Document:

Exhibit 10.1

 

	
  CONFIDENTIAL

  	
   

  	
  EXECUTION

  COPY

  

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

 

LICENSE,
DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

 

by
and between

 

THERAVANCE,
INC.

 

and

 

ASTELLAS
PHARMA INC.

 

 

Dated:  November 7, 2005

 

 

TABLE
OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  Section 1.01

  	
  “Adverse Drug Experience”

  	
   

  	
  1

  
	
  Section 1.02

  	
  “Affiliate”

  	
   

  	
  1

  
	
  Section 1.03

  	
  “Anti-Infective Franchise Plan”

  	
   

  	
  2

  
	
  Section 1.04

  	
  “API Compound”

  	
   

  	
  2

  
	
  Section 1.05

  	
  “ASTELLAS IP”

  	
   

  	
  2

  
	
  Section 1.06

  	
  “ASTELLAS Invention”

  	
   

  	
  2

  
	
  Section 1.07

  	
  “ASTELLAS Know-How”

  	
   

  	
  2

  
	
  Section 1.08

  	
  “ASTELLAS Patents”

  	
   

  	
  2

  
	
  Section 1.09

  	
  “ASTELLAS Product Trademark”

  	
   

  	
  3

  
	
  Section 1.10

  	
  “Basic Commercial Plan”

  	
   

  	
  3

  
	
  Section 1.11

  	
  “Basic Development Plan”

  	
   

  	
  3

  
	
  Section 1.12

  	
  “Breaching Party”

  	
   

  	
  3

  
	
  Section 1.13

  	
  “Business Day”

  	
   

  	
  3

  
	
  Section 1.14

  	
  “Calendar Quarter”

  	
   

  	
  3

  
	
  Section 1.15

  	
  “Calendar Month”

  	
   

  	
  3

  
	
  Section 1.16

  	
  “Calendar Year”

  	
   

  	
  3

  
	
  Section 1.17

  	
  “Claim”

  	
   

  	
  3

  
	
  Section 1.18

  	
  “Commercial Manufacture”

  	
   

  	
  3

  
	
  Section 1.19

  	
  “Commercialization”

  	
   

  	
  4

  
	
  Section 1.20

  	
  “Confidential Information”

  	
   

  	
  4

  
	
  Section 1.21

  	
  “Contracting Issues”

  	
   

  	
  5

  
	
  Section 1.22

  	
  “Control”

  	
   

  	
  5

  
	
  Section 1.23

  	
  “Cost Of Goods Sold”

  	
   

  	
  5

  
	
  Section 1.24

  	
  “Country”

  	
   

  	
  6

  
	
  Section 1.25

  	
  “cSSSI”

  	
   

  	
  6

  
	
  Section 1.26

  	
  “Deployment Issues”

  	
   

  	
  6

  
	
  Section 1.27

  	
  “Designated Foreign Filings”

  	
   

  	
  6

  
	
  Section 1.28

  	
  “Detailed Development Plan”

  	
   

  	
  6

  
	
  Section 1.29

  	
  “Development” or “Develop”

  	
   

  	
  6

  
	
  Section 1.30

  	
  “Diligent Efforts”

  	
   

  	
  7

  
	
  Section 1.31

  	
  “Disclosing Party”

  	
   

  	
  8

  
	
  Section 1.32

  	
  “Distribution Issues”

  	
   

  	
  8

  
	
  Section 1.33

  	
  “DMF”

  	
   

  	
  8

  
	
  Section 1.34

  	
  “Due Diligence Notice Date”

  	
   

  	
  8

  
	
  Section 1.35

  	
  “Economic Integration Period”

  	
   

  	
  8

  
	
  Section 1.36

  	
  “Effective Date”

  	
   

  	
  8

  
	
  Section 1.37

  	
  “FDA”

  	
   

  	
  8

  
	
  Section 1.38

  	
  “Field”

  	
   

  	
  8

  
	
  Section 1.39

  	
  “Filing”

  	
   

  	
  8

  
	
  Section 1.40

  	
  “First Commercial Sale”

  	
   

  	
  9

  
	
  Section 1.41

  	
  “First Commercial Sale Stock”

  	
   

  	
  9

  
					

 

1

 

	
  Section 1.42

  	
  “Force Majeure Event”

  	
   

  	
  9

  
	
  Section 1.43

  	
  “Governmental Authority”

  	
   

  	
  9

  
	
  Section 1.44

  	
  “HAP”

  	
   

  	
  9

  
	
  Section 1.45

  	
  “Hatch-Waxman Certification”

  	
   

  	
  9

  
	
  Section 1.46

  	
  “Housemark”

  	
   

  	
  9

  
	
  Section 1.47

  	
  “Indemnified Party”

  	
   

  	
  9

  
	
  Section 1.48

  	
  “Indemnifying Party”

  	
   

  	
  9

  
	
  Section 1.49

  	
  “Initial Indications”

  	
   

  	
  9

  
	
  Section 1.50

  	
  “Invention”

  	
   

  	
  9

  
	
  Section 1.51

  	
  “Issue of Necessity”

  	
   

  	
  9

  
	
  Section 1.52

  	
  [*]

  	
   

  	
  10

  
	
  Section 1.53

  	
  [*]

  	
   

  	
  10

  
	
  Section 1.54

  	
  “Joint Invention”

  	
   

  	
  10

  
	
  Section 1.55

  	
  “JSC”

  	
   

  	
  10

  
	
  Section 1.56

  	
  “Know-How”

  	
   

  	
  10

  
	
  Section 1.57

  	
  “Know-How Royalty Term”

  	
   

  	
  10

  
	
  Section 1.58

  	
  “Last Patient, Last Visit”

  	
   

  	
  10

  
	
  Section 1.59

  	
  “Laws”

  	
   

  	
  10

  
	
  Section 1.60

  	
  “Licensed Product”

  	
   

  	
  10

  
	
  Section 1.61

  	
  “Litigation Condition”

  	
   

  	
  10

  
	
  Section 1.62

  	
  “Losses”

  	
   

  	
  10

  
	
  Section 1.63

  	
  “Major Market Country”

  	
   

  	
  11

  
	
  Section 1.64

  	
  “Marketing Authorization”

  	
   

  	
  11

  
	
  Section 1.65

  	
  “Medical Marketing Plan”

  	
   

  	
  11

  
	
  Section 1.66

  	
  “Milestone”

  	
   

  	
  11

  
	
  Section 1.67

  	
  “NDA”

  	
   

  	
  11

  
	
  Section 1.68

  	
  “NDA Approval”

  	
   

  	
  11

  
	
  Section 1.69

  	
  “NDA Filing”

  	
   

  	
  11

  
	
  Section 1.70

  	
  “NDA Holder”

  	
   

  	
  11

  
	
  Section 1.71

  	
  “Net Sales”

  	
   

  	
  11

  
	
  Section 1.72

  	
  “Net Sales Report”

  	
   

  	
  12

  
	
  Section 1.73

  	
  “Opt-In Right”

  	
   

  	
  12

  
	
  Section 1.74

  	
  “Other Indications”

  	
   

  	
  13

  
	
  Section 1.75

  	
  “OUS”

  	
   

  	
  13

  
	
  Section 1.76

  	
  “Patents”

  	
   

  	
  13

  
	
  Section 1.77

  	
  “Patent Infringement Claim”

  	
   

  	
  13

  
	
  Section 1.78

  	
  “Patent Infringement Notice”

  	
   

  	
  13

  
	
  Section 1.79

  	
  “Patent Resolution Issue”

  	
   

  	
  13

  
	
  Section 1.80

  	
  “Payment Period”

  	
   

  	
  13

  
	
  Section 1.81

  	
  “Person”

  	
   

  	
  13

  
	
  Section 1.82

  	
  “Phase 3a Studies”

  	
   

  	
  13

  
	
  Section 1.83

  	
  “Phase 3b Studies”

  	
   

  	
  13

  
	
  Section 1.84

  	
  “Phase 4 Studies”

  	
   

  	
  13

  
	
  Section 1.85

  	
  “POC Data”

  	
   

  	
  13

  
	
  Section 1.86

  	
  “Plan”

  	
   

  	
  14

  
	
  Section 1.87

  	
  “PRC”

  	
   

  	
  14

  

 

 

[*]=CERTAIN
INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

2

 

	
  Section 1.88

  	
  “Product Supplier”

  	
   

  	
  14

  
	
  Section 1.89

  	
  “Promotional Materials”

  	
   

  	
  14

  
	
  Section 1.90

  	
  “Promotional/MedEd Issues”

  	
   

  	
  14

  
	
  Section 1.91

  	
  “Promotional/MedEd Spending”

  	
   

  	
  14

  
	
  Section 1.92

  	
  “Receiving Party”

  	
   

  	
  14

  
	
  Section 1.93

  	
  “Recording Party”

  	
   

  	
  14

  
	
  Section 1.94

  	
  “Registration Batches”

  	
   

  	
  14

  
	
  Section 1.95

  	
  “Registration Expenses”

  	
   

  	
  14

  
	
  Section 1.96

  	
  “Samples”

  	
   

  	
  14

  
	
  Section 1.97

  	
  [*]

  	
   

  	
  15

  
	
  Section 1.98

  	
  [*]

  	
   

  	
  15

  
	
  Section 1.99

  	
  “Signing Date”

  	
   

  	
  15

  
	
  Section 1.100

  	
  “Studies”

  	
   

  	
  15

  
	
  Section 1.101

  	
  “Supplied Licensed Product”

  	
   

  	
  15

  
	
  Section 1.102

  	
  [*]

  	
   

  	
  15

  
	
  Section 1.103

  	
  “Taxes”

  	
   

  	
  15

  
	
  Section 1.104

  	
  “TD-1792 Compound”

  	
   

  	
  15

  
	
  Section 1.105

  	
  “TD-1792 Phase 3 Study”

  	
   

  	
  15

  
	
  Section 1.106

  	
  “TELAVANCIN”

  	
   

  	
  15

  
	
  Section 1.107

  	
  “TELAVANCIN Product Management Team”

  	
   

  	
  15

  
	
  Section 1.108

  	
  “Term-Additional”

  	
   

  	
  15

  
	
  Section 1.109

  	
  “Term-Basic”

  	
   

  	
  16

  
	
  Section 1.110

  	
  “Term-Total”

  	
   

  	
  16

  
	
  Section 1.111

  	
  “Territory”

  	
   

  	
  16

  
	
  Section 1.112

  	
  “THERAVANCE Compound”

  	
   

  	
  16

  
	
  Section 1.113

  	
  “THERAVANCE IP”

  	
   

  	
  16

  
	
  Section 1.114

  	
  “THERAVANCE Invention”

  	
   

  	
  16

  
	
  Section 1.115

  	
  “THERAVANCE Know-How”

  	
   

  	
  17

  
	
  Section 1.116

  	
  “THERAVANCE Patents”

  	
   

  	
  17

  
	
  Section 1.117

  	
  “THERAVANCE Product Trademark”

  	
   

  	
  17

  
	
  Section 1.118

  	
  “Third Party”

  	
   

  	
  17

  
	
  Section 1.119

  	
  “Third Party Claim”

  	
   

  	
  17

  
	
  Section 1.120

  	
  “United States”

  	
   

  	
  17

  
	
  Section 1.121

  	
  “Valid Claim”

  	
   

  	
  17

  
	
  ARTICLE 2

  	
  LICENSE
  RIGHTS AND OBLIGATIONS

  	
   

  	
  18

  
	
  Section 2.01

  	
  License Grants From THERAVANCE to ASTELLAS

  	
   

  	
  18

  
	
  Section 2.02

  	
  TD-1792 Option Grant To ASTELLAS

  	
   

  	
  18

  
	
  Section 2.03

  	
  Further Commercialization In The Field

  	
   

  	
  19

  
	
  Section 2.04

  	
  Right To Sublicense

  	
   

  	
  19

  
	
  Section 2.05

  	
  Right To Appoint Distributors

  	
   

  	
  20

  
	
  Section 2.06

  	
  Duration Of License Grants

  	
   

  	
  20

  
	
  Section 2.07

  	
  Trademarks And Housemarks

  	
   

  	
  20

  
	
  Section 2.08

  	
  Further THERAVANCE Inventions, In-Licensing
  and Updates to Exhibit A; Covenants

  	
   

  	
  21

  
	
  ARTICLE 3

  	
  GOVERNANCE

  	
   

  	
  24

  
	
  Section 3.01

  	
  Overviews

  	
   

  	
  24

  
					

 

 

[*]=CERTAIN
INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

 

3

 

	
  Section 3.02

  	
  Joint Steering Committee

  	
   

  	
  25

  
	
  Section 3.03

  	
  TELAVANCIN Product Management Team

  	
   

  	
  28

  
	
  Section 3.04

  	
  Budgeting

  	
   

  	
  30

  
	
  Section 3.05

  	
  Decision-Making

  	
   

  	
  30

  
	
  Section 3.06

  	
  Dispute Resolution

  	
   

  	
  32

  
	
  ARTICLE 4

  	
  DEVELOPMENT
  OF LICENSED PRODUCT

  	
   

  	
  33

  
	
  Section 4.01

  	
  Obligations For Development

  	
   

  	
  33

  
	
  Section 4.02

  	
  ASTELLAS Assistance

  	
   

  	
  35

  
	
  Section 4.03

  	
  Transfer Of THERAVANCE Know-How

  	
   

  	
  35

  
	
  Section 4.04

  	
  Certain Activities; Non-delegation

  	
   

  	
  36

  
	
  ARTICLE 5

  	
  COMMERCIALIZATION

  	
   

  	
  37

  
	
  Section 5.01

  	
  Medical Marketing Plans

  	
   

  	
  37

  
	
  Section 5.02

  	
  Obligations For Commercialization

  	
   

  	
  38

  
	
  Section 5.03

  	
  Commercialization

  	
   

  	
  38

  
	
  Section 5.04

  	
  Collaborative Working Meetings

  	
   

  	
  40

  
	
  Section 5.05

  	
  Compliance

  	
   

  	
  40

  
	
  Section 5.06

  	
  Respective Employees’ Status Not Changed

  	
   

  	
  40

  
	
  ARTICLE 6

  	
  FINANCIAL
  PROVISIONS

  	
   

  	
  41

  
	
  Section 6.01

  	
  Signing Payment

  	
   

  	
  41

  
	
  Section 6.02

  	
  Licensing Milestone Payments

  	
   

  	
  41

  
	
  AMOUNT

  	
   

  	
   

  	
  42

  
	
  Section 6.03

  	
  Payment Of Royalties On Net Sales Of
  Licensed Product

  	
   

  	
  43

  
	
  Section 6.04

  	
  Net Sales Report

  	
   

  	
  47

  
	
  Section 6.05

  	
  U.S. GAAP

  	
   

  	
  47

  
	
  Section 6.06

  	
  Currencies

  	
   

  	
  47

  
	
  Section 6.07

  	
  Manner Of Payments

  	
   

  	
  47

  
	
  Section 6.08

  	
  Interest On Late Payments

  	
   

  	
  47

  
	
  Section 6.09

  	
  Tax

  	
   

  	
  48

  
	
  Section 6.10

  	
  Financial Records; Audits

  	
   

  	
  48

  
	
  ARTICLE 7

  	
  PROMOTIONAL
  MATERIALS AND SAMPLES

  	
   

  	
  49

  
	
  Section 7.01

  	
  Review Of Promotional Materials

  	
   

  	
  49

  
	
  Section 7.02

  	
  Markings Of Packaging And Promotional
  Materials

  	
   

  	
  50

  
	
  Section 7.03

  	
  Statements Consistent With Labeling

  	
   

  	
  50

  
	
  ARTICLE 8

  	
  REGULATORY
  MATTERS

  	
   

  	
  50

  
	
  Section 8.01

  	
  OUS Governmental Authorities

  	
   

  	
  50

  
	
  Section 8.02

  	
  United States Governmental Authorities

  	
   

  	
  51

  
	
  Section 8.03

  	
  Recalls Or Other Corrective Action

  	
   

  	
  53

  
	
  Section 8.04

  	
  Rights Of Reference To DMFs

  	
   

  	
  53

  
	
  Section 8.05

  	
  Events Affecting Integrity Or Reputation

  	
   

  	
  54

  
	
  ARTICLE 9

  	
  ORDERS;
  SUPPLY AND RETURNS

  	
   

  	
  54

  
	
  Section 9.01

  	
  Orders And Terms Of Sale To Third Parties

  	
   

  	
  54

  
	
  Section 9.02

  	
  Supply Of API Compound And Formulated
  Licensed Product For Development

  	
   

  	
  54

  
	
  Section 9.03

  	
  Supply Of API Compound For Commercialization

  	
   

  	
  55

  
	
  Section 9.04

  	
  Supply Of Licensed Product For
  Commercialization

  	
   

  	
  55

  
					

 

4

 

	
  Section 9.05

  	
  Inventories

  	
   

  	
  55

  
	
  Section 9.06

  	
  [*]

  	
   

  	
  55

  
	
  Section 9.07

  	
  Transition Assistance

  	
   

  	
  56

  
	
  ARTICLE 10

  	
  CONFIDENTIAL
  INFORMATION

  	
   

  	
  57

  
	
  Section 10.01

  	
  Confidential Information

  	
   

  	
  57

  
	
  Section 10.02

  	
  Permitted Disclosure And Use

  	
   

  	
  57

  
	
  Section 10.03

  	
  Publications

  	
   

  	
  58

  
	
  Section 10.04

  	
  Public Announcements

  	
   

  	
  58

  
	
  Section 10.05

  	
  Confidentiality Of This Agreement

  	
   

  	
  59

  
	
  Section 10.06

  	
  Termination Of Prior Confidentiality
  Agreements

  	
   

  	
  59

  
	
  Section 10.07

  	
  Survival

  	
   

  	
  59

  
	
  ARTICLE 11

  	
  REPRESENTATIONS
  AND WARRANTIES; COVENANTS

  	
   

  	
  59

  
	
  Section 11.01

  	
  Mutual Representations And Warranties

  	
   

  	
  59

  
	
  Section 11.02

  	
  Representations And Warranties Of
  THERAVANCE

  	
   

  	
  60

  
	
  Section 11.03

  	
  Acknowledgement Of ASTELLAS

  	
   

  	
  62

  
	
  Section 11.04

  	
  Limitations

  	
   

  	
  62

  
	
  Section 11.05

  	
  Covenants

  	
   

  	
  63

  
	
  ARTICLE 12

  	
  INDEMNIFICATION

  	
   

  	
  63

  
	
  Section 12.01

  	
  Indemnification By ASTELLAS

  	
   

  	
  63

  
	
  Section 12.02

  	
  Indemnification By THERAVANCE

  	
   

  	
  63

  
	
  Section 12.03

  	
  Procedure For Indemnification

  	
   

  	
  64

  
	
  Section 12.04

  	
  Assumption Of Defense

  	
   

  	
  65

  
	
  Section 12.05

  	
  Insurance

  	
   

  	
  65

  
	
  ARTICLE 13

  	
  PATENTS

  	
   

  	
  66

  
	
  Section 13.01

  	
  Prosecution And Maintenance Of Patents

  	
   

  	
  66

  
	
  Section 13.02

  	
  Patent Infringement

  	
   

  	
  70

  
	
  Section 13.03

  	
  Notice Of Certification

  	
   

  	
  71

  
	
  Section 13.04

  	
  Assistance

  	
   

  	
  72

  
	
  Section 13.05

  	
  Settlement

  	
   

  	
  72

  
	
  Section 13.06

  	
  Ownership Of Inventions

  	
   

  	
  72

  
	
  Section 13.07

  	
  Licensing Discussion Procedures

  	
   

  	
  73

  
	
  ARTICLE 14

  	
  TERM AND
  TERMINATION

  	
   

  	
  74

  
	
  Section 14.01

  	
  Term And Expiration Of Term

  	
   

  	
  74

  
	
  Section 14.02

  	
  Termination For Material Breach

  	
   

  	
  74

  
	
  Section 14.03

  	
  Terminations For Cause

  	
   

  	
  75

  
	
  Section 14.04

  	
  Contemporaneous Termination Of Opt-In Right

  	
   

  	
  76

  
	
  Section 14.05

  	
  Survival Of Obligations

  	
   

  	
  76

  
	
  Section 14.06

  	
  Survival of Provisions Upon Termination
  and/or Expiration

  	
   

  	
  76

  
	
  ARTICLE 15

  	
  CONSEQUENCES
  OF TERMINATION

  	
   

  	
  77

  
	
  Section 15.01

  	
  Termination And Handback Of License

  	
   

  	
  77

  
	
  Section 15.02

  	
  Termination Followed By Continued License

  	
   

  	
  79

  
	
  ARTICLE 16

  	
  MISCELLANEOUS

  	
   

  	
  80

  
	
  Section 16.01

  	
  Relationship Of The Parties

  	
   

  	
  80

  
	
  Section 16.02

  	
  Registration And Filing Of This Agreement

  	
   

  	
  80

  
	
  Section 16.03

  	
  Force Majeure

  	
   

  	
  81

  
					

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

5

 

	
  Section 16.04

  	
  Governing Law

  	
   

  	
  81

  
	
  Section 16.05

  	
  Attorneys’ Fees And Related Expenses

  	
   

  	
  81

  
	
  Section 16.06

  	
  Assignment

  	
   

  	
  81

  
	
  Section 16.07

  	
  Performance by Affiliates

  	
   

  	
  82

  
	
  Section 16.08

  	
  Notices

  	
   

  	
  82

  
	
  Section 16.09

  	
  Limitation on Liability

  	
   

  	
  83

  
	
  Section 16.10

  	
  Severability

  	
   

  	
  84

  
	
  Section 16.11

  	
  Headings; Interpretation

  	
   

  	
  84

  
	
  Section 16.12

  	
  Waiver

  	
   

  	
  84

  
	
  Section 16.13

  	
  Entire Agreement

  	
   

  	
  84

  
	
  Section 16.14

  	
  No License

  	
   

  	
  84

  
	
  Section 16.15

  	
  Third Party Beneficiaries

  	
   

  	
  85

  
	
  Section 16.16

  	
  Counterparts

  	
   

  	
  85

  
	
  Section 16.17

  	
  Single Closing Condition

  	
   

  	
  85

  

 

6

 

AGREEMENT

 

This AGREEMENT (“Agreement”) dated November 7, 2005, is made by
and between THERAVANCE, Inc., a Delaware corporation, and having its
principal office at 901 Gateway Boulevard, South San Francisco, California
94080 (“THERAVANCE”), and ASTELLAS PHARMA INC., a Japanese corporation, and
having its principal office at 3-11, Nihonbashi-Honcho 2-chome, Chuo-ku, Tokyo
103-8411, Japan (“ASTELLAS”).  THERAVANCE
and ASTELLAS may be referred to as a “Party” or together, the “Parties”.

 

RECITALS

 

WHEREAS, THERAVANCE
has discovered and is currently developing the proprietary compound identified
as TELAVANCIN for use as a parenteral antibiotic;

 

WHEREAS, ASTELLAS
performs development of pharmaceutical compounds and marketing of
pharmaceutical products including in the anti-infective area; and

 

WHEREAS, ASTELLAS
desires to obtain a license and to undertake development and commercialization
activities with respect to TELAVANCIN, in collaboration with THERAVANCE, under
the terms and conditions of this Agreement.

 

NOW, THEREFORE, in
consideration of the foregoing premises and the representations, covenants and
agreements contained herein, THERAVANCE and ASTELLAS, intending to be legally
bound, hereby agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

For purposes of this Agreement, the following initially capitalized
terms, whether used in the singular or plural, shall have the following
meanings (with derivative forms of them being interpreted accordingly):

 

Section 1.01                                “Adverse Drug
Experience” means any of: an “adverse drug experience,” a “life-threatening
adverse drug experience,” a “serious adverse drug experience,” or an “unexpected
adverse drug experience,” as those terms are defined in either 21 C.F.R.§312.32
or 21 C.F.R.§314.80.

 

Section 1.02                                “Affiliate” of a
Party means any Person, whether de jure or de facto, that directly or
indirectly controls, is controlled by, or is under common control with such
Party for so long as such control exists, where “control” means the
decision-making authority as to such Person and, further, where such control
shall be presumed to exist where a Person owns more than fifty percent (50%) of
the equity (or such lesser percentage which is the maximum allowed to be owned
by a foreign corporation in a particular jurisdiction) having the power to vote
on or direct the affairs of or elect the management of the entity.

 

1

 

Section 1.03                                “Anti-Infective Franchise
Plan” shall mean that certain annual plan developed by [*] describing at a
high level the basic principles for [*] to the extent [*] including the [*].

 

Section 1.04                                “API Compound”
means bulk quantities of THERAVANCE Compound as an active pharmaceutical
ingredient prior to the commencement of secondary manufacturing resulting in
the Licensed Product.

 

Section 1.05                                “ASTELLAS IP”
means ASTELLAS Know-How, ASTELLAS Patents, ASTELLAS Inventions, and any Patents
claiming same, ASTELLAS Product Trademark and ASTELLAS’ interest in the Joint
Inventions and any Patents claiming same.

 

Section 1.06                                “ASTELLAS Invention”
means an Invention that is invented (a) by any employee(s) or agent(s) of
ASTELLAS (and/or any of its Affiliates) whether solely, jointly among themselves,
or jointly with one or more Third Party(ies) (including without limitation via
the subcontractors and service providers of any of them performing Development
or Commercialization); or (b) by any Third Party with which ASTELLAS or
any of its Affiliates has contracted to perform Development and/or
Commercialization hereunder, in each case to the full extent Controlled by
ASTELLAS.

 

Section 1.07                                “ASTELLAS Know-How”
means all present and future Know-How relating to the THERAVANCE Compound,
Licensed Product or the ASTELLAS Inventions, including without limitation all
data, records and regulatory filings relating to the THERAVANCE Compound or
Licensed Product, that is necessary or useful for THERAVANCE to perform its
obligations or exercise it rights under this Agreement, and which during the
Term-Basic are in ASTELLAS’ or any of its Affiliates’ possession or control and
are or become owned by, or otherwise may be licensed to, ASTELLAS, in all cases
to the extent Controlled by ASTELLAS or any of its Affiliates.  ASTELLAS Know-How does not include ASTELLAS
Patents (other than the information contained in unpublished applications).
[*].

 

Section 1.08                                “ASTELLAS Patents”
means all present and future patents and patent applications including United
States provisional applications and any continuations, continuations-in-part,
divisionals, registrations, confirmations, revalidations, re-examinations,
renewals, reissues, Patent Cooperation Treaty applications, certificates of
addition, utility models, design patents and petty patents, including without
limitation extensions or restorations of terms thereof, pediatric use
extensions, supplementary protection certificates or any other such right (“Patents”)
that covers the making, having made, use, sale, offer for sale, or importation
of THERAVANCE Compound or Licensed Product that are or become during the
Term-Basic owned by ASTELLAS or ASTELLAS’ Affiliates, or as to which ASTELLAS
or ASTELLAS’ Affiliates otherwise are or become during the Term-Basic licensed,
now or in the future, in all cases solely to the extent ASTELLAS or any of its
Affiliates Controls such Patent.

 

Section 1.09                                “ASTELLAS Product
Trademark” means any and all trademarks and trade dress that ASTELLAS (or
its Affiliates) may file to register and/or register and Control for Licensed
Product in the Territory during the Term-Basic excluding any ASTELLAS
Housemark.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

2

 

Section 1.10                                “Basic Commercial
Plan” means that certain plan for the pre-launch, achieving First
Commercial Sale and medical marketing and promotion (in the first three (3) years
after the first US Marketing Authorization is approved by the FDA) of
TELAVANCIN for the Initial Indications in the US agreed to by the Parties in
writing as of the Signing Date and containing a section on assumptions and
objectives, a section on commitments and an appendix with background
information.  The Basic Commercial Plan
assumes successful completion of the activities called for in the Basic
Development Plan.

 

Section 1.11                                “Basic Development
Plan” shall mean that certain Development plan for the clinical Development
of TELAVANCIN for the Initial Indications for the United States agreed to by
the Parties in writing as of the Signing Date and containing a section on
assumptions and objectives, a section on commitments and an appendix with
background information.

 

Section 1.12                                “Breaching Party”
shall have the meaning set forth in Section 14.02.

 

Section 1.13                                “Business Day”
means any day on which commercial banks in New York City, New York, United
States are open for business.

 

Section 1.14                                “Calendar Quarter”
means for each Calendar Year, each of the three-month periods beginning in
January, April, July and October.

 

Section 1.15                                “Calendar Month”
means for each Calendar Year, each of the one-month periods.

 

Section 1.16                                “Calendar Year”
means, for the first calendar year, the period commencing on the Effective Date
and ending on December 31 of the calendar year during which the Effective
Date occurs, and each successive period beginning on January 1 and ending
twelve (12) consecutive calendar months later on December 31.

 

Section 1.17                                “Claim” means
all charges, complaints, actions, suits, proceedings, hearings, investigations,
claims and demands.

 

Section 1.18                                “Commercial
Manufacture” means all activities relating to supply of Licensed Product
for Phase 3b Studies and Phase 4 Studies and for all commercial supply of API
Compound and Licensed Product after THERAVANCE’s delivery of the First
Commercial Sale Stock.  This includes
without limitation formulation, fill, finish, QA, QC, and all analytical
methods development.

 

Section 1.19                                “Commercialization”
means any and all activities directed to conducting Phase 3b Studies and Phase
4 Studies; marketing, promoting, distributing, offering for sale and selling
the Licensed Product; and importing the Licensed Product (to the extent
applicable).  Commercialization includes
(without limitation) Commercial Manufacture. 
When used as a verb, “Commercialize” means to engage in
Commercialization.

 

Section 1.20                                “Confidential
Information” means all secret, confidential or proprietary information,
data or other Know-How (including without limitation ASTELLAS Know-How and
THERAVANCE Know-How) whether provided in written, oral, graphic, video,

 

3

 

computer or other form, provided by one Party or its Affiliates (the “Disclosing
Party”) to the other Party or its Affiliates (collectively the “Receiving Party”)
pursuant to this Agreement or generated pursuant to this Agreement (the Party
not generating the information shall be the Receiving Party with respect
thereto), including but not limited to information relating to the Disclosing
Party’s existing or proposed research, Development efforts, patent
applications, business or products, the terms of this Agreement and any other
materials that have not been made available by the Disclosing Party to the
general public.  Solely with respect to
information, data and other Know-How that regards manufacturing (including
without limitation information, data and Know-How as to the process to make and
formulate TELAVANCIN and Licensed Product in final finished form and that which
is covered by the [*] or the [*] Agreement), to qualify as Confidential
Information, the information, data or other Know-How must be (i) marked
confidential on initial disclosure, (ii) confirmed in writing to be
confidential within a reasonable time (not less than 30 days) after initial
disclosure, or (iii) of a nature or disclosed in a context within which
the Receiving Party should reasonably be expected to understand that it is
confidential. Confidential Information shall not include any information or
materials that the Receiving Party can document with competent written proof:

 

(a)                                  were already known to
the Receiving Party (other than under an obligation of confidentiality), at the
time of disclosure by the Disclosing Party;

 

(b)                                 were generally
available to the public or otherwise part of the public domain at the time of
its disclosure to the Receiving Party;

 

(c)                                  became generally
available to the public or otherwise part of the public domain after its
disclosure or development, as the case may be, and other than through any act
or omission of a Party in breach of such Party’s confidentiality obligations
under this Agreement;

 

(d)                                 were disclosed to a
Party, other than under an obligation of confidentiality, by a Third Party who
had no obligation to the Disclosing Party not to disclose such information to
others; or

 

(e)                                  were independently
discovered or developed by or on behalf of the Receiving Party without the use
of the Confidential Information belonging to the other Party.

 

Notwithstanding the foregoing, any combination of features or
disclosures of Confidential Information shall not be deemed to be within the
public domain or in the rightful possession of the Receiving Party merely
because individual features are published or available to the general public or
in the rightful possession of the Receiving Party unless the combination itself
and principle of operation (if applicable) are published or available to the general
public or in the rightful possession of the Receiving Party.  In addition, specific aspects or details of
Confidential Information shall not be deemed to be within the public domain or
in the rightful possession of the Receiving Party merely because they are
contained within more general public disclosures or more general information in
the rightful possession of the Receiving Party (as non-limiting
illustrations:  if a temperature range of
60 – 80 degrees were publicly disclosed, then the more specific termperature of
70 degrees as being preferred over

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

4

 

all other temperatures in that range would not be considered publicly
known based on the more general public disclosure of the overall range; and a
specific compound within a chemical class that is patentably distinct over a
large genus of compounds would not be deemed to be in the public domain merely
because the large genus of compounds within which it falls is publicly known if
the specific compound has never been publicly disclosed individually).

 

Section 1.21                                “Contracting Issues”
means all issues and decisions regarding price and price terms [*] and other
contract terms respecting Licensed Product sales in the US.  This shall include without limitation all
issues and decisions with respect to contracting with managed care entities,
hospitals, GPOs, PBMs, and government, and specifically includes issues and
decisions about the offer of discounts or rebates for formulary placement for
Licensed Product.  Contracting Issues [*]
issues and decisions regarding [*] and all other [*].

 

Section 1.22                                “Control” with
respect to an item of intellectual property means ownership of or possession of
a license (or other similar right) under such item of intellectual property, in
each case with the right to grant a license or sublicense thereunder to the other
Party of the scope and content provided for in this Agreement without breaching
any written agreement with a Third Party (a) existing as of the Signing
Date or (b) by which such Party granting the license or sublicense
hereunder derives rights to such item of intellectual property after the
Signing Date.

 

Section 1.23                                “Cost Of Goods Sold”
means as applicable, either (a) the amounts paid to Third Party
manufacturers for the manufacture and supply of Licensed Product to be sold
hereunder or (b) the sum of the following costs to the extent directly
related to Licensed Product to be sold hereunder: the cost of direct materials,
direct labor, licensing costs (not including payments made pursuant to the [*])
and manufacturing overhead related to the facility in which the Products are
produced. The Cost of Goods Sold shall exclude the following: corporate
overhead and any allocable costs not generated in the manufacturing facility.
The Cost of Goods Sold shall be calculated in a manner consistent with United
States GAAP consistently applied and as generally used by the applicable Party.

 

Section 1.24                                “Country” means
any sovereign entity generally recognized internationally as a nation.  Country excludes the individual states within
the United States and other similar entities in other jurisdictions that are
not recognized internationally as nations, but includes the US as a whole.

 

Section 1.25                                “cSSSI” has the
meaning given such term in the definition of Initial Indications.

 

Section 1.26                                “Deployment Issues”
means all issues and decisions regarding the deployment of the sales force for
Licensed Product, including without limitation hiring, firing and compensation
of sales force personnel promoting Licensed Product, all other employment
matters relating to the personnel who form such sales force, the specific
allocation of sales representatives between and within customer accounts (both
existing and potential), account universe, physician call universe, the
geographic focus of sales efforts, the amount of time spent in presenting
Licensed

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

5

 

Product within a sales call, and the order of presenting Licensed
Product relative to other promoted products in such sales call (sales
hierarchy).  Deployment Issues shall not
include Promotional/MedEd Issues, defined below.  As an illustration (but without limitation),
decisions about which [*] that a significant percentage [*] a specific type of
[*] that Licensed Product provides [*].

 

Section 1.27                                “Designated Foreign
Filings” shall have the meaning set forth in Section 13.01(b)(ii).

 

Section 1.28                                “Detailed
Development Plan” means the plan for the detailed implementation of the
Basic Development Plan, designed to achieve Development for the Licensed
Product for the Initial Indications for the US consistent with the Basic
Development Plan and this Agreement, including, without limitation, the nature,
number and schedule of Development activities as well as the estimated
resources necessary to implement such activities.  The Detailed Development Plan must at all
times be consistent with the Basic Development Plan and this Agreement.  The Detailed Development Plan is intended to
reflect the Parties’ plans for the detailed implementation of the Basic
Development Plan, but not to alter the Basic Development Plan in any way.

 

Section 1.29                                “Development” or
“Develop” means nonclinical and clinical drug development activities,
including, among other things (but in the case of manufacturing-related
activities, specifically excluding Commercial Manufacture as of the date that
THERAVANCE delivers the First Commercial Sale Stock): test method development
and stability testing, toxicology, formulation, process development,
manufacturing scale-up to commercial scale, development-stage manufacturing,
current Good Manufacturing Practices audits, current Good Clinical Practices
audits, current Good Laboratory Practices audits, analytical method validation,
manufacturing process validation, cleaning validation, scale-up, quality
assurance/quality control development, statistical analysis and report writing,
nonclinical and clinical studies, regulatory filing submission, and regulatory
affairs related to the foregoing. When used as a verb, “Develop” means to
engage in Development.

 

Section 1.30                                “Diligent Efforts”
means with respect to the efforts to be expended by a Party with respect to any
objective, the use of reasonable, diligent, good faith efforts to accomplish
such objective as such Party would normally use to accomplish a similar
objective under similar circumstances, it being understood and agreed that with
respect to the Development or Commercialization of the Licensed Product, such
efforts shall be commensurate with those efforts and resources commonly used by
a Party for a product owned by it or to which it has rights, which product is
at a similar stage in its development or product life and is of similar market
potential (in each case as compared to the Licensed Product) taking into
account efficacy, safety, Governmental Authority-approved labeling, the
competitiveness of alternative products in the marketplace, the patent and
other proprietary position of the product, the likelihood of regulatory
approval given the regulatory structure involved, the profitability of the
product taking into account the royalties payable to licensors of patent or
other intellectual property rights, alternative products, manufacturing costs
and all other relevant commercial factors. Diligent Efforts requires that:

 

(a)                                  each Party [*] for
such obligations [*] (which in the case of [*] includes the Party’s [*] as part
of such [*]);

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

6

 

(b)                                 each Party [*] for
carrying out [*]; and

 

(c)                                  each Party [*]
designed to [*] with respect to such [*].

 

Diligent Efforts shall be [*] for the Licensed Product, and it is
anticipated that the [*] it is understood and agreed that this [*] will be
staged over [*]. Also, additional [*] under the [*] by the [*] and therefore
may [*].

 

It is understood and agreed that [*] among other things [*] as well as
[*].  Statements elsewhere in this
Agreement that [*] for those activities because they are called out separately.

 

A Party may satisfy its obligation to devote Diligent Efforts to
particular obligations in whole or in part through the efforts of a
sublicensee, a distributor or an outside service provider (engaged in a manner
that is otherwise in accordance with this Agreement, i.e., permitted or
approved sublicensees, distributors and service providers).

 

Section 1.31                                “Disclosing Party”
shall have the meaning set forth in the definition of Confidential Information
above.

 

Section 1.32                                “Distribution Issues”
means all issues and decisions regarding the distribution of Licensed Product
in the Territory, including without limitation decisions as to whether and with
which distributors to contract, and the terms of contracts with distributors
(subject to Section 2.05), and the other or more detailed matters set
forth in Section 5.03(a)(iii).

 

Section 1.33                                “DMF” shall mean
a drug master file submitted to the FDA.

 

Section 1.34                                “Due Diligence
Notice Date” shall have the meaning set forth in Section 2.02(a).

 

Section 1.35                                “Economic
Integration Period” means the time period from [*], until the [*].

 

Section 1.36                                “Effective Date”
means the date the Closing Condition described in Section 16.17 occurs.

 

Section 1.37                                “FDA” means the
United States Food and Drug Administration and any successor agency thereto.

 

Section 1.38                                “Field” means the
field of [*].  For example (but without
limitation), Field includes as of the Signing Date [*].  Field excludes as of the Signing Date
[*].  For example (but without
limitation), Field excludes [*]. 
Further, in any event, Field excludes [*].

 

Section 1.39                                “Filing” means (i) in
the case of the U.S., the NDA Filing; (ii) in the case of OUS, the date on
which the appropriate Regulatory Authority in any Country has accepted for
review a Marketing Authorization application according to applicable Laws in such
Country.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

7

 

Section 1.40                                “First Commercial
Sale” means with respect to a particular Country and Licensed Product, the
first shipment of commercial quantities of any Licensed Product sold to a Third
Party by ASTELLAS, its Affiliates and/or their sublicensee and/or distributor
in such Country after receipt of Marketing Authorization for such Licensed
Product in such Country. Sales for test marketing, sampling and promotional
uses, clinical study purposes or compassionate or similar uses shall not be
considered to constitute a First Commercial Sale.

 

Section 1.41                                “First Commercial
Sale Stock” means the quantities of Licensed Product that will be sold in
the U.S. to achieve First Commercial Sale of Licensed Product in the US and
that are anticipated to be sold (or required to be on-hand for potential sales)
within six (6) months after such First Commercial Sale in the U.S.  The Parties will agree an appropriate time in
advance of anticipated First Commercial Sale as to such quantity.

 

Section 1.42                                “Force Majeure Event”
shall have the meaning set forth in Section 16.03.

 

Section 1.43                                “Governmental
Authority” means any court, tribunal, arbitrator, agency, legislative body,
commission, official or other instrumentality of (i) any government of any
Country, (ii) a federal, state, province, county, city or other political
subdivision thereof or (iii) any supranational body, including without
limitation the European Agency for the Evaluation of Medicinal Products.

 

Section 1.44                                “HAP” has the
meaning given such term in the definition of Initial Indications.

 

Section 1.45                                “Hatch-Waxman
Certification” shall have the meaning set forth in Section 13.03.

 

Section 1.46                                “Housemark”
means the name and logo of ASTELLAS or THERAVANCE or, as applicable, any of
their respective Affiliates, as identified by one Party to the other from time
to time.

 

Section 1.47                                “Indemnified Party”
shall have the meaning set forth in Section 12.03(a).

 

Section 1.48                                “Indemnifying Party”
shall have the meaning set forth in Section 12.03(a).

 

Section 1.49                                “Initial Indications”
means complicated skin and skin structure infections (herein, “cSSSI”) and
hospital-acquired pneumonia (herein, “HAP”).

 

Section 1.50                                “Invention”
means any invention or discovery (whether patentable or not) invented during
the Term-Basic (while it is in effect anywhere in the world with respect to the
Licensed Product) as a result of research, Development or Commercialization
activities related to the THERAVANCE Compound or Licensed Product hereunder
(including without limitation API Compound and Licensed Product manufacturing
of both Development and Commercialization supplies).

 

Section 1.51                                “Issue of Necessity”
shall have the meaning set forth in Section 6.03(c)(ii).

 

8

 

Section 1.52                                [*] means all Patents
and Know-How licensed to THERAVANCE pursuant to and/or in accordance with the
[*].

 

Section 1.53                                [*] has the meaning
given in [*].

 

Section 1.54                                “Joint Invention”
means an Invention that is invented jointly by employee(s), contractors, and/or
agent(s) of each of THERAVANCE (or an Affiliate thereof) and ASTELLAS (or an
Affiliate thereof) hereunder.

 

Section 1.55                                “JSC” shall have
the meaning set forth in Section 3.02(a).

 

Section 1.56                                “Know-How” means
technical and other information, which is not subject to published patent rights
and which is not publicly known, including, but not limited to, information
comprising or relating to discoveries, data, formulae, inventions, methods,
models, assays, procedures, designs for experiments and tests and results of
experimentation and testing (including without limitation results of research
or development), processes (including without limitation manufacturing
processes), specifications and techniques, laboratory records, chemical,
pharmacological, toxicological, clinical, analytical and quality control data,
study data, clinical research plans, case report forms, data analyses, reports,
manufacturing data or summaries and information contained in submissions to and
information from ethical committees and regulatory authorities.

 

Section 1.57                                “Know-How Royalty
Term” has the meaning given such phrase in the definition of
Term-Basic.

 

Section 1.58                                “Last Patient, Last
Visit” means, with respect to a clinical study, the date of the “Test-of-Cure
Evaluation” (as defined in the applicable study protocol) for the last patient
enrolled in such clinical study.

 

Section 1.59                                “Laws” means all
laws, statutes, rules, regulations (including, without limitation, current Good
Manufacturing Practice Regulations as specified in 21 C.F.R. §§ 210 and
211; Investigational New Drug Application regulations in 21 C.F.R. § 312;
NDA regulations in 21 C.F.R. § 314; relevant provisions of the Federal
Food, Drug and Cosmetic Act; and other laws and regulations enforced by the
FDA), ordinances and other pronouncements having the binding effect of law of
any Governmental Authority.

 

Section 1.60                                “Licensed Product”
means any pharmaceutical composition or product containing the THERAVANCE
Compound as an active ingredient.

 

Section 1.61                                “Litigation
Condition” shall have the meaning set forth in Section 12.03(b).

 

Section 1.62                                “Losses” means,
with respect to a Claim by a Third Party, any and all damages (including
without limitation all incidental, consequential, statutory and treble
damages), awards, deficiencies, settlement amounts, defaults, assessments,
fines, dues, penalties, expenses, fees, liabilities, obligations, taxes, liens,
losses, lost profits and expenses (including without limitation court expenses,
interest and reasonable fees of attorneys, accountants and other experts)
incurred by or awarded to Third Parties and required to be paid to Third
Parties with respect to a Claim by reason of any judgment, order, decree,

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

9

 

stipulation or injunction, or any settlement entered into in accordance
with the provisions of this Agreement, together with all documented
out-of-pocket expenses and expenses incurred in complying with any judgments,
orders, decrees, stipulations and injunctions that arise from or relate to that
Claim of a Third Party.

 

Section 1.63                                “Major Market
Country” means each of [*].

 

Section 1.64                                “Marketing
Authorization” means, with respect to a Country, the regulatory
authorization required to legally market and sell a Licensed Product in such
Country as granted by the relevant Governmental Authority, including (without
limitation) any applicable pricing, final labeling or reimbursement approvals.

 

Section 1.65                                “Medical Marketing
Plan” means, for the Licensed Product, the plan for implementation at a
detailed level of the Basic Commercial Plan, such plan for implementation at a
detailed level being prepared by the TELAVANCIN Product Management Team and
approved by the Joint Steering Committee. 
The Medical Marketing Plan must always be consistent with the Basic
Commercial Plan and Basic Development Plan (as, if and to the extent
applicable).  The Medical Marketing Plan
is intended to reflect the Parties’ plans for detailed implementation of the
Basic Commercial Plan, but not to alter the Basic Commercial Plan in any way.

 

Section 1.66                                “Milestone”
shall have the meaning set forth in Section 6.02(a).

 

Section 1.67                                “NDA” means a
new drug application or supplemental new drug application or any amendments
thereto submitted to the FDA in the United States.

 

Section 1.68                                “NDA Approval”
means the approval of an NDA by the FDA.

 

Section 1.69                                “NDA Filing”
means the written notification by the FDA that the NDA has met all the criteria
for filing acceptance pursuant to 21 C.F.R. §314.101.

 

Section 1.70                                “NDA Holder”
shall have the meaning set forth in Section 8.02(b).

 

Section 1.71                                “Net Sales”
means the gross invoice price of a Licensed Product sold by ASTELLAS, its
Affiliates or their sublicensees (or such sublicensees’ sublicensed affiliates)
to a Third Party (excluding sales to Affiliates and/or sublicensees for resale
or use in any Study), less the following to the full extent not already
excluded from the gross invoice price:

 

(a)                                  deduction of cash,
trade and quantity discounts specifically identified, actually paid or
incurred;

 

(b)                                 discounts, refunds,
rebates, chargebacks, retroactive price adjustments, and any other allowances
actually made which effectively reduce the net selling price, including without
limitation any institutional rebate or discount for government subsidy or
reimbursement programs such as Medicare or Medicaid provided in the United
States or any similar organization elsewhere in the world, and [*] or any
comparable [*];

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

10

 

(c)                                  credits and
allowances for product returns actually made consistent with ASTELLAS’
then-current policy;

 

(d)                                 freight, packing and
handling [*]; and

 

(e)                                  taxes, including
without limitation value added taxes and sales taxes, but excluding taxes on
seller’s net income.

 

In any case, [*] agrees that the foregoing [*] in a manner [*].

 

Net Sales shall exclude the value of Samples distributed in the usual
course of business.

 

In the case of [*] as follows:

 

If ASTELLAS (or its Affiliate) [*] (see definition of this term below)
of [*] includes [*] then to the extent, if at all, ASTELLAS [*] included in the
[*] as set forth below, then [*].

 

	
  [*]

  	
  [*]

  	
  [*]

  

 

where [*] of the [*] equals the [*] as established by [*].

 

For purposes of this Section 1.72, a [*] for which ASTELLAS or its
Affiliate [*], such that the [*].

 

If THERAVANCE so requests in writing, then ASTELLAS shall provide
THERAVANCE with documentation [*] with respect to [*].

 

Section 1.72                                “Net Sales Report”
shall have the meaning set forth in Section 6.04.

 

Section 1.73                                “Opt-In Right”
shall have the meaning set forth in Section 2.02.

 

Section 1.74                                “Other Indications”
means any use of the Licensed Product for indications other than the Initial
Indications.

 

Section 1.75                                “OUS” means
outside the United States.

 

Section 1.76                                “Patents” shall
have the meaning given such term as set forth in the defintion of ASTELLAS
Patents in Section 1.08.

 

Section 1.77                                “Patent Infringement
Claim” shall have the meaning set forth in Section 13.02(a).

 

Section 1.78                                “Patent Infringement
Notice” shall have the meaning set forth in Section 13.02(b).

 

Section 1.79                                “Patent Resolution
Issue” shall have the meaning given in Section 13.01(c).

 

Section 1.80                                “Payment Period”
shall have the meaning set forth in Section 6.03(a).

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

11

 

Section 1.81                                “Person” means
any natural person, corporation, general partnership, limited partnership,
limited liability company, joint venture, proprietorship, other business
organization or governmental entity.

 

Section 1.82                                “Phase 3a Studies”
means that portion of clinical development relating to the Initial Indications
of the Licensed Product which provides for large scale, pivotal, clinical
studies conducted in a sufficient number of patients and whose primary
objective is to obtain a definitive evaluation of the efficacy and safety of
the Licensed Product in patients that is needed to evaluate the overall
risk-benefit profile of the Licensed Product and to provide adequate basis for
obtaining requisite regulatory approval(s) and product labeling for Initial
Indications, as more fully defined in 21 C.F.R. § 312.21(c).

 

Section 1.83                                “Phase 3b Studies”
means that portion of clinical development relating to the Licensed Product
commenced before receipt of Regulatory Approval for the Initial Indications in
the jurisdiction where such trials are being conducted, but which are not
required for receipt of Marketing Authorization for the Initial Indications and
which are conducted primarily for the purpose of registering the Licensed
Product for Other Indications or for product support (i.e., providing
additional drug profile data).

 

Section 1.84                                “Phase 4 Studies”
means that portion of clinical development relating to the Licensed Product
that is initiated after receipt of a Marketing Authorization for the Licensed Product
and that is principally intended to support the medical marketing of such
Licensed Product, including without limitation investigator initiated trials,
clinical experience trials and studies conducted to fulfill local commitments
made as a condition of any Marketing Authorization.

 

Section 1.85                                “POC Data” means
the material, data and supporting documentation relating to achievement of
clinical proof of concept by the TD-1792 compound, prepared by THERAVANCE and
delivered to ASTELLAS in sufficient detail and intended to enable ASTELLAS to
determine whether or not to exercise its Opt-In Right in accordance with Section 2.02.  The POC Data shall include at least the
content described in Exhibit D.

 

Section 1.86                                “Plan” means the
Basic Development Plan or the Basic Commercial Plan.

 

Section 1.87                                “PRC” has the
meaning given in Section 7.01.

 

Section 1.88                                “Product Supplier”
means any manufacturer, packager or processor of THERAVANCE Compound, API
Compound or the Licensed Product for development, marketing and sale.

 

Section 1.89                                “Promotional
Materials” means the written, printed, video or graphic advertising,
promotional, educational and communication materials (other than Licensed
Product labeling) for marketing, advertising and promotion of the Licensed Product.

 

Section 1.90                                “Promotional/MedEd
Issues” means all issues and decisions regarding the following promotional
and medical education matters respecting Licensed Product: [*] activities [*]
(including without limitation [*].

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

12

 

Section 1.91                                “Promotional/MedEd
Spending” means expenses incurred in implementing or effectuating
Promotional/MedEd Issues.

 

Section 1.92                                “Receiving Party”
shall have the meaning set forth in the definition of Confidential Information
above.

 

Section 1.93                                “Recording Party”
shall have the meaning set forth in Section 6.10.

 

Section 1.94                                “Registration
Batches” means those manufacturing batches of Licensed Product the
characterization of which is included in (or intended to be included in) the
application for US Marketing Authorization (NDA) for such Licensed Product.

 

Section 1.95                                “Registration
Expenses” means all documented, external out-of-pocket costs and expenses
directly related to Development of the Licensed Product for the Initial
Indications in the U.S., including but not limited to external out-of-pocket
registration expenses, as well as documented, external out-of-pocket costs and
expenses directly related to manufacture and supply of Registration Batches and
all other quantities of Licensed Product (except for Phase 3b and Phase 4
supplies) through THERAVANCE’s delivery of the First Commercial Sale
Stock.  No THERAVANCE nor THERAVANCE
Affiliate overhead shall be included in Registration Expenses.

 

Section 1.96                                “Samples” means
Licensed Product packaged and distributed as a complimentary trial for use in
the Territory.

 

Section 1.97                                “[*]” means [*].

 

Section 1.98                                “[*] Agreement”
means that certain [*] Agreement between THERAVANCE and [*] (as amended prior
to the Signing Date) and relating to [*].

 

Section 1.99                                “Signing Date”
means the date set forth on the first page of this Agreement.

 

Section 1.100                          “Studies” means
nonclinical studies and clinical trials.

 

Section 1.101                          “Supplied Licensed Product”
shall have the meaning set forth in Section 15.01(a)(viii).

 

Section 1.102                          “[*]” means, [*] with respect
to a particular time period [*] over such time period.

 

Section 1.103                          “Taxes” shall have the
meaning set forth in Section 6.09.

 

Section 1.104                          “TD-1792 Compound”
means: (a) the THERAVANCE compound known as TD-1792, the structure of
which has been disclosed in writing to ASTELLAS prior to the Signing Date; and (b) all
salts, esters, complexes, chelates, hydrates, isomers, stereoisomers,
crystalline and amorphous forms, prodrugs, solvates, metabolites and metabolic
precursors (whether active or inactive) and pegylated forms of the foregoing in
(a).

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

13

 

Section 1.105                          “TD-1792 Phase 3 Study”
means that portion of clinical development relating to the TD-1792 Compound
which provides for pivotal clinical studies conducted in a sufficient number of
patients and whose primary objective is to obtain a definitive evaluation of
the compound’s therapeutic efficacy and safety in patients that is needed to
evaluate the overall risk-benefit profile and provide a basis for obtaining the
requisite regulatory approvals and product labeling.

 

Section 1.106                          “TELAVANCIN” means the
chemical compound known as TELAVANCIN, the structure of which is shown in Exhibit C.

 

Section 1.107                          “TELAVANCIN Product
Management Team” shall have the meaning set forth in Section 3.03(a).

 

Section 1.108                          “Term-Additional”
means, on a Country-by-Country basis, the period from the expiration of the
Term-Basic until the expiration of [*] or through an [*] or due to an [*] that
[*] for the [*] (for purposes of evaluating such [*] shall be deemed to be[*].  As with the Term-Basic, there is only one
Term-Additional per Country.

 

Section 1.109                          “Term-Basic” means, on
a Country-by-Country basis, the period from the Effective Date until the later
of (a) the expiration of the last Valid Claim of a THERAVANCE Patent
listed in Exhibit A (whether as of the Signing Date or through an update
pursuant to Section 2.08(b) or due to an ASTELLAS election pursuant
to Section 2.08(d)(iii)) in such Country that but for the licenses granted
ASTELLAS hereunder would be infringed by the manufacture, use, importation or
sale of the Licensed Product in such Country (for purposes of evaluating such
infringement, pending Valid Claims shall be deemed to be issued), and (b) [*]
after First Commercial Sale in such Country. 
If (b) occurs later than (a), then the period from (a) to (b) is
the “Know-How Royalty Term” with respect to such Country.  To avoid any doubt, there is only one
Term-Basic per Country, regardless of the number of forms (including without
limitation differing dosage forms and different versions of the Licensed
Product that include any of the variations on TELAVANCIN referred to in the
definition of THERAVANCE Compound) in which the Licensed Product is marketed in
the particular Country.  In particular,
this means that prong (b) does not recommence each time a new form of the
Licensed Product is introduced in the particular Country.

 

Section 1.110                          “Term-Total” means on
a Country-by-Country basis the period from the Effective Date until the
later-to-expire of the Term-Basic and the Term-Additional in such Country.  As with Term-Basic and Term-Additional, there
is only one Term-Total per Country.

 

Section 1.111                          “Territory” means
worldwide, excluding Japan.

 

Section 1.112                          “THERAVANCE Compound”
means TELAVANCIN and all salts, esters, complexes, chelates, hydrates, isomers,
stereoisomers, crystalline and amorphous forms, prodrugs, solvates, metabolites
and metabolic precursors (whether active or inactive) and pegylated forms of
TELAVANCIN.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

14

 

Section 1.113                          “THERAVANCE IP” means
the THERAVANCE Patents (including without limitation any Patents claiming
THERAVANCE Inventions and THERAVANCE’s interest in any Patents claiming Joint
Inventions); the THERAVANCE Know-How; the THERAVANCE Inventions; THERAVANCE’S
interest in the Joint Inventions; and the THERAVANCE Product Trademarks.
THERAVANCE IP excludes [*].

 

Section 1.114                          “THERAVANCE Invention”
means an Invention that is invented (a) by any employee(s) or agent(s) of
THERAVANCE or any of its Affiliates whether solely, jointly among themselves or
jointly with one or more Third Party(ies) (including without limitation via
subcontractors and service providers of any of them performing Development or
Commercialization), or (b) by any Third Party with which THERAVANCE or any
of its Affiliates has contracted to perform THERAVANCE’S obligations hereunder
(without limiting the restrictions on THERAVANCE’S ability to subcontract or
delegate its duties hereunder as set forth in Section 4.04).

 

Section 1.115                          “THERAVANCE Know-How”
means all present and future Know-How relating to the THERAVANCE Compounds,
Licensed Product or the THERAVANCE Inventions that is necessary or useful for
ASTELLAS to perform its obligations or exercise its rights under this
Agreement, and which during the Term-Basic are in THERAVANCE’s or any of its
Affiliates’ possession or control and are or become owned by, or otherwise may
be licensed to any of them, in each case to the extent Controlled by THERAVANCE
or any THERAVANCE Affiliate.  THERAVANCE
Know-How does not include (i) any THERAVANCE Patents (other than
information contained in unpublished applications), or (ii) any [*].

 

Section 1.116                          “THERAVANCE Patents”
means all Patents that are or become owned by THERAVANCE or THERAVANCE’s
Affiliates, or as to which THERAVANCE or THERAVANCE’s Affiliates are or become
licensed, now or in the future, to the extent (a) Controlled by THERAVANCE
or any THERAVANCE Affiliate, and (b) covering the development, making,
having made, use, offer for sale, sale or importation of any THERAVANCE
Compound or Licensed Product (whether directly through their composition
(including without limitation their formulation) or indirectly through their
manufacture (including without limitation any article useful and/or
consumed in such manufacture) or use (including without limitation methods of
administration)).  The THERAVANCE Patents
include without limitation those Patents set forth in Exhibit A as of the
Signing Date (or through an update to Exhibit A under Section 2.08(b) or
due to an ASTELLAS election under Section 2.08(d)(iii)); all
continuations, continuations-in-part, divisionals, substitutions and other
patent applications claiming priority thereto; all patents issuing on any of
the foregoing; all renewals, extensions, reissues and re-examinations of any of
the foregoing; and all counterparts to any of the foregoing in other countries.  THERAVANCE Patents exclude the [*].

 

Section 1.117                          “THERAVANCE Product
Trademark” means any and all trademarks and (if any) trade dress that
THERAVANCE or any of its Affiliates has on or before the Signing Date filed to
register and/or registered for Licensed Product (or which are protected under
common law) in the Territory, excluding any THERAVANCE Housemark.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

 

15

Section 1.118                          “Third Party” means a
Person who is not a Party or an Affiliate of a Party.

 

Section 1.119                          “Third Party Claim”
shall have the meaning set forth in Section 12.03(a).

 

Section 1.120                          “United States” means
the United States, its territories and possessions.  “US” and “U.S.” each also have the same
meaning.

 

Section 1.121                          “Valid Claim” means
any claim of a THERAVANCE Patent (other than a Patent claiming a Joint
Invention, subject to Section 2.08(d)(iii)) which claim(s) is pending in a
patent application [*] or is in an unexpired patent which has not been held
unenforceable, unpatentable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal, and which has not has been admitted to be
invalid or unenforceable through reissue or disclaimer and has not lapsed or
gone abandoned.  If in any country there
should be two or more such decisions conflicting with respect to the validity
or unenforceability of the same claim, the decision of the higher or highest
tribunal shall thereafter control; however, should the tribunals be of equal
rank, then the decision or decisions upholding the claim shall prevail when the
decisions are equal in number, and the majority of decisions shall prevail when
the conflicting decisions are unequal in number.  [*] application that [*] because it [*] may
[*].

 

ARTICLE 2

 

LICENSE
RIGHTS AND OBLIGATIONS

 

Section 2.01                                License Grants From
THERAVANCE to ASTELLAS. Subject to the terms of this Agreement and subject
to THERAVANCE retaining such rights as it requires to perform its obligations
under this Agreement, THERAVANCE hereby grants to ASTELLAS (i) an
exclusive license during the Term-Basic in each Country under the THERAVANCE
IP, (ii) subject to Section 2.08(d) and during the
Term-Additional in each Country, a non-exclusive license under the THERAVANCE
Patents, (iii) an exclusive sublicense under [*] under the [*] during the
Term-Total in each Country (or if longer the life of the [*]), and (iv) a
non-exclusive license under the THERAVANCE Know-How during the Term-Additional
in each Country and thereafter, in each case:

 

(a)                                  to develop, have
developed, use, have used, make, have made, import, have imported, market, have
marketed, offer to sell, sell and have sold the Licensed Products for any and
all indications in the Territory; and

 

(b)                                 to develop, have
developed, make, have made, use, have used, import and have imported THERAVANCE
Compounds, API Compounds and Licensed Products anywhere in the world (i.e., in
Japan in addition to the Territory) for the sole purpose of: developing them
(and having them developed), selling them and having them sold, using them and
having them used, offering them and having them offered for sale, marketing
them and having them marketed, and supplying them and having them supplied,
for, in or to, in all of the foregoing cases, the Territory.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

16

 

For the avoidance of doubt, THERAVANCE retains no right to sell (or
license another to sell) API Compound or THERAVANCE Compound in the Territory
to anyone other than ASTELLAS or an ASTELLAS Affiliate during the Term-Basic.

 

Section 2.02                                TD-1792 Option Grant
To ASTELLAS. ASTELLAS shall have the exclusive option (the “Opt-In Right”)
to Develop and commercialize the TD-1792 Compound pursuant to the terms and
conditions set forth below in this Section 2.02.  While ASTELLAS’ Opt-In Right is in effect
(i.e. from the Signing Date until it is exercised or expires unexercised),
THERAVANCE shall provide ASTELLAS with quarterly written and oral updates (at
the time of and through the JSC’s meetings) regarding TD-1792 Development, at a
reasonable level of detail that includes at a minimum all information generated
as of the date of the report that is or would be required to be included in the
POC Data, as well as plans and objectives for the next twelve (12) months.  Subject to the terms of this Agreement,
THERAVANCE hereby grants ASTELLAS an option to obtain an exclusive,
royalty-bearing license under all relevant Know-How and Patents Controlled by
THERAVANCE and/or its Affiliates during the term of this Agreement, to Develop
and commercialize the TD-1792 Compound worldwide as follows:

 

(a)                                  no later than [*]
prior to initiation of the first TD-1792 Phase 3 Study, THERAVANCE will deliver
to ASTELLAS (in a manner and format to be designated by ASTELLAS) the POC Data
(the date THERAVANCE provides the POC Data to ASTELLAS, the “Due Diligence
Notice Date”);

 

(b)                                 within [*] of the Due
Diligence Notice Date, ASTELLAS will notify THERAVANCE in writing as to whether
or not it is exercising its Opt-In Right;

 

(c)                                  if ASTELLAS exercises
its Opt-In Right, the Parties have a further [*] to negotiate and sign a
definitive license, Development and commercialization agreement on
substantially the same terms and conditions contained in this Agreement (it
being understood by the Parties that they intend to carry over substantially
the same economic terms, governance terms and allocation of responsibilities as
set forth in this Agreement [*] as regards any [*] prior to the [*]; and

 

(d)                                 if ASTELLAS does not
exercise its Opt-In Right within [*] of the Due Diligence Notice Date,
THERAVANCE will be entitled to pursue all Development and commercialization of
the TD-1792 Compound alone or in combination with a Third Party and ASTELLAS
will have no other legal or financial claim to the TD-1792 Compound.

 

Section 2.03                                Further
Commercialization In The Field. Subject to Section 16.06(b), other
than with respect to TD-1792 and the THERAVANCE Compound, each Party agrees
that it and its Affiliates will not commercialize (alone or with a Third Party)
any other compound in the Field in the Territory for a period of [*] from the
Effective Date.  Subject to Section 16.06(b),
if either Party acquires or is acquired by a Person who is either merged into
such Party or becomes an Affiliate of such Party, and such non-Party Person
commercializes a compound in the Field at the time of the relevant transaction
(the merger or acquisition transaction), then the Party and such Person will
have a period

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

17

 

of [*] to effect a disposition of such other compound in the Field
(which may be an out-license to endure until the end of such [*] period, or may
be a more complete disposition) and no breach shall be deemed to have occured
hereunder prior to the end of such [*].

 

Section 2.04                                Right To Sublicense.
ASTELLAS shall have the right to grant sublicenses under the rights granted
under Section 2.01, through one (1) or more tiers or layers of
sublicensees without (except as provided below) consent, provided that ASTELLAS
shall notify THERAVANCE of each such sublicense without unreasonable delay
following any such grant of sublicense, [*] that any such [*]. ASTELLAS shall
contractually require all of its sublicensees to comply with all terms and
conditions of this Agreement applicable to sublicensees and ASTELLAS shall
remain fully responsible for the compliance by such sublicensees with the
applicable terms and conditions of this Agreement as if such sublicensees were
ASTELLAS hereunder.  ASTELLAS shall secure
all appropriate covenants, obligations and rights from any such sublicensee of
it under this Agreement, including, but not limited to, intellectual property
rights and confidentiality obligations in any such agreement or other
relationship, to ensure that such sublicensee complies with all of ASTELLAS’
covenants and obligations to THERAVANCE under this Agreement that are
applicable to sublicensees. ASTELLAS’ rights to sublicense its rights are
limited to those expressly set forth in this Section 2.04.

 

Section 2.05                                Right To Appoint
Distributors. ASTELLAS shall also have the right to appoint distributors in
the Territory for the sale of the Licensed Products without consent. ASTELLAS
shall at all times ensure that its distributors act fully in compliance with
the applicable terms and conditions of this Agreement and shall be fully
responsible for their compliance.

 

Section 2.06                                Duration Of License
Grants.

 

(a)                                  The exclusive license
set out in Section 2.01(i), and associated rights set out in Section 2.04
and Section 2.05, shall continue in accordance with what is stated therein
on a Country-by-Country basis until royalty payment under Section 6.03(a) (as
adjusted by Section 6.03(c) - Section 6.03(f)) is no longer due
in the Country concerned (i.e., until the Term-Basic has expired with respect
to such Country).

 

(b)                                 The non-exclusive
license set out in Section 2.01(ii), and associated rights set out in Section 2.04
and Section 2.05, shall, subject to Section 2.08(d), be in effect in
each Country during, [*] with respect to [*] the Term-Additional in such
Country.

 

(c)                                  The exclusive
sublicense set out in Section 2.01(iii), and associated rights set out in Section 2.04
and Section 2.05, shall be in effect during the Term-Total in each Country
or if longer the term of the [*] in the particular Country.

 

(d)                                 The non-exclusive
THERAVANCE Know-How license set out in Section 2.01(iv), and associated
rights set out in Section 2.04 and Section 2.05, shall be in effect
in each Country at all times after the end of the Term-Basic in such Country
and is perpetual and royalty-free.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

18

 

Section 2.07                                Trademarks And
Housemarks. 

 

(a)                                  Trademarks.
The Licensed Product shall be Commercialized under trademarks and trade dress
[*].  Prior to any such proposed
trademark(s) and trade dress being [*], ASTELLAS shall be responsible for
undertaking their preliminary selection and shall be responsible for the
procurement, filing and maintenance of trademark registrations for such
trademarks and trade dress and all expenses related thereto.  All such trademarks and trade dress shall be
deemed to be ASTELLAS Product Trademarks. 
ASTELLAS (or an ASTELLAS Affiliate) shall exclusively own all ASTELLAS
Product Trademarks.  ASTELLAS (or an
ASTELLAS Affiliate) shall also exclusively own all trade dress and copyrights
associated with the Licensed Product and any Promotional Materials.

 

(b)                                 Housemarks.
Each Party acknowledges the goodwill and reputation that has been associated
with the other Party’s Housemarks over the years, and shall use such Housemarks
in a manner that maintains and promotes such goodwill and reputation and is
consistent with trademark guidelines. Each Party shall take all reasonable
precautions and actions to protect the goodwill and reputation that has inured
to the other Party’s Housemarks, shall refrain from doing any act that is
reasonably likely to impair the reputation of such Housemarks, and shall
cooperate fully to protect such Housemarks. 
To avoid any doubt, neither Party grants to the other any license,
express or implied, with respect to any Housemarks; provided, however, that THERAVANCE hereby grants ASTELLAS a
license (with rights to sublicense Affiliates, sublicenses and distributors of
Licensed Product) under the entire right, title and interest in and to the
THERAVANCE Housemarks and all intellectual property rights therein to use and
display the THERAVANCE Housemarks solely for the purpose of and to the extent
necessary or reasonably required to comply with ASTELLAS’ obligations under
this Agreement (for example, to identify THERAVANCE as the licensor of Licensed
Product in accordance with Section 7.02).

 

Section 2.08                                Further THERAVANCE
Inventions, In-Licensing and Updates to Exhibit A; Covenants.

 

(a)                                  Inventions. In
accordance with the definitions of ASTELLAS Inventions and THERAVANCE
Inventions, Inventions invented by their subcontractors and service providers
performing Development and/or Commercialization hereunder are included within
the ASTELLAS Inventions and THERAVANCE Inventions.  Each Party shall use Diligent Efforts to make
its contractual arrangements with such subcontractors and service providers
(including without limitation manufacturers or those performing process
development) such that the contracting Party shall own, or otherwise Control
within the scope of the licenses granted ASTELLAS under Section 2.01, any
such Inventions that regard THERAVANCE Compound or Licensed Product (or a
method of manufacture or use thereof). 
If THERAVANCE does not Control exclusive rights under the THERAVANCE
Patent corresponding to a particular such THERAVANCE Invention (to avoid any
doubt, we refer here to exclusive rights within the scope of the grants listed
out in Section 2.01(a) and Section 2.01(b), without regard to
whether the Patent has broader coverage nor whether THERAVANCE would Control
any rights outside the scope of the grants listed out in Section 2.01(a) and
Section 2.01(b)), then such THERAVANCE Patent’s claims shall not be deemed
to be Valid Claims of

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

19

 

THERAVANCE Patents listed on Exhibit A at any time for purposes of
determinining the Term-Basic (and thus royalty payments hereunder) in each
Country in which THERAVANCE does not Control such exclusive rights (but shall
be considered to be Valid Claims of THERAVANCE Patents for the purpose of
determining any Term Additional should ASTELLAS elect to have a non-exclusive
license therein under Section 2.08(d)(ii)).

 

(b)                                 Exhibit A
Updates. Exhibit A shall be updated by the Parties at least quarterly
to reflect additional THERAVANCE Patents on THERAVANCE Inventions first filed
prior to [*] after the Signing Date (“Exhibit A Period”).  No
further updates will be made to Exhibit A after the Exhibit A Period, but
if the Parties make an error and fail to include such a Patent filed within the
Exhibit A Period on Exhibit A through the regular updates, and the
error is discovered after such time period, then ASTELLAS may at its option
include such Patent on Exhibit A by written notice to THERAVANCE.

 

(c)                                  Further
In-Licensing for the Licensed Product. With respect to all Patents and
Know-How that THERAVANCE or any of its Affiliates acquires, in-licenses or
otherwise obtains rights to Control after the Signing Date, to the extent
specific to Licensed Product or THERAVANCE Compound, such Patents and Know-How
will fall within the definition of THERAVANCE IP and be licensed to ASTELLAS
under this Agreement.  THERAVANCE and its
Affiliates shall not, however, during the term of this Agreement acquire,
in-license or otherwise obtain rights in the Territory to any Patents or
Know-How intended particularly for Licensed Product(s) or THERAVANCE
Compound(s) without first obtaining ASTELLAS’ written consent (and all
discussions seeking such consent shall be conducted in accordance with the
procedures set forth in Section 13.07). 
ASTELLAS is entitled to withhold such consent, and the expectation going
forward from the Effective Date is that to the extent additional Patents and
Know-How will be in-licensed particularly for the purpose of covering the
THERAVANCE Compound or Licensed Product, ASTELLAS will be the in-licensing
Party and have a direct relationship with the Third-Party licensor.

 

(d)                                 Election Regarding
Rights During Term-Additional.

 

(i)                                     No later than
eighteen (18) months prior to the
expiration of the Term-Basic in each Country, THERAVANCE shall notify ASTELLAS
in writing of which THERAVANCE Patents (including without limitation Patents
claiming Joint Inventions) THERAVANCE believes would cover the THERAVANCE
Compound or Licensed Product or the manufacture or use of either of them in
such Country as of the expiration of the Term-Basic in such Country.  If ASTELLAS wishes to maintain a license
beyond the end of the then-Term-Basic under any THERAVANCE Patents noticed by
THERAVANCE in such Country, then ASTELLAS shall within [*] after the deadline
for THERAVANCE’s notice (or if noticed late, [*] after THERAVANCE actually
provides such notice) notify THERAVANCE in writing of the license ASTELLAS
desires in such Country.  This license
may be exclusive or non-exclusive, and may be for some or all of the THERAVANCE
Patents of which THERAVANCE has notified ASTELLAS.  ASTELLAS shall specify these details in its
notice.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

20

 

(ii)                                  If ASTELLAS elects a
non-exclusive license in such Country for any THERAVANCE Patent(s) (other than
Patents claiming Joint Inventions) identified in THERAVANCE’s notice, then
ASTELLAS shall have a non-exclusive license under such THERAVANCE Patent(s) in
such Country, [*] in accordance with [*] with respect to [*].

 

(iii)                               If ASTELLAS elects an
exclusive license in such Country under any THERAVANCE Patent(s) identified in
THERAVANCE’s notice, then the THERAVANCE Patent(s) that ASTELLAS identifies in
its notice (“Exclusively Elected Patents”) shall be automatically deemed
included in Exhibit A with respect to such Country, thus extending the
Term-Basic in such Country (until the expiration of the last Valid Claim of the
Exclusively Elected Patents that supports the continued duration in such
Country of the Term-Basic in accordance with the definition of
Term-Basic).  Accordingly, Net Sales in
such Country shall continue to be royalty-bearing according to the rates of Section 6.03(a) (as
adjusted by Section 6.03(c) - Section 6.03(f)) until the
expiration of the thus-extended Term-Basic. 
To be clear, ASTELLAS may make its election for the exclusive license
for any THERAVANCE Patent, including without limitation any that is a Patent
claiming a Joint Invention, and if ASTELLAS elects to take an exclusive license
for a Patent claiming a Joint Invention, then such Patent’s claims shall be
entitled to qualify as Valid Claims and it shall be deemed to be listed on Exhibit A
(to the same effect as generally described in this subsection (iii) with
regard to the Term-Basic and royalties due on Net Sales in the relevant
Country).

 

(iv)

 

(A)                              For the avoidance of
doubt, ASTELLAS will have an exclusive license under THERAVANCE’s rights in any
Patents claiming Joint Inventions for so long as ASTELLAS pays a royalty
according to the rates of Section 6.03(a) (as adjusted by Section 6.03(c) -
Section 6.03(f)) with respect to Net Sales in each Country.  If all Valid Claims in THERAVANCE Patents
listed on Exhibit A (whether as of the Signing Date or thereafter through
an update under Section 2.08(b) or due to an ASTELLAS election under Section 2.08(d)(iii) with
respect to a THERAVANCE Patent that does not claim a Joint Invention) have
expired in a particular Country, and ASTELLAS does not desire to continue its
exclusive rights in Patents claiming Joint Inventions that have not yet expired
in such Country, ASTELLAS can choose to rely on its ownership rights in such
Patents claiming Joint Inventions and stop paying royalty to THERAVANCE
whereupon THERAVANCE shall be free to license its rights in any such Patents to
Third Parties, except not to the exclusion of ASTELLAS, in accordance with the
following:

 

(B)                                Other than as licensed
under Section 2.01, the Parties wish to achieve, to the maximum extent
permitted by Law in each OUS Country, the rights of joint owners of US patents
based on co-inventorship in the absence of a written agreement (i.e., that each
may practice and license the jointly owned Patent without a duty of accounting
to the other, again except to the extent otherwise licensed under Section 2.01).  Accordingly, each Party hereby grants all
permissions and consents and licenses, and hereby waives all of the other Party’s
duties of accounting (or other

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

21

 

right of the waiving Party to payment (other than a royalty explicitly
agreed to under this Agreement) in respect of such practice or licensing), to
the full extent required to achieve such result in each OUS Country, and agrees
to execute and deliver all documents reasonably required to evidence, record or
effect such permissions, consents, licenses and waivers.  To be clear, the background rights of the
Parties as joint owners are further subject to the license grant of Section 2.01.  Also (but without limiting royalties that may
apply by application of Section 2.08(d)(iii)), any licenses granted under
this Section 2.08(d)(iv)(B) shall not be deemed licenses for purposes
of determining Patent coverage by reference to Patents that would be infringed
“but for” the licenses granted hereunder, in the definitions of Term-Basic and
Term-Additional (i.e., anything that is done to achieve the background rights
of the Parties as joint owners of Patent claiming Joint Inventions shall not be
considered to constitute a royalty-bearing license).

 

(v)                                 If ASTELLAS declines
to maintain a license under any THERAVANCE Patent(s) identified in THERAVANCE’s
notice (either non-exclusive under Section 2.08(d)(ii) or exclusive
under Section 2.08(d)(iii)), then those THERAVANCE Patent(s) for which
ASTELLAS declines to maintain a license shall be excluded from the THERAVANCE
Patents in such Country from the time that the Term-Basic expires in such
Country forward and forever.

 

(vi)                              Should THERAVANCE omit
any relevant THERAVANCE Patent from a notice under subsection (i), then
once THERAVANCE becomes aware of the error it shall promptly notify ASTELLAS in
writing, and ASTELLAS shall be entitled to make its licensing election (whether
to have a license at all, in which Country(ies), and whether any license shall
be exclusive or non-exclusive) with respect to the newly-noticed THERAVANCE
Patent within [*] days after receipt of this notice.

 

(vii)                           The elections of this Section 2.08(d) operate
on a Country-by-Country basis.  ASTELLAS
is not required to make worldwide elections, rather, it is entitled to make its
elections under this Section on a Country-by-Country basis.

 

(viii)                        The Parties may negotiate
different royalty rates and licenses than set forth above in this Section 2.08(d) for
the Patents referred to in this Section 2.08(d), however, for different
royalty rates or licenses to apply, an amendment under Section 16.13 would
be required.

 

ARTICLE 3

 

GOVERNANCE

Section 3.01                                Overviews.

 

(a)                                  Various Plans and
Their Relationships to Each Other and This Agreement. This Agreement
provides for four (4) different Licensed Product-related plans, three (3) covering
the Initial Indications in the US (namely, the Basic Development Plan, the
Basic Commercial Plan, and the Detailed Development Plan) and one covering
marketing activities worldwide (namely, the Medical Marketing Plan).  The Basic Development

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

22

 

Plan and Basic Commercial Plan represent the Parties’ agreement as of
the Signing Date as to Development and Commercialization, respectively (until
[*] after the first US Marketing Authorization) of Licensed Product for the
Initial Indications for the US market. 
These Plans may only be changed by mutual agreement between the Parties
as set forth in Section 3.05(b). 
The Detailed Development Plan is intended to implement the Basic
Development Plan at a detailed level, consistent with the Basic Development
Plan and this Agreement.  The Medical
Marketing Plan is intended to implement the Basic Commercial Plan in the United
States at a detailed level (in a manner consistent with the Basic Commercial
Plan and this Agreement), as well as to describe ASTELLAS’ OUS
Commercialization.  The Medical Marketing
Plan and changes and updates thereto are to be established in accordance with Section 5.01.

 

(b)                                 Governance
Structures And Management. The Parties’ collaboration hereunder will be
managed at a high level by a Joint Steering Committee (the JSC, as defined in Section 3.02)
responsible for strategic decisions and high-level management of the
collaboration operating by consensus, as and within the limits further set
forth below.  At a more detailed level, a
TELAVANCIN Product Management Team will be responsible for making decisions
required to implement the plans approved by the Joint Steering Committee and
making tactical decisions consistent with the plans approved by the Joint Steering
Committee and implementing the plans.

 

(c)                                  General Guidelines
And Initial Coordination Efforts. In all matters related to the
collaboration established by this Agreement, the Parties shall strive to
balance as best they can the legitimate interests and concerns of the Parties
and [*] of the Licensed Product.  In all
matters relating to this Agreement, the Parties shall seek to comply with good
pharmaceutical and environmental practices. 
The Parties intend, following the Effective Date, to organize meetings
of applicable internal staff to communicate and explain the provisions of this
Agreement to ensure the efficient and timely Development and Commercialization
of the Licensed Product.

 

Section 3.02                                Joint Steering
Committee.

 

(a)                                  Purpose. The
purposes of the Joint Steering Committee (hereinafter the “JSC”) shall be to
provide a forum (i) to oversee the Development and Commercialization of
the Licensed Product and (ii) to resolve disputes concerning the
Development and Commercialization of the Licensed Product in accordance with Section 3.06(a).

 

(b)                                 Members. Within
ten (10) days after the Effective Date, the Parties shall establish the
JSC, and ASTELLAS and THERAVANCE shall each designate four (4) employees
as representatives.  Each of ASTELLAS and
THERAVANCE may replace any or all of its representatives on the JSC with
another (or other) employee(s) at any time upon written notice to the other
Party.  Such representatives shall
include individuals who have the relevant experience and expertise to oversee Development
and/or Commercialization of Licensed Product. Each Party shall at all times
have a JSC member who is at a level of Vice President or above.  A Party may designate a substitute to
temporarily attend and perform the functions of such Party’s designee at any
meeting of

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

23

 

the JSC. ASTELLAS and THERAVANCE each may, on advance written notice to
the other Party, invite non-member representatives of such Party to attend
meetings of the JSC. The JSC shall be chaired on an alternating basis by a
representative from each Party for one-year terms.  The first year’s chairman shall be a
representative of THERAVANCE. The Party that has not selected the chairman for
that year shall select one of its representatives to be secretary for that
year.

 

(c)                                  Responsibilities.
The JSC shall perform the following functions:

 

(i)                                     Review and approve
Detailed Development Plans with respect to Licensed Product Development to
support Marketing Authorizations for the Initial Indications (such Detailed
Development Plans to be initially prepared by THERAVANCE within ninety (90)
days after the Effective Date and discussed initially at the TELAVANCIN Product
Management Team level);

 

(ii)                                  Review and approve
the Medical Marketing Plans prepared by the TELAVANCIN Product Management Team
and any material changes proposed by the TELAVANCIN Product Management Team
(but this approval extends only to aspects of the Medical Marketing Plan that
do not involve decisions reserved to ASTELLAS under Section 3.05(c));

 

(iii)                               Review and approve the
life cycle management of the Licensed Product;

 

(iv)                              Review, approve, and
monitor regulatory strategy and activities for the Licensed Product in
accordance with ARTICLE 8;

 

(v)                                 Discuss the state of
the markets for Licensed Product and opportunities and issues concerning the
Commercialization of Licensed Product, including consideration of marketing and
promotional strategy, market research plans, labeling, Licensed Product
platform positioning and Licensed Product profile issues;

 

(vi)                              At each meeting review
the Development and Commercialization activities for Licensed Product in the
Territory as reported by the responsible Party including reviewing and
approving any material changes proposed by THERAVANCE and/or ASTELLAS (to avoid
any doubt, this means changes to Development and Commercialization activities
themselves, not changes to the contractual terms (terms of this Agreement)
surrounding such activities, which contractual terms may only be amended by the
Parties in accordance with Section 16.13);

 

(vii)                           At each meeting, review the
status of all Studies conducted on Licensed Product and any results therefrom;

 

(viii)                        At each meeting, review Net
Sales for the year-to-date, as available;

 

(ix)                                In accordance with the
procedures established in Section 3.06, resolve disputes and disagreements
between the Parties; and

 

24

 

(x)                                   Have such other
responsibilities as may be assigned to the JSC pursuant to this Agreement or as
may be mutually agreed upon by the Parties from time to time.

 

(d)                                 Meetings. Until
[*] after the first Marketing Authorization in the US, the JSC shall have at
least quarterly meetings and more frequently as ASTELLAS and THERAVANCE
mutually agree.  Thereafter, the JSC
shall have semi-annual meetings for at least [*].  After that, the JSC will not have standing
meetings but either Party may call a special meeting, if required, for
consultation or discussions on an as-needed basis with respect to matters
within the JSC’s purview as set forth below (but not more frequently than
quarterly).  In the first year after the
Effective Date, all of the required JSC meetings shall be face-to-face, but
thereafter they may take place by video- or tele-conference; provided, however, that at least two (2) 
meetings per year until [*] after the first Marketing Authorization in the US
shall be face-to-face.  The location of
the meetings shall alternate between the offices of THERAVANCE and ASTELLAS, or
such other location as the Parties may mutually agree, with the first meeting
occurring at THERAVANCE’s facilities within twenty (20) days after the
establishment of the JSC.

 

(e)                                  Minutes Of
Committee Meetings. Definitive minutes of all JSC meetings shall be
finalized no later than thirty (30) Business Days after the meeting to which
the minutes pertain as follows:

 

(i)                                     Within ten (10) Business
Days after a JSC meeting, the secretary of the JSC shall prepare and distribute
to all members of the JSC draft minutes of the meeting. Such minutes shall
provide a list of any issues in dispute.

 

(ii)                                  The Party members of
the JSC shall have ten (10) Business Days after receiving such draft
minutes to collect comments thereon and provide them to the secretary of the
JSC.

 

(iii)                               Upon the expiration of
such second ten (10) Business Day period, the Parties shall have an additional
ten (10) Business Days to discuss each other’s comments and finalize the
minutes. The secretary and chairperson of the JSC shall each sign and date the
final minutes. The signature of such chairperson and secretary upon the final
minutes shall indicate each Party’s assent to the minutes.

 

(f)                                    Expenses.
Each Party shall be responsible for all travel and related expenses for its
members and other representatives to attend meetings of, and otherwise
participate on the JSC.

 

(g)                                 Limits of Authority.
The JSC shall have only those powers and that authority explicitly set forth in
this Agreement for it and is subject to the terms and conditions of this
Agreement.  The JSC shall be kept
apprised of, but shall have no decision-making or deliberative authority respecting
Contracting Issues, Deployment Issues and Distribution Issues, which are
ASTELLAS’ sole responsibility and right to decide in accordance with Section 3.05(c).
The JSC shall have no power or authority to

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

25

 

amend or waive compliance with this Agreement, the Basic Development
Plan or the Basic Commercial Plan.

 

(h)                                 JSC Decision-Making.
The manner in which the JSC makes decisions is described in Section 3.05(a) with
any disputes among the JSC being resolved as per Section 3.06.

 

Section 3.03                                TELAVANCIN Product
Management Team.

 

(a)                                  Purpose.  It is the Parties’ intent that the relevant
employees from each Party work together in a [*] team (the “TELAVANCIN Product
Management Team”) to effectively Commercialize the Licensed Product.  The TELAVANCIN Product Management Team will
be responsible, in particular, for [*].  
The TELAVANCIN Product Management Team is expected to meet regularly and
have a close and ongoing day-to-day working relationship, each during the US
pre-launch period and through [*] after First Commercial Sale in the US.  Both Parties’ TELAVANCIN Product Management
Team members shall be responsible for implementing the [*], all as further
described in ARTICLE 5.  The
TELAVANCIN Product Management Team shall be led by THERAVANCE personnel with
respect to US Initial Indication Development activities and US Initial
Indication Promotional Med/Ed issues, and be led by ASTELLAS personnel with
respect to all other Development and Commercialization activities.  Such leadership, in each case, shall be
subject to consistency and compliance with the Plan(s), if any, applicable to
such activities, and the terms and conditions of the Agreement.  Leadership in this context means that the
lead Party will take responsibility to initiate and formulate plans covering
the applicable activities using the full resources of the TELAVANCIN Product
Management Team (including without limitation the input and participation of
non-lead members).

 

(b)                                 Composition.
The TELAVANCIN Product Management Team shall be composed of a maximum of [*]
THERAVANCE employees and as many ASTELLAS employees as ASTELLAS deems
necessary.  In any case, each Party shall
be entitled to have at least [*] TELAVANCIN Product Management Team members and
may designate and replace its own members by written notice to the other
Party.  During time periods with respect
to which the medical marketing services fee is due under Section 3.03(d),
THERAVANCE shall have at least [*] fully dedicated employees as TELAVANCIN
Product Management Team members.  The
TELAVANCIN Product Management Team will be composed of individuals having
appropriate experience in marketing, market analytics and forecasting,
pharmacoeconomics and clinical development.

 

(c)                                  Responsibilities.
The TELAVANCIN Product Management Team shall perform the following functions as
approved by the JSC:

 

(i)                                     Prepare the
Medical Marketing Plan for submission to and review and approval by the JSC,
[*] — in every case subject to consistency with the Basic Development Plan and
Basic Commercial Plan (and, consistent with Section 3.05(c), certain
decisions ASTELLAS is entitled to make) as further outlined in Section 5.01;

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

26

 

(ii)                                  Prepare and present
to the JSC for approval [*], including but not limited to [*] (subject to
consistency with the Basic Commercial Plan);

 

(iii)                               On an annual rolling
basis beginning within six (6) months of the Effective Date, update and
amend the Medical Marketing Plan for the following Calendar Year so that it can
immediately thereafter submit to the JSC such proposed Medical Marketing Plan
for review and approval;

 

(iv)                              Recommend to the JSC any
material amendments or modifications to the Medical Marketing Plan during the
Calendar Year with respect to the US;

 

(v)                                 Provide reports to the
JSC regarding the state of the markets for Licensed Product and opportunities
and issues concerning the Commercialization of the Licensed Product, including
consideration of [*];

 

(vi)                              Review Net Sales for the
year-to-date, as available, and provide reports with assessments and
recommendations to the JSC;

 

(vii)                           Regularly review ASTELLAS’
progress to [*] in the United States that is consistent with the Medical
Marketing Plan.  Such [*] will be
undertaken by ASTELLAS; and

 

(viii)                        Have such other
responsibilities as may be assigned to the TELAVANCIN Product Management Team
pursuant to this Agreement or as may be mutually agreed upon by the Parties
through the JSC in final, undisputed written minutes from time to time.

 

(d)                                 Expenses. With
respect to TELAVANCIN Product Management Team members from THERAVANCE directed
at Commercialization, ASTELLAS will pay THERAVANCE an annual medical marketing
services fee equal to [*] in each year through [*] after the first Marketing
Authorization in the US — up to a maximum over the life of this Agreement of
[*] — but ASTELLAS shall not be responsible for any other Commercialization
expenses, internal or external, incurred by THERAVANCE without ASTELLAS’ prior
written agreement, except as provided in Section 5.03 with regard to
expenses that are below the threshold stated in such Section for written
approval to be required, provided that
such expenses below such threshold are within the budget and consistent with
the Medical Marketing Plan.  This annual
[*] medical marketing fee will be paid [*] commencing with 2006.  Further, after [*] from the year the first US
Marketing Authorization is obtained, the Parties do not intend for ASTELLAS to
further pay the medical marketing services fee described in this Section 3.03(d).

 

(e)                                  Decision-Making.
It is the Parties’ intent that disputes within the TELAVANCIN Product
Management Team be resolved within the team or through escalation to ASTELLAS’
Vice President, Marketing and Sales, Hospital Products (or successor position)
and the Senior Vice President, Commercial Development (or successor position)
at THERAVANCE.  In the failure of
agreement, either Party may escalate disputed issues within the TELAVANCIN
Product Management Team’s authority and responsibility, as provided herein, to
the JSC for resolution.  The Parties

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

27

 

acknowledge escalation to the JSC is intended to be extraordinary, and
instead the TELAVANCIN Product Management Team is expected to have a close
working relationship and work out issues within their area of responsibility in
a manner acceptable to each Party and consistent with the Plans and this
Agreement.  The TELAVANCIN Product Management
Team shall not be empowered to make any decision inconsistent with any Plan and
shall not make any decision inconsistent with or that undermines any such
applicable Plan.

 

(f)                                    Limits of
Authority. The TELAVANCIN Product Management Team shall have only those
powers and that authority explicitly set forth in this Agreement for it and is
subject to the terms and conditions of this Agreement.  The TELAVANCIN Product Management Team shall
be kept apprised of, but shall have no decision-making or deliberative
authority respecting Contracting Issues, Deployment Issues and Distribution
Issues, which are ASTELLAS’ responsibility and right to decide in accordance
with Section 3.05(c).  The
TELAVANCIN Product Management Team shall have no power or authority to amend or
waive compliance with this Agreement, the Basic Development Plan, or the Basic
Commercial Plan.

 

Section 3.04                                Budgeting. The
Plans include maximum budgets that cannot be exceeded without ASTELLAS’ prior
written consent. Annually, the TELAVANCIN Product Management Team shall prepare
a detailed annual budget for the upcoming Calendar Year.  This process shall commence in June.  The annual budget shall be finalized by the
end of September annually and is subject ultimately to approval by
ASTELLAS, within the guidelines set forth in the Basic Commercial Plan.  In any case, ASTELLAS shall not be required
to approve any budget that exceeds the applicable limits set forth in the
Plans.

 

Section 3.05                                Decision-Making.

 

(a)                                  General. The
JSC may make decisions with respect to any subject matter that is subject to
the JSC’s decision-making authority and functions as set forth in Section 3.02(c).  All decisions of the Joint Steering Committee
shall be made by consensus, with the representatives from each Party presenting
a unified position on behalf of such Party. 
The JSC shall use Diligent Efforts to resolve the matters within its
authority.  The JSC’s decisions must be
consistent at all times with the Plans and this Agreement.

 

(b)                                 Plan Changes.
The Basic Development Plan and the Basic Commercial Plan each contain a section entitled
“Commitments”. Because changes to the “Commitments” section of the Basic
Development Plan and Basic Commercial Plan are fundamentally business
decisions, the Parties consider that any change to the “Commitments” sections
of such Plans (provided that such changes are not subject to decision-making
authority of ASTELLAS pursuant to Section 3.05(c)), should be decided by
the Parties and not by recourse to the dispute resolution provisions of Section 3.06
nor to any form of dispute resolution (including without limitation court and
arbitration), except to the extent of any Contract Compliance Dispute described
in Section 3.06(c).  Accordingly,
the Parties intend and agree that (i) any change to the “Commitments”
section(s) of either and/or both such Plan(s) shall only be made if the Parties
mutually in their sole discretions (subject to consistency with the exercise of
Diligent Efforts and this

 

28

 

Agreement’s terms) agree to the change (in the manner provided in Section 16.13
with respect to all amendments); (ii) the JSC — while it may discuss any
such change proposed by a Party — shall have no authority to agree to any such
change; and (iii) the dispute resolution procedures set forth in Section 3.06(b) shall
not apply to any disagreement or failure of consensus regarding whether or how
to change the “Commitments” section of either and/or both such
Plan(s).  The Parties acknowledge that it
is their intent that any change to the “Commitments” section of either
and/or both such Plan(s) should only be supportable by material changes in the
underlying circumstances surrounding Licensed Products.

 

(c)                                  Contracting
Issues, Deployment Issues and Distribution Issues.

 

(i)                                     General.  Contracting Issues, Deployment Issues and
Distribution Issues shall be at the sole discretion of ASTELLAS. [*] right [*]
without [*] in accordance with [*].   
Provided that ASTELLAS exercises its right to make these decisions consistent
with the applicable Plans and any requirements that it apply Diligent Efforts
with respect to the subject matter of the decision, disputes regarding the
exercise of any decision by ASTELLAS with regard to a Contracting Issue,
Deployment Issue or Distribution Issue shall not be referable to dispute
resolution under Section 3.06(b).   
Moreover to avoid any doubt, ASTELLAS cannot deem an amendment to the
Net Sales definition herein to be a Contracting Issue within its sole
discretion and, absent a mutually agreed upon amendment, shall comply with the
Net Sales definition as written herein for purposes of calculating payments due
hereunder.

 

(ii)                                  Pricing.  Notwithstanding anything else express or
implied in this Agreement, ASTELLAS shall have the sole authority to make the
decision as to all Licensed Product pricing matters [*], and while ASTELLAS
will share information and THERAVANCE may express its ideas and concerns
through JSC and TELAVANCIN Product Management Team participation regarding [*]
pricing matters, none of THERAVANCE, the JSC nor the TELAVANCIN Product
Management Team shall have any decision-making authority with regard to [*]
pricing matters.

 

Section 3.06                                Dispute Resolution.

 

(a)                                  Work Towards
Consensus. With respect to any issue that the JSC is empowered to decide
that is in dispute, if the JSC cannot reach consensus within thirty (30)
Business Days after the issue has been brought to the attention of the full
JSC, then such issue shall be referred to the Chief Executive Officer of
THERAVANCE and the Chief Executive Officer of ASTELLAS US, LLC (collectively,
the “Officers”) for resolution.  The
Parties accept that the use of the Officers for resolution of any unresolved
issues will be on an exceptional basis. 
If any disputes arise between the Parties regarding this Agreement or
its interpretation that are not those Development and Commercialization matters
the JSC is empowered to decide, either Party may refer the matter directly to
the Officers for discussion (without first calling a JSC meeting and waiting an
additional thirty (30) Business Days as with issues that go first to JSC
discussions).

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

29

 

(b)                                 Resolution by Third
Party. If the Officers are unable to reach consensus within thirty (30)
Business Days after the matter has been referred to them, except for Excluded
Issues under Section 3.06(c),   the
final decision will be made by a mutually acceptable Third Party
arbitrator.  Either Party can initiate
such arbitration on 30 days written notice to the other Party (given at any
time following the period of the Officers’ discussions).  The Parties will use best efforts to agree on
an arbitrator within such 30-day period. 
If the Parties do not agree on an arbitrator within such 30 days, then
the Parties’ proposed arbitrators (one proposed by each Party) shall within 15
additional days choose the arbitrator, who shall be unaffiliated with both
Parties and their respective Affiliates. 
If the Parties’ proposed arbitrators fail to timely select the
arbitrator, the Parties shall engage a single arbitrator (unaffiliated with
both Parties) from and selected by the organization JAMS (standing for
“Judicial Arbitration and Mediation Services”) (“JAMS”), to be appointed within
ten (10) additional Business Days. 
Such arbitration will occur as promptly as practicable, but in no event
later than 60 days following selection of the arbitrator and will be held in
New York City, New York.  The arbitration
shall be conducted in accordance with the JAMS rules.  The decision of the arbitrator will be final
and binding on the Parties; provided that either Party shall retain all rights
to bring an action against the other to enforce the arbitrator’s decision.

 

(c)                                  Excluded Issues.
Notwithstanding anything express or implied to the contrary in this Agreement,
decisions regarding changes to the “Commitments” sections of the Plans and
ASTELLAS’ exercise of its right to make the decisions regarding Deployment
Issues, Contracting Issues, and Distribution Issues shall not be referable to
dispute resolution under Section 3.06(b) nor to any other form of
dispute resolution (including without limitation court and, other than as
provided in this subsection 3.06(c) for Contract Compliance Disputes,
arbitration), except to the extent required to determine whether each Party has
acted in accordance with (i.e., has not breached) this Agreement (including
without limitation the obligations set forth in this Agreement that it devote
(and agree to devote) Diligent Efforts, and the obligations to act consistent
with the Basic Development Plan and/or the Basic Commercial Plan) (each a
“Contract Compliance Dispute”).  Contract
Compliance Disputes are referable for dispute resolution under Section 3.06(b).  In addition, notwithstanding anything express
or implied in this Agreement and absent fraud in connection with any dispute
resolution under Section 13.01(c), Patent Resolution Issues remaining
unresolved after initial dispute resolution under Section 3.06(a) shall
not be referable for dispute resolution under Section 3.06(b), but shall
instead be resolved as set forth in Section 13.01(c).

 

(d)                                 Exclusive Procedures.
The procedures set forth in this Section 3.06  (including without limitation by reference to
Section 13.01(c)) shall be the sole and exclusive procedures for resolving
disputes between the Parties in connection with this Agreement.  The only exceptions to this are that either
Party may (i) seek preliminary injunctive relief from a court having
jurisdiction over both Parties pending the outcome of a dispute resolution in
accordance with this Section 3.06,  (ii) seek
injunctive relief from a court having jurisdiction over both Parties for a
breach or a threatened breach of Article 10, or (iii) seek judicial
enforcement of the arbitrator’s decision.

 

30

 

ARTICLE 4

 

DEVELOPMENT
OF LICENSED PRODUCT

 

Section 4.01                                Obligations For
Development. 

 

(a)                                  General.
THERAVANCE, acting through the TELAVANCIN Product Management Team, shall have
the overall responsibility for, and use Diligent Efforts in, assuring the
performance of all Development activities (x) 
for the Initial Indications to support an application for Marketing
Authorization in the US in accordance with the Detailed Development Plan and
Basic Development Plan, and in particular for the desired label identified in
the Basic Development Plan, and (y) delivery of the First Commercial Sale
Stock.  This shall include, where
applicable, preparing relevant US regulatory filings (as contemplated under ARTICLE 8)
for the Licensed Product for the Initial Indications.  ASTELLAS shall use Diligent Efforts to
advance such Licensed Product through regulatory filings outside the U.S. for
Initial Indications for the Major Market Countries and other Countries, and
through Development for Other Indications. THERAVANCE will maintain such
scientific support for the Licensed Product, including without limitation
microbiology, PK/ADME, and toxicology, as is deemed necessary by the JSC.

 

(b)                                 Development Funding
Responsibilities. THERAVANCE shall be responsible for and pay all
Registration Expenses for Initial Indications to support an NDA submission for
such indications in the US for the Target Label from [*] to the time of FDA
approval of the Initial Indications;  provided, however, that: (i) should
such costs and expenses exceed [*], then to the extent incurred in a manner
consistent with the Basic Development Plan and the Detailed Development Plan
(for post-Effective Date costs and expenses) ASTELLAS shall pay to THERAVANCE
an amount equal to [*];  provided, however, that ASTELLAS shall not
be obligated to pay THERAVANCE more than [*] pursuant to this clause (i) without
ASTELLAS’ prior written consent; and (ii) should such costs and expenses
(incurred in a manner consistent with the Basic Development Plan and Detailed
Development Plan, for post-Effective Date costs and expenses) be less than
[*].  THERAVANCE represents that
Registration Expenses from [*] total approximately [*].  Within thirty (30) days after the Effective
Date, THERAVANCE shall (in conjunction with and as part of providing the
Detailed Development Plan) provide for JSC review a budget for all remaining
Registration Expenses.  Thereafter,
quarterly, THERAVANCE shall provide actual-to-budget Registration Expense
expenditures for the past quarter as well as an updated budget for JSC
review.  All Registration Expenses shall
be reported to the JSC on a quarterly basis and the amounts owed by one Party
to the other, as applicable, determined by the JSC at the appropriate time (in
the case of (ii), no later than thirty (30) days after receipt of the US
Marketing Authorization for the Licensed Product for the Initial
Indications).  Any dispute regarding an
amount owed will be handled by the normal dispute mechanism (see Section 3.06).  Payments will be made within twenty (20)
Business Days of the determination by the JSC. 
ASTELLAS shall be responsible for and pay all costs and expenses for
Development activities beyond the scope of those activities covered by the
Registration Expenses.  To the extent
this would involve covering any costs or expenses incurred by or for THERAVANCE
or its Affiliate, such costs and expenses must be specifically

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

31

 

budgeted for in advance in accordance with Section 3.04 (provided
that in no event shall ASTELLAS be obligated to cover or reimburse anything
other than external out-of-pocket expenses). 
In the event this Agreement terminates for any reason other than
material breach by THERAVANCE or a for-cause termination under Section 14.03,  in either case prior to the first NDA Filing
Milestone set forth in Section 6.02(b), ASTELLAS shall be responsible for
and pay (X) [*] through the date of termination (post-Effective Date, to the
extent incurred consistent with the Basic Development Plan and Detailed
Development Plan), less (Y) [*].

 

(c)                                  Development Cost
Sharing During the Economic Integration Period. Notwithstanding anything to
the contrary herein, during the Economic Integration Period, ASTELLAS shall be
responsible for and shall pay up to a total of [*] in Development expenses to
the extent actually incurred by THERAVANCE to develop Licensed Product for HAP.  ASTELLAS shall pay such amount promptly after
being invoiced in writing by THERAVANCE for such amount, and THERAVANCE shall
provide supporting documentation as to such costs actually incurred if
requested by ASTELLAS.  Amounts paid by
ASTELLAS pursuant to this Section are deemed included in Registration
Expenses for all purposes under this Agreement (excluding only the requirement
that ASTELLAS pay such amount, unlike all other Registration Expenses, which
are paid by THERAVANCE).

 

(d)                                 Reporting.
Quarterly, each Party shall keep the JSC fully and timely advised of ongoing
Development activities by providing the JSC with an update report that includes
information as to every (i) initiation (i.e., first person dosed) of any
study involving the Licensed Product, and (ii) the last person dosed/last
visit in any study relating to the Licensed Product, in each case in the
quarter leading up to the report.  This
report shall be in addition to quarterly reports to the JSC on other subject
matter in connection with its regular meetings.

 

(e)                                  Notification.
The Party responsible to conduct the activity shall immediately notify the
other Party and provide particulars of any halt or substantial delay in any
development program or clinical study, any obstacles in the Licensed Product
reaching the market and any substantial changes anticipated in the sales
potential of the Licensed Product. 
Details shall be provided to the members of the JSC.

 

(f)                                    Diligent Efforts.
THERAVANCE shall use Diligent Efforts for Development activities related to the
Initial Indications and in pursuing regulatory approvals for Initial
Indications in the U.S., in accordance with the terms of ARTICLE 8.  ASTELLAS shall use Diligent Efforts for
Development of Other Indications and in pursuing regulatory approvals for
Initial Indications and Other Indications outside the U.S. and Other
Indications in the U.S., all in accordance with the terms of ARTICLE 8 and
consistent with Section 4.01(a).

 

Section 4.02                                ASTELLAS Assistance.
ASTELLAS will endeavor to provide THERAVANCE, upon THERAVANCE’s request, and at
ASTELLAS’ sole discretion, such assistance as may be reasonably required by
THERAVANCE to achieve its

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

32

 

Development obligations, which such assistance may be provided directly
or through ASTELLAS’ vendors or contractors.

 

Section 4.03                                Transfer Of
THERAVANCE Know-How. Without unreasonable delay following the Effective
Date (and in any event within ninety (90) days thereafter and with respect to
items not yet available to THERAVANCE as of the Effective Date as soon as
available to THERAVANCE), THERAVANCE shall make available and transfer to
ASTELLAS the following THERAVANCE Know-How and Know-How to which it derives
rights under the [*] or the [*] Agreement:

 

(a)                                  a detailed written
description of the process(es) used by THERAVANCE for the manufacture of the
Licensed Product intended for Phase 3 Studies and the full report of the
development of such process;

 

(b)                                 a detailed written
description of the analytical methods and validation reports for the starting
materials and intermediates to be used in the manufacture of the Licensed
Product;

 

(c)                                  the detailed written
description of the test methods used by THERAVANCE for validating the
commercial process for the API Compound and Licensed Product manufactured, and
the full report of the validation done thereon by THERAVANCE (and/or its
contractors);

 

(d)                                 to the extent
available to THERAVANCE at the Effective Date (and in any event promptly after
it is available to THERAVANCE), reference and analytical standard compounds to
be used as reference material in the conduct of comparative analyses in
relation to the manufacturing process with the API Compound. It is explicitly
understood that no such reference or analytical standard compound may be used
for any other purpose than the purpose now stated; and

 

(e)                                  a description of all
THERAVANCE Know-How relating to Studies conducted by THERAVANCE using the API
Compound and the Licensed Product prior to the Effective Date.

 

In addition, in the first [*] months after the Effective Date,
THERAVANCE shall provide the advice and assistance reasonably required to
expeditiously transfer the THERAVANCE Know-How (including without limitation
the ability for ASTELLAS to practice, itself or through an Affiliate or
Third-Party contractor), the then-current processes to make API Compound and
finished Licensed Product (i.e., the finished form that is in First Commercial
Sale Stock) to ASTELLAS, to include updating information described in
subsections (a) through (e) above as it becomes available, at no
charge to ASTELLAS.

 

Following the aforementioned [*]-month period, upon reasonable request
of ASTELLAS from time to time, THERAVANCE shall make appropriate personnel
(including without limitation from THERAVANCE’s contractors) available, for
consultation, updates and assistance regarding THERAVANCE Know-How.  [*] of their respective [*].

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

33

 

THERAVANCE’s obligations under this Section 4.03 extend to
providing ASTELLAS with the full right to access (including without limitation
all reasonably required letters of access) THERAVANCE’s current (as of the
Signing Date) Licensed Product-related DMF and any and all updates thereto
during the term of this Agreement.

 

Section 4.04                                Certain Activities;
Non-delegation. After the Signing Date, with regard to new contracts with
Third Parties respecting manufacturing, supply, formulation and process
development and material changes to existing contracts with Third Parties
respecting manufacturing, supply, formulation and process development — in all
cases to the extent that it affects THERAVANCE Compound or Licensed Product —
THERAVANCE shall not execute such new contract or such material change to an
existing contract without ASTELLAS’ prior written consent, which will not be
withheld unreasonably.  THERAVANCE shall
provide ASTELLAS copies of all such proposed contracts and amendments for
advance review and approval prior to execution. THERAVANCE shall not
subcontract or otherwise delegate its duties or obligations with respect to
THERAVANCE Compound and Licensed Product manufacture, supply, formulation and
process development other than pursuant to a written contract.  THERAVANCE shall not subcontract or otherwise
delegate its duties or obligations (nor assign its rights) with respect to
TELAVANCIN Product Management Team activities (i.e., THERAVANCE’s members on
this team must be THERAVANCE employees).

 

ARTICLE 5

 

COMMERCIALIZATION

 

Section 5.01                                Medical Marketing
Plans.

 

(a)                                  General. The
TELAVANCIN Product Management Team shall be responsible for preparing and the
JSC shall be responsible for reviewing and approving a high-level
Territory-wide Medical Marketing Plan for the Licensed Product (“Medical
Marketing Plan”).  The Medical Marketing
Plan shall define the goals and objectives for Commercializing the Licensed
Product in the Territory in the pertinent Calendar Year consistent with the
Basic Development Plan and — with respect to the US — the Basic Commercial
Plan.  In addition, the Parties recognize
the value of coordinating Licensed Product promotion within the context of
ASTELLAS’ anti-infectives franchise (and that THERAVANCE has chosen ASTELLAS as
THERAVANCE’s commercial collaborator for Licensed Product in part based on the
value that ASTELLAS brings through its anti-infectives franchise leadership
position).  ASTELLAS is entitled to [*]
with THERAVANCE each year [*] for the year, on a timeline that is consistent
with ASTELLAS’ internal process for annual planning of this sort.  If THERAVANCE (or its Affiliate) has in
late-stage clinical development (phase 3a or beyond) or commercializes a
product that competes with any other products within ASTELLAS’ anti-infectives
franchise at any time, then ASTELLAS may choose not to provide THERAVANCE with
[*], and to avoid any doubt will not be required to provide THERAVANCE with
information regarding such other ASTELLAS product(s).

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

34

 

(b)                                 Contents Of Each
Medical Marketing Plan. The initial Medical Marketing Plan for the Licensed
Product shall be prepared within six (6) months following the Effective
Date and shall be a rolling, three (3) year plan, updated annually, and
shall contain at a minimum and as appropriate to then-current knowledge:

 

(i)                                     Results of market
research and strategy, including market size, market dynamics, market growth,
customer segmentation, customer targeting, competitive analysis and global
Licensed Product platform positioning;

 

(ii)                                  [*]

 

(iii)                               ASTELLAS’ pricing
strategy for Licensed Product;

 

(iv)                              Annual sales forecasts
for Major Market Countries;

 

(v)                                 For each Major Market
Country (as available and to the extent applicable): sales plans which will
include the target number of sales representatives, detail strategy, target
number of details, and targeted physicians by tier;

 

(vi)                              Core, global advertising
and promotion programs and strategies, including but not limited to publication
plans, media plans, key opinion leader development, symposia and speaker
programs; and

 

(vii)                           [*] studies to be conducted.

 

Section 5.02                                Obligations For
Commercialization. Both Parties shall use Diligent Efforts to carry out the
responsibilities assigned to them hereunder to Commercialize the Licensed
Product.

 

Section 5.03                                Commercialization.

 

(a)                                  ASTELLAS Responsibility.
Subject to the Plans and the obligations and responsibilities of the TELAVANCIN
Product Management Team and the JSC specifically set forth in ARTICLE 3,
ASTELLAS shall have responsibility for Commercialization of Licensed
Product.  Other than as provided in Section 5.03(c),
ASTELLAS shall be responsible for and pay all expenses associated with the
Commercialization of Licensed Product for sale or distribution including
without limitation all financial and administrative support.  For the avoidance of doubt, ASTELLAS shall
have no obligation hereunder to pay for or reimburse any expenses incurred by
or for THERAVANCE or its Affiliates in conducting any Commercialization
activities unless approved by ASTELLAS in advance in writing under Section 5.03(c) (if
written approval is required under such subsection (c)), except for the
medical marketing services fee to the extent provided in Section 3.03(d),
and expenses under the written approval threshold to the extent provided to be
reimbursed under Section 5.03(c).

 

(i)                                     ASTELLAS shall
have the sole right and responsibility to distribute, sell, record sales and
collect payments for Licensed Product.

 

(ii)                                  ASTELLAS shall have
the sole right and responsibility for establishing and modifying the terms and
conditions with respect to the sale of Licensed

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

35

 

Product, including without limitation the sole right and responsibility
for deciding all Contracting Issues.

 

(iii)                               ASTELLAS will be
responsible for supply, storage, order receipt, order fulfillment, shipping and
invoicing of Licensed Product, including without limitation the sole right and
responsibility for deciding all Distribution Issues.

 

(iv)                              Following Marketing
Authorization in each Country of the Territory ASTELLAS shall use Diligent
Efforts to launch the Licensed Product in such Country.

 

(v)                                 Regarding any Country
of the Territory where the Licensed Product is launched, ASTELLAS shall
promptly inform THERAVANCE in writing of the occurrence of such launch.

 

(vi)                              ASTELLAS shall, in each
Country of the Territory where the Licensed Product has been launched, at its
own expense, or the expense of its Affiliates, sublicensees or distributors,
use Diligent Efforts to Commercialize the Licensed Product.

 

(vii)                           In the United States,
ASTELLAS shall be responsible for hiring, organizing and maintaining a field
sales force of appropriate number and training to promote sales of the Licensed
Product consistent with Diligent Efforts and shall be responsible for deciding
all other Deployment Issues.

 

(viii)                        [*] that is consistent with the
[*].

 

(ix)                                [*] using the [*] that
are [*].

 

(x)                                   ASTELLAS shall be
responsible for all activities in connection with any line extensions of the
Licensed Product and Other Indications.

 

(b)                                 Semi-Annual Reports.
ASTELLAS shall provide the JSC reports semi-annually. Such reports shall set
forth in summary form the results of ASTELLAS’ Commercialization activities
performed during such semi-annual period in the Major Market Countries,
including to the extent Diligent Efforts so warrant, a proposed development
plan for Other Indications for review.

 

(c)                                  Commercialization
Expense Financial Controls. It is the Parties’ intent to incur and pay for
Commercialization expenses in a manner consistent with the Medical Marketing
Plan and the approved budget and consistent with ASTELLAS’ internal financial
controls.  THERAVANCE’s members of the
TELAVANCIN Product Management Team shall not be empowered to and shall not
commit to any individual Commercialization expense of more than [*] without the
prior written approval of ASTELLAS, shall only be empowered to commit (absent
ASTELLAS’ prior written approval) to expenses below such threshold to the
extent consistent with the annual budget and Medical Marketing Plan, and after
the time period with respect to which the medical marketing services fee is due
under Section 3.03(d) shall not be empowered to and shall not commit
to any Commercialization expenses.  If
the TELAVANCIN Product

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

36

 

Management Team decides that a particular expense will be incurred,
then responsibility for paying for such expense shall rest with ASTELLAS
(subject to the limits imposed by the annual budgets).

 

Other than paying the annual medical marketing services fee through [*]
years after the first Marketing Authorization in the US as provided for in Section 3.03(d),
ASTELLAS will not be responsible to reimburse Commercialization expenses
incurred by THERAVANCE, without ASTELLAS’ prior written consent.

 

(d)                                 Marketing Cost
Sharing During the Economic Integration Period. During the Economic
Integration Period, THERAVANCE shall be responsible for and shall pay up to a total
of [*] in marketing expenses to the extent actually incurred by ASTELLAS to
market Licensed Product for its first approved indication (anticipated to be
cSSSI).  THERAVANCE shall pay such amount
promptly after being invoiced in writing by ASTELLAS for such amount, and
ASTELLAS shall provide supporting documentation as to such costs actually
incurred if requested by THERAVANCE.  To
avoid any doubt, examples of marketing expenses that count towards such [*]
include without limitation sales force salaries and Promotional/MedEd Spending.

 

Section 5.04                                Collaborative
Working Meetings. Except for information that ASTELLAS’ internal or
external counsel, HR department, or internal or external compliance or
regulatory advisors require be kept confidential within ASTELLAS and except to
the extent required by Law, planning information regarding [*] shall be shared
openly with the TELAVANCIN Product Management Team (subject to the protections
of ARTICLE 10 (Confidentiality)). 
TELAVANCIN Product Management Team meetings shall include discussions of
[*] (excluding, again to avoid doubt, matters required by internal or external
counsel, HR or internal or external compliance or regulatory advisors to be
kept confidential).

 

Section 5.05                                Compliance. Each
Party shall in its activities hereunder comply with all applicable Laws,
industry codes and industry guidelines. 
Each member of the TELAVANCIN Product Management Team shall be trained
on ASTELLAS’ compliance policies at least annually and shall comply with such
policies (including without limitation providing an annual certification as to
having been trained on such policies). 
Furthermore, nothing in this Agreement shall be deemed to require
ASTELLAS to act in a manner not in accordance with its own internal regulatory
compliance guidelines.  Nothing in this
Agreement shall be deemed to require THERAVANCE to act in a manner not in
accordance with its own internal regulatory compliance guidelines; provided, however, that to the extent
ASTELLAS’ compliance guidelines impose a higher or stricter standard, then in
its activities under this Agreement THERAVANCE must adhere to such higher or
stricter standard.

 

Section 5.06                                Respective Employees’
Status Not Changed. THERAVANCE’s employees performing hereunder shall not
obtain the status of or otherwise be considered ASTELLAS employees by virtue of
their activities under this Agreement or work in conjunction with
ASTELLAS.  They shall not hold themselves
out as, nor give any person any reason to believe that they are, employees of ASTELLAS.  They shall not be

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

37

 

eligible for any ASTELLAS employee benefits (including without
limitation fringe benefits, equity compensation and retirement benefits).  All payroll and employment taxes, insurance,
worker’s compensation and benefits with respect to such persons shall be the
sole responsibility of THERAVANCE.  If
any THERAVANCE employee performing hereunder (or his or her heir or estate)
makes any Claim relating to an alleged employment relationship with ASTELLAS,
relating to ASTELLAS employee benefits, or in relation to or resulting from
such person’s involvement in activities covered by this Agreement (each a
“THERAVANCE Employee Claim”), then such THERAVANCE Employee Claim shall be
subject to THERAVANCE’s Indemnification obligation pursuant to Section 12.02.

 

Similarly, ASTELLAS’ employees performing hereunder shall not obtain
the status of or otherwise be considered THERAVANCE employees by virtue of
their activities under this Agreement or work in conjunction with
THERAVANCE.  They shall not hold
themselves out as, nor give any person any reason to believe that they are,
employees of THERAVANCE.  They shall not
be eligible for any THERAVANCE employee benefits (including without limitation
fringe benefits, equity compensation and retirement benefits).  All payroll and employment taxes, insurance,
worker’s compensation and benefits with respect to such persons shall be the
sole responsibility of ASTELLAS.  If any
ASTELLAS employee performing hereunder (or his or her heir or estate) makes any
Claim relating to an alleged employment relationship with THERAVANCE, relating
to THERAVANCE employee benefits, or in relation to or resulting from such
person’s involvement in activities covered by this Agreement (each an “ASTELLAS
Employee Claim”), then such ASTELLAS Employee Claim shall be subject to
ASTELLAS’ Indemnification obligation pursuant to Section 12.01.

 

ARTICLE 6

 

FINANCIAL
PROVISIONS

 

Section 6.01                                Signing Payment.
In partial consideration for the acquisition of the license rights in Section 2.01
under the THERAVANCE IP by ASTELLAS, ASTELLAS shall within three (3) Business
Days after the Effective Date, pay to THERAVANCE a non-creditable,
non-refundable amount of Sixty Million United States Dollars (U.S.
$60,000,000.00); and in consideration for the acquisition of the Opt-In Right
in Section 2.02 under this Agreement, ASTELLAS shall within three (3) Business
Days after the Effective Date, pay to THERAVANCE a non-creditable,
non-refundable amount of Five Million United States Dollars (U.S.
$5,000,000.00).

 

Section 6.02                                Licensing Milestone
Payments.

 

(a)                                  General. In
further consideration of the license rights granted herein and the covenants
and agreements contained herein, ASTELLAS shall also pay to THERAVANCE the
non-creditable (except as provided in the last sentence of Section 4.01(b)),
non-refundable payments set forth below for each such Milestone referred to
therein (each, a “Milestone”).

 

38

 

(b)                                 Licensing Milestone
Payments To THERAVANCE.  ASTELLAS
shall make the following one-time licensing Milestone payments to THERAVANCE
following the achievement of the indicated Milestone for the Licensed Product
(with payment due on the timing set forth in subsection (c)).

 

	
  Milestone

  	
   

  	
  Amount

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
  [*]

  	
   

  	
  [*]

  
	
   

  	
   

  	
   

  
	
  Total possible Milestones

  	
   

  	
  U.S. $156
  Million

  

 

(c)                                  Notification And
Payment.  In the event a Party
achieves a Milestone, it shall promptly, but in no event more than ten (10) Business
Days after the achievement of each such Milestone, notify the other Party in
writing of the achievement of same. For all Milestones achieved, ASTELLAS shall
promptly (no more than thirty (30) days after notification of the achievement
of each such Milestone) remit payment to THERAVANCE for such Milestone.

 

(d)                                 One-Time-Only
Milestones.  Each Milestone shall be
payable hereunder a maximum of one (1) time under this Agreement,
regardless of how many times in addition to one (1) time the corresponding
milestone event is achieved with respect to one (1) or more Licensed
Products.

 

Section 6.03                                Payment Of Royalties
On Net Sales Of Licensed Product.

 

(a)                                  Royalty Rates.  Within thirty (30) days after the end of each
Calendar Quarter (the “Payment Period”), ASTELLAS shall pay THERAVANCE royalty

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

39

 

payments based on Net Sales in the Territory in such Payment Period
during the Term-Basic as follows:

 

	
  On total
  Calendar Year-to-date Net Sales up to and including [*]

  	
   

  	
  [*]

  
	
  On total
  Calendar Year-to-date Net Sales greater than [*] and up to and including [*]

  	
   

  	
  [*]

  
	
  On total
  Calendar Year-to-date Net Sales greater than [*]

  	
   

  	
  [*]

  

 

For example, where total Calendar Year-to-date Net Sales in all
Countries in the Territory totals to [*] (for example, [*] in each of [*]
Countries), the royalties are calculated as follows:  The first [*] is subject to the [*] rate,
yielding [*] in royalties on that portion of the Calendar Year’s Net
Sales.  The next [*] is subject to the
[*] rate, yielding [*] in royalties on that portion of the Calendar Year’s Net
Sales.  The last [*] is subject to the
[*] rate, yielding [*] on that portion of the Calendar Year’s Net Sales.  The total royalty for the year calculated
under this Section 6.03(a) would be [*] plus [*] plus [*] for a grand
total for the year of [*].  (To avoid
doubt, depending upon the facts and circumstances, this total may be subject to
adjustment under Sections 6.03(c)-(f).)

 

The Parties agree that the [*] set forth in [*] under this Agreement.

 

(b)                                 Payment Calculation.  The royalties payable under this Section 6.03
shall be calculated on a Country-by-Country basis from the date of First
Commercial Sale of the Licensed Product in a particular Country until the end
of the Term-Total in that Country, with the rates of Section 6.03(a) (as
adjusted by Sections 6.03(c)-(f)) applying during the Term-Basic, and the rate
of Section 6.03(g) (as adjusted by Section 6.03(e) with
respect to Combination Products) applying during the Term-Additional.

 

(c)                                  Offsets.

 

(i)                                     Financials.  Subject to Section 6.03(c)(ii) and Section 6.03(c)(iii) below,
if ASTELLAS (or an Affiliate or sublicensee hereunder) pays any Third Party a
royalty on Licensed Products (however calculated) under an intellectual
property license that is necessary or reasonably required to avoid claims of
infringement or misappropriation that are reasonably likely to succeed (or
settlement of an intellectual property dispute under intellectual property that
is necessary or reasonably required on the foregoing standard), then ASTELLAS
shall be entitled to reduce the royalty to THERAVANCE hereunder by [*]; provided, however, that the royalty to
THERAVANCE hereunder shall not be reduced in any Payment Period by operation of
this offset to less than [*] for such Payment Period if such offset did not
apply.  ASTELLAS may carry forward any unused
offset (unused due to the [*]) to apply in future Payment Periods.  Notwithstanding the foregoing, payments to
[*] in accordance with Section 9.06 do not qualify for the offset of this Section 6.03(c)(i).  The offset provided for in Section 6.03(c) shall
operate on a Country-by-Country basis, and ASTELLAS shall be reasonable in its
allocation between Countries where judgment is required.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

40

 

(ii)                                  Discussions.  It is anticipated that the Parties will
discuss all potentially desirable intellectual property licenses through the
mechanism provided in Section 13.07. 
All intellectual property licenses that the Parties agree should be
taken through such discussions shall automatically qualify for the offset
provided for in Section 6.03(c)(i). 
With respect to all other intellectual property licenses from Third
Parties, if THERAVANCE disagrees whether the license is necessary or reasonably
required to avoid claims of infringement or misappropriation that are
reasonably likely to succeed (the “Issue of Necessity”) then THERAVANCE may
refer the Issue of Necessity for resolution under Section 13.01(c).  If the independent patent counsel under such Section determines
the Issue of Necessity in favor of the license, then royalties under such
license shall qualify for the offset of Section 6.03(c)(i).  If such patent counsel determines the Issue
of Necessity against taking the license, then while ASTELLAS may still take
(whether before or after the independent patent counsel’s decision) and
maintain the license at its sole expense, royalties under such license shall
not qualify for the offset of Section 6.03(c)(i).  Intellectual property settlements involving
an in-license over which the Parties disagree shall be handled in the same
manner as provided in this Section 6.03(c)(ii).

 

(iii)                               Exception.  The offset provided for in Section 6.03(c)(i) is
intended to ensure that if additional Third-Party intellectual property is
needed to permit ASTELLAS to enjoy its rights and benefits under this Agreement
to Develop and Commercialize the Licensed Product in the form in which it
receives NDA Approval using a manufacturing process delivered by THERAVANCE
that is consistent with that used for the Registration Batches and that
achieves the Target Cost of Goods (and any updates or modifications required to
respond to any legitimate safety issues or Regulatory Authority requirements
that may emerge, or required to achieve or maintain such Target Cost of Goods,
which such updates or modifications are referred to herein as “Required
Changes”), then THERAVANCE shares the costs of obtaining such Third-Party
intellectual property through the royalty offset and ASTELLAS is not subject to
royalty stacking.  As used herein,
“Target Cost of Goods” means a cost of goods sold for Licensed Product of [*],
based on a [*] patient receiving a [*]. 
However, the offset is not intended to cover the situation where
ASTELLAS unilaterally decides to in-license Third-Party intellectual property
that covers Licensed Product or activities hereunder only because of a change
ASTELLAS has alone (not through a JSC decision) decided to make in the Licensed
Product or manufacturing process that is not a Required Change (“Discretionary,
Third-Party IP”).  Accordingly, if
ASTELLAS without reaching consensus with THERAVANCE through the JSC decides to
in-license any Discretionary, Third Party IP, the royalty payable in respect of
the license under the Discretionary, Third-Party IP shall not qualify for the
offset of Section 6.03(c)(i).

 

(iv)                              The offset of Section 6.03(c)(i) shall
not be deemed or read to limit in any way THERAVANCE’s representations and
warranties in ARTICLE 11.

 

(d)                                 Generic Competition.  At any time during the Term-Basic, if a
competitive product is launched or sold by a Third Party that contains the
THERAVANCE Compound as its active ingredient in any Country where ASTELLAS
markets the Licensed Product, and if the Net Sales hereunder of the Licensed
Product in that Country

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

41

 

decline by [*] or more in such Country relative to the same time period
in the prior calendar year (e.g., with Q3 of year 2 being measured as against
Q3 of year 1), then the royalty rates set forth in Section 6.03(a) shall
be reduced by [*]; provided, however,
that (i) the total reduction in the royalty rate shall in no case be more
than [*]of the rate set forth in 6.03(a) and (ii) any subsequent
increase in Net Sales in such Country relative to the same time period in the
prior calendar year shall cause the royalty rates to be increased by a
percentage amount equal to [*] (the comparison here, too, being measured
relative to the corresponding period of the prior year, e.g. with Q3 of year 2
being measured as against Q3 of year 1), provided,
however, that the increase will [*].

 

Because the Net Sales tiers of Section 6.03(a) are based on
worldwide Net Sales, but the adjustment of this Section 6.03(d) applies
to Net Sales on a Country-by-Country basis, the following assumption will be
applied to allocate Net Sales in the individual Country(ies) with respect to
which ASTELLAS is entitled to a reduction under this Section 6.03(d) being
allocated between the sales tiers as follows: 
Net Sales in each Country in a given Calendar Year shall be apportioned
to the royalty tiers in Section 6.03(a) in the same proportion as
total Net Sales worldwide for the year fall into such royalty tiers, regardless
of in which Countries the earlier Net Sales in the Calendar Year were
made.  For example, on the facts recited
in the example set forth in Section 6.03(a), if ASTELLAS is entitled to a
generic competition royalty reduction for Net Sales in a particular Country,
Net Sales in that Country will be deemed to fall [*].

 

As an example of how to calculate the generic competition royalty
reduction, if in Q1 of 2011 in the US ASTELLAS had [*] in Net Sales, in Q4 of
2011 a generic THERAVANCE Compound product entered the US market, and in Q1 of
2012 ASTELLAS’ Net Sales in the US were [*], the reduction would be calculated
as follows:  [*], and [*] is [*] of
[*].  [*], therefore the generic
competition reduction of this subsection (d) is applicable.  [*]. 
For Net Sales in the US falling in the lowest royalty tier, a rate of
[*], applies; in the next royalty tier, a rate of [*], applies; and in the top
tier a rate of [*], applies.  Which tier
to assign the [*] in sales to shall be made in accordance with the paragraph
immediately preceding this one (on this example, the tier does not matter in
the sense that it does not affect the total royalty calculated on Net Sales in
the Country, however, in circumstances where the drop in Net Sales is greater
so that the [*] on the 6.03(a) rates applies, assignment to tiers could
make a difference in the royalty calculated).

 

(e)                                  Combination
Products.  If any Licensed Product
contains any active pharmaceutical ingredient (i.e., a chemical entity
performing an identifiable therapeutic or prophylactic function) in addition to
the THERAVANCE Compound active pharmaceutical ingredient (the THERAVANCE
Compound component the “Licensed Product Component,” and the combination, a
“Combination Product”), then the royalty applicable to sales of the Combination
Product during the applicable Term-Basic or Term-Additional shall be the
royalty calculated by multiplying the appropriate rate set forth in Section 6.03(a) by
a pro rata share of the Net Sales of the Combination Product determined on the
basis of the Licensed Product Component’s contribution to the fair market value
of the Combination Product.  Fair market
values of the components of a Combination Product shall be determined, to the
extent possible, by the list prices of the

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

42

 

active components when sold separately. 
For the avoidance of doubt, the Licensed Product in the form in which it
exists as of the Signing Date is not a Combination Product, and any other form
of it that incorporates a [*] shall not be considered a Combination Product
solely on the basis of incorporating a [*].

 

(f)                                    Know-How Royalty
Term Rates.  The rates set forth in Section 6.03(a) shall
be reduced to [*] of the level otherwise calculated in accordance with Section 6.03(a)-(d) with
respect to Net Sales during the Know-How Royalty Term in each Country.

 

(g)                                 Term-Additional [*].  If ASTELLAS has taken a non-exclusive license
under Section 2.08(d)(ii) to any THERAVANCE Patent, within thirty
(30) days after the end of each Payment Period during the Term-Additional,
ASTELLAS shall pay THERAVANCE [*].  Once
no further Valid Claim for a Patent not listed in Exhibit A (whether as of
the Signing Date or through an update pursuant to Section 2.08(d) or
due to an ASTELLAS election under Section 2.08(d)(iii)) is in force in the
particular Country (i.e., when the Term-Additional expires in the particular
Country), no [*] shall be due hereunder.

 

Section 6.04                                Net Sales Report.  Within thirty (30) Business Days after the
end of each Payment Period ASTELLAS shall submit to THERAVANCE a written report
setting forth Net Sales in the Territory on a Country-by-Country basis during
such Payment Period, total royalty payments due THERAVANCE, and relevant market
share data (each a “Net Sales Report”). 
With respect to Major Market Countries, the figure in this report shall
be actual Net Sales in such Countries. 
With respect to other Countries, the figure in this report may be an
estimate, and ASTELLAS shall provide a further Net Sales Report and true-up
payment (if any further payment is due) with respect to Net Sales in such
non-Major Market Countries within sixty (60) Business Days after the end of the
Payment Period (if on the other hand ASTELLAS has overpaid then it may credit
the amount of the overpayment against the next payment due hereunder or if no
further payments are due hereunder THERAVANCE shall promptly upon written invoice
from ASTELLAS refund the overpayment).

 

Section 6.05                                U.S. GAAP.  All defined and undefined financial terms and
standards used in this Agreement for sales or activities shall be governed by
and determined in accordance with United States generally accepted accounting
principles, consistently applied.

 

Section 6.06                                Currencies.  Monetary conversion from the currency of a
foreign country in which Licensed Product is sold into US Dollars shall be
calculated in accordance with either (a) the methodology referred to in
ASTELLAS’ then current corporate finance reporting policy (or its successor
policy that applies throughout the organization) or (b) as otherwise
mutually agreed by the Parties.

 

Section 6.07                                Manner Of Payments.  All sums due to THERAVANCE under this ARTICLE 6
shall be payable [*] in United States Dollars by bank wire transfer in
immediately available funds to such US bank account(s) as THERAVANCE shall

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

43

 

designate.  Such payment shall
not withhold any tax, except as may be required by applicable law (in which
case the provisions of Section 6.09 shall apply).  [*] is required to [*] then the [*]shall be
[*].  ASTELLAS shall notify THERAVANCE as
to the date and amount of any such wire transfer to THERAVANCE at least five (5) Business
Days prior to such transfer.  ASTELLAS
shall always be entitled to make any and all payments due hereunder to a US
entity, regardless of any assignment of this Agreement by THERAVANCE to a
non-US entity or other circumstance.

 

Section 6.08                                Interest On Late
Payments.  If ASTELLAS shall fail to
make a timely payment pursuant to this ARTICLE 6, any such payment that is
not paid on or before the date such payment is due under this Agreement shall
bear interest, to the extent permitted by applicable law, at the average
one-month London Inter-Bank Offering Rate (LIBOR) plus [*] for the United
States Dollar as reported from time to time in The Wall Street Journal,
effective for the first date on which payment was delinquent and calculated on
the number of days such payment is overdue or, if such rate is not regularly
published, as published in such source as the JSC agrees.

 

Section 6.09                                Tax.  ASTELLAS shall be responsible for all taxes,
levies and other duties (“Taxes”) on Licensed Product manufacture or sale
arising out of this Agreement other than Taxes attributable to THERAVANCE
income.  If ASTELLAS is required by
applicable law (after giving effect to any applicable tax treaty) to deduct or
withhold any Taxes from or in respect of any amount payable to THERAVANCE under
this Agreement, [*] ASTELLAS shall make the necessary witholding or deduction
of applicable Taxes and pay the relevant taxation authority the minimum amount
necessary to comply with the applicable law, [*] the corresponding [*] so that
[*] by applicable law, to [*] as provided above, THERAVANCE shall [*] and, at
the time of such [*] hereunder whereby ASTELLAS [*] under this Agreement.  Both Parties [*] under applicable law [*]
hereunder. 

 

Section 6.10                                Financial Records;
Audits.  ASTELLAS shall keep, and
shall cause its Affiliates and sublicensees to keep, such accurate and complete
records of Net Sales as are necessary to determine the amounts due to
THERAVANCE under this Agreement and such records shall be retained by ASTELLAS
or any of its Affiliates or sublicensees (in such capacity, the “Recording
Party”) for at least the three Calendar Years after the period to which the Net
Sales relate. During normal business hours and with reasonable advance notice
to the Recording Party, such records shall be made available at a single
location for inspection, review and audit, at the request of THERAVANCE, by an
independent certified public accountant, or the local equivalent, appointed and
paid by THERAVANCE and reasonably acceptable to the Recording Party for the
sole purpose of verifying the accuracy of the Recording Party’s accounting
reports and payments made or to be made pursuant to this Agreement; provided,
however that such audits may not be performed by THERAVANCE more than once per
Calendar Year. Such accountants shall be instructed not to reveal to THERAVANCE
the details of its review, except for (i) such information as is required
to be disclosed under this Agreement and (ii) such information presented
in a summary fashion as is necessary to report the accountants’ conclusions to
THERAVANCE, and all such information shall be deemed Confidential Information
of the Recording Party; provided, however, that in any event such

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

44

 

information may be presented to THERAVANCE in a summary fashion as is
necessary to report the accountants’ conclusions. All external expenses
incurred in connection with performing any such audit shall be paid by
THERAVANCE unless the audit discloses at least a [*] shortfall, in which case
the Recording Party will bear the full expense of the audit for such Calendar
Year. THERAVANCE will be entitled to recover any shortfall in payments due to
it as determined by such audit, plus interest thereon calculated in accordance
with Section 6.08, or alternatively shall have the right to offset and
deduct any such shortfall in payments due to it against payments THERAVANCE is otherwise
required to make to the Reporting Party under this Agreement.  ASTELLAS may offset any overpayment against
any other payment(s) due THERAVANCE hereunder or require THERAVANCE to refund
the overpayment within 30 days.  The
documents from which were calculated the sums due under this ARTICLE 6
shall be retained by the relevant Party during the Term-Total plus [*].

 

The foregoing in this Section 6.10 shall apply mutatis mutandis regarding THERAVANCE’s
and its Affiliates’ recordkeeping and ASTELLAS’ right to review and audit
records of expenses for which THERAVANCE may seek reimbursement under this
Agreement, including without limitation Registration Expenses.

 

ARTICLE 7

 

PROMOTIONAL
MATERIALS AND SAMPLES

 

Section 7.01                                Review Of
Promotional Materials.  Subject to
applicable Law, the Parties, acting under the direction of the JSC, will
jointly, through consultation and with the assistance of each other, create a
mechanism (which must be consistent with the remainder of this Section 7.01)
to review and approve the core Promotional Materials.  The relevant legal, medical, marketing and
regulatory personnel of each Party shall have the opportunity to review and
comment on all such core Promotional Materials prior to use and such comments
shall be considered in the review and approval of such core Promotional
Materials.

 

The specific mechanism and procedure for review shall be as follows:

 

All proposed core Promotional Materials, academic, scientific and
medical publications and public presentations relating to a Licensed Product or
any research or Development activities under this Agreement will be submitted
to a Promotional Review Committee (hereinafter “PRC”), for review and approval
in connection with preservation of patentability and trade secrets and/or to
determine whether Confidential Information should be modified or deleted from
the proposed publication or public presentation. The PRC will operate in the
same manner and on the same timeframes as ASTELLAS’ PRCs for other products
within ASTELLAS’ portfolio.  [*] from
each of its [*] all materials [*] from one person [*].  The Parties will each comply with standard
academic practice regarding authorship of scientific publications and
recognition of contribution of other parties in any publications relating to
the Licensed Product or any Development activities under this Agreement.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

45

 

Section 7.02                                Markings Of
Packaging And Promotional Materials. 
Except where prohibited by applicable Law, all packaging, package
inserts and outserts, sample labels, labeling and Promotional Materials shall
each contain reference to THERAVANCE indicating the contribution of the license
from THERAVANCE for the Licensed Product (for example, by stating “Licensed
from THERAVANCE, Inc.”).  Subject to
the foregoing, and except where prohibited by applicable Law, the THERAVANCE
Housemark and the ASTELLAS Housemark shall both be given exposure and
prominence on the materials referred to in this Section 7.02.

 

Section 7.03                                Statements
Consistent With Labeling.  ASTELLAS
shall ensure that its sales representatives detail the Licensed Product in the
US in a manner consistent with the requirements of the Federal Food, Drug and
Cosmetic Act of the United States, as amended, including, but not limited to,
the regulations in 21 C.F.R. § 202 in the United States, and detail the
Licensed Product in OUS in a manner consistent with the requirements of other
similar Laws in each jurisdiction as applicable.

 

ARTICLE 8

 

REGULATORY
MATTERS

 

Section 8.01                                OUS Governmental
Authorities.  ASTELLAS shall be
primarily responsible for communicating with OUS Governmental Authorities but
will give THERAVANCE the opportunity to have a representative present at any
material meeting or material communication with an OUS Major Market
Governmental Authority (with no less than reasonable (under the circumstances)
advance notice of the meeting).  ASTELLAS
will keep THERAVANCE informed of any significant issue or issues with any OUS
Governmental Authority in a timely manner.

 

(a)                                  OUS Filings.  ASTELLAS shall be solely responsible for
filing Marketing Authorization applications for Licensed Product OUS and will
use Diligent Efforts in seeking appropriate approvals for Licensed Product in
those Countries, and shall be responsible for maintaining such Marketing
Authorization(s).  Such regulatory
documents for each filing shall be centralized and held at the offices of
ASTELLAS. THERAVANCE shall provide such reasonable assistance as may be
required by ASTELLAS where cooperation between the Parties is, or may be,
necessary to enable ASTELLAS to fulfill its responsibilities hereunder.  This assistance shall include (without
limitation):  providing ASTELLAS with
full access to all data from Licensed Product and THERAVANCE Compound Studies,
and full rights of reference and access to any and all Licensed Product and
THERAVANCE Compound regulatory filings held by THERAVANCE (and/or its
Affiliates).  ASTELLAS shall solicit
THERAVANCE’S advice and review of all material regulatory submissions, material
correspondence and material intended discussions with OUS Major Market Country
regulatory authorities, taking into account and incorporating THERAVANCE’S
reasonable comments and recommendations, and both Parties shall have the
opportunity to participate in correspondence and discussions with such
authorities regarding Licensed Products and THERAVANCE Compounds, including but
not limited to discussion regarding labeling. Copies of the submissions and
correspondence referred to in this Section 8.01(a) shall be

 

46

 

made available to THERAVANCE upon its request.  ASTELLAS shall be fully responsible for
bearing all expenses associated with undertaking and completing said OUS
registration activities, including but not limited to the expenses of preparing
and prosecuting applications for such Marketing Authorizations and fees payable
to Governmental Authorities in obtaining and maintaining same.

 

(b)                                 Exchange Of Drug
Safety Information.  ASTELLAS shall
be responsible for receipt, recording, investigating, summarizing, notifying,
reporting and reviewing all OUS Adverse Drug Experiences in accordance with
applicable Laws and shall require that its Affiliates (i) adhere to all
requirements of applicable Laws which relate to the reporting and investigation
of OUS Adverse Drug Experiences, and (ii) keep THERAVANCE informed on a
timely basis respecting same.  ASTELLAS
shall also keep the JSC apprised on a regular basis of such drug safety
matters.

 

Section 8.02                                United States
Governmental Authorities.  Until the
Licensed Product NDA is transferred to ASTELLAS in accordance with Section 8.02(a),
THERAVANCE shall be primarily responsible for communicating with the FDA
regarding the Initial Indications but will give ASTELLAS the opportunity to
have a representative present at any meeting with or material conversation with
the FDA (with no less than reasonable (under the circumstances) advance notice
of the meeting and in any event no less than twenty-four (24) hours
notice).  THERAVANCE will keep ASTELLAS
informed of any significant issue or issues with the FDA in a timely
manner.  This introductory paragraph to Section 8.02
shall apply mutatis mutandis (i.e.
vice versa) to ASTELLAS once such
NDA is transferred to ASTELLAS.

 

(a)                                  Filings In The
United States.  In the United States,
THERAVANCE shall also be solely responsible for filing Marketing Authorization
applications for the Initial Indications for the Licensed Product and will use
Diligent Efforts in seeking appropriate Marketing Authorizations for the
Initial Indications for the Licensed Product in the United States, and, until
transfer of same to ASTELLAS, as described below, THERAVANCE shall be
responsible for maintaining such Marketing Authorizations. Promptly following
receipt of Marketing Authorization in the United States for an indication within
the second-to-be-approved of the Initial Indications, and in any event no later
than [*] after initial NDA Approval (even if earlier than such second
approval), THERAVANCE will transfer ownership of the Marketing Authorizations
(along with all INDs or other applications and registrations respecting
Licensed Products) in the United States to ASTELLAS, after which ASTELLAS will
solely own and maintain the United States Marketing Authorizations.  Such regulatory documents for each filing
shall be centralized and held at the offices of THERAVANCE prior to the
transfer of ownership to ASTELLAS and by ASTELLAS subsequent to such transfer
of ownership.  With respect to THERAVANCE’s
efforts to seek Marketing Authorizations for the Initial Indications for the
Licensed Product in the United States, THERAVANCE shall provide ASTELLAS (and
its representatives) with access to all clinical and manufacturing data,
including but not limited to source data, as well as the opportunity to audit
clinical and manufacturing sites. 
THERAVANCE may accomplish this by exercising THERAVANCE’S rights to
access such items in cooperation with ASTELLAS by permitting ASTELLAS to have
its representative(s) present when THERAVANCE

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

47

 

accesses such items.  THERAVANCE
shall take into account and incorporate ASTELLAS’ reasonable comments and
recommendations respecting same. 
THERAVANCE shall solicit ASTELLAS’ advice and review of all regulatory
submissions, correspondence and intended discussions with the FDA respecting
the Initial Indications, taking into account and incorporating ASTELLAS
reasonable comments and recommendations, and both Parties shall participate in
correspondence and discussions with the FDA regarding Licensed Products and
THERAVANCE Compounds, including but not limited to discussion regarding
labeling.  ASTELLAS shall also provide
such reasonable assistance as may be required by THERAVANCE where liaison
between the Parties is, or may be, necessary to enable THERAVANCE to fulfill
its responsibilities hereunder. In the United States, ASTELLAS shall be solely
responsible for filing all Marketing Authorization applications for Other
Indications for the Licensed Product and will use Diligent Efforts in seeking
appropriate Marketing Authorizations for the Other Indications for the Licensed
Product in the United States.  ASTELLAS
shall solicit THERAVANCE’s advice and review of all regulatory submissions,
correspondence and intended discussions with the FDA respecting Marketing
Authorization filings for Other Indications in the United States, taking into
account and incorporating THERAVANCE’s reasonable comments and recommendations,
and both Parties shall participate in correspondence and discussions with such
authorities regarding Licensed Products and THERAVANCE Compounds, including,
but not limited to, discussions regarding labeling for any such Other
Indications.  ASTELLAS shall be
responsible for maintaining the US Marketing Authorizations for such Other
Indications and shall solely own all such US Marketing Authorizations.

 

(b)                                 Exchange Of Drug
Safety Information.  During its
ownership, the Party owning the United States Marketing Authorization (herein,
the “NDA Holder”) shall be responsible for recording, investigating,
summarizing, notifying, reporting and reviewing all Adverse Drug Experiences
that occur in the United States in accordance with applicable Laws and shall
set up procedures and an organization to (i) adhere to all requirements of
applicable Laws which relate to the reporting and investigation of Adverse Drug
Experiences, and (ii) keep the other Party informed of same on a timely
basis.  Prior to THERAVANCE’s transfer of
the United States Marketing Authorizations to ASTELLAS (as described in Section 8.02(a)),
the Parties shall put in place a global data safety exchange agreement with
agreed-upon procedures and allocation of responsibilities between them for the
recording, investigating, summarizing, notifying, reporting and reviewing all
Adverse Drug Experiences, including but not limited to Adverse Drug Experience
reporting obligations under the [*].  The
NDA Holder shall also keep the JSC apprised on a regular basis of drug safety
matters.

 

(c)                                  CMC Obligations.  Recognizing that THERAVANCE shall be the NDA
Holder for a period after First Commercial Sale, until the time of NDA transfer
to ASTELLAS, THERAVANCE agrees to fulfill all responsibilites and obligations
of an NDA holder or to execute and file with FDA appropriate instuments
delegating some or all of such responsibitiles and obligations to
ASTELLAS.  THERAVANCE shall confer and
agree with ASTELLAS in advance with respect to the content of any such
instruments of delegation.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

48

 

Section 8.03                                Recalls Or Other
Corrective Action.  If, during its
ownership of the NDA, the NDA Holder (defined above in Section 8.02(b))
receives any information that would lead a Party to reasonably conclude that a
recall is required or warranted, the NDA Holder shall, within twenty-four (24)
hours, notify the other Party of that information in sufficient detail to allow
the Parties to comply with any and all applicable Laws. The NDA Holder shall
promptly notify the other Party of any material actions to be taken by the NDA
Holder with respect to any recall or market withdrawal or other corrective
action related to the Licensed Product and, where feasible given statutory or
regulatory timelines for taking such action, shall permit the other Party a
reasonable opportunity to consult with the NDA Holder with respect thereto
prior to such action.  Except to the
extent due to a THERAVANCE failure to supply Licensed Product conforming to applicable
specifications or Development action, all expenses with respect to a recall,
market withdrawal or other corrective action shall be borne by ASTELLAS.

 

Section 8.04                                Rights Of Reference
To DMFs.  THERAVANCE hereby grants
ASTELLAS the following rights of reference:

 

(a)                                  the right to reference
the Licensed Product DMF filed prior to the Effective Date by THERAVANCE
(including without limitation all updates thereto);

 

(b)                                 [*] the right to
reference the Licensed Product DMF filed prior to the Effective Date by [*]
(including without limitation all updates thereto);

 

(c)                                  the right to
reference the Licensed Product DMF filed by (or on behalf of) [*] (including
without limitation all updates thereto); and

 

(d)                                 the right to reference
any and all Licensed Product DMFs on file as of or after the Effective Date by
any of THERAVANCE, [*], or any other applicable DMF that THERAVANCE may have
the right to reference, together with all updates to each of the foregoing.

 

In addition THERAVANCE has granted to ASTELLAS the right of access to
THERAVANCE’s DMF that is set forth in Section 4.03, and shall extend to
ASTELLAS (through an outright grant or by exercising any right THERAVANCE may
have on ASTELLAS’ behalf) the benefit of any right of access that THERAVANCE
may have or obtain to any and all other DMFs referred to in this Section 8.04.  This includes without limitation any rights
to access the regulatory filings or other similar rights that may become
effective on a failure by the Third Party to fully supply.

 

Section 8.05                                Events Affecting
Integrity Or Reputation.  During the
Term-Basic, the Parties shall notify each other immediately of any
circumstances of which they are aware and which could impair the integrity and
reputation of the Licensed Product or if a Party or its Affiliate is threatened
by the unlawful activity of any Third Party in relation to the Licensed
Product, which circumstances shall include, by way of illustration, deliberate
tampering with or contamination of the Licensed Product by any Third Party as a
means of extorting payment from the Parties or another Third Party or
otherwise. In any such circumstances, the Parties shall use Diligent Efforts to
prevent any damage to the public,

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

49

 

the Parties and/or to the Licensed Product.  Where practicable, the Parties shall promptly
call a JSC meeting to discuss and resolve such circumstances (but exigent
circumstances may require a response without a formal JSC meeting).

 

ARTICLE 9

 

ORDERS;
SUPPLY AND RETURNS

 

Section 9.01                                Orders And Terms Of
Sale To Third Parties.  [*]
(including without limitation with regard to [*], ASTELLAS shall have the sole
right to (i) receive, accept and fill orders for the Licensed Product, (ii) control
invoicing, order processing and collection of accounts receivable for the
Licensed Product sales, (iii) record the Licensed Product sales in its
books of account, and (iv) establish and modify the commercial terms and
conditions with respect to the sale and distribution of the Licensed Product,
including without limitation matters such as the local price at which the
Licensed Product will be sold and whether any discounts, rebates or other
deductions should be made, paid or allowed and in general to make decisions as
to these and other Contracting Issues.

 

Section 9.02                                Supply Of API
Compound And Formulated Licensed Product For Development.

 

(a)                                  Supply Of API Compound
For Development.  THERAVANCE shall be
responsible for supply of worldwide requirements of API Compound for Studies
supporting Initial Indications and the Registration Batches thereof as well as
all other supply for the Initial Indications in the US up through delivery of
the First Commercial Sale Stock.  Such
API Compound shall be manufactured and supplied in accordance with applicable
Laws and current Good Manufacturing Practices.

 

(b)                                 Supply Of Licensed
Product For Development and First Commercial Sale Stock.  THERAVANCE shall be responsible for supply
of  worldwide requirements of Licensed
Product for Studies supporting  Initial
Indications and the Registration Batches thereof as well as all other supply
for the Initial Indications in the US up through delivery of the First
Commercial Sale Stock.  Such Licensed
Product  shall be manufactured and
supplied in accordance with applicable Laws and current Good Manufacturing Practices
(and, with respect to Licensed Product in the First Commercial Sale Stock, in
accordance with agreed-upon specifications). 
Within a reasonable period of time following six (6) months after
First Commercial Sale in the U.S., the Parties will review the amount of
Licensed Product actually sold during such six (6) month period and, to
the extent less Licensed Product was sold in such period than was delivered by
THERAVANCE, ASTELLAS will pay THERAVANCE its Cost of Goods Sold associated with
manufacturing such excess amount of Licensed Product.

 

 

(c)                                  Supply To ASTELLAS.  At ASTELLAS’ request, THERAVANCE shall supply
ASTELLAS with its API Compound and Licensed Product requirements for
nonclinical studies, for Phase 3b and Phase 4 Studies and for Development of
the Licensed Product for Other Indications worldwide and for Initial Indications
for OUS, on

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

50

 

the terms set forth in Exhibit B and in all cases only through
delivery of First Commercial Sale Stock.

 

Section 9.03                                Supply Of API
Compound For Commercialization. 
Subject to THERAVANCE providing to ASTELLAS a commercially validated
process for API Compound manufacture, ASTELLAS shall be responsible for supply
of API Compound for Commercial purposes following THERAVANCE’s delivery of
First Commercial Sale Stock, including API Compound for clinical trials of
Other Indications subject to the fulfillment of any orders that may be pending
at that time under Section 9.02(c). A non-binding forecast for API
Compound requirements for Commercialization of the Licensed Product shall be
prepared and periodically updated by ASTELLAS.

 

Section 9.04                                Supply Of Licensed
Product For Commercialization. 
Subject to THERAVANCE providing to ASTELLAS a commercially validated
process for finished Licensed Product manufacture, ASTELLAS shall obtain supply
of Licensed Product for Commercial purposes following Marketing Authorization,
including Licensed Product for clinical studies of Other Indications once the
Registration Batches of Licensed Product are complete and subject to the
fulfillment of any orders that may be pending at that time under Section 9.02(c).  Such packaged and labeled Licensed Product
shall be manufactured and supplied in accordance with all applicable Laws and
current Good Manufacturing Practices. ASTELLAS shall be solely responsible for
secondary manufacture, packaging and labeling of the Licensed Product.

 

Section 9.05                                Inventories.  THERAVANCE, ASTELLAS and their respective
Product Suppliers shall maintain an inventory of API Compound and Licensed
Product in accordance with their normal practices and so as to ensure
fulfillment of their respective supply obligations herein.

 

 

Section 9.06                                [*].  [*] ASTELLAS shall have sole responsibility
for THERAVANCE’s financial obligations arising after the Effective Date to pay
any milestones and/or royalties due under the [*] as a result of ASTELLAS’
exercise of its  sublicense thereunder.  This payment obligation applies only to the
[*] and not to any other THERAVANCE (or THERAVANCE Affiliate) in-licenses.  To avoid any doubt, this obligation
specifically excludes all payment obligations under the [*] arising on or
before the Effective Date or after the Effective Date where due to THERAVANCE
action or inaction independently of ASTELLAS, as well as all damages that may
now or at any time be due [*] as a result of or in connection with THERAVANCE’S
breach of the [*] on or before the Effective Date or after the Effective Date
where due to THERAVANCE action or inaction independently of ASTELLAS,
indemnification obligations thereunder for matters arising on or before the
Effective Date or after the Effective Date where due to THERAVANCE action or
inaction independently of ASTELLAS, and/or other payment obligations thereunder
for matters that occurred on or before the Effective Date or after the
Effective Date where due to THERAVANCE action or inaction independently of
ASTELLAS.  THERAVANCE covenants that it (a) shall
not amend or terminate the [*] or take any action with regard to the [*] after
the Effective Date without the prior consent of ASTELLAS, which consent shall
not be unreasonably withheld; and (b) shall, to the extent [*] will not
accept reports and payments directly from ASTELLAS

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

51

 

and provided that ASTELLAS timely provides to THERAVANCE all
information required to be reported to [*] in relation to activities under this
Agreement and payments in respect of such activities (and provided that while
THERAVANCE is responsible for supply THERAVANCE shall be responsible for
information on such activities and to notify ASTELLAS sixty (60) days in
advance the amount of any payment that is coming due), timely make the required
payments and reports to [*] (which acts on THERAVANCE’s part are expressly
authorized by ASTELLAS).

 

Section 9.07                                Transition
Assistance.  The Parties recognize
and agree that subject to the terms and conditions herein, ASTELLAS will be
responsible for Commercial Manufacture of Licensed Product, itself or through
one or more Third Parties as of THERAVANCE’s delivery of the First Commercial
Sale Stock.  In furtherance of same, the
Parties contemplate that THERAVANCE and its Third Party suppliers will work
actively and collaboratively with ASTELLAS as of the Effective Date to assist
ASTELLAS in assuming such manufacturing responsibilities on a timely basis.
THERAVANCE shall provide ASTELLAS with all reasonable cooperation and
assistance to achieve technology transfer of the current processes for
THERAVANCE Compounds and Licensed Product (including without limitation the
following processes: manufacturing, analytical methods, release procedures and
all other relevant processes). 
THERAVANCE shall use Diligent Efforts as and to the extent reasonably
requested by ASTELLAS to assist ASTELLAS at its option to (a) take
assignment of THERAVANCE’S existing THERAVANCE Compound and Licensed Product
supply agreements, (b) negotiate new agreements with THERAVANCE’S existing
suppliers, and/or (c) enter into three-way agreements among THERAVANCE,
ASTELLAS, and such suppliers for the transitional period, if required.  THERAVANCE’S assistance under the foregoing
paragraph shall be at no additional charge to ASTELLAS.

 

ARTICLE 10

 

CONFIDENTIAL
INFORMATION

 

Section 10.01                          Confidential Information.  Each of ASTELLAS and THERAVANCE shall keep
all Confidential Information received from the other Party with the same degree
of care it maintains the confidentiality of its own Confidential Information.
Neither Party shall use such Confidential Information for any purpose other
than in performance of this Agreement or the exercise of its rights hereunder
or disclose the same to any other Person other than to such of its or its
Affiliates’ (and in the case of ASTELLAS, its and its Affiliates’ sublicensees’
and distributors’) employees, consultants, agents and sublicensees who have a
need to know such Confidential Information to implement the terms of this
Agreement or enforce or exercise the rights granted under this Agreement.  A Receiving Party (as defined in the
definition of Confidential Information) shall contractually obligate any such
recipient to obligations of confidentiality and non-use at least as restrictive
as those contained herein prior to any such disclosure.  Upon termination or expiration of this
Agreement in its entirety, the Receiving Party shall promptly upon the request
of the Disclosing Party return or destroy all documents, tapes or other media
containing Confidential Information of the Disclosing Party that remain in the
Receiving Party’s or its agents’ (including without limitation Affiliates’)
possession,

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

52

 

except for any such Confidential Information to be used in connection
with any surviving rights or surviving obligations of such Receiving Party
hereunder and except that the Receiving Party may keep one copy of the
Confidential Information in the legal department files of the Receiving Party,
solely for archival purposes. Such archival copy and any such Confidential
Information retained for use in connection with any surviving rights or
surviving obligations of the Receiving Party shall be deemed to be the property
of the Disclosing Party, and shall continue to be subject to the provisions of
this ARTICLE 10. Notwithstanding anything to the contrary in this
Agreement, the Receiving Party shall have the right to disclose this Agreement
or Confidential Information provided hereunder if, in the reasonable opinion of
the Receiving Party’s legal counsel, such disclosure is necessary to comply
with the terms of this Agreement, or the requirements of any Law. Where possible,
the Receiving Party shall notify the Disclosing Party of the Receiving Party’s
intent to make such disclosure pursuant to the provision of the preceding
sentence sufficiently prior to making such disclosure so as to allow the
Disclosing Party adequate time to take whatever action the Disclosing Party may
deem to be appropriate to protect the confidentiality of the information.  The Receiving Party will cooperate reasonably
with the Disclosing Party’s efforts to protect the confidentiality of the information.  Each Party will be liable for breach of this ARTICLE 10
by any of its Affiliates, agents, or sublicensees.

 

Section 10.02                          Permitted Disclosure And
Use.  Notwithstanding Section 10.01,
a Party may disclose Confidential Information belonging to the other Party only
to the extent such disclosure is reasonably necessary to: (a) obtain
Marketing Authorization of a Licensed Product; (b) enforce the provisions
of this Agreement; or (c) comply with Laws. If a Party deems it necessary
to disclose Confidential Information of the other Party pursuant to this Section 10.02,
such Party shall give reasonable advance notice of such disclosure to the other
Party to permit such other Party sufficient opportunity to object to such
disclosure or to take measures to ensure confidential treatment of such
information. The Receiving Party will cooperate reasonably with the Disclosing
Party’s efforts to protect the confidentiality of the information.

 

Either Party may disclose Confidential Information of the other Party
as is reasonably necessary to effectuate the purposes of this Agreement
(including but not limited to entering into undertakings with Third Parties for
research, Development, manufacturing and Commercialization purposes), provided,
however, that whenever either Party (the “Further Disclosing Party”) intends to
disclose Confidential Information of the other Party to such Third Party
(“Permitted Recipient”), the Further Disclosing Party shall first obtain from
the Permitted Recipient a written nondisclosure and non-use agreement.  The Further Disclosing Party will secure the
Permitted Recipient’s agreement to nondisclosure and non-use terms that are
equivalent in scope to those imposed upon the Further Disclosing Party itself
under this Agreement and for as long a duration as is reasonably possible, up
to the duration of the Further Disclosing Party’s own nondisclosure and non-use
obligations hereunder, but in any case not less than five (5) years after
the termination of such agreement with the Permitted Recipient;  provided,
however, that if the Permitted Recipient is a formulation or
manufacturing entity, the Further Disclosing Party will obtain the prior
written consent of the Disclosing Party (not to be withheld unreasonably)
before agreeing to nondisclosure and nonuse terms that are

 

53

 

not equivalent in scope to those imposed upon the Further Disclosing
Party.  The Further Disclosing Party
shall require the Permitted Recipient to likewise agree to the following
conditions: (1) all confidential data and materials disclosed to the
Permitted Recipient or generated by it in the course of the work to be
performed is proprietary to the Further Disclosing Party and Permitted
Recipient has no right to publish, sell, assign, or otherwise transfer same,
except that, in the case of Permitted Recipients who are performing clinical
development work on the THERAVANCE Compound and/or Licensed Product, Permitted
Recipient may publish the results of its work in a manner consistent with
Permitted Recipient’s institutional policies and in the interest of academic
and/or scientific advancement, and in accordance with the publication
provisions of Section 10.03 hereof; and (2) no confidential data or
materials may be retained by Permitted Recipient after conclusion of its work
for  the Further Disclosing Party except (i) to
the extent Permitted Recipient deems reasonably necessary to ensure its
compliance with its nondisclosure obligations to the Further Disclosing Party;
and (ii) as may be required by Law, regulation, or court order.

 

Section 10.03                          Publications.  All publications relating to the Licensed
Product must be approved via the procedure provided in Section 7.01.

 

Section 10.04                          Public Announcements.  Except as may be expressly permitted under Section 10.03
or required by applicable Laws and subject to the final sentence of this Section 10.04,
neither Party (nor its Affiliates) will make any public announcement of any
information regarding this Agreement (including without limitation its
execution and terms), the Licensed Product or Development or Commercialization
activities under this Agreement without the prior written approval of the other
Party, which approval shall not be withheld unreasonably.  The Parties have (prior to the Signing Date)
agreed to and exchanged the final text of a joint press release announcing the
execution of this Agreement, and the text of a press release announcing the
achievement of the Closing Condition described in Section 16.17. Once any
statement is approved for disclosure by the Parties or information is otherwise
made public in accordance with the preceding sentence, either Party may make a
subsequent public disclosure of the contents of such statement without further
approval of the other Party.  In its
press releases, investor presentations and other official public statements by
its officers or investor relations personnel in all cases that mention or are
regarding the Licensed Product or the collaboration under this Agreement,
ASTELLAS shall refer to the fact that it has licensed Licensed Product from
THERAVANCE.

 

Section 10.05                          Confidentiality Of This
Agreement.  The terms of this
Agreement shall be Confidential Information of each Party and, as such, shall
be subject to the provisions of this ARTICLE 10.  Either Party may disclose the terms of this
Agreement if, in the opinion of its counsel, such disclosure is required by
Law.  In such event, the disclosing Party
will seek appropriate confidentiality of those portions of the Agreement for
which confidential treatment is typically permitted by the relevant
Governmental Authority.  In any case, if
a Party is legally required to publicly file a copy of this Agreement, the
disclosing Party will provide the other Party with an advance draft of the redacted
form of the Agreement as the disclosing Party proposes to file it, with not
less than five (5) Business Days for review, and shall incorporate the
non-disclosing Party’s comments

 

54

 

thereon, to the extent additional or other redactions requested by the
non-disclosing Party may reasonably be afforded confidential treatment under
applicable law and then-prevailing SEC practice.

 

Section 10.06                          Termination Of Prior
Confidentiality Agreements.  This
Agreement supersedes all existing Confidential Disclosure Agreements (“CDA”)
between the Parties relating to the Licensed Product and to TD-1792, including
the CDA dated December 1, 2004 and amended on October 17, 2005.  The information exchanged under such agreement
shall be deemed to have been exchanged under this Agreement.

 

Section 10.07                          Survival.  The obligations and prohibitions contained in
this ARTICLE 10 shall survive the expiration or termination of this
Agreement in its entirety for a period of ten (10) years.

 

ARTICLE 11

 

REPRESENTATIONS
AND WARRANTIES; COVENANTS

 

Section 11.01                          Mutual Representations And
Warranties.  THERAVANCE and ASTELLAS
each represents and warrants to the other as of the Signing Date that:

 

(a)                                  such Party (i) is
a company duly organized, validly existing, and in good standing under the Laws
of its jurisdiction of incorporation; (ii) is duly qualified as a
corporation and in good standing under the Laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification, where the failure to be so qualified would have a material
adverse effect on its financial condition or its ability to perform its
obligations hereunder; (ii) has the requisite corporate power and
authority and the legal right to conduct its business as now conducted and
hereafter contemplated to be conducted; (iv) has or will obtain all
necessary licenses, permits, consents, or approvals from or by, and has made or
will make all necessary notices to, all Governmental Authorities having
jurisdiction over such Party, to the extent required for the ownership and
operation of its business, where the failure to obtain such licenses, permits,
consents or approvals, or to make such notices, would have a material adverse effect
on its financial condition or its ability to perform its obligations hereunder;
and (v) is in compliance with its charter documents;

 

(b)                                 the execution,
delivery and performance of this Agreement by such Party and all instruments
and documents to be delivered by such Party hereunder (i) are within the
corporate power of such Party; (ii) have been duly authorized by all
necessary or proper corporate action; (iii) do not conflict with any
provision of the charter documents of such Party; (iv) will not, to the
best of such Party’s knowledge, violate any law or regulation or any order or
decree of any court of governmental instrumentality; (v) will not violate
or conflict with any terms of any indenture, mortgage, deed of trust, lease,
agreement, or other instrument to which such Party is a party, or by which such
Party or any of its property is bound, which violation would have a material
adverse effect on its financial condition or on its ability to perform its
obligations hereunder or the other Party’s enjoyment of its rights hereunder;

 

55

 

(c)                                  this Agreement has
been duly executed and delivered by such Party and constitutes a legal, valid
and binding obligation of such Party, enforceable against such Party in
accordance with its terms, except as such enforceability may be limited by
applicable insolvency and other Laws affecting creditors’ rights generally, or
by the availability of equitable remedies; and

 

(d)                                 all of its employees,
officers, and consultants have executed agreements or have existing obligations
under law requiring assignment to such Party of all Inventions made by such
individuals during the course of and as the result of their association with
such Party, and obligating such individuals to maintain as confidential such
Party’s Confidential Information.

 

Section 11.02                          Representations And
Warranties Of THERAVANCE.  THERAVANCE
represents and warrants to ASTELLAS as follows:

 

(a)                                  Exhibit A is an
accurate and complete list as of the Signing Date of all THERAVANCE Patents;
and

 

(b)                                 as of the Signing Date
it is the sole and exclusive owner of the THERAVANCE Patents listed in Exhibit A,
all of which as well as the THERAVANCE Know-How are free and clear of any
liens, charges and encumbrances; and

 

(c)                                  as of the Signing
Date THERAVANCE and its Affiliates have not previously assigned, transferred,
licensed, conveyed or otherwise encumbered their right, title and interest in
the THERAVANCE IP and [*] in whole or in part; and

 

(d)                                 as of the Signing
Date, no Person other than THERAVANCE or any of its Affiliates, has any
ownership with respect to THERAVANCE IP nor has any Person made or threatened
any claim to such ownership nor to [*]; and

 

(e)                                  as of the Signing
Date and to THERAVANCE’S knowledge, the manufacture, use and sale of the
THERAVANCE Compound and the current (as of the Signing Date) form of the
Licensed Product do not infringe upon any intellectual property rights of any
Third Party; and

 

(f)                                    as of the Signing
Date there are no claims, judgments or settlements against or owed by
THERAVANCE relating to the THERAVANCE IP or pending or threatened claims or
litigation relating to the THERAVANCE IP nor relating to [*]; and

 

(g)                                 except as insofar [*]
and, as of the Signing Date there are no other Patents or Know-How other than
THERAVANCE Patents or THERAVANCE Know-How owned or licensed by THERAVANCE
required to develop and/or commercialize the THERAVANCE Compound; and

 

(h)                                 as of the Signing Date
there are no interferences — nor re-examination nor re-issue proceeding(s) —
pending, declared, or threatened involving THERAVANCE with the THERAVANCE
Patents, nor any re-examination or reissue proceeding concerning such
THERAVANCE Patents; and

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

56

 

(i)                                     as of the Signing
Date THERAVANCE has no knowledge from which it can reasonably be inferred that
the granted THERAVANCE Patents are invalid or unenforceable or that the
applications for THERAVANCE Patents will not proceed to grant or yield valid
and enforceable issued Patents; and

 

(j)                                     the [*] is in full
force and effect as of the Signing Date; the copy of the [*] that THERAVANCE
has disclosed to ASTELLAS on or before the Signing Date is a true and accurate
copy of such agreement; as of the Signing Date, THERAVANCE has made all
payments and fulfilled all obligations due and/or owed under the [*] for which
the payment or other obligation arose on or before the Signing Date; and as of
the Signing Date, THERAVANCE is not in breach of the [*] and has received no
notice of breach thereunder; and

 

(k)                                  THERAVANCE has
disclosed in writing to ASTELLAS all currently effective agreements relating to
THERAVANCE Compound(s) and/or Licensed Product(s) to which THERAVANCE and/or
any of its Affiliates is a party as of the Signing Date (excluding clinical
site agreements, clinical investigator agreements and related documentation,
and excluding confidentiality or non-disclosure agreements with Third Parties);
and

 

(l)                                     as of the Signing
Date, THERAVANCE is not a Party to any in-effect agreement or obliged to any
surviving obligation under any expired agreement, in each case that would limit
THERAVANCE’s ability to grant ASTELLAS a license of the scope set forth in Section 2.01
(ignoring solely for purposes of evaluating this representation and warranty
any limitations that the definition of “Control” would place on the scope of Patents
and Know-How included in the license) under the THERAVANCE IP; and

 

(m)                               the safety- and
efficacy-related data and information (including without limitation nonclinical
and clinical data) regarding TELAVANCIN as of the Signing Date is true and
accurate in all material respects and THERAVANCE has not omitted to disclose to
ASTELLAS any data or information (including without limitation nonclinical and
clinical data) that is or reasonably could be expected to be material to
ASTELLAS’ (or any reasonable prospective licensee’s or collaborator’s) decision
to enter into the transaction contemplated in this Agreement as of the Signing
Date; and

 

(n)                                 as of the Signing
Date, the THERAVANCE IP and [*] are not subject to any license, option,
covenant not to sue or other similar interests that limit or restrict the
licenses granted to ASTELLAS hereunder; and

 

(o)                                 other than the
THERAVANCE Compound and the TD-1792 Compound, THERAVANCE and its Affiliates do
not as of the Signing Date have in nonclinical development, IND-enabling work
or clinical development any other compound in the Field, themselves or through
contract(s) with any Third Party(ies).

 

Section 11.03                          Acknowledgement Of
ASTELLAS.  ASTELLAS is aware that the
THERAVANCE Patents or the THERAVANCE Know-How may not sufficiently enable

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

57

 

ASTELLAS to successfully implement modifications to the process
relating to the manufacture of the THERAVANCE Compound and/or API Compound or
preparation of the Licensed Product  that
THERAVANCE will provide to ASTELLAS hereunder, or to conduct any other
operational or manufacturing-related activities with respect to such
ASTELLAS-implemented process modifications. 
It is explicitly understood by ASTELLAS that ASTELLAS will have to
independently conduct any analysis, evaluation and investigation regarding what
intellectual property, techniques, routes, equipment or other help or
assistance that will be required for implementation of any such new
processes.  This acknowledgement, to
avoid any doubt, in no way alters and shall not be deemed to undermine,
interpret or lessen THERAVANCE’S representations and warranties set forth in Section 11.01
and Section 11.02 particularly (but without limitation) as they relate to
the manufacturing processes and THERAVANCE Know-How that THERAVANCE shall
deliver to ASTELLAS hereunder.

 

Section 11.04                          Limitations.  EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT EACH OF THERAVANCE AND ASTELLAS EXPRESSLY DISCLAIMS ANY AND ALL
IMPLIED OR EXPRESS WARRANTIES AND MAKE NO EXPRESS OR IMPLIED WARRANTY,
STATUTORY OR OTHERWISE, OF ANY KIND, INCLUDING ANY WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE REGARDING THE THERAVANCE
COMPOUNDS, THERAVANCE CONFIDENTIAL INFORMATION, ASTELLAS CONFIDENTIAL
INFORMATION, THERAVANCE IP, ASTELLAS IP, [*] OR LICENSED PRODUCTS.

 

Section 11.05                          Covenants.  Each Party hereby covenants and agrees during
the Term-Basic that it shall carry out its obligations or activities hereunder
in accordance with (i) the terms of this Agreement and (ii) all
applicable Laws.

 

ARTICLE 12

 

INDEMNIFICATION

 

Section 12.01                          Indemnification By
ASTELLAS.  Subject to Section 12.04,
ASTELLAS shall defend, indemnify and hold harmless (collectively, “Indemnify”)
THERAVANCE and its Affiliates, sublicensees and distributors and all of the
foregoing entities’ officers, directors, shareholders, employees, agents,
successors and assigns from and against all Claims of Third Parties, and all
associated Losses, to the extent arising out of (a) ASTELLAS’ or its
Affiliates’ negligence or willful misconduct in performing any of their
obligations under this Agreement, (b) a breach by ASTELLAS (or its
Affiliates) of any of their representations, warranties, covenants or
agreements under this Agreement, or (c) the manufacture, use, handling,
storage, marketing, sale, distribution or other disposition of the API
Compound, the THERAVANCE Compound or Licensed Product by ASTELLAS, its
Affiliates, agents, sublicensees or distributors.  In addition, this Indemnification obligation
applies to ASTELLAS Employee Claims as provided for in Section 5.06.  The obligation to Indemnify under this Section 12.01
shall not apply to the extent of any Claims and associated Losses resulting
from a cause listed in Section 12.02(a)-(c) or in the second sentence
of Section 12.02.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

58

 

Section 12.02                          Indemnification By
THERAVANCE.  Subject to Section 12.04,
THERAVANCE shall Indemnify ASTELLAS and its Affiliates, and their sublicensees
and distributors hereunder and all of the foregoing entities’ officers,
directors, shareholders, employees, agents, successors and assigns from and
against all Claims of Third Parties, and all associated Losses, to the extent
arising out of (a) THERAVANCE’S or its Affiliates’ negligence or willful
misconduct in performing any of their obligations under this Agreement, or (b) a
breach by THERAVANCE (or its Affiliates) of any of their representations,
warranties, covenants or agreements under this Agreement, or (c) the
manufacture, use, handling, storage, marketing or other disposition of the API
Compound, the THERAVANCE Compound or Licensed Product by THERAVANCE, its
Affiliates, agents, licensees (including without limitation  sublicensees), and distributors or the
failure of any Licensed Product supplied by THERAVANCE hereunder to conform to
the specifications therefor or any representations and warranties made with
respect thereto by THERAVANCE in accordance with Section 9.02 and Exhibit B.  In addition, this Indemnification obligation
applies to THERAVANCE Employee Claims as provided for in Section 5.06.  This obligation to Indemnify shall not apply
to the extent of any Claims and associated Losses resulting from a cause listed
in Section 12.01(a)-(c) or in the second sentence of  Section 12.01.

 

Section 12.03                          Procedure For
Indemnification.

 

(a)                                  Notice.  Each Party will notify promptly the other in
writing if it becomes aware of a Claim (actual or potential) by any Third Party
(a “Third Party Claim”) for which indemnification may be sought by that Party
and will give such information with respect thereto as the other Party shall
reasonably request. If any proceeding (including any governmental
investigation) is instituted involving any Party for which such Party may seek
an indemnity under Section 12.01 or Section 12.02, as the case may be
(the “Indemnified Party”), the Indemnified Party shall not make any admission
or statement concerning such Third Party Claim, but shall promptly notify the
other Party (the “Indemnifying Party”) orally and in writing and the
Indemnifying Party and Indemnified Party shall meet to discuss how to respond
to any Third Party Claims that are the subject matter of such proceeding. The
Indemnifying Party shall not be obligated to indemnify the Indemnified Party to
the extent any admission or statement made by the Indemnified Party or any
failure by such Party to notify the Indemnifying Party of the claim materially prejudices
the defense of such claim.

 

(b)                                 Defense Of Claim.  If the Indemnifying Party elects to defend
or, if local procedural rules or laws do not permit the same, elects to
control the defense of a Third Party Claim, it shall be entitled to do so provided
it gives notice to the Indemnified Party of its intention to do so within
forty-five (45) days after the receipt of the written notice from the
Indemnified Party of the potentially indemnifiable Third Party Claim (the
“Litigation Condition”). The Indemnifying Party expressly agrees that the
Indemnifying Party shall be responsible for satisfying and discharging any
award made to or settlement reached with the Third Party pursuant to the terms
of this Agreement without prejudice to any provision in this Agreement or
rights or remedies available at law which will allow the Indemnifying Party
subsequently to recover any amount from the Indemnified Party.

 

59

 

Subject to compliance with the Litigation Condition, the Indemnifying
Party shall retain counsel reasonably acceptable to the Indemnified Party (such
acceptance not to be unreasonably withheld, refused, conditioned or delayed) to
represent the Indemnified Party and shall pay the fees and expenses of such counsel
related to such proceeding. In any such proceeding, the Indemnified Party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Party. The Indemnified Party
shall not settle any claim for which it is seeking indemnification without the
prior written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld, refused, conditioned or delayed. The Indemnified Party
shall, if requested by the Indemnifying Party, cooperate in all reasonable
respects in the defense of such claim that is being managed and/or controlled
by the Indemnifying Party. The Indemnifying Party shall not, without the
written consent of the Indemnified Party (which consent shall not be
unreasonably withheld, refused, conditioned or delayed), effect any settlement
of any pending or threatened proceeding in which the Indemnified Party is, or
based on the same set of facts could have been, a party and indemnity could
have been sought hereunder by the Indemnified Party, unless such settlement
includes an unconditional release of the Indemnified Party from all liability
to Third Parties on claims that are the subject matter of such proceeding and
provided such settlement does not limit or restrict the rights granted to the
Indemnified Party hereunder in any material respect or otherwise materially
adversely affect the ability of the Indemnified Party to enjoy the benefits of
this Agreement. If the Litigation Condition is not met, then neither Party
shall have the right to control the defense of such Third Party Claim and the
Parties shall cooperate in and be consulted on the material aspects of such
defense at each Party’s own expense; provided
that if the Indemnifying Party does not satisfy the Litigation Condition, the
Indemnifying Party may at any subsequent time during the pendency of the
relevant Third Party Claim irrevocably elect, if permitted by local procedural rules or
laws, to defend and/or to control the defense of the relevant Third Party Claim
so long as the Indemnifying Party also agrees to pay the reasonable fees and
expenses incurred by the Indemnified Party in relation to the defense of such
Third Party Claim from the inception of the Third Party Claim until the date
the Indemnifying Party assumes the defense or control thereof.

 

Notwithstanding the foregoing, if the Parties do not agree as to the
application of Section 12.01 and Section 12.02 to any particular
Claim (and associated Losses), then each may conduct its own defense of such
Claim and reserve the right to claim indemnification from the other Party upon
resolution of the underlying Claim.

 

Section 12.04                          Assumption Of Defense.  Notwithstanding anything to the contrary
contained herein, an Indemnified Party shall be entitled to assume the defense
of any Third Party Claim with respect to the Indemnified Party, upon written
notice to the Indemnifying Party pursuant to this Section 12.04, in which
case the Indemnifying Party shall be relieved of liability under Section 12.01
or Section 12.02, as applicable, solely for such Third Party Claim and
related Losses.

 

Section 12.05                          Insurance.  During [*], each Party shall obtain and/or
maintain at its sole expense, product liability insurance (including any
self-insured arrangements) in amounts which are reasonable and customary in the
U.S. pharmaceutical industry for companies of

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

60

 

comparable size and activities, in any event no less than [*] for
ASTELLAS and [*] for THERAVANCE.  The
Parties agree to revisit or consult via the JSC in the future respecting
[*].  Such product liability insurance or
self-insured arrangements shall insure against all reasonable and customary
liability typically covered by such insurance policies including without
limitation personal injury, physical injury, or property damage arising out of the
manufacture, sale, distribution, or marketing of the Licensed Product. Each
Party shall provide written proof of the existence of such insurance to the
other Party upon request.

 

ARTICLE 13

 

PATENTS

 

Section 13.01                          Prosecution And
Maintenance Of Patents.

 

(a)                                  Prosecution And
Maintenance Of THERAVANCE Patents. 

 

In this Section 13.01(a), references to “THERAVANCE Patents” are
intended only to apply to those THERAVANCE Patents that are not Patents on
Joint Inventions.  Patents on Joint
Inventions are handled separately in Section 13.01(b).

 

(i)                                     Responsibility.  THERAVANCE shall have the exclusive right and
the obligation to (subject to THERAVANCE’S election not to file, prosecute, or
maintain pursuant to Section 13.01(e)), or, if applicable, to cause its licensors
to, prepare, file, prosecute in a diligent manner (including without limitation
by conducting interferences, oppositions and reexaminations or other similar
proceedings), maintain (by timely paying all maintenance fees, renewal fees,
and other such fees and expenses required under applicable Laws) and extend all
THERAVANCE Patents and related applications, in accordance with input from
ASTELLAS as provided below.

 

(ii)                                  Abandonment.  THERAVANCE shall consult with ASTELLAS and
comply with Section 13.01(e) prior to abandoning any THERAVANCE
Patents.

 

(iii)                               Input.  THERAVANCE shall regularly advise ASTELLAS of
the status of all pending applications, including with respect to any hearings
or other proceedings before any Governmental Authority, and, at ASTELLAS’
request, shall provide ASTELLAS with copies of all documentation concerning
such applications, including all correspondence to and from any Governmental
Authority, including without limitation drafts of all filings and
correspondence with any Governmental Authority no later than [*] prior to the
date such filing will be made or correspondence sent unless (without fault of
THERAVANCE) deadlines will not permit such advance notice in which case a copy
of any such filing or correspondence will be promptly provided to ASTELLAS.
Other than as set forth in this Agreement regarding prosecution of Patents
claiming Joint Inventions, THERAVANCE shall solicit ASTELLAS’ advice regarding
prosecution of THERAVANCE Patents and THERAVANCE shall take into account ASTELLAS’
reasonable comments related thereto.  In
the event of a dispute between the Parties with respect to patent prosecution
and/or maintenance (including without

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

61

 

limitation substantive patent issues and decisions as to in which
Countries OUS any particular filing should be made or extended), THERAVANCE
shall make the final decision in a manner consistent with the Diligent Efforts
standard.  Within the priority period,
THERAVANCE shall agree with ASTELLAS regarding the Countries outside the United
States in which corresponding applications should be filed (“OUS Filings”). It
is presumed that a corresponding Patent Cooperation Treaty (“PCT”) application
will be filed unless otherwise agreed by the Parties.  THERAVANCE shall effect filing of all such
applications within the priority period. 
Extension of the PCT Filing into individual Countries shall be made on a
case-by-case basis consistent with the Diligent Efforts standard.

 

(iv)                              Expenses.  ASTELLAS shall be responsible for [*] percent
([*]%) [*] THERAVANCE’S external, properly documented, out-of-pocket expenses
incurred after the Effective Date to procure THERAVANCE Patents in the
Territory with respect to those patent families that include any members listed
in Exhibit A (whether as of the Signing Date or thereafter through an
update pursuant to Section 2.08(a) or due to an ASTELLAS election
under Section 2.08(d)(iii)) including without limitation PCT and
individual country filing fees, translations, maintenance, annuities, and
protest proceedings.  For all such
corresponding patent applications, THERAVANCE will invoice ASTELLAS on a
quarterly basis beginning the first Calendar Quarter following the Effective
Date, setting forth all such expenses incurred. 
Reimbursement will be made to THERAVANCE in United States Dollars within
thirty (30) days of receipt of the invoice by ASTELLAS.  ASTELLAS will within thirty (30) days
following the Effective Date identify the ASTELLAS representative that should
receive such invoices from THERAVANCE. 
THERAVANCE shall be responsible for all of its internal expenses
associated with prosecution and maintenance.  
ASTELLAS’ obligations hereunder are in addition to any obligations of
ASTELLAS under Section 13.01(b)(ii).

 

(v)                                 [*] Patents.  This Section 13.01(a) applies
equally to the Patents within the [*] to the extent THERAVANCE has rights to
prosecute under the [*] and owes prosecution costs thereunder.

 

(b)                                 Prosecution And
Maintenance Of Patents Covering Joint Inventions.

 

(i)                                     For Patents
covering Joint Inventions, the Parties shall agree, without prejudice to ownership,
which Party shall have the right to prepare and file a priority patent
application, and prosecute such application(s) and maintain any patents derived
therefrom, with [*] the reasonable out-of-pocket expenses for the preparation,
filing, prosecution and maintenance of such priority patent application.  The Parties will reasonably cooperate to
obtain any export licenses that might be required for such activities.  Should the agreed-upon Party elect not to
prepare and/or file any such priority patent application, it shall (x) provide
the other Party with written notice as soon as reasonably possible after making
such election but in any event no later than sixty (60) days before the other
Party would be faced with a possible loss of rights, (y) give the other Party
the right, at the other Party’s discretion and sole expense, to prepare and
file the priority application(s), and (z) offer reasonable assistance in
connection with such preparation and filing at no expense to the other Party
except for reimbursement of

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

62

 

reasonable out-of-pocket expenses incurred by the agreed upon Party in
rendering such assistance. The other Party, at its discretion and expense,
shall prosecute such application(s) and maintain sole ownership (and the
opting-out Party shall assign ownership to such other Party) of any patents
derived therefrom.

 

(ii)                                  Within nine (9) months
after the filing date of a priority application directed to a Joint Invention,
the Party filing the priority application shall request that the other Party
identify those non-priority, non-PCT (“foreign”) Countries in which the other
Party desires that the Party filing the priority application file corresponding
patent applications. Within thirty (30) days after receipt by the other Party
of such request from the Party filing the priority application, the other Party
shall provide to the Party filing the priority application a written list of
such foreign Countries in which the other Party wishes to effect corresponding
foreign patent applications filings. The Parties will then attempt to agree on
the particular Countries in which such applications will be filed, provided
that in the event agreement is not reached, the application will be filed in
the disputed as well as the non-disputed Countries (all such filings referred
to hereinafter as “Designated Foreign Filings”). Thereafter, within twelve (12)
months after the filing date of the priority application, the Party filing the
priority application shall effect all such Designated Foreign Filings.  It is presumed (unless otherwise agreed in writing
by the Parties) that a corresponding PCT application will be filed designating
all PCT member Countries. As to each Designated Foreign Filing and PCT
application, each Party shall bear [*] of the expenses for the filing and
prosecutions of such Designated Foreign Filing and PCT application (including
entering national phase in all agreed countries) unless ASTELLAS opts out as
provided herein. Should the Party filing the priority application not agree to
file or cause to be filed a Designated Foreign Filing, the other Party will
have the right to effect such Designated Foreign Filing in its name.

 

(iii)                               Should the filing Party
pursuant to Section 13.01(b)(i) or Section 13.01(b)(ii) no
longer wish to prosecute and/or maintain any patent application or patent
resulting from such application, the filing Party shall (x) provide the
non-filing Party with written notice of its wish no later than sixty (60) days
before the patent or patent applications would otherwise become abandoned, (y)
give the non-filing Party the right, at the non-filing Party’s election and
sole expense, to prosecute and/or maintain such patent or patent application,
and (z) offer reasonable assistance to the non-filing Party in connection with
such prosecution and/or maintenance at no expense to the non-filing Party
except for reimbursement of the filing Party’s reasonable out-of-pocket
expenses incurred by the filing Party in rendering such assistance.

 

(iv)                              Should the non-filing
Party pursuant to Section 13.01(b)(iii) not wish to incur its share
of preparation, filing, prosecution and/or maintenance expenses for a patent
application filed pursuant to Section 13.01(a)(i) or Section 13.01(b)(ii) or
patents derived therefrom, it shall (x) provide the filing Party with 30 days
advance written notice of its wish, (y) continue to offer reasonable assistance
to the filing Party in connection with such prosecution or maintenance and (z)
assign its entire right, title and interest therein to the filing Party in each
case at no expense to the filing Party except for reimbursement of the
non-filing Party’s reasonable external, out-of-pocket expenses incurred by the
non-filing Party in rendering such assistance.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

63

 

(v)                                 The Parties agree to
cooperate in the preparation and prosecution of all patent applications filed
under Section 13.01(b)(i) and Section 13.01(b)(ii), including
obtaining and executing necessary powers of attorney and assignments by the
named inventors, providing relevant technical reports to the filing Party
concerning the invention disclosed in such patent application, obtaining
execution of such other documents which shall be needed in the filing and
prosecution of such patent applications, and, as requested, updating each other
regarding the status of such patent applications.

 

(c)                                  Patent-Related
Dispute Resolution.  The Parties wish
to foster a truly collaborative and cooperative relationship between their
respective patent counsel.  The Parties
recognize that from time to time, despite such a positive relationship, their
respective patent counsel may disagree as to certain matters relating to
prosecution of Patents covering Joint Inventions, as well as the Issue of
Necessity referred to in Section 6.03(c)(ii) (each of the foregoing
issues regarding prosecution of Patents covering Joint Inventions, and each
Issue of Necessity, a “Patent Resolution Issue”).  In such event, instead of resorting to the
dispute resolution process as described in Section 3.06(b), the Parties
agree to seek guidance and resolution from an independent, mutually acceptable
patent attorney as further described below in this Section.  If the Parties reach an impasse (remaining
even after resort to the initial dispute resolution provided for in Section 3.06(a))
as to any Patent Resolution Issue, then they shall submit the Patent Resolution
Issue to an experienced patent attorney mutually acceptable to the Parties —
and who does not otherwise perform work for either Party or any of its
Affiliates — for resolution.  They shall
engage such attorney within thirty (30) days after either Party notifies the
other of a Patent Resolution Issue impasse remaining unresolved after resort to
Section 3.06(a).  If they cannot
agree as to who such attorney shall be within such time period, then the total
of two nominees of the Parties (one from each Party) shall select a third
patent attorney who shall be the attorney to resolve the dispute.  (Alternatively the Parties may choose to
designate the patent attorney who will resolve Patent Resolution Issues in
advance of any such issue arising.)  The
Parties shall share equally the expenses incurred for the services of such
patent attorney.  Within fifteen (15)
days after engaging the patent attorney, the Parties shall each submit up to
twenty (20) pages of documentation to the patent attorney.  Within five (5) Business Days thereafter,
the Parties shall convene a discussion with the patent attorney during which
each Party may orally present its position on the Patent Resolution Issue for
no more than one (1) hour.  The
Parties shall endeavor to cause the patent attorney to render his or her
guidance as to the Patent Resolution Issue within five (5) Business Days
after such discussion.  Neither Party
shall engage in any ex parte communications
with the patent attorney.  The Parties
shall accept and follow the guidance and resolution of the patent attorney
absent any fraud in the proceedings.

 

(d)                                 Prosecution And
Maintenance Of ASTELLAS Patents. Except as provided in Section 13.01(f) and
ARTICLE 15, ASTELLAS shall have the sole right to file, prosecute,
maintain and enforce the ASTELLAS Patents.

 

64

 

(e)                                  ASTELLAS Step-In
Rights.

 

This Section 13.01(e), where it refers to “THERAVANCE Patents,” is
intended only to apply to those THERAVANCE Patents that are not Patents on
Joint Inventions.  Patents on Joint
Inventions are handled separately in Section 13.01(b).

 

If THERAVANCE elects not to file, prosecute or maintain the THERAVANCE
Patents or claims encompassed by such THERAVANCE Patents that cover any
THERAVANCE Compound or Licensed Product (whether directly through its
composition (including without limitation formulations) or indirectly through
its manufacture or use (including without limitation methods of
administration), THERAVANCE shall give ASTELLAS notice thereof within a reasonable
period prior to allowing such THERAVANCE Patents, or such claims encompassed by
such THERAVANCE Patents, to lapse or become abandoned or unenforceable (in any
event no less than 30 days written notice), and ASTELLAS shall thereafter have
the right, at its sole expense, to prepare, file, prosecute and maintain such
THERAVANCE Patents in such Country.

 

(f)                                    Execution Of
Documents By Agents. Each of the Parties shall execute or have executed by
its appropriate agents such documents as may be necessary to obtain, perfect or
maintain any Patents filed or to be filed pursuant to this Agreement, and shall
cooperate with the other Party so far as reasonably necessary with respect to
furnishing all information and data in its possession reasonably necessary to obtain
or maintain such Patent Rights.

 

(g)                                 Patent Term
Extensions Including Supplementary Protection Certificates (“SPCs”) and Any
Similar Rights. The Parties shall cooperate with each other in gaining
patent term extension or related extension of rights, including without
limitation SPCs and similar rights, 
where applicable to Licensed Product. 
The JSC shall discuss which patents the Parties shall endeavor to have
extended.  All filings for such extension
will be made by the Party to whom the patent is assigned after consultation
with the other Party.  If the JSC does
not agree, then:  first, a Party is
entitled to refuse to allow its own Patent to be extended; and second, normal
dispute resolution applies (Section 3.06 dispute resolution) to select
which Patent shall be extended in accordance with the principle of the next
sentence.  It is understood and agreed
that the purpose of any patent term extensions under this Section is to
extend the term of meaningful patent exclusivity for the Licensed Product, not
provide either (i) for a protracted royalty term for THERAVANCE hereunder
in situations where a THERAVANCE Patent extension will not extend the overall
life of meaningful patent exclusivity for the Licensed Product , or (ii) for
a decreased royalty term for ASTELLAS where the THERAVANCE Patent would provide
greater exclusivity than the ASTELLAS Patent.

 

Section 13.02                          Patent Infringement.

 

(a)                                  Infringement
Claims By Third Parties. With respect to any and all Claims instituted by
Third Parties against THERAVANCE or ASTELLAS or any of their respective
Affiliates for patent infringement involving the manufacture, use, license,
marketing, sale, offer for sale or importation of a Licensed Product in any
Country or Countries of the Territory during any Term-Basic in the applicable
Country(ies) (each, a “Patent Infringement Claim”) as applicable, THERAVANCE
and ASTELLAS will assist

 

65

 

one another and cooperate in the defense and settlement of such Patent
Infringement Claims at the other Party’s request.  This shall not alter ARTICLE 12 as
regards Indemnification between the Parties, including without limitation with
respect to Claims arising out of a breach of a representation and warranty
hereunder, including without limitation THERAVANCE’s intellectual property
representations and warranties hereunder.

 

(b)                                 Infringement Of
THERAVANCE Patents. In the event that THERAVANCE or ASTELLAS becomes aware
of actual or threatened infringement of a THERAVANCE Patent during the
Term-Basic, that Party will promptly notify the other Party in writing (a
“Patent Infringement Notice”).   [*] will
have the first right but not the obligation to bring an infringement action
against any Third Party.  If [*] elects
to pursue such infringement action, [*] shall be solely responsible for the
expenses associated with such action with any recovery going first to pay for
all expenses incurred by [*] in connection with bringing and maintaining such
action (including without limitation via reimbursement of [*] expenses) and any
remaining amount being divided as follows: (i) [*] with [*] retaining the
[*] and (ii) any other portion of the award shall be retained by [*].  During the Term-Basic in the applicable
Country(ies) of infringement, in the event that [*] does not undertake such an
infringement action within ninety (90) days after the Patent Infringement
Notice between the Parties regarding the applicable infringement, [*] shall be
permitted to do so in [*] or the relevant [*] Affiliate’s name.  If a Party is authorized to bring an
infringement action under this section but such Party is not recognized by
the applicable court or other relevant body as having the requisite standing to
pursue such action, then the other Party shall join as a party-plaintiff.  If [*] elects to pursue such infringement
action, [*] may be represented in such action by attorneys of its own choice
and its own expense with [*] taking the lead in and controlling such action (and
this sentence applies mutatis mutandis or
vice versa with respect to suits
pursued instead by [*]).  Recoveries on
[*] suits under this Section 13.02(b) shall go first to reimburse [*]
litigation expenses, and the remaining recovery shall be treated as [*].

 

This Section 13.02(b) applies to those THERAVANCE Patents
that are not Patents on Joint Inventions, however, unlike with the other
THERAVANCE Patents, with respect to Patents on Joint Inventions, the Parties
must agree which Party will have the first right to enforce them, with the
other Party having a back-up right equivalent to the ASTELLAS’ back-up right
described above in this Section 13.02(b).

 

(c)                                  Infringement Of
ASTELLAS Patents. During the Term-Total, ASTELLAS shall have the sole and
exclusive right to pursue infringement of any ASTELLAS Patents in its sole
discretion, retaining all recoveries.

 

(d)                                 [*]. Section 13.02(b) applies
mutatis mutandis to the Patents
within the [*], subject only to the [*] therein.

 

Section 13.03                          Notice Of Certification.
ASTELLAS and THERAVANCE each shall promptly give notice to the other of any
certification filed under the “U.S. Drug Price Competition and Patent Term
Restoration Act of 1984” as amended or as it may be amended (or its foreign
equivalent) claiming that a THERAVANCE Patent is invalid or

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

66

 

that infringement will not arise from the manufacture, use or sale of
the Licensed Product by a Third Party (“Hatch-Waxman Certification”) with
cooperation between the Parties to start immediately upon either Party having
knowledge that a Hatch-Waxman Certification has been filed.  This Section is explicitly intended to
apply both to successor legislation in the US and counterpart or similar
legislation OUS.

 

(a)                                  Notice. If a
Party decides not to bring infringement proceedings against the entity making
such a certification, such Party shall give notice to the other Party of its
decision not to bring suit within twenty-one (21) days after receipt of notice
of such certification.

 

(b)                                 Option. Such
other Party then may, but is not required to, bring suit against the entity
that filed the certification.

 

(c)                                  Name Of Party.
Any suit by THERAVANCE or ASTELLAS shall either be in the name of THERAVANCE or
in the name of ASTELLAS, (or any Affiliate) or jointly in the name of
THERAVANCE and ASTELLAS (or any Affiliate), as may be required by law.

 

Outside the US or if the time period in the US is amended from that
operative as of the Effective Date, the time period for notice under Section 13.03(a) shall
be one-half the time before the deadline for response without loss of rights
under applicable Law.  This Section 13.03
only designates the notice time period that applies to infringement actions in
relation to Hatch-Waxman or similar actions, but otherwise the suits will be
handled is as set forth in Section 13.03.

 

Section 13.04                          Assistance. For
purposes of Section 13.02 and Section 13.03, each Party shall
execute such legal papers and provide such reasonable assistance and take such
further actions as is necessary for the prosecution of such suit as may be
reasonably requested by the other Party. 
This shall be at the expense of the Party bringing suit (on an
at-expense, pass-through basis).

 

Section 13.05                          Settlement. No
settlement or consent judgment or other voluntary final disposition of a suit
under this Article may be entered into without the joint written consent
of ASTELLAS and THERAVANCE (which consent will not be withheld unreasonably)
except as follows:  either Party may
settle an infringement claim against it by a Third Party for money damages that
such Party will pay and for which it will not seek reimbursement, offset or
expense-sharing from the other Party;  provided that ASTELLAS’ right to
sublicense shall not be limited by this Section 13.05.

 

In addition, THERAVANCE shall not settle any suit under Section 13.02
in a manner inconsistent with ASTELLAS’ exclusive license hereunder (this
means, without limitation, that THERAVANCE shall not grant in the context of a
settlement any license (whether or not exclusive), covenant not to sue,
non-suit or other with respect to THERAVANCE Compound(s) and/or Licensed
Products).

 

Section 13.06                          Ownership Of Inventions.
Each Party shall promptly disclose to the other Party all Inventions made by it
during the Term-Basic; provided that ASTELLAS will be

 

67

 

allowed a reasonable time to file patent applications covering ASTELLAS
Inventions prior to disclosing the ASTELLAS Invention to THERAVANCE.  THERAVANCE will be allowed a reasonable time
to file patent applications covering THERAVANCE Inventions prior to disclosing
the THERAVANCE Invention to ASTELLAS; [*]. Such designated [*] have been [*]
regarding such [*] regarding the [*] prior to [*].  Any such draft patent application will be
considered THERAVANCE Confidential Information [*].  THERAVANCE shall own all THERAVANCE Inventions
and ASTELLAS shall own all ASTELLAS Inventions. 
All Joint Inventions shall be owned jointly by THERAVANCE and ASTELLAS,
and each Party hereby consents (without granting any license) to the exercise,
assignment or license or other disposition by the other Party of its joint
interest in Joint Inventions without accounting or the need to seek the consent
of the other Party to such assignment or license or other disposition; provided
that any such assignment, license or other disposition shall at all times be
subject to the grant of rights and accompanying conditions under Section 2.01,
Section 2.04 and ARTICLE 15. 
The determination of inventorship for Inventions shall be made in
accordance with the applicable Laws relating to inventorship set forth in the
patent Laws of the United States (Title 35, United States Code).

 

Section 13.07                          Licensing Discussion
Procedures. Until expiration of the last Term-Basic in all Countries in the
Territory, if either Party identifies any Third-Party Patents and/or Know-How
that it believes may be desirable to license to cover activities hereunder, it
shall request (in writing) a meeting between one JSC member from each Party and
internal or external counsel for each Party. 
Such meeting shall occur within thirty (30) days after requested.  If requested by counsel for either Party, the
Parties shall enter into an appropriate and customary joint defense/common
interest agreement to cover any and all such discussions and document the
parties’ common interest with respect to Licensed Product-related Third-Party
intellectual property.  In their meeting
and any follow-up meetings, the Parties shall seek to reach consensus as to the
relevance of such Third-Party intellectual property to Licensed Product, and
whether it is desirable to take a license under such Third-Party intellectual
property.  Any minutes of such meeting(s)
shall be prepared and kept only by counsel and shall be at an appropriate level
of detail and include only statements that are appropriate in view of the possibility
of litigation.

 

ARTICLE 14

 

TERM
AND TERMINATION

 

Section 14.01                          Term And Expiration Of
Term. Unless otherwise mutually agreed to by the Parties, this Agreement
shall commence on the Effective Date and shall end upon expiration of the last
Term-Total, unless terminated early as contemplated hereunder (and to avoid any
doubt, with royalty obligations separately earlier expiring on a
Country-by-Country basis on the expiration of the Term-Total in such
Country).  Unless terminated early under
this ARTICLE 14, the licenses granted by THERAVANCE to ASTELLAS shall
survive and shall be considered fully-paid and royalty-free, and non-exclusive
on a Country-by-Country basis at the times and as more particularly set forth
in Section 2.06.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

68

 

Section 14.02                          Termination For Material
Breach. Either Party may, without prejudice to any other remedies available
to it at law or in equity, terminate this Agreement subject to ARTICLE 15
in the event that the other Party (as used in this subsection, the “Breaching
Party”) shall have materially breached this Agreement or materially defaulted
in its performance of its obligations hereunder, and not corrected the
situation following notice and an opportunity to cure through performing an
appropriate remedy as provided below. 
The Breaching Party shall have [*] after written notice thereof (with
the written notice being required to specify that it is a notice of material
breach under this Section 14.02  and
describing the breach with reasonable specificity) was provided to the
Breaching Party by the non-breaching Party to remedy such default (or, if such
default cannot be cured within such [*] period, the Breaching Party must
commence actions to cure such default during such [*] period and thereafter
diligently continue such actions).  Any
such termination shall become effective at the end of such [*] period unless
the Breaching Party has cured any such breach or default prior to the
expiration of such [*] period (or, if such default is capable of being cured
but cannot be cured within such [*] period, the Breaching Party has commenced
and diligently continued actions to cure such default provided always that, in
such instance, such cure must have occurred within [*] after written notice
thereof was provided to the Breaching Party by the non-breaching Party to remedy
such default).  If the Breaching Party
disputes the existence of a material breach in good faith, or disputes the
appropriate remedy for such breach or whether any attempt to cure the breach
has been adequate or successful, this Agreement shall not be terminated unless
and until a final determination of uncured breach is made in accordance with Section 3.06.

 

Notwithstanding anything express or implied in the foregoing paragraph,
in recognition of the substantial investment ASTELLAS is making in the Licensed
Product (both through payments to THERAVANCE hereunder and otherwise), both
Parties expressly intend that termination of this Agreement shall be a remedy
of last and extraordinary resort, and preference shall in all cases (absent
proven fraud or extreme, overt and exceptional bad faith) be given to
fashioning a remedy or cure that leaves the licenses to ASTELLAS intact but
adequately addresses the breach.  Such
possible remedies and cures include, without limitation: an adjustment to the
royalties due hereunder, other money damages, the requirement that ASTELLAS
carry out additional Development and/or Commercialization (to an extent
consistent with Diligent Efforts) or conversion of the licenses to ASTELLAS to
no longer be exclusive with respect to THERAVANCE and its Affiliates.  In addition, to the extent the breach relates
primarily to a particular Country (for example in the case of a failure to
apply Diligent Efforts to Licensed Product Development or Commercialization
with respect to a particular Country), to the extent no remedy short of
termination can adequately address the breach, preference shall in all cases
(absent proven fraud or extreme, overt and exceptional bad faith) be given to
termination solely with respect to such Country.  Any arbitrator of a dispute arising in
connection with this Section 14.02 is hereby explicitly instructed to
fashion an appropriate remedy short of termination in all cases where any
remedy other than termination is reasonably adequate to cure the breach, and
where termination is the only remedy that can adequately address the breach to
limit termination to the Country with respect to which the breach occurred.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

69

 

Section 14.03                          Terminations For Cause.
ASTELLAS shall have the right to terminate this Agreement for cause, defined as
any (or any combination) of the following occurring:

 

(i)                                     If the results of
TELAVANCIN Studies do not support the submission of an NDA for the Licensed
Product, or do not support NDA Filing for the Licensed Product within [*] after
the Effective Date [*].

 

(ii)                                  If the FDA refuses to
file or declines to approve an NDA (once filed) for the Licensed Product within
[*].

 

(iii)                               If the labeling approved
by the FDA for the Licensed Product indicates that [*] population [*] defined
as those patients [*].

 

(iv)                              If the labeling approved
by the FDA for the Licensed Product indicates that [*] population [*] defined
as those patients [*].    [*].

 

(v)                                 If TELAVANCIN is not
approved by the FDA [*].

 

(vi)                              If serious safety
concerns arise with respect to the Licensed Product that result in its withdrawal
from the market in [*].

 

Section 14.04                          Contemporaneous
Termination Of Opt-In Right. The Opt-In Right shall terminate automatically
at the time of any early termination of this Agreement under this ARTICLE 14
with respect to any Major Market Country except a termination by ASTELLAS under
Section 14.02 for THERAVANCE’s material breach (i.e. the Opt-In Right
survives any such termination as per Section 15.02).

 

Section 14.05                          Survival Of Obligations.
Termination or expiration of this Agreement shall not relieve either Party from
any obligation accrued hereunder prior to the effective date of termination or
expiration.

 

Section 14.06                          Survival of Provisions
Upon Termination and/or Expiration. In addition to the survival of accrued
obligations under Section 14.05 (and the survival of any provisions to the
extent in accordance with the express terms thereof), the following Sections
and Articles shall survive any and all terminations and expirations of this
Agreement (on a Country-by-Country basis in the case of partial
terminations):  Articles 1 (to the extent
required to interpret surviving rights); 6 (solely (i) as regards
mechanics of payment to ensure payment of payment obligations that have accrued
prior to expiration or termination, and payment obligations to the extent
surviving under Section 15.02), and (ii) with respect to audits under
Section 6.10 for a period of [*] years after expiration or termination);
10 (with obligations thereunder expiring on the timetable set forth in such
Article); 11; 12; 14; 15; and 16; and the following Sections:  Section 2.01 to the extent provided in Section 2.06
(along with corresponding Section 2.04, Section 2.05, and Section 2.07
rights); Section 2.08 (but only the following pieces:  subsection (b), subsection (d)(iv)(B),
and subsection (d)(vi)); Section 3.06; Section 5.06; Section 8.01
and Section 8.02(a) (solely as regards ownership of the NDA and OUS
Regulatory Authorizations but not after terminations of this Agreement for
ASTELLAS’ material

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

70

 

breach); Section 8.04 (but not after terminations for ASTELLAS’
material breach); Section 9.06 (solely to the extent ASTELLAS wishes to
continue to exercise a sublicense thereunder, and not after terminations for
ASTELLAS’ material breach); Section 13.01(b); Section 13.02, Section 13.03,
Section 13.04 and Section 13.05 (for all of Sections 13.02, 13.03,
13.04 and 13.05, these survive with respect to infringement occurring during
the Term-Total in each Country, but do not survive termination for THERAVANCE’s
material breach, patent enforcement rights after which breach are governed by Section 15.02);
and Section 13.07 as regards any common interest or joint defense
agreements entered into prior to expiration or termination.

 

ARTICLE 15

 

CONSEQUENCES
OF TERMINATION

 

Section 15.01                          Termination And Handback
Of License. In addition to any remedy either Party may have in law, tort or
in contract, upon termination of the Agreement in a certain Country or in the
Territory as a whole, the following shall apply.

 

(a)                                  Termination Of
Licenses. Upon termination of this Agreement by THERAVANCE in a certain
Country or the Territory as a whole pursuant to Section 14.02  or by ASTELLAS in a certain Country or in the
Territory as a whole pursuant to Section 14.03  (in either case the “Date of
Termination”),  the licenses and rights
granted under Section 2.01, Section 2.04, Section 2.05, and Section 2.08
regarding the Country(ies) contemplated by the termination concerned shall
cease, and ASTELLAS shall, regarding the Territory or the Country concerned,
whichever is applicable:

 

(i)                                     in exchange for a
royalty on Net Sales of Licensed Products equal to [*] for the longer of the
life of the ASTELLAS Patents and [*] years after the Date of Termination
(subject to a [*] reduction on patent expiration in the applicable Country)
plus THERAVANCE paying [*] any royalties, milestones and other payments (x) due
Third-Party licensors of the ASTELLAS IP in respect of the rights ASTELLAS
grants under this Section 15.01 and (y) due Third-Party licensors of
reverted THERAVANCE IP and/or [*] previously sublicensed to ASTELLAS (including
without limitation to [*]), and committing to reasonable diligence obligations,
at the option of THERAVANCE, grant to THERAVANCE a non-exclusive,
Territory-wide or for the Country concerned, whichever is applicable,
sub-licensable, license under the ASTELLAS IP to develop, have developed, make,
have made, use, have used, import, have imported, market, have marketed, sell
and have sold the Licensed Product for any indications in the form(s) in which
it was in clinical development or on the market as of termination. ASTELLAS
shall do all such acts and things as may reasonably be necessary to fulfill
this obligation in a timely manner.

 

(ii)                                  return to THERAVANCE
all THERAVANCE Know-How and —subject to the financial terms required in subsection (i) —
deliver to THERAVANCE a copy of all ASTELLAS Know-How in written form;

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

71

 

(iii)                               promptly after
THERAVANCE’S request, deliver to THERAVANCE at the location specified by
THERAVANCE any and all quantities of API Compound and Licensed Product in its
possession, power, custody or control subject always to ASTELLAS’ right to
dispose of Licensed Product which is the subject of pre-termination date
orders.  THERAVANCE shall pay for the
quantities thus transferred to it in an amount equal to ASTELLAS’ Cost of Goods
Sold for such quantities.  For the
avoidance of doubt, should this Section 15.01(a)(iii) become
applicable because of termination regarding a certain Country or Countries
pursuant to Section 14.02,   then
the quantities of Licensed Product referred to herein shall mean only those
quantities clearly designated, by marking, labeling or similar, for the Country
or Countries concerned and which could only be used for the Country or
Countries concerned;

 

(iv)                              for all ASTELLAS Patents
that ASTELLAS intends to prosecute and/or maintain and subject to Section 15.01(a)(i),
ASTELLAS shall effective on the Date of Termination grant THERAVANCE an
exclusive license to develop, have developed, use, have used, make, have made,
import, have imported, market, have marketed, sell, and have sold the
THERAVANCE Compound and Licensed Product for all indications and uses with the
right to sublicense.  For any ASTELLAS
Patents that ASTELLAS elects not to prosecute and/or maintain, ASTELLAS shall: (1) promptly
notify THERAVANCE with sufficient time for THERAVANCE to assume such
prosecution and/or maintenance; (2) fully cooperate with THERAVANCE and
ensure that its patent attorneys immediately transfer to THERAVANCE a copy of
the patent files relating to such ASTELLAS Patents; (3) effective on the
Date of Termination grant THERAVANCE an exclusive license under any such
ASTELLAS Patents to develop, have developed, make, have made, use, have used,
sell, offer to sell, market, have marketed, import or have imported the API and
Licensed Products for any and all indications in the Territory; and (4) take
any action and produce any documents so as to enable THERAVANCE to apply for
patent term extensions, including, but not limited to, supplementary protection
certificates (or any other procedure by which the effective term of the
ASTELLAS Patent is extended), relating to the ASTELLAS Patents in THERAVANCE’S
name;

 

(v)                                 subject to Section 15.01(a)(i),
commensurate with legislative and regulatory requirements, transfer to
THERAVANCE or its nominee all Marketing Authorizations and regulatory filings
for the Licensed Product including, without limitation, all information and
documentation used in the filings relating to the Licensed Product, subject to
THERAVANCE’S payment of the royalties provided for in subsection (i).  In the event that in any Country such a
transfer is not possible, ASTELLAS shall use reasonable efforts to ensure that
THERAVANCE has the benefit of the relevant Marketing Authorizations, and other
related regulatory filings and approvals and, to this end, consents to any
regulatory authority cross-referencing to the data and information on file with
any Governmental Authority as may be necessary to facilitate the granting of
second Marketing Authorizations to and permit filings of a Marketing Authorizations
application by THERAVANCE, and ASTELLAS agrees to complete whatever other
procedures that are reasonably necessary in relation to the same to enable
THERAVANCE (either itself or in conjunction with a Third Party) freely to

 

72

 

develop and sell the Licensed Product in the Country concerned in
substitution for ASTELLAS;

 

(vi)                              subject to Section 15.01(a)(i),
if applicable, assign the ASTELLAS Product Trademark or grant a royalty-free
exclusive license to THERAVANCE to use the ASTELLAS Product Trademark as well
as trade dress and copyrights (to avoid any doubt, excluding any ASTELLAS
Housemarks) for the marketing, sales and distribution of the Licensed Product;

 

(vii)                           not after the date of
termination itself take any further action to Develop, manufacture, have
manufactured, use, market, distribute or sell the Licensed Product during the
life of the ASTELLAS Patents or the THERAVANCE Patents, whichever is the longer
but in any event only for so long as the licenses granted in 15.01(a)(i) and
15.01(a)(ii) are in effect, except that ASTELLAS has the right to dispose
of that part of its inventory of Licensed Product on hand as of the effective
Date of Termination which is the subject of orders for Licensed Product accepted
prior to the date of notice of termination for a period of six (6) months
after the effective Date of Termination, and, within thirty (30) days after
disposition of such inventory pursuant to the fulfillment of such orders,
ASTELLAS will forward to THERAVANCE a final report and pay all royalties due on
the Net Sales of Licensed Product during such period; and

 

(viii)                        for a period of [*] following
the effective Date of Termination manufacture or supply such API Compound and
Licensed Product if any, that is being manufactured by or for ASTELLAS prior to
such termination (“Supplied Licensed Product”) to THERAVANCE or to THERAVANCE’S
designee.  Such Supplied Licensed Product
shall be provided to THERAVANCE at ASTELLAS’ Cost Of Goods Sold plus any
amounts that may be due under the [*] in respect of such supply (to the extent
not already paid by THERAVANCE under subsection (i)).  During said [*] period, THERAVANCE shall
manufacture according to the requirements of the current updated forecast for
Licensed Product as of the date of termination. 
ASTELLAS shall also provide THERAVANCE, should THERAVANCE so require,
with reasonable assistance in relation to THERAVANCE’S appointment of a Third
Party manufacturer of Licensed Product and THERAVANCE shall have the right to
disclose ASTELLAS Confidential Information and ASTELLAS Know-How under
customary and reasonable legally binding obligations of confidentiality and
non-use, to any such potential Third Party manufacturer.

 

In the cases of part-world terminations, each of (i)-(viii) shall
only apply with respect to the terminated Country(ies) (and intellectual
property rights granted therein), and in particular (ii) shall only apply
with respect to Know-How that is specific to such Country(ies), and (iii) shall
only apply with respect to quantities that are labelled and can only legally be
used for sale in such Countries.

 

(b)                                 Disclosure Of
Confidential Information. Upon termination by THERAVANCE under Section 14.02  as stated in this ARTICLE 15, THERAVANCE
shall have the right to disclose Confidential Information, under customary and
reasonable legally binding obligations of confidentiality and non-use, to Third
Parties for the

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

73

 

purpose only of, and only to the extent necessary for, enabling such
Third Party to evaluate the financial and scientific status of the Licensed
Product for the purpose of making a financial offer to THERAVANCE on the
licensing or acquisition of the rights returned to THERAVANCE and the rights
licensed to THERAVANCE under this ARTICLE 15, and, if such licensing or
acquisition occurs, as necessary to exploit or enforce such rights.

 

Section 15.02                          Termination Followed By
Continued License. Upon the termination of this Agreement by ASTELLAS
pursuant to Section 14.02, in addition to those Articles and Sections
explicitly surviving as per Section 14.06,   THERAVANCE’S licenses granted to ASTELLAS
under Section 2.01 (and ASTELLAS’ associated rights under Section 2.04
and Section 2.05 and Section 2.08) shall continue, provided that
ASTELLAS continues to make payments pursuant to ARTICLE 6 as if the
Agreement were still in effect and the following Sections shall additionally
survive:  Section 2.02, Section 2.03
(as applied to THERAVANCE only), Section 2.08, Section 4.03 (to the
extent not already completely performed), 9.02-9.04 (but only as regards
THERAVANCE’s obligations and solely to the extent ASTELLAS does not choose to
assume such obligations and THERAVANCE has not already completely performed
them), and Section 13.04.  To avoid
any doubt, ASTELLAS shall have no further diligence obligations to THERAVANCE
after such termination under Section 14.02 and no further obligation to
include THERAVANCE in the Development or Commercialization (including without
limitation any decisions with respect to such activities, which decisions shall
belong solely to ASTELLAS post-termination). 
ASTELLAS shall further under such circumstances be entitled to conduct
all enforcement against infringement within the scope of the licenses to
ASTELLAS hereunder (treating all recoveries over expenses as Net Sales, to the
full extent not representing treble or punitive damages).  In addition, if THERAVANCE elects not to
file, prosecute or maintain the THERAVANCE Patents or claims encompassed by
such THERAVANCE Patents after such termination, ASTELLAS shall have the same
“step-in rights” (and THERAVANCE shall have the same notification obligations)
as are provided in Section 13.01(e) (to avoid any doubt this specific
remedy is not to exclusion of any other remedy that may be available to
ASTELLAS).

 

ARTICLE 16

 

MISCELLANEOUS

 

Section 16.01                          Relationship Of The
Parties. Each Party shall bear its own expenses incurred in the performance
of its obligations hereunder without charge or expense to the other except as
expressly provided in this Agreement. 
Neither Party shall have any responsibility for the hiring,  termination or compensation of the other
Party’s employees or for any employee benefits of such employee.  No employee or representative of a Party
shall have any authority to bind or obligate the other Party to this Agreement
for any sum or in any manner whatsoever, or to create or impose any contractual
or other liability on the other Party without said Party’s prior written
approval.  For all purposes, and
notwithstanding any other provision of this Agreement to the contract, the
legal relationship between the Parties under this Agreement shall be that of
independent

 

74

 

contractors.  This Agreement is
not a partnership agreement and nothing in this Agreement shall be construed to
establish a relationship of co-partners, partners or joint venturers between
the Parties nor to render one Party the agent of the other Party.

 

Section 16.02                          Registration And Filing Of
This Agreement. To the extent, if any, that either Party concludes in good
faith that it or the other Party is required to file or register this Agreement
or a notification thereof with any Governmental Authority, including without
limitation the U.S. Securities and Exchange Commission, the Competition Directorate
of the Commission of the European Communities or the U.S. Federal Trade
Commission, in accordance with Law, such Party shall inform the other Party
thereof. Should either of them be required (as determined by such Party in good
faith) to submit or obtain any such filing, registration or notification, the
Parties shall follow the procedures relating thereto set forth in Section 10.05,
and they shall cooperate, each at its own expense, in such filing, registration
or notification and shall execute all documents reasonably required in
connection therewith.  The Parties shall
promptly inform each other as to the activities or inquiries of any such
Governmental Authority relating to this Agreement, and shall reasonably cooperate
to respond to any request for further information there from on a timely basis.

 

Section 16.03                          Force Majeure. The
occurrence of an extraordinary event which materially interferes with the
ability of a Party to perform its obligations or duties hereunder which is not
within the reasonable control of the Party affected or any of its Affiliates,
not due to malfeasance by such Party or its Affiliates, and which could not
with the exercise of due diligence have been avoided (each, a “Force Majeure
Event”), including, but not limited to, an injunction, order or action by a
Governmental Authority, fire, accident, labor difficulty, strike, riot, civil
commotion, act of God, act of war, act of terrorism, inability to obtain raw
materials, delay or errors by shipping companies or change in law, shall not
excuse such Party from the performance of its obligations or duties under this
Agreement, but shall merely suspend such obligation or performance during the
continuation of the Force Majeure. The Party prevented from performing its
obligations or duties because of a Force Majeure Event shall promptly notify
the other Party of the occurrence and particulars of such Force Majeure and
shall provide the other Party, from time to time, with its best estimate of the
duration of such Force Majeure Event and with notice of the termination
thereof. The Party so affected shall use Diligent Efforts to avoid or remove
such causes of nonperformance as soon as is reasonably practicable. Upon
termination of the Force Majeure Event, the performance of any suspended obligation
or duty shall promptly recommence. The Party subject to the Force Majeure Event
shall not be liable to the other Party for any direct, indirect, consequential,
incidental, special, punitive, exemplary or other damages arising out of or
relating to the suspension or termination of any of its obligations or duties
under this Agreement by reason of the occurrence of a Force Majeure Event,
provided such Party complies in all material respects with its obligations
under this Section 16.03.

 

Section 16.04                          Governing Law. This
Agreement shall be construed, and the respective rights of the Parties
determined, according to the substantive law of the State of New York, United
States of America, notwithstanding the provisions governing conflict of laws
under such New York law to the contrary.

 

75

 

Section 16.05                          Attorneys’ Fees And
Related Expenses. In the event that any legal proceeding is brought to
enforce or interpret any of the provisions of this Agreement, the prevailing
party shall be entitled to recover its reasonable attorneys’ fees, court
expenses and expenses of litigation whether or not the action or proceeding
proceeds to final judgment.

 

Section 16.06                          Assignment.

 

(a) This Agreement may not be assigned
by either Party without the prior written consent of the other Party; provided,
however that either Party may assign this Agreement, in whole or in part, to
any of its Affiliates if such Party guarantees the performance of this
Agreement by such Affiliate; and provided further that either Party may assign
this Agreement to a successor to all or substantially all of the assets of such
Party whether by merger, sale of stock, sale of assets or other similar
transaction. This Agreement shall be binding upon, and subject to the terms of
the foregoing sentence, inure to the benefit of the Parties hereto, their
permitted successors, legal representatives and assigns.  [*] (each of the foregoing referred to in
this sentence, [*].

 

(b) If (i) THERAVANCE assigns this
Agreement as permitted in the foregoing paragraph, and the assignee has in
clinical development or on the market in any Country in the Territory, or has
filed an application for Marketing Authorization (with such term for this
purpose being deemed to cover only applications that are for products other
than Licensed Product) in any Country in the Territory for, a product candidate
or product in the Field, or (ii) [*], then ASTELLAS shall be entitled to
terminate its diligence obligations and obligations to collaborate with
(including without limitation sharing information with, which includes without
limitation providing updates to the Medical Marketing Plan, and having the
TELAVANCIN Product Management Team meet at all, or the JSC meet at all) the
acquiror or perform ASTELLAS’ activities under this Agreement in accordance
with any previously exchanged information and plans, and ASTELLAS shall be
entitled to make all decisions previously reserved to the JSC and/or THERAVANCE
Product Management Team.  However, in the
case of (i) (but solely as relates to assignments not involving a [*]), if
the acquiror divests the competitive product within one hundred and eighty
(180) days after the assignment, then the foregoing sentence shall not apply to
such transaction.  The effect of such
termination of ASTELLAS’ obligations shall be as if ASTELLAS had terminated
pursuant to Section 14.02,  which
effect is as described in Section 15.02 (to the full extent not already
provided for above in this Section 16.06). 
Furthermore, the acquiror shall promptly return or destroy all
Confidential Information to ASTELLAS and certify within sixty (60) days after
the assignment in an officer’s certificate that all Confidential Information
has been so returned or destroyed.  In
the event that this subparagraph 16.06(b) applies (and there is no
divestiture of the applicable competitive product as provided above), then Section 2.03
shall not apply to either Party and both Parties shall be released from the
obligations thereunder.

 

Section 16.07                          Performance by Affiliates.
ASTELLAS may perform its obligations and exercise its rights hereunder by or
through one or more of its Affiliates, provided always

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

76

 

that ASTELLAS shall be responsible for the acts/omissions of any such
ASTELLAS Affiliate.

 

Section 16.08                          Notices. All demands, notices,
consents, approvals, reports, requests and other communications hereunder must
be in English and in writing and will be deemed to have been duly given only if
delivered personally, by facsimile with confirmation of receipt, by mail (first
class, postage prepaid), or by overnight delivery using a globally-recognized
carrier, to the Parties at the following addresses:

 

	
  THERAVANCE:

  	
   

  	
  THERAVANCE, Inc.

  
	
   

  	
   

  	
  901 Gateway Boulevard

  
	
   

  	
   

  	
  South San Francisco, CA 94080

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
  Attn: Senior Vice President, Commercial
  Development

  
	
   

  	
   

  	
   

  
	
  With a required copy to:

  	
   

  	
  THERAVANCE, Inc.

  
	
   

  	
   

  	
  901 Gateway Boulevard

  
	
   

  	
   

  	
  South San Francisco, CA 94080

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
  Attn: Senior Vice President and General
  Counsel

  
	
   

  	
   

  	
   

  
	
  ASTELLAS:

  	
   

  	
  ASTELLAS PHARMA INC

  
	
   

  	
   

  	
  3-11, Nihonbashi-Honcho

  
	
   

  	
   

  	
  2-chome Chuo-ku

  
	
   

  	
   

  	
  Tokyo

  
	
   

  	
   

  	
  103-8411

  
	
   

  	
   

  	
  Japan

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
  Attn: Vice President, Legal Department

  
	
   

  	
   

  	
   

  
	
  With required copies to:

  	
   

  	
  ASTELLAS US LLC

  
	
   

  	
   

  	
  Three Parkway North

  
	
   

  	
   

  	
  Deerfield, IL 60015-2548

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
  Attn: General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ASTELLAS US LLC

  
	
   

  	
   

  	
  Three Parkway North

  
	
   

  	
   

  	
  Deerfield, IL 60015-2548

  
	
   

  	
   

  	
  [*]

  
	
   

  	
   

  	
  Attn: Senior Vice President, Business
  Development

  

 

or to such other address as the addressee shall have last furnished in
writing in accord with this provision to the addressor. All notices shall be
deemed effective upon receipt by the addressee.

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

77

 

Section 16.09                          Limitation on Liability.
EXCEPT FOR BREACH OF ARTICLE 10 (CONFIDENTIALITY) OR TO THE EXTENT A PARTY
MAY BE REQUIRED TO INDEMNIFY THE OTHER PURSUANT TO ARTICLE 12
(INDEMNIFICATION), IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF
ANY KIND ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, HOWEVER CAUSED
AND ON ANY THEORY OF LIABILITY (WHETHER IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), STRICT LIABILITY OR OTHERWISE).

 

Section 16.10                          Severability. In the
event of the invalidity of any provisions of this Agreement or if this
Agreement contains any gaps, the Parties agree that such invalidity or gap
shall not affect the validity of the remaining provisions of this Agreement.
The Parties will replace an invalid provision or fill any gap with valid
provisions which most closely approximate the purpose and economic effect of
the invalid provision or, in case of a gap, the Parties’ presumed intentions.
In the event that the terms and conditions of this Agreement are materially
altered as a result of the preceding sentences, the Parties shall renegotiate
the terms and conditions of this Agreement in order to resolve any inequities.
Nothing in this Agreement shall be interpreted so as to require either Party to
violate any applicable Laws, rules or regulations.

 

Section 16.11                          Headings; Interpretation.
The headings used in this Agreement have been inserted for convenience of
reference only and do not define or limit the provisions hereof.

 

Also in interpreting this Agreement, where examples are given or the
phrases “including,” “such as” or a like phrase is used, the intent is not to
be limiting but rather merely illustrative.

 

Section 16.12                          Waiver. Any term or
condition of this Agreement may be waived at any time by the Party that is
entitled to the benefit thereof, but no such waiver shall be effective unless
set forth in a written instrument duly executed by or on behalf of the Party
waiving such term or condition. No waiver by any Party of any term or condition
of this Agreement, in any one or more instances, shall be deemed to be or
construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. Except as expressly set forth in this
Agreement, all rights and remedies available to a Party, whether under this
Agreement or afforded by law or otherwise, will be cumulative and not in the
alternative to any other rights or remedies that may be available to such
Party.

 

Section 16.13                          Entire Agreement. This
Agreement (including the exhibits and schedules hereto) constitutes the entire
agreement between the Parties hereto with respect to the subject matter of this
Agreement and supersedes all previous agreements and understandings between the
Parties, whether written or oral. This Agreement may be altered, amended or
changed only by a writing making specific reference to this Agreement, stating
that it amends this Agreement, and signed by duly authorized officers

 

78

 

(at a seniority level within the relevant Party at least as high as the
original signatory from such Party having executed this Agreement) of
THERAVANCE and ASTELLAS.

 

Section 16.14                          No License. Nothing in
this Agreement shall be deemed to constitute the grant of any license or other
right in either Party, to or in respect of any, patent, trademark, Confidential
Information, trade secret, data or any other intellectual property of the other
Party, except as expressly set forth herein.

 

Section 16.15                          Third Party Beneficiaries.
None of the provisions of this Agreement shall be for the benefit of or
enforceable by any Third Party, including without limitation any creditor of
either Party hereto. No such Third Party shall obtain any right under any
provision of this Agreement or shall by reasons of any such provision make any
Claim in respect of any debt, liability or obligation (or otherwise) against
either Party hereto.

 

Section 16.16                          Counterparts. This
Agreement may be executed in any two counterparts, each of which, when
executed, shall be deemed to be an original and both of which together shall
constitute one and the same document.

 

Section 16.17                          Single Closing Condition.
The obligation of each Party to consummate the transaction contemplated hereby
is subject to the satisfaction of the following condition (the “Closing
Condition”):  All filings under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any other similar
competition or merger control laws that are necessary in any jurisdiction with
respect to the transaction contemplated hereby shall have been made and any
required waiting period under such laws shall have expired or been terminated
and any Governmental Authority that has power under or authority to enforce such
laws shall have, if applicable, approved, cleared or decided neither to
initiate proceedings or otherwise intervene in respect of the transaction
contemplated hereby nor to refer the transaction to any other competent
Governmental Authority.  Each Party shall
use good faith efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other party in doing,
all things necessary, proper or advisable to consummate and make effective the
transaction contemplated by this Agreement, including, but not limited to
satisfaction of the Closing Condition and each Party shall keep the other Party
reasonably apprised of the status of matters relating to the completion of
same.  In connection with the foregoing,
the Parties hereby agree to negotiate in good faith to make as soon as
practicable any modification or amendment to this Agreement or any agreement
related hereto that is required by the United States Federal Trade Commission,
Department of Justice or equivalent Governmental Authority, provided that no
Party shall be required to agree to any modification or amendment that, in the
reasonable opinion of such Party’s external legal or financial counsel, would
be adverse to such Party.  This Agreement
may be terminated by either Party upon written notice any time after [*] of the
Signing Date if the transactions contemplated by this Agreement shall not have
been consummated due to failure to satisfy the Closing Condition; provided,
however, that the terminating Party shall not have breached in any material
respect its obligations under this Agreement in any manner that shall have been
the proximate cause of, or resulted in, the failure to satisfy the Closing
Condition or otherwise to consummate the transactions contemplated by this
Agreement by such date.  Prior to the
Closing Condition being

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

79

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

80

 

satisfied or this Agreement being terminated under this Section 16.17,  neither Party shall take any action that will
make any of its representations and warranties under ARTICLE 11 untrue as
of the Effective Date, it being understood that with respect to THERAVANCE’s
representations in Section 11.02, threats, claims, proceedings or actions
by Third Parties that may occur after the Signing Date do not in and of
themselves constitute “taking any action” by THERAVANCE for purposes of the
preceding sentence.

 

IN WITNESS WHEREOF,
the Parties have executed this Agreement by the hands of their duly authorized
officers as of the Effective Date.

 

	
  THERAVANCE, INC.

  	
  ASTELLAS PHARMA INC.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
										

 

81

 

LISTS
OF EXHIBITS

 

	
  Exhibit A -

  	
   

  	
  THERAVANCE Patents as of the Effective Date

  
	
   

  	
   

  	
   

  
	
  Exhibit B -

  	
   

  	
  Supply Terms

  
	
   

  	
   

  	
   

  
	
  Exhibit C -

  	
   

  	
  Chemical Structure of TELAVANCIN

  
	
   

  	
   

  	
   

  
	
  Exhibit D -

  	
   

  	
  POC Data Contents

  

 

1

 

Exhibit A

 

THERAVANCE
Patents as of the Effective Date

 

[*]

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

1

 

EXHIBIT B

 

Supply
Terms

 

As provided in Section 9.02(c) of this Agreement, this Exhibit B
sets forth the terms upon which THERAVANCE will supply ASTELLAS with quantities
of API Compound and Licensed Product.  If
the Parties choose to enter into a more detailed written agreement for this
supply, then this more detailed written agreement once executed by the Parties,
will supersede the terms of this Exhibit B.

 

	
  Requirements

  	
   

  	
  THERAVANCE shall supply ASTELLAS with API
  Compound and Licensed Product for ASTELLAS’ requirements under Section 9.02(c).

   

  
	
  Forecasts

  	
   

  	
  ASTELLAS would provide THERAVANCE with [*]
  forecasts for Licensed Product, covering a period of time beginning [*] after
  the date the forecast is provided, with the first [*], and the succeeding
  [*].

   

  
	
  Orders

  	
   

  	
  ASTELLAS would place quarterly purchase
  orders with THERAVANCE for Licensed Products, [*] in advance of the quarter
  in which delivery is requested. These orders cannot exceed by more than [*]
  the last forecast for the [*] of delivery.

   

  
	
  Order Cancellation

  	
   

  	
  ASTELLAS could cancel any order prior to it
  being delivered provided that it covered any cancellation expenses.

   

  
	
  Acceptance and Rejection

  	
   

  	
  ASTELLAS would have [*] to inspect each
  shipment to determine its conformance to the applicable specifications, and
  would be deemed to have accepted a shipment if it provided no notice of
  rejection within such time period after receiving such shipment. If ASTELLAS
  were to reject any quantity of Licensed Product, THERAVANCE could agree with
  the rejection or send the dispute to a Third-Party lab for determination whether
  the quantity rejected was in conformity with specifications.

   

  
	
  At-Cost Transfer Pricing

  	
   

  	
  THERAVANCE would supply ASTELLAS at cost on
  a pass-through basis based on the price THERAVANCE pays its Third-Party
  suppliers.

   

  
	
  Compliance with Laws

  	
   

  	
  THERAVANCE would comply with applicable
  laws in discharging the manufacture and supply obligation hereunder, and
  would contractually require the same of its suppliers.

  
	
   

  	
   

  	
   

  
	
  Conformance of

  	
   

  	
  THERAVANCE would deliver Licensed Product
  manufactured

  

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

1

 

	
  delivered quantities to cGMP and Regulatory
  Requirements

  	
   

  	
  in accordance with then-current cGMP, the
  applicable specifications and other applicable requirements of regulatory
  authorities.

  
	
   

  	
   

  	
   

  
	
  GMP Audits

  	
   

  	
  THERAVANCE would exercise its audit right
  of any Third-Party suppliers in accordance with ASTELLAS’ request and permit
  ASTELLAS and/or ASTELLAS representatives to accompany THERAVANCE on the
  audit.

   

  In addition, ASTELLAS (itself or by and
  through its representatives) would be entitled to audit THERAVANCE, to the
  full extent THERAVANCE is performing any release testing or other activities
  governed by cGMP.

   

  
	
  Risk Allocation

  	
   

  	
  THERAVANCE would indemnify ASTELLAS for
  Claims arising out of any failure of Licensed Product delivered to ASTELLAS
  hereunder to conform to applicable specifications or be manufactured in accordance
  with the standards set forth above.

  

 

2

 

Exhibit C

 

Chemical
Structure of TELAVANCIN

 

[*]

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

3

 

Exhibit D

POC
Data Contents

 

[*]

 

 

[*]=CERTAIN INFORMATION HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
WITH RESPECT TO THE OMITTED PORTIONS.

 

4QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.1    
    

          

  

  

  

 

SANMINA-SCI CORPORATION,

as Issuer 

THE
GUARANTORS PARTY HERETO,

as Guarantors 

and 

U.S.
BANK NATIONAL ASSOCIATION,

as Trustee 

Indenture

Dated
as of                   , 

$                        

%
Senior Subordinated Notes due 

  

   

   

   

   

   

 

SANMINA-SCI CORPORATION 

Reconciliation
and tie between Trust Indenture Act

of 1939 and Indenture, dated as of                        , 

	Trust Indenture Act Section
 
	 	Indenture Section

	§ 310(a)(1)	 	609
	(a)(2)	 	609
	(a)(3)	 	Not Applicable
	(a)(4)	 	Not Applicable
	(a)(5)	 	Not Applicable
	(b)	 	608
	(c)	 	Not Applicable
	§ 311(a)	 	613
	(b)	 	613
	(c)	 	Not Applicable
	§ 312(a)	 	701, 702
	(b)	 	702
	(c)	 	702
	§ 313(a)	 	703
	(b)(1)	 	703, 1103
	(b)(2)	 	703
	(c)	 	703
	(d)	 	703
	§ 314(a)	 	704, 1020
	(c)(1)	 	102
	(c)(2)	 	102
	(c)(3)	 	Not Applicable
	(e)	 	102
	(f)	 	Not Applicable
	§ 315(a)	 	601
	(b)	 	602
	(c)	 	601
	(d)	 	601
	(d)(1)	 	601
	(e)	 	514
	§ 316(a) (last sentence)	 	501
	(a)(l)(A)	 	104, 501, 503, 512
	(a)(l)(B)	 	501, 513
	(a)(2)	 	Not Applicable
	(b)	 	508
	§ 317(a)(1)	 	503
	(a)(2)	 	504
	(b)	 	1003
	§ 318(a)	 	107

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

  

 
 

TABLE OF CONTENTS    
    

	 
	 
	 	Page

	ARTICLE ONE	DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION	 	1
	 	
 SECTION 101.	

Definitions	
 	

1
	 	SECTION 102.	Compliance Certificates and Opinions	 	32
	 	SECTION 103.	Form of Documents Delivered to Trustee	 	33
	 	SECTION 104.	Acts of Holders; Record Date	 	33
	 	SECTION 105.	Notices, Etc., to Trustee and Company	 	35
	 	SECTION 106.	Notice to Holders; Waiver	 	35
	 	SECTION 107.	Conflict with Trust Indenture Act	 	35
	 	SECTION 108.	Effect of Headings and Table of Contents	 	35
	 	SECTION 109.	Successors and Assigns	 	36
	 	SECTION 110.	Separability Clause	 	36
	 	SECTION 111.	Benefits of Indenture	 	36
	 	SECTION 112.	Governing Law	 	36
	 	SECTION 113.	Legal Holidays	 	36
	 	SECTION 114.	Indenture and Securities Solely Corporate Obligations	 	36
	 	SECTION 115.	Counterparts	 	36
	

ARTICLE TWO	

NOTE FORMS	
 	

37
	 	
 SECTION 201.	

Forms Generally	
 	

37
	 	SECTION 202.	Restrictive Legends	 	37
	

ARTICLE THREE	

THE NOTES	
 	

38
	 	
 SECTION 301.	

Title and Terms	
 	

38
	 	SECTION 302.	Denominations	 	38
	 	SECTION 303.	Execution, Authentication, Delivery and Dating	 	38
	 	SECTION 304.	Temporary Notes	 	39
	 	SECTION 305.	Registration and Registration of Transfer and Exchange Generally; Certain Transfers and Exchanges, Provisions Applying to Global Notes	 	40
	 	SECTION 306.	Mutilated, Destroyed, Lost and Stolen Notes	 	42
	 	SECTION 307.	Payment of Interest; Interest Rights Preserved	 	43
	 	SECTION 308.	Persons Deemed Owners	 	43
	 	SECTION 309.	Cancellation	 	44
	 	SECTION 310.	Computation of Interest	 	44
	 	SECTION 311.	CUSIP Numbers	 	44
	 	SECTION 312.	Issuance of Additional Notes	 	44
	 	SECTION 313.	Designation of Notes as Senior Debt	 	45
	

ARTICLE FOUR	

SATISFACTION AND DISCHARGE	
 	

45
	 	
 SECTION 401.	

Satisfaction and Discharge of Indenture	
 	

45
	 	SECTION 402.	Application of Trust Money	 	46
	

ARTICLE FIVE	

REMEDIES	
 	

46
	 	
 SECTION 501.	

Events of Default	
 	

46
	 	SECTION 502.	Acceleration of Maturity; Rescission and Annulment	 	48
	 	SECTION 503.	Collection of Debt and Suits for Enforcement by Trustee	 	49
	 	 	 	 

i

 

	 	SECTION 504.	Trustee May File Proofs of Claim	 	49
	 	SECTION 505.	Trustee May Enforce Claims Without Possession of Notes	 	49
	 	SECTION 506.	Application of Money Collected	 	50
	 	SECTION 507.	Limitation on Suits and Remedies	 	50
	 	SECTION 508.	Unconditional Right of Holders to Receive Principal, Premium and Interest	 	50
	 	SECTION 509.	Restoration of Rights and Remedies	 	50
	 	SECTION 510.	Rights and Remedies Cumulative	 	51
	 	SECTION 511.	Delay or Omission Not Waiver	 	51
	 	SECTION 512.	Control by Holders	 	51
	 	SECTION 513.	Waiver of Past Defaults	 	51
	 	SECTION 514.	Undertaking for Costs	 	52
	 	SECTION 515.	Waiver of Stay or Extension Laws	 	52
	

ARTICLE SIX	

THE TRUSTEE	
 	

52
	 	
 SECTION 601.	

Certain Duties and Responsibilities	
 	

52
	 	SECTION 602.	Notice of Defaults	 	52
	 	SECTION 603.	Certain Rights of Trustee	 	52
	 	SECTION 604.	Not Responsible for Recitals or Issuance of Notes	 	54
	 	SECTION 605.	May Hold Notes	 	54
	 	SECTION 606.	Money Held in Trust	 	54
	 	SECTION 607.	Compensation and Reimbursement	 	54
	 	SECTION 608.	Disqualification: Conflicting Interests	 	55
	 	SECTION 609.	Corporate Trustee Required; Eligibility	 	55
	 	SECTION 610.	Resignation and Removal; Appointment of Successor	 	55
	 	SECTION 611.	Acceptance of Appointment by Successor	 	56
	 	SECTION 612.	Merger, Conversion, Consolidation or Succession to Business	 	56
	 	SECTION 613.	Preferential Collection of Claims Against Company	 	56
	 	SECTION 614.	Appointment of Authenticating Agent	 	56
	

ARTICLE SEVEN	

HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY	
 	

58
	 	
 SECTION 701.	

Company to Furnish Trustee Names and Addresses of Holders	
 	

58
	 	SECTION 702.	Preservation of Information; Communications to Holders	 	58
	 	SECTION 703.	Reports by Trustee	 	58
	 	SECTION 704.	Reports by Company	 	59
	

ARTICLE EIGHT	

MERGERS, CONSOLIDATION AND SALE OF PROPERTY	
 	

59
	 	
 SECTION 801.	

The Company May Consolidate, etc. only on Certain Terms	
 	

59
	 	SECTION 802.	The Notes Guarantors May Consolidate, etc. only on Certain Terms	 	60
	

ARTICLE NINE	

SUPPLEMENTAL INDENTURES	
 	

60
	 	
 SECTION 901.	

Supplemental Indentures Without Consent of Holders	
 	

60
	 	SECTION 902.	Supplemental Indentures with Consent of Holders	 	61
	 	SECTION 903.	Execution of Supplemental Indentures	 	62
	 	SECTION 904.	Effect of Supplemental Indentures	 	62
	 	SECTION 905.	Conformity with Trust Indenture Act	 	62
	 	SECTION 906.	Reference in Notes to Supplemental Indentures	 	62
	 	SECTION 907.	Notice of Supplemental Indenture	 	62
	 	SECTION 908.	Form of Consent	 	63
	 	 	 	 

ii

 

	

ARTICLE TEN	

COVENANTS	
 	

63
	 	
 SECTION 1001.	

Payment of Principal, Premium and Interest	
 	

63
	 	SECTION 1002.	Maintenance of Office or Agency	 	63
	 	SECTION 1003.	Money for Note Payments to be Held in Trust	 	63
	 	SECTION 1004.	Corporate Existence	 	64
	 	SECTION 1005.	Maintenance of Properties	 	64
	 	SECTION 1006.	Payment of Taxes and Other Claims	 	64
	 	SECTION 1007.	Maintenance of Insurance	 	65
	 	SECTION 1008.	Limitation on Debt	 	65
	 	SECTION 1009.	Limitation on Restricted Payments	 	65
	 	SECTION 1010.	Limitation on Restrictions on Distributions from Restricted Subsidiaries	 	68
	 	SECTION 1011.	Limitation on Liens	 	70
	 	SECTION 1012.	[Intentionally Omitted]	 	70
	 	SECTION 1013.	Limitation on Asset Sales	 	70
	 	SECTION 1014.	Limitation on Transactions with Affiliates	 	72
	 	SECTION 1015.	Repurchase at the Option of Holders upon a Change of Control	 	73
	 	SECTION 1016.	Designation of Restricted and Unrestricted Subsidiaries	 	74
	 	SECTION 1017.	Payments for Consent	 	74
	 	SECTION 1018.	Limitation on Layered Debt	 	74
	 	SECTION 1019.	Available Information	 	74
	 	SECTION 1020.	Statement by Officers as to Default; Compliance Certificates	 	75
	 	SECTION 1021.	Waiver of Certain Covenants	 	75
	 	SECTION 1022.	Covenants After Fall-Away Event	 	75
	

ARTICLE ELEVEN	

REDEMPTION OF NOTES	
 	

76
	 	
 SECTION 1101.	

Right of Redemption	
 	

76
	 	SECTION 1102.	Applicability of Article	 	76
	 	SECTION 1103.	Election to Redeem; Notice to Trustee	 	76
	 	SECTION 1104.	Selection by Trustee of Notes to be Redeemed	 	77
	 	SECTION 1105.	Notice of Redemption	 	77
	 	SECTION 1106.	Deposit of Redemption Price	 	78
	 	SECTION 1107.	Notes Payable on Redemption Date	 	78
	 	SECTION 1108.	Notes Redeemed in Part	 	78
	

ARTICLE TWELVE	

GUARANTEES	
 	

78
	 	
 SECTION 1201.	

Notes Guarantee	
 	

78
	 	SECTION 1202.	Execution and Delivery of the Notes Guarantees	 	80
	 	SECTION 1203.	Limitation on Notes Guarantors' Liability	 	80
	 	SECTION 1204.	Rights under the Notes Guarantees	 	80
	 	SECTION 1205.	Primary Obligations	 	81
	 	SECTION 1206.	Notes Guarantee by Future Domestic Subsidiaries	 	81
	 	SECTION 1207.	Release of Notes Guarantors	 	82
	

ARTICLE THIRTEEN	

DEFEASANCE AND COVENANT DEFEASANCE	
 	

82
	 	
 SECTION 1301.	

Company's Option to Effect Defeasance or Covenant Defeasance	
 	

82
	 	SECTION 1302.	Defeasance and Discharge	 	82
	 	 	 	 

iii

 

	 	SECTION 1303.	Covenant Defeasance	 	83
	 	SECTION 1304.	Conditions to Defeasance or Covenant Defeasance	 	83
	 	SECTION 1305.	Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous Provisions	 	84
	 	SECTION 1306.	Reinstatement	 	85
	

ARTICLE FOURTEEN	

SUBORDINATION	
 	

85
	 	
 SECTION 1401.	

Agreement to Subordinate	
 	

85
	 	SECTION 1402.	Liquidation, Dissolution, Bankruptcy	 	85
	 	SECTION 1403.	Default on Senior Debt	 	86
	 	SECTION 1404.	Acceleration of Payment of Securities	 	86
	 	SECTION 1405.	When Distribution Must Be Paid Over	 	87
	 	SECTION 1406.	Subrogation	 	87
	 	SECTION 1407.	Relative Rights	 	87
	 	SECTION 1408.	Subordination May Not Be Impaired by Company	 	87
	 	SECTION 1409.	Rights of Trustee and Paying Agent	 	87
	 	SECTION 1410.	Distribution or Notice to Representative	 	88
	 	SECTION 1411.	Article Fourteen Not to Prevent Events of Default or Limit Right to Accelerate	 	88
	 	SECTION 1412.	Trust Moneys Not Subordinated	 	88
	 	SECTION 1413.	Trustee Entitled to Rely	 	88
	 	SECTION 1414.	Trustee to Effectuate Subordination	 	88
	 	SECTION 1415.	Trustee Not Fiduciary for Holders of Senior Debt	 	88
	 	SECTION 1416.	Reliance by Holders of Senior Debt on Subordination Provisions	 	89
	 	SECTION 1417.	Subordination of Notes Guarantor	 	89
	

Exhibit A	

Form of Note	
 	

A-1
	Exhibit B	Guarantee	 	B-1

iv

  

        INDENTURE, dated as of                     ,        ,
among Sanmina-SCI Corporation, a corporation duly organized and existing under the laws of the State of Delaware, as
issuer (herein called the "Company"), having its principal executive offices at 2700 North First Street, San Jose, California 95134, the Notes
Guarantors (as defined herein) and U.S. Bank National Association, as trustee (herein called the "Trustee"). 

 
 

RECITALS OF THE COMPANY    
    

        The Company has duly authorized the creation of an issue of its    % Senior Subordinated Notes
due            , of substantially the tenor and
amount hereinafter set forth herein, and to provide therefor the Company and the Notes Guarantors have duly authorized the execution and delivery of this Indenture. The Notes may consist of any of or
all of the Original Notes or Additional Notes, each as defined herein. The Original Notes and any Additional Notes shall rank pari passu with one
another, shall together constitute a single class and series of securities and will vote together as one series of securities under this Indenture. 

        All
things necessary to make the Notes, when executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and
to make this Indenture a valid agreement of the Company, in accordance with their and its terms, have been done. 

        All
things necessary to make the Notes Guarantees, when executed by the Notes Guarantors and delivered hereunder, the valid obligations of the Notes Guarantors, and to make this
Indenture a valid agreement of the Notes Guarantors, in accordance with their and its terms, have been done. 

        This
Indenture is subject to, and shall be governed by, the same provisions of the Trust Indenture Act that are required to be a part of and govern indentures qualified under the Trust
Indenture Act. 

        NOW,
THEREFORE, THIS INDENTURE WITNESSETH: 

        For
and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders, as follows: 

 
 

ARTICLE ONE
  DEFINITIONS AND OTHER PROVISIONS
  OF GENERAL APPLICATION    
    

        SECTION
101.    Definitions.    

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

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

        (2)   all
other terms used herein which are defined in the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
either directly or by reference therein, have the meanings assigned to them therein; 

        (3)   all
accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States
(whether or not such is indicated herein), and, except as otherwise herein expressly provided, the term "generally accepted accounting principles" or
"GAAP" with respect to any financial or accounting computation required or permitted hereunder shall mean such accounting principles as are generally
accepted in the United States as in effect from time to time; 

1

 

        (4)   unless
the context otherwise requires, any reference to an "Article" or a "Section", or to an "Exhibit" or a "Schedule", refers to an Article or Section of, or to an
Exhibit or a Schedule attached to, this Indenture, as the case may be; 

        (5)   unless
the context otherwise requires, any reference to a statute, rule or regulation refers to the same (including any successor statute, rule or regulation thereto) as
it may be amended from time to time; 

        (6)   unless
otherwise specifically set forth herein, all calculations or determinations of a Person shall be performed or made on a consolidated basis in accordance with
GAAP; 

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

        (8)   except
as otherwise specifically provided in this Indenture, whenever the covenant or default provisions or definitions in this Indenture refer to an amount in U.S.
dollars, that amount will be deemed to refer to the U.S. Dollar Equivalent of the amount of any obligation denominated in any other currency or currencies, including composite currencies. Any
determination of U.S. Dollar Equivalent for any purpose under this Indenture will be determined as of a date of determination as described in the definition of "U.S. Dollar Equivalent" and, in any
case, no subsequent change in the U.S. Dollar Equivalent after the applicable date of determination will cause such determination to be modified. 

        (b)   Certain
terms, used principally in Article Ten, are defined in that Article. Other terms are defined as follows: 

        "6.75% Senior Subordinated Notes" means the 6.75% Senior Subordinated Notes due 2013 of the Company. 

        "10.375% Senior Secured Notes" means the 10.375% Senior Secured Notes due January 15, 2010 of the Company. 

        "Acquired Debt" means Debt of a Person (a) outstanding on the date on which such Person becomes a Restricted Subsidiary or
(b) assumed in connection with the acquisition of assets from such Person. Acquired Debt shall be deemed to be Incurred on the date the acquired Person becomes a Restricted Subsidiary or the
date of the related acquisition of assets from such Person. 

        "Act," when referring to the Act of Holders, shall have the meaning set forth in Section 104. 

        "Additional Assets" means: 

        (a)   any
Property (other than cash, Cash Equivalents and securities) to be owned by the Company or any Restricted Subsidiary and used in a Permitted Business, including,
without limitation, receivables repurchased in connection with a Receivables Program; 

        (b)   Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary from
any Person other than the Company or an Affiliate of the Company; provided, however, that, in the case of this clause (b), such Restricted
Subsidiary is primarily engaged in a Permitted Business; and 

        (c)   any
Permitted Investment (other than as described in clauses (a), (b) (insofar as the Investment is made in a Restricted Subsidiary) or (d) of the
definition of "Permitted Investment"). 

        "Additional Notes" means additional Notes that may be issued under this Indenture after the date that the Original Notes are first issued
by the Company and authenticated by the Trustee under this Indenture, which shall rank pari passu with the Original Notes initially issued in all
respects. Additional Notes shall include Notes of like terms and tenor issued in exchange for Additional Notes and any Successor Notes in respect thereof. 

2

 

        "Affiliate" of any specified Person means: 

        (a)   any
other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; or 

        (b)   any
other Person who is a director or executive officer of: 

        (1)   such
specified Person; 

        (2)   any
Subsidiary of such specified Person; or 

        (3)   any
Person described in clause (a) of this definition. 

        For
the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For purposes of Sections 1013 and 1014 and the definition of
"Additional Assets" only, "Affiliate" shall also mean any beneficial owner of shares representing 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence of this definition. 

        "Affiliate Transaction" has the meaning specified in Section 1014. 

        "Agent Members" means any member of, or direct participants in, the Depository. 

        "Allocable Excess Proceeds" has the meaning specified in Section 1013. 

        "Applicable Procedures" means the rules and procedures of the Depository. 

        "Asset Sale" means any sale, transfer, issuance or other disposition (or series of related sales, transfers, issuances or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a
"disposition"), of: 

        (a)   any
shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares), or 

        (b)   any
other assets of the Company or any Restricted Subsidiary (excluding Capital Stock of the Company, cash and Cash Equivalents) outside of the ordinary course of
business of the Company or such Restricted Subsidiary, 

in
the case of either clause (a) or (b), (1) that have a Fair Market Value in excess of $10.0 million, or (2) for net proceeds in excess of $10.0 million. 

        Notwithstanding
the foregoing clauses (a) and (b) of this definition, in no event shall an Asset Sale include: 

        (1)   any
disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Restricted Subsidiary; 

        (2)   any
disposition that constitutes a Permitted Investment or Restricted Payment or any disposition of a Permitted Investment, in any such case, to the extent permitted by
Section 1009; 

        (3)   any
disposition effected in compliance with Section 801; 

        (4)   any
disposition of damaged, worn out, surplus or other obsolete personal or real property in the ordinary course of business so long as such property is no longer
necessary for the proper conduct of the business of the Company and its Restricted Subsidiaries; 

3

 

        (5)   any
issuance of Capital Stock by a Subsidiary of the Company to the Company or to another Subsidiary of the Company (other than the issuance of Capital Stock by a
Restricted Subsidiary to an Unrestricted Subsidiary); 

        (6)   the
licensing by the Company or any Restricted Subsidiary of intellectual property or know-how on commercially reasonable terms and in the ordinary course of
business; 

        (7)   the
sale, lease, conveyance or other disposition of Property in connection with the obligation of the Company or any Restricted Subsidiary to remarket or sell any
Property at the end of the lease term or otherwise under or in connection with any Synthetic Lease or Sale and Leaseback Transaction relating to the Office Campus; 

        (8)   the
surrender or waiver of litigation rights or settlement, release or surrender of tort or other litigation claims of any kind; 

        (9)   the
sale, lease, conveyance or other disposition of Receivables Program Assets by the Company or any Restricted Subsidiary in connection with any Receivables Program; 

        (10) the
sub-lease of facilities of the Company or any Restricted Subsidiary and the lease by the Company or any Restricted Subsidiary of facilities under any
operating lease, in either such case, in the ordinary course of business; 

        (11) one
or more sales of fixed assets by the Company or any Restricted Subsidiary in connection with the Restructuring Plans and any future restructuring plans of the
Company, provided that the aggregate consideration for all such sales does not exceed $50.0 million; and 

        (12) the
granting of a Permitted Lien. 

        "Attributable Debt" in respect of a Sale and Leaseback Transaction means, at any date of determination, 

        (a)   if
such Sale and Leaseback Transaction is a Capital Lease Obligation, the amount of Debt represented thereby according to the definition of "Capital Lease Obligation";
and 

        (b)   in
all other instances, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental
payments during the remaining term of the lease included in such Sale and Leaseback Transaction (including any period for which such lease has been extended). 

        "Authenticating Agent" means any Person authorized by the Trustee pursuant to Section 614 to act on behalf of the Trustee to
authenticate Notes. 

        "Available Credit" means, as of any date of determination, the maximum amount available that may be drawn under the Company's and each
Restricted Subsidiary's Credit Facilities at such date of determination. 

        "Average Life" means, as of any date of determination, with respect to any Debt or Preferred Stock, the quotient obtained by dividing: 

        (a)   the
sum of the product of the numbers of years (rounded to the nearest one-twelfth of one year) from the date of determination to the dates of each
successive scheduled principal payment (or, in the case of the Company's Zero Coupon Debentures, to the Stated Maturity) of such Debt or redemption or similar payment with respect to such Preferred
Stock multiplied by the amount of such payment by 

        (b)   the
sum of all such payments. 

4

 

        "Board of Directors" means the Board of Directors of the Company or the Notes Guarantors, as the case may be, or any committee thereof
authorized with respect to any particular matter to exercise the power of the Board of Directors. 

        "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Notes
Guarantors, as the case may be, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. 

        "Borrowing Base" means an amount equal to the sum of (A) 80% of the book value of the accounts receivable of the Company and its
Restricted Subsidiaries plus (B) 60% of the book value of the inventory of the Company and its Restricted Subsidiaries, in each case as of the end of the most recently ended fiscal quarter of
the Company for which financial statements of the Company have been made publicly available. 

        "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the City of
New York, New York or San Jose, California or such other city in which the Corporate Trust Office of the Trustee is located, are authorized or obligated by law or executive order to close. 

        "Capital Lease Obligations" means any obligation under a lease of any property (whether real, personal or mixed) that is capitalized for
financial reporting purposes in accordance with GAAP; and the amount of Debt represented by such obligation shall be the capitalized amount of such obligations determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease. For purposes of Section 1011, a Capital Lease Obligation shall be deemed
secured by a Lien on the Property being leased. 

        "Capital Stock" means, with respect to any Person, any shares or other equivalents (however designated) of any class of corporate stock or
partnership interests or any other participations, rights, warrants, options or other interests in the nature of an equity interest in such Person, including Preferred Stock, but excluding any debt
security convertible or exchangeable into any such equity interest. 

        "Capital Stock Sale Proceeds" means the aggregate cash proceeds received by the Company from the issuance or sale (other than to a
Restricted Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary for the benefit of their employees) by the Company of its Capital
Stock (other than Disqualified Stock) after the Issue Date, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. 

        "Cash Equivalents" means: 

        (a)   securities
issued or directly and fully guaranteed or insured by (i) the United States Government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof), or (ii) any member of the European Economic Area or Switzerland, or any agency or instrumentality thereof (provided that
such country, agency or instrumentality has a credit rating at least equal to that of the United States and the full faith and credit of such country is pledged in support thereof), in each case, with
such securities having maturities of not more than thirteen months from the date of acquisition; 

        (b)   marketable
general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof
maturing within thirteen months from the date of acquisition thereof (provided that the full faith and credit of such state is 

5

 

pledged
in support thereof) and, at the time of acquisition thereof, having credit ratings of at least AA- (or the equivalent) by S&P and at least Aa3 (or the equivalent) by Moody's; 

        (c)   certificates
of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers' acceptances having maturities of not more than thirteen months from
the date of acquisition thereof issued by any commercial bank organized in the United States of America, Canada, Japan or Switzerland or any member of the European Economic Area, in each case, of
recognized standing and having combined capital and surplus in excess of $500.0 million (or the foreign currency equivalent thereof); 

        (d)   repurchase
obligations with a term of not more than seven days for underlying securities of the types described in clauses (a), (b) and (c) of this
definition entered into with any bank meeting the qualifications specified in clause (c) of this definition; 

        (e)   commercial
paper rated at the time of acquisition thereof in one of the two highest categories obtainable from both S&P and Moody's or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments, and in any case maturing within thirteen months after the date of acquisition
thereof; 

        (f)    interests
in any investment company or money market fund substantially all of the assets of which are of the type specified in clauses (a) through (e) of
this definition; and 

        (g)   asset
backed securities rated AAA or better by S&P or Moody's, with such securities having maturities of not more than thirteen months from the date of acquisition. 

        "Change of Control" means the occurrence of any of the following events: 

        (a)   if
any "person" or "group" (as such terms are used in Sections 13 (d) and 14 (d) of the Exchange Act or any successor provisions to either of the
foregoing), 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,
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, except that a person will be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% or more of the total voting power of the Voting Stock
of the Company (for purposes of this clause (a), such person or group shall be deemed to beneficially own any Voting Stock of a corporation held by any other corporation (the
"parent corporation") so long as such person or group beneficially owns, directly or indirectly, in the aggregate a majority of the total voting power
of the Voting Stock of such parent corporation); or 

        (b)   the
sale, transfer, assignment, lease, conveyance or other disposition, directly or indirectly, of all or substantially all the assets of the Company and its Restricted
Subsidiaries, considered as a whole (other than a disposition of such assets as an entirety or virtually as an entirety to a Wholly Owned Restricted Subsidiary) shall have occurred, or the Company
merges, consolidates or amalgamates with or into any other Person or any other Person merges, consolidates or amalgamates with or into the Company, in any such event pursuant to a transaction in which
the outstanding Voting Stock of the Company is reclassified into or exchanged for cash, securities or other Property, other than any such transaction where: 

        (1)   the
outstanding Voting Stock of the Company is reclassified into or exchanged for other Voting Stock of the Company or for Voting Stock of the surviving corporation; and 

        (2)   the
holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the
Company or the surviving corporation immediately after such transaction and in substantially the same proportion as before the transaction; 

6

 

        (c)   during
any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose
election or appointment by such Board or whose nomination for election by the shareholders of the Company was approved by a vote of not less than a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors
then in office; or 

        (d)   the
shareholders of the Company shall have approved any plan of liquidation or dissolution of the Company. 

        "Change of Control Offer" has the meaning specified in Section 1015. 

        "Change of Control Purchase Date" has the meaning specified in Section 1015. 

        "Change of Control Purchase Price" has the meaning specified in Section 1015. 

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

        "Commodity Agreement" means any forward contract, commodity swap agreement, commodity option agreement or other similar agreement or
arrangement. 

        "Company" means the corporation named as the "Company" in the first paragraph of this Indenture until a successor corporation shall have
become such pursuant to the applicable provisions of this Indenture, and, thereafter, "Company" shall mean such successor corporation. 

        "Company Request" or "Company Order" means a written request or order signed in the name
of the Company by an Officer, and delivered to the Trustee. 

        "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Notes that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of the Notes. 

        "Comparable Treasury Price" means, with respect to any Redemption Date: 

        (a)   the
average of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day
preceding such Redemption Date, as set forth in the most recently published statistical release designated "H.15(519)" (or any successor release) published by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities"; or 

        (b)   if
such release (or any successor release) is not published or does not contain such prices on such Business Day, the Reference Treasury Dealer Quotations for such
Redemption Date. 

        "Consolidated Current Liabilities" means, as of any date of determination, the aggregate amount of liabilities of the Company and its
consolidated Restricted Subsidiaries which may properly be classified as current liabilities (including taxes accrued as estimated), after eliminating: 

        (a)   all
intercompany items between the Company and any Restricted Subsidiary or between Restricted Subsidiaries; and 

        (b)   all
current maturities of long-term Debt. 

7

 

        "Consolidated Interest Coverage Ratio" means, as of any date of determination, the ratio of: 

        (a)   the
aggregate amount of EBITDA for the most recently ended four consecutive fiscal quarters for which financial statements have been made publicly available; to 

        (b)   Consolidated
Interest Expense for such four fiscal quarters; 

provided, however, that 

        (1)   if

        (A)  since
the beginning of such period but prior to such date of determination, the Company or any Restricted Subsidiary has Incurred any Debt that remains outstanding or
Repaid any Debt; or 

        (B)  the
transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is an Incurrence or Repayment of Debt, 

Consolidated
Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Incurrence or Repayment as if such
Debt was Incurred or Repaid on the first day of such period, provided that, (i) in the event of any such Repayment of Debt, EBITDA for such
period shall be calculated as if the Company or such Restricted Subsidiary had not earned any interest income actually earned during such period in respect of the funds used to Repay such Debt and
(ii) in making such computation, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period; and 

        (2)   if

        (A)  since
the beginning of such period but prior to such date of determination the Company or any Restricted Subsidiary shall have made any Asset Sale or an acquisition of
Property which constitutes all or substantially all of an operating unit of a business; 

        (B)  the
transaction giving rise to the need to calculate the Consolidated Interest Coverage Ratio is such an Asset Sale or acquisition; or 

        (C)  since
the beginning of such period but prior to such date of determination any Person (that subsequently became a Restricted Subsidiary or was merged with or into the
Company or any Restricted Subsidiary since the beginning of such period) shall have made such an Asset Sale or acquisition; 

EBITDA
for such period shall be calculated after giving pro forma effect to such Asset Sale or acquisition as if such Asset Sale or acquisition had
occurred on the first day of such period. 

        If
any Debt bears a floating rate of interest and is being given pro forma effect, the interest expense on such Debt shall be calculated
as if the base interest rate in effect for such floating rate of interest on the date of determination had been the applicable base interest rate for the entire period (taking into account any
Interest Rate Agreement applicable to such Debt if such Interest Rate Agreement has a remaining term in excess of the lesser of (i) 12 months and (ii) the remaining period until
the Stated Maturity of such Debt). In the event the Capital Stock of any Restricted Subsidiary is sold during the period, the Company shall be deemed, for purposes of clause (b)(1) of this
definition, to have Repaid during such period the Debt of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Debt after such
sale. 

        "Consolidated Interest Expense" means (without duplication), for any period, the total interest expense of the Company and its
consolidated Restricted Subsidiaries, plus, to the extent not included in 

8

 

such
total interest expense, and to the extent Incurred by the Company or its Restricted Subsidiaries during that period: 

        (a)   interest
expense attributable to Capital Lease Obligations and the imputed interest with respect to Attributable Debt; 

        (b)   amortization
of debt discount and debt issuance cost, including commitment fees; 

        (c)   capitalized
interest; 

        (d)   non-cash
interest expense; 

        (e)   commissions,
discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; 

        (f)    net
costs associated with Hedging Obligations (including amortization of fees); 

        (g)   Disqualified
Stock Dividends, other than dividends payable to the Company or a Restricted Subsidiary of the Company; 

        (h)   Preferred
Stock Dividends, other than dividends payable to the Company or a Restricted Subsidiary of the Company; 

        (i)    interest
actually paid by the Company or any Restricted Subsidiary on any Debt of any other Person to the extent such Debt is Guaranteed by the Company or any Restricted
Subsidiary; and 

        (j)    cash
contributions to any employee stock ownership plan or similar trust of the Company to the extent such contributions are used by such plan or trust to pay interest
or fees to any Person (other than the Company) in connection with Debt Incurred by such plan or trust. 

        "Consolidated Net Income" means, for any period, the net income (loss) of the Company and its consolidated Restricted Subsidiaries;  provided, however, that there shall
not be included in such Consolidated Net Income (without duplication): 

        (a)   if
any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, an amount that is equal to (i) the amount of net income attributable to such Restricted
Subsidiary multiplied by (ii) the percentage ownership interest in the income of such Restricted Subsidiary not owned on the last day of such period by the Company or any of its Restricted
Subsidiaries, 

        (b)   any
net income (loss) of any Person (other than the Company) if such Person is not a Restricted Subsidiary, except that: 

        (1)   the
Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash or any
Property distributed by such
Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the
limitations contained in clause (d) of this definition); and 

        (2)   the
Company's equity in a net loss of any such Person other than an Unrestricted Subsidiary for such period shall be included in determining such Consolidated Net
Income; 

9

   
        (c)   for purposes of calculating the amount of Restricted Payments that may be made pursuant to clause (a)(3) of Section 1009 only, any net income (loss) of any
Person acquired by the Company or any of its consolidated Subsidiaries in a pooling of interests transaction for any period prior to the date of such acquisition; 

        (d)   any
net income (loss) of any Restricted Subsidiary if such Restricted Subsidiary is unable to both pay dividends and otherwise distribute cash to the Company and any
other Restricted Subsidiary because it is subject to the restrictions of its charter or other organizational document or any agreement, instrument, contract, judgment, decree, order or statute, rule
or governmental regulation applicable to the Restricted Subsidiary, except that: 

        (1)   the
Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of
cash distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other
distribution to another Restricted Subsidiary, to the limitation contained in this clause); and 

        (2)   the
Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income; 

        (e)   any
gain (or loss) realized upon the sale or other disposition of any Property of the Company or any of its consolidated Restricted Subsidiaries (including pursuant to
any Sale and Leaseback Transaction) that is not sold or otherwise disposed of in the ordinary course of business; 

        (f)    any
extraordinary gain or loss; 

        (g)   restructuring
charges, write-downs and reserves (to the extent not excluded in subsection (f) of this definition) taken by the Company or its Restricted
Subsidiaries during any such period, provided that: 

        (1)   the
aggregate amount of charges that are paid in cash that are excluded pursuant to this clause (g) in connection with the Restructuring Plans shall not in the
aggregate exceed $60.0 million for all periods during which Consolidated Net Income may be calculated plus any restructuring charges taken in
connection with the Restructuring Plans for the fiscal year ended October 1, 2005; and any charges paid in cash in excess of such amount shall be included in the calculation of Consolidated Net
Income for the period when such charges are paid in cash; and 

        (2)   the
aggregate amount of charges that are paid in cash that are excluded pursuant to this clause (g) in connection with the Company's future restructuring plans
shall not exceed $125.0 million for all periods during which Consolidated Net Income may be calculated plus any amounts permitted to be applied and not so applied to the $60.0 million
limit set forth in subclause (1) above; 

provided, further, that for purposes of calculating the amount of Restricted Payments that may be made pursuant to clause (a)(3) of
Section 1009 only, this clause (g) shall not apply; 

        (h)   the
cumulative effect of a change in accounting principles; and 

        (i)    any
non-cash compensation expense realized for grants of, or in connection with the exercise of, performance shares, stock options or other rights to
officers, directors and employees of the Company or any Restricted Subsidiary, provided that such shares, options or other rights can be redeemed at the
option of the holder for Capital Stock of the Company (other than Disqualified Stock). 

Notwithstanding
the foregoing, for purposes of Section 1009 only, there shall be excluded from Consolidated Net Income any dividends, repayments of loans or advances or other transfers of
assets from Unrestricted Subsidiaries to the Company or a Restricted Subsidiary to the extent such dividends, 

10

 

repayments
or transfers increase the amount of Restricted Payments permitted under clause (a)(3)(D) of Section 1009. 

        "Consolidated Net Tangible Assets" means, as of any date of determination, the sum of the amounts that would appear on a consolidated
balance sheet of the Company and its consolidated Restricted Subsidiaries as the total assets (less accumulated depreciation and amortization, allowances for doubtful receivables, other applicable
reserves and other properly deductible items) of the Company and its Restricted Subsidiaries, after giving effect to purchase accounting and after deducting therefrom Consolidated Current Liabilities
and, to the extent otherwise included in the determination of Consolidated Net Tangible Assets, the following amounts (without duplication) shall be excluded: 

        (a)   the
excess of cost over fair market value of assets or businesses acquired; 

        (b)   unamortized
debt discount and expenses and other unamortized deferred charges, goodwill, patents, trademarks, service marks, trade names, copyrights, licenses,
organization or developmental expenses and other intangible items; 

        (c)   minority
interests in consolidated Subsidiaries held by Persons other than the Company or any Restricted Subsidiary; 

        (d)   treasury
stock; 

        (e)   cash
or securities set aside and held in a sinking or other analogous fund established for the purpose of redemption or other retirement of Capital Stock to the extent
such obligation is not reflected in Consolidated Current Liabilities; and 

        (f)    Investments
in and assets of Unrestricted Subsidiaries. 

        "Consolidated Net Worth" means, as of any date of determination, the total of the amounts shown on the consolidated balance sheet of such
Person and its Restricted Subsidiaries as: 

        (a)   the
par or stated value of all outstanding Capital Stock of such Person; plus 

        (b)   paid-in
capital or capital surplus relating to such Capital Stock; plus 

        (c)   any
retained earnings or earned surplus less (1) any accumulated deficit, and (2) any amounts attributable to Disqualified Stock; 

in
each case as of the end of the most recent fiscal quarter of such Person for which financial statements have been made publicly available. 

        "Consolidated Tangible Foreign Assets" means, as of any date of determination, the sum of the amounts that would appear on the
consolidated balance sheet of the Foreign Subsidiaries of the Company as the
total assets of the Foreign Subsidiaries of the Company, minus the total intangible assets of the Foreign Subsidiaries of the Company. 

        "Convertible Debentures" means the Zero Coupon Debentures and the 3% Convertible Subordinated Notes Due 2007 issued by SCI
Systems, Inc. 

        "Convertible Debentures Repurchase" means the purchase, repurchase, redemption, defeasance or acquisition for value of any Convertible
Debentures. 

        "Corporate Trust Office" means the office of the Trustee or its affiliate at which at any particular time its corporate trust business may
be administered and any additional office it may designate in writing to the Company. At the date of this Indenture, the Corporate Trust Office of the Trustee is located at 633 West 5th Street, 24th
Floor, Los Angeles, California 90071, Attention: Corporate Trust Services (Sanmina SCI Corporation    % Senior Subordinated Notes due            ). 

        "covenant defeasance" has the meaning specified in Section 1303. 

11

 

        "Credit Facilities" means, with respect to the Company or any Restricted Subsidiary, one or more debt or commercial paper facilities or
instruments with banks or other institutional lenders whether acting with or through a trustee (including the Senior Credit Facility), or (b) indentures, in each case providing for one or more
revolving credit loans, term loans, receivables or inventory financing (including through the sale of receivables or inventory to such lenders or to special purpose, bankruptcy remote entities formed
to borrow from such lenders against such receivables or inventory) swing-line or commercial paper facilities (including any letter of credit, sub-facilities or other
facilities), letters of credit or note facilities or issuances, in each case together with any Refinancings thereof, whether any such Refinancing is under one or more debt or commercial paper
facilities, indentures or other agreements, by a lender or syndicate of lenders or trustees, including, in each case, any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time, whether or not with the same agent, trustee, representative lender
or holders, and irrespective of any change in the terms and conditions thereof. 

        "Currency Exchange Protection Agreement" means, in respect of a Person, any foreign exchange contract, currency swap agreement, currency
option or other similar agreement or arrangement designed to manage or hedge fluctuations in currency exchange rates. 

        "Debt" means, with respect to any Person on any date of determination (without duplication): 

        (a)   the
principal of and premium (if any) and any other obligations in respect of: 

        (1)   debt
of such Person for money borrowed; and 

        (2)   debt
evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable; 

        (b)   all
Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by such Person; 

        (c)   all
obligations of such Person to pay the deferred purchase price of Property, all conditional sale obligations of such Person and all obligations of such Person under
any title retention agreement (but excluding trade accounts payable and accrued expenses related thereto arising in the ordinary course of business and excluding any lease properly classified as an
operating lease in accordance with GAAP); 

        (d)   all
obligations of such Person for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction but excluding obligations
with respect to letters of credit securing obligations (other than obligations described in clauses (a) through (c) of this definition and (f) and (g) of this definition)
entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the
third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit; 

        (e)   the
amount of all obligations of such Person with respect to the Repayment of any Disqualified Stock; 

        (f)    all
obligations of the type referred to in clauses (a) through (e) of this definition of other Persons and all dividends of other Persons for the payment
of which, in either case, such Person is liable as obligor or Guarantor, including by means of any Guarantee; 

        (g)   all
obligations of the type referred to in clauses (a) through (f) of this definition of other Persons secured by any Lien on any Property of such Person
(whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the fair market value (as determined by the Company in good faith) of such
Property subject to such Lien or the amount of the obligation so secured; and 

12

 

        (h)   to
the extent not otherwise included in this definition, the net liability under Hedging Obligations of such Person, 

if
and only to the extent that any of the preceding items (other than letters of credit, Hedging Obligations and obligations referred to in clauses (f) and (g) of this definition) would
appear as a liability upon the balance sheet of the specified Person prepared in accordance with GAAP (and in the case of Disqualified Stock that does not appear as a liability upon the balance sheet,
the price at which such Disqualified Stock may be redeemed by the holder thereof on the date such Disqualified Stock may first be redeemed by the holders thereof). 

        In
no event shall the term "Debt" include (i) any debt under any overdraft or cash management facility, provided that any such debt
is incurred in the ordinary course of business and consistent with past practice, and is repaid in full no later than the business day immediately following the date on which it was incurred, or
(ii) any trade payable. The amount of Debt of any Person at any date shall be (x) the accreted value thereof in the case of any Debt that does not require current payments of interest,
(y) the principal amount of such Debt and (z) the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. 

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

        "Defaulted Interest" has the meaning specified in Section 307. 

        "defeasance" has the meaning specified in Section 1302. 

        "Depositary" means The Depositary Trust Company until a successor Depositary shall have become such pursuant to the applicable provisions
of this Indenture, and thereafter Depositary shall mean each successor Depositary. 

        "Designated Senior Debt" means: 

        (a)   any
Senior Debt that has, at the time of determination, an aggregate principal amount outstanding of at least $25.0 million (including the amount of all undrawn
commitments and matured and contingent reimbursement obligations pursuant to letters of credit thereunder) that is specifically designated as such in the instrument evidencing such Senior Debt and is
designated as such in a notice delivered by the Company to the holders or a Representative of the holders of such Senior Debt and in an Officers' Certificate delivered to the Trustee as "Designated
Senior Debt" of the Company and any Notes Guarantor for purposes of the Indenture, 

        (b)   any
Senior Debt outstanding under the Credit Facilities, and 

        (c)   Debt
represented by the 10.375% Senior Secured Notes. 

        "Disqualified Stock" means, with respect to any Person, any Capital Stock that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable, in either case at the option of the holder thereof) or otherwise: 

        (a)   matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise; 

        (b)   is
or may become redeemable or repurchaseable at the option of the holder thereof, in whole or in part; or 

        (c)   is
convertible or exchangeable at the option of the holder thereof for Debt or Disqualified Stock; 

on
or prior to, in the case of clause (a), (b) or (c) of this definition, the date that is 91 days after the Stated Maturity of the Notes. Notwithstanding the foregoing,
any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of
a change of control or asset sale 

13

 

will
not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such
repurchase or redemption complies with Section 1009. 

        "Disqualified Stock Dividends" means all dividends made with respect to Disqualified Stock of the Company held by Persons other than a
Restricted Subsidiary other than dividends paid in Capital Stock of the Company. The amount of any such dividend shall be equal to the quotient of such dividend divided by the difference between one
and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the Company. 

        "Dollar" and "$" means such coins or currency of the United States of America which is
legal tender for payment of public and private debts. 

        "Domestic Restricted Subsidiary" means any Restricted Subsidiary other than (a) a Foreign Restricted Subsidiary, (b) a
Subsidiary of a Foreign Restricted Subsidiary and (c) any special purpose entity established solely in connection with a Receivables Program or any Synthetic Lease or Sale and Leaseback
Transaction with respect to the Office Campus. 

        "DTC" has the meaning set forth in Section 201(c). 

        "EBITDA" means, for any period, an amount equal to, for the Company and its consolidated Restricted Subsidiaries: 

        (a)   the
sum of Consolidated Net Income for such period, plus the following to the extent reducing Consolidated Net Income for such period: 

        (1)   the
provision for taxes based on income or profits or utilized in computing net income; 

        (2)   Consolidated
Interest Expense; 

        (3)   depreciation; 

        (4)   amortization; 

        (5)   any
other non-cash items (other than any such non-cash item to the extent that it represents an accrual of or reserve for cash expenditures in
any future period); 

        (6)   charges
associated with integration-related expenses (but excluding any associated restructuring expenses) Incurred in such period in connection with any merger or
acquisition permitted under the Senior Credit Facility, as in effect on the Issue Date; 

        (7)   accelerated
recognition of pension expenses previously deferred under FAS 87/88 in connection with early termination of SCI Systems, Inc.'s "Supplemental
Retirement Plan" not to exceed $20.0 million in the aggregate; 

        (8)   charges
associated with the repayment or redemption of the Convertible Debentures, the 10.375% Senior Secured Notes or the 6.75% Senior Subordinated Notes; and 

        (9)   to
the extent that GAAP requires stock-based compensation or share-based payments to be expensed, any non-cash charges associated therewith, minus 

        (b)   all
non-cash items increasing Consolidated Net Income for such period. 

Notwithstanding
the foregoing clause (a), the provision for taxes and the depreciation, amortization and non-cash items of a Restricted Subsidiary shall be added to Consolidated Net
Income to compute EBITDA only to the extent (and in the same proportion) that the net income of such Restricted Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be paid as dividends to the Company by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant
to the terms of its 

14

 

charter
and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to such Restricted Subsidiary or its shareholders. 

        "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security
that is convertible into, or exchangeable for, Capital Stock). 

        "Equity Offering" means (a) any public offering of common stock (other than Disqualified Stock) of the Company or (b) any
unregistered offering of common stock (other than Disqualified Stock) of the Company with net cash proceeds in excess of $50 million. 

        "European Economic Area" means the member nations of the European Economic Area pursuant to the Oporto Agreement on the European Economic
Area dated May 2, 1992, as amended. 

        "Event of Default" has the meaning specified in Section 501. 

        "Excess Proceeds" has the meaning specified in Section 1013. 

        "Exchange Act" means the Securities Exchange Act of 1934, as it may be amended and any successor act thereto. 

        "Expiration Date" has the meaning specified in Section 104. 

        "Fair Market Value" means, with respect to any Property, the price that would reasonably be expected to be paid in an arm's-length free
market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined,
except as otherwise provided, 

        (a)   if
such Property has a Fair Market Value equal to or less than $50.0 million, by any Officer of the Company; or 

        (b)   if
such Property has a Fair Market Value in excess of $50.0 million, by a majority of the Board of Directors and evidenced by a Board Resolution, dated within
45 days of the relevant transaction and delivered to the Trustee. 

        "Fall-Away Event" means the occurrence of the following events: 

        (a)   the
Notes have received Investment Grade Ratings from both Rating Agencies; 

        (b)   no
Default or Event of Default has occurred or is continuing; and 

        (c)   the
Company has delivered to the Trustee an Officers' Certificate certifying as to the events specified in clauses (a) and (b) of this definition. 

        "Foreign Restricted Subsidiary" means any Restricted Subsidiary that is not organized under the laws of the United States or any state
thereof or the District of Columbia. 

        "Foreign Subsidiary" means any Subsidiary of the Company that is not organized under the laws of the United States, any state thereof or
the District of Columbia. 

        "Global Note" means a Note that is registered in the Note Register in the name of a Depositary or a nominee thereof. 

        "Guarantee" or "Guaranty" means any obligation, contingent or otherwise, of any Person
guaranteeing in any manner any Debt of any other Person; provided, however, that the terms "Guarantee"
and "Guaranty" shall not include: 

        (a)   endorsements
for collection or deposit in the ordinary course of business; or 

        (b)   a
contractual commitment by one Person to invest in another Person for so long as such Investment is reasonably expected to constitute a Permitted Investment under
clause (b) of the definition of "Permitted Investment." 

15

 

The
term "Guarantee" used as a verb has a corresponding meaning. The term "Guarantor" shall mean any
Person Guaranteeing any obligation. 

        "Hedging Obligation" of any Person means any obligation of such Person pursuant to any Interest Rate Agreement, Currency Exchange
Protection Agreement, Commodity Agreement or any other similar agreement or arrangement. 

        "Holder" means the Person in whose name any Note is registered in the Note Register. 

        "Incur" means, with respect to any Debt or other obligation of any Person, to create, issue, incur (by merger, conversion, exchange or
otherwise), extend, assume, Guarantee or become liable in respect of such Debt or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Debt or obligation on the
balance sheet of such Person (and "Incurrence" and "Incurred" shall have meanings correlative to the
foregoing); provided, however, that a change in GAAP that results in an obligation of such Person that exists at such time, and is not theretofore
classified as Debt, becoming Debt shall not be deemed an Incurrence of such Debt; provided, further, however, that any Debt or other obligations of a
Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it becomes a
Subsidiary. 

        "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more
indentures supplemental hereto entered into pursuant to the applicable provisions hereof including, for all purposes of this instrument and any such supplemental indenture, the Exhibits attached to
this instrument. 

        "Independent Investment Banker" means one of the Reference Treasury Dealers, or if any such firm is unwilling or unable to select the
Comparable Treasury Issue, an investment banking firm of national reputation selected by the Company. 

        "Interest Payment Date" means those dates specified in the Notes for the payment of interest on the Notes. 

        "Interest Rate Agreement" means, for any Person, any interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement designed to manage fluctuations in interest rates. 

        "Investment" by any Person means any direct or indirect loan (other than advances to customers or other persons in the ordinary course of
business that are recorded as accounts receivable, prepaid expenses or deposits on the balance sheet of such Person), advance or other extension of credit or capital contribution (by means of
transfers of cash or other Property to others or payments for Property or services for the account or use of others) (but excluding commission, travel and similar advances to officers, directors and
employees made in the ordinary course of business) to, or Incurrence of a Guarantee of any obligation of, or purchase or acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person; provided that in no event shall the licensing or transfer of know-how or intellectual property
or the providing of services, each in the ordinary course of business, be considered an Investment. If the Company or any Restricted Subsidiary sells or otherwise disposes of any Capital Stock of any
direct or indirect Restricted Subsidiary such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the fair market value (as determined in good faith by the Company) of the Capital Stock of such Restricted Subsidiary not
sold or disposed. 

        "Investment Grade Rating" means a rating equal to or higher than Baa3 (or the equivalent) by Moody's and BBB- (or the
equivalent) by S&P (or the equivalent investment grade rating by another Rating Agency). 

16

 

        "Issue Date" means the date on which the Notes are initially issued pursuant to this Indenture. 

        "Lien" with respect to a Person means, with respect to any Property of such Person, any mortgage or deed of trust, pledge, hypothecation,
security interest, lien, fixed or floating charge, easement (other than any easement not materially impairing usefulness or marketability), encumbrance or other security agreement of any kind or
nature whatsoever on or with respect to such Property (including any Capital Lease Obligation, conditional sale or other title retention agreement having substantially the same economic effect as any
of the foregoing); provided, that the term "Lien" shall not include any lease properly classified as an operating lease in accordance with GAAP. 

        "Liquidity" means the cash and Cash Equivalents on the balance sheet of the Company and its Restricted Subsidiaries plus the Available
Credit of the Company and its Restricted Subsidiaries as of a date that is no earlier than three business days prior to the date of determination. 

        "Make-Whole Premium" means, with respect to a Note on any date of redemption, the greater of: 

        (a)   1%
of the principal amount of such Note; or 

        (b)   the
excess of (1) the present value at such date of redemption of (A) the Redemption Price of such Note at            ,
            as set forth in
Section 1101(a) plus (B) all remaining required interest payments (exclusive of interest accrued and unpaid to the date of redemption) due on such Note through,            ,
            , computed using a discount rate equal to the Treasury Rate plus 50 basis points, over (2) the then outstanding principal amount of such Note. 

        "Moody's" means Moody's Investors Service, Inc. or any successor to the rating agency business thereof. 

        "Net Available Cash" from any Asset Sale means cash payments actually received therefrom by the Company or its Restricted Subsidiaries
(including any cash payments actually received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring Person of Debt or other obligations relating to the Property that is the subject of such Asset Sale or received in any other
non-cash form), in each case net of: 

        (a)   all
legal, title and recording expenses, commissions and other fees and expenses Incurred (including, without limitation, investment banking, sales commissions and
relocation expenses), and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Sale; 

        (b)   all
payments made on any Debt that is secured by any Lien upon Property that is the subject of such Asset Sale, or by applicable law, which are repaid out of the
proceeds from such Asset Sale; 

        (c)   all
distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Sale; and 

        (d)   any
reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP. 

        "Note" and "Notes" means the    % Senior Subordinated Notes due
    , and more particularly means any Original Notes and Additional Notes authenticated and delivered under this Indenture or any supplemental indenture hereto. For all purposes of this
Indenture, the term "Notes" shall include any Additional Notes that may be issued under a supplemental indenture and, for purposes of this Indenture, both the Notes and the Additional Notes shall vote
together as one series of Notes under this Indenture. 

17

   
        "Note Register" has the meaning set forth in Section 305(a)(1). 

        "Note Registrar" has the meaning set forth in Section 305(a)(1). 

        "Notes Guarantees" means Guarantees of the Company's obligations under this Indenture and the Notes by the Notes Guarantors in accordance
with the provisions of this Indenture. 

        "Notes Guarantors" means each Domestic Restricted Subsidiary on the Issue Date and any other Person that becomes a Guarantor of the
Company's obligations under this Indenture and the Notes pursuant to Section 1206 or who executes and delivers a supplemental indenture to this Indenture providing for a Notes Guarantee. 

        "Notice of Default" means a written notice of the kind specified in Section 501(b). 

        "Obligations" means all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Debt. 

        "Office Campus" means the Company's principal office campus located on North First Street in San Jose, California. 

        "Officer" means (a) the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President of the Company
and (b) the Treasurer or Assistant Treasurer or Secretary or Assistant Secretary of the Company. 

        "Officers' Certificate" means a certificate signed by (a) (1) one Officer listed in clause (a) of the definition of
"Officer" and (2) one Officer listed in clause (b) of the definition of "Officer," or (b) two Officers listed in clause (a) of the definition of "Officer," and, in either
case, delivered to the Trustee. 

        "Opinion of Counsel" means a written opinion from legal counsel to the Company. The counsel may be an employee of, or counsel to, the
Company or the Trustee. 

        "Original Notes" means the Notes issued on the Issue Date and their Successor Notes. 

        "Outstanding" when used with respect to Notes, means, as of the date of determination, all Notes therefore authenticated and delivered
under this Indenture, except: 

        (a)   Notes
theretofore cancelled by the Trustee or Authenticating Agent or delivered to the Trustee or Authenticating Agent for cancellation; 

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

        (c)   Notes,
except to the extent provided in Sections 1302 and 1303, with respect to which the Company has effected defeasance and/or covenant defeasance as provided in
Article Thirteen; and 

        (d)   Notes
which have been paid pursuant to Section 306 or in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this
Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such
Notes are valid obligations of the Company; 

provided, however, that in determining whether the Holders of the requisite principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor of the Notes or any Affiliate of the 

18

 

Company
or of such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver or other action, only Notes which the Trustee knows to be so owned by written notice delivered at its notice address specified in Section 105
hereof, shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor. 

        "pari passu," when used with respect to the ranking of any Debt of any Person in relation to other Debt of such Person, means that each
such Debt (a) either (i) is not subordinated in right of payment to any other Debt of such Person or (ii) is subordinate in right of payment to the same Debt of such Person as is
the other and is so subordinate to the same extent and (b) is not subordinate in right of payment to the other or to any Debt of such Person as to which the other is not so subordinate. 

        "Paying Agent" means any Person authorized by the Company to pay the principal of (and premium, if any) or interest on any Note on behalf
of the Company, which initially shall be the Trustee. 

        "Payment Blockage Period" has the meaning specified in Section 1403. 

        "Payment Blockage Notice" has the meaning specified in Section 1403. 

        "Permitted Business" means any business that is related, ancillary or complementary to the businesses of the Company and the Restricted
Subsidiaries on the Issue Date or any reasonable extension thereof. 

        "Permitted Debt" is defined to include the following: 

        (a)   Debt
of the Company evidenced by the Notes issued on the Issue Date; 

        (b)   Debt
of the Company or a Restricted Subsidiary under any Credit Facilities, provided that on the date of Incurrence the
aggregate principal amount of the Debt to be Incurred plus all Debt previously issued pursuant to this clause (b) which remains outstanding shall not exceed (1) the greater of
(A) $800.0 million and (B) the Borrowing Base, less (2) the amount by which any such Debt previously Incurred under this clause (b) that has been permanently reduced
by the amount of Net Available Cash used to Repay Debt and not subsequently reinvested in Additional Assets or used to purchase Notes or Repay other Debt pursuant to Section 1013; 

        (c)   Debt
of the Company or a Restricted Subsidiary in respect of Capital Lease Obligations and Purchase Money Debt, provided
that: 

        (1)   the
aggregate principal amount of such Debt does not exceed the fair market value (as determined by the Company in good faith) on the date of the Incurrence thereof in
the case of a Capital Lease Obligation and on the date of the acquisition, construction, lease, improvement or installation of the underlying asset in the case of Purchase Money Debt, of the Property
acquired, constructed, leased, improved or installed; and 

        (2)   the
aggregate principal amount of all Debt Incurred pursuant to this clause (c) at any one time outstanding (together with all Permitted Refinancing Debt Incurred
and then outstanding in respect of Debt previously Incurred pursuant to this clause (c)) shall not exceed 10.0% of Total Assets; 

        (d)   Debt
of the Company owing to and held by any Restricted Subsidiary and Debt of a Restricted Subsidiary owing to and held by the Company or any Restricted Subsidiary;  provided, however, that (1) if the
Company is the obligor on such Debt, such Debt must be contractually subordinated in right of payment to the
Notes, and (2) any subsequent issue or transfer of Capital Stock or other event that results in any such Debt being held by a Person other than the Company or a 

19

 

Restricted
Subsidiary or any subsequent transfer of any such Debt (except to the Company or a Restricted Subsidiary) shall be deemed, in each case, to constitute the Incurrence of such Debt by the
issuer thereof; 

        (e)   Debt
of a Restricted Subsidiary outstanding on the date on which such Restricted Subsidiary was acquired by the Company or otherwise became a Restricted Subsidiary
(other than Debt Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of transactions pursuant to which such
Restricted Subsidiary became a Subsidiary of the Company or was otherwise acquired by the Company), provided that the aggregate principal amount (or
accreted value, as applicable) of all such Debt Incurred pursuant to this clause (e) at any time outstanding shall not exceed $50.0 million; 

        (f)    Debt
under Hedging Obligations entered into by the Company or a Restricted Subsidiary for the purpose of fixing, managing or hedging interest rate, commodity or currency
risk in the ordinary course of the financial management of the Company or such Restricted Subsidiary and not for speculative purposes; 

        (g)   Debt
in connection with one or more banker's acceptances, letters of credit, surety or performance bonds or security deposits issued by the Company or a Restricted
Subsidiary in the ordinary course of business and for purposes customary in the Company's industry; 

        (h)   Debt
of the Company or a Restricted Subsidiary outstanding on the Issue Date, other than Debt under the Notes and the Senior Credit Facility; 

        (i)    Debt
of the Company or a Restricted Subsidiary in an aggregate principal amount (or accreted value or liquidation preference, as applicable) outstanding at any one time
and Incurred pursuant to this clause (i) not to exceed $150.0 million; 

        (j)    in
addition to the Debt that may be Incurred under clause (b) of this definition, the Incurrence of Debt by one or more Foreign Restricted Subsidiaries in an
aggregate principal amount (or accreted value, as applicable) at any time outstanding (together with all Permitted Refinancing Debt Incurred and then outstanding in respect of Debt previously Incurred
pursuant to this clause (j)) not to exceed 10.0% of Consolidated Tangible Foreign Assets, provided that; 

        (1)   no
Default or Event of Default shall have occurred or be continuing or would be caused by such Incurrence of Debt, and 

        (2)   such
Debt shall be used solely: 

        (A)  to
fund the working capital or used for general corporate purposes of such Foreign Restricted Subsidiary; or 

        (B)  to
pay dividends or any other distributions on or in respect of its Capital Stock or pay any Debt or other obligation owed, or make any loans or advances, in each case,
to the Company or any other Restricted Subsidiary; 

        (k)   the
Guarantee by the Company of Debt of a Restricted Subsidiary or the Guarantee (given substantially concurrent with the Incurrence of Debt being Guaranteed) by a
Restricted Subsidiary of Debt of the Company or any other Restricted Subsidiary of the Company, in each case with respect to Debt that is permitted to be Incurred by Section 1008 or this
definition of Permitted Debt; 

        (l)    Debt
Incurred by the Company or a Restricted Subsidiary not to exceed the greater of $50.0 million and the Fair Market Value of the Office Campus, in each case
that is secured by a mortgage on the Office Campus; 

        (m)  Permitted
Refinancing Debt Incurred in respect of Debt Incurred pursuant to clause (a)(1) of Section 1008 and clauses (a), (c), (e), (h), (j) and
(l) of this definition and this clause (m). 

20

 

        "Permitted Investment" means any Investment by the Company or a Restricted Subsidiary in: 

        (a)   the
Company; 

        (b)   any
Restricted Subsidiary or any Person that will, upon the making of such Investment, become a Restricted Subsidiary,  provided that the primary business of such Restricted Subsidiary is a Permitted
Business; 

        (c)   any
Person if as a result of such Investment such Person is merged or consolidated with or into, or transfers or conveys all or substantially all its Property to, or is
liquidated into, the Company or a Restricted Subsidiary, provided that such Person's primary business is a Permitted Business; 

        (d)   cash
or Cash Equivalents; 

        (e)   Investments
(i) of the types specified in the definition of Cash Equivalents but which mature on dates up to three years from the date of acquisition and
(ii) consisting of corporate obligations with long-term ratings of A or better from S&P and A2 or better from Moody's, having maturities of not more than twelve months from the date
of acquisition, so long as the aggregate value of the Investments described in clauses (i) and (ii) does not exceed 20% of the value of cash and short-term investments and
long-term investments of the types described in the definition of Cash Equivalents and this clause (e), in each case as shown on the Company's most recent balance sheet that has
been made publicly available; 

        (f)    receivables
owing to the Company or a Restricted Subsidiary, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with
customary trade terms (and Investments obtained in exchange for or settlement of accounts receivable for which the Company or a Restricted Subsidiary has determined that collection is not likely);
provided, however, that such trade terms may include such concessionary trade terms as the Company or such Restricted Subsidiary deems reasonable under the circumstances; 

        (g)   commission,
entertainment, relocation, payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of business; 

        (h)   loans
and advances to, or Guarantees of third party loans to, employees, directors and officers made in the ordinary course of business consistent with past practices of
the Company or such Restricted Subsidiary and in compliance with applicable laws, provided that such loans and advances in the aggregate do not exceed
$5.0 million at any one time outstanding; 

        (i)    any
acquisition of Property solely in exchange for the issuance of Capital Stock (other than Disqualified Stock) or the transfer on a non-exclusive basis of
intellectual property or know-how of the Company; 

        (j)    any
Investment received in settlement of debts created in the ordinary course of business and owing to the Company or a Restricted Subsidiary or in satisfaction of
judgments, including pursuant to a plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or consideration received in settlement of
litigation claims in tort, bankruptcy, liquidation, receivership or insolvency or otherwise; 

        (k)   any
Person to the extent such Investment represents the non-cash portion of the consideration received in connection with an Asset Sale consummated in
compliance with Section 1013; 

        (l)    Hedging
Obligations permitted under Section 1008; 

        (m)  prepaid
expenses and negotiable instruments held for collection in the ordinary course of business; 

21

 

        (n)   lease,
utility and workers' compensation, performance and other similar deposits arising in the ordinary course of business; 

        (o)   Investments
existing as of the Issue Date and Investments purchased or received in exchange for such Investments,  provided that any additional consideration provided by the Company or any Restricted Subsidiary in
such exchange shall be not be permitted pursuant to
this clause (o); 

        (p)   loans
or advances to customers in the ordinary course of business; 

        (q)   any
Person engaged in a Permitted Business, provided that such Investments in the aggregate do not exceed 10% of Total
Assets at any one time outstanding; and 

        (r)   the
Original Notes, any Additional Notes and the Notes Guarantees. 

        "Permitted Joint Venture" means any Person that is, directly or indirectly, engaged principally in a Permitted Business, and the Capital
Stock (or securities convertible into Capital Stock) of which is owned by the Company and one or more Persons other than the Company or any Affiliate of the Company. 

        "Permitted Junior Securities" means: 

        (a)   Capital
Stock in the Company or any Notes Guarantor; or 

        (b)   debt
securities (including debt securities that are issued in exchange for Senior Debt) that are subordinated to all Senior Debt to substantially the same extent that,
or to a greater extent than, the Notes and the Notes Guarantees are subordinated to Senior Debt and that have a Stated Maturity after (and do not provide for scheduled principal payments prior to) the
Stated Maturity of any Senior Debt; 

provided, however, that, if such Capital Stock or debt securities are distributed in a bankruptcy or insolvency proceeding, such Capital Stock or debt
securities are distributed pursuant to a plan of reorganization consented to by each class of Designated Senior Debt. 

        "Permitted Liens" means: 

        (a)   Liens
on any assets to secure Debt permitted to be Incurred pursuant to Section 1008 under clause (b) of the definition of "Permitted Debt" and other
Obligations related thereto; 

        (b)   Liens
to secure Debt permitted to be Incurred pursuant to Section 1008 under clause (c) of the definition of "Permitted Debt" and other Obligations related
thereto, Liens to secure Capital Lease Obligations and Purchase Money Debt (and other Obligations related thereto) where the aggregate principal amount of such Debt at any time outstanding shall not
exceed 10.0% of Total Assets, provided that, in each case, any such Lien may not extend to any Property of the Company or any Restricted Subsidiary,
other than the Property acquired, constructed, improved or leased with the proceeds of such Debt and any additions, parts, attachments, fixtures, leasehold improvements, proceeds, improvements or
accessions related thereto; 

        (c)   Liens
for taxes, assessments or governmental charges or levies on the Property of the Company or any Restricted Subsidiary if the same shall not at the time be
delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings, provided that any reserve or
other appropriate provision that shall be required in conformity with GAAP shall have been made therefor; 

        (d)   Liens
imposed by law or arising by operation of law, including without limitation, landlords', mailmen's, suppliers', vendors', carriers', warehousemen's and mechanics'
Liens and other similar Liens, Liens for master's and crew's wages and other similar laws, on the Property of the Company or any Restricted Subsidiary arising in the ordinary course of business and
for payment obligations that are not more than 60 days past due or are being contested in good faith and by appropriate proceedings; 

22

 

        (e)   Liens
on the Property of the Company or any Restricted Subsidiary Incurred in the ordinary course of business to secure performance of obligations with respect to
statutory or regulatory requirements, performance or return-of-money bonds, surety or appeal bonds or other obligations of a like nature and Incurred in a manner consistent
with industry practice; 

        (f)    Liens
on Property at the time the Company or any Restricted Subsidiary acquired such Property, including any acquisition by means of a merger or consolidation with or
into the Company or any Restricted Subsidiary; provided, however, that any such Lien may not extend to any other Property of the Company or any
Restricted Subsidiary; provided further, however, that such Liens shall not have been Incurred in anticipation of or in connection with the transaction
or series of transactions pursuant to which such Property was acquired by the Company or any Restricted Subsidiary; 

        (g)   Liens
on the Property of a Person existing at the time such Person becomes a Restricted Subsidiary; provided, however,
that any such Lien may not extend to any other Property of the Company or any other Restricted Subsidiary that is not a direct Subsidiary of such Person; provided further,
however, that any such Lien was not Incurred in anticipation of or in connection with the transaction or series of transactions pursuant to which such Person became a
Restricted Subsidiary; 

        (h)   Liens
Incurred or pledges or deposits made by the Company or any Restricted Subsidiary under workmen's compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Debt) or leases to which the Company or any Restricted Subsidiary is party, or deposits
to secure public or statutory obligations of the Company, or deposits for the payment of rent, in each case Incurred in the ordinary course of business; 

        (i)    utility
easements, building restrictions and such other encumbrances or charges against real Property as are of a nature generally existing with respect to properties of
a similar character; 

        (j)    Liens
existing on the Issue Date not otherwise described in clauses (a) through (i) of this definition; 

        (k)   Liens
not otherwise described in clauses (a) through (j) of this definition on the Property of any Restricted Subsidiary that is not a Notes Guarantor to
secure any Debt permitted to be Incurred by such Restricted Subsidiary pursuant to Section 1008; 

        (l)    Liens
on the Property of the Company or any Restricted Subsidiary to secure any Refinancing, in whole or in part, of any Debt secured by Liens referred to in clauses
(a), (b), (f), (g), (j), (k), (o), (p), (t), (u), (x) and (y) of this definition; provided, however, that any such Lien shall be limited
to all or part of the same Property that secured the original Lien (together with improvements and accessions to such Property) and the aggregate principal amount of Debt that is secured by such Lien
shall not be increased to an amount greater than the sum of: 

        (1)   the
outstanding principal amount, or, if greater, the committed amount, of the Debt secured by Liens described under clauses (a), (b), (f), (g), (j), (k), (o),
(p), (t), (u), (x) and (y) of this definition, as the case may be, at the time the original Lien became a Permitted Lien under this Indenture; and 

        (2)   an
amount necessary to pay any fees and expenses, including premiums and defeasance costs, incurred by the Company or such Restricted Subsidiary in connection with such
Refinancing; 

        (m)  judgment
Liens not giving rise to a Default or Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings that may have been
initiated for the review of such judgment, decree or order shall not have been finally terminated or the period within which such proceedings may be initiated shall not have expired; 

23

 

        (n)   Liens
upon specific items of inventory or other goods and proceeds of any Person securing such Person's obligations in respect of banker's acceptances issued or credited
for the account of such Person to facilitate the purchase, shipment or storage of such inventory or goods; 

        (o)   Liens
securing obligations of the Company under Hedging Obligations permitted to be Incurred pursuant to Section 1008 under clause (f) of the definition of
"Permitted Debt"; 

        (p)   Liens
securing reimbursement obligations with respect to commercial letters of credit that encumber cash, documents and other Property relating to such letters of credit
and proceeds thereof; 

        (q)   Liens
on assets leased to the Company or a Restricted Subsidiary if such lease is properly classified as an operating lease in accordance with GAAP or is a Synthetic
Lease or Sale and Leaseback Transaction relating to the Office Campus; 

        (r)   Liens
arising under consignment or similar arrangements for the sale of goods in the ordinary course of business; 

        (s)   Liens
in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; 

        (t)    Liens
securing obligations of the Company or any Restricted Subsidiary in respect of a Receivables Program, provided that
any such Lien will be limited to the Receivables Program Assets under such Receivables Program; 

        (u)   Liens
on cash securing obligations of the Company or a Restricted Subsidiary in connection with or under a Synthetic Lease or Sale and Leaseback Transaction relating to
the Office Campus; 

        (v)   Liens
in favor of the Company; 

        (w)  Liens
on Capital Stock of Unrestricted Subsidiaries; 

        (x)   Liens
on the Office Campus to secure Debt permitted to be Incurred pursuant to Section 1008 under clause (l) of the definition of "Permitted Debt"; 

        (y)   Liens
securing other Debt not exceeding $10.0 million at any time outstanding; and 

        (z)   Liens
arising out of transactions relating to tax-planning strategies of the Company and its Restricted Subsidiaries;  provided, that all such transactions are between or among Restricted Subsidiaries, the
Company and any trustee, transfer agent or escrow agent relating
to such tax-planning strategies, or any combination of the foregoing parties. 

        "Permitted Refinancing Debt" means any Debt that Refinances any other Debt, including any successive Refinancings, so long as: 

        (a)   such
Debt is in an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price) not in excess of the sum of: 

        (1)   the
aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value) and all accrued interest then outstanding of the Debt being
Refinanced; and 

        (2)   an
amount necessary to pay any fees and expenses, including premiums and defeasance costs, related to such Refinancing; 

        (b)   the
Average Life of such Debt is equal to or greater than the Average Life of the Debt being Refinanced; 

        (c)   the
Stated Maturity of such Debt is no earlier than the Stated Maturity of the Debt being Refinanced; and 

24

 

        (d)   the
new Debt shall not be senior in right of payment to the Debt that is being Refinanced, except that, in the case of any Debt that Refinances the Convertible
Debentures, such Debt may be senior in right of payment to the Convertible Debentures, provided, that such Debt is subordinated or  pari passu in right of
payment to the Notes; 

        provided, however, that Permitted Refinancing Debt shall not include: 

        (1)   Debt
of a Subsidiary that is not a Notes Guarantor that Refinances Debt of the Company or a Notes Guarantor; or 

        (2)   Debt
of the Company or a Restricted Subsidiary that Refinances Debt of an Unrestricted Subsidiary. 

        "Person" means any individual, corporation, company (including any limited liability company), association, partnership, joint venture,
trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. 

        "Predecessor Note" of any particular Note means every previous Note evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Note shall be deemed to evidence the same debt as the mutilated, destroyed,
lost or stolen Note. 

        "Preferred Stock" means any Capital Stock of a Person, however designated, which entitles the holder thereof to a preference with respect
to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of any other class of Capital Stock issued by
such Person. 

        "Preferred Stock Dividends" means all dividends (other than dividends paid in Capital Stock of the Company) made with respect to Preferred
Stock of Restricted Subsidiaries held by Persons other than the Company or a Wholly Owned Restricted Subsidiary. The amount of any such dividend shall be equal to the quotient of such dividend divided
by the difference between one and the maximum statutory federal income rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Preferred Stock. 

        "Prepayment Offer" has the meaning specified in Section 1013(d). 

        "pro forma" means, with respect to any calculation made or required to be made pursuant to the terms of this Indenture, a calculation
performed in accordance with Article Eleven of Regulation S-X promulgated under the Securities Act, as interpreted in good faith by an Officer, or otherwise a calculation made in
good faith by an Officer after consultation with the independent certified public accountants of the Company. 

        "Property" means, with respect to any Person, any interest of such Person in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible, including Capital Stock in, and other securities of, any other Person. For purposes of any calculation required pursuant to this Indenture, the value of any Property
shall be its fair market value. 

        "Purchase Agreement" means the Purchase Agreement dated            ,        between the Company, the Guarantors named
therein
and the Purchasers. 

        "Purchase Date" has the meaning specified in Section 1013(d). 

        "Purchase Money Debt" means Debt: 

        (a)   consisting
of the deferred purchase price of Property, conditional sale obligations, obligations under any title retention agreement, other purchase money obligations
and obligations in respect of 

25

 

industrial
revenue bonds, in each case where the maturity of such Debt does not exceed the anticipated useful life of the Property being financed; or 

        (b)   Incurred
to finance all or any part of the purchase price or cost of an acquisition, construction improvement, installation or lease by the Company or a Restricted
Subsidiary of Property used in the business of the Company and its Restricted Subsidiaries, including additions and improvements thereto; 

provided, however, that such Debt is Incurred within 180 days after the acquisition, construction, improvement, installation or lease of such
Property by the Company or such Restricted Subsidiary. 

        "Purchase Price" has the meaning specified in Section 1013(d). 

        "Purchasers" means                        . 

        "Rating Agency" means Moody's and S&P (or, if either such entity ceases to rate the Notes for reasons outside the control of the Company,
then in place of that entity, any other securities rating organization nationally recognized in the United States and selected by the Company as a replacement agent). 

        "Receivables Program" means, with respect to any Person, an agreement or other arrangement or program providing for the advance of funds
to such Person against the pledge, contribution, sale or other transfer or encumbrances of Receivables Program Assets of such Person or such Person and/or one or more of its Subsidiaries. 

        "Receivables Program Assets" means all of the following Property and interests in Property, including any undivided interest in any pool
of any such Property or interests, whether now existing or existing in the future or hereafter arising or acquired: 

        (a)   accounts
(as defined in the Uniform Commercial Code or any similar or equivalent legislation as in effect in any applicable jurisdiction); 

        (b)   accounts
receivable, general intangibles, instruments, contract rights, documents and chattel paper (including, without limitation, all rights to payment created by or
arising from sales of goods, leases of goods or the rendition of services, no matter how evidenced, whether or not earned by performance); 

        (c)   all
unpaid sellers' or lessors' rights (including, without limitation, rescission, replevin, reclamation and stoppage in transit) relating to any of the foregoing or
arising therefrom; 

        (d)   all
rights to any goods or merchandise represented by any of the foregoing; 

        (e)   all
reserves and credit balances with respect to any such accounts receivable or account debtors; 

        (f)    all
letters of credit, security or Guarantees of any of the foregoing; 

        (g)   all
insurance policies or reports relating to any of the foregoing; 

        (h)   all
collection or deposit accounts relating to any of the foregoing; 

        (i)    all
books and records relating to any of the foregoing; 

        (j)    all
instruments, contract rights, chattel paper, documents and general intangibles relating to any of the foregoing; and 

        (k)   all
proceeds of any of the foregoing. 

26

   
        "Redemption Date" when used with respect to any Note to be redeemed, in whole or in part, means the date fixed for such redemption by or
pursuant to this Indenture. 

        "Redemption Price" when used with respect to any Note to be redeemed, in whole or in part, means the price at which it is to be redeemed
pursuant to this Indenture. 

        "Reference Treasury Dealer" means                        , and their respective successors;
provided,
however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another Primary Treasury Dealer. 

        "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Independent Investment Banker, of the bid and ask prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the
Independent Investment Banker by such Reference Treasury Dealer at 5:00 p.m. on the third Business Day preceding such Redemption Date. 

        "Refinance" means, in respect of any Debt, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund
or Repay, or to issue other Debt, in exchange or replacement for, such Debt. "Refinanced" and
"Refinancing" shall have correlative meanings. 

        "Regular Record Date" has the meaning specified in the form of Note attached as Exhibit A. 

        "Repay" means, in respect of any Debt, to repay, prepay, repurchase, redeem, legally defease or otherwise retire such Debt.
"Repayment" and "Repaid" shall have correlative meanings. For purposes of Section 1013 and the
definition of "Consolidated Interest Coverage Ratio," Debt shall be considered to have been Repaid only to the extent the related loan commitment, if any, shall have been permanently reduced in
connection therewith. 

        "Representative" means the trustee, agent or representative expressly authorized to act in such capacity, if any, for an issue of Senior
Debt. 

        "Responsible Officer," when used with respect to the Trustee, means any officer in the Corporate Trust Office of the Trustee and also
means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. 

        "Restricted Payment" means: 

        (a)   any
dividend or distribution (whether made in cash, securities or other Property) declared or paid on or with respect to any shares of Capital Stock of the Company or
any Restricted Subsidiary (including any such payment in connection with any merger or consolidation with or into the Company or any Restricted Subsidiary), except for any dividend or distribution
that is made solely to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, to the other shareholders of such Restricted Subsidiary
on a pro rata basis or on a basis that results in the receipt by the Company or a Restricted Subsidiary of dividends or distributions of greater value
than it would receive on a pro rata basis) or any dividend or distribution payable solely in shares of Capital Stock (other than Disqualified Stock) of
the Company; 

        (b)   the
purchase, repurchase, redemption, acquisition or retirement for value of any Capital Stock of the Company (other than from a Restricted Subsidiary); 

        (c)   the
purchase, repurchase, redemption, acquisition or retirement for value, prior to the earliest of the Stated Maturity or the date for any sinking fund or amortization
or other installment payment, of any Subordinated Debt (other than the purchase, repurchase, redemption, acquisition or retirement of any Subordinated Debt purchased in anticipation of satisfying a
payment at the earliest of the Stated 

27

 

Maturity,
or the date of any sinking fund or amortization or other installment obligation, in each case due within one year of the date of purchase, repurchase, redemption, acquisition or retirement);
or 

        (d)   any
Investment (other than Permitted Investments) in any Person. 

        "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. 

        "Restructuring Plans" means each of the restructuring plans of the Company and its Subsidiaries as announced by the Company on
(1) October 29, 2002 in the Company's press release and earnings conference call relating to its fourth quarter ended September 28, 2002 and year-end
results for fiscal 2002 and (2) July 10, 2004 in the Company's press release and earnings call relating to its third quarter ended June 26, 2004, as revised in the Company's press
release and earnings call relating to its first quarter ended January 1, 2005. 

        "S&P" means Standard & Poor's Ratings Service or any successor to the rating agency business thereof. 

        "Sale and Leaseback Transaction" means any direct or indirect arrangement relating to Property now owned or hereafter acquired whereby the
Company or a Restricted Subsidiary transfers such Property to another Person and the Company or a Restricted Subsidiary leases it from such Person. Neither a transaction solely between the Company and
any of its Restricted Subsidiaries or between any Restricted Subsidiaries of the Company, nor a sale and leaseback transaction that is consummated within 180 days after the purchase of the
assets subject to such transaction, shall be considered a Sale and Leaseback Transaction. 

        "Securities Act" means the Securities Act of 1933, as amended from time to time, and (unless the context otherwise requires) includes the
rules and regulations of the Commission promulgated thereunder. 

        "Senior Credit Facility" means the Amended and Restated Credit and Guaranty Agreement, dated as of December 16, 2005, among,  inter alia, the Company, the Notes
Guarantors, the lenders from time to time party thereto, Bank of America, N.A., as Initial Issuing Bank, Citicorp
USA, Inc., as Syndication Agent, The Bank of Nova Scotia, Deutsche Bank Trust Company Americas and KeyBank National Association, as Co-Documentation Agents, Banc of America
Securities LLC and Citigroup Global Markets Inc., as Joint Book Managers and Joint Lead Arrangers, Bank of America, N.A., as Administrative Agent, and Citibank, N.A., as Collateral Agent,
including any related notes, collateral documents, letters of credit and documentation and Guarantees and any appendices, exhibits or schedules to any of the foregoing, as any or all of such
agreements (or any other agreement that Refinances any or all of such agreements or any of the foregoing other agreements) may be amended, restated, modified or supplemented from time to time, or
renewed, refunded, refinanced, restructured, replaced, Repaid or extended from time to time, whether with the original agents and lenders or other agents and lenders or otherwise, and whether provided
under the original credit agreement or one or more other credit agreements or otherwise. 

        "Senior Debt" means: 

        (a)   all
obligations consisting of the principal, premium, if any, and accrued and unpaid interest (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such post-filing interest is allowed in such proceeding) in respect of: 

        (1)   Debt
of the Company for borrowed money; and 

        (2)   Debt
of the Company evidenced by notes, debentures, bonds or other similar instruments permitted under this Indenture for the payment of which the Company is responsible
or liable; 

28

 

        (b)   all
Capital Lease Obligations of the Company and all Attributable Debt in respect of Sale and Leaseback Transactions entered into by the Company; 

        (c)   all
obligations of the Company: 

        (1)   for
the reimbursement of any obligor on any letter of credit, bankers' acceptance or similar credit transaction; 

        (2)   under
Hedging Obligations; or 

        (3)   issued
or assumed as the deferred purchase price of Property and all conditional sale obligations of the Company and all obligations under any title retention agreement
permitted under this Indenture; and 

        (d)   all
obligations of other Persons of the type referred to in clauses (a), (b) and (c) of this definition for the payment of which the Company is responsible
or liable as Guarantor; 

provided, however, that Senior Debt shall not include: 

        (1)   Debt
of the Company that is by its terms subordinate or pari passu in right of payment to the Notes, including any
Subordinated Debt or any Senior Subordinated Debt; 

        (2)   any
Debt Incurred in violation of the provisions of this Indenture; 

        (3)   accounts
payable or any other obligations of the Company to trade creditors created or assumed by the Company in the ordinary course of business in connection with the
obtaining of materials or services (including Guarantees thereof or instruments evidencing such liabilities); 

        (4)   any
liability for Federal, state, local or other taxes owed or owing by the Company; 

        (5)   any
obligation of the Company to any Subsidiary; or 

        (6)   any
obligations with respect to any Capital Stock of the Company. 

        "Senior Debt" of any Notes Guarantor has a correlative meaning to the definition of "Senior Debt." 

        "Senior Subordinated Debt" of the Company means the 6.75% Senior Subordinated Notes, the Notes and any other subordinated Debt of the
Company that specifically provides that such Debt is to rank pari passu with the Notes and is not subordinated by its terms to any other Subordinated
Debt or other obligation of the Company which is not Senior Debt. "Senior Subordinated Debt" of any Notes Guarantor has a correlative meaning. 

        "Significant Subsidiary" means any Subsidiary that would be a "significant subsidiary" of the Company within the meaning of
Rule 1-02 under Regulation S-X promulgated by the Commission. In no event shall an Unrestricted Subsidiary be considered a Significant Subsidiary for purposes of
this definition. 

        "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 307. 

        "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any mandatory redemption or repurchase provision (but excluding any provision providing for the redemption or repurchase of such
security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). 

        "Subordinated Debt" means any Debt of the Company or any Notes Guarantor (whether outstanding on the Issue Date or thereafter Incurred)
that is subordinate or junior in right of payment to the Notes or the applicable Notes Guaranty, as the case may be, pursuant to a written agreement to 

29

 

that
effect. No Debt of the Company or a Notes Guarantor shall be deemed to be subordinated in right of payment to any other Debt of the Company or such Notes Guarantor solely by virtue of any Liens,
Guarantees, maturity of payments or structural subordination. 

        "Subsidiary" means, in respect of any Person, any corporation, company (including any limited liability company), association,
partnership, joint venture or other business entity of which a majority of the total voting power of the Voting Stock is at the time owned or controlled, directly or indirectly, by: 

        (a)   such
Person; 

        (b)   such
Person and one or more Subsidiaries of such Person; or 

        (c)   one
or more Subsidiaries of such Person. 

        "Successor Note" of any particular Note means every Note issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Note; and for the purposes of this definition, any Note authenticated and delivered under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or stolen
Note shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Note. 

        "Surviving Person" has the meaning set forth in Section 801. 

        "Suspended Covenants" has the meaning specified in Section 1022. 

        "Suspension Period" means any period or periods beginning on the date of a Fall-Away Event and ending on the earlier of
(A) the date one or both Rating Agencies withdraw their ratings or downgrade the ratings assigned to the Notes below Investment Grade Ratings or (B) the date on which a Default or Event
of Default occurs and is continuing. 

        "Synthetic Lease" means an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of
such Person but which, for U.S. federal income tax purposes, is characterized as the indebtedness of such Person (without regard to accounting treatment) and any related documents including any
refinancings, extensions, renewals, defeasance, amendments, modifications, supplements, restructuring, replacements, refundings, repayments, payments, purchases, redemptions or retirements, or the
entering into of other such leases or agreements, in exchange or replacement for, such agreement or lease. 

        "Total Assets" means, as of any date of determination, the amount that would appear on a consolidated balance sheet of the Company and its
consolidated Restricted Subsidiaries as the total assets. 

        "Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the yield to maturity of the Comparable Treasury
Issue, compounded semi-annually, assuming a price for such Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such
redemption date. 

        "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this instrument was executed, except as
provided in Section 905; provided, however, that, in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act"
means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. 

        "Trustee" means the Person named as the "Trustee" in the first subsection of this instrument until a successor Trustee shall have become
such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. 

        "United States" or "U.S." means the United States of America (including the States thereof
and the District of Columbia), its territories, its possessions and other areas subject to its jurisdiction. 

30

 

        "Unregistered Senior Debt" means any Senior Debt of the Company or any Subsidiary that was issued in a transaction not registered under
the Securities Act or which the Company has not agreed to register the resale of, or exchange for, Senior Debt in a transaction registered under the Securities Act. 

        "Unrestricted Notes Certificate" means a certificate substantially in the form set forth in Exhibit D. 

        "Unrestricted Subsidiary" means any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary
pursuant to a Board Resolution, but only to the extent that such Subsidiary at the time of such designation: 

        (a)   is
a Person with respect to which neither the Company nor any Restricted Subsidiary has an obligation to (1) subscribe for additional Capital Stock or
(2) maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; 

        (b)   has
no Debt other than Debt: 

        (1)   as
to which neither the Company nor any of its Restricted Subsidiaries (A) provides credit support of any kind (including any undertaking, agreement or instrument
that would constitute Debt), (B) is directly or indirectly liable as a Guarantor or otherwise, or (C) constitutes the lender; provided,
however, the Company or a Restricted Subsidiary may loan, advance or extend credit to, or Guarantee the Debt of, an Unrestricted Subsidiary that is permitted under Sections
1008 and 1009; 

        (2)   no
default with respect to which (including any rights that the holders thereof may have to take enforcement action against an Unrestricted Subsidiary) would permit upon
notice, lapse of time or both any holder of any other Debt (other than the Notes, the Notes Guarantees or any Guarantee permitted by the proviso to paragraph (1) of this clause (b)) of
the Company or any of its Restricted Subsidiaries, in an aggregate amount greater than $50.0 million or its foreign currency equivalent at the time, to declare a default on such other Debt or
cause the payment thereof to be accelerated or payable prior to its Stated Maturity; and 

        (3)   as
to which the lenders have been notified in writing or have otherwise agreed in writing that they will not have any recourse to the stock or other Property of the
Company or any Restricted Subsidiary, except for Debt that has been Guaranteed by the Company or any Restricted Subsidiary as permitted by the proviso to paragraph (1) of this
clause (b); 

        (c)   does
not own any Capital Stock, or hold any Lien on any Property of, the Company or any Restricted Subsidiary; and 

        (d)   is
not a party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that could reasonably be expected to be obtained at the time from any Person that is not an
Affiliate of the Company or any Restricted Subsidiary. 

        Any
designation of a Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced by filing with the Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation complied with the preceding conditions and was permitted under Section 1009. If at any time any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Debt of such Subsidiary
shall be deemed to be Incurred by a Restricted Subsidiary as of such date, and, if such Debt is not permitted to be Incurred as of such date under the covenant described under Section 1008, the
Company shall be in default of such covenant. The Board of Directors may at any time designate an Unrestricted Subsidiary to be a Restricted Subsidiary;  provided that (1) all Liens and Debt of such
Unrestricted Subsidiary outstanding immediately following such designation, would, if Incurred at
such time, have been permitted to be 

31

 

Incurred
under this Indenture, and (2) no Default or Event of Default would occur or be continuing following such designation. The term "Unrestricted Subsidiary" shall also include any
Subsidiary of an Unrestricted Subsidiary. 

        "U.S. Dollar Equivalent" means, with respect to any monetary amount in a currency other than the U.S. dollar, at or as of any time for the
determination thereof, the amount of U.S. dollars obtained by converting such foreign currency involved in such computation into U.S. dollars at the spot rate for the purchase of U.S. dollars with the
applicable foreign currency as quoted by Reuters (or, if Reuters ceases to provide such spot quotations, by any other reputable service as is providing such spot quotations, as selected by the
Company) at approximately 11:00 a.m. (New York City time) on a day not more than two business days prior to such determination. 

        "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or
redeemable at the issuer's option. 

        "U.S. Person" has the meaning set forth in Rule 902(k) under the Securities Act. 

        "Vice President," when used with respect to the Company, means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president." 

        "Voting Stock" of any Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. 

        "Wholly Owned Restricted Subsidiary" means, at any time, a Restricted Subsidiary, all the Capital Stock of which (except director's
qualifying shares or shares required by applicable law to be held by third persons) is at such time owned, directly or indirectly, by the Company and its other Wholly Owned Restricted Subsidiaries. 

        "Zero Coupon Debentures" means the Zero Coupon Convertible Subordinated Debentures due 2020 of the Company. 

        SECTION
102.    Compliance Certificates and Opinions.    

        (a)   Upon
any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee such
certificates and opinions as may be required under the Trust Indenture Act. Each such certificate or opinion shall be given in the form of an Officers' Certificate, if to be given by an officer of the
Company, or an Opinion of Counsel, if to be given by counsel, and shall comply with the requirements of the Trust Indenture Act and any other requirement set forth in this Indenture. 

        (b)   Every
certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include (in form reasonably satisfactory to the
Trustee): 

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

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

        (3)   a
statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been complied with (which, in the case of an Opinion of Counsel, may be limited to reliance on an Officers' Certificate as to matters of fact); and 

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

32

  

        SECTION 103.    Form of Documents Delivered to Trustee.    

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

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

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

        SECTION
104.    Acts of Holders; Record Date.    

        (a)   Any
request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by any agent duly appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. The Trustee shall promptly deliver to the
Company copies of all such instruments delivered to the Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 601) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 104. 

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

        (c)   The
ownership of Notes (including the principal amount and serial numbers of Notes held by any Person, and the date of holding the same) shall be proved by the Note
Register. 

        (d)   Any
request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the
Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon such Note. 

33

 

        (e)   The
Company may set any day as a record date for the purpose of determining the Holders of Outstanding Notes entitled to give, make or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Notes;  provided that the Company may not set a record
date for, and the provisions of this subsection shall not apply with respect to, the giving or making of
any notice, declaration, request or direction referred to in subsection (f). If not set by the Company prior to the first solicitation of a Holder made by any Person in respect of any such matter
referred to in the foregoing sentence, the record date for any such matter shall be the 30th day (or, if later, the date of the most recent list of Holders required to be provided pursuant to
Section 701) prior to such first solicitation. If any record date is set pursuant to this subsection, the Holders of Outstanding Notes on such record date, and no other Holders, shall be
entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective
hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this subsection (e) shall
be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this subsection (e) (whereupon the record date
previously set shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this subsection shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this subsection, the Company, at its own expense, shall cause
notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder in the manner set forth in Section 106. 

        (f)    The
Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Notes entitled to join in the giving or making of (1) any
Notice of Default, (2) any declaration of acceleration referred to in Section 502, (3) any request to institute proceedings referred to in Section 507 or any direction
referred to in Section 512. If any record date is set pursuant to this subsection, the Holders of Outstanding Notes on such record date, and no other Holders, shall be entitled to join in such
notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Notes on such record date. Nothing in this subsection shall
be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this subsection (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no effect), and nothing in this subsection shall be construed to render ineffective any action taken by Holders of the
requisite principal amount of Outstanding Notes on the date such action is taken. Promptly after any record date is set pursuant to this subsection, the Trustee, at the Company's expense, shall cause
notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder in the manner set forth in Section 106. 

        (g)   With
respect to any record date set pursuant to this Section 104, the party hereto which sets such record date may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any earlier or later day;  provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in writing, and to
each Holder in the manner set forth in Section 106, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this
Section 104, the party hereto which set such record date shall be deemed to have initially designated the 180th day after such record date as the Expiration Date with respect thereto, subject
to its right to change the Expiration Date as provided in this subsection. Notwithstanding the foregoing, no Expiration Date shall be later than the 180th day after the applicable record date. 

34

 

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

        SECTION
105.    Notices, Etc., to Trustee and Company.    

        Any
request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with, 

        (a)   the
Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its
Corporate Trust Office, Attention: Corporate Trust Department. 

        (b)   the
Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to the Company addressed to it at the address of its principal office specified in the Recitals to this Indenture or at any other address previously furnished in writing
to the Trustee by the Company. 

        SECTION
106.    Notice to Holders; Waiver.    

        (a)   Where
this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and
mailed, first-class postage prepaid, or delivered by hand or overnight courier, to each Holder affected by such event, at his address as it appears in the Note Register, not later than the latest date
(if any), and not earlier than the earliest date (if any), prescribed for the giving of such notice, with a copy to Trustee at the same time, and delivered to the Trustee in the manner provided in
clause (a) of Section 105. In any case where notice to Holders is given by mail, neither the failure to mail or deliver by hand or overnight courier such notice, nor any defect in any
notice so mailed or delivered by hand or overnight courier, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice
in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. 

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

        SECTION
107.    Conflict with Trust Indenture Act.    

        Until
such time as this Indenture shall be qualified under the Trust Indenture Act, this Indenture, the Company and the Trustee shall be deemed for all purposes hereof to be subject to
and governed by the Trust Indenture Act to the same extent as would be the case if this Indenture were so qualified on the date hereof. If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a part of and govern this Indenture, the latter provision shall control. If any provision of this Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. 

        SECTION
108.    Effect of Headings and Table of Contents.    

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

35

 

        SECTION
109.    Successors and Assigns.    

        All
covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. 

        SECTION
110.    Separability Clause.    

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

        SECTION
111.    Benefits of Indenture.    

        Nothing
in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto, any Paying Agent, any Notes Registrar and their successors
hereunder and the Holders of Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. 

        SECTION
112.    Governing Law.    

        THIS INDENTURE, THE NOTES AND EACH NOTATION OF A NOTES GUARANTY DELIVERED PURSUANT TO SECTION 1202 SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.

        SECTION
113.    Legal Holidays.    

        In
any case where any Interest Payment Date, Redemption Date, Purchase Date or Stated Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this
Indenture or of the Notes) payment of interest or principal (and premium, if any) need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as
if made on the Interest Payment Date, Redemption Date or Purchase Date, or at the Stated Maturity, provided that no interest shall accrue for the period
from and after such Interest Payment Date, Redemption Date or Purchase Date or Stated Maturity, as the case may be if and to the extent the required payment is made on the next succeeding Business
Day. 

        SECTION
114.    Indenture and Securities Solely Corporate Obligations.    

        No
recourse for the payment of the principal of or premium, if any, or interest on the Notes, or for any claim based thereon or otherwise in respect thereof, and no recourse under or
upon any obligation, covenant or agreement of the Company or the Notes Guarantors in this Indenture or in any supplemental indenture or in any Note or Notes Guarantee, or because of the creation of
any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, agent, officer, or director or subsidiary, as such, past, present or future, of the Company or the
Notes Guarantors or of any successor corporation, either directly or through the Company or the Notes Guarantors or any successor corporation, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes and Notes Guarantees. 

        SECTION
115.    Counterparts.    

        This
Indenture may be executed in any number of counterparts, each of which shall be original; but such counterparts shall together constitute but one and the same instrument. 

36

 

 
 

ARTICLE TWO
  NOTE FORMS    
    

        SECTION
201.    Forms Generally.    

        (a)   The
Notes and the Trustee's certificates of authentication shall be in substantially the form of Exhibit A attached hereto, the terms of which are incorporated in
and made a part of this Indenture. Each Note shall include the Notes Guarantee in the form of Exhibit B attached hereto, executed by the Notes Guarantors existing on the date of issuance of
such Note, the terms of which are incorporated in and made a part of this Indenture. The Notes may have such appropriate insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may be required to comply with the rules of any
securities exchange, any organizational document or governing instrument or applicable law, or as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of a Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. 

        (b)   The
definitive Notes shall be printed or produced in any other manner, provided that such manner is permitted by the
rules of any securities exchange on which the Notes may be listed, all as determined by the Officers executing such Notes, as evidenced by their execution of such Notes. 

        (c)   Upon
their original issuance, the Notes shall be issued in the form of one or more Global Notes registered in the name of The Depositary Trust Company, a New York
Corporation (including its direct and indirect participants, "DTC"), as Depositary, or its nominee and deposited with the Trustee, as custodian for DTC,
for credit by DTC to the respective accounts of beneficial owners of the Notes represented thereby (or such other accounts as they may direct). The aggregate principal amount of the Global Note may
from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as provided in Section 305. 

        SECTION
202.    Restrictive Legends.    

        [Include if Note is a Global Note—THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS
SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE]. 

        UNLESS
THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (INCLUDING ITS DIRECT ANY INDIRECT PARTICIPANTS, "DTC"), TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER 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 BECAUSE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. 

37

 

 
 

ARTICLE THREE
  THE NOTES    
    

        SECTION
301.    Title and Terms.    

        (a)   Subject
to the provisions of this Indenture and applicable law, the aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is
unlimited. The Company may from time to time issue Additional Notes pursuant to a Board Resolution and subject to Section 312. 

        (b)   The
Notes (including Additional Notes) shall be known and designated as the "    % Senior Subordinated Notes due            " of the Company. Their final
maturity date shall be            ,    and they shall bear interest at the rate of    % per annum,
from            ,        , or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, as the case may be, regardless of when issued, payable semi-annually in arrears
on            and            ,
commencing            ,        , until the principal thereof is paid or made available for payment. 

        (c)   The
principal of (and premium, if any) and interest on the Notes shall be payable at the office or agency of the Company in The City of New York, New York, maintained
for such purpose or at any other office or agency maintained by the Company for such purpose (which shall initially be an office or agency of the Trustee); provided,
however, that at the option of the Company interest may be paid (1) by check mailed to the address of the Person entitled thereto as such address shall appear in the
Note Register or (2) by wire transfer to an account located in the United States maintained by the payee. 

        (d)   Holders
shall have the right to require the Company to purchase their Notes, in whole or in part, in the event of a Change of Control pursuant to Section 1015.
The Notes shall be subject to repurchase by the Company pursuant to a Prepayment Offer as provided in Sections 1013. 

        (e)   The
Notes shall be redeemable as provided in Article Eleven and in the Notes. 

        (f)    The
due and punctual payment of principal of, and premium, if any, and interest on the Notes payable by the Company is irrevocably and unconditionally guaranteed, to the
extent set forth herein, by each of the Notes Guarantors. 

        (g)   The
Notes shall be subject to defeasance at the option of the Company as provided in Article Thirteen. 

        (h)   The
Notes do not have the benefit of any sinking fund obligation. 

        (i)    Unless
the context otherwise requires, the Original Notes and the Additional Notes shall constitute one class and series of securities for all purposes under this
Indenture, including with respect to any amendment, waiver, acceleration or other Act of Holders or, redemption, Prepayment Offer or Change of Control Offer. 

        SECTION
302.    Denominations.    

        The
Notes shall be issuable only in registered form without coupons and only in principal amounts of $1,000 at maturity and any integral multiple thereof. 

        SECTION
303.    Execution, Authentication, Delivery and Dating.    

        (a)   The
Notes shall be executed on behalf of the Company by any two of the Chairman of the Board, its Chief Executive Officer, its President, its Chief Financial Officer,
its Corporate Secretary, any Vice President, any Assistant Secretary, the Treasurer or any Assistant Treasurer. The signature of any of these officers on the Notes may be manual or facsimile. 

38

 

        (b)   Notes
bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. 

        (c)   At
any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Original Notes or Additional Notes (subject to
Section 312) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Original Notes or Additional Notes; and the
Trustee or Authenticating Agent in accordance with such Company Order shall authenticate and deliver such Original Notes or Additional Notes as in this Indenture provided and not otherwise. 

        (d)   Each
Note shall be dated the date of its authentication. 

        (e)   No
Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for on the form of Note attached hereto as Exhibit A, executed by the Trustee or Authenticating Agent by manual or facsimile signature, and
such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. 

        (f)    In
the case of any transaction that satisfies the requirements of Section 801 in which the Company is not the Surviving Person, any of the Notes authenticated or
delivered prior to such transaction may, from time to time, at the request of the Surviving Person, be exchanged for other Notes executed in the name of the Surviving Person with such changes in
phraseology and form as may be appropriate, but otherwise in substance of like tenor as the Note surrendered for such exchange and of like principal amount; and the Trustee upon Company Order of the
Surviving Person, shall authenticate and deliver replacement Notes as specified in such request for the purpose of such exchange. If replacement Notes shall at any time be authenticated and delivered
in any new name of a Surviving Person pursuant to this Section 303 in exchange or substitution for or upon registration of transfer of any Notes, such Surviving Person, at the option of any
Holder but without expense to such Holder, shall provide for the exchange of all Notes at the time outstanding held by such Holder for Notes authenticated and delivered in such new name. 

        SECTION
304.    Temporary Notes.    

        (a)   Pending
the preparation of definitive Notes, the Company may execute, and upon Company Order the Trustee or Authenticating Agent shall authenticate and deliver,
temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Notes in lieu of which
they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Note may determine, as evidenced by their execution of such Notes. 

        (b)   If
temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the
temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at any office or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary Notes the Company shall execute and the Trustee or Authenticating Agent shall authenticate and deliver in exchange therefor a
like principal amount of definitive Notes of authorized denominations. Until so exchanged the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as definitive
Notes. 

39

 

        SECTION
305.    Registration and Registration of Transfer and Exchange Generally; Certain Transfers and Exchanges; Provisions Applying to Global
Notes.    

        (a)   General
Provisions Regarding Registration and Registration of Transfer and Exchange. 

        (1)   The
Notes are issuable only in registered form. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in
such office and in any other office or agency designated pursuant to Section 1002 being herein sometimes collectively referred to as the "Note
Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of Notes and of transfers and exchanges of
Notes. The Note Register will be in written form or any other form capable of being converted into written form within a reasonable time. The Trustee is hereby appointed "Note
Registrar" for the purpose of registering Notes and transfers and exchanges of Notes as herein provided. Such Note Register shall distinguish between Original Notes and the
Additional Notes. 

        (2)   Subject
to the other provisions of this Indenture regarding restrictions on transfer, upon surrender for registration of transfer of any Note at an office or agency of
the Company designated pursuant to
Section 1002 for such purpose, the Company shall execute, and the Trustee or Authenticating Agent shall authenticate and deliver, in the name of the designated transferee or transferees, one or
more new Notes of any authorized denominations and of a like aggregate principal amount bearing such restrictive legends as may be required by this Indenture. 

        (3)   At
the option of the Holder, and subject to the other provisions of this Section 305, Notes may be exchanged for other Notes of any authorized denominations and
of a like aggregate principal amount and bearing such restrictive legends as may be required hereunder, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, and subject to the other provisions of this Section 305, the Company shall execute, and the Trustee or Authenticating Agent shall authenticate and deliver, the Notes
which the Holder making the exchange is entitled to receive. 

        (4)   All
Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Company, evidencing the same Debt, and (except for the
differences between Original Notes and Additional Notes provided for in this Indenture) entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer
or exchange. 

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

        (6)   No
service charge shall be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 304, 906 or 1108 or in accordance with any
Prepayment Offer pursuant to Section 1013 or a Change of Control Offer pursuant to Section 1015, not involving any transfer. 

        (7)   The
Company and the Trustee shall not be required (i) to issue, register the transfer of or exchange any Note during a period beginning at the opening of business
15 days before the day of the mailing of a notice of redemption of Notes selected for redemption under Section 1104 and ending at the close of business on the day of such mailing, or
(ii) to register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. 

40

 

        (b)   Certain Transfers and Exchanges. Notwithstanding any other provisions of this Indenture or the Notes, transfers and
exchanges of Notes and beneficial interests in a Global Note shall be made only in accordance with this subsection 305(b). Transfers and exchanges subject to this subsection 305(b) shall also be
subject to the other provisions of this Indenture that are not inconsistent with this subsection 305(b). 

        (1)   Each
Holder of a Note agrees to indemnify the Trustee and Authenticating Agent against any liability that may result from the transfer, exchange or assignment of such
Holder's Note in violation of any provision of this Indenture and/or applicable United States federal or state securities law. 

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

        (3)   A
beneficial interest in a Global Note may be exchanged for a Note that is not a Global Note as provided in this Section 305. 

        (c)   Provisions Applying to Global Notes. The following provisions shall apply only to Global Notes: 

        (1)   Each
Global Note authenticated under this Indenture shall be registered in the name of the Depositary designated by the Company or a nominee thereof and delivered to the
Trustee custodian therefor, and each such Global Note shall constitute a single Note for all purposes of this Indenture. 

        (2)   Notwithstanding
any other provision in this Indenture or the Notes, no Global Note may be exchanged in whole or in part for Notes, and no transfer of a Global Note in
whole or in part may be registered in the name of any Person other than the Depositary or a nominee thereof unless (A) the Depositary (i) has notified the Company that it is unwilling or
unable to continue as Depositary for such Global Note or (ii) has ceased to be a clearing agency registered under the Exchange Act, and in either case the Company thereupon fails to appoint a
successor depositary within 90 days of such notice, or (B) there shall have occurred and be continuing an Event of Default with respect to such Global Note and the Depositary has
requested such transfer or exchange in writing. 

        (3)   If
any Global Note is to be exchanged for other Notes or cancelled in whole, it shall be surrendered by or on behalf of the Depositary or its nominee to the Trustee, as
Note Registrar, for exchange or cancellation as provided in this Article Three. If any Global Note is to be exchanged for other Notes or cancelled in part, or if another Note is to be exchanged in
whole or in part for a beneficial interest in any Global Note, then either (A) such Global Note shall be so surrendered for exchange or cancellation as provided in this Article Three or
(B) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or cancelled, or equal to the principal amount of such other Note to
be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Trustee, as Note Registrar, whereupon the Trustee, in accordance
with the Applicable Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global
Note, the Trustee shall, subject to Section 305(b) and as otherwise provided in this Article Three, authenticate and deliver any Notes issuable in exchange for such Global Note (or any portion
thereof) to or upon 

41

 

the
order of, and registered in such names as may be directed by, the Depositary or its authorized representative. Upon the request of the Trustee in connection with the occurrence of any of the
events specified in the preceding paragraph, the Company shall promptly make available to the Trustee a reasonable supply of Notes that are not in the form of Global Notes. The Trustee shall be
entitled to rely upon any order, direction or request of the Depositary or its authorized representative which is given or made pursuant to this Article Three if such order, direction or request is
given or made in accordance with the Applicable Procedures and in accordance with all applicable laws. 

        (4)   Every
Note authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Note or any portion thereof, whether pursuant to this
Article Three or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Note, unless such Note is registered in the name of a Person other than the Depositary for such
Global Note or a nominee thereof. 

        (5)   The
Depositary or its nominee, as registered owner of a Global Note, shall be the Holder of such Global Note for all purposes under this Indenture and the Notes and
owners of beneficial interests in a Global Note shall hold such interests pursuant to the Applicable Procedures. Accordingly, any such owner's beneficial interest in a Global Note will be shown only
on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Agent Members. 

        SECTION
306.    Mutilated, Destroyed, Lost and Stolen Notes.    

        (a)   If
any mutilated Note is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Note of like
tenor and principal amount and bearing a number not contemporaneously outstanding: 

        (1)   If
there shall be delivered to the Company and the Trustee (A) evidence to their satisfaction of the destruction, loss or theft of any Note and (B) such
security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of notice to the Company or the Trustee that such Note has been
acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee or Authenticating Agent shall authenticate and deliver, in lieu of any such destroyed, lost or stolen
Note, a new Note of like tenor and principal amount and bearing a number not contemporaneously outstanding; and 

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

        (b)   Upon
the issuance of any new Note under this Section 306, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. 

        (c)   Every
new Note issued pursuant to this Section 306 in lieu of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual
obligation of the Company, whether or not the destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder. 

        (d)   The
provisions of this Section 306 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes. 

42

 

        SECTION
307.    Payment of Interest; Interest Rights Preserved.    

        (a)   Interest
on any Note which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Note (or
one or more Predecessor Notes) is registered at the close of business on the Regular Record Date for such interest. 

        (b)   Any
interest on any Note which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder on such
date, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (1) or (2) of this subsection: 

        (1)   The
Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the
close of business on a "Special Record Date" for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee
an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than
10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of
the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it
appears in the Note Register, not less than 10 days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been
so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Notes (or their respective Predecessor Notes) are registered at the close of business on such Special Record Date and
shall no longer be payable pursuant to clause (2) of this subsection. 

        (2)   The
Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes
may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee in its reasonable judgment. 

        (c)   Subject
to the foregoing provisions of this Section 307, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu
of any other Note shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Note. 

        SECTION
308.    Persons Deemed Owners.    

        Prior
to due registration of any Note for transfer by a Holder as provided in Section 305, the Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the purpose of receiving payment of principal of (and premium, if any) and (subject to Section 307) interest on such
Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the
contrary. None of the Company, the Notes Guarantors, the Trustee or any agent of the Company, the Notes Guarantors or the Trustee shall have any responsibility or liability for any aspect of the
records relating to or 

43

 

payments
made on account of beneficial ownership interests of a Note in global form, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
Notwithstanding the foregoing, with respect to any Note in global form, nothing herein shall prevent the Company or the Trustee, or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by any Depositary (or its nominee), as a Holder, with respect to such Note in global form and nothing herein shall impair, as between such
Depositary and owners of beneficial interests in such Note in global form, the operation of customary practices governing the exercise of the rights of such Depositary (or its nominee) as a Holder of
such Note in global form. 

        SECTION
309.    Cancellation.    

        All
Notes surrendered for payment, redemption, registration of transfer or exchange or for credit against any Prepayment Offer pursuant to Section 1013 or Change of Control Offer
pursuant to Section 1015 shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee or Authenticating Agent for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Notes so delivered
shall be promptly cancelled by the Trustee. If the Company shall so acquire any of the Notes, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness
represented by such Notes unless and until the same are surrendered to the Trustee for cancellation. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section 309, except as expressly permitted by this Indenture. All cancelled Notes held by the Trustee shall be disposed of by the Trustee in accordance with its customary procedures and
certification of their disposal delivered to the Company unless by Company Order the Company shall direct that cancelled Notes be returned to it. 

        SECTION
310.    Computation of Interest.    

        Interest
on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months. 

        SECTION
311.    CUSIP Numbers.    

        The
Company in issuing the Notes may use "CUSIP," or "ISIN" numbers (if then generally in use) and the Trustee shall use CUSIP, or ISIN numbers, as the case may be, in notices of
redemption, exchange and other notices to Holders as a convenience to Holders; provided, however, that any such notice may state that no representation
is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a redemption or other notice and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption or notice shall not be affected by any defect in or such omission of such numbers. The Company shall promptly notify the Trustee of
any change in CUSIP, or ISIN numbers for the Notes. 

        SECTION
312.    Issuance of Additional Notes.    

        (a)   Additional
Notes ranking pari passu with the Notes issued the date hereof may be created and issued from time to time by
the Company without notice to or consent of the Holders and shall be consolidated with and form a single series with the Notes initially issued and shall have the same terms as to status,
redemption or otherwise as the Notes originally issued; provided, however, that the Company's ability to issue Additional Notes shall be subject to the
Company's compliance with Section 1008. Any Additional Notes shall be issued pursuant to an indenture supplemental to this Indenture specifying the amount of Additional Notes being issued. 

        (b)   At
any time and from time to time after the execution and delivery of this Indenture, the Company may, pursuant to a Board Resolution, deliver Additional Notes executed
by the Company to the Trustee or Authenticating Agent for authentication, together with a Company Order for the 

44

 

authentication
and delivery of such Additional Notes, an Officers' Certificate stating that the issuance of such Additional Notes will not result in a breach or violation of any of the covenants
contained in this Indenture and that all conditions precedent to such issuance, authentication and delivery of Additional Notes in this Indenture have been fully complied with and satisfied, and the
Trustee or Authenticating Agent in accordance with the Company Order shall authenticate and deliver such Notes. Prior to authenticating such Additional Notes, and accepting any additional
responsibilities under this Indenture in relation to such Notes, the Trustee and any Authenticating Agent shall be entitled to receive, if requested, and (subject to Section 601) shall be fully
protected in relying upon, an Opinion of Counsel stating in substance that the issuance of such Additional Notes will not result in a breach or violation of any of the covenants contained in this
Indenture and as to the due authorization, execution and delivery of the Additional Notes, the enforceability of the Additional Notes, and the duly incorporated status and good standing of the
Company, subject to customary exceptions and carve-outs. 

        SECTION
313.    Designation of Notes as Senior Debt.    

        The
Notes are designated senior debt for purposes of the Zero Coupon Debentures and the Company's Guaranty of the 3% Convertible Subordinated Notes Due 2007 issued by SCI
Systems, Inc. The Notes Guaranty by SCI Systems, Inc. is designated senior debt for purposes of the 3% Convertible Subordinated Notes Due 2007 issued by SCI Systems, Inc. 

 
 

ARTICLE FOUR
  SATISFACTION AND DISCHARGE    
    

        SECTION
401.    Satisfaction and Discharge of Indenture.    

        (a)   This
Indenture shall be discharged and shall cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of the Notes herein
expressly provided for) as to all Outstanding Notes when: 

        (1)   either:

        (A)  all
Notes theretofore authenticated and delivered (other than (i) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided
in Section 306 and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 1003) have been delivered to the Trustee for cancellation; or 

        (B)  all
such Notes not theretofore delivered to the Trustee for cancellation: 

        (i)    have
become due and payable, or 

        (ii)   will
become due and payable at their Stated Maturity within one year, or 

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

and
the Company, in the case of subclauses (i), (ii) or (iii), has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders
an amount of cash or U.S. Government Obligations, or a combination thereof, in such amount as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire
Debt on such Notes not theretofore delivered to the Trustee for cancellation, for principal, and premium, if any, and accrued interest, if any, to the date of such deposit (in the case of Notes which
have become due and payable), or to the Stated Maturity or Redemption Date, as the case may be; 

45

  

        (2)   no
Default or Event of Default under this Indenture shall have occurred and be continuing on the date of the deposit pursuant to subclause (B) of
clause (a)(1) of this Section 401, or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other
material instrument to which the Company is a party or by which the Company is bound; 

        (3)   the
Company has paid or caused to be paid all other sums payable hereunder by the Company; 

        (4)   the
Company has delivered irrevocable instructions to the Trustee to apply the deposited money and the U.S. Government Obligations, or both, toward the payment of the
Notes at the Stated Maturity or on the Redemption Date, as the case may be; and 

        (5)   the
Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that the Company has complied with all conditions
precedent herein provided for relating to the satisfaction and discharge of this Indenture. 

        (b)   Notwithstanding
the satisfaction and discharge of this Indenture pursuant to this Article Four, the obligations of the Company to the Trustee under Section 607
and, if money shall have been deposited with the Trustee pursuant to paragraph (B) of clause (a)(1) of this Section 401, the obligations of the Trustee under Section 402
and clause (e) of Section 1003 shall survive. 

        SECTION
402.    Application of Trust Money.    

        Subject
to the provisions of subsection (e) of Section 1003, all money deposited with the Trustee pursuant to Section 401 shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest, if any, for whose payment such money has been deposited with the Trustee. 

 
 

ARTICLE FIVE
  REMEDIES    
    

        SECTION
501.    Events of Default.    

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

        (1)   failure
to make the payment of any interest, on the Notes, when the same becomes due and payable, and such failure continues for a period of 30 days; 

        (2)   failure
to make the payment of any principal of, or premium, if any, on, any of the Notes when the same becomes due and payable at its Stated Maturity, upon
acceleration, redemption, optional redemption, required repurchase or otherwise; 

        (3)   failure
by the Company or its Restricted Subsidiaries to comply with Article Eight; 

        (4)   failure
by the Company or any Restricted Subsidiary to comply with any other covenant or agreement in the Notes or in this Indenture (other than a failure that is the
subject of subclauses (1), (2) or (3) of this subsection 501(a)) and such failure continues for 30 days after written notice is given to the Company as provided in
clause (b) of this Section 501; 

        (5)   a
default under any Debt (other than Disqualified Stock with respect to which the sole remedy for any default thereunder is a right to elect one or more additional
members to the board 

46

 

of
directors of the issuer of the Disqualified Stock) by the Company or any Restricted Subsidiary that results in acceleration of the maturity of such Debt, or failure to pay any such Debt at maturity
and such defaulted payment at maturity shall not have been made, waived or extended within the applicable grace period related to any such payment default, in an aggregate amount greater than
$50.0 million or its foreign currency equivalent at the time; 

        (6)   failure
by the Company or any Restricted Subsidiaries that, individually or in the aggregate, would constitute a Significant Subsidiary to pay final judgments for the
payment of money in an aggregate amount in excess of $50.0 million (or its foreign currency equivalent at the time) that shall not be waived, satisfied or discharged for any period of 60
consecutive days during which a stay of enforcement shall not be in effect; 

        (7)   either
the Company or any Restricted Subsidiaries that, individually or in the aggregate, would constitute a Significant Subsidiary: 

        (A)  commences
or commence a voluntary case or proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to
be adjudicated a bankrupt or insolvent; 

        (B)  consents
or consent to the entry of a decree or order for relief in an involuntary case or proceeding against the Company or the Restricted Subsidiaries that
individually or in the aggregate would constitute a Significant Subsidiary under any applicable U.S. Federal or State, or other applicable bankruptcy, insolvency, reorganization or other similar law; 

        (C)  consents
or consent to the commencement of any bankruptcy or insolvency case or proceeding against the Company or the Restricted Subsidiaries that individually or in the
aggregate would constitute a Significant Subsidiary; 

        (D)  files
or file a petition or answer or consent seeking reorganization or relief under any applicable U.S. Federal or State, or other applicable law, or consent or
consents to the filing of such petition; 

        (E)  consents
or consent to the appointment of, or taking possession by, a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of the Company
or Restricted Subsidiaries that
individually or in the aggregate would constitute a Significant Subsidiary or of substantially all of the property of such entity or entities; 

        (F)  makes
or make an assignment for the benefit of creditors, or admits or admit, as the case may be, in writing of its inability to pay its or their debts generally as they
become due, or the taking of corporate action by the Company or Restricted Subsidiaries that individually or in the aggregate would constitute a Significant Subsidiary in furtherance of any such
action; and 

        (8)   the
Notes Guarantees provided by any of the Notes Guarantors that, individually or in the aggregate, would constitute a Significant Subsidiary cease to be in full force
and effect (other than in accordance with the terms of such Notes Guarantees) or any of the Notes Guarantors that, individually or in the aggregate, would constitute a Significant Subsidiary deny or
disaffirm their obligations under their Notes Guarantees (other than by reason of the release of a Notes Guarantor in accordance with the terms of this Indenture). 

        (b)   A
Default under clause (a)(4) of this Section 501 is not an Event of Default under this Indenture until the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Notes notify the Company of the Default, and the Company does not cure such Default within the time specified after receipt of such notice. Such notice
must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default." 

47

 

        (c)   The
Company shall deliver to the Trustee, within 30 days after the Company's knowledge thereof, written notice in the form of an Officers' Certificate of any
event that with the giving of notice and the lapse of time would become an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto. 

        SECTION
502.    Acceleration of Maturity; Rescission and Annulment.    

        (a)   If
an Event of Default with respect to the Notes (other than an Event of Default specified in subsection 501(a)(7)), shall have occurred and be continuing, the Trustee
or the Holders of not less than 25% in aggregate principal amount of the Outstanding Notes may declare to be immediately due and payable, by a notice in writing to the Company (and to the Trustee if
given by Holders), the principal amount of all the Outstanding Notes, plus accrued but unpaid interest to the date of acceleration. If an Event of Default specified in subsection 501(a)(7) shall
occur, the principal amount of all Outstanding Notes, plus accrued but unpaid interest to the date of acceleration, shall be due and payable immediately without any declaration or other act on the
part of the Trustee or the Holders. 

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

        (1)   the
Company has paid or deposited with the Trustee a sum sufficient to pay: 

        (A)  all
overdue interest on all Outstanding Notes; 

        (B)  the
principal of (and premium, if any) any Outstanding Notes which have become due otherwise than by such declaration of acceleration (including any Notes required to
have been purchased on the Purchase Date pursuant to a Prepayment Offer or the Change of Control Purchase Date pursuant to a Change of Control Offer made by the Company) and, to the extent that
payment of such interest is lawful, interest thereon at the rate provided by the Outstanding Notes; 

        (C)  to
the extent that payment of such interest is lawful, interest upon overdue interest at the rate provided by the Notes; and 

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

        (2)   all
Events of Default, other than the non-payment of the principal, interest and premium on the Notes which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513. 

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

        (d)   Subject
to the provisions of this Indenture relating to the duties of the Trustee, in case an Event of Default shall occur and be continuing, the Trustee will be under
no obligation to exercise any of its rights or powers under this Indenture at the request or direction of any of the holders of the Notes unless such holders shall have offered to such Trustee
reasonable indemnity. Subject to such provisions for the indemnification of the Trustee, the holders of a majority in aggregate principal amount of the Outstanding Notes will have the right to direct
the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Notes. 

48

 

        SECTION
503.    Collection of Debt and Suits for Enforcement by Trustee.    

        (a)   The
Company covenants that if: 

        (1)   default
is made in the payment of any interest on any Note when such interest becomes due and payable and such default continues for a period of 30 days; or 

        (2)   default
is made in the payment of the principal of (or premium, if any, on) any Note at the Stated Maturity thereof or, with respect to any Note required to have been
purchased pursuant to a Prepayment Offer made by the Company, at the Purchase Date thereof, 

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

        (b)   If
an Event of Default occurs and is continuing, subject to Section 512, the Trustee may in its discretion proceed to protect and enforce its rights and the
rights of the Holders by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. 

        SECTION
504.    Trustee May File Proofs of Claim.    

        (a)   In
case of any judicial proceeding relative to the Company (or any other obligor upon the Notes, including the Notes Guarantors), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized under the Trust Indenture Act in order to have claims of the Holders
and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to
distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 607. The provisions of this subsection
(a) shall be subject to Section 512. 

        (b)   No
provision of this Indenture shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 

        SECTION
505.    Trustee May Enforce Claims Without Possession of Notes.    

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

49

 

        SECTION
506.    Application of Money Collected.    

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

FIRST:
To the payment of all amounts due the Trustee under Section 607; 

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

THIRD:
The balance, to the Person or Persons entitled thereto, including the Company, the Notes Guarantors or any other obligors of the Notes, as their interests may appear or as a court of competent
jurisdiction may direct. 

        SECTION
507.    Limitation on Suits and Remedies.    

        No
Holder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless: 

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

        (b)   the
Holders of not less than 25% in aggregate principal amount of the Outstanding Notes shall have made a written request and offered reasonable indemnity to the Trustee
to institute proceedings or pursue remedies in respect of such Event of Default in its own name as Trustee hereunder; and 

        (c)   no
direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate
principal amount of the Outstanding Notes, 

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

        SECTION
508.    Unconditional Right of Holders to Receive Principal, Premium and Interest.    

        Notwithstanding
any other provision in this Indenture, any Holder shall have the right, which is absolute and unconditional, to receive payment of the principal of (and premium, if any)
and (subject to Section 307) interest on such Note on the Stated Maturity expressed in such Note (or, in the case of redemption, on the Redemption Date or in the case of Prepayment Offer or
Change of Control Offer made by the Company and required to be accepted as to such Note, on the Purchase Date or Change of Control Purchase Date, respectively) and to institute suit for the
enforcement of any such payment, and such rights shall not be impaired without the consent of such Holder. 

        SECTION
509.    Restoration of Rights and Remedies.    

        If
the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or
has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Notes Guarantors, the Trustee and the
Holders 

50

 

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

        SECTION
510.    Rights and Remedies Cumulative.    

        Except
as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes pursuant to Section 306, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 

        SECTION
511.    Delay or Omission Not Waiver.    

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

        SECTION
512.    Control by Holders.    

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

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

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

        (c)   the
Trustee may refuse to follow any such direction that may involve the Trustee in personal liability; and 

        (d)   the
Trustee may refuse to follow any such direction that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders not joining in the
giving of such direction. 

        SECTION
513.    Waiver of Past Defaults.    

        (a)   The
Holders of not less than a majority in aggregate principal amount of the Outstanding Notes may, by notice to the Trustee, on behalf of the Holders of all the Notes,
waive any existing Default or Event of Default hereunder and its consequences, except: 

        (1)   a
Default or Event of Default in the payment of the principal of (or premium, if any) or interest on any Note (including any Note which is required to have been
purchased pursuant to a Prepayment Offer or Change of Control Offer which has been made by the Company); or 

        (2)   a
Default or Event of Default in respect of a covenant or provision hereof which under Article Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Note affected. 

        (b)   Upon
any such waiver described in subsection (a) of this Section 513, such Default shall cease to exist and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Indenture; provided that no such waiver shall extend to any subsequent or other default or impair
any right consequent thereon. 

51

 

        SECTION
514.    Undertaking for Costs.    

        In
any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, a court may
require any party litigant in such suit to file an undertaking to pay the reasonable costs of such suit, and may assess reasonable costs against any such party litigant, in the manner and to the
extent provided in the Trust Indenture Act; provided that this Section 514 shall not be deemed to authorize any court to require such an
undertaking or to make such an assessment in any suit instituted by the Company, the Trustee or by any Holder or group of Holders' holding in the aggregate more than 10% in principal amount of the
Outstanding Notes, or by a Holder pursuant to Section 508. 

        SECTION
515.    Waiver of Stay or Extension Laws.    

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

 
 

ARTICLE SIX
  THE TRUSTEE    
    

        SECTION
601.    Certain Duties and Responsibilities.    

        The
duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 601. 

        SECTION
602.    Notice of Defaults.    

        If
any Default or any Event of Default occurs and is continuing and if such Default or Event of Default is known to the Trustee, the Trustee shall mail to each Holder, in the manner and
to the extent provided in the Trust Indenture Act, notice of the Default or Event of Default within 45 days after it occurs, unless such Default or Event of Default has been cured;  provided, however, that, except in the case of a default in the payment of the principal of (or premium, if any) or interest on any Note, the Trustee
shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or a Responsible Officer of the Trustee in good
faith determines that the withholding of the notice is in the interest of the Holders. 

        SECTION
603.    Certain Rights of Trustee.    

        (a)   Except
during the continuance of an Event of Default, the Trustee undertakes to perform such functions and duties and only such functions and duties as are specifically
set forth in this Indenture, and no implied duties or obligations shall be read into this Indenture against the Trustee. During the existence of an Event of Default, the Trustee shall exercise such of
the rights and powers under this Indenture vested in the Trustee under this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs. No provision of this Indenture shall be construed to relieve the Trustee from its duties, 

52

 

except
to the extent permitted by the Trust Indenture Act. Subject to the provisions of Section 601, whether or not therein expressly so provided, every provision of this Indenture relating to
the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 603. 

        (b)   Subject
to the Trust Indenture Act and Section 601: 

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

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

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

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

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

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

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

        (8)   the
Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Notes unless either (A) a Responsible Officer shall have
actual knowledge of such Default or Event of Default or (2) written notice of such Default or Event of Default shall have been given to the Trustee by the Company, any Notes Guarantor or by any
Holder. 

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

        (A)  this
clause (9) of subsection (b) of this Section 603 shall not be construed to limit the effect of subsection (b)(1) of this Section 603; 

53

 

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

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

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

        (10) Whether
or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section 603. 

        SECTION
604.    Not Responsible for Recitals or Issuance of Notes.    

        The
recitals contained herein and in the Notes, except the Trustee's certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Notes. The Trustee shall not be accountable for the use or
application by the Company of Notes or the proceeds from the issuance of the Notes. The Trustee shall not have any responsibility or liability for any information provided to Holders or any other
Person, including without limitation in the
solicitation of any consent or waiver hereunder, or pursuant to any offering documents, or pursuant to any Prepayment Offer. 

        SECTION
605.    May Hold Notes.    

        The
Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of
Notes and, subject to Sections 608 and 613, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Note Registrar or such
other agent. Subject to the limitations imposed by the Trust Indenture Act, nothing in this Indenture shall prohibit the Trustee from becoming and acting as trustee or as collateral agent under other
indentures, under which other securities, or certificates of interest or participation in other securities, of the Company or any Notes Guarantor are outstanding in the same manner as if it were not
Trustee hereunder. 

        SECTION
606.    Money Held in Trust.    

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

        SECTION
607.    Compensation and Reimbursement.    

        The
Company agrees: 

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

54

 

        (b)   except
as otherwise expressly provided herein, to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and 

        (c)   to
indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part (subject to the
provisions of Sections 601 and 603), arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure
by the Trustee to notify the Company shall not relieve the Company of its obligations hereunder. 

        SECTION
608.    Disqualification: Conflicting Interests.    

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

        SECTION
609.    Corporate Trustee Required; Eligibility.    

        There
shall at all times be a Trustee hereunder which shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and (together with its corporate Affiliates)
has a combined capital and surplus of at least $50,000,000. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section 609, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 609, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article Six. 

        SECTION
610.    Resignation and Removal; Appointment of Successor.    

        (a)   No
resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by
the successor Trustee under Section 611. 

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

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

        (d)   If
at any time: 

        (1)   the
Trustee shall fail to comply with Section 608 after written request therefor by the Company or by any Holder who has been a bona fide Holder of a Note for at
least six months, or 

        (2)   the
Trustee shall cease to be eligible under Section 609 and shall fail to resign after written request therefor by the Company or by any such Holder, or 

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

then,
in any such case, (A) the Company by a Board Resolution may remove the Trustee, or (B) subject to Section 514, any Holder who has been a bona fide Holder of a Note for at
least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. 

55

  

        (e)   If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee. If, within one year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed
by Act of the Holders of a majority in principal amount of the Outstanding Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of a Note for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. 

        (f)    The
Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee to all Holders in the manner provided in
Section 106. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. 

        SECTION
611.    Acceptance of Appointment by Successor.    

        (a)   Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money
held by such retiring Trustee hereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts. 

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

        SECTION
612.    Merger, Conversion, Consolidation or Succession to Business.    

        Any
corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee (including the administration of the trust created under this
Indenture), shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Notes shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and deliver the Notes so authenticated with the same effect as if such successor Trustee had itself authenticated such Notes. 

        SECTION
613.    Preferential Collection of Claims Against Company.    

        If
and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes), the Trustee shall be subject to the provisions of the Trust Indenture Act
regarding the collection of claims against the Company (or any such other obligor). 

        SECTION
614.    Appointment of Authenticating Agent.    

        (a)   The
Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Notes issued upon original issue and
upon exchange, 

56

 

registration
of transfer, partial conversion or partial redemption or pursuant to Section 306, and Notes so authenticated shall be entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Notes by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of
the United States of America, any State thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having (together with its corporate Affiliates) a combined
capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or State authority. If such Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 614, the combined capital and surplus of such Authenticating Agent shall
be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions to this Section 614, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 614. 

        (b)   Any
corporation into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a party, or any corporation succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall otherwise be eligible under this Section 614, without the execution or filing of any paper or any further act on the part
of the Trustee or the Authenticating Agent. 

        (c)   An
Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an
Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 614, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to
the Company and shall mail written notice of such appointment by first-class mail, postage prepaid, to all Holders as their names and addresses appear in the Note Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section 614. 

        (d)   The
Trustee agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 614, and the Trustee shall be
entitled to be reimbursed for such payments, subject to the provisions of Section 607. 

57

 

        (e)   If
an appointment is made pursuant to this Section 614, the Notes may have endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form: 

        "This
is one of the Notes described in the within-mentioned Indenture. 

	 	 	U.S. BANK NATIONAL ASSOCIATION
	

 	
 	

 	

As Trustee
	

 	
 	

By:	

    
 As Authenticating Agent
	

 	
 	

By:	

    
 Authorized Signatory"

 
 

ARTICLE SEVEN
  HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY    
    

        SECTION
701.    Company to Furnish Trustee Names and Addresses of Holders.    

        If
the Trustee is not the Note Registrar, the Company will furnish or cause to be furnished to the Trustee 

        (a)   semi-annually,
not more than 15 days after each Regular Record Date, a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of such Regular Record Date, and 

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

        SECTION
702.    Preservation of Information; Communications to Holders.    

        (a)   The
Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the
Trustee as provided in Section 701 and the names and addresses of Holders received by the Trustee in its capacity as Note Registrar. The Trustee may destroy any list furnished to it as provided
in Section 701 upon receipt of a new list so furnished. 

        (b)   The
rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Notes and the corresponding rights and duties of
the Trustee, shall be provided by the Trust Indenture Act. 

        (c)   Every
Holder, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall
be held accountable by reason of any disclosure of information as to the names and addresses of Holders made pursuant to the Trust Indenture Act. 

        SECTION
703.    Reports by Trustee.    

        (a)   The
Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant thereto. 

58

 

        (b)   A
copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with any stock exchange upon which the Notes are listed, with the
Commission and with the Company. The Company will notify the Trustee when the Notes are listed on any stock exchange. 

        SECTION
704.    Reports by Company.    

        The
Company shall file with the Trustee and the Commission, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required
pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant to the Trust Indenture Act; provided that, if allowed under the Trust Indenture
Act, any such information, documents or reports required to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act shall be deemed to be filed with the Trustee when
filed with the Commission. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such 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 Officers' Certificates and written notices delivered to the Trustee in accordance with the terms of this Indenture). 

 
 

ARTICLE EIGHT
  MERGERS, CONSOLIDATION AND SALE OF PROPERTY    
    

        SECTION
801.    The Company May Consolidate, etc. only on Certain Terms.    

        (a)   The
Company shall not merge, consolidate or amalgamate with or into any other Person (other than a merger of a Restricted Subsidiary into the Company) or sell, transfer,
assign, lease, convey or otherwise dispose of all or substantially all of the Properties and assets of the Company and its Restricted Subsidiaries, taken as a whole, in any one transaction or series
of transactions unless: 

        (1)   the
Company shall be the surviving Person (the "Surviving Person") or the Surviving Person (if other than the Company)
formed by such merger, consolidation or amalgamation or to which such sale, transfer, assignment, lease, conveyance or disposition is made shall be a corporation organized and existing under the laws
of the United States, any State thereof or the District of Columbia; 

        (2)   the
Surviving Person (if other than the Company) expressly assumes all of the obligations of the Company under the Notes by executing a supplemental indenture and other
documents reasonably satisfactory to the Trustee; 

        (3)   after
giving effect to such transaction or series of transactions on a pro forma basis (and treating, for purposes of
this clause (3) and clause (4) of this subsection (a) of this Section 801, any Debt that becomes, or is anticipated to become, an obligation of the Surviving Person or any
Restricted Subsidiary as a result of such transaction or series of transactions as having been Incurred by the Surviving Person or such Restricted Subsidiary at the time of such transaction or series
of transactions), no Default or Event of Default shall have occurred and be continuing; 

        (4)   immediately
after giving effect to such transaction or series of transactions on a pro forma basis, (A) the
Company or the Surviving Person, as the case may be, would be able to Incur at least $1.00 of additional Debt under clause (a)(1) of Section 1008 and (B) the Surviving Person
shall have a Consolidated Net Worth in an amount which is not less than 90% of the Consolidated Net Worth of the Company immediately prior to such transaction or series of transactions; and 

        (5)   the
Company shall deliver, or cause to be delivered, to the Trustee, in form and substance reasonably satisfactory to the Trustee, an Officers' Certificate and an
Opinion of Counsel, each stating that such transaction and the supplemental indenture, if any, in respect thereto comply with 

59

 

this
Section 801 and that all conditions precedent herein provided for relating to such transaction have been satisfied. 

        (b)   Clause (a)(4)
of this Section 801 shall not apply to mergers of the Company into a Wholly Owned Restricted Subsidiary or into a Person solely for the
purpose of effecting a change in the state of incorporation of the Company. 

        (c)   Upon
satisfaction of the conditions in subsection (a) of this Section 801, the Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of the Company under this Indenture; provided that the predecessor company in the case of a lease of all or substantially all of its assets shall not be released from any of the
obligations and covenants under this Indenture, including with respect to the payment of the Notes, and in all other cases, the predecessor company shall be released from all obligations and covenants
under this Indenture, including with respect to the payment of the Notes. 

        SECTION
802.    The Notes Guarantors May Consolidate, etc. only on Certain Terms.    

        (a)   A
Notes Guarantor may not, sell, transfer, assign, lease, convey or otherwise dispose of all or substantially all of its assets in any one transaction or series of
transactions to, or merge, consolidate or amalgamate with or into another Person (whether or not such Notes Guarantor is the Surviving Person), in any such case, other than to, with or into the
Company or another Notes Guarantor, unless: 

        (1)   immediately
after giving effect to that transaction, no Default or Event of Default exists under this Indenture; and 

        (2)   either:

        (A)  the
Surviving Person (if not such Notes Guarantor) is a Domestic Restricted Subsidiary and expressly assumes all the obligations of that Notes Guarantor under this
Indenture, the Notes Guaranty by executing a supplemental indenture and other documents reasonably satisfactory to the Trustee; or 

        (B)  such
sale, transfer, assignment, lease, conveyance or other disposition or merger, consolidation or amalgamation is otherwise in compliance with Section 1013. 

        (b)   Upon
satisfaction of the conditions in subsection (a) of this Section 802, the Surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of the Notes Guarantor under the Notes Guaranty and this Indenture; provided, that the predecessor company in the case of a lease of all or substantially all of its assets shall
not be released from any of the obligations and covenants under this Indenture and the applicable Notes Guaranty, including with respect to the payment of the Notes, and in all other cases the
predecessor company shall be released from all obligations and covenants under this Indenture and such Notes Guaranty, as applicable. 

 
 

ARTICLE NINE
  SUPPLEMENTAL INDENTURES    
    

        SECTION
901.    Supplemental Indentures Without Consent of Holders.    

        (a)   Without
the consent of any Holders, the Company and the Notes Guarantors, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to the Trustee, to: 

        (1)   cure
any ambiguity, omission, defect or inconsistency; 

        (2)   provide
for the assumption by a successor corporation of the obligations of the Company or a Notes Guarantor under this Indenture and the Notes Guarantees as applicable; 

60

 

        (3)   provide
for uncertificated Notes in addition to or in place of certificated Notes; 

        (4)   add
Notes Guarantees with respect to the Notes or release Notes Guarantees as provided by the terms of this Indenture; 

        (5)   secure
the Notes or Notes Guarantees, add to the covenants of the Company or its Restricted Subsidiaries, as applicable, for the benefit of the holders of such Notes or
to surrender any right or power conferred upon the Company or its Restricted Subsidiaries by this Indenture; 

        (6)   make
any change that does not adversely affect the rights of any Holder; 

        (7)   make
any change to the subordination provisions of this Indenture that would limit or terminate the benefits available to any holder of Senior Debt under such
provisions; 

        (8)   comply
with any requirement of the Commission in connection with the qualification of this Indenture under the Trust Indenture Act; 

        (9)   provide
for the issuance of Additional Notes in accordance with this Indenture; or 

        (10) to
evidence and provide for the acceptance and appointment hereunder of a successor Trustee. 

        SECTION
902.    Supplemental Indentures with Consent of Holders.    

        (a)   Except
as permitted by Section 901, with the consent of the Holders of at least a majority in aggregate principal amount of the Outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for such Notes), by Act of said Holders delivered to the Company, the Notes Guarantors and the Trustee, the Company, and the Notes
Guarantors when authorized by a Board Resolution, and the Trustee may (A) enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or the Notes or of modifying in any manner the rights of the Holders under this Indenture or (B) waive compliance with any
provision in this Indenture and the Notes (other than waivers of past Defaults in accordance with Section 513 and waivers of covenants in accordance Section 1021);  provided, however, that no
such supplemental indenture or waiver shall, without the consent of the Holder of each Outstanding Note affected thereby: 

        (1)   reduce
the amount of the Notes whose holders must consent to an amendment or waiver; 

        (2)   reduce
the rate of, or extend the time for payment of interest on, any Note; 

        (3)   reduce
the principal of, or extend the Stated Maturity of, any Note; 

        (4)   make
any Note payable in money other than that stated in such Note; 

        (5)   impair
the right of any Holder to receive payment of principal of and interest on such Holder's Note on or after the due dates therfor or to institute suit for the
enforcement of any payment on or with respect to such Holder's Note or any Note Guaranty; 

        (6)   make
any change to the subordination provisions of this Indenture that would adversely affect the Holders in any material respect; 

        (7)   reduce
the premium payable upon the redemption of any Note or change the time at which any such Note may be redeemed pursuant to Article 11; 

        (8)   reduce
the premium payable upon a Change of Control or, at any time after a Change of Control has occurred, change the time at which the Change of Control Offer relating
thereto must be made or at which the Notes must be repurchased pursuant to such Change of Control Offer; 

61

 

        (9)   at
any time after the Company is obligated to make a Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at which such Prepayment Offer must be
made or at which the Notes must be repurchased pursuant thereto; or 

        (10) following
the mailing of a notice of a Prepayment Offer or a Change of Control Offer, modify the provisions of this Indenture with respect to such offer in a manner
adverse to the Holders. 

        (b)   No
amendment may be made to the subordination provisions of this Indenture that adversely affects the rights of any holder of Senior Debt then outstanding unless the
holders of such Senior Debt (or their Representative) consent to such change. 

        (c)   Upon
the written request of the Company and the Notes Guarantors accompanied by a copy of the Board Resolution authorizing the execution of any such supplemental
indenture or agreement or upon the filing with the Trustee of evidence of the consent of the Holders as aforesaid, the Trustee shall join with the Company and the Notes Guarantors in execution of such
supplemental indenture. It shall not be necessary for any Act of Holders under this Section 902 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient
if such Act shall approve the substance thereof. 

        SECTION
903.    Execution of Supplemental Indentures.    

        In
executing, or accepting the additional trusts created by, any supplemental indenture, agreement, instrument or waiver permitted by this Article Nine or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Sections 601 and 603) shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such supplemental indenture, agreement, instrument or waiver is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental
indenture, agreement, instrument or waiver which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. 

        SECTION
904.    Effect of Supplemental Indentures.    

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

        SECTION
905.    Conformity with Trust Indenture Act.    

        Every
supplemental indenture executed pursuant to this Article Nine shall conform to the requirements of the Trust Indenture Act. 

        SECTION
906.    Reference in Notes to Supplemental Indentures.    

        Notes
authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall, if required by the Trustee, bear a notation in form approved
by the Trustee as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Notes so modified as to conform, in the opinion of the Trustee and the Company, to
any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Notes. 

        SECTION
907.    Notice of Supplemental Indenture.    

        Promptly
after execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of Section 902, the Company shall give notice thereof to the
Holders of each Outstanding Notes affected, in the manner provided for in Section 106, setting forth in general terms 

62

 

the
substance of such supplemental indenture. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such
supplemental indenture. 

        SECTION
908.    Form of Consent.    

        The
consent of the Holders is not necessary to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment. 

 
 

ARTICLE TEN
  COVENANTS    
    

        SECTION
1001.    Payment of Principal, Premium and Interest.    

        The
Company will duly and punctually pay the principal of (and premium, if any) and interest on the Notes in accordance with the terms of the Notes and this Indenture. The Company shall
pay interest on overdue principal and premium, if any, and interest on overdue installments of interest, to the extent lawful, at the rate per annum specified in the Notes in accordance with the terms
of this Indenture and the Notes. 

        SECTION
1002.    Maintenance of Office or Agency.    

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

        (b)   The
Company may also from time to time designate one or more other offices or agencies in the United States where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the United States for such purposes. The Company will give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency. 

        SECTION
1003.    Money for Note Payments to be Held in Trust.    

        (a)   If
the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of (and premium, if any) or interest, on any of the
Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal (and premium, if any) or interest so becoming due until such sums shall be paid
to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of its action or failure so to act. 

        (b)   Whenever
the Company shall have one or more Paying Agents, it will, by 10:00 a.m. New York City time on or before each due date of the principal of (and premium,
if any) or interest on any Notes, deposit with a Paying Agent a sum sufficient to pay the principal (and premium, if any) or interest so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal at maturity, premium or interest as provided in the Trust Indenture Act, and (unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act. 

63

 

        (c)   The
Company will cause each Paying Agent other than the Trustee or the Company to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section 1003, that such Paying Agent will: 

        (1)   comply
with the provisions of the Trust Indenture Act applicable to it as a Paying Agent (or, until such time as this Indenture shall be qualified under the Trust
Indenture Act, which would be applicable to it as Paying Agent if this Indenture were so qualified); and 

        (2)   at
any time during the continuance of any Default by the Company (or any other obligor upon the Notes) in the making of any payment in respect of the Notes, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent for payment in respect of the Notes; 

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

        (e)   Any
money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of (and premium, if any) or interest on
any Note and remaining unclaimed for a period ending on the earlier of the date that is ten Business Days prior to the date such money would escheat to the State or two years after such principal (and
premium, if any) or interest has become due and payable shall be paid to the Company on Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such
Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease. 

        SECTION
1004.    Corporate Existence.    

        Subject
to Article Eight and Section 1013, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence. 

        SECTION
1005.    Maintenance of Properties.    

        The
Company will cause all material properties used or useful in the conduct of its business or the business of any Restricted Subsidiary to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted) and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly conducted at all times;  provided, however, that
nothing in this Section 1005 shall prevent the Company or any of its Restricted Subsidiaries from discontinuing the
operation or maintenance of any of such properties if such discontinuance is, as determined by the Company or Restricted Subsidiary in good faith, desirable in (or not materially adverse to) the
conduct of its business or the business of any Restricted Subsidiary and not adverse in any material respect to the Holders. 

        SECTION
1006.    Payment of Taxes and Other Claims.    

        The
Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (1) all material taxes, assessments and governmental charges levied
or imposed upon the Company or any of its Restricted Subsidiaries or upon the income, profits or property of the Company or any of its Restricted Subsidiaries, and (2) all material lawful
claims for labor, materials and supplies which, if unpaid, might by law become a lien upon the property of the Company or any of its Restricted Subsidiaries; provided,
however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate negotiations or proceedings. 

64

  

        SECTION 1007.    Maintenance of Insurance.    

        The
Company shall, and shall cause its Restricted Subsidiaries to, keep at all times all of their properties which are of an insurable nature insured (which may include self insurance)
against loss or damage with insurers believed by the Company or such Restricted Subsidiary to be responsible to the extent that property of similar character is usually so insured by corporations
similarly situated and owning like properties in accordance with good business practice. 

        SECTION
1008.    Limitation on Debt    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, Incur any Debt (including Acquired Debt) unless, after giving effect to the application of the
proceeds thereof, either: 

        (1)   such
Debt is Debt of the Company or a Restricted Subsidiary and after giving effect to the Incurrence of such Debt and the application of the proceeds thereof, the
Consolidated Interest Coverage Ratio would be greater than 2.0 to 1.0; or 

        (2)   such
Debt is Permitted Debt. 

        (b)   Notwithstanding
anything to the contrary contained in this Section 1008, any increase in the amount of Debt solely by reason of currency fluctuation shall not be
considered an Incurrence of Debt for purposes of this Section 1008. For purposes of determining compliance with this Section 1008, the U.S. dollar-equivalent principal amount of Debt
denominated in any currency other than U.S. dollars shall be calculated based on the relevant currency exchange rate in effect as of the date such Debt is Incurred;  provided that the amount of any
Permitted Refinancing Debt denominated in the same currency as the Debt being Refinanced thereby shall be calculated
based on the relevant exchange rate in effect as of the date of the Incurrence of the Debt being so Refinanced; 

        (c)   The
accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Debt in the form of additional Debt with the same
terms, the accumulation of dividends on Disqualified Stock or Preferred Stock of Restricted Subsidiaries (to the extent not paid) and the payment of dividends on Disqualified Stock or Preferred Stock
of Restricted Subsidiaries in the form of additional shares of the same class of Disqualified Stock or Preferred Stock of Restricted Subsidiaries will not be deemed to be an Incurrence of Debt or an
issuance of Disqualified Stock for purposes of this Section 1008; provided that, in each case, the amount thereof shall be included in
Consolidated Interest Expense of the Company as accrued; and 

        (d)   For
purposes of determining compliance with this Section 1008, in the event that an item of Debt meets the criteria of more than one of the categories of
Permitted Debt described in clauses (a) through (m) of the definition of Permitted Debt or is entitled to be incurred pursuant to clause (a)(1) of this Section 1008, the
Company shall, in its sole discretion, classify or reclassify such item of Debt (or any part thereof), in any manner that complies with this Section 1008, and such item of Debt will be treated
as having been Incurred pursuant to one or more of such categories of Permitted Debt or pursuant to clause (a)(1) of this Section 1008. For purposes of determining any particular amount
of Debt under this Section 1008, Guarantees, Liens or obligations, in each case, in support of letters of credit supporting Debt shall not be included to the extent such letters of credit are
included in the amount of Debt. 

        SECTION
1009.    Limitation on Restricted Payments.    

        (a)   The
Company shall not make, and shall not permit any Restricted Subsidiary to make, any Restricted Payment if at the time of, and after giving effect to, such proposed
Restricted Payment: 

        (1)   a
Default or Event of Default shall have occurred and be continuing; 

        (2)   the
Company could not Incur at least $1.00 of additional Debt pursuant to clause (a)(1) of Section 1008; or 

65

 

        (3)   the
aggregate amount of such Restricted Payment and all other Restricted Payments declared or made since the Issue Date (the amount of any Restricted Payment, if made
other than in cash, to be based upon Fair Market Value on the date made) would exceed an amount equal to the sum of: 

        (A)  50%
of the aggregate amount of Consolidated Net Income accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter during which
the Issue Date occurs to
the end of the most recent fiscal quarter for which financial statements have been made publicly available at the time of such Restricted Payment (or if the aggregate amount of Consolidated Net Income
for such period shall be a deficit, less 100% of such deficit); plus 

        (B)  100%
of Capital Stock Sale Proceeds; plus 

        (C)  100%
of the aggregate net cash proceeds received by the Company or any Restricted Subsidiary from the issuance or sale after the Issue Date of convertible or
exchangeable Debt that has been converted into or exchanged for Capital Stock (other than Disqualified Stock) of the Company, excluding: 

        (i)    any
such Debt issued or sold to the Company or a Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such Subsidiary
for the benefit of their respective employees; and 

        (ii)   the
aggregate amount of any cash or other Property distributed by the Company or any Restricted Subsidiary upon any such conversion or exchange; 

        plus

        (D)  an
amount equal to the sum of: 

        (i)    in
the case of the net reduction in Investments (which Investments constituted a Restricted Payment when made) in any Person other than the Company or a Restricted
Subsidiary resulting from dividends, repayments of loans or advances or other transfers of Property, in each case to the Company or any Restricted Subsidiary from such Person, or from the sale or
other disposition of any such Investment to any Person other than the Company or a Restricted Subsidiary, the lesser of: 

        (x)   the
cash return of capital with respect to such Investment; and 

        (y)   the
aggregate value of such Investment; 

in
the case of either clause (x) or (y) in this subparagraph (a)(3)(D)(i), less the cost of the disposition of such Investment; plus 

        (ii)   the
portion (proportionate to the Company's equity interest in an Unrestricted Subsidiary) of the Fair Market Value of the net assets of such Unrestricted Subsidiary at
the time such Unrestricted Subsidiary is designated a Restricted Subsidiary; 

provided, however, that no amount will be included under this paragraph (D) to the extent already included in the calculation of Consolidated Net
Income; 

        plus 

        (E)  $25.0 million. 

66

 

        (b)   Notwithstanding
the limitations in subsection (a) of this Section 1009, the Company or any Restricted Subsidiary may: 

        (1)   pay
dividends on its Capital Stock within 60 days of the declaration thereof if, on the declaration date, such dividends could have been paid in compliance with
this Indenture; provided, however, that such dividends shall be included in the calculation of the amount of Restricted Payments pursuant to
clause (a)(3) of this Section 1009; 

        (2)   purchase,
repurchase, redeem, defease, acquire or retire for value Capital Stock or Subordinated Debt of the Company or any Restricted Subsidiary in exchange for, upon
conversion of or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Company whether contemporaneously or in the future (other than Disqualified Stock that is not
Permitted Refinancing Debt and other than Capital Stock issued or sold to a Restricted Subsidiary of the Company or an employee stock ownership plan or trust established by the Company or any such
Subsidiary for the benefit of their employees) or any Permitted Refinancing Debt; provided, however, that: 

        (A)  such
purchase, repurchase, redemption, legal defeasance, acquisition or retirement shall be excluded in the calculation of the amount of Restricted Payments pursuant to
clause (a)(3) of this Section 1009; and 

        (B)  the
Capital Stock Sale Proceeds from such exchange or sale shall be excluded from the calculation pursuant to paragraph (a)(3)(B) of this Section 1009; 

        (3)   purchase,
repurchase, redeem, defease, acquire or retire for value any Subordinated Debt in exchange for, or out of the proceeds of the sale of, Permitted Refinancing
Debt; 

        (4)   so
long as no Default or Event of Default has occurred and is continuing, purchase, repurchase, redeem, defease, acquire or retire for value Capital Stock of the Company
or any Subsidiary of the Company from any officer, director, employee or consultant of the Company or its Restricted Subsidiaries in an aggregate amount not to exceed $10.0 million per year; 

        (5)   extend
loans to employees, officers and directors of the Company and its Restricted Subsidiaries in compliance with applicable laws and in an amount not to exceed
$5.0 million in the aggregate at any one time outstanding; 

        (6)   acquire
the Capital Stock of the Company in connection with the exercise of stock options or stock appreciation rights by way of cashless exercise or in connection with
the satisfaction of withholding tax obligations; 

        (7)   in
connection with an acquisition by the Company or by any of its Restricted Subsidiaries, receive or accept the return to the Company or any of its Restricted
Subsidiaries of Capital Stock of the Company or any of its Restricted Subsidiaries constituting a portion of the purchase price consideration in settlement of indemnification claims; 

        (8)   purchase
fractional shares of the Capital Stock of the Company arising out of stock dividends, splits or combinations or business combinations; 

        (9)   effect
a Convertible Debentures Repurchase, provided that on a pro forma
basis, after giving effect to such Convertible Debentures Repurchase, the Liquidity of the Company and its Restricted Subsidiaries shall equal or exceed $500 million; 

        (10) honor
any conversion request by a holder of any convertible Debt of the Company or its Restricted Subsidiaries and make cash payments in lieu of fractional shares in
connection with any conversion of convertible Debt in accordance with the terms of any convertible Debt; 

67

 

        (11) make
any payment on or with respect to, or repurchase, redeem, defease or acquire or retire for value, any Subordinated Debt convertible into Equity Interests (other
than Disqualified Stock) of the Company in connection with: 

        (A)  an
optional redemption of such convertible Subordinated Debt pursuant to the terms thereof; provided that, the current
market price per share of the Company's common stock (calculated based upon the average closing price as reported on the Nasdaq National Market (or any national securities exchange on which such
common stock is listed) for the 30-trading day period immediately preceding the date any notice of redemption is sent or published) into which such Debt is convertible equals or exceeds
150% of the conversion price in effect for such Debt on the date of such notice; and 

        (B)  the
payment by the Company of cash in lieu of any fractional shares deliverable upon conversion of any Debt in compliance with the terms of the instruments governing
such Debt; 

provided that any amounts paid pursuant to this clause (11) will be deducted in determining the amount of Restricted Payments permitted under
clause (a)(3) of this Section 1009; 

        (12) engage
in transactions relating to tax planning strategies of the Company and its Restricted Subsidiaries; provided that
all such transactions are between or among Restricted Subsidiaries, the Company and any trustee, transfer agent or escrow agent relating to such tax planning strategies, or any combination of the
foregoing parties; and 

        (13) so
long as no Default or Event of Default has occurred and is continuing, make Restricted Payments in an aggregate amount not to exceed $50.0 million. 

        (c)   The
actions described in the preceding clauses (1), (4), (5), (11) and (13) of subsection (b) of this Section 1009 shall be Restricted
Payments that shall be permitted to be made in accordance with this Section 1009 but which shall reduce the amount that would otherwise be available for Restricted Payments under
clause (a)(3) of this Section 1009, and the actions described in the preceding clauses (2), (3), (6), (7), (8), (9) (10) and (12) shall be Restricted Payments that
shall be permitted to be taken in accordance with this Section 1009 and shall not reduce the amount that would otherwise be available for Restricted Payments under clause (a)(3) of this
Section 1009. 

        SECTION
1010.    Limitation on Restrictions on Distributions from Restricted Subsidiaries.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, create or otherwise cause any consensual restriction on the right of any Restricted Subsidiary
to: 

        (1)   pay
dividends, in cash or otherwise, or make any other distributions on or in respect of its Capital Stock, or pay any Debt or other obligation owed, to the Company or
any other Restricted Subsidiary; 

        (2)   make
any loans or advances to the Company or any other Restricted Subsidiary; or 

        (3)   transfer
any of its Property to the Company or any other Restricted Subsidiary. 

        (b)   The
limitations set forth in subsection (a) of this Section 1010 will not apply: 

        (1)   with
respect to clauses (1), (2) and (3) of subsection (a) of this Section 1010, to restrictions: 

        (A)  in
effect on the Issue Date (and restrictions pursuant to the Notes, this Indenture, the Notes Guarantees and the Senior Credit Facility); 

        (B)  imposed
on a Restricted Subsidiary and existing at the time it became a Restricted Subsidiary if such restrictions were not created in connection with or in anticipation
of the 

68

 

transaction
or series of transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the Company; 

        (C)  that
result from the Refinancing or subsequent Refinancing of Debt Incurred pursuant to an agreement, instrument or contract referred to in subclause (A), (B),
(E), (F), (H), (I), (J) or (K) of this clause (1) of subsection (b) of this Section 1010, provided that the restrictions existing
under or by reason of any such agreement, instrument or contract are not materially less favorable, taken as a whole, to the Holders than those under the agreement evidencing the Debt so Refinanced; 

        (D)  existing
by virtue of, or arising under, applicable law, regulation, order, approval, license, permit, grant or similar restriction, in each case issued or imposed by a
governmental authority; 

        (E)  under
any agreement, instrument or contract affecting Property or a Person at the time such Property or Person was acquired by the Company or any Restricted Subsidiary,
so long as such restriction relates solely to the Property or Person so acquired and was not created in connection with or in anticipation of such acquisition; 

        (F)  under
or in connection with any joint venture agreements, partnership agreements, stock sale agreements, asset sale agreements and other similar agreements,  provided that any such agreements are entered into
in the ordinary course of business and in good faith and that such restrictions are reasonably
customary for such agreements; 

        (G)  under
any customary provisions with respect to cash or other deposit or net worth requirements under agreements, instruments or contracts entered into in the ordinary
course of business and consistent with past practices; 

        (H)  under
any agreement entered into in connection with the Incurrence of Debt of the type described in clause (j) of the definition of Permitted Debt; 

        (I)   under
any customary provisions under any agreements, instruments or contracts relating to any Receivables Program; 

        (J)   under
any customary provisions under any agreements, instruments or contracts relating to any Synthetic Lease of the Office Campus; 

        (K)  under
any agreement, instrument or contract relating to Debt that is permitted under Section 1008 to be Incurred pursuant to clause (b) of the definition
of Permitted Debt; 

        (L)  under
any agreement, instrument or contract entered into in connection with any transactions relating to tax planning strategies of the Company and its Restricted
Subsidiaries; provided that all such transactions are between or among Restricted Subsidiaries, the Company and any trustee, transfer agent or escrow
agent relating to such tax planning strategies, or any combination of the foregoing parties; and 

        (M) any
restriction with respect to property or assets subject to a Permitted Lien imposed by the secured party. 

        (2)   only
with respect to clause (3) of subsection (a) of this Section 1010 to: 

        (A)  customary
provisions restricting subletting or assignment of leases or customary provisions in licenses or other agreements that restrict assignment of such agreements
or rights thereunder; 

        (B)  customary
provisions restricting the sale or other disposition of Property contained in agreements limiting the transfer of Property pending the closing of such sale;
and 

69

 

        (C)  restrictions
on the sale or other disposition of Property acquired, constructed, improved or leased (and any additions, parts, attachments, fixtures, leasehold
improvements, proceeds, improvements or accessions related thereto) in whole or in part under any agreement, instrument or contract relating to Debt permitted under Section 1008 to be Incurred
under clause (c) of the definition of Permitted Debt. 

        SECTION
1011.    Limitation on Liens.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, Incur or permit to exist any Lien of any nature whatsoever, other than Permitted Liens or Liens
securing Senior Debt, on any of its properties (including Capital Stock of a Restricted Subsidiary), whether owned at the Issue Date or thereafter acquired, securing any Debt, unless: 

        (1)   if
such Lien secures Senior Subordinated Debt, the Notes or the applicable Notes Guaranty are secured by a Lien in the same properties as those securing such Lien and on
an equal and ratable basis with such Senior Subordinated Debt, and 

        (2)   if
such Lien secures Subordinated Debt, such Lien shall be subordinated to a Lien securing the Notes or the applicable Notes Guaranty in the same properties as those
securing such Lien at the same level of priority as such Subordinated Debt is subordinated to the Notes and the Notes Guarantees. 

        SECTION
1012.    [Intentionally Omitted].    

        SECTION
1013.    Limitation on Asset Sales.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, consummate any Asset Sale unless: 

        (1)   the
Company or such Restricted Subsidiary receives consideration in connection with such Asset Sale at least equal to the Fair Market Value of the Property subject to
such Asset Sale; 

        (2)   at
least 75% of the consideration received by the Company or such Restricted Subsidiary in connection with such Asset Sale is in the form of any one or a combination of
the following: (A) cash, Cash Equivalents or Additional Assets, (B) the assumption by the purchaser of liabilities of the Company or any Restricted Subsidiary in the amounts as shown on
the latest consolidated balance sheet on which such liability appears (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or the applicable Notes
Guaranty, as the case may be), as a result of which the Company and the Restricted Subsidiaries are no longer obligated with respect to such liabilities, (C) securities, notes or other
obligations received by the Company or such Restricted Subsidiary to the extent such securities, notes or other obligations are converted by the Company or such Restricted Subsidiary into cash, Cash
Equivalents or Additional Assets within 90 days of such Asset Sale, and (D) Debt of a Restricted Subsidiary that is no longer a Restricted Subsidiary as a result of such Asset Sale if
the Company and all of its Restricted Subsidiaries immediately are released from all Guarantees, if any, of payments or other obligations with respect to such Debt and such Debt is no longer the
liability of the Company or any of its Restricted Subsidiaries; and 

        (3)   in
connection with any Asset Sale for consideration with a value in excess of $50.0 million, the Company delivers an Officers' Certificate to the Trustee
certifying that such Asset Sale complies with clauses (1) and (2) of subsection (a) of this Section 1013. 

70

 

        (b)   The
Net Available Cash (or any portion thereof) from Asset Sales may be applied by the Company or a Restricted Subsidiary, to the extent the Company or such Restricted
Subsidiary elects (or is required by the terms of any Debt): 

        (1)   to
Repay Senior Debt of the Company or any Notes Guarantor (excluding, in either case, any Debt owed to the Company or an Affiliate of the Company); or 

        (2)   to
reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or
another Restricted Subsidiary). 

        (c)   Any
Net Available Cash from an Asset Sale not used in accordance with subsection (b) of this Section 1013 within 365 days from the date of the
receipt of such Net Available Cash shall constitute "Excess Proceeds." Pending application of any such Net Available Cash within such
365-day period, the Company may temporarily reduce any revolving borrowings that constitute Senior Debt. 

        (d)   When
the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company will be required to make an offer to repurchase the Notes (the
"Prepayment Offer"), which offer shall be in the amount of the Allocable Excess Proceeds (rounded to the nearest $1,000), on a  pro rata basis according to
principal amount at a purchase price equal to 100% of the principal amount, plus accrued and unpaid interest (the
"Purchase Price"), to, but excluding, the purchase date (the "Purchase Date") (subject to the right of
Holders on the relevant Regular Record Date that is prior to the Purchase Date to receive interest due on the relevant Interest Payment Date). If the Notes delivered for payment exceed, in aggregate
principal amount, the Allocable Excess Proceeds, the Company will purchase such Notes on a pro rata basis. 

        (e)   The
term "Allocable Excess Proceeds" will mean the product of: 

        (1)   the
Excess Proceeds and 

        (2)   a
fraction, 

        (A)  the
numerator of which is the aggregate principal amount of the Notes Outstanding on the date of the Prepayment Offer, and 

        (B)  the
denominator of which is the sum of the aggregate principal amount of the Notes outstanding on the date of the Prepayment Offer and the aggregate principal amount of
other Debt of the Company outstanding on the date of the Prepayment Offer that is pari passu in right of payment with the Notes and subject to terms and
conditions in respect of Asset Sales similar in all material respects to this Section 1013 and requiring the Company to make an offer to purchase such Debt at substantially the same time as the
Prepayment Offer. 

        (f)    To
the extent that any portion of the amount of Net Available Cash remains after a Prepayment Offer pursuant to subsection (d) of this Section 1013, and  provided that all holders of Notes have
been given the opportunity to tender their Notes for purchase in accordance with this Section 1013, the
Company or such Restricted Subsidiary may use such remaining amount for any purpose permitted by this Indenture and the amount of Excess Proceeds will be reset to zero. 

        (g)   Within
five Business Days after the Company becomes obligated to make a Prepayment Offer, the Company shall give written notice of such Prepayment Offer to each Holder
by first-class mail, postage prepaid, at the address of such Holder appearing in the Note Register, stating, (1) the Purchase Price and the Purchase Date, which date shall be a Business Day no
earlier than 30 days nor later than 60 days from the date such notice is mailed, or such other dates as are necessary to comply with requirements under the Exchange Act or any applicable
securities laws or regulations; (2) that any Note not tendered will continue to accrue interest if interest is then accruing; (3) that, unless the Company defaults in the payment of the
Purchase Price, any Notes accepted for payment pursuant to 

71

 

the
Prepayment Offer shall cease to accrue interest after the Purchase Date; (4) that Holders electing to have any Notes purchased pursuant to a Prepayment Offer shall be required to surrender
the Notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying Agent at the address specified in the notice prior to the close of business
on the third Business Day preceding the Purchase Date; (5) that Holders shall be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the
second Business Day preceding the Purchase Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a
statement that such Holder is withdrawing its election to have such Notes purchased; (6) that Holders whose Notes are being purchased only in part shall be issued new Notes equal in principal
amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof; (7) the instructions that
Holders of Notes must follow in order to tender their Notes; (8) the circumstances and facts that the Company deems relevant regarding such Excess Proceeds Offer and (9) such information
regarding the Company and its Subsidiaries that the Company, in good faith, believes will enable the Holders to make an informed decision with respect to such Prepayment Offer. 

        (h)   The
Company will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations and any
applicable rules of any securities exchange on which the Notes may be listed in connection with the repurchase of Notes pursuant to this Section 1013. To the extent that the provisions of any
securities laws or regulations or the rules of any securities exchange conflict with provisions of this Section 1013, the Company will comply with the applicable securities laws and regulations
or the rules of any securities exchange and will not be deemed to have breached its obligations under this Section 1013 by virtue of such compliance. 

        SECTION
1014.    Limitation on Transactions with Affiliates.    

        (a)   The
Company shall not, and shall not permit any Restricted Subsidiary to, conduct any business or enter into any transaction or series of transactions (including the
purchase, sale, transfer, assignment, lease, conveyance or exchange of any Property or the rendering of any service) with, or for the benefit of, any Affiliate of the Company (an
"Affiliate Transaction"), unless: 

        (1)   the
terms of such Affiliate Transaction are, when viewed together with related Affiliate Transactions, if any, no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those that reasonably could be expected to be obtained in a comparable arm's-length transaction with a Person that is not an Affiliate of the Company; and 

        (2)   with
respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $50 million, the Company
delivers to the Trustee either a resolution of the Board of Directors set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this Section 1014 and that
such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors, or an opinion as to the fairness to the Company of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment banking firm of national standing. 

        (b)   Notwithstanding
the foregoing limitation, the following shall not be Affiliate Transactions: 

        (1)   any
transaction or series of transactions between the Company and one or more Restricted Subsidiaries or between two or more Restricted Subsidiaries,  provided that no more than 10% of the total voting power
of the Voting Stock (on a fully diluted basis) of any such Restricted Subsidiary is owned by an
Affiliate of the Company (other than a Restricted Subsidiary); 

        (2)   any
Restricted Payment permitted to be made pursuant to Section 1009 or any Permitted Investment; 

72

 

        (3)   the
payment of compensation (including amounts paid pursuant to employee benefit plans), performance or contribution obligations for the personal services of, the
issuance, grant or award of stock options or other equity related interests to, or the granting of indemnification to, officers, directors and employees of the Company or any of the Restricted
Subsidiaries, in the ordinary course of business; 

        (4)   loans
and advances to directors, employees or officers made in the ordinary course of business in compliance with applicable laws and consistent with the past practices
of the Company or such Restricted Subsidiary, as the case may be, provided that such loans and advances do not exceed $5.0 million in the
aggregate at any one time outstanding; 

        (5)   the
entering into, maintaining or performance of any employment contract, collective bargaining agreement, benefit plan, program or arrangement, related trust agreement
or other similar arrangement (in each case entered into in the ordinary course of business and consistent with past practice) for or with any employee, officer or director, including vacation, health,
insurance, deferred compensation, retirement, savings or other similar plans; 

        (6)   transactions
to which no other Affiliate of the Company or any Restricted Subsidiary is a party with Permitted Joint Ventures; and 

        (7)   the
payment of reasonable and customary regular fees to directors of the Company who are not employees of the Company and indemnification arrangements entered into by
the Company in the ordinary course of business. 

        SECTION
1015.    Repurchase at the Option of Holders upon a Change of Control.    

        (a)   Upon
the occurrence of a Change of Control, each Holder shall have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral
multiple of $1,000) of such Holder's Notes pursuant to the offer described below (the "Change of Control Offer") at a purchase price (the
"Change of Control Purchase Price") equal to 101% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the Change of
Control Purchase Date (subject to the right of Holders on the relevant Regular Record Date that is prior to the Change of Control Purchase Date to receive interest due on an Interest Payment Date). 

        (b)   Within
30 days following any Change of Control, the Company (or at the request of the Company, the Trustee) shall send, by first-class mail, with a copy to the
Trustee, to each Holder at such Holder's address appearing in the Note Register, a notice stating: 

        (1)   that
a Change of Control has occurred and a Change of Control Offer is being made pursuant to Section 1015 of this Indenture and that all Notes timely tendered
will be accepted for payment; 

        (2)   the
Change of Control Purchase Price and the repurchase date (the "Change of Control Purchase Date"), which date shall
be, subject to any contrary requirements of applicable law, a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed; 

        (3)   the
circumstances giving rise to the Change of Control; 

        (4)   the
procedures that Holders must follow in order to tender their Notes (or portions thereof) for payment, and the procedures that Holders must follow in order to
withdraw an election to tender Notes (or portions thereof) for payment; and 

        (5)   that
on and after the Change of Control Purchase Date, interest shall cease to accrue on the Notes or portions of the Notes surrendered for purchase by the Company,
unless the Company defaults in the payment of the Change of Control Purchase Price. 

73

 

        (c)   The
Company will comply, to the extent applicable, with the requirements of Section 14 (e) of the Exchange Act and any other securities laws or regulations
or rules of any securities exchange on which the Notes may be listed in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations or rules of such securities exchange conflict with the provisions of this Section 1015, the Company, to the extent applicable, will comply with the applicable
securities laws and regulations or rules of such securities exchange and will not be deemed to have breached its obligations under this Section 1015 by virtue of such compliance. 

        SECTION
1016.    Designation of Restricted and Unrestricted Subsidiaries.    

        (a)   The
Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default or Event of Default. 

        (b)   If
a Restricted Subsidiary is designated as an Unrestricted Subsidiary, all outstanding Investments owned by the Company and its Restricted Subsidiaries in the
Subsidiary so designated will be deemed to be an Investment made as of the time of such designation and will reduce the amount available for Restricted Payments under clause (a)(3) of
Section 1009 or Permitted Investments, as applicable; provided that Investments in Persons in existence before such Person becomes a Subsidiary
that were Permitted Investments or allowed under Section 1009, will not be deemed to be Investments at the time such Person becomes a Subsidiary and is designated as an Unrestricted Subsidiary.
All such outstanding Investments will be valued at their Fair Market Value at the time of such designation. A designation will be permitted only if such Restricted Payment would be permitted at that
time and if such Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. 

        (c)   The
Board of Directors may redesignate an Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default or Event of Default. 

        SECTION
1017.    Payments for Consent.    

        The
Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to
any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or is paid to
all Holders that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement. 

        SECTION
1018.    Limitation on Layered Debt.    

        The
Company shall not, and shall not permit any Notes Guarantor to, Incur, directly or indirectly, any Debt (including Permitted Debt, but excluding Acquired Debt that is not Incurred in
anticipation of or in connection with the transaction or series of transactions pursuant to which any Person becomes a Restricted Subsidiary of the Company) that is contractually subordinated in right
of payment to any Senior Debt unless such Debt is Senior Subordinated Debt or is contractually subordinated in right of payment to Senior Subordinated Debt. Notwithstanding the foregoing, no Debt of
the Company or any Notes Guarantor shall be deemed to be contractually subordinated in right of payment to any other Debt of the Company or any Notes Guarantor solely by reason of such other Debt
being secured, being Guaranteed, having a shorter maturity of payment or being structurally senior. 

        SECTION
1019.    Available Information.    

        Notwithstanding
that the Company may not be subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act, the Company shall file with the Commission and
provide the Trustee and Holders with such annual reports and such information, documents and other reports as are specified in Sections 13(a) and 15(d) of the Exchange Act and applicable to a U.S.
corporation subject to such Sections, such information, documents and reports to be so filed and provided at the 

74

 

times
specified for the filing of such information, documents and reports under such Sections; provided, however, that the Company shall not be so
obligated to file such information, documents and reports with the Commission if the Commission does not permit such filings; provided, further, that
any information accepted for filing by the Commission shall be deemed to have been provided to Holders and the Trustee. 

        If
at any time during the two-year period following the date of original issue of the Notes the Company is not subject to the information requirements of Section 13 or
15(d) of the Exchange Act and the Notes constitute "restricted securities" within the meaning of the Securities Act, the Company will furnish to holders of Notes and prospective purchasers designated
by such holders the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act in order to permit compliance with Rule 144A in connection with resales of
such Notes. 

        SECTION
1020.    Statement by Officers as to Default; Compliance Certificates.    

        The
Company will deliver to the Trustee, within 120 days after the end of each fiscal year (which as of the Issue Date is the Saturday nearest September 30) of the Company
ending after the date hereof an Officers' Certificate (in which one of the two Officers signing such certificate is either a principal executive officer, principal financial officer or principal
accounting officer of the Company), stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and
conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall
be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. 

        SECTION
1021.    Waiver of Certain Covenants.    

        Subject
to Section 902, the Company may omit in any particular instance to comply with any covenant or condition set forth in Article Eight and Sections 1004 to 1023, inclusive,
Article Eleven, and Section 1306 if before or after the time for such compliance the Holders of at least a majority in principal amount of the Outstanding Notes shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company and the duties of the Trustee in respect of any such covenant or condition shall remain in
full force and effect. 

        SECTION
1022.    Covenants After Fall-Away Event.    

        (a)   Upon
the occurrence of the Fall-Away Event, the Company and its Restricted Subsidiaries will no longer be obligated to comply with the following restrictive
covenants: 1008, 1009, 1010, 1013, 1014, 1015, 1017 and clause (a)(4) of Section 801, of this Indenture (collectively, the "Suspended
Covenants"), and the Company and its Restricted Subsidiaries shall have no obligation or liability in respect of such sections for such period; 

        (b)   In
the event that the Company and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the occurrence of a
Fall-Away Event and, subsequently, one or both of the Rating Agencies withdraw their ratings or downgrade the ratings assigned to the Notes below Investment Grade Ratings or a Default or
Event of Default occurs and is continuing, then the Company and the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants. Compliance with the Suspended Covenants with
respect to Restricted Payments made after the time of such withdrawal, downgrade, Default or Event of Default will be calculated in accordance with Section 1009 as though such
Section 1009 had been in effect during the entire period of time from the Issue Date. 

75

 

 
 

ARTICLE ELEVEN
  REDEMPTION OF NOTES    
    

        SECTION
1101.    Right of Redemption.    

        (a)   All
or any portion of the Notes may be redeemed, at once or over time, at the election of the Company, at any time on or after            ,        , at
the
Redemption Prices (expressed as percentages of principal amount) set forth below, together with accrued and unpaid interest to but excluding the Redemption Date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the 12-month period commencing
on                        of the years
set forth below: 

	Year
 
	 	Redemption

Price
	 
	 	 	            	%
	 	 	            	%
	 	 	            	%
	and thereafter	 	100.000	%

        (b)   All
or any portion of the Notes may be redeemed at once or over time at the election of the Company, at any time prior to            ,        , at a
Redemption Price equal to the sum of (1) the principal amount of the Notes to be redeemed, plus (2) accrued and unpaid interest to, but excluding, the Redemption Date (subject to the
right of Holders on the relevant Regular Record Date that is prior to the Redemption Date to receive interest due on the relevant Interest Payment Date) plus (3) the Make-Whole
Premium. 

        (c)   At
any time and from time to time, prior to            ,        , the Company may redeem up to a maximum of 35% of the aggregate principal amount of the
Notes
(including any Additional Notes) in an amount not to exceed the amount of the net cash proceeds of one or more Equity Offerings at a redemption price equal to    % of the principal amount
of such Notes, plus accrued and unpaid interest thereon to but excluding the Redemption Date (subject to the right of holders of record on the relevant Regular Record Date to receive interest due on
the relevant Interest Payment Date); provided, however, that after giving effect to any such redemption, at least 65% of the aggregate principal amount
of the Notes (including any Additional Notes, but excluding Notes held by the Company and its Subsidiaries) remains outstanding. Any such redemption shall be made within 90 days of such Equity
Offering upon not fewer than 30 nor more than 60 days' prior notice. 

        SECTION
1102.    Applicability of Article.    

        Redemption
of Notes at the election of the Company, as permitted by any provision of this Indenture, shall be made in accordance with this Article. 

        SECTION
1103.    Election to Redeem; Notice to Trustee.    

        The
election of the Company to redeem any Notes pursuant to Section 1201 shall be evidenced by a Board Resolution. In case of any redemption at the election of the Company of the
Notes, the Company shall, at least 45 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date, the principal amount of Notes to be redeemed and the subsection of this Indenture pursuant to which redemption shall occur. In the case of (a) any redemption pursuant to
subsection 1101(c), the Company shall also furnish to the Trustee at the same time as the notification of the Redemption Date, an Officers' Certificate stating that the Company is entitled to effect
such redemption and setting forth a statement of facts showing that the condition or conditions precedent to the right of the Company so to redeem have occurred or been satisfied and, (b) in
case of a redemption pursuant to subsection 1101(b), the 

76

 

Company
shall furnish to the Trustee an Officers' Certificate stating the Redemption Price no later than two Business Days prior to the Redemption Date. 

        SECTION
1104.    Selection by Trustee of Notes to be Redeemed.    

        (a)   If
less than all the Notes are to be redeemed, the particular Notes to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the
Trustee, from the Outstanding Notes not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of
portions (equal to $1,000 or any integral multiple thereof) of the principal amount of Notes of a denomination larger than $1,000; provided that the
Trustee shall select the Notes to be redeemed on as nearly a pro rata basis as is practicable. 

        (b)   The
Trustee shall promptly notify the Company and each Note Registrar in writing of the Notes selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed. 

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

        SECTION
1105.    Notice of Redemption.    

        (a)   Notice
of redemption shall be given by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder to be redeemed, at his address appearing in the Note Register. 

        (b)   All
notices of redemption shall state: 

        (1)   the
Redemption Date and the CUSIP or ISIN number, of the Notes, as applicable; 

        (2)   the
calculation of the Redemption Price, but need not include the Redemption Price itself if the redemption is pursuant to subsection 1101(b); 

        (3)   whether
the redemption is being made pursuant to subsection 1101(a), (b) or (c) and if being made pursuant to subsection 1101(c), a brief statement setting
forth the facts showing that the condition or conditions precedent to the right of the Company so to redeem have occurred or been satisfied; 

        (4)   if
less than all the Outstanding Notes are to be redeemed, the identification (and, in the case of partial redemption, the principal amount) of the particular Notes to
be redeemed; 

        (5)   that
on the Redemption Date the Redemption Price will become due and payable upon each such Note to be redeemed and that interest thereon will cease to accrue on and
after said date; and 

        (6)   the
place or places where such Notes are to be surrendered for payment of the Redemption Price. 

        (c)   At
the Company's request (which request may be revoked by the Company at any time prior to the time at which the Trustee shall have given such notice to the Holders),
made in writing to the Trustee at least 45 days (or such shorter period as shall be satisfactory to the Trustee) prior to the Redemption Date. The Trustee shall give the notice of redemption in
the name and at the expense of the Company. If, however, the Company gives such notice to the Holders, the Company shall concurrently deliver a copy of such notice to the Trustee. 

        (d)   Notice
of redemption shall be deemed to be given when mailed, whether or not the Holder receives the notice. In any event, failure to give such notice, or any defect
therein, shall not affect the 

77

 

validity
of the proceedings for the redemption of the Notes held by Holders to whom such notice was properly given. 

        SECTION
1106.    Deposit of Redemption Price.    

        On
or prior to any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust
as provided in Section 1003) an amount of money sufficient to pay the Redemption Price of, and (except if the Redemption Date shall be an Interest Payment Date) accrued interest on, all the
Notes which are to be redeemed on that date. 

        SECTION
1107.    Notes Payable on Redemption Date.    

        (a)   Notice
of redemption having been given as provided in Section 1205, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Notes shall cease to bear interest.
Upon surrender of any such Note for redemption in accordance with said notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest to, but excluding, the
Redemption Date; provided, however, that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the
Holders registered as such at the close of business on the Regular Record Dates. 

        (b)   If
any Note called for redemption shall not be so paid upon surrender thereof for redemption, the principal amount (and premium, if any) shall, until paid, bear interest
from the Redemption Date at the rate provided by the Note in accordance with Section 307. 

        SECTION
1108.    Notes Redeemed in Part.    

        Any
Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 1002 (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 his attorney duly
authorized in writing), and the Company shall execute, and the Trustee or the Authenticating Agent shall authenticate and deliver to the Holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal amount of the Note so surrendered. 

 
 

ARTICLE TWELVE
  GUARANTEES    
    

        SECTION
1201.    Notes Guarantee.    

        (a)   Subject
to the provisions of this Article Twelve, each Notes Guarantor, jointly and severally, hereby fully and unconditionally guarantees to each holder of a Note
authenticated and delivered by the Trustee and to the Trustee, irrespective of the validity or enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder: 

        (1)   the
due and punctual payment of the principal of (and premium, if any) and interest on, the Notes, whether at Stated Maturity or on an Interest Payment Date, by
acceleration, call for redemption or otherwise (subject to any applicable grace period); 

        (2)   the
due and punctual payment of interest on the overdue principal and premium, if any, of, and interest on, the Notes, if lawful; 

        (3)   the
due and punctual payment and performance (subject to any applicable grace period) of all other obligations of the Company under this Indenture and the Notes; and 

78

  

        (4)   in
case of any extension of time of payment or renewal of any Notes or any of such other obligations under this Indenture or under the Notes, the due and punctual
payment or performance thereof (subject to any applicable grace period) in accordance with the terms of the extension or renewal, whether at Stated Maturity, by acceleration, call for redemption or
otherwise. 

        (b)   Failing
payment when due by the Company of any amount so Guaranteed for whatever reason, the Notes Guarantors shall be jointly and severally obligated to pay the same
immediately. An Event of Default under this Indenture or the Notes shall constitute an event of default under this Notes Guarantee, and shall entitle the Holders or the Trustee to accelerate the
obligations of the Notes Guarantors hereunder in the same manner and to the same extent as the obligations of the Company. 

        (c)   Each
Notes Guarantor hereby agrees that (1) its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the
Notes, this Indenture or the obligations of the Company hereunder or thereunder, the absence of any action to enforce the same, whether or not a Notes Guarantee is affixed to any particular Note, any
waiver or consent by any Holder with respect to any provisions hereof or thereof, any amendment of this Indenture or the Notes, the recovery of any judgment against the Company or any its
Subsidiaries, any action to enforce the same, or any other circumstance that might otherwise constitute a legal or equitable discharge or defense of a guarantor (other than payment in full of the
Notes) and (2) subject to Section 1207, each Notes Guarantee will not be discharged except by complete performance of the obligations of the Company under the Notes and this Indenture. 

        (d)   The
Notes Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or
reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company's
assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes, whether as a "voidable preference," "fraudulent transfer" or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be
reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 

        (e)   Each
Notes Guarantor hereby agrees that it shall not be entitled to and irrevocably waives diligence, presentment, demand of payment, filing of claim with a court in the
event of insolvency or bankruptcy of the Company, any Notes Guarantor, any other Subsidiary of the Company or any other obligor under the Notes, any right to require a proceeding first against the
Company, any Notes Guarantor, any other Subsidiary of the Company or any other obligor under this Indenture or the Notes and any right, protest, notice and all demands whatsoever. 

        (f)    If
any Holder or the Trustee is required by any court or otherwise to return to the Company, any Notes Guarantor, any other Subsidiary of the Company or any other
obligor under this Indenture or the Notes or any trustee, liquidator or other similar official, any amount paid by the Company, any Notes Guarantor, any other Subsidiary of the Company or any other
obligor under this Indenture or the Notes to the Trustee or such Holder, the Notes Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect. 

        (g)   Each
Notes Guarantor agrees that, as between the Notes Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (i) the maturity of the
obligations of the Company guaranteed hereby may be accelerated as provided in Article Five for the purposes of the Notes Guarantees, notwithstanding any stay, injunction or other prohibition
preventing such acceleration as to the Company of the obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of those obligations as provided in Article Five,
those obligations (regardless of whether 

79

 

due
and payable) will forthwith become due and payable by each of the Notes Guarantors for the purpose of the Notes Guarantees. 

        (h)   No
shareholder, officer, director, employee or incorporator, past, present or future, of any Notes Guarantor, as such, shall have any personal liability under this Notes
Guarantee by reason of his, her or its status as such shareholder, officer, director, employee or incorporator. 

        SECTION
1202.    Execution and Delivery of the Notes Guarantees.    

        (a)   To
evidence the Notes Guarantees set forth in Section 1201, the Company and each Notes Guarantor hereby agrees that: 

        (1)   a
notation of the Notes Guarantees substantially as set forth on Exhibit E hereto shall be endorsed on each Note authenticated and delivered by the Trustee; 

        (2)   such
endorsement shall be executed on behalf of each Notes Guarantor by any one officer of such Notes Guarantor; and 

        (b)   Each
Notes Guarantor hereby agrees that its Notes Guarantee set forth in Section 1201 shall remain in full force and effect notwithstanding any failure to endorse
on each Note a notation of such Notes Guarantee. 

        (c)   If
an officer whose signature is on this Indenture no longer holds that office at the time the Trustee authenticates the Notes on which a Notes Guarantee is endorsed,
the Notes Guarantee shall nevertheless be valid. 

        (d)   The
delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Notes Guarantees set forth in this Indenture on
behalf of the Notes Guarantors. 

        (e)   Such
signatures upon this Indenture may be by manual or facsimile signature of such officers and may be imprinted or otherwise reproduced on this Indenture. 

        SECTION
1203.    Limitation on Notes Guarantors' Liability.    

        Each
Notes Guarantor and by its acceptance hereof each Holder hereby confirms that it is the intention of all such parties that the guarantee by such Notes Guarantor pursuant to its
Notes Guarantee not constitute a fraudulent transfer or conveyance for purposes of any federal or state law. To effectuate the foregoing intention, the Holders and the Notes Guarantors hereby
irrevocably agree that the obligations of each Notes Guarantor under its Notes Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed
liabilities of such Notes Guarantor and to any collections from or payments made by or on behalf of any other Notes Guarantor in respect of the obligations of such other Notes Guarantor under its
Notes Guarantee, result in the obligations of such Notes Guarantor under its Notes Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law and not
rendering a Notes Guarantor insolvent. 

        SECTION
1204.    Rights under the Notes Guarantees.    

        (a)   Until
payment in full of the Notes, no payment by any Notes Guarantor pursuant to the provisions hereof shall give rise to any claim of the Notes Guarantor against the
Trustee or any Holder. 

        (b)   Each
Notes Guarantor waives notice of the issuance, sale and purchase of the Notes and notice from the Trustee or the Holders from time to time of any of the Notes of
their acceptance and reliance on its Guaranty. 

        (c)   No
set-off, counterclaim, reduction or diminution of any obligation or any defense of any kind or nature (other than performance by the Notes Guarantors of
their obligations hereunder) that any 

80

 

Notes
Guarantor may have or assert against the Trustee or any Holder shall be available hereunder to such Notes Guarantor. 

        (d)   Each
Notes Guarantor shall pay all reasonable costs, expenses and fees, including all reasonable attorneys' fees, that may be incurred by the Trustee in enforcing or
attempting to enforce the Notes Guarantees or protecting the rights of the Trustee or the Holder, if any, in accordance with this Indenture. 

        SECTION
1205.    Primary Obligations.    

        The
obligations of each Notes Guarantor hereunder shall constitute a guaranty of payment and not of collection. Each Notes Guarantor agrees that it is directly liable to each Holder
hereunder, that the obligations of each Notes Guarantor hereunder are independent of the obligations of the Company or any other Notes Guarantor, and that a separate action may be brought against each
Notes Guarantor, whether such action is brought against the Company or any other Notes Guarantor or whether the Company or any other Notes Guarantor is joined in such action. Each Notes Guarantor
agrees that its liability hereunder shall be immediate and shall not be contingent upon the exercise or enforcement by the Trustee or the Holders of whatever remedies they may have against the Company
or any other Notes Guarantor or the enforcement of any lien or realization upon any security the Trustee may at any time possess. Each Notes Guarantor agrees that any release that may be given by the
Trustee or the Holders to the Company or any other Notes Guarantor shall not release such Notes Guarantor. 

        SECTION
1206.    Notes Guarantee by Future Domestic Subsidiaries.    

        (a)   The
Company shall cause each Person that is or becomes a Domestic Restricted Subsidiary having assets with a net book value of greater than $1.0 million and that,
directly or indirectly, Guarantees the payment, or pledges any of its Property to secure the payment, of other Debt of the Company or any other Subsidiary (other than Unregistered Senior Debt and Debt
under the Senior Credit Facility) to execute and deliver the Trustee a supplemental indenture hereto providing for a Notes Guarantee, on an unsecured, senior subordinated basis, at the time such
Restricted Subsidiary issues such Guarantee or pledge. 

        (b)   Notwithstanding
the foregoing, (i) Restricted Subsidiaries that are special purpose entities established solely in connection with any Receivables Program or in
connection with any Synthetic Lease or Sale or Leaseback Transaction relating to the Office Campus shall not be required to Guarantee the Notes and (ii) if the 10.375% Senior Secured Notes are
repaid in full, the Guarantees of all Notes Guarantors will be released, which will then result in the Notes Guarantors being released, provided that as
a result of such release the Notes Guarantors cease to Guarantee any obligations pursuant to the 6.75% Senior Subordinated Notes or any other Debt of the Company or any other Subsidiary (other than
Unregistered Senior Debt and Debt under the Senior Credit Facility). 

        (c)   The
Company hereby covenants and agrees that, immediately following the release of the Notes Guarantors under this Indenture, the Company shall cause to be released the
Guarantees of the Notes Guarantors under the indenture governing the 6.75% Senior Subordinated Notes; provided, however, and notwithstanding anything to
the contrary contained in this Section 1206, in the event that, subsequent to the release of the Guarantees of the Notes Guarantors under the indenture governing the 6.75% Senior Subordinated Notes as
provided herein, any such Guarantees shall be reinstated, upon such reinstatement the Notes Guarantees shall also be reinstated. 

        (d)   The
Company shall deliver to the Trustee an Opinion of Counsel, in form reasonably satisfactory to the Trustee, to the effect that (A) such supplemental indenture
has been duly authorized, executed and delivered by such Domestic Restricted Subsidiary and (B) such supplemental indenture constitutes the legal, valid, binding and enforceable obligations of
such Domestic Restricted Subsidiary, subject to customary exceptions and carve-outs applicable to other similar opinions. 

81

 

        (e)   The
fact that any Note may fail to have endorsed thereon a Notes Guarantee executed by a Notes Guarantor shall not affect the validity or enforceability of such Notes
Guarantee against such Notes Guarantor. 

        SECTION
1207.    Release of Notes Guarantors.    

        (a)   A
Notes Guarantor shall be released from all of its obligations under its Notes Guarantee and this Indenture: 

        (1)   in
connection with any sale or other disposition of all or substantially all of the assets or all of the Capital Stock of that Notes Guarantor (including by way of
merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Domestic Restricted Subsidiary of the Company, if such sale or other
disposition is in compliance with Section 1013; 

        (2)   upon
the designation of such Guarantor as an Unrestricted Subsidiary, in accordance with the terms of this Indenture; 

        (3)   upon
the delivery by the Company to the Trustees of an Officers' Certificate certifying that the net book value of the assets of such Notes Guarantor is equal to or less
than $1.0 million; 

        (4)   upon
the release of a Notes Guarantor from its Guarantee under all other Debt of the Company and its Subsidiaries other than the 63/4% Senior Subordinated
Notes, Unregistered Senior Debt and Debt under the Senior Credit Facility; or 

        (5)   upon
the repayment of the 10.375% Senior Secured Notes, in accordance with the terms of Section 1206(b)(ii); 

and
in each case other than a release pursuant to clause (4) of this subsection (a) the Company has delivered to the Trustee an Officers' Certificate, each stating that all conditions
precedent herein provide for relating to such transactions have been complied with and that such release is authorized and permitted hereunder. 

        (b)   If
all of the conditions to release contained in this Section 1207 have been satisfied, the Trustee shall execute any documents reasonably requested by the
Company or any Notes Guarantor in order to evidence the release of such Notes Guarantor from its obligations under its Notes Guarantee under this Article Twelve. 

 
 

ARTICLE THIRTEEN
  DEFEASANCE AND COVENANT DEFEASANCE    
    

        SECTION
1301.    Company's Option to Effect Defeasance or Covenant Defeasance.    

        The
Company may at its option, by Board Resolution, at any time, elect to have either Section 1302 or Section 1303 applied to the Outstanding Notes upon compliance with the
conditions set forth below in this Article Thirteen. 

        SECTION
1302.    Defeasance and Discharge.    

        Upon
the Company's exercise of the option provided in Section 1301 applicable to this Section 1302, the Company and the Notes Guarantors shall be deemed to have been
discharged from their obligations with respect to the Outstanding Notes and this Indenture on the date the conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company and the Notes Guarantors shall be deemed to have paid and discharged the entire
indebtedness represented by the Outstanding Notes and the Company and the Notes Guarantors will be deemed to have satisfied all of their other obligations under such Notes, the Notes Guarantees and
this Indenture insofar as such Notes and Notes Guarantees are concerned (and the Trustee, at the 

82

 

expense
of the Company, shall execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of such Notes to receive, solely from the trust fund described in Section 1304 and as more fully set forth in such Section 1304, payments in respect of the principal of (and
premium, if any) and interest on such Notes when such payments are due, (b) the Company's obligations with respect to such Notes under Sections 305, 306, 1002 and 1003, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (d) this Article Thirteen. Subject to compliance with this Article Thirteen, the Company may exercise its option under this
Section 1302 notwithstanding the prior exercise of its option under Section 1303. 

        SECTION
1303.    Covenant Defeasance.    

        Upon
the Company's exercise of the option provided in Section 1301 applicable to this Section 1303, (a) the Company and the Notes Guarantors shall be released from
their obligations under Sections 1005 through 1019 inclusive, Section 1206 and clause (a)(4) of Section 801, (b) the occurrence of an event specified in Sections 501(a)(3)
(with respect to clause (a)(4) of Section 801), 501(a)(4) (with respect to any of Sections 1008 through 1014, inclusive, Sections 1016, 1018 and 1206), 501(a)(5), 501(a)(6), 501(a)(7)
(with respect to Significant Subsidiaries or Restricted Subsidiaries that individually or in the aggregate would constitute a Significant Subsidiary), and 501(a)(8) through 501(a)(10), inclusive,
shall not be deemed to be an Event of Default (hereinafter, "covenant defeasance"). For this purpose, such covenant defeasance means that the Company
and its Restricted Subsidiaries may omit to comply with
and shall have no liability in respect of any term, condition or limitation set forth in any such Section, Clause or Article, whether directly or indirectly by reason of any reference elsewhere herein
to any such Section, Clause or Article or by reason of any reference in any such Section, Clause or Article to any other provision herein or in any other document, but the remainder of this Indenture
and such Notes shall be unaffected thereby. 

        SECTION
1304.    Conditions to Defeasance or Covenant Defeasance.    

        The
following shall be the conditions to application of either Section 1302 or Section 1303 to the then Outstanding Notes: 

        (a)   The
Company shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 609 who shall
agree to comply with the provisions of this Article Thirteen applicable to it) as trust funds in trust for the purpose of making the following payments, dedicated solely to the benefit of the Holders
of such Notes, (1) money in an amount, or (2) U.S. Government Obligations that through the scheduled payment of principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment, money in an amount, or (3) a combination thereof, sufficient to pay and discharge, and which shall be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the principal of (premium, if any,) and each installment of interest on the Outstanding Notes on the Stated Maturity (or Redemption Date, if
applicable) of such principal or installment of interest in accordance with the terms of this Indenture and of such Notes; 

        (b)   The
Company delivers a certificate to the Trustee (or other qualifying trustee) from a nationally recognized firm of independent registered public accountants expressing
their opinion that the amounts deposited pursuant to subsection (a) of this Section 1304 (without reinvestment on the deposited money or U.S. Government Obligations or combination
thereof) will provide cash at such times and in such amounts as will be sufficient to pay principal (premium, if any) and interest when due on all the Notes to Stated Maturity or redemption, as the
case may be; 

83

 

        (c)   In
the case of an election under Section 1302, the Company shall have delivered to the Trustee an Opinion of Counsel qualified to practice law in the United
States stating that: 

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

        (2)   since
the date of this Indenture there has been a change in the applicable U.S. Federal income tax law, 

to
the effect, in either case, that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the Outstanding Notes will not recognize income, gain or loss for U.S. Federal income
tax purposes as a result of such deposit, defeasance and discharge and will be subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the
case if such deposit, defeasance and discharge had not occurred; 

        (d)   In
the case of an election under Section 1303, the Company shall have delivered to the Trustee an Opinion of Counsel qualified to practice law in the United
States to the effect that the Holders of the Outstanding Notes will not recognize gain or loss for U.S. Federal income tax purposes as a result of such deposit and covenant defeasance and will be
subject to U.S. Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and covenant defeasance had not occurred; 

        (e)   Such
defeasance or covenant defeasance shall not cause the Trustee to have a conflicting interest as defined in Section 608 and for purposes of the Trust
Indenture Act with respect to any securities of the Company; 

        (f)    No
Default or Event of Default of the Company or such Person making the deposit in clause (a) shall have occurred and be continuing on the date of such deposit
or, insofar as clause 501(a)(7) is concerned, at any time during the period ending on the 123rd day after the date of such deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period); 

        (g)   The
Company shall have delivered to the Trustee an Opinion of Counsel qualified to practice law in the United States to the effect that such deposit shall not cause the
trust so created to be subject to the Investment Company Act of 1940; 

        (h)   Such
deposit, defeasance or covenant defeasance and discharge shall not result in a breach or violation of, or constitute a default under, any other material agreement
or instrument to which the Company is a party or by which the Company is bound; 

        (i)    The
Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for in this
Indenture relating to either the defeasance under Section 1302 or the covenant defeasance under Section 1303 (as the case may be) have been complied with; and 

        Upon
satisfaction of the above conditions in order to effect a defeasance or conveyance defeasance, all Notes Guarantors will be fully and unconditionally released from their obligations
under this Indenture. 

        SECTION
1305.    Deposited Money and U.S. Government Obligations to be Held in Trust; Other Miscellaneous
Provisions.    

        (a)   Subject
to the provisions of the last subsection of Section 1003, all money and U.S. Government Obligations (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee—collectively, for purposes of this Section 1305, the "Trustee") pursuant to Section 1404 in respect of the Notes shall be held in trust
and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any 

84

 

Paying
Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Holders of such Notes, of all sums due and to become due thereon in respect of principal (and
premium, if any) and interest, but such money need not be segregated from other funds except to the extent required by law. 

        (b)   The
Company shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against any U.S. Government Obligations deposited pursuant to
Section 1304 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the Outstanding Notes. 

        (c)   Anything
in this Article Thirteen to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or
U.S. Government Obligations held by it as provided in Section 1304 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent defeasance or covenant defeasance. 

        SECTION
1306.    Reinstatement.    

        If
the Trustee or the Paying Agent is unable to apply any money in accordance with Section 1302 or 1303 by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Notes, and the obligations of the Notes Guarantors under the Notes
Guarantees, shall be revived and reinstated as though no deposit had occurred pursuant to this Article Thirteen until such time as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 1302 or 1303;  provided, however, that if the Company makes any payment of principal of, and premium, if any, or interest on any Note following the reinstatement of
its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or the Paying Agent. 

 
 

ARTICLE FOURTEEN
  SUBORDINATION    
    

        SECTION
1401.    Agreement to Subordinate.    

        The
Company agrees, and each Holder by accepting a Note agrees, that the payment of principal of, premium, if any, and interest on and all other amounts payable in respect of, the Notes
is subordinated in right of payment, to the extent and in the manner provided in this Article Fourteen and subject to the provisions of Article Thirteen hereof, to the payment when due in cash of all
Senior Debt of the Company and that the subordination is for the benefit of and enforceable by the holders of such Senior Debt. The Notes shall in all respects rank pari
passu with all future Senior Subordinated Debt of the Company and senior to all existing and future Subordinated Debt of the Company. All provisions of this Article Fourteen
shall be subject to Section 1412. 

        SECTION
1402.    Liquidation, Dissolution, Bankruptcy.    

        (a)   Upon
any payment or distribution of the assets of the Company upon a total or partial liquidation, dissolution or winding up of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the Company or Property or upon an assignment for the benefit of creditors or the marshaling of its assets and liabilities,
the holders of Senior Debt will be entitled to receive payment in full in cash before the Holders are entitled to receive any payment of principal of, premium, if any, or interest on, or any other
amount payable to Holders in respect of, the Notes, except that Holders may receive and retain such payments made in Permitted Junior Securities and payments from the trust described in
Section 1412 hereof; and 

85

 

        (b)   Until
the Senior Debt is paid in full in cash, any distribution to which Holders would be entitled but for this Article Fourteen will be made to holders of the Senior
Debt as their interests may appear (except that Holders may receive and retain payments made in Permitted Junior Securities and payments and other distributions made from the trust described in
Section 1412 hereof; provided that (i) no Holder shall have the right to receive and retain any such Permitted Junior Securities if the existence of such right would have the effect of
causing the Notes to be treated in the same class of claims as the Senior Debt or any class of claims which is pari passu with such Senior Debt and
(ii) holders of Senior Debt shall be entitled to receive any cash payments made to any Holder on the account of Permitted Junior Securities until all Obligations in respect of Senior Debt have
been paid in full in cash). 

        SECTION
1403.    Default on Senior Debt.    

        (a)   The
Company may not pay (except in Permitted Junior Securities or from the trust described in Section 1412 and Article Thirteen hereof) principal of, or premium,
if any, or interest on, or any other amounts payable in respect of, the Notes, or make any deposit pursuant to Section 1304, and may not repurchase, redeem or otherwise retire any Notes
(collectively, "pay the Notes") if (i) any principal, premium, interest or any other amount payable in respect of any Senior Debt is not paid within any applicable grace period (including at
maturity), or (ii) any other default on Senior Debt occurs and the maturity of such Senior Debt is accelerated in accordance with its terms, unless, in either case, (A) the default has
been cured or waived and any such acceleration has been rescinded or (B) such Senior Debt has been paid in full in cash; provided, however, that the Company may pay the Notes without regard to
the foregoing if the Company and the Trustee receive written notice approving such payment from the Representative of such issue of Senior Debt or, if there is no Representative, from the holders of
such Senior Debt. 

        (b)   During
the continuance of any default (other than a default described in clause (a)(i) or (ii) above) with respect to any Designated Senior Debt
pursuant to which the maturity thereof may be accelerated immediately without further notice (except any notice required to effect the acceleration) or the expiration of any applicable grace period,
the Company may not pay the Notes for a period (a "Payment Blockage Period") commencing upon the receipt by the Company and the Trustee of written
notice of such default from the Representative of the holders of such Designated Senior Debt or, if there is no Representative, from the holders of such Designated Senior Debt, specifying an election
to effect a Payment Blockage Period (a "Payment Blockage Notice") and ending 179 days thereafter, unless such Payment Blockage Period is earlier
terminated by written notice to the Trustee and the Company from the Representative of the holders of such Designated Senior Debt or, if there is no Representative, from the holders of such Designated
Senior Debt that gave such Payment Blockage Notice, (i) because such default is no longer continuing, or (ii) because such Designated Senior Debt has been repaid in full in cash. Not
more than one Payment Blockage Notice with respect to all issues of Designated Senior Debt may be given in any consecutive 360-day period, irrespective of the number of defaults with
respect to one or more issues of Designated Senior Debt during such period. No non-payment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to
the Trustee shall be the basis for a subsequent Payment Blockage Notice. Following the expiration of any period during which the Company is prohibited from making payments on the Notes pursuant to a
Payment Blockage Notice, the Company shall (unless otherwise prohibited as described in the first two sentences of this paragraph) resume making any and all required payments in respect of the Notes,
including, without limitation, any missed payments, unless the maturity of any Designated Senior Debt has been accelerated, and such acceleration has not been rescinded. 

        (c)   The
Company shall give prompt written notice to the Trustee of any default in the payment after the expiration of the cure period, if any, of any Senior Debt or any
acceleration under any Senior Debt or under any agreement pursuant to which Senior Debt may have been issued. Failure to give 

86

 

such
notice shall not effect the subordination of the Notes to the Senior Debt or the application of the other provisions provided in this Article Fourteen. 

        SECTION
1404.    Acceleration of Payment of Securities.    

        If
payment of the Notes is accelerated when any Designated Senior Debt is outstanding, the Company may not pay the Notes until three Business Days after the Representatives of all issues
of Designated Senior Debt or, if there is no Representative, the holders of such Designated Senior Debt receive notice of such acceleration and, thereafter, may pay the Notes only if this Indenture
otherwise permits payment at that time. 

        SECTION
1405.    When Distribution Must Be Paid Over.    

        If
a payment or distribution is made to Holders or to the Trustee for the benefit of Holders that, due to this Article Fourteen, should not have been made to them, such Holders or the
Trustee will be required to hold it in trust for holders of Senior Debt and pay it over to them as their interests may appear. 

        SECTION
1406.    Subrogation.    

        After
all Senior Debt is paid in full and until the Notes are paid in full, Holders shall be subrogated (equally and ratably with all other Debt that is pari
passu with the Notes) to the rights of holders of Senior Debt to receive distributions applicable to Senior Debt to the extent that distributions otherwise payable to the
Holders have been applied to the payment of Senior Debt. A distribution made under this Article Fourteen to holders of Senior Debt that otherwise would have been made to Holders is not, as between the
Company and Holders, a payment by the Company on such Senior Debt. 

        SECTION
1407.    Relative Rights.    

        This
Article Fourteen defines the relative rights of Holders and holders of Senior Debt. Nothing in this Indenture shall: 

        (a)   impair,
as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium, if any, and interest on,
the Notes in accordance with their terms; 

        (b)   affect
the relative rights of Holders and creditors of the Company other then their rights in relation to holders of Senior Debt; or 

        (c)   prevent
the Trustee or any Holder from exercising its available remedies upon a Default or an Event of Default, subject to the rights of holders of Senior Debt to
receive distributions otherwise payable to Holders. 

        SECTION
1408.    Subordination May Not Be Impaired by Company.    

        No
right of any holder of Senior Debt to enforce the subordination of the Debt evidenced by the Notes shall be impaired by any act or failure to act by the Company or by its failure to
comply with this Indenture. 

        SECTION
1409.    Rights of Trustee and Paying Agent.    

        Notwithstanding
Section 1403, the Trustee or Paying Agent may continue to make payments on the Notes and shall not be charged with knowledge of the existence of facts that would
prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Responsible Officer receives notice satisfactory to it that payments may not be
made under this Article Fourteen. The Company, the Note Registrar or co-registrar, the Paying Agent, a Representative or a 

87

 

holder
of Senior Debt may give the notice; provided, however, that, if an issue of Senior Debt has a Representative, only the Representative may give the notice. 

        The
Trustee in its individual or any other capacity may hold Senior Debt with the same rights it would have if it were not Trustee. The Note Registrar and co-registrar and
the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article Fourteen with respect to any Senior Debt that may at any time be held by
it, to the same extent as any other holder of such Senior Debt; and nothing in Article Six shall deprive the Trustee of any of its rights as such holder. Nothing in this Article Fourteen shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 607. 

        SECTION
1410.    Distribution or Notice to Representative.    

        Whenever
a distribution is to be made or a notice given to holders of Senior Debt, the distribution may be made and the notice given to their Representative (if any). 

        SECTION
1411.    Article Fourteen Not to Prevent Events of Default or Limit Right to Accelerate.    

        Nothing
in this Article Fourteen shall prevent an Event of Default in accordance with Article Five or have any effect on the right of the Holders or the Trustee to accelerate the
maturity of the Notes or to exercise the rights and remedies in Article Five. 

        SECTION
1412.    Trust Moneys Not Subordinated.    

        Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds of non-callable U.S. Government Securities held in trust under Article Thirteen
by the Trustee for the payment of principal of and interest on the Notes shall not be subordinated to the prior payment of any Senior Debt or subject to the restrictions set forth in this Article
Fourteen, and none of the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Debt or any other creditor of the Company. 

        SECTION
1413.    Trustee Entitled to Rely.    

        Upon
any payment or distribution pursuant to this Article Fourteen, the Trustee and the Holders shall be entitled to rely (a) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 1402 are pending, (b) upon a certificate of the liquidating trustee or agent or other Person making such
payment or distribution to the Trustee or to the Holders or (c) upon a certificate of the Representative of the holders of Senior Debt or, if there is no Representative, the holders of Senior
Debt for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of Senior Debt and other Debt of the Company, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Fourteen. In the event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article Fourteen, the Trustee may request such Person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this Article Fourteen, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment. The provisions of Section 601 and 603 shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article Fourteen. 

        SECTION
1414.    Trustee to Effectuate Subordination.    

        Each
Holder by accepting a Note authorizes and directs the Trustee on his behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination
between the 

88

 

Holders
and the holders of Senior Debt as provided in this Article Fourteen and appoints the Trustee as attorney-in-fact for any and all such purposes. 

        SECTION
1415.    Trustee Not Fiduciary for Holders of Senior Debt.    

        The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall mistakenly pay over or distribute to
Holders or the Company or any other Person, money or assets to which any holders of Senior Debt shall be entitled by virtue of this Article Fourteen or otherwise, except if such mistake was the result
of the Trustee's gross negligence or willful misconduct. 

        SECTION
1416.    Reliance by Holders of Senior Debt on Subordination Provisions.    

        Each
Holder by accepting a Note acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any
Senior Debt, whether such Senior Debt was created or acquired before or after the issuance of the Notes, to acquire and continue to hold, or to continue to hold, such Senior Debt and such holder of
such Senior Debt shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Debt. 

        SECTION
1417.    Subordination of Notes Guarantor.    

        The
Notes Guaranty of each Notes Guarantor will be subordinated to Senior Debt of such Notes Guarantor to the same extent and in the same manner as the Notes are subordinated to Senior
Debt of the Company. 

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

89

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

	 	 	The Trustee
	

 	
 	

U.S. BANK NATIONAL ASSOCIATION
	

 	
 	

By:	

    
 Name:

Title:

	 	 	The Company
	

 	
 	

SANMINA-SCI CORPORATION
	

 	
 	

By:	

    
 Name:

Title:
	

 	
 	

By:	

    
 Name:

Title:

	 	 	Notes Guarantors
	

 	
 	

COMPATIBLE MEMORY, INC.

HADCO CORPORATION

HADCO SANTA CLARA, INC.

INTERAGENCY, INC.

NEWISYS, INC.

SANMINA-SCI ENCLOSURE USA INC.

SANMINA-SCI SYSTEMS (ALABAMA) INC.

SANMINA-SCI SYSTEMS ENCLOSURES

        (DENTON) INC.

SANMINA-SCI SYSTEMS HOLDINGS, INC.

SANMINA-SCI USA, INC.

SCI SYSTEMS, INC.

SCI TECHNOLOGY, INC.

SCIMEX, INC.

VIKING INTERWORKS INC.
	

 	
 	

All By:	

    
 Name:

Title:

	 	 	Notes Guarantors
	

 	
 	

SCI PLANT NO. 5, L.L.C.
	

 	
 	

By:	

 
	

 	
 	

SANMINA-SCI SYSTEMS (ALABAMA) INC.,

its Sole Member
	

 	
 	

By:	

    
 Name:

Title:

	 	 	Notes Guarantors
	

 	
 	

SCI PLANT NO. 22, L.L.C.
	

 	
 	

By:	

 
	

 	
 	

SCI TECHNOLOGY, INC.,

its Sole Member
	

 	
 	

By:	

    
 Name:

Title:

	 	 	Notes Guarantors
	

 	
 	

SANMINA GENERAL, L.L.C.

SANMINA LIMITED, L.L.C.
	

 	
 	

All by:
	

 	
 	

SANMINA-SCI CORPORATION,

their Sole Member
	

 	
 	

By:	

    
 Name:

Title:

	 	 	Notes Guarantors
	

 	
 	

SANMINA TEXAS, L.P.
	

 	
 	

By:	

SANMINA GENERAL, L.L.C.,

its General Partner
	

 	
 	

 	

By:	

SANMINA-SCI CORPORATION,

its Sole Member
	

 	
 	

By:	

    
 Name:

Title:

   EXHIBIT A  

[FACE
OF NOTE] 

[APPLICABLE
LEGENDS PURSUANT TO SECTION 305(C)] 

SANMINA-SCI
CORPORATION 

%
Senior Subordinated Note due                        , 

[CUSIP]
[ISIN] [________] 

	No. ______	 	$ __________

        SANMINA-SCI CORPORATION, a Delaware corporation (the "Company," which term includes any successor Person under the Indenture hereinafter referred to),
for value received, promises to pay to                        , or its registered assigns, the principal amount
of                        ($            ) [If
this Note is a
Global Note, then insert—(such principal amount may from time to time be increased or decreased to such other principal amounts (which, taken together with the
principal amounts of all other Outstanding Notes, shall not exceed the sum of (a) $                        plus (b) the
principal amount of any Additional Notes issued pursuant to the
within-mentioned Indenture) by adjustments made on the records of the Trustee referred to in the Indenture)]
on                        ,             . 

        Interest
Payment
Dates:                        and                
        . 

        Regular
Record
Dates:                        and                
        . 

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

        The
Notes Guarantors that are parties to the Indenture, and their successors under the Indenture, have jointly and severally, fully and unconditionally, guaranteed the payment of
principal of, premium, if any, and interest on the Notes. 

        IN
WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. 

	 	 	The Company	 	 
	

 	
 	

SANMINA-SCI CORPORATION	
 	

 
	

 	
 	

By:	

    
 Name:

Title:	
 	

 
	

 	
 	

By:	

    
 Name:

Title:	
 	

 

(Trustee's
Certificate of Authentication) 

        This
is one of the            % Senior Subordinated Notes
due                        ,
                        described in the within-mentioned Indenture. 

	Date:	 	U.S. BANK NATIONAL ASSOCIATION,

as Trustee	 	 
	

 	
 	

By:	

    
 Authorized Signatory	
 	

 

A-1

 
[REVERSE SIDE OF NOTE] 

SANMINA-SCI
CORPORATION 

%
Senior Subordinated Note due                        ,
            

	1.
	Principal and Interest. 

        The
Company will pay the principal amount of this Note on                        ,
             . 

        The
Company promises to pay interest semiannually in arrears on the principal amount of this Note on each Interest Payment Date at the rate per annum shown above, commencing on
                        ,             . Interest on the Notes
will accrue from the most recent date to which interest has been paid or duly provided for, or, if no interest has been paid or duly
provided for, from                        ,             .
Interest will be computed on the basis of a 360-day year of twelve 30-day months. 

        The
Company shall pay interest on overdue principal and premium, if any, and interest on overdue installments of interest, to the extent lawful, at a rate per annum that is equal
to         %. 

	2.
	Method of Payment. 

        The
Company will pay principal as provided above and interest (except Defaulted Interest) on the principal amount of the Notes as provided above on each            and
            , to the Persons who are Holders (as reflected in the Note Register at the close of business on
the            or            immediately preceding the Interest Payment Date,
such date referred to herein as the "Regular Record Date"), in each case, even if the Note is cancelled on registration of transfer or registration of exchange after such Regular Record Date. 

        The
Company will pay principal (and premium, if any), and as provided above, interest, in money of the United States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal (and premium, if any), and interest by its check payable in such money. It may mail an interest check to a Holder's registered address (as
reflected in the Note Register). If a payment date is a date other than a Business Day at a place of payment, payment may be made at that place on the next succeeding day that is a Business Day and no
interest shall accrue for the intervening period if and to the extent the required payment is made on the next succeeding Business Day. 

	3.
	Paying Agent and Note Registrar. 

        Initially,
the Trustee will act as authenticating agent, Paying Agent and Note Registrar. The Company may change any authenticating agent, Paying Agent or Note Registrar without notice.
The Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent, Note Registrar or co-Note Registrar. 

	4.
	Indenture; Limitations. 

        The
Company issued the Notes under an Indenture among the Company, each of the Notes Guarantors named therein and U.S. Bank National Association, as trustee (the "Trustee") dated as of
                        ,             (the "Indenture").
Capitalized terms herein are used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms and Holders are referred to the Indenture and the Trust Indenture Act
for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the
Indenture shall control. 

        The
Notes are senior subordinated obligations of the Company. 

A-2

 

        The
Company may, subject to the provisions of the Indenture and applicable law, issue Additional Notes under the Indenture. 

	5.
	Optional Redemption. 

        Except
as set forth below, the Notes will not be redeemable at the option of the Company prior to            ,             .
Starting on that date, the Company may redeem
all or any portion of the Notes, at once or over time, after giving the required notice under the Indenture. 

        The
Notes may be redeemed in whole or in part at the election of the Company, at any time and from time to time on or
after                        ,             , at the Redemption
Prices set forth below, plus accrued and unpaid interest to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest due
on the relevant Interest Payment Date). The following Redemption Prices (expressed as percentages of principal amount) are for the Notes redeemed during the 12-month period commencing on
            of the years set forth below: 

	Year
 
	 	Redemption Price

	        	 	%
	        	 	%
	        	 	%
	        and thereafter	 	100.000%

        At
any time and from time to time prior to                        ,
             , the Company may redeem all or any portion of the Notes after giving the required notice under the
Indenture, at a Redemption Price equal to the sum of: 

        (a)   the
principal amount of the Notes to be redeemed, plus 

        (b)   accrued
and unpaid interest to but excluding the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date that is prior to the
Redemption Date to receive interest due on the relevant Interest Payment Date), plus 

        (c)   the
Make-Whole Premium (as defined in the Indenture). 

        In
addition, at any time and from time to time, prior to                        ,
             , the Company may redeem up to a maximum of 35% of the aggregate principal amount of the
Notes (including any Additional Notes) in an amount not to exceed the amount of the net cash proceeds of one or more Equity Offerings at a Redemption Price equal to        % of the principal
amount of the Notes, plus accrued and unpaid interest thereon to, but excluding, the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date to receive interest
due on the relevant Interest Payment Date); provided, however, that after giving effect to any such redemption, at least 65% of the aggregate principal
amount of the Notes (including any Additional Notes, but excluding Notes held by the Company and its Subsidiaries) remains outstanding. Any such redemption shall be made within 90 days of such
Equity Offering upon not fewer than 30 nor more than 60 days' prior notice. 

        In
the event of redemption or purchase of this Note in part only, a new Note or Notes for the unredeemed or unpurchased portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof. 

	6.
	Repurchase upon Change of Control. 

        Upon
the occurrence of any Change of Control, each Holder shall have the right to require the Company to repurchase its Notes in cash pursuant to the offer described in the Indenture at
the Change of Control Purchase Price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the Change of Control Purchase Date. 

A-3

 

        A
notice of such Change of Control will be mailed within 30 days after any Change of Control occurs to each Holder by first-class mail at its last address as it appears in the
Note Register. Notes in original denominations larger than $1,000 may be sold to the Company in part (equal to $1,000 or an integral multiple of $1,000). On and after the Change of Control Purchase
Date, interest shall cease to accrue on Notes or portions of Notes surrendered for purchase by the Company, unless the Company defaults in the payment of the Change of Control Purchase Price. 

	7.
	Denominations; Transfer; Exchange. 

        The
Notes are in registered form without coupons in denominations of $1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder may register the transfer or exchange
of Notes in accordance with the Indenture. The Note Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees
required by law or permitted by the Indenture. The Note Registrar need not register the transfer or exchange of any Notes selected for redemption in whole or in part, except the unredeemed portion of
any Note being redeemed in part. Also, it need not issue, register the transfer of or exchange any Notes during a period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption of Notes selected for redemption. 

	8.
	Persons Deemed Owners. 

        A
Holder shall be treated as the owner of a Note for all purposes. 

	9.
	Amendment; Supplement; Waiver. 

        Subject
to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of Outstanding Notes,
and any existing default or compliance with any provision may be waived with the consent of the Holders of at least a majority in principal amount of Outstanding Notes. Without notice to or the
consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, omission, defect or inconsistency and make any change that
does not adversely affect the rights of any Holder. 

	10.
	Restrictive Covenants. 

        The
Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries, among other things, to Incur additional Debt, make Restricted Payments, suffer to
exist restrictions on the ability of Restricted Subsidiaries to make certain payments to the Company, engage in transactions with Affiliates, suffer to exist or incur Liens, use the proceeds from
Asset Sales, or merge, consolidate or transfer substantially all of their assets. The Company will deliver to the Trustee, within 120 days after the end of each fiscal year of the Company
ending after the date hereof an Officers' Certificate (in which one of the two Officers signing such certificate is either a principal executive officer, principal financial officer or principal
accounting officer of the Company), stating whether or not to the best knowledge of the signers thereof the Company is in default in the performance and observance of any of the terms, provisions and
conditions of the Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge. During a Suspension Period, the Company will not be subject to a majority of these restrictive covenants. 

	11.
	Subordination

        The
Notes and Notes Guarantees are subordinated to Senior Debt to the extent set forth in the Indenture. 

A-4

 

	12.
	Successor Persons. 

        When
a successor person or other entity assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor person will be released from those obligations
except in limited circumstances described in the Indenture. 

	13.
	Defaults and Remedies. 

        The
Indenture sets forth events that constitute an Event of Default under the Indenture. If an Event of Default shall occur and be continuing, there may be declared due and payable the
principal amount (together with accrued and unpaid interest) on the Notes in the manner and with the effect provided in the Indenture. If certain bankruptcy or insolvency events occur and continue
with respect to the Company or its Restricted Subsidiaries that individually or in the aggregate would constitute a Significant Subsidiary, the Notes shall automatically become due and payable in
accordance with the terms of the Indenture. 

	14.
	Notes Guarantee. 

        The
Company's obligations under the Notes are fully and unconditionally guaranteed, jointly and severally, by the Notes Guarantors as such Notes Guarantors may change from time to time
in accordance with the terms of the Indenture. 

	15.
	Designation as Senior Debt. 

        The
Notes are designated senior debt for purposes of the Zero Coupon Debentures and the Company's Guaranty of the 3% Convertible Subordinated Notes Due 2007 issued by SCI
Systems, Inc. The Notes Guaranty by SCI Systems, Inc. is designated senior debt for purposes of the 3% Convertible Subordinated Notes Due 2007 issued by SCI Systems, Inc. 

	16.
	Trustee Dealings with the Company. 

        The
Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company, the Notes Guarantors or their
Affiliates and may otherwise deal with the Company, the Notes Guarantors or their Affiliates as if it were not the Trustee. 

	17.
	No Recourse Against Others. 

        No
incorporator or any past, present or future partner, stockholder, other equityholder, officer, director, employee or controlling person, as such, of the Company, the Notes Guarantors
or of any successor Person shall have any liability for any obligations of the Company or the Notes Guarantors under the Notes, the Notes Guarantees or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the
issuance of the Notes and the Notes Guarantees. 

	18.
	Authentication. 

        This
Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on the other side of this Note. 

	19.
	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 entireties), 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 a copy of the Indenture to any Holder upon written request and without charge. Requests may be made to Sanmina-SCI Corporation, 2700 North First
Street, San Jose, California 95134. 

	20.
	Governing Law. 

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

A-5

 
[FORM
OF TRANSFER NOTICE] 

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

Insert Taxpayer Identification No.  

	

 Please print or typewrite name and address including zip code of assignee
	

 the within Note and all rights thereunder, hereby irrevocably constituting and appointing
	

 attorney to transfer said Note on the books of the Company with full power of substitution in the premises.

A-6

 
OPTION OF HOLDER TO ELECT PURCHASE 

        If
you wish to have this Note purchased by the Company pursuant to Section 1103 or 1105 of this Indenture, check the Box: o 

        If you wish to have a portion of this Note purchased by the Company pursuant to Section 1103 or 1105 of the Indenture, state the principal amount:
$_______________. 

Date: 

Your
Signature:    ____________________________________________________

                              (Sign exactly as your name appears on the other side of this Note)

Signature
Notes Guarantee: __________________________________

Signature
must be guaranteed by an eligible Guarantor Institution (banks, stockbrokers, savings and loan associations and credit union) with membership in an approved signature medallion program
pursuant to Securities and Exchange Commission Rule 17Ad-15). 

A-7

  

 
 

EXHIBIT B—Form
  Of Notes Guarantee    

 
 

GUARANTEE    
    

        For good and valuable consideration received from the Company by the undersigned (hereinafter referred to as the "Notes
Guarantors," which term includes any successor or additional Notes Guarantors), the receipt and sufficiency of which is hereby acknowledged, subject to Section 1203 of
the Indenture, each Notes Guarantor, jointly and severally, hereby unconditionally guarantees, irrespective of the validity or enforceability of the Indenture, the Notes or the obligations of any
party under the Notes or the Indenture, (a) the due and punctual payment of the principal of (and premium, if any) and interest on, the Notes, whether at Stated Maturity or on an Interest
Payment Date, by acceleration, call for redemption or otherwise (subject to any applicable grace period), (b) the due and punctual payment of interest on the overdue principal and premium, if
any, of the interest on, the Notes, if lawful, (c) the due and punctual payment and performance (subject to any applicable grace period) of all other obligations of the Company under the Notes
and the Indenture, all in accordance with the terms set forth therein and (d) in case of any extension of time of payment or renewal of any Notes or any of such other obligations under the
Notes or the Indenture, the due and punctual payment or performance thereof (subject to any applicable grace period) in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration, call for redemption or otherwise. 

        No
past, present or future director, officer, employee, incorporator, stockholder, members or controlling person of the Notes Guarantor (or any successor entity), as such, shall have any
liability under this Notes Guarantee for any obligations of the Notes Guarantor under the Notes or the Indenture, or for any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder by accepting the Note to which this Notes Guarantee is attached waives and releases all such liability. 

[Signatures
on following pages] 

B-1

 

        IN
WITNESS WHEREOF, each of the Notes Guarantors has caused this Notes Guarantee to be signed by a duly authorized officer. 

	Date:                   ,	 	Notes Guarantors
	

 	
 	

COMPATIBLE MEMORY, INC.

HADCO CORPORATION

HADCO SANTA CLARA, INC.

INTERAGENCY, INC.

NEWISYS, INC.

SANMINA-SCI ENCLOSURE USA INC.

SANMINA-SCI SYSTEMS (ALABAMA) INC.

SANMINA-SCI SYSTEMS ENCLOSURES

        (DENTON) INC.

SANMINA-SCI SYSTEMS HOLDINGS, INC.

SANMINA-SCI USA, INC.

SCI SYSTEMS, INC.

SCI TECHNOLOGY, INC.

SCIMEX, INC.

VIKING INTERWORKS INC.
	

 	
 	

All By:	

    
 Name:

Title:

B-2

 

	 	 	Notes Guarantors
	

 	
 	

SCI PLANT NO. 5, L.L.C.
	

 	
 	

By:	

 
	

 	
 	

SANMINA-SCI SYSTEMS (ALABAMA) INC.,

its Sole Member
	

 	
 	

By:	

    
 Name:

Title:

B-3

 

	 	 	Notes Guarantors
	

 	
 	

SCI PLANT NO. 22, L.L.C.
	

 	
 	

By:	

 
	

 	
 	

SCI TECHNOLOGY, INC.,

its Sole Member
	

 	
 	

By:	

    
 Name:

Title:

B-4

 

	 	 	Notes Guarantors
	

 	
 	

SANMINA GENERAL, L.L.C.

SANMINA LIMITED, L.L.C.
	

 	
 	

All by:
	

 	
 	

SANMINA-SCI CORPORATION,

their Sole Member
	

 	
 	

By:	

    
 Name:

Title:

B-5

 

	 	 	Notes Guarantors
	

 	
 	

SANMINA TEXAS, L.P.
	

 	
 	

By:	

SANMINA GENERAL, L.L.C.,

its General Partner
	

 	
 	

 	

By:	

SANMINA-SCI CORPORATION,

its Sole Member
	

 	
 	

By:	

    
 Name:

Title:

B-6

QuickLinks

Exhibit 4.1

TABLE OF CONTENTS

RECITALS OF THE COMPANY

ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

ARTICLE TWO NOTE FORMS

ARTICLE THREE THE NOTES

ARTICLE FOUR SATISFACTION AND DISCHARGE

ARTICLE FIVE REMEDIES

ARTICLE SIX THE TRUSTEE

ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY

ARTICLE EIGHT MERGERS, CONSOLIDATION AND SALE OF PROPERTY

ARTICLE NINE SUPPLEMENTAL INDENTURES

ARTICLE TEN COVENANTS

ARTICLE ELEVEN REDEMPTION OF NOTES

ARTICLE TWELVE GUARANTEES

ARTICLE THIRTEEN DEFEASANCE AND COVENANT DEFEASANCE

ARTICLE FOURTEEN SUBORDINATION

EXHIBIT B —Form Of Notes Guarantee

GUARANTEE

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00096-of-00352.parquet"}]]