rate to be
negotiated at time of change in exclusivity; and/or (ii) require Vanda to prove to Novartis’
reasonable satisfaction that the Know-How is not being used for such activities. Notwithstanding
the foregoing, Novartis and Vanda agree that in the event Vanda acquires rights to one or more of
the * compounds or products listed in the first paragraph of this Section 12.4 (the “Acquired
Compounds or Products”) as part of a corporate transaction Novartis shall use its good faith
efforts to cause Sanofi-Aventis and Titan to waive any rights that it may have against Vanda or
Novartis under this Section 12.4 and Section 12.4 of the Titan Agreement. To assist Novartis in
obtaining such waiver from Sanofi-Aventis, Vanda will provide Novartis with arguments supporting
how Vanda intends to prevent the Products from being negatively impacted by the Acquired Compounds
or Products. In the event that Sanofi-Aventis or Titan will not waive such rights and Vanda does
not agree to divest the Acquired Compounds or Products or, alternatively, sublicense the Product to
a mutually acceptable Third Party (which Third Party must also be acceptable to Sanofi-Aventis and
Titan), Novartis agrees that its sole and exclusive remedy against Vanda shall be to terminate the
Exclusive nature of the Sublicense Agreement in the EEA as provided for in this Section 12.4, and
to terminate this Sublicense Agreement elsewhere in the ROW Territory.

     12.5 During the term of this Agreement, Novartis shall: (i) not enter into any
subsequent agreement with Titan or Sanofi-Aventis that modifies or amends the Titan Agreement or
the Sanofi-Aventis Agreement in any material respect, or otherwise waives any rights under the
Titan Agreement or Sanofi-Aventis Agreement in any material respect, in either case, in a manner
that would adversely affect Vanda’s rights under this Sublicense Agreement, without the prior
written consent of Vanda, (ii) not terminate the Titan Agreement, in whole or in part (in any
material respect), directly or indirectly (including by delivery of any notification pursuant to
Section 10.1(a) of the Titan Agreement), and (iii) furnish Vanda with copies of all written notices
received by Novartis (or any of its Affiliates) relating to any alleged

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

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breach or default by Novartis under the Titan Agreement promptly after Novartis’ (or its
Affiliate’s) receipt thereof.

     12.6 Vanda shall indemnify, defend and hold Novartis, Sanofi-Aventis, Titan and their
respective Affiliates harmless from and against any and all liabilities, claims, demands, damages,
costs, expenses, fines, penalties or money judgments including without limitation court costs and
reasonable attorney’s fees (hereinafter referred to as “Liabilities”), incurred by or rendered
against Novartis, Titan, Sanofi-Aventis and their respective Affiliates to the extent they arise
out of the clinical testing, use or labeling, or the manufacture, processing, packaging, sale or
distribution of the Compound or Product (as the case may be) by Vanda, its Affiliates and
Sublicensees, or the breach of this Sublicense Agreement by Vanda (including without limitation any
breach of Vanda’s representations and warranties under this Sublicense Agreement) or any negligence
or misconduct of Vanda, except to the extent that such Liabilities are directly attributable to the
breach of this Sublicense Agreement or the Supply Agreement by Novartis or breach of the Titan
Agreement by Sanofi-Aventis or Titan (including without limitation any breach of Novartis’
representations or warranties under this Sublicense Agreement or the Supply Agreement or any breach
of Sanofi-Aventis’ or Titan’s representations or warranties under the Titan Agreement) or any
negligence or misconduct by Novartis, Titan or Sanofi-Aventis. Vanda shall also indemnify, defend
and hold Novartis, Titan, Sanofi-Aventis and their respective Affiliates harmless from and against
any and all Liabilities incurred by or rendered against Novartis, Titan, Sanofi-Aventis and their
respective Affiliates which arise out of any of Vanda’s contracts or arrangements with Third
Parties (including CROs) relating to the development and/or registration process for the Compound
or Product from and after the Effective Date of this Sublicense Agreement, whether *, except to the
extent that such Liabilities are directly attributable to the breach of this Sublicense Agreement
by Novartis or breach of the Titan Agreement by Sanofi-Aventis or Titan (including without
limitation any breach of Novartis’ representations or warranties under this Sublicense Agreement or
any breach of Sanofi-Aventis’ or Titan’s representations or warranties under the Titan Agreement)
or any negligence or misconduct by Novartis, Titan or Sanofi-Aventis.

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 70 

 

     12.7 Novartis shall indemnify, defend and hold Vanda, its Affiliates and Sublicensees
harmless from and against any and all Liabilities (as defined in Section 12.6 hereof), incurred by
or rendered against Vanda, its Affiliates and Sublicensees, which arise out of the breach of this
Sublicense Agreement by Novartis (including any breach of Novartis’ representations or warranties
under this Sublicense Agreement) or any negligence or misconduct by Novartis, except to the extent
that such Liabilities are directly attributable to the breach of this Sublicense Agreement or the
Supply Agreement by Vanda (including without limitation any breach of Vanda’s representations and
warranties under this Sublicense Agreement or the Supply Agreement) or breach of the Titan
Agreement by Sanofi-Aventis or Titan (including without limitation any breach of Sanofi-Aventis’
or Titan’s representations or warranties under the Titan Agreement) or any negligence or misconduct
by Vanda, Sanofi-Aventis or Titan. Novartis shall also indemnify, defend and hold Vanda, its
Affiliates and Sublicensees harmless from and against any and all Liabilities incurred by or
rendered against Vanda, and its Affiliates and Sublicensees which arise out of the manufacture, use
or sale of the Compound and Product that has been manufactured or sold by or on behalf of Novartis
and its Affiliates or Sublicensees * (including in those countries in the ROW Territory where
Vanda’s sublicense rights hereunder have been terminated), including the clinical testing, use and
labeling of Product and the manufacture, processing, packaging, sale or distribution of Product by
or on behalf of Novartis and its Affiliates and Sublicensees, which arise out of the activities of
any CRO which occurred prior to the execution of this Sublicense Agreement and that were undertaken
pursuant to a written contract between Novartis and such CRO relating to the Compound or Product.

     12.8 Each party shall give the other prompt notice in writing of any claim or demand referred
to in Sections 12.6 or 12.7. In addition, the obligations of any indemnifying party shall be
subject to the indemnified party fulfilling the following obligations:

          (a) With respect to Third Party claims, the indemnified party shall fully cooperate with the
indemnifying party in the defense of such claim or demand which defense shall be controlled by the
indemnifying party; and

 

			
	*	 	Certain information has been omitted and filed separately with the
Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 71 

 

          (b) With respect to Third Party claims, the indemnified party shall not, except at its
own cost, voluntarily make any payment or incur any expense with respect to any claim, demand or
suit (including without limitation retaining its own counsel) without the prior written consent of
the indemnifying party, which such party shall not be required to give.

13. COMPLIANCE WITH LAW

     Each party shall perform its obligations under this Sublicense Agreement in accordance with
all applicable laws, including without limitation, applicable privacy laws. No party shall, or
shall be required to, undertake any activity under or in connection with this Sublicense Agreement
which violates, or which it believes, in good faith, may violate, any applicable law.

14. NO PROJECTIONS

     Vanda and Novartis acknowledge and agree that nothing in this Sublicense Agreement shall be
construed as representing an estimate or projection of anticipated sales of any Product, and that
the milestones and Net Sales levels set forth in this Sublicense Agreement or that have otherwise
been discussed by the parties are merely intended to define the milestone and royalty obligations
that each party has to the other in the event such milestones or Net Sales levels are achieved.
NEITHER VANDA NOR NOVARTIS MAKES ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT
WILL BE ABLE TO SUCCESSFULLY COMMERCIALIZE ANY PRODUCT OR, IF COMMERCIALIZED, THAT ANY PARTICULAR
NET SALES LEVEL OF SUCH PRODUCT WILL BE ACHIEVED.

15. FORCE MAJEURE

     15.1 If the performance of any part of this Sublicense Agreement by either party, or if any
obligation under this Sublicense Agreement, is prevented, restricted, interfered with or delayed by
reason of any cause beyond the reasonable control of the party required to perform, the party so
affected, upon giving written notice and written evidence of such force majeure to the other party,
shall be excused from such performance to the extent of such prevention, restriction, interference
or delay, provided that the affected party shall use its reasonable commercial efforts to avoid or
remove such causes of non-performance and shall continue performance with the utmost dispatch
whenever the force majeure is removed. In the event of a

Page 72 

 

force majeure, the parties shall also discuss whether modifications of the terms of this
Sublicense Agreement are necessary to alleviate the hardship or loss caused by the force majeure.

16. GOVERNING LAW AND ARBITRATION

     16.1 This Sublicense Agreement shall be deemed to have been made in the State of New York and
its form, execution, validity, construction and effect shall be determined in accordance with the
laws of the State of New York (without regard to New York’s or any other jurisdiction’s choice of
law principles).

     16.2 In the event of any dispute, controversy or claim arising out of or relating to the
interpretation or failure to comply with the terms of this Sublicense Agreement, the parties shall
try to settle their differences amicably between themselves. Any unresolved disputes arising
between the parties relating to, arising out of or in any way connected with the interpretation of
this Sublicense Agreement or failure to comply with any term or condition hereof, or the
performance by either party of its obligations hereunder, whether before or after termination of
this Sublicense Agreement, shall be resolved by final and binding arbitration. Whenever a party
shall decide to institute arbitration proceedings, it shall give written notice to that effect to
the other party. Except in the case of a determination to be made where payments are to be made to
by one party to the other, the party giving such notice shall refrain from instituting the
arbitration proceedings for a period of sixty (60) days following such notice to allow the parties
time to further attempt to come to an amicable resolution of the dispute. Arbitration shall be
held in New York City, New York according to the commercial rules of the American Arbitration
Association (“AAA”). The arbitration will be conducted by a panel of three (3) arbitrators
appointed in accordance with AAA rules; provided, however, that each party shall within thirty (30)
days after the institution of the arbitration proceedings appoint a party arbitrator, and the
party-arbitrators shall select a neutral arbitrator, to be chairman of the arbitration panel,
within thirty (30) days thereafter. If the party-arbitrators are unable to select a neutral within
such period, the neutral shall be appointed in accordance with AAA rules. All arbitrator(s)
eligible to conduct the arbitration must agree to render their opinion(s) within thirty (30) days
of the final arbitration hearing. No arbitrator (nor the panel of arbitrators) shall have the
power to award punitive damages under this Sublicense Agreement and such award is

Page 73 

 

expressly prohibited. Decisions of the arbitrator(s) shall be final and binding on all of the
parties. Judgment on the award so rendered may be entered in a court having jurisdiction thereof.
In any arbitration pursuant to this Sublicense Agreement, the arbitrators shall interpret the
express terms hereof and apply the laws of the State of New York. The losing party to the
arbitration as determined by the arbitrators shall pay the costs of arbitration. Notwithstanding
the provisions of this clause, either party may seek preliminary or injunctive measures or relief
in any competent court having jurisdiction without first having to comply with this Section 16.2.

17. SEPARABILITY

     17.1 In the event any portion of this Sublicense Agreement not material to the remaining
portions shall be held illegal, void or ineffective, the remaining portions hereof shall remain in
full force and effect.

     17.2 If any of the terms or provisions of this Sublicense Agreement are in conflict with any
applicable statute or rule of law, then such terms or provisions shall be deemed inoperative to the
extent that they may conflict therewith and shall be deemed to be modified to conform with such
statute or rule of law.

     17.3 In the event that the terms and conditions of this Sublicense Agreement are materially
altered as a result of Sections 17.1 or 17.2, the parties shall renegotiate the terms and
conditions of this Sublicense Agreement so as to accomplish as nearly as possible the original
intentions of the parties.

18. ENTIRE AGREEMENT; AMENDMENTS

     18.1 This Sublicense Agreement and the Appendices attached hereto, and the Original Agreement
(solely with respect to periods prior to the Effective Date), constitutes the entire agreement
between the parties relating to the subject matter hereof and supersedes, as of the Effective Date,
all previous writings and understandings, including the Confidentiality Agreements between the
parties dated June 16, 2003 and June 8, 2009, as amended, (it being understood and agreed that all
Confidential Information of Sanofi-Aventis, Titan and Novartis disclosed to Vanda prior to the
Execution Date of this Sublicense Agreement shall be subject to

Page 74 

 

Sections 6.6, 6.8, 6.9 and 6.11 of this Sublicense Agreement). No terms or provisions of this
Sublicense Agreement shall be varied or modified by any prior or subsequent statement, conduct or
act of either of the parties, except that the parties may amend this Sublicense Agreement by
written instruments specifically referring to and executed in the same manner as this Sublicense
Agreement. Any amendments to this agreement require the prior written approval of Titan and
Sanofi-Aventis, which approval will not be unreasonably withheld.

19. NOTICES

     19.1 Any notice required or permitted under this Sublicense Agreement shall be in writing and
in English and shall be sent by airmail, postage prepaid, or facsimile or courier to the following
address of each party or to such other address as may be designated in writing by the respective
parties (and shall be effective upon receipt by the party to whom it is addressed):

     If to NOVARTIS:

Novartis Pharma AG

Legal Services

P.O. Box

4002 Basel

Switzerland

Facsimile: +41 61 324 68 59

Attention: General Counsel Pharma Legal

With a copy to:

Business Development and Licensing Novartis Pharma AG

P.O. Box

4002 Basel

Switzerland

Attention: Head of Global Partnering

If to Vanda:

Vanda Pharmaceuticals Inc.

9605 Medical Center Drive

Suite 300

Rockville, MD 20850

Attention: Chief Business Officer

Facsimile: (301) 294-1900

Page 75 

 

With a copy to:

Gunderson, Dettmer, Stough, Villeneuve, Franklin & Hachigian, LLP

610 Lincoln Street

Waltham, MA 02451

Attention: Timothy Ehrlich, Esq.

Facsimile: (781)-622-1622

     19.2 Any notice required or permitted to be given concerning the Sublicense Agreement or
Sanofi-Aventis Agreement shall be effective upon receipt by the party to whom it is addressed.

If to TITAN:

Titan Pharmaceuticals, Inc.

400 Oyster Point Blvd., Suite 505

South San Francisco, CA 94080

Attention: Sunil Bhonsle, President

Telephone: (650) 244-4990

Facsimile: (650) 244-4956

With a copy to:

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Attn: Fran Stoller

Phone: 212-407-4935

Facsimile: 212-407-4990

e-mail: fstoller@loeb.com

If to Sanofi-Aventis:

sanofi-aventis

200 Crossing Boulevard

Mail Stop BX2 800D

Bridgewater, NJ 08807-0890

Facsimile: 908-231-3619

Attention: Senior Vice President, Corporate Development

Page 76 

 

With copies to:

sanofi-aventis

200 Crossing Boulevard

Mail Stop BX2 700A

Bridgewater, NJ 08807-0890

Facsimile: 908-231-4480

Attn: Vice President, Legal Corporate Development

For safety and Adverse Event Reporting:

sanofi-aventis

Global Pharmacovigilance & Epidemiology

Suraj Patel, License Partner Coordinator

200 Crossing Boulevard

PO Box 6890, BX4-400G

Bridgewater, NJ 08807-0890

USA

Phone: +1 908 541 5431

Fax: +1 908 231 4229

Email: suraj.patel@aventis.com

With copies to:

sanofi-aventis

US Regulatory Liaison

Kerry Rothschild, License Partner Coordinator

200 Crossing Boulevard

PO Box 6890, BX2-209G

Bridgewater, NJ 08807-0890

USA

Phone: +1 908 231 2848

Email: kerry.rothschild@aventis.com

And,

sanofi-aventis

US Regulatory Coordination

Steve Caffe, License Partner Coordinator

200 Crossing Boulevard

PO Box 6890, BX2-209G

Bridgewater, NJ 08807-0890

USA

Phone: +1 908 231 5683

Fax: +1 908 541 5293

Email: steve.caffe@aventis.com

Page 77 

 

20. ASSIGNMENT

     20.1 This Sublicense Agreement or any portions thereof and the sublicenses herein shall be
binding upon and inure to the benefit of the successors in interest and assignees of the respective
parties.

     20.2 Vanda may assign this Sublicense Agreement to an Affiliate without the prior written
consent of Novartis, and in such event Vanda will continue to guarantee the obligations of such
Affiliate hereunder. Subject to the foregoing, Vanda shall not have the right to assign this
Sublicense Agreement to any Third Party without the prior written consent of Novartis, Titan and
Sanofi-Aventis, such consent not to be unreasonably withheld; provided, however, that no such
consent shall be required in connection with an assignment in connection with any event referred to
in Section 20.3 below.

     20.3 In the event of a consolidation, merger, acquisition which involves a change in control
of Vanda, this Sublicense Agreement shall remain in full force and effect, and Vanda agrees to
notify Novartis, Titan and Sanofi-Aventis. Consolidation, mergers and/or acquisitions to which
Vanda is a party which do not involve a change in control of Vanda shall not require such notice.

     20.4 In order for any assignment by Vanda of this Sublicense Agreement (which is permitted by
this Sublicense Agreement) to be valid, the assignee of such assignment shall assume and agree to
be bound by the provisions hereof.

21. FAILURE TO ENFORCE

     21.1 The failure of either party to enforce at any time any provisions hereof shall not be
construed to be a waiver of such provision nor of the right of such party thereafter to enforce
each and every such provision.

22. AGENCY

     22.1 Except as expressly set forth in this Sublicense Agreement, nothing in this Sublicense
Agreement authorizes either party to act as agent for the other or, as to any Third Party, to
indicate or imply the existence of any such agency relationship. The relationship between the
parties is that of independent contractors.

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23. FURTHER ASSURANCES

     23.1 Each party hereto agrees to execute, acknowledge and deliver such further instruments,
and to do all such other acts, as may be necessary or appropriate in order to carry out the
purposes and intent of this Sublicense Agreement.

24. CAPTIONS

     24.1 Captions are inserted for convenience only and in no way are to be construed to define,
limit or affect the construction or interpretation hereof

25. MISCELLANEOUS

     25.1 Both parties agree to discuss matters arising during the term of this Sublicense
Agreement in the spirit of co-operation and good faith and endeavor to resolve any differences by
mutual agreement whenever possible. If the parties fail to reach agreement, either party may
submit the matter for resolution pursuant to Section 16.2.

     25.2 Sanofi-Aventis and its Affiliates shall be third party beneficiaries under this
Sublicense Agreement to the extent that this Sublicense Agreement inures to the benefit of
Sanofi-Aventis, with respect to Sections 0, 2.1, 2.3(a), 2.4(a), 2.6, 3.4(a), 3.5, 4.1(a), 4.2,
4.3, 5.2, 5.3, 5.5, 6.5, 6.6, 6.9, 8.1, 8.2, 8.4, 8.5, 8.6, 8.7, 8.9, 8.10, 8.11, 8.12, 8.13, 9.1,
9.3, 9.4, 9.5(a), 10.1(b), 11.5, 12.6, 19.2, 20.2, 20.3, 20.4, 25.2 and 25.3 with all rights and
remedies associated therewith.

     25.3 Vanda covenants to Novartis that during the term of this Sublicense Agreement, Vanda, its
Affiliates and Sublicensees shall not violate the Federal Foreign Corrupt Practices Act in the
performance of its negotiations or obligations hereunder.

     25.4 Unless the context of this Sublicense Agreement otherwise requires, the following rules
of interpretation apply to this Sublicense Agreement: (i) “include”, “includes” and “including”
are not limiting; (ii) “hereof”, “hereto”, “herein” and “hereunder” and words of similar import
when used in this Sublicense Agreement refer to this Sublicense Agreement as a whole and not to any
particular provision of this Sublicense Agreement; (iii) words of one gender include the other
gender; (iv) references to a Person are also to its permitted successors and assigns (to the extent
permitted by this Sublicense Agreement); (v) references to an

Page 79

 

“Article”, “Section”, “Appendix”, “Annex”, “Exhibit” or “Schedule” refer to an Article or
Section of, or an Appendix, Annex, Exhibit or Schedule to, this Sublicense Agreement, unless
expressly stated otherwise; (vii) references to a law include any amendment or modification to such
law and any rules and regulations issued thereunder, whether such amendment or modification is
made, or issuance of such rules and regulations occurs, before or after the date of this Sublicense
Agreement only for so long as such law is applicable to this Sublicense Agreement; and (viii) words
using the singular or plural number also include the plural or singular number, respectively.
Whenever this Sublicense Agreement refers to a number of days, unless otherwise specified, such
number shall refer to calendar days.

26. HSR FILING

     26.1 If required by applicable law, both parties shall promptly file, following the Execution
Date, their respective pre-merger notification and report forms with the Federal Trade Commission
(“FTC”) and the Department of Justice (“DOJ”) pursuant to the U.S. Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (“HSR
Act”) (such notification and report forms, collectively, the “HSR Filing”). Each party will be
responsible for * associated with any HSR Filing but * shall be responsible for *.

     26.2 The parties shall use their Commercially Reasonable Efforts to obtain prompt clearance
required under the HSR Act for the consummation of this Sublicense Agreement and the transactions
contemplated hereby and shall keep each other apprised of the status of any communications with,
and any inquiries or requests for additional information from, the FTC and the DOJ and shall comply
promptly with any such inquiry or request; provided, however, that neither party shall be required
to consent to the divestiture or other disposition of any of its or its Affiliates’ assets or to
consent to any other material structural or conduct remedy.

     26.3 Notwithstanding anything to the contrary in this Sublicense Agreement, this Article 26
shall be binding upon the parties as of the Execution Date; however, the remainder of this
Sublicense Agreement shall not take effect (other than Sections 12.1B, 12.1C, 16, 17, 18, 19, 20,
21, 22, 24, 25.1 and 25.4), and the licenses granted pursuant to Article 2 shall not take

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted portions.

Page 80

 

effect, until the Effective Date. As used herein, the “HSR Clearance Date” shall mean such
time as: (a) the parties shall have made all filings in accordance with all applicable
requirements of the HSR Act; (b) the waiting period under the HSR Act shall have expired or earlier
been terminated; (c) no judicial or administrative proceeding pursuant to the HSR Act opposing
consummation of all or any part of this Sublicense Agreement shall be pending; (d) no injunction
(whether temporary, preliminary or permanent) prohibiting consummation of the transactions
contemplated by this Sublicense Agreement or any material portion hereof pursuant to the HSR Act
shall be in effect; and (e) no requirements or conditions shall have been formally requested or
imposed by the DOJ or FTC in connection therewith that are not reasonably and mutually satisfactory
to the parties (collectively, the “HSR Conditions”). In the event that the HSR Conditions are not
met within * of the Execution Date, this Sublicense Agreement shall be null and void.

27. AFFILIATES

     In the event of a merger, purchase or sale of stock, purchase or sale of assets or other
similar transaction (“Acquisition Transaction”), where a party to this Sublicense Agreement or one
of its Affiliates (the “Transaction Party”) or its assets is acquired by or acquires or merges with
a Person other than the other party or its Affiliates (such Person, the “Transaction
Counterparty”), then the Transaction Counterparty and the Transaction Counterparty’s Affiliates
other than the Transaction Party and its controlled Affiliates (collectively, the “Transaction
Counterparty Group”) will not be deemed to be an Affiliate of the Transaction Party for purposes of
the licenses or * granted to or by or required disclosures to or by the other party to this
Sublicense Agreement and any restrictions on the Transaction Party hereunder will not apply to the
Transaction Counterparty Group (apart from the business of the Transaction Party and its controlled
Affiliates), provided, that, and so long as, intellectual property rights relating to or affecting
the Product or Compound are not disclosed to or used by the Transaction Party Group (except for
disclosure solely pursuant to a confidentiality agreement executed by and between the Transaction
Party and the Transaction Party Group for purposes of due diligence in connection with the
Transaction Party Group’s evaluation of a proposed Acquisition Transaction and no further
disclosures after consummation of the Acquisition Transaction). For example, if a Transaction
Counterparty

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted
portions.

Page 81

 

     Group at the time of an Acquisition Transaction also has an iloperidone program or
product, then, subject to the proviso of the immediately preceding sentence, any related know-how
and intellectual property rights of the Transaction Counterparty Group will not become part of this
Sublicense Agreement and such Transaction Counterparty Group shall not be entitled to the benefits
of the Transaction Party under this Sublicense Agreement (but instead shall be deemed a Third Party
for all purposes hereof except that transfers or sales of Compound or Product between the
Transaction Party and the Transaction Counterparty Group that is a Sublicensee shall be disregarded
for purposes of the definition of Net Sales), and such Transaction Counterparty Group will not be
required to disclose any inventions it has or in the future conceives, reduces to practice, makes
or develops (apart from the business of the Transaction Party).

     For the purposes of this Agreement, “Transaction Counterparty Group Intellectual Property”
shall mean rights in patents and patent applications in any country and know-how (including
information, trade secrets and data, whether patentable or not) which are controlled by a
Transaction Counterparty Group immediately prior to the consummation of the Acquisition Transaction
involving such Transaction Counterparty Group and the applicable Transaction Party; provided,
however that such patent rights and know-how of a Transaction Counterparty Group shall not be
considered Transaction Counterparty Group Intellectual Property (and shall therefore be included as
NVS Patents or Know-How, or Vanda Patents or Vanda Know-How, as applicable) in the event that (i)
any such patent rights and/or know-how are actually used by such Transaction Counterparty Group or
any of its Affiliates at any time during the term of this Sublicense Agreement in the research,
development or commercialization of the Compound or Product or (ii) such patent rights and know-how
were licensed to Novartis or Vanda (as applicable) hereunder prior to the consummation of the
Acquisition Transaction.

     Each party will be responsible for all acts or omissions of their respective Affiliates which,
if such Affiliate were a party to this Sublicense Agreement, would constitute a breach hereof, and
any such acts or omissions shall be considered a breach of the Sublicense Agreement by the first
party.

Page 82

 

***[Remainder of page intentionally left blank — signature page follows]***

Page 83

 

     IN WITNESS WHEREOF, the parties hereto have caused this Sublicense Agreement to be executed by
their duly authorized representatives as of the Execution Date.

	 	 	 	 	 
	 	VANDA PHARMACEUTICALS INC.

 	 
	 	By:  	/s/Mihael Polymeropoulos
 	 
	 	 	Name:  	Mihael Polymeropoulos 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	NOVARTIS PHARMA AG

 	 
	 	By:  	/s/Paul D. Burns
 	 
	 	 	Name:  	Paul D. Burns 	 
	 	 	Title:  	General Counsel, Pharma Legal 	 
	 
	 	 	 
	 	By:  	                 /s/Anthony Rosenberg
 	 
	 	 	Name:  	Anthony Rosenberg 	 
	 	 	Title:  	Head of Global BD&L 	 
	 

Page 84

 

List of Appendices

	 	 	 
	Patents and Patent Applications

	 	Appendix A
	 
	 	 
	Metabolites

	 	Appendix B
	 
	 	 
	Trademark Licenses

	 	Appendix C
	 
	 	 
	Vanda Domain Names

	 	Appendix D
	 
	 	 
	Joint Steering Committee

	 	Appendix E
	 
	 	 
	Special Countries

	 	Appendix F
	 
	 	 
	Financial Obligations Assumed by Novartis

	 	Appendix G
	 
	 	 
	Novartis Development Plan

	 	Appendix H
	 
	 	 
	Form of Invoice

	 	Appendix I
	 
	 	 
	Novartis Depot Formulation Patents

	 	Appendix J
	 
	 	 
	Quantities and Cost of Transferred Supply; Specifications

	 	Appendix K

 

 

Appendix A

Patents and Patent Applications

Sanofi-Aventis Patents and Patent Applications

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted
portions.

Appendix A
— 1

 

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted
portions.

Appendix A
— 2

 

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted
portions.

Appendix A
— 3

 

Appendix A (continued)

Novartis Patents and Patent Applications

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted
portions.

Appendix A
— 4

 

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted
portions. 

Appendix A
— 5

 

Annex 1 to Appendix A

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix A
— 6

 

Annex 2 to Appendix A

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted portions.

Appendix A — 7

 

 

Appendix B

Metabolites

*

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted portions. 

Appendix B — 1

 

 

Appendix C

Trademark Licenses

1. Definitions

     “Novartis Trademarks” shall mean all trademarks, trade names, trade dress, brand names, logos
and/or slogans, and all registrations therefor, other than any Vanda Trademarks owned or controlled
by Novartis or its Affiliates (other than Novartis’ corporate trademarks (including any house
marks), trade names, trade dress, brand names, logos and slogans) and used or intended to be used
in connection with the commercialization of the Compounds or Products in the U.S./Canadian
Territory and/or the ROW Territory.

     “Vanda Trademarks” shall mean (a) any trademarks, trade names, trade dress, brand names, logos
and/or slogans, and all registrations therefor, owned or controlled by Vanda or its Affiliates and
existing as of the Effective Date, as set forth in Annex 1 to this Appendix C which are directly
related to the Compounds or Products, (b) Vanda’s corporate trademarks (including any house marks),
trade names, trade dress and logos and (c) any copyrights owned or controlled by Vanda or its
Affiliates directly related to the commercialization of the Compounds or Products in the
U.S./Canadian Territory (the “Vanda Copyrights”).

2. License Grants

     2.1 Subject to the terms and conditions of the Sublicense Agreement, including this

Appendix C:

          (a) Vanda hereby grants to Novartis (i) an exclusive right and license, with the right to
grant sublicenses, to use the Vanda Trademark “FANAPTTM” in the U.S./Canadian Territory in
connection with the manufacture, use, import and commercialization of Products in the U.S./Canadian
Territory; (ii) subject to Sections 2.1(a)(i) and (iii) of this Appendix C, a non-exclusive license
to use the Vanda Trademarks (other than “FANAPTTM”) in the U.S./Canadian Territory in connection
with the manufacture and commercialization of Products, such license to include the right to
distribute Products in the U.S./Canadian Territory with packaging that bears the Vanda Trademarks;
and (iii) an exclusive right and license, with the right to grant sublicenses, to use the Vanda
Copyrights in connection with the commercialization of the

Appendix C
—  1 

 

Products in the U.S./Canadian Territory. Except as otherwise expressly provided for in the
Sublicense Agreement, Vanda may continue to use the Vanda Trademarks as it sees fit in the ordinary
course of business, including in connection with the manufacturing and commercialization of the
Compound or Product in the ROW Territory.

          (b) Novartis hereby grants to Vanda an exclusive, royalty-free license, with the right to
grant sublicenses, under the Novartis Trademarks to commercialize Compounds and Products (including
in any Depot Formulations) in the ROW Territory. In the event that Novartis files for and
commercializes any Depot Formulation of the Product in the U.S./Canadian Territory under a Depot
Trademark (as defined in Section 2.4(b) of the Sublicense Agreement), and such Depot Trademark is
approved by Sanofi-Aventis pursuant to Section 2.5 of the Titan Agreement, then Vanda may, at its
option, elect to acquire a license to such Depot Trademark under the same license terms as set
forth in the preceding sentence by providing written notice of its election to Novartis. Upon
Vanda’s issuance of said notice, the Depot Trademark will be deemed to be automatically added
within the scope of the aforementioned exclusive license to the Novartis Trademarks.

     2.2 Quality Control. Prior to commercial launch of any Product and at reasonable
intervals during the term of the Sublicense Agreement and thereafter (as long as such party
continues to use the other party’s trademarks licensed hereunder), that party shall provide the
other party with samples of marketing materials, packages and package insertions incorporating any
of the other party’s trademarks sufficient to permit the other party to maintain quality control
over its trademarks, trade dress, logos and slogans. Neither party shall take any actions or do
anything that is likely to diminish or impair the image and/or value of any of the other party’s
trademarks.

3. Ownership; Protection of Rights

     3.1 Trademark Ownership. All trademarks shall be registered by the party owning such
trademark in its name as owner in all applicable countries. All trade dress, logos, slogans and
designs may be registered by the party owning such trade dress, logos or slogan, in the discretion
of such party, in its name as owner in all applicable countries.

Appendix C
—  2 

 

     3.2 Vanda Trademarks. Vanda will continue to own, throughout the world, all Vanda
Trademarks and all registrations thereof, used or intended to be used for a Product, including,
without limitation, the trademark “FANAPTTM”. All goodwill attributable to the Vanda Trademarks
generated by the commercialization of a Product bearing a Vanda Trademark shall inure to the
benefit of Vanda. Novartis shall solely bear all costs of prosecution of applications to register
and to record licenses (if applicable) for, and maintenance of, each Vanda Trademark licensed to it
hereunder (other than Vanda’s corporate trademarks (including any house marks), trade names, trade
dress and logos) which are used by Novartis in connection with any sales, marketing or promotion of
any Products for the U.S./Canadian Territory. Vanda shall invoice Novartis from time-to-time for
such costs, and Novartis shall pay such invoices within * following the date of the invoice.

     3.3 Novartis Trademarks. Novartis will continue to own, throughout the world, all
Novartis Trademarks. All goodwill attributable to the Novartis Trademarks generated by the
commercialization of a Product bearing a Novartis Trademark shall inure to the benefit of Novartis.
Novartis shall solely bear all reasonable costs of prosecution of applications to register and to
record licenses (if applicable) for, and maintenance of, each Novartis Trademark.

     3.4 Infringement of Trademarks and Copyrights. Vanda shall take * to protect, defend
and maintain each Vanda Trademark used in connection with a Product in the U.S./Canadian Territory
and all registrations therefor. * shall notify * promptly upon learning of any actual, alleged or
threatened infringement of any such Vanda Trademark. Upon learning of such offences, * shall *,
unless the parties otherwise mutually agree. To the extent related to the commercialization of
Product in the U.S./Canadian Territory, all recoveries in connection therewith will be allocated *.
* shall have the right to participate fully in all such actions or proceedings. During the period
that Novartis has a license to the Vanda Trademarks under the Sublicense Agreement, in the event
that * does not undertake such an infringement action, then * shall be permitted to

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted portions.

Appendix C — 3 

 

do so *, and all recoveries in connection therewith will be allocated *. For the purposes of
this Section 3.4, the party that brings suit to enforce a given trademark (solely to the extent
related to the commercialization of Product in the U.S./Canadian Territory) shall also have the
right to control settlement of such claim; provided, however, that a settlement that does not
contain a complete release of the other party shall not be entered into without the written consent
of the other party, such consent not to be unreasonably withheld.

     3.5 Costs of Defense. The parties will * the unrecovered out-of-pocket costs
(including legal fees) incurred by the parties in bringing, maintaining and prosecuting any action
to maintain, protect or defend any Vanda Trademark (other than Vanda’s corporate trademarks
(including any house marks), trade names, trade dress and logos) covering or used or intended to be
used in connection with the marketing or sale of any Product in the U.S./Canadian Territory.

     3.6 Acknowledgment of Ownership. Novartis acknowledges the sole ownership by Vanda
and validity of all Vanda Trademarks. Novartis further agrees that any use of such Vanda
Trademarks by Novartis shall be for the benefit of Vanda, and any goodwill accrued in connection
with the use and display of any Vanda Trademarks shall accrue solely to the benefit of Vanda and
not Novartis. Novartis agrees that it will not at any time during or after the term of the
Sublicense Agreement assert or claim any interest in or do anything which may materially and
adversely affect the validity or enforceability of any Vanda Trademark owned by Vanda and used or
intended to be used on or in connection with the marketing or sale of a Product. Novartis will not
register, seek to register or cause to be registered any Vanda Trademarks owned by Vanda and used
or intended to be used on or in connection with the marketing or sale of a Product or any variation
thereof, under any law providing for registration of trademarks, service marks, trade names,
fictitious names or similar laws, as an Internet domain name, or in the name of a corporation,
partnership, limited liability company or other entity, without Vanda’s prior written consent;
provided, that, for the avoidance of doubt, the foregoing shall not prevent Novartis from *. Each
reference to and use of a Vanda

 

			
	*	 	Certain information has been omitted and filed separately with the Commission.
	 
	 	 	Confidential treatment has been requested with respect to the omitted portions.

Appendix C
—  4 

 

Trademark owned by Vanda shall be accompanied by an acknowledgement that the Vanda Trademark
is a trademark or registered trademark owned by Vanda and used by Novartis under license.

     3.7 Use of a Party’s Trademarks. Except as allowed hereunder, neither party shall use
the trademarks, including any trade names or logos, of the other party without such other party’s
prior written approval.

Appendix C-5

 

Annex 1 to Appendix C

Annex 1 to Appendix C

Vanda Trademarks

* 

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix C-6

 

Appendix D

Vanda Domain Names

* 

* Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix D-1

 

* 

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix D-2

 

Appendix E

Joint Steering Committee

     (a) General. The parties shall establish a Joint Steering Committee (“JSC”) within * after
the Effective Date of the Sublicense Agreement. As soon as practicable following the
Effective Date of the Sublicense Agreement (but in no event more than * following the Effective
Date of the Sublicense Agreement), each party shall designate * representatives (in addition to its
Alliance Manager (as defined below)) to serve on the JSC by written notice to the other party.
Either party may designate a substitute for any of its representatives who is unable to be present
at a meeting. From time to time each party may replace its representatives by written notice to
the other party specifying the prior representative(s) and their replacement(s). Each party’s
representatives and any substitute for a representative shall be bound by the obligations of
confidentiality set forth in Article 6. One of the * representatives shall serve as the
chairperson of the JSC. The chairperson shall be responsible for (i) scheduling meetings on a
quarterly basis, (ii) preparing and issuing minutes of each such meeting reasonably promptly
thereafter, and (iii) preparing and circulating an agenda for the upcoming meeting; provided, that
the chairperson shall * .

     (b) Committee Meetings. The JSC shall hold * meetings at such times * ; provided that
the parties will endeavor to have the first meeting of the JSC within * after the establishment of
the JSC. Meetings of the JSC shall be effective only if * of each party is present or
participating. The JSC may meet either (i) in person at either party’s facilities or at such
locations as the parties may otherwise agree or (ii) by audio or video teleconference. Other
representatives of each party involved with the Compound or Product may attend meetings, subject to
the confidentiality provisions set forth in Article 6. Each party shall be responsible for all of
its own expenses incurred in connection with participating in the JSC meetings.

     (c) Responsibilities. The JSC shall have responsibility for * .

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix E-1

 

     (d) Authority. The JSC shall have only the responsibilities assigned expressly to it in
this Appendix E, and shall not have any power to * . In furtherance thereof, each party shall * .
Notwithstanding any other provision of this Appendix E or any other provision of the Sublicense
Agreement, the JSC shall not have authority to make any decisions with regard to * .

     (e) Upon a Change of Control of Vanda, Novartis shall * .

     (f) Alliance Managers. Within * following the Effective Date of the Sublicense
Agreement, each party shall appoint a representative (“Alliance Manager”) to facilitate
communications between the parties and to act as a liaison between the parties with respect to such
other matters as the parties may mutually agree in order to maximize the efficiency of the
collaboration. Each party’s Alliance Manager shall serve on the JSC in addition to each such
party’s * representatives designated pursuant to Section (a) of this Appendix E. Each party may
replace its Alliance Manager with an alternative representative at any time with prior written
notice to the other party.

* Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix E-2

 

Appendix F

Special Countries

* 

* Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix F-1

 

Appendix G

Financial Obligations Assumed by Novartis

* 

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix G-1

 

Appendix H

Novartis Development Plan

     * 

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix H-1

 

* 

* Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix H-2

 

Appendix I

Form of Invoice

Attached.

Appendix I-1

 

*

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix I-2

 

Appendix J

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix J-1

 

Appendix K

Quantities and Cost of Transferred Supply; Specifications

Quantity of Compound and Product Ordered as of Execution Date and Timing of Delivery of such
Compound and Product:

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix K-1

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix K-2

 

The table below presents the breakdown and total of the committed costs associated with the
supply quantities and timelines outlined above. As noted below, some portion of these costs have
already been paid by Vanda to the various vendors.

Cost of Supply Ordered as of Execution Date:

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

Appendix K-3

 

Specifications for the Compound and Product: See attached.

Appendix K-4

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

1

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

 

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

2

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

3

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

 

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

2

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

3

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

4

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

5

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

6

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

7

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

8

 

*  

	*	 	Certain information has been omitted and filed separately with the Commission.

Confidential treatment has been requested with respect to the omitted portions.

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