Document:

EXHIBIT 10.17 

 

 

 

UNIT
PURCHASE AGREEMENT

 

dated
as of July 31, 2018

 

by
and among

 

IMAC
HOLDINGS INC., a Delaware corporation,

 

ADVANTAGE
HAND THERAPY AND ORTHOPEDIC REHABILITATION, LLC, 

 

a
Missouri limited liability company

 

and

 

Charles
Renner, sole Unitholder of 

 

ADVANTAGE
HAND THERAPY AND ORHTOPEDIC REHABILITATION, LLC

 

 

 

    	 

    	 

    

 

Table
of Contents

 

	 	Page
	 	 
	ARTICLE
    I THE UNIT PURCHASE	1
	 	 
	Section
    1.1     Purchase and Sale of the Interests	1
	Section
    1.2     Closing	2
	Section
    1.3     Working Capital Adjustment	2
	 	 
	ARTICLE
    II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE UNITHOLDERS	4
	 	 
	Section
    2.1     Organization, Etc . 	4
	Section
2.2     Capitalization	4
	Section
    2.3     Subsidiaries	5
	Section
2.4     Authority Relative to this Agreement	5
	Section
    2.5     Consents and Approvals; No Violations	5
	Section
2.6     Financial Statements	6
	Section
2.7     No Undisclosed Liabilities	6
	Section
2.8     Absence of Certain Changes	6
	Section
2.9     Compliance with Law	7
	Section
2.10   Material Contracts	7
	Section
2.11   Permits	8
	Section
2.12   Litigation	8
	Section
2.13   Taxes	8
	Section
2.14   Title to Properties; Sufficiency of Assets	10
	Section
2.15   Intellectual Property	11
	Section
2.16   Insurance	12
	Section
2.17   Environmental Matters	12
	Section
2.18   Employee and Labor Matters	13
	Section
2.19   Employee Plans	13
	Section
2.20   Brokers and Finders	15
	Section
    2.21   Absence of Questionable Payments	15
	Section
2.22   Bank Accounts; Powers of Attorney	15
	Section
2.23   Customers and Suppliers	16
	Section
2.24   Accounts Receivable	16
	Section
    2.25   Certain Transactions	16
	Section
2.26   No Other Representations or Warranties	16
	Section
    2.27   Disclosure	16
	 	 
	ARTICLE
    III REPRESENTATIONS AND WARRANTIES OF HOLDINGS	17
	 	 
	Section
    3.1     Corporate Organization, Etc . 	17
	Section
3.2     Authority Relative to this Agreement	17
	Section
3.3     Consents and Approvals; No Violations	17

 

    	 	- i -	 

    	 

    

 

Table
of Contents

(continued)

 

	 	Page
	 	 
	Section
    3.4     Litigation	18
	Section
    3.5     Brokers and Finders	18
	Section
3.6     Sufficient Funds	18
	 	 
	ARTICLE
    IV COVENANTS	19
	 	 
	Section
4.1     Conduct of the Business of the Company Pending the Closing	19
	Section
4.2     Access to Information	21
	Section
4.3     Disclosure Supplements	21
	Section
    4.4     Consents and Approvals	21
	Section
4.5     Filings	21
	Section
4.6     Further Assurances	21
	 	 
	ARTICLE
    V ADDITIONAL AGREEMENTS	22
	 	 
	Section
5.1     Acquisition Proposals	22
	Section
5.2     Public Announcements	22
	Section
5.3     Indemnification	23
	Section
    5.4     Notification of Certain Matters	26
	Section
5.5     Non-Competition	26
	Section
5.6     Tax Covenants	28
	Section
5.7     Retention Agreements	29
	 	 
	ARTICLE
    VI CONDITIONS TO CONSUMMATION OF THE UNIT PURCHASE	30
	 	 
	Section
    6.1     Conditions to Each Party’s Obligations to Effect the Unit Purchase	30
	Section
6.2     Conditions to the Obligation of Holdings	30
	Section
6.3     Conditions to the Obligations of the Company and the Unitholders	31
	Section
    6.4     Closing Deliveries	32
	 	 
	ARTICLE
    VII TERMINATION	32
	 	 
	Section
7.1     Termination by Mutual Agreement	32
	Section
7.2     Termination by either Holdings or the Unitholders	32
	Section
7.3     Termination by the Unitholders	33
	Section
7.4     Termination by Holdings	33
	Section
7.5     Effect of Termination and Abandonment	33
	 	 
	ARTICLE
    VIII MISCELLANEOUS	33
	 	 
	Section
8.1     Entire Agreement; Assignment	33
	Section
8.2     Notices	33
	Section
8.3     Governing Law; Jurisdiction; WAIVER OF JURY TRIAL	34
	Section
8.4     Expenses	35

 

    	 	- ii -	 

    	 

    

 

Table
of Contents

(continued)

 

	 	Page
	 	 
	Section
    8.5     Descriptive Headings	35
	Section
8.6     Parties in Interest	35
	Section
8.7     Severability	35
	Section
8.8     Specific Performance	35
	Section
8.9     Counterparts	35
	Section
8.10   Interpretation	36
	Section
8.11   Amendment and Modification; Waiver	37
	Section
8.12   Definitions	37

 

INDEX
OF EXHIBITS

 

Exhibit
A – Form of Retention Agreements

 

Exhibit
B – Working Capital Worksheet

 

    	 	- iii -	 

    	 

    

 

UNIT
PURCHASE AGREEMENT

 

THIS
UNIT PURCHASE AGREEMENT (this “Agreement”), dated as of July 31, 2018, is by and among IMAC Holdings Inc.,
a Delaware corporation (“Holdings”), Advantage Hand Therapy and Orthopedic Rehabilitation, LLC, a Missouri
limited liability company (the “Company”), and Charles Renner, sole Unitholder of the Company (collectively,
the “Unitholder”). Certain capitalized terms used herein are defined in Section 8.12.

 

RECITALS

 

WHEREAS,
as of the date of this Agreement, the outstanding membership interests in the Company consist of 1 unit (the “Units”
and those units of membership interests, the “Interests”);

 

WHEREAS,
as of the date hereof, the Unitholder owns 100% of the outstanding Interests;

 

WHEREAS,
the parties desire to enter into this Agreement to provide for the acquisition by Holdings of the Company through the purchase
by Holdings from the Unitholder of the Interests.

 

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

 

ARTICLE
I

THE UNIT PURCHASE

 

Section
1.1 Purchase and Sale of the Interests. Upon the terms and subject to the conditions of this Agreement, the Unitholder
agrees to sell to Holdings, and Holdings agrees to purchase from the Unitholder, the Units at the Closing (the “Unit
Purchase”). The purchase price for the Interests shall be equal to the dollar amount represented by .7 times the total
Collections from payments for service in Company account from June 1, 2017 to May 31, 2018 and shall be paid in the form as follows,
subject to adjustment as provided in Section 1.4 and offset as provided in Section 5.3(c):

 

(a)
Twenty-two thousand, nine hundred thirty dollars and ninety-four cents ($22,930.94) in the form of cash payable at the Closing
(the “Cash Consideration”); and

 

(b)
108,750 shares of common stock, par value $0.001 per share (the “Holdings Shares”), of Holdings (the “Stock
Consideration” and, together with the Cash Consideration, the “Total Consideration”).

 

Payment
of the Cash Consideration shall be made in immediately available funds to Unitholder no more than five Business Days after the
Closing Date. Payment of the Stock Consideration shall be based on the gross price per share of the Holdings Shares received by
Holdings (or otherwise calculable) in the last round of financing by Holdings of any of its shares of common stock, preferred
stock or any other equity or equity-linked securities in a third-party financing transaction; provided, that, in the event an
agreement or letter of intent for an initial public offering (which offering includes Holdings’ contemplated public offering),
is executed by Holdings establishing a valuation of Holdings and is actively in the process of being completed, the price shall
not be less than the price per share of Holding Shares established (or calculable) in the agreement or letter of intent for such
public offering.

 

    	 

    	 

    

 

Section
1.2 Closing. The closing of the Contemplated Transactions (the “Closing”) will take place at a time
and on a date to be specified by the parties (the “Closing Date”), which shall be August 1, 2018, or no later
than the second Business Day after satisfaction or waiver (to the extent legally permissible) of the conditions set forth in Article
VI (other than those conditions that by their nature are to be satisfied at the Closing, but subject to the fulfillment or waiver
of those conditions), at the offices of Olshan Frome Wolosky LLP, 1325 Avenue of the Americas, 15th Floor, New York,
New York 10019, or at such other time, date or place as agreed to in writing by the parties hereto. At the Closing, the Unitholder
will deliver to Holdings good and valid title to the Interests, free and clear of all Encumbrances, together with a certificate(s)
for the Interests duly endorsed or accompanied by a power(s) duly endorsed in blank, with any required transfer stamps affixed
thereto, against payment or delivery of the Total Consideration.

 

Section
1.3 Working Capital Adjustment.

 

(a)
The Company and the Unitholder shall use commercially reasonable efforts to ensure that as of the close of business on the day
prior to the Closing Date, the Company shall have Closing Date Working Capital in the amount of $75,000 (the “Working
Capital Threshold”). Before the Closing Date, the Unitholder shall prepare, or cause to be prepared, in consultation
with Holdings, and deliver to Holdings a statement (the “Estimated Closing Date Working Capital Statement”),
which shall be subject to the prior review and approval of Holdings, setting forth the estimated Company Working Capital as of
the close of business on the day prior to the Closing Date (the “Estimated Closing Date Working Capital”).
The “Company Working Capital” shall be equal to the current assets minus the current liabilities of the Company
(each as determined in accordance with GAAP and the working capital worksheet attached as Exhibit B hereto), including
as a payable of the Company (i) any fees and out-of-pocket expenses incurred by the Company or the Unitholder (including fees
and expenses of counsel and of any broker or finder), to be paid by the Company but which has not previously been paid by the
Company, in connection with this Agreement or any of the other Transaction Documents or the consummation of any of the Contemplated
Transactions, (ii) any liability for Taxes directly or indirectly arising out of or related to the consummation of any of the
Contemplated Transactions and (iii) any liability for Transfer Taxes arising out of or related to any of the Contemplated Transactions
and accrued or paid by the Company. The Estimated Closing Date Working Capital Statement shall fairly and accurately present the
Estimated Closing Date Working Capital, determined in the manner set forth in the immediately preceding sentence. If the Estimated
Closing Date Working Capital is less than the Working Capital Threshold, then the Cash Consideration payable on the Closing Date
shall be reduced by the amount of such difference. If the Estimated Closing Date Working Capital is greater than the Working Capital
Threshold, then the Cash Consideration payable on the Closing Date shall be increased by the amount of such excess. 

 

    	 	2	 

    	 

    

 

(b)
Within ninety (90) days after the Closing, Holdings shall prepare, or cause to be prepared, and deliver to the Unitholder a statement
(the “Closing Date Working Capital Statement”) setting forth the actual Company Working Capital as of the close
of business on the day prior to the Closing Date (the “Closing Date Working Capital”). The Closing Date Working
Capital Statement shall fairly and accurately present the Closing Date Working Capital, determined in the manner set forth in
the definition of Company Working Capital in Section 1.4(a).

 

(c)
The Unitholder shall have a period of thirty (30) days after the date on which the Closing Date Working Capital Statement is delivered
to them (the “Review Period”) to review the Closing Date Working Capital Statement. If the Unitholder objects
to the calculation of the Closing Date Working Capital as set forth on such Closing Date Working Capital Statement, the Unitholder
shall so inform Holdings in writing (the “Objection”) on or before the last day of the Review Period, setting
forth in reasonable detail the basis of the Objection and the adjustments to the Closing Date Working Capital Statement which
the Unitholder believes should be made. In the event that an Objection is not delivered to Holdings on or before the last day
of the Review Period, the Unitholder shall be deemed to have agreed to the Closing Date Working Capital Statement. In the event
that an Objection is delivered to Holdings on or before the last day of the Review Period, Holdings and the Unitholder shall attempt
in good faith to reach an agreement with respect to any matters in dispute. If Holdings and the Unitholder are unable to resolve
all of their differences within thirty (30) days after delivery of the Objection to Holdings, they shall refer their remaining
differences to an independent public accountants as to which Holdings and the Unitholder shall mutually agree (the “WC
Arbiter”). The WC Arbiter shall, based on those items as to which Holdings and the Unitholder has agreed and the WC
Arbiter’s determination regarding those items in dispute, finally determine the Closing Date Working Capital; provided,
however, that the Closing Date Working Capital as finally determined by the WC Arbiter shall not be less than the amount
proposed by Holdings or greater than the amount proposed by the Unitholder. The WC Arbiter’s determination shall be set
forth in writing and shall be conclusive and binding upon all parties hereto and may be entered as a final judgment in any court
of competent jurisdiction. The non-prevailing party shall pay the fees of the WC Arbiter (unless the WC Arbiter otherwise determines),
and each of Holdings and the Unitholder shall pay the fees and expenses of their own legal counsel, accountants and other Representatives.
Each of the parties hereto shall make available to the WC Arbiter and each other party hereto all relevant books and records and
any work papers (including those, if any, of the accountants of the Company) in its possession or readily obtainable by it relating
to the Closing Date Working Capital, and all other items reasonably requested by the WC Arbiter and each other party hereto.

 

(d)
The “Final Working Capital Amount” shall be (i) if no Objection is sent to Holdings prior to the end of the
Review Period, the amount of Closing Date Working Capital set forth on the Closing Date Working Capital Statement delivered by
Holdings, (ii) if an Objection is made but finally determined between Holdings and the Unitholder prior to referring any such
dispute to a WC Arbiter, the amount of Closing Date Working Capital so finally determined between them; and (iii) if an Objection
is sent to the WC Arbiter, the amount of Closing Date Working Capital finally determined by such WC Arbiter.

 

    	 	3	 

    	 

    

 

(e)
If the Final Working Capital Amount is less than the Estimated Closing Date Working Capital, then Holdings shall offset against
the Stock Consideration (by the forfeiture of Holdings Shares proportionally by the Unitholder) an amount equal to the difference
between the Estimated Closing Date Working Capital and the Final Working Capital Amount. If the amount of such difference exceeds
the amounts to be due (and not previously offset as provided herein), then any such excess shall be the obligation of the Unitholder
and shall be paid to Holdings within ten (10) days after the determination of the Final Working Capital Amount.

 

(f)
If the Final Working Capital Amount is greater than the Estimated Closing Date Working Capital, then the excess balance shall
be paid by Holdings to the Unitholder within ten (10) days after the determination of the Final Working Capital Amount.

 

(g)
Any amounts paid by a party pursuant to Section 1.4(e) or Section 1.4(f) will be treated as an adjustment to the Cash Consideration.

 

ARTICLE
II

REPRESENTATIONS AND WARRANTIES OF THE 

COMPANY
AND THE UNITHOLDER

 

Except
as set forth in the Company’s disclosure schedule provided herewith (the “Company Disclosure Schedule”),
the Company and the Unitholder hereby jointly and severally represent and warrant to Holdings, as of the date hereof and as of
the Closing Date, except to the extent certain representations and warranties are limited to a certain date set forth in the applicable
Section, as follows:

 

Section
2.1 Organization, Etc. The Company is duly formed, validly existing and in good standing under the Laws of the State of
Missouri and has all requisite limited liability company power and authority to conduct its business as it is now being conducted
and to own, lease and operate its properties and assets. The Company is qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except where
the failure to be so qualified or in good standing would not, individually or in the aggregate, have a Company Material Adverse
Effect. True and complete copies of the Certificate of Formation of the Company (the “Certificate of Formation”),
and Limited Liability Company Operating Agreement of the Company (the “Operating Agreement”), each as presently
in effect, have been heretofore made available to Holdings. The Company is not in violation of any term or provision of the Certificate
of Formation or Operating Agreement.

 

Section
2.2 Capitalization. The Company has 100 Units outstanding, 100% of which are owned of record and beneficially by the Unitholder,
free and clear of all Encumbrances. No other securities of the Company are issued or outstanding. All outstanding Interests are
duly authorized, validly issued, fully paid and non-assessable, and issued free from preemptive rights and in compliance with
all applicable securities Laws. Except as set forth in Section 2.2 of the Company Disclosure Schedule, there are no outstanding
(a) securities convertible into or exchangeable for Units of the Company, (b) options, warrants or other rights to purchase or
subscribe for Units of the Company, or (c) contracts, commitments, agreements, understandings or arrangements of any kind relating
to the issuance of any Units of the Company, any such convertible or exchangeable securities or any such options, warrants or
rights, pursuant to which, in any of the foregoing cases, the Company is subject or bound. The Unitholder has not granted any
power of attorney or proxy with respect to any Units owned by them. As a result of the Contemplated Transactions, Holdings will
acquire good, valid and marketable title to the Interests free and clear of all Encumbrances, other than those that may be created
or incurred by Holdings.

 

    	 	4	 

    	 

    

 

Section
2.3 Subsidiaries. The Company does not have any subsidiaries or own any equity interest in any other Person.

 

Section
2.4 Authority Relative to this Agreement. The Company has all requisite limited liability company power and authority,
and the Unitholder has all requisite right, power and authority, to execute and deliver the Transaction Documents to which it
or they are a party, to perform its or their obligations thereunder and to consummate the Contemplated Transactions. The execution
and delivery of the Transaction Documents to which the Company is a party, the performance of its obligations thereunder and the
consummation of the Contemplated Transactions have been duly and validly authorized by all required limited liability company
action on the part of the Company, and no other limited liability company or other proceedings on the part of the Company are
necessary to authorize the Transaction Documents to which it is a party or to consummate the Contemplated Transactions. This Agreement
has been, and each of the other Transaction Documents to which it or they are a party will be, duly and validly executed and delivered
by the Company and the Unitholder and, assuming this Agreement has been, and each of the other Transaction Documents to which
it or they are a party will be, duly authorized, executed and delivered by the other parties thereto, this Agreement constitutes,
and each of the other Transaction Documents to which it or they are a party will constitute, a legal, valid and binding obligation
of each of the Company and the Unitholders, enforceable against each of the Company and the Unitholder in accordance with their
respective terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws now
or hereafter in effect relating to or affecting creditors’ rights generally, including the effect of statutory and other
Laws regarding fraudulent conveyances and preferential transfers and subject to the limitations imposed by general equitable principles
(regardless whether such enforceability is considered in a proceeding at law or in equity) (collectively, the “Bankruptcy
and Equity Principles”).

 

Section
2.5 Consents and Approvals; No Violations. Except as set forth on Section 2.5 of the Company Disclosure Schedule,
none of the execution or delivery of any of the Transaction Documents by the Company or the Unitholders, the performance by the
Company or the Unitholder of any of their obligations thereunder, or the consummation of any of the Contemplated Transactions
by the Company or the Unitholder will (a) violate any provision of the Certificate of Formation or Operating Agreement, (b) require
them to obtain or make any consent, waiver, approval, exemption, declaration, license, authorization or permit of, or registration
or filing with or notification to, any U.S. federal, state, local or foreign government, executive official thereof, governmental,
administrative or regulatory authority, agency, body or commission, including any court of competent jurisdiction, domestic or
foreign (each, a “Governmental Entity”), (c) require a consent under, result in a material violation or material
breach of, constitute (with or without notice or lapse of time or both) a material default (or give rise to any right of termination,
cancellation, amendment or acceleration or any obligation) under, or result in the creation of any Encumbrance on any of the properties
or assets of the Company pursuant to, any of the terms, conditions or provisions of any Material Contract or Lease or any contract
to which the Unitholder is a party or by which the Unitholder or any of their properties or assets are bound, or (d) violate any
Law of any Governmental Entity applicable to the Company or the Unitholder or by which the Company or the Unitholder or any of
their respective properties or assets are bound.

 

    	 	5	 

    	 

    

 

Section
2.6 Financial Statements. The Company has previously delivered or made available to Holdings true and complete copies of
the following financial statements, each of which is included in Section 2.6 of the Company Disclosure Schedule: the balance
sheet and related statements of income and retained earnings of the Company as of and for each of the years ended December 31,
2016 and December 31, 2017, each of which has been compiled by the Company’s independent registered public accounting firm
(collectively, the “Company Financials”). Each of the Company Financials (i) has been prepared from, and is
in accordance with, the books and records of the Company, (ii) does not deviate in any material respect from GAAP (except, in
the case of unaudited financial statements, for the absence of footnotes and, in the case of interim financial statements, normal
and recurring year-end adjustments (the nature or amount of which adjustments would not reasonably be expected, individually or
in the aggregate, to be material)), and (iii) fairly presents in all material respects the financial position and results of operations
of the Company as of the respective dates thereof and for the respective periods indicated therein (except that the unaudited
financial statements do not contain footnotes and interim financial statements are subject to normal and recurring year-end adjustments
(the nature or amount of which adjustments would not reasonably be expected, individually or in the aggregate, to be material)).

 

Section
2.7 No Undisclosed Liabilities.

 

(a)
The Company does not have any liabilities or obligations of any nature (absolute, accrued, contingent or otherwise), except as
and to the extent specifically set forth, disclosed in, provided for, reflected in or otherwise described in the Company Financials
or in Section 2.7(a) of the Company Disclosure Schedule, and except for those incurred in the ordinary course of business
since January 1, 2017.

 

(b)
Section 2.7(b) of the Company Disclosure Schedule sets forth all indebtedness of the Company for borrowed money.

 

Section
2.8 Absence of Certain Changes. Since December 31, 2016, except as set forth on Section 2.8 of the Company Disclosure
Schedule, the Company has not (a) conducted business other than in the ordinary and usual course consistent with past practice,
(b) suffered any Company Material Adverse Effect, (c) declared, set aside for payment or paid any dividend or other distribution
(whether in cash, securities, property or any combination thereof) in respect of any Units, or redeemed or otherwise acquired
any Units, (d) incurred any indebtedness for borrowed money or assumed, guaranteed or endorsed the obligations of any other Person,
(e) acquired or Transferred or entered into a Contract to acquire or Transfer any assets outside the ordinary course of business,
other than this Agreement, (f) created any Encumbrance on any of its properties or assets, (g) increased in any manner the rate
or terms of compensation of any of its directors, officers or employees except for any increases for employees (other than the
Unitholders) made in the ordinary course of business, (h) paid or agreed to pay any pension, retirement allowance or other material
employee benefit not required by any existing Benefit Plan or Employee Arrangement, (i) entered into or amended any employment,
bonus, severance or retirement Contract other than with employees (other than the Unitholders) in the ordinary course of business,
(j) made or revoked any election relating to Taxes, (k) changed any methods of reporting income or deductions for U.S. federal
income tax purposes, (l) made any capital expenditures, individually or in the aggregate, in excess of $10,000, (m) suffered any
damage, destruction or loss (whether or not covered by insurance) to any of its material assets, (n) had any officer or key employee
resign or terminate employment, or (o) settled or compromised any pending or threatened suit, action, proceeding or, other than
in the ordinary course of business, claim.

 

    	 	6	 

    	 

    

 

Section
2.9 Compliance with Law. The Company is, and has been for the past three (3) years, in compliance in all material respects
with all Laws applicable to it or any of its businesses, properties or assets, including, but not limited to, the federal Health
Insurance Portability and Accountability Act of 1996 (HIPAA) and all Missouri state medical practice acts and regulations of the
state board of medical examiners and state board of nursing. The Company has not received notice from any Governmental Entity
of any violation of any provision of any applicable Law that remains unresolved.

 

Section
2.10 Material Contracts.

 

(a)
Section 2.10(a) of the Company Disclosure Schedule sets forth a list of all Contracts that are material to the Company
to which it is a party or by which it or any of its properties or assets is bound, including (i) any employment Contract or other
Contract for services that is not terminable at will without liability for any penalty or severance payment, (ii) any Contract
involving annual payments or receipts by the Company of $50,000 or more with respect to any such Contract, (iii) any Contract
with each of the 15 largest customers and 10 largest suppliers of the Company, which largest customers and suppliers shall be
determined using revenues/payments by the Company during the year ended December 31, 2017 (respectively, the “Major Customers”
and the “Major Suppliers” and, collectively, the “Major Customers and Suppliers”), (iv)
any Contract containing an exclusivity provision that restricts any of the Company’s businesses or any Contract limiting
its freedom to compete in any line of business, in any geographic area or with any Person, (v) any Contract providing for the
borrowing or lending of money or any guarantee or, other than in the ordinary course of business, any indemnification of any third
party, and (vi) any partnership or joint venture agreement (collectively, the “Material Contracts”). The Company
has made available to Holdings true, correct and complete copies of all Material Contracts. The Company will not have any responsibilities,
obligations or liabilities, contractual or otherwise, arising under any change of control provision of any Contract as a result
of any of the Contemplated Transactions. 

 

(b)
Each of the Material Contracts constitutes the valid, legally binding and enforceable obligation of the Company and, to the Knowledge
of the Company, each of the other parties thereto, except as may be limited by applicable Bankruptcy and Equity Principles. Each
Material Contract is in full force and effect. 

 

    	 	7	 

    	 

    

 

(c)
Except as set forth in Section 2.10(c) of the Company Disclosure Schedule, the Company is not in breach or default in any
material respect, and no event has occurred that with notice or lapse of time or both would constitute such a breach or default
by the Company or permit termination, modification or acceleration, of or under any of the Material Contracts and, to the Knowledge
of the Company, no other party to any of the Material Contracts is in breach or default in any material respect, and no event
has occurred that with notice or lapse of time or both would constitute such a breach or default in any material respect by such
party, of or under any of the Material Contracts. The Company has not received a written notice or claim by any party to a Material
Contract in respect of any breach or default thereunder that remains unresolved.

 

(d)
Except as set forth in Section 2.10(d) of the Company Disclosure Schedule, the Company has not received written notice
of termination, cancellation, material reduction of services or non-renewal that is currently in effect with respect to any Material
Contract and, to the Knowledge of the Company, no other party to a Material Contract plans to terminate, cancel or not renew,
or materially reduce the services provided under, any such Material Contract.

 

Section
2.11 Permits. The Company has all material permits, licenses, certificates of authority and other authorizations from all
Governmental Entities necessary for the conduct of its business as presently conducted (the “Permits”) and
is in compliance in all material respects with the terms of its Permits. All such Permits are in full force and effect, and the
Company has not received written notice of any event, inquiry or proceeding that is reasonably likely to lead to the revocation,
amendment, failure to renew, limitation, suspension or restriction of any Permit.

 

Section
2.12 Litigation. Except as set forth in Section 2.12 of the Company Disclosure Schedule, there is no action, suit,
proceeding or investigation pending or, to the Knowledge of the Company, threatened against the Company or any of its properties
by or before any Governmental Entity. The Company is not subject to any outstanding injunction, writ, judgment, order or decree
of any Governmental Entity. There is no action, suit, proceeding or investigation pending or, to Knowledge of the Company, threatened
against any current or former officer, director, employee or consultant of any of the Company in his or her capacity as such.
There is no action, suit or proceeding pending or, to the Knowledge of the Company, threatened against the Company or the Unitholder
by or before any Governmental Entity that questions the validity of any of the Transaction Documents or any action to be taken
in connection with the consummation of any of the Contemplated Transactions or would otherwise prevent or materially delay the
consummation of any of the Contemplated Transactions.

 

Section
2.13 Taxes. Except as set forth in Section 2.13 of the Company Disclosure Schedule:

 

(a)
The Company has

 

(i)
duly and timely filed, or caused to be filed, in accordance with applicable Law, all material Company Tax Returns, each of which
is true, correct and complete in all material respects,

 

    	 	8	 

    	 

    

 

(ii)
duly and timely paid in full, or caused to be paid in full, all Company Taxes reflected on such Company Tax Returns, and

 

(iii)
properly accrued, in a manner that does not deviate in any material respect from GAAP, on its books and records a provision for
the payment of all Company Taxes that are due, are claimed to be due, or may or will become due with respect to any Tax period
(or portion thereof) ending on or before the Closing Date.

 

(b)
No extension of time to file a Company Tax Return, which Company Tax Return has not since been filed in accordance with applicable
Law, has been filed. There is no power of attorney in effect with respect or relating to any Company Tax or Company Tax Return.

 

(c)
No Company Tax Return has been filed, and no Company Tax has been determined, on a consolidated, combined, unitary or other similar
basis (including, but not limited to, a consolidated U.S. federal income tax return). There is no circumstance (including, but
not limited to, as a transferee or successor, under Code Section 6901 or Treasury Regulation Section 1.1502-6 (or similar provision
of applicable Law), as result of a Tax sharing agreement or other Contract or by operation of Law) under which the Company is
or may be liable for any Tax determined, in whole or in part, by taking into account any income, sale or asset of, or any activity
conducted by, any other Person.

 

(d)
The Company has complied in all material respects with all applicable Laws relating to the deposit, collection, withholding, payment
or remittance of any Tax (including, but not limited to, Code Section 3402 or similar provision of applicable Law).

 

(e)
There is no Encumbrance for any Tax upon any asset or property of the Company, except for any statutory lien for any Tax not yet
due.

 

(f)
No audit, action, assessment, examination, hearing, inquiry or investigation is pending or, to the Knowledge of the Company, threatened
with regard to the Company, any Company Tax or any Company Tax Return.

 

(g)
The statute of limitations for any audit, action, assessment, examination, hearing, inquiry or investigation relating to 

 

(h)
any Company Tax or any Company Tax Return has not been modified, extended or waived. 

 

(i)
Any material assessment, deficiency, adjustment or other similar item relating to any Company Tax or Company Tax Return has been
reported to all Governmental Entities in accordance with applicable Law.

 

(j)
No jurisdiction where no Company Tax Return has been filed or no Company Tax has been paid has made or threatened in writing to
make a claim for the payment of any Company Tax or the filing of any Company Tax Return. 

 

    	 	9	 

    	 

    

 

(k)
The Company is not a party to any agreement with any Governmental Entity (including, but not limited to, any closing agreement
within the meaning of Code Section 7121 or any analogous provision of applicable Law).

 

(l)
The Company is not a party to any Contract that results or could reasonably be expected to result in any amount that is not deductible
under Code Section 280G or Code Section 404, or any similar provision of applicable Law.

 

(m)
The Company does not have any “tax-exempt bond-financed property” or “tax-exempt use property,” within
the meaning of Code Section 168(h) or any similar provision of applicable Law.

 

(n)
No asset of the Company is required to be treated as being owned by any other Person pursuant to any provision of applicable Law
(including, but not limited to, the “safe harbor” leasing provisions of Code Section 168(f)(8), as in effect prior
to the repeal of those “safe harbor” leasing provisions).

 

(o)
The Company is not and will not be required to include any item of income in, or exclude any item of deduction from, U.S. federal
taxable income for any Tax period (or portion thereof) ending after the Closing Date, as a result of a change in method of accounting,
any installment sale or open transaction, any prepaid amount, refund or credit. 

 

(p)
The Company is not and has not been a beneficiary or otherwise participated in any reportable transaction within the meaning of
Treasury Regulation Section 1.6011-4(b)(1).

 

(q)
The Company has not distributed securities of another Person and has not had its securities distributed by another Person, in
a transaction that was purported or intended to be governed in whole or in part by Code Section 355 or Code Section 361.

 

(r)
No election under Code Section 338 or any similar provision of applicable Law has been made or required to be made by or with
respect to the Company.

 

Section
2.14 Title to Properties; Sufficiency of Assets.

 

(a)
Except as set forth on Section 2.14(a) of the Company Disclosure Schedule, the Company has good, valid and marketable title
to, or a valid leasehold or contractual interest in, all of the assets and properties (real and personal) which it owns or leases,
and such assets and properties are owned or leased by it free and clear of all Encumbrances. Section 2.14(a) of the Company
Disclosure Schedule contains a complete and correct list of all real property leased by the Company. The Company does not own
and has never owned any real property. True, correct and complete copies of all lease agreements, including all amendments and
modifications thereto, for all leased real property (the “Leases”) have been made available to Holdings. All
rents due under the Leases have been paid. The Company enjoys undisturbed possession of its leased real properties and is in compliance
in all material respects with the terms of the Leases, and all Leases are in full force and effect. Each Lease constitutes the
valid, legally binding and enforceable obligation of the Company and, to the Knowledge of the Company, each of the other parties
thereto, except as may be limited by applicable Bankruptcy and Equity Principles. No party to any Lease has given written notice
to the Company or made a claim in writing against the Company in respect of any breach or default thereunder.

 

    	 	10	 

    	 

    

 

(b)
All tangible personal property owned or leased by the Company is in good operating condition and repair, ordinary wear and tear
excepted and subject to routine maintenance, and is suitable and adequate for the uses for which it is being used. Except as set
forth on Section 2.14(b) of the Company Disclosure Schedule, the Company’s assets and properties (real, personal
and intangible) include all material tangible and intangible assets, properties and rights necessary to conduct its businesses
following the Closing Date in substantially the same manner as is currently conducted.

 

Section
2.15 Intellectual Property.

 

(a)
All Intellectual Property owned or used by the Company in the conduct of its business as currently conducted is referred to as
the “Company Intellectual Property.” Section 2.15(a) of the Company Disclosure Schedule identifies all
of the following Company Intellectual Property: (i) Patents and applications therefor, the number, issue date, title and priority
information for each country in which any such Patent has been issued, or the application number, date of filing, title and priority
information for each country in which any such Patent application is pending; (ii) registered and unregistered Trademarks (excluding
Internet domain names) and applications for registration of Trademarks, the registration or application number related thereto
(and, if applicable, the class of goods or the description of the goods or services covered thereby), the countries of filing
and the expiration date of each registration in each country in which a registration was issued; (iii) registered and unregistered
Copyrights and applications for registration of Copyrights, the registration number and registration date, or the application
number and application date, related thereto, and the countries of filing; and (iv) registered Internet domain names. All of the
Company Intellectual Property, the registrations and applications for registration of which are set forth on Section 2.15(a)
of the Company Disclosure Schedule, is valid and in full force and effect. To the Knowledge of the Company, all of the other
rights within the Company Intellectual Property are valid and subsisting. All filings for the Company Intellectual Property are
in good standing. 

 

(b)
The Company owns and has good and valid title to the Company Intellectual Property, free and clear of all Encumbrances. The Company
Intellectual Property constitutes all of the Intellectual Property necessary for the Company to conduct its business as such business
is currently being conducted. 

 

(c)
Except as set forth on Section 2.15(c) of the Company Disclosure Schedule, the Company does not license any Intellectual
Property (other than (i) widely available, commercial off-the-shelf third-party Software licensed to the Company on a non-exclusive
basis or (ii) any open source Software, in the case of clauses (i) and (ii), as to which the Company is in compliance with the
terms of the applicable license agreements and has made all payments required to be made thereunder) to or from any third party.

 

    	 	11	 

    	 

    

 

(d)
To the Knowledge of the Company, there is no unauthorized use, disclosure, infringement or misappropriation of any Company Intellectual
Property by any third party, including any current or former employee of the Company. 

 

(e)
The Company has not received any notice or other communication (in writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, and, to the Knowledge of the Company, the Company is not infringing, misappropriating
or making unlawful use of, any Intellectual Property owned by any third party. There are no actions, suits or proceedings that
are pending or, to the Knowledge of the Company, threatened against the Company with respect to any infringement, misappropriation
or unlawful use of any Intellectual Property owned or used by any third party. 

 

Section
2.16 Insurance. The Company maintains policies of fire and casualty, liability and other forms of insurance, in such amounts,
with such deductibles, covering against such risks and losses and with such reputable insurers, as are customary for businesses
of a type and size, and with assets and properties, comparable to those of the businesses of the Company. Set forth on Section
2.16 of the Company Disclosure Schedule is a listing of each insurance policy maintained by the Company, setting forth the
issuers, amounts, deductibles and coverages for each, and a description of all material claims under any insurance policy maintained
by the Company at any time during the past three years. All such policies are in full force and effect and all premiums due and
payable thereon have been paid in full, and no notice of cancellation or termination has been received with respect to any such
policy which has not been replaced on substantially similar terms prior to the date of such cancellation. There are no pending
claims under any of such policies.

 

Section
2.17 Environmental Matters.

 

(a)
The operations of the Company are in compliance with, in all material respects, and have complied with, in all material respects,
all applicable Environmental Laws. 

 

(b)
The Company does not have any material liability under any Environmental Law nor is it responsible for any material liability
of any other Person under any Environmental Law, whether by Contract, by operation of Law or otherwise

 

(c)
The Company has not received any written information request, notice or other communication from a Governmental Entity, and there
are no actions, suits, proceedings or investigations pending or, to the Knowledge of the Company, threatened against the Company,
relating to any violation, or alleged violation of, or liability under, any Environmental Law or relating to any Hazardous Materials.

 

(d)
For purposes of this Section 2.17, the following terms shall have the following meanings:

 

(i)
“Environmental Laws” means all U.S. federal, state and local Laws of any Governmental Entity relating to (A)
the generation, treatment, storage, disposal, use, handling, manufacturing, transportation or shipment of Hazardous Materials,
or (B) the environment or to emissions, discharges, releases or threatened releases of Hazardous Materials into the environment.

 

    	 	12	 

    	 

    

 

(ii)
“Hazardous Materials” means (A) petroleum and petroleum products, radioactive materials and friable asbestos;
and (B) chemicals and other materials and substances which are now defined as or included in the definition of “hazardous
substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,”
“restricted hazardous wastes,” “toxic substances,” or “toxic pollutants” under any Environmental
Law.

 

Section
2.18 Employee and Labor Matters. The Company is not a party to any collective bargaining or other labor union Contract
applicable to Persons employed by it, no collective bargaining agreement is being negotiated by the Company, and, to the Knowledge
of the Company, there are no activities or proceedings of any labor union to organize any of the employees of the Company. Except
as set forth in Section 2.18 of the Company Disclosure Schedule, (a) the Company is in compliance in all material respects
with all applicable Laws relating to employment and employment practices, wages, hours, occupational safety, health standards,
severance payments, equal opportunity, payment of social security, national insurance and other Taxes, and terms and conditions
of employment, (b) there are no charges with respect to or relating to the Company pending, or to the Knowledge of the Company,
threatened by or before any Governmental Entity responsible for the prevention of unlawful or discriminatory employment practices
or unfair labor practices, and (c) there is no strike, work stoppage, work slowdown, lockout, picketing, concerted refusal to
work overtime, or other similar labor activity pending or, to the Knowledge of the Company, threatened against or involving the
Company currently or within the last three years. All sums due for employee, consultant and independent contractor compensation
and benefits, including pension and severance benefits, and all vacation time owing to any employees of the Company have been
duly and adequately accrued on the accounting records of the Company. All individuals characterized and treated by the Company
as consultants or independent contractors are properly treated as independent contractors under all applicable Laws. All employees
of the Company classified as exempt under the Fair Labor Standards Act or applicable state and local wage and hour Laws are properly
classified.

 

Section
2.19 Employee Plans.

 

(a)
Section 2.19 of the Company Disclosure Schedule sets forth a true, correct and complete list of:

 

(i)
all “employee benefit plans,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) with respect to which the Company has any obligation or liability, contingent or otherwise
(the “Benefit Plans”);

 

(ii)
all current directors, officers and employees of the Company; and

 

(iii)
all employment, consulting, termination, profit sharing, severance, change of control, individual compensation and indemnification
agreements, and all bonus and other incentive compensation, deferred compensation, salary continuation, disability, severance,
equity award, unit option, unit purchase, educational assistance, legal assistance, club membership, employee discount, employee
loan, credit union and vacation agreements, policies and arrangements under which the Company has any obligation or liability
(contingent or otherwise) in respect of any current or former officer, director, employee, consultant or contractor of the Company
(the “Employee Arrangements”).

 

    	 	13	 

    	 

    

 

(b)
In respect of each Benefit Plan and Employee Arrangement, a complete and correct copy of each of the following documents (if applicable)
has been made available to Holdings: (i) the most recent plan and related trust documents, and all amendments thereto; (ii) the
most recent summary plan description, and all related summaries of modifications thereto; (iii) the most recent Form 5500 (including
schedules and attachments); (iv) the most recent Internal Revenue Service (“IRS”) determination, opinion or
notification letter; and (v) each written Employee Arrangement, and all amendments thereto.

 

(c)
None of the Benefit Plans or Employee Arrangements is subject to Title IV of ERISA, constitutes a defined benefit retirement plan
or is a multiemployer plan described in Section 3(37) of ERISA, and the Company does not have any obligation or liability (contingent
or otherwise) in respect of any such plans. 

 

(d)
The Benefit Plans and their related trusts intended to qualify under Sections 401 and 501(a) of the Code, respectively, have either
received a favorable determination, opinion or notification letter from the IRS with respect to each such Benefit Plan as to its
qualified status under the Code, or has remaining a period of time under applicable U.S. Treasury Regulations or IRS pronouncements
in which to apply for such a letter and make any amendments necessary to obtain a favorable determination as to the qualified
status of each such Benefit Plan. 

 

(e)
All contributions and other payments required to have been made by the Company to or under any Benefit Plan or Employee Arrangement
by applicable Law or the terms of such Benefit Plan or Employee Arrangement (or any agreement relating thereto) have been timely
and properly made.

 

(f)
The Benefit Plans and Employee Arrangements have been maintained and administered in all material respects in accordance with
their terms and applicable Laws. 

 

(g)
There are no pending or, to the Knowledge of the Company, threatened actions, claims, suits or proceedings against or relating
to any Benefit Plan or Employee Arrangement (other than routine benefit claims by persons entitled to benefits thereunder) and,
to the Knowledge of the Company, there are no facts or circumstances which could reasonably be expected to form the basis for
any of the foregoing.

 

(h)
The Company does not have any obligation or liability (contingent or otherwise) to provide post-retirement life insurance or health
benefits coverage for current or former officers, directors, employees, consultants or contractors except (i) as may be required
under Part 6 of Title I of ERISA, (ii) a medical expense reimbursement account plan pursuant to Section 125 of the Code, or (iii)
through the last day of the calendar month in which the participant terminates employment.

 

    	 	14	 

    	 

    

 

(i)
Neither the execution and delivery of any of the Transaction Documents nor the consummation of any of the Contemplated Transactions
will (i) result in any payment becoming due to any director, officer, employee, consultant or contractor (current, former or retired)
of the Company, (ii) increase any benefits under any Benefit Plan or Employee Arrangement or (iii) result in the acceleration
of the time of payment of, vesting of, or other rights in respect of any such benefits (except as which may be required by the
partial or full termination of any Benefit Plan intended to be qualified under Section 401 of the Code). No Benefit Plan or Employee
Arrangement in effect immediately prior to the Closing Date would result, individually or in the aggregate (including as a result
of this Agreement, any of the Transaction Documents or any of the Contemplated Transactions), in the payment of any “excess
parachute payment” within the meaning of Section 280G of the Code.

 

(j)
Each Benefit Plan or Employee Arrangement that is a non-qualified deferred compensation plan or arrangement subject to Section
409A of the Code has been operated and administered in good faith compliance with Section 409A of the Code from the period beginning
January 1, 2007, or the date such Benefit Plan or Employee Arrangement was established, whichever date is later, through the date
hereof.

 

(k)
The Company has made available to Holdings a true, complete and correct list of the following (if applicable) for each current
employee, consultant and contractor of the Company: base salary; any bonus obligations; immigration status; hire date; time-off
balance; and pay rate.

 

Section
2.20 Brokers and Finders. None of the Company, the Unitholder or any of their respective Representatives has employed any
investment banker, broker or finder or incurred any liability for any investment banking fees, brokerage fees, commissions or
finders’ fees in connection with any of the Contemplated Transactions for which Holdings would be liable.

 

Section
2.21 Absence of Questionable Payments. None of the Company or the Unitholder or, to the Knowledge of the Company, any director,
officer, employee, consultant or other Person acting on behalf of the Company has (a) used any Company funds for unlawful contributions,
payments, gifts or expenditures, or (b) made any unlawful expenditures of Company funds relating to political activity to government
officials or others. None of the Company or the Unitholder or, to the Knowledge of the Company, any director, officer, employee,
consultant or other Person acting on behalf of the Company has offered, paid or agreed to pay to any Person (including any governmental
official), or solicited, received or agreed to receive from any such Person, directly or indirectly, any unlawful contributions,
payments, gifts, expenditures, money or anything of value for the purpose or with the intent of (a) obtaining or maintaining business
for the Company, (b) facilitating the purchase or sale of any product or service, or (c) avoiding the imposition of any fine or
penalty.

 

Section
2.22 Bank Accounts; Powers of Attorney. Section 2.22 of the Company Disclosure Schedule sets forth a true, complete
and correct list showing: (a) all banks in which the Company maintains a bank account or safe deposit box (collectively, “Bank
Accounts”), together with, as to each such Bank Account, the type of account, account number and the names of all signatories
thereof and, with respect to each such safe deposit box, if any, the number thereof and the names of all Persons having access
thereto; and (b) the names of all Persons holding powers of attorney from the Company, true, complete and correct copies of which
have been made available to Holdings.

 

    	 	15	 

    	 

    

 

Section
2.23 Customers and Suppliers. There are no disputes between the Company, on the one hand, and any of the Major Customers
and Suppliers, on the other hand, that relate to the operation of the business of the Company. Since December 31, 2016, none of
the Major Customers and Suppliers has terminated, cancelled, not renewed or materially reduced, or notified the Company in writing
of its intention to terminate, cancel, not renew or materially reduce, its relationship with the Company.

 

Section
2.24 Accounts Receivable. Except as set forth in Section 2.24 of the Company Disclosure Schedule, all accounts receivable
of the Company have arisen from bona fide transactions in the ordinary course of business, are valid and enforceable, are collectible
within 90 days in amounts not less than the amounts thereof carried on the books of the Company (except to the extent of the allowance
for doubtful accounts shown on the Company Financials), and are not subject to set-off or counterclaim. Any allowances that the
Company has established for doubtful accounts have been established on a basis consistent with past practice and do not deviate
in any material respect from GAAP.

 

Section
2.25 Certain Transactions. Except as set forth on Section 2.25 of the Company Disclosure Schedule, none of the Unitholders,
officers, directors or employees of the Company, or any of their respective Affiliates or any member of any such Person’s
immediate family (for this purpose, “immediate family” means such Person’s spouse, parents, children and siblings),
is presently a party to any Contract or transaction with the Company, including any Contract (i) providing for the furnishing
of services by, (ii) providing for the rental of real or personal property from, or (iii) otherwise requiring payments to (other
than for services in the foregoing capacities) any such Person or any corporation, partnership, trust or other entity in which
any such Person has a substantial interest as a Unitholders, officer, director, trustee or partner.

 

Section
2.26 No Other Representations or Warranties. Except for the representations and warranties contained in this Article II,
none of the Company, the Unitholder or any other Person makes any representations or warranties, and the Company and the Unitholder
hereby disclaim any other representations or warranties, whether made by either of them or any officer, director, employee, agent
or other Representative of the Company, the Unitholder or any other Person, with respect to this Agreement or any of the Contemplated
Transactions. For the avoidance of doubt, the foregoing is not intended to limit the ability of a Holdings Indemnified Party to
make a claim arising out, based upon or related to fraud and shall not be given any effect in the case of fraud.

 

Section
2.27 Disclosure. All factual information (taken as a whole) furnished by or on behalf of the Company or the Unitholder
in writing (including electronically) to Holdings or any of its Representatives for purposes of or in connection with any of the
Transactions Documents or any of the Contemplated Transactions is true and accurate in all material respects and not incomplete
by omitting to state any material fact necessary to make such information not misleading in light of the circumstances under which
such information was provided.

 

    	 	16	 

    	 

    

 

ARTICLE
III

REPRESENTATIONS AND WARRANTIES OF HOLDINGS

 

Except
as set forth in Holdings’ disclosure schedule provided herewith (the “Holdings Disclosure Schedule”),
Holdings hereby represents and warrants to the Company and the Unitholders, as of the date hereof and as of the Closing Date,
except to the extent certain representations and warranties are limited to a certain date set forth in the applicable Section,
as follows:

 

Section
3.1 Corporate Organization, Etc. Holdings is duly incorporated, validly existing and in good standing under the Laws of
the State of Delaware and has all requisite corporate power and authority to conduct its business as it is now being conducted
and to own, lease and operate its properties and assets.

 

Section
3.2 Authority Relative to this Agreement. Holdings has all requisite corporate power and authority to execute and deliver
the Transaction Documents to which it is a party, to perform its obligations thereunder and to consummate the Contemplated Transactions.
The execution and delivery of the Transaction Documents to which it is a party, the performance of its obligations thereunder
and the consummation of the Contemplated Transactions have been duly and validly authorized by all required corporate action on
the part of Holdings, and no other corporate or other proceedings on the part of Holdings are necessary to authorize the Transaction
Documents to which it is a party or to consummate the Contemplated Transactions. This Agreement has been, and each of the other
Transaction Documents to which it is a party will be, duly and validly executed and delivered by Holdings and, assuming this Agreement
has been, and each of the other Transaction Documents to which it is a party will be, duly authorized, executed and delivered
by the other parties thereto, this Agreement constitutes, and each of the other Transaction Documents to which it is a party will
constitute, a legal, valid and binding obligation of Holdings, enforceable against it in accordance with their respective terms,
except as limited by applicable Bankruptcy and Equity Principles.

 

Section
3.3 Capitalization of Holdings. The authorized capital stock of Holdings consists of 30,000,000 shares of the Holdings
Shares and 5,000,000 shares of preferred stock, par value $0.001 per share. There are approximately 7,000,000 shares of the Holding
Shares, and no shares of preferred stock, issued and outstanding as of the date of this Agreement. Holdings has no outstanding
stock options, warrants, rights or commitments to issue Holdings Shares or other equity securities and no outstanding securities
convertible into or exchangeable for Holdings Shares or other equity securities. All outstanding shares of the Holdings Shares
are validly issued and outstanding, fully paid and nonassessable.

 

    	 	17	 

    	 

    

 

Section
3.4 Consents and Approvals; No Violations. None of the execution or delivery of any of the Transaction Documents by Holdings,
the performance by Holdings of any of its obligations thereunder, or the consummation of any of the Contemplated Transactions
by Holdings will (a) violate any provision of the organizational or governing documents of Holdings, (b) require it to obtain
or make any consent, waiver, approval, exemption, declaration, license, authorization or permit of, or registration or filing
with or notification to, any Governmental Entity, except for such consents, waivers, approvals, exemptions, declarations, licenses,
authorizations, permits, registrations, filings and notifications which are listed in Section 3.3 of the Holdings Disclosure
Schedule (the “Holdings Consents”), (c) require a consent under, result in a material violation or material
breach of, constitute (with or without notice or lapse of time or both) a material default (or give rise to any right of termination,
cancellation, amendment or acceleration or any obligation) under, or result in the creation of any Encumbrance on any of the properties
or assets of Holdings pursuant to, any of the terms, conditions or provisions of any material Contract to which Holdings is a
party or by which Holdings or any of its properties or assets is bound, or (d) violate any Law of any Governmental Entity applicable
to Holdings or by which Holdings or any of its properties or assets is bound.

 

Section
3.5 Litigation. There is no action, suit or proceeding pending or, to the Knowledge of Holdings, threatened against Holdings
by or before any Governmental Entity that questions the validity of any of the Transaction Documents or any action to be taken
in connection with the consummation of any of the Contemplated Transactions or would otherwise prevent or materially delay the
consummation of any of the Contemplated Transactions.

 

Section
3.6 Brokers and Finders. Holdings has not employed any investment banker, broker or finder or incurred any liability for
any investment banking fees, brokerage fees, commissions or finders’ fees in connection with any of the Contemplated Transactions
for which the Company or the Unitholder would be liable.

 

Section
3.7 Sufficient Funds. Holdings will have sufficient cash on hand to pay the Cash Consideration and consummate the Contemplated
Transactions at the Closing.

 

Section
3.8 Validity of Shares. The approximately 107,500 shares of Holdings Shares to be issued at the Closing pursuant to Section
1.1(b) hereof, when issued and delivered in accordance with the terms hereof, shall be duly and validly issued, fully paid and
nonassessable. Based in part on the representations and warranties of the Unitholder in this Agreement and assuming the accuracy
thereof, the issuance of the Holdings Shares at the Closing pursuant to Section 1.1(b) will be exempt from the registration and
prospectus delivery requirements of the Securities Act and from the qualification or registration requirements of any applicable
state blue sky or securities laws.

 

Section
3.9 No General Solicitation. In issuing the Holdings Shares hereunder, neither Holdings nor anyone acting on its behalf
has offered to sell the Holdings Shares by any form of general solicitation or advertising.

 

Section
3.10 No Other Representations or Warranties. Except for the representations and warranties contained in this Article III,
neither Holdings nor any other Person makes any representations or warranties, and Holdings hereby disclaims any other representations
or warranties, whether made by it or any officer, director, employee, agent or other Representative of Holdings or any other Person,
with respect to this Agreement or any of the Contemplated Transactions. For the avoidance of doubt, the foregoing is not intended
to limit the ability of a Unitholder Indemnified Party to make a claim arising out, based upon or related to fraud and shall not
be given any effect in the case of fraud.

 

    	 	18	 

    	 

    

 

ARTICLE
IV

COVENANTS

 

Section
4.1 Conduct of the Business of the Company Pending the Closing. Except as otherwise expressly provided by this
Agreement or with the prior written consent of Holdings, during the period between the date of this Agreement and the
Closing, the Company will, and the Unitholder will cause the Company to, conduct its business and operations in the ordinary
and usual course of business, in substantially the same manner as heretofore conducted, and use commercially reasonable
efforts consistent therewith to preserve intact its properties, assets and business organization, to keep available the
services of its officers, employees, consultants and contractors and to maintain its business relationships with customers,
suppliers, distributors and others having commercially beneficial business relationships with it. Without limiting the
generality of the foregoing, the Company will not, and the Unitholder will cause the Company not to, prior to the Closing,
without the prior written consent of Holdings:

 

(a)
issue, sell or pledge, or authorize or propose the issuance, sale or pledge of, any (i) additional Units or other equity
interests, or securities convertible into or exchangeable for any such Units or interests, or any rights, warrants or options
to acquire any such Units or interests or other convertible or exchangeable securities, or (ii) other securities in respect
of, in lieu of, or in substitution for, any Units or other equity interests outstanding on the date hereof;

 

(b)
split, combine or reclassify any Units or other equity interests;

 

(c)
declare or pay any dividend or distribution to any Person;

 

(d)
redeem, purchase or otherwise acquire any outstanding Units or other equity interests;

 

(e)
propose or adopt any amendment to any of its organizational or governing documents;

 

(f)
(i) incur or assume any long-term or short-term debt or issue any debt securities; (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person;
(iii) make any loans, advances or capital contributions to, or investments in, any other Person; (iv) pledge or otherwise
encumber any Units or other equity interests; (v) Transfer or permit to be Transferred any Units or other equity interests of
the Company; or (vi) mortgage or pledge any of its assets, tangible or intangible, or create or suffer to exist any
Encumbrance thereupon;

 

    	 	19	 

    	 

    

 

(g)
(i) increase in any manner the rate or terms of compensation or benefits of any of its directors, officers, employees,
consultants or contractors, except for increases to employees (other than officers), consultants or contractors made in the
ordinary course of business consistent with past practice, (ii) pay or agree to pay any pension, retirement allowance or
other benefit not required or permitted by any existing Benefit Plan or Employee Arrangement to any director, officer,
employee, consultant or contractor, whether past or present, or (iii) adopt, enter into, terminate or amend any Benefit Plan
or Employee Arrangement;

 

(h)
acquire, sell, lease or dispose of any assets outside the ordinary and usual course of business consistent with past
practice;

 

(i)
acquire (by merger, consolidation or acquisition of securities or assets) any corporation, partnership or other business
organization or entity or division thereof or any equity interest therein;

 

(j)
settle or compromise any pending or threatened suit, action, proceeding or, other than in the ordinary course of business
consistent with past practice, claim;

 

(k)
fail to comply in any material respect with any Law or Permit applicable to it or any of its assets or allow any Permit to
lapse;

 

(l)
sell, dispose of, permit to lapse or license any rights to any material Intellectual Property;

 

(m)
change any of its banking or safe deposit arrangements;

 

(n)
fail to maintain its books, accounts and records in the ordinary course on a basis consistent with prior years or make any
change in the accounting principles, methods or practices used by it;

 

(o)
amend, modify, waive any material provision of or terminate any Material Contract or enter into any Contract which, if
entered into prior to the date hereof, would have been a Material Contract;

 

(p)
make any capital expenditures in excess of $5,000 in the aggregate;

 

(q)
satisfy, discharge, waive or settle any liabilities, other than in the ordinary course of business consistent with past
practice;

 

(r)
(i) fail to timely file any Tax Return that is due, (ii) file any amended Tax Return or claim for refund, (iii) consent to
any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment, (iv) make any Tax
election, or (v) settle or compromise any Tax liability; or

 

(s)
take, propose to take, or agree in writing or otherwise to take any of the actions described in this Section 4.1 or any
action that would make any of the representations or warranties contained in this Agreement untrue, incomplete or incorrect
in any material respect.

 

    	 	20	 

    	 

    

 

Section
4.2 Access to Information. From the date of this Agreement to the Closing, the Company will (a) give Holdings and its
authorized Representatives reasonable access to all personnel, books, records, Contracts, customers, offices and other facilities
and properties of the Company, (b) permit Holdings and its authorized Representatives to make such inspections thereof as Holdings
may reasonably request and (c) cause the officers and employees of the Company to furnish Holdings with such financial and operating
data and other information with respect to the business and operations of the Company as Holdings may from time to time reasonably
request; provided, however, that all access under this Section 4.2 shall be conducted at a reasonable time, during
normal business hours, on reasonable advance notice and in such a manner as not to interfere unreasonably with the operation of
the business of the Company. Holdings shall be permitted to contact customers of the Company regarding such customers’ business
relationships with the Company, and the Company will cooperate with Holdings in facilitating such contacts with its customers.
No investigation under this Section 4.2 shall affect or be deemed to modify any of the representations or warranties made by the
Company or the Unitholder in this Agreement.

 

Section
4.3 Disclosure Supplements. From time to time prior to the Closing, the Company will supplement or amend the Company
Disclosure Schedule with respect to any matter hereafter arising or of which the Company or the Unitholder becomes aware after
the date hereof which, if existing, occurring or known at or prior to the date of this Agreement, would have been required to
be set forth or described in the Company Disclosure Schedule or which is necessary to complete or correct any information in the
Company Disclosure Schedule or in any representation or warranty which has been rendered inaccurate thereby. No such supplement
or amendment shall be given effect for purposes of determining the satisfaction of the conditions set forth in Article VI hereof.

 

Section
4.4 Consents and Approvals. Each of the parties hereto shall use its commercially reasonable efforts to obtain as
promptly as practicable all consents, waivers, approvals, exemptions, licenses and authorizations required to be obtained
from any Person or Governmental Entity in connection with the consummation of any of the Contemplated Transactions; provided, however,
that no party is required to make any payment to any Person or Governmental Entity to obtain any consents, waivers,
approvals, exemptions, licenses or authorizations.

 

Section
4.5 Filings. Promptly after the execution of this Agreement, each of the parties hereto shall prepare and make or
cause to be made any required filings, registrations, submissions and notifications under the Laws of any jurisdiction to the
extent necessary to consummate any of the Contemplated Transactions.

 

Section
4.6 Further Assurances.

 

(a) Upon
the terms and subject to the conditions herein provided, each of the parties hereto agrees to use its commercially reasonable
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 parties
hereto in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable,
the Contemplated Transactions. 

 

    	 	21	 

    	 

    

 

(b) The
Company and the Unitholder will use their commercially reasonable efforts to have employees of the Company identified by Holdings,
if any, execute and deliver at will employment letters with the Company on terms and conditions acceptable to Holdings.

 

ARTICLE
V

ADDITIONAL AGREEMENTS

 

Section
5.1 Acquisition Proposals. Neither the Company nor the Unitholder will, nor will either of them authorize or permit
any officer, director, employee, consultant or contractor or any investment banker, attorney, accountant or other agent or Representative
of the Company or the Unitholder acting on either of their behalf to, directly or indirectly, (a) solicit, initiate or intentionally
encourage the submission of any Acquisition Proposal or (b) participate in any discussions or negotiations regarding, or furnish
to any Person any information in respect of, or take any other action to facilitate, any Acquisition Proposal or any inquiries
or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Acquisition Proposal. Immediately
after the execution and delivery of this Agreement, each of the Company and the Unitholder will, and will cause their respective
officers, directors, employees, investment bankers, attorneys, accountants and other agents and Representatives to, cease and
terminate any existing activities, discussions or negotiations with any parties conducted heretofore in respect of any possible
Acquisition Proposal and will promptly inform Holdings of the receipt of any subsequent Acquisition Proposal. Each of the Company
and the Unitholder will take all necessary steps to promptly inform the individuals or entities referred to in the first sentence
of this Section 5.1 of the obligations undertaken in this Section 5.1. “Acquisition Proposal” means an inquiry,
offer or proposal regarding any of the following (other than the Contemplated Transactions) involving the Company: (i) any merger,
consolidation, share exchange, recapitalization, business combination or other similar transaction; (ii) any sale of Units or
other equity interests or securities, (iii) any sale, lease, exchange, mortgage, pledge, Transfer or other disposition of all
or any material portion of its assets in a single transaction or series of transactions; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to engage in any of the foregoing.

 

Section
5.2 Public Announcements. Each of Holdings, on the one hand, and the Company and the Unitholders, on the other hand,
will consult with one another before issuing any press release or otherwise making any public statements in respect of any of
the Contemplated Transactions, including the Unit Purchase, and will not issue any such press release or make any such public
statement without the prior written consent of the other party; provided, however, that any party may at any time
make disclosures regarding the Contemplated Transactions if it is advised by legal counsel that such disclosure is required under
applicable Law or by a Governmental Entity, in which case the disclosing party will consult with the other parties hereto prior
to such disclosure.

 

    	 	22	 

    	 

    

 

Section
5.3 Indemnification.

 

(a) Indemnification
by the Unitholders. Subject to the other terms of this Section 5.3, the Unitholder will defend, indemnify and hold harmless
Holdings, its Affiliates and each of Holdings’ and its Affiliates’ respective Representatives (collectively, the “Holdings
Indemnified Parties”), from and against and in respect of any and all losses, liabilities, obligations, claims, actions,
damages, judgments, penalties, fines, settlements and expenses, including reasonable attorneys’ fees (collectively, “Losses”),
incurred by any of the Holdings Indemnified Parties arising out of, based upon or related to (i) any inaccuracy or breach of any
of the representations or warranties made by the Company and/or the Unitholder in this Agreement, (ii) any breach of or failure
to comply with any covenant or agreement made by the Company and/or the Unitholder in this Agreement, or (iii) any Company Taxes
for any Tax period (or portion thereof) ending on or prior to the Closing Date, excluding 50% of any Transfer Taxes incurred in
connection with this Agreement or any of the Contemplated Transactions. “Transfer Taxes” shall mean any transfer,
documentary, sales, use, stamp, registration and other substantially similar Taxes and fees.

 

(b) Indemnification
by Holdings. Subject to the other terms of this Section 5.3, Holdings will defend, indemnify and hold harmless the Unitholders,
their respective Affiliates and each of the Unitholders’ and their respective Affiliates’ respective Representatives
(collectively, the “Unitholder Indemnified Parties”) from and against and in respect of any and all Losses
incurred by any of the Unitholder Indemnified Parties arising out of, based upon or related to (i) any inaccuracy or breach of
any of the representations or warranties made by Holdings in this Agreement, or (ii) any breach of or failure to comply with any
covenant or agreement made by Holdings in this Agreement. 

 

(c) Indemnification
Procedure.

 

(i) The
Person seeking indemnification under this Section 5.3 (the “Indemnified Party”) shall give to the party(ies)
from whom indemnification is sought (the “Indemnifying Party”) prompt written notice of any third-party claim
which may give rise to any indemnity obligation under this Section 5.3, and the Indemnifying Party will have the right to assume
the defense of any such claim through counsel of its own choosing, by so notifying the Indemnified Party within 10 days of receipt
of the Indemnified Party’s written notice; provided, however, that such counsel shall be reasonably satisfactory
to the Indemnified Party. Failure of the Indemnified Party to give prompt notice shall not affect the Indemnifying Party’s
indemnification obligations hereunder except to the extent the Indemnifying Party is materially prejudiced by such failure. If
the Indemnified Party desires to participate in any such defense assumed by the Indemnifying Party, it may do so at its sole cost
and expense; provided, however, that the Indemnified Party will be entitled to participate in any such defense with
separate counsel at the expense of the Indemnifying Party if, in the reasonable judgment of counsel to the Indemnified Party,
a conflict or potential conflict exists, or there are separate or additional defenses available to the Indemnified Party, that
would make such separate representation advisable. If the Indemnifying Party declines to assume any such defense or fails to diligently
pursue any such defense, then the Indemnifying Party will be liable for all reasonable costs and expenses incurred by the Indemnified
Party in connection with investigating, defending, settling and/or otherwise dealing with such claim, including reasonable fees
and disbursements of counsel. The parties hereto agree to cooperate with each other in connection with the defense of any such
claim. The Indemnifying Party will not, without the prior written consent of the Indemnified Party, settle, compromise, or consent
to the entry of any judgment with respect to any such claim, unless such settlement, compromise or judgment (A) does not result
in the imposition of a consent order, injunction or decree that would restrict the future activity or conduct of the Indemnified
Party or any Affiliate thereof, (B) does not involve any remedies other than monetary damages, and (C) includes an unconditional
release of the Indemnified Party and its Affiliates for all liability arising out of such claim and any related claim. The Indemnified
Party will not, without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld, delayed
or conditioned, settle, compromise, or consent to the entry of any judgment with respect to any such claim.

 

    	 	23	 

    	 

    

 

(ii) If
an indemnification claim by any Indemnified Party is not disputed by the Indemnifying Party within 20 days after the Indemnifying
Party’s having received written notice thereof, or has been resolved by a Law of a Governmental Entity, by a settlement
of the indemnification claim in accordance with Section 5.3(c)(i), or by agreement of the Indemnified Party and the Indemnifying
Party (any of the foregoing, a “Resolution”), then (A) in the case of indemnification under Section 5.3(b),
Holdings will pay to the Unitholder Indemnified Party promptly following such Resolution an amount equal to the Losses of such
Unitholder Indemnified Party as set forth in such Resolution, or (B) in the case of indemnification under Section 5.3(a), Holdings
will offset against the Stock Consideration (by the forfeiture of Holdings Shares proportionally by the Unitholders) an amount
equal to the Losses of the Holdings Indemnified Party as set forth in such Resolution; provided, that if the amount of
such Losses exceeds the amounts to be due (and not previously offset as provided herein), then any such excess shall be the obligation
of the Unitholder and shall be paid to such Holdings Indemnified Party promptly following such Resolution.

 

(d) Limitations.

 

(i) The
foregoing indemnification obligations under Section 5.3(a)(i) and 5.3(b)(i) will survive the consummation of the Unit Purchase
until the second anniversary of the Closing Date; provided, however, that the right to indemnification arising out
of, based upon or related to any inaccuracy or breach of any of the representations or warranties contained in Sections 2.1, 2.13,
2.19, 2.2, 2.3, 2.4, 2.5, 2.20, 3.1, 3.2, 3.3, 3.5 and the first sentence of Section 2.14(a) will survive until 60 days after
the expiration of the applicable statute of limitations, including any extensions thereof, and provided, further,
that claims first asserted in writing within the applicable survival period will not thereafter be barred.

 

(ii) Except
for any indemnification claims arising out of, based upon or related to fraud or intentional misrepresentation, or any indemnification
claims arising out of, based upon or related to any of the Fundamental Representations (none of which are subject to the limitations
in this Section 5.3(d)(ii)), the Unitholder will have no liability to the Holdings Indemnified Parties for indemnification claims
brought under Section 5.3(a)(i) until the total amount of Losses in respect of indemnification claims under such section exceeds
$25,000 in the aggregate, and then the Holdings Indemnified Parties will be entitled to recover all such amounts, including the
original $25,000.

 

(iii) Except
for any indemnification claims arising out of, based upon or related to fraud or intentional misrepresentation, or any indemnification
claims arising out of, based upon or related to any of the Fundamental Representations (none of which will be counted towards
the Claims Cap), the maximum liability of the Unitholder for any and all Losses in respect of indemnification claims brought under
Section 5.3(a)(i) shall be limited to an amount equal to $25,000 (the “Claims Cap”).

 

    	 	24	 

    	 

    

 

(iv) Except
for any indemnification claims arising out of, based upon or related to fraud or intentional misrepresentation, or any indemnification
claims arising out of, based upon or related to any of the Fundamental Representations (none of which are subject to the limitations
in this Section 5.3(d)(iv)), Holdings will have no liability to the Unitholder Indemnified Parties for indemnification claims
brought under Section 5.3(b)(i) until the total amount of Losses in respect of indemnification claims under such section exceeds
$25,000 in the aggregate, and then the Unitholder Indemnified Parties will be entitled to recover all such amounts, including
the original $25,000.

 

(v) Except
for any indemnification claims arising out of, based upon or related to fraud or intentional misrepresentation, or any indemnification
claims arising out of, based upon or related to any of the Fundamental Representations (none of which will be counted towards
the Claims Cap), the maximum liability of Holdings for any and all Losses in respect of indemnification claims brought under Section
5.3(b)(i) shall be limited to an amount equal to the Claims Cap.

 

(vi) The
right of an Indemnified Party to indemnification hereunder will not be affected by any investigation conducted, or any knowledge
acquired (or capable or being acquired), at any time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy of, or compliance with, any of the representations, warranties, covenants or agreements
set forth in this Agreement.

 

(vii) For
purposes of this Section 5.3, the terms “material” and “Company Material Adverse Effect”, as such terms
are used in any representation or warranty contained in Article II or III, shall be disregarded and, for purposes of this Section
5.3, such representations and warranties shall be deemed to be not qualified by such terms.

 

(viii) In
calculating the amount of Losses recoverable pursuant to this Section 5.3, the amount of such Losses shall be reduced by (A) any
insurance proceeds actually received by the Indemnified Party from any unaffiliated insurance carrier offsetting the amount of
such Loss, net of any expenses incurred by the Indemnified Party in obtaining such insurance proceeds (including the payment of
a deductible with respect to the same and any premium increase directly attributable thereto), and (B) any recoveries actually
received by the Indemnified Party from other Persons pursuant to indemnification (or otherwise) with respect thereto, net of any
expenses incurred by the Indemnified Party in obtaining such payment. If any Losses for which indemnification payments have actually
been received by the Indemnifying Party hereunder are subsequently reduced by any insurance payment or other recovery actually
received from another Person, the Indemnified Party shall promptly remit the amount of such recovery to the applicable Indemnifying
Party (up to the amount of the payment by the applicable Indemnifying Party, after deducting therefrom the full amount of the
expenses incurred by such Indemnified Party (i) in procuring such recovery or (ii) in connection with such indemnification to
the extent required to be, but which have not been, paid or reimbursed).

 

    	 	25	 

    	 

    

 

(ix) Following
the Closing Date, the sole and exclusive remedy of the Holdings Indemnified Parties and the Unitholder Indemnified Parties for
any of the matters set forth in this Section 5.3 shall be indemnification in accordance with this Section 5.3, except with respect
to any claim arising out of, based upon or related to fraud or intentional misrepresentation, a breach of any of the covenants
set forth in Section 5.5 or as otherwise provided in Section 8.8. Each Indemnified Party entitled to indemnification hereunder
shall use commercially reasonable efforts to mitigate Losses for which it seeks indemnification hereunder, and the costs and expenses
incurred in connection with such mitigation efforts shall be deemed Losses for purposes of this Section 5.3.

 

(e) The
parties to this Agreement agree to treat any indemnity payment made pursuant to this Section 5.3 as an adjustment to the Total
Consideration for U.S. federal, state and local income tax purposes.

 

Section
5.4 Notification of Certain Matters. From the date of this Agreement to the Closing, each of the Company and the
Unitholder will give prompt notice to Holdings, and Holdings will give prompt notice to the Company and the Unitholders, of
(a) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause any
representation or warranty made by it or them contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Closing, (b) any failure of the Company, the Unitholder or Holdings, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by it or them hereunder, (c) any notice or
other communication received from any third party alleging that the consent of such third party is or may be required in
connection with any of the Contemplated Transactions, or (d) in the case of the Company, any facts or circumstances that
could reasonably be expected to result in a Company Material Adverse Effect; provided, however, that the delivery of
any notice pursuant to this Section 5.4 will not cure such breach or non-compliance or limit or otherwise affect the rights,
obligations or remedies available hereunder to the party receiving such notice.

 

Section
5.5 Non-Competition. As a material inducement to Holdings’ consummation of the Contemplated Transactions,
including Holdings’ acquisition of the goodwill associated with the business of the Company, the Unitholder agrees as
follows:

 

(a) The
Unitholder will not, for a period of three (3) years following the Closing Date (computed by excluding from such computation any
time during which any of the Unitholder is found by a court of competent jurisdiction to have been in violation of any provision
of this Section 5.5(a)) (the “Restricted Period”), directly or indirectly, for itself or on behalf of or in
conjunction with any other Person, engage in, invest in or otherwise participate in (whether as an owner, employee, officer, director,
manager, consultant, independent contractor, agent, partner, advisor, or in any other capacity) any business that competes with
the business of the Company (such business, the “Restricted Business”) in any Restricted Area, or at any time
following the Closing Date make any use of any Company Intellectual Property other than in connection with the business of the
Company. Notwithstanding the above, the foregoing covenant shall not be deemed to prohibit the acquisition as a passive investment
of not more than one percent (1%) of the capital stock of a competing business whose stock is traded on a national securities
exchange or over-the-counter market.

 

    	 	26	 

    	 

    

 

(b) The
Unitholder will not, for a period of three (3) years following the Closing Date (computed by excluding from such computation any
time during which any of the Unitholder is found by a court of competent jurisdiction to have been in violation of any provision
of this Section 5.5(b)), directly or indirectly, for itself or on behalf of or in conjunction with any other Person, (i) solicit
or hire (or assist or encourage any other Person to solicit or hire), or otherwise interfere in any manner with the employment
or consulting relationship of, any Person who is an employee or consultant of any of Holdings, the Company or any of Holdings’
other subsidiaries (each, a “Restricted Entity”), other than by general public advertisement or other such
general solicitation not specifically targeted at any such Person, (ii) induce or request any customer of any Restricted Entity
to reduce, cancel or terminate its business with a Restricted Entity or otherwise interfere in any manner in any Restricted Entity’s
business relationship with any of its customers, or (iii) solicit or accept business from any customer of any Restricted Entity
in connection with a Restricted Business. For purposes of this Section 5.5(b), a Person shall be deemed to be an employee, consultant
or customer of any Restricted Entity if any such relationship existed or exists at any time (A) during the thirty (30) days prior
to the execution of this Agreement or (B) after the Closing Date and during the operation of this provision, and any such Person
shall cease to have the applicable status one year after the termination of any such relationship.

 

(c) The
Unitholder agrees that the foregoing covenants are reasonable with respect to their duration, geographic area and scope, to protect,
among other things, Holdings’ acquisition of the goodwill associated with the business of the Company. If a judicial or
arbitral determination is made that any provision of this Section 5.5 constitutes an unreasonable or otherwise unenforceable restriction
against the Unitholders, then the provisions of this Section 5.5 shall be rendered void with respect to the Unitholder only to
the extent such judicial or arbitral determination finds such provisions to be unenforceable. In that regard, any judicial or
arbitral authority construing this Section 5.5 shall be empowered to sever any prohibited business activity, time period or geographical
area from the coverage of any such agreements and to apply the remaining provisions of this Section 5.5 to the remaining business
activities, time periods and/or geographical areas not so severed. Moreover, in the event that any provision, or the application
thereof, of this Section 5.5 is determined not to be specifically enforceable, Holdings shall nevertheless be entitled to recover
monetary damages as a result of the breach of such agreement.

 

(d) The
Unitholder acknowledges that they have carefully read and considered the provisions of this Section 5.5. The Unitholder acknowledges
that they have received and will receive sufficient consideration and other benefits to justify the restrictions in this Section
5.5. The Unitholder also acknowledges and understands that these restrictions are reasonably necessary to protect interests of
Holdings, including protection of the goodwill acquired, and the Unitholder acknowledges that such restrictions will not prevent
them from conducting businesses that are not included in the Restricted Business set forth in this Section 5.5 during the periods
covered by the restrictive covenants set forth in this Section 5.5. The Unitholder also acknowledges that the Contemplated Transactions
constitute full and adequate consideration for the execution and enforceability of the restrictions set forth in this Section
5.5. 

 

    	 	27	 

    	 

    

 

Section
5.6 Tax Covenants.

 

(a) To
the extent permitted under applicable Law, the Company and the Unitholder shall close or terminate (or cause to be closed or terminated),
as of the close of business on the Closing Date, each Tax period relating to any Company Tax or Company Tax Return. 

 

(b) To
the extent not filed prior hereto, the Unitholder will prepare or cause to be prepared, in accordance with applicable Law and
consistent with past practice of the Company, each Company Tax Return for each Pre-Closing Period. At least twenty (20) days prior
to the date on which a Company Tax Return for a Pre-Closing Period is due (after taking into account any valid extension), the
Unitholder will deliver such Company Tax Return to Holdings. No later than five (5) days prior to the date on which a Company
Tax Return for a Pre-Closing Period is due (after taking into account any valid extension), Holdings may make reasonable changes
and revisions to such Company Tax Return. The Unitholder will cooperate fully in making any reasonable changes and revisions to
any Company Tax Return for a Pre-Closing Period. At least three (3) days prior to the date on which a Company Tax Return (as reasonably
revised by Holdings) for a Pre-Closing Period is due (after taking into account any valid extension), the Unitholder will pay
to Holdings an amount equal to any Company Tax due with respect to such Company Tax Return, and Holdings will file such Company
Tax Return.

 

(c) Holdings
will prepare and file each Company Tax Return for any Post-Closing Period or any Straddle Period in accordance with applicable
Law. At least twenty (20) days prior to the date on which a Company Tax Return for a Straddle Period is due (after taking into
account any valid extension), Holdings will deliver such Company Tax Return to the Unitholders. No later than five (5) days prior
to the date on which a Company Tax Return for any Straddle Period is due (after taking into account any valid extension), the
Unitholder may make reasonable changes and revisions to such Company Tax Return. Holdings will cooperate fully in making any reasonable
changes and revisions to any Company Tax Return for any Straddle Period. At least three (3) days prior to the date on which such
Company Tax Return (as reasonably revised by the Unitholders) for a Straddle Period is due (after taking into account any valid
extension), the Unitholder will pay to Holdings an amount equal to the Company Tax on such Company Tax Return to the extent such
Company Tax relates, as determined under Section 5.6(d), to the portion of such Straddle Period ending on and including the Closing
Date. 

 

(d) In
the case of a Company Tax payable for a Straddle Period, the portion of such Company Tax that relates to the portion of the Straddle
Period ending on the Closing Date will (i) in the case of a Tax other than a Tax based upon or related to income, employment,
sales or other transactions, franchise or receipts, be deemed to be the amount of such Tax for the entire Straddle Period multiplied
by a fraction the numerator of which is the number of days in the portion of the Straddle Period ending on the Closing Date and
the denominator of which is the number of all of the days in the Straddle Period; and (ii) in the case of a Tax based upon or
related to income, employment, sales or other transactions, franchise or receipts, be deemed equal to the amount that would be
payable if the Straddle Period ended on the Closing Date and such Tax was based on an interim closing of the books as of the close
of business on the Closing Date.

 

    	 	28	 

    	 

    

 

(e) Each
party will promptly forward to the others a copy of all written communications from any Governmental Entity relating to any Company
Tax or Company Tax Return for a Pre-Closing Period or Straddle Period. Upon reasonable request, each party will make available
to the others all information, records and other documents relating to any Company Tax or any Company Tax Return for a Pre-Closing
Period or Straddle Period. The parties will preserve all information, records and other documents relating to a Company Tax or
a Company Tax Return for a Pre-Closing Period or Straddle Period until the date that is six (6) months after the expiration of
the statute of limitations applicable to the Company Tax or the Company Tax Return. Prior to transferring, destroying or discarding
any information, records or documents relating to any Company Tax or any Company Tax Return for a Pre-Closing Period or Straddle
Period, the Unitholder will give to Holdings reasonable written notice and, to the extent Holdings so requests, the Unitholder
will permit Holdings to take possession of all such information, records and documents. In addition, the parties will cooperate
with each other in connection with all matters relating to the preparation of any Company Tax Return or the payment of any Company
Tax for a Pre-Closing Period or Straddle Period and in connection with any audit, action, suit, claim or proceeding relating to
any such Company Tax or Company Tax Return, and Holdings will have the right to control any such audit, action, suit, claim or
proceeding. Nothing in this Section 5.6(e) will affect or limit any indemnity or similar provision or any representations, warranties
or obligations of any of the parties. Each party will bear its own costs and expenses in complying with the provisions of this
Section 5.6(e). 

 

(f) Holdings
and the Unitholder shall each be liable for and each shall pay when due fifty percent (50%) of all Transfer Taxes incurred in
connection with this Agreement or any of the Contemplated Transactions. The party required by any applicable Law to file a Tax
Return or other documentation with respect to such Transfer Taxes shall do so within the time period prescribed by Law, and the
other party shall promptly reimburse such party for any Transfer Taxes for which the other party is responsible upon receipt of
notice that such Transfer Taxes are payable. To the extent permitted by any applicable Law, the parties hereto shall cooperate
in taking reasonable steps to minimize any Transfer Taxes.

 

(g) The
Unitholder will not make or request a refund of any Company Tax or with respect to any Company Tax Return or amend any Company
Tax Return, unless Holdings, in its reasonable discretion, consents in writing thereto. Holdings will not be obligated to seek
or request any refund of any Company Tax or amend any Company Tax Return, unless Holdings is reimbursed for out-of-pocket costs
incurred in preparing such Tax Return and Holdings determines in its reasonable discretion that neither Holdings nor any of its
subsidiaries will be adversely impacted by filing such Tax Return.

 

(h) Any
Tax sharing or similar agreement with respect to or involving the Company will be terminated as of the Closing Date, without liability
to the Company, and will have no further effect for any year (whether the current year, a future year or a past year). Any amounts
payable under any Tax sharing or similar agreement will be cancelled as of the Closing Date, without any liability to the Company.

 

Section
5.7 Retention Agreements. Retention Agreements shall be executed at, and shall be a condition precedent for Closing
for Chuck Renner (the “Employee Unitholder”) Under their Retention Agreements, the form of which is attached
as Exhibit A hereto, the Employee Unitholder shall be entitled to receive a base salary. The Retention Agreement shall
have a three (3) year term and provide for other terms customary for retention arrangements of other Holdings management; the
final terms of which will be mutually agreed upon by both Holdings and each of the Employee Unitholders. No rights to employment
will exist unless and until the Retention Agreements are executed and delivered.

 

    	 	29	 

    	 

    

 

ARTICLE
VI

CONDITIONS TO CONSUMMATION OF THE UNIT PURCHASE

 

Section
6.1 Conditions to Each Party’s Obligations to Effect the Unit Purchase. The respective obligations of each
party to consummate the Contemplated Transactions are subject to the fulfillment at or prior to the Closing of each of the
following conditions, any or all of which may be waived in writing in whole or in part by the party being benefited thereby,
to the extent permitted by applicable Law:

 

(a) Holdings,
the Company and the Unitholder shall have timely obtained from each Governmental Entity all authorizations, approvals, licenses,
permits, waivers and consents necessary for consummation of any of the Contemplated Transactions, as determined by Holdings.

 

(b) There
shall not be in effect any Law of any Governmental Entity of competent jurisdiction restraining, enjoining, making illegal or
otherwise preventing or prohibiting consummation of any of the Contemplated Transactions, or imposing any limitation on the operation
or conduct of the business of the Company or Holdings after the Closing, and no Governmental Entity shall have instituted or threatened
to institute any proceeding seeking any such Law.

 

(c) No
action, suit or proceeding shall have been instituted or threatened against any of the parties hereto seeking to restrain, materially
delay or prohibit, or to obtain substantial damages or other injunctive or other equitable relief with respect to, the consummation
of any of the Contemplated Transactions.

 

Section
6.2 Conditions to the Obligation of Holdings. The obligation of Holdings to consummate the Contemplated Transactions
is subject to the fulfillment at or prior to the Closing of each of the following additional conditions, any or all of which may
be waived in writing in whole or part by Holdings to the extent permitted by applicable Law:

 

(a) The
representations and warranties of the Company and of the Unitholder contained herein qualified as to materiality or Company Material
Adverse Effect shall be true and correct in all respects and those not so qualified shall be true and correct in all material
respects as of the date hereof and at and as of the Closing Date as though such representations and warranties were made at and
as of such date (except for representations and warranties made as of a specified date, which shall speak only as of the specified
date).

 

    	 	30	 

    	 

    

 

(b) Each
of the Company and the Unitholder shall have performed or complied with in all material respects all agreements, covenants and
conditions contained herein required to be performed or complied with by it or them prior to or at the time of the Closing.

 

(c) Since
December 31, 2016, there shall not have been any event, change, effect, occurrence or circumstance that, individually or in the
aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect

 

(d) No
action, suit or proceeding shall be pending or threatened against the Company.

 

(e) The
Company and the Unitholder shall have delivered to Holdings certificates, dated the date of the Closing, signed by an executive
officer of the Company and by the Unitholders, certifying as to the fulfillment of the conditions specified in Section 6.2(a),
Section 6.2(b), Section 6.2(c) and Section 6.2(d).

 

(f) The
Company Consents and the Holdings Consents shall have been obtained.

 

(g) Holdings
shall have completed its due diligence investigation of the Company to the satisfaction of Holdings in its sole discretion.

 

(h) The
Company shall have delivered to Holdings an income statement for the period of June 1, 2017 through May 31, 2018, which income
statement shall be complete and correct and shall not deviate in any material respect from GAAP.

 

(i) The
Retention Agreements shall have been executed and delivered by the Company and the Employee Unitholders.

 

(j) All
proceedings of the Company and the Unitholder that are required in connection with the Contemplated Transactions shall be reasonably
satisfactory in form and substance to Holdings and its counsel, and Holdings and its counsel shall have received such evidence
of any such proceedings, good standing certificates (if applicable), organizational and governing documents, certified if requested,
as may be reasonably requested and is customary in transactions such as this one.

 

(k) The
Unitholder shall have executed and delivered to Holdings a lock-up agreement, in customary form, with respect to restricting the
sale or otherwise transfer of the Holding Shares for 180 days from the date of a prospectus for an initial public offering by
Holdings, as and to the extent requested by the underwriter of such public offering.

 

(l) All
agreements set forth on Section 6.2(l) of the Company Disclosure Schedule shall have been terminated, without any further
liability or obligation of any of the Company thereunder, and shall cease to be of force or effect.

 

Section
6.3 Conditions to the Obligations of the Company and the Unitholders. The respective obligations of the Company and
the Unitholder to consummate the Contemplated Transactions are subject to the fulfillment at or prior to the Closing of each of
the following additional conditions, any or all of which may be waived in writing in whole or in part by the Company or the Unitholder
to the extent permitted by applicable Law:

 

    	 	31	 

    	 

    

 

(a) The
representations and warranties of Holdings contained herein qualified as to materiality shall be true and correct in all respects
and those not so qualified shall be true and correct in all material respects as of the date hereof and at and as of the Closing
Date as though such representations and warranties were made at and as of such date (except for representations and warranties
made as of a specified date, which shall speak only as of the specified date).

 

(b) Holdings
shall have performed or complied with in all material respects all agreements, covenants and conditions contained herein required
to be performed or complied with by it prior to or at the time of the Closing.

 

(c) Holdings
shall have delivered to the Unitholder a certificate, dated the Closing Date, signed by an executive officer of Holdings, certifying
as to the fulfillment of the conditions specified in Section 6.3(a) and Section 6.3(b).

 

Section
6.4 Closing Deliveries. At Closing, the following documents will be delivered, or caused to be delivered, to the
parties as set forth in each subsection:

 

(a) The
Employee Unitholder shall deliver to Holdings the Retention Agreements.

 

ARTICLE
VII

TERMINATION

 

Section
7.1 Termination by Mutual Agreement. This Agreement may be terminated and the Unit Purchase may be abandoned at any
time prior to the Closing, by mutual written consent of Holdings and the Unitholders.

 

Section
7.2 Termination by either Holdings or the Unitholders. This Agreement may be terminated and the Unit Purchase may be
abandoned at any time prior to the Closing by Holdings or the Unitholder if:

 

(a) the
Unit Purchase shall not have been consummated by December 31, 2018; 

 

(b) any
Law permanently restraining, enjoining or otherwise prohibiting or preventing consummation of the Unit Purchase shall become final
and non-appealable; or provided, however, that the right to terminate this Agreement pursuant to this Section 7.2
shall not be available to any party (and in the case of the Unitholders, including the Company) that has breached in any material
respect its obligations under this Agreement in any manner that shall have proximately contributed to the occurrence of the failure
of the Unit Purchase to be consummated.

 

    	 	32	 

    	 

    

 

Section
7.3 Termination by the Unitholders. This Agreement may be terminated and the Unit Purchase may be abandoned at any
time prior to the Closing by the Unitholders, if any representation of Holdings contained in this Agreement shall have been
inaccurate, or Holdings shall have breached any representation, warranty, covenant or other agreement contained in this
Agreement, in any such event that would give rise to the failure of a condition set forth in Section 6.3(a) or (b) hereof,
which inaccuracy or breach cannot be or has not been cured within twenty (20) days after the giving of written notice by the
Unitholder to Holdings thereof.

 

Section
7.4 Termination by Holdings. This Agreement may be terminated and the Unit Purchase may be abandoned at any time
prior to the Closing by Holdings, if any representation of the Company and/or the Unitholder contained in this Agreement
shall have been inaccurate, or the Company and/or the Unitholder shall have breached any representation, warranty, covenant
or other agreement contained in this Agreement, in any such event that would give rise to the failure of a condition set
forth in Section 6.2(a) or (b) hereof, which inaccuracy or breach cannot be or has not been cured within twenty (20) days
after the giving of written notice by Holdings to the Unitholder thereof.

 

Section
7.5 Effect of Termination and Abandonment. In the event of the termination of this Agreement and the abandonment of
the Unit Purchase pursuant to this Article VII, this Agreement (other than this Section 7.5, Section 5.2 and Article VIII) shall
become void and of no effect with no liability on the part of any party hereto (or of any of its directors, officers, employees,
consultants, contractors, agents, attorneys or other Representatives); provided, however, that no such termination shall
relieve any party hereto of any liability or damages resulting from any willful breach of this Agreement by such party.

 

ARTICLE
VIII

MISCELLANEOUS

 

Section
8.1 Entire Agreement; Assignment.

 

(a) This
Agreement (including the exhibits hereto, the Holdings Disclosure Schedule and the Company Disclosure Schedule) constitutes the
entire agreement among the parties hereto in respect of the subject matter hereof and supersede all other prior agreements and
understandings, both written and oral, among the parties in respect of the subject matter hereof.

 

(b) Neither
this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by the Company or the Unitholders,
on the one hand, or Holdings, on the other hand, without the prior written consent of the other party(ies). Any assignment in
violation of the preceding sentence shall be void.

 

Section
8.2 Notices. All notices, requests, demands, instructions and other documents and communications to be given under
this Agreement shall be in writing and shall be deemed given (a) three (3) Business Days following sending by registered or
certified mail, postage prepaid, (b) when sent if sent by facsimile or email, provided that in the case of facsimile
receipt is confirmed and in the case of e-mail the e-mail is not returned with an undeliverable, delayed or similar message,
(c) when delivered, if delivered personally to the intended recipient, and (d) one Business Day following sending by
overnight delivery via a nationally recognized overnight courier service, and in each case, addressed to a party at the
following address for such party:

 

    	 	33	 

    	 

    

 

	 	if
    to Holdings, to:	 
	 	 	IMAC
    Holdings Corp.
	 	 	2725
    James Sanders Blvd.
	 	 	Paducah,
    Kentucky 42001
	 	 	Attention:
    Mr. Jeff Ervin, Chief Executive Officer
	 	 	Facsimile:
    
	 	 	E-mail:
    jervin@imacrc.com
	 	 	 
	 	with
    a copy (which shall	 
	 	not
    constitute notice) to:	Olshan
    Frome Wolosky LLP
	 	 	1325
    Avenue of the Americas, 15th Floor
	 	 	New
    York, New York 10019
	 	 	Attention:
    Spencer G. Feldman, Esq.
	 	 	Facsimile:
    (212) 451-2222
	 	 	Email:
    sfeldman@olshanlaw.com
	 	 	 
	 	if
    to the Company	 
	 	or
    the Unitholders, to:	Advantage
    Therapy
	 	 	2017
    W. Woodland St.
	 	 	Springfield,
    Missouri 65807
	 	 	Attention:
    Charles Renner 
	 		Email:
chuck@advantagetherapyonline.com

 

or
to such other address, email address or facsimile number as the party to whom notice is given shall have previously furnished
to the other parties in writing in the manner set forth above.

 

Section
8.3 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Missouri, without giving effect to the choice of law principles thereof to the
extent that the application of the Laws of another jurisdiction would be required thereby. All actions, suits or proceedings
arising out of or relating to this Agreement or any of the other Transaction Documents shall be heard and determined
exclusively in any Missouri state or federal court. The parties hereto hereby (a) submit to the exclusive jurisdiction of any
state or federal court sitting in Missouri for the purpose of any action, suit or proceeding arising out of or relating to
this Agreement or any of the other Transaction Documents, and (b) irrevocably waive, and agree not to assert by way of
motion, defense, or otherwise, in any such action, suit or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action,
suit or proceeding is brought in an inconvenient forum, that the venue of the action, suit or proceeding is improper, or that
this Agreement, any of the other Transaction Documents or any of the Contemplated Transactions may not be enforced in or by
any of the above-named courts. Each of the parties hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law. Each of the parties hereto hereby consents to
process being served by any party to this Agreement in any suit, action or proceeding by delivery of a copy thereof in
accordance with the provisions of Section 8.2. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING
HEREUNDER.

 

    	 	34	 

    	 

    

 

Section
8.4 Expenses. Except as otherwise provided by this Agreement, all fees and out-of-pocket expenses incurred in
connection with this Agreement or any of the other Transaction Documents or the consummation of any of the Contemplated
Transactions shall be paid by the party incurring the same.

 

Section
8.5 Descriptive Headings. The descriptive headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this Agreement.

 

Section
8.6 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto
and its successors and permitted assigns, and, except as provided in Section 5.3, nothing in this Agreement, express or
implied, is intended to or shall confer upon any other Person any rights, benefits or remedies of any nature whatsoever under
or by reason of this Agreement.

 

Section
8.7 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability
of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement,
or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision
shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid
or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity
or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

Section
8.8 Specific Performance. Notwithstanding Section 5.3(d)(ix), the parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent
any breach or threatened of this Agreement and to enforce specifically the terms and provisions of this Agreement, without the
requirement to post a bond or other security, this being in addition to any other remedy to which they are entitled at law or
in equity.

 

Section
8.9 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original
and all of which together shall be considered one and the same agreement and shall become effective when one or more counterparts
have been signed by each of the parties hereto and delivered to the other parties hereto. Facsimile or .pdf signatures shall have
the same force and effect as original signatures.

 

    	 	35	 

    	 

    

 

Section
8.10 Interpretation.

 

(a) The
words “hereof,” “herein,” “herewith” and words of similar import shall, unless otherwise stated,
be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section,
paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified. Whenever the words “include,” “includes” or “including” are used
in this Agreement, they shall be deemed to be followed by the words “without limitation.” All terms defined in this
Agreement shall have the defined meanings contained herein when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein. The definitions contained in this Agreement are applicable to the singular as well as
the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. Any agreement,
instrument or statute defined or referred to herein or in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, qualified or supplemented, including (in the case of agreements and instruments)
by waiver or consent and (in the case of statutes) by succession of comparable successor statutes and all attachments thereto
and instruments incorporated therein. References to a Person are also to its successors and permitted assigns. 

 

(b) The
phrases “the date of this Agreement,” “the date hereof,” and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth in the opening paragraph of this Agreement.

 

(c) The
parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

 

    	 	36	 

    	 

    

 

Section
8.11 Amendment and Modification; Waiver. This Agreement can be amended, supplemented or changed, and any provision
hereof can be waived, only by written instrument making specific reference to this Agreement signed by Holdings, the Company
and the Unitholders. No action taken pursuant to this Agreement, including any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty,
covenant or agreement contained herein. The waiver by any party hereto of a breach of any provision of this Agreement shall
not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party
preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

Section
8.12 Definitions. As used herein,

 

“Affiliate”
has the meaning given to it in Rule 12b-2 of Regulation 12B under the Exchange Act.

 

“Business
Day” means any day other than a Saturday, a Sunday or a day on which banks in the State of New York generally are closed
for regular banking business.

 

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

 

“Collections”
mean the gross selling price received by the Company from the sale of its regeneration-related services and associated products,
less (a) normal or customary trade, cash, prompt payment and/or quantity discounts, (b) refunds, returns, claims or allowances,
rebates and chargebacks, and (c) fees and commissions paid to third-party dealers, distributors and other selling agents (other
than employees of the Company). A regeneration-related service or associated product is considered sold hereunder when paid for,
if paid for before delivery, or when shipped or mailed or otherwise delivered. All sales shall be bona fide, arm’s-length
transactions.

 

“Company
Consents” means each of the consents, waivers, approvals, exemptions, declarations, licenses, authorizations, permits, registrations,
filings and notifications of or with each Governmental Entity or under or pursuant to each Contract listed in Section 2.5
of the Company Disclosure Schedule required to be made or obtained in connection with the execution or delivery of any of the
Transaction Documents by the Company or the Unitholders, the performance by the Company or the Unitholder of any of its or their
obligations thereunder, or the consummation of any of the Contemplated Transactions.

 

“Company
Material Adverse Effect” means any event, development, change, circumstance, effect, occurrence or condition that, either
individually or in the aggregate, (i) has caused or would reasonably be expected to cause a material adverse effect on the business,
operations, financial condition or results of operations of the Company, or (ii) prevents or materially impairs or delays the
ability, or would reasonably be expected to prevent or materially impair or delay the ability, of the Company or the Unitholder
to perform any of their respective obligations under any of the Transaction Documents or to consummate any of the Contemplated
Transactions.

 

    	 	37	 

    	 

    

 

“Company
Tax” means any Tax, if and to the extent that the Company is or may be potentially liable under applicable Law, under Contract
or on any other grounds (including, but not limited to, as a transferee or successor, under Code Section 6901 or Treasury Regulation
Section 1.1502-6 (or similar provision of applicable Law), as a result of any Tax sharing or other agreement, or by operation
of Law) for any such Tax.

 

“Company
Tax Return” means any Tax Return filed or required to be filed with any Governmental Entity, if, in any manner or to any
extent, relating to or inclusive of the Company or any Company Tax.

 

“Contemplated
Transactions” means the transactions contemplated by this Agreement and the other Transaction Documents, including the Unit
Purchase.

 

“Contract”
means any written or oral contract, agreement, license, lease, instrument or note that creates a legally binding obligation.

 

“Encumbrance”
means any lien, encumbrance, security interest, claim, charge, surety, mortgage, option, pledge, easement, limitation or restriction
(including on any right to vote or Transfer any asset or security) of any nature whatsoever.

 

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

 

“Fundamental
Representations” means the representations and warranties contained in Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.13, 2.19, 2.20,
3.1, 3.2, 3.3, 3.5 and the first sentence of Section 2.14(a).

 

“GAAP”
means United States generally accepted accounting principles applied on a consistent basis throughout the periods involved.

 

“Intellectual
Property” means all intellectual property rights arising from or in respect of the following: (i) all patents and applications
therefor, including continuations, divisionals, provisionals, continuations-in-part, or reissues of patent applications and patents
issuing thereon (collectively, “Patents”), (ii) all trademarks, service marks, trade names, service names,
brand names, trade dress rights, logos, slogans, Internet domain names and individual, entity and business names, together with
the goodwill associated with any of the foregoing, and all applications, registrations and renewals thereof (collectively, “Trademarks”),
(iii) copyrights and registrations and applications therefor, works of authorship and mask work rights (collectively, “Copyrights”),
(iv) all computer programs and software (including any and all software implementations of algorithms, models and methodologies,
whether in source code, object code or other form, but excluding off-the-shelf commercial or shrink-wrap software), databases
and compilations (including any and all data and collections of data), and all descriptions, flow-charts and other work product
used to design, plan, organize or develop any of the foregoing, screens, user interfaces, report formats, firmware, development
tools, templates, menus, buttons and icons, all technology supporting any of the foregoing, and all documentation, including user
manuals and other training documentation, related to any of the foregoing (collectively, “Software”), and (v)
all trade secrets, designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development,
technical data, programs, specifications, processes, inventions (whether patentable or unpatentable and whether or not reduced
to practice), creations, improvements and other similar materials, and all recordings, graphs, drawings, reports, analyses and
other works of authorship, and other tangible embodiments of the foregoing, in any form except teaching techniques, and all related
technology.

 

    	 	38	 

    	 

    

 

“Knowledge”
means the actual knowledge, after reasonable inquiry, of (i) in the case of the Company, of each of the Unitholders, (ii) in the
case of the Unitholders, the Unitholders, and (ii) in the case of Holdings, Jeff Ervin and Anthony Bond.

 

“Law”
means any order, writ, injunction, decree, judgment, permit, license, ordinance, law, statute, rule, regulation, administrative
interpretation, directive or other requirement of any Governmental Entity.

 

“Person”
means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in the Exchange Act).

 

“Pre-Closing
Period” means any Tax period ending on or before the Closing Date.

 

“Post-Closing
Period” means any Tax period beginning after the Closing Date.

 

“Representative”
means, with respect to any Person, each of such Person’s Affiliates, directors, officers, employees, partners, members,
managers, consultants, advisors, accountants, attorneys, representatives and agents.

 

“Restricted
Area” means the States of Kentucky, Missouri, Tennessee and Texas.

 

“Retention
Agreements” mean the Retention Agreements between the Company and each of the Employee Unitholder in the form attached hereto
as Exhibit A.

 

“Straddle
Period” means any Tax period beginning before the Closing Date and ending after the Closing Date.

 

“Tax”
means any tax, charge, deficiency, duty, fee, levy, toll or other amount (including any net income, gross income, profits, gross
receipts, excise, property, sales, ad valorem, withholding, social security, retirement, excise, employment, unemployment, minimum,
alternative, add-on minimum, estimated, severance, stamp, occupation, environmental, premium, capital stock, disability, windfall
profits, use, service, net worth, payroll, franchise, license, gains, customs, transfer, recording, registration or other tax)
assessed or otherwise imposed by any Governmental Entity or under applicable Law, together with any interest, penalties or any
other additions or increases.

 

    	 	39	 

    	 

    

 

“Tax
Return” means mean any return, election, declaration, report, schedule, information return, document, information, opinion,
statement, or any amendment to any of the foregoing (including any consolidated, combined or unitary return and any related or
supporting information) with respect to Taxes.

 

“Transaction
Documents” means this Agreement and the Retention Agreements.

 

“Transfer”
means any sale, assignment, pledge, hypothecation or other disposition or Encumbrance.

 

“Treasury
Regulations” means the regulations promulgated under the Code.

 

[Signature
Page Follows]

 

    	 	40	 

    	 

    

 

IN
WITNESS WHEREOF, each of the parties has caused this Agreement to be duly executed on its behalf as of the date first above
written.

 

	 	IMAC
    HOLDINGS CORP. 
	 	 
	 	By:	/s/
        Jeff Ervin

	 	Name: 	Jeff
    Ervin
	 	Title:	Chief
    Executive Officer

 

	 	ADVANTAGE
    HAND THERAPY AND ORTHOPEDIC REHABILITATION, LLC
	 	 
	 	By:	/s/
        Charles Renner

	 	Name:	Charles
    Renner          
	 	Title:	Owner

 

	 	THE
    UNITHOLDER:
	 	 
	 	/s/
        Charles Renner

	 	Charles
    Renner

 

    	 	41Exhibit 4.1

 

EXECUTION COPY

 

INDENTURE

 

dated as of November 30, 2018

 

by and between

 

TRIPLE ROYALTY SUB LLC,
 a Delaware limited liability company,
 as issuer of the Notes described herein,

 

and

 

U.S. BANK NATIONAL ASSOCIATION,
 a national banking association,
 as initial trustee, transfer agent, paying agent, registrar and calculation agent of the Notes described herein

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Article I
    
	
GENERAL
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Defined Terms and Rules   of Construction
    	
4
    
	
Section 1.2
    	
Officer’s Certificates   and Opinions
    	
4
    
	
Section 1.3
    	
Acts of Noteholders
    	
5
    
	
 
    	
 
    	
 
    
	
Article II
    
	
THE NOTES
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Amount of Notes; Terms;   Form; Execution and Delivery
    	
6
    
	
Section 2.2
    	
Restrictive Legends
    	
10
    
	
Section 2.3
    	
Registrar, Transfer   Agent, Paying Agent and Calculation Agent
    	
16
    
	
Section 2.4
    	
Paying Agent to Hold   Money in Trust
    	
17
    
	
Section 2.5
    	
Method of Payment
    	
18
    
	
Section 2.6
    	
Minimum Denominations
    	
18
    
	
Section 2.7
    	
Transfer and Exchange;   Cancellation
    	
19
    
	
Section 2.8
    	
Mutilated, Destroyed,   Lost or Stolen Notes
    	
20
    
	
Section 2.9
    	
Payments of Transfer   Taxes
    	
20
    
	
Section 2.10
    	
Book-Entry Provisions
    	
20
    
	
Section 2.11
    	
Special Transfer   Provisions
    	
22
    
	
Section 2.12
    	
Temporary Definitive   Notes
    	
27
    
	
Section 2.13
    	
Statements to   Noteholders
    	
27
    
	
Section 2.14
    	
Identification Numbers
    	
31
    
	
Section 2.15
    	
Refinancing Notes
    	
31
    
	
Section 2.16
    	
Subordinated Notes
    	
33
    
	
Section 2.17
    	
Section 3(c)(7)   Procedures
    	
35
    
	
Section 2.18
    	
Beneficial Holder Representations   and Warranties
    	
36
    
	
Section 2.19
    	
Non-Permitted Holders
    	
40
    
	
 
    	
 
    	
 
    
	
Article III
    
	
ACCOUNTS;   PRIORITY OF PAYMENTS
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Establishment of   Accounts
    	
41
    
	
Section 3.2
    	
Investments of Cash
    	
42
    
	
Section 3.3
    	
Payments and Transfers   In Connection with Issuance of Notes
    	
43
    
	
Section 3.4
    	
Calculation Date   Calculations
    	
43
    
	
Section 3.5
    	
Payment Date First Step   Transfers
    	
45
    
	
Section 3.6
    	
Payment Date Second   Step Withdrawals
    	
45
    
	
Section 3.7
    	
Interest Shortfalls:   Interest Deferral Period, Voluntary Capital Contributions
    	
47
    
	
Section 3.8
    	
Redemptions
    	
48
    
	
Section 3.9
    	
Procedure for   Redemptions
    	
50
    

 

i

 

	
Section 3.10
    	
Additional Capital   Contributions from the Issuer to TRC LLC
    	
51
    
	
 
    	
 
    	
 
    
	
Article IV
    
	
DEFAULT AND   REMEDIES
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Events of Default
    	
51
    
	
Section 4.2
    	
Acceleration,   Rescission and Annulment
    	
54
    
	
Section 4.3
    	
Other Remedies
    	
54
    
	
Section 4.4
    	
Limitation on Suits
    	
56
    
	
Section 4.5
    	
Waiver of Existing   Defaults
    	
57
    
	
Section 4.6
    	
Restoration of Rights   and Remedies
    	
57
    
	
Section 4.7
    	
Remedies Cumulative
    	
57
    
	
Section 4.8
    	
Authority of Courts Not   Required
    	
58
    
	
Section 4.9
    	
Rights of Noteholders   to Receive Payment
    	
58
    
	
Section 4.10
    	
Trustee May File Proofs   of Claim
    	
58
    
	
Section 4.11
    	
Undertaking for Costs
    	
58
    
	
Section 4.12
    	
Control by Noteholders
    	
58
    
	
Section 4.13
    	
Senior Trustee
    	
59
    
	
Section 4.14
    	
Application of Proceeds
    	
59
    
	
Section 4.15
    	
Waivers of Rights   Inhibiting Enforcement
    	
59
    
	
Section 4.16
    	
Security Interest   Absolute
    	
59
    
	
Section 4.17
    	
Observer
    	
60
    
	
 
    	
 
    	
 
    
	
Article V
    
	
REPRESENTATIONS   AND WARRANTIES AND COVENANTS
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Representations and   Warranties
    	
62
    
	
Section 5.2
    	
Covenants
    	
62
    
	
Section 5.3
    	
Reports and Other   Deliverables by the Issuer
    	
68
    
	
Section 5.4
    	
Development and   Commercialization of Products
    	
69
    
	
 
    	
 
    	
 
    
	
Article VI
    
	
THE TRUSTEE
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
Acceptance of Trusts   and Duties
    	
69
    
	
Section 6.2
    	
Copies of Documents and   Other Notices
    	
70
    
	
Section 6.3
    	
Representations and   Warranties
    	
71
    
	
Section 6.4
    	
Reliance; Agents;   Advice of Counsel
    	
72
    
	
Section 6.5
    	
Not Acting in Individual   Capacity
    	
74
    
	
Section 6.6
    	
Compensation of Trustee
    	
74
    
	
Section 6.7
    	
Notice of Defaults
    	
74
    
	
Section 6.8
    	
May Hold Notes
    	
74
    
	
Section 6.9
    	
Corporate Trustee   Required; Eligibility
    	
74
    
	
Section 6.10
    	
Reports by the Trustee
    	
75
    
	
Section 6.11
    	
Account Control Agreement,   Pledge and Security Agreement and Other Transaction Documents
    	
75
    
	
Section 6.12
    	
Collateral
    	
75
    

 

ii

 

	
Section 6.13
    	
Preservation and   Disclosure of Noteholder Lists
    	
76
    
	
Section 6.14
    	
Compliance with   Applicable Anti-Terrorism and Anti-Money Laundering Regulations
    	
76
    
	
Section 6.15
    	
Jurisdiction of Trustee
    	
77
    
	
Section 6.16
    	
Notice of Event of   Default to the Servicer and the Equityholder
    	
77
    
	
 
    	
 
    	
 
    
	
Article VII
    
	
SUCCESSOR   TRUSTEES, REGISTRARS, TRANSFER AGENTS, PAYING AGENTS AND CALCULATION AGENTS
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Resignation and Removal   of Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent
    	
77
    
	
Section 7.2
    	
Appointment of   Successor
    	
78
    
	
 
    	
 
    	
 
    
	
Article VIII
    
	
INDEMNITY
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Indemnity
    	
79
    
	
Section 8.2
    	
Survival
    	
80
    
	
 
    	
 
    	
 
    
	
Article IX
    
	
MODIFICATION
    
	
 
    	
 
    	
 
    
	
Section 9.1
    	
Modification with   Consent of Noteholders
    	
80
    
	
Section 9.2
    	
Modification Without   Consent of Noteholders
    	
81
    
	
Section 9.3
    	
Subordination; Priority   of Payments
    	
82
    
	
Section 9.4
    	
Execution of Amendments   by Trustee
    	
82
    
	
 
    	
 
    	
 
    
	
Article X
    
	
SUBORDINATION
    
	
 
    	
 
    	
 
    
	
Section 10.1
    	
Subordination of the   Notes
    	
82
    
	
 
    	
 
    	
 
    
	
Article XI
    
	
DISCHARGE OF   INDENTURE; SURVIVAL
    
	
 
    	
 
    	
 
    
	
Section 11.1
    	
Discharge of Indenture;   Survival
    	
84
    
	
Section 11.2
    	
Release of Security   Interest in Certain Collateral
    	
84
    
	
 
    	
 
    	
 
    
	
Article XII
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    
	
Section 12.1
    	
Right of Trustee to   Perform
    	
85
    
	
Section 12.2
    	
Waiver
    	
85
    
	
Section 12.3
    	
Severability
    	
85
    
	
Section 12.4
    	
Restrictions on   Exercise of Certain Rights
    	
85
    
	
Section 12.5
    	
Notices
    	
86
    
	
Section 12.6
    	
Assignments
    	
87
    

 

iii

 

	
Section 12.7
    	
Application to Court
    	
87
    
	
Section 12.8
    	
GOVERNING LAW
    	
87
    
	
Section 12.9
    	
Jurisdiction
    	
87
    
	
Section 12.10
    	
Counterparts
    	
89
    
	
Section 12.11
    	
Table of Contents and   Headings
    	
89
    
	
Section 12.12
    	
Trust Indenture Act
    	
89
    
	
Section 12.13
    	
Confidential   Information
    	
89
    
	
Section 12.14
    	
Limited Recourse
    	
89
    
	
Section 12.15
    	
Tax Matters
    	
90
    
	
Section 12.16
    	
Waiver
    	
91
    
	
Section 12.17
    	
Distribution Reports
    	
91
    
	
Section 12.18
    	
No Voting Rights for   Non-Permitted Holders
    	
91
    
	
Section 12.19
    	
U.S.A. Patriot Act
    	
92
    
	
 
    	
 
    	
 
    
	
Schedule A
    	
Assumed Amortization   Schedule for Optional Redemption in Respect of the Original Notes
    	
 
    
	
 
    	
 
    	
 
    
	
Annex A
    	
Rules of Construction   and Defined Terms
    	
 
    
	
 
    	
 
    	
 
    
	
Exhibit A-1
    	
Form of Rule 144A   Global Note
    	
 
    
	
Exhibit A-2
    	
Form of IAI Global Note
    	
 
    
	
Exhibit A-3
    	
Form of Temporary   Regulation S Global Note
    	
 
    
	
Exhibit A-4
    	
Form of Permanent   Regulation S Global Note
    	
 
    
	
Exhibit A-5
    	
Form of Retained Notes
    	
 
    
	
Exhibit B
    	
Form of Confidentiality   Agreement
    	
 
    
	
Exhibit C
    	
Coverage of   Distribution Report
    	
 
    
	
Exhibit D
    	
UCC Financing   Statements
    	
 
    
	
Exhibit E-1
    	
Form of Transferee   Certificate for transfers to Temporary Regulation S Global Note
    	
 
    
	
Exhibit E-2
    	
Form of Transferee   Certificate for transfers to Permanent Regulation S Global Note
    	
 
    
	
Exhibit E-3
    	
Form of Transferee   Certificate for transfers to Rule 144A Global Note
    	
 
    
	
Exhibit F
    	
Form of Portfolio   Interest Certificate
    	
 
    
	
Exhibit G
    	
Important Section   3(c)(7) Notice
    	
 
    
	
Exhibit H
    	
Form of Noteholder   Certification
    	
 
    

 

iv

 

INDENTURE

 

This INDENTURE, dated as of November 30, 2018, is by and between TRIPLE ROYALTY SUB LLC, a Delaware limited liability company, as issuer of the Notes described herein, and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as initial trustee, transfer agent, paying agent, registrar and calculation agent of the Notes described herein.

 

GRANTING CLAUSES

 

The Issuer hereby Grants to the Trustee, for the benefit and security of the Secured Parties, all of the Issuer’s right, title and interest in, to and under, in each case, whether now owned or existing, or hereafter acquired or arising thereafter, the following described property, rights and privileges (such property, rights and privileges, including all other property, rights and privileges hereafter specifically subjected to the lien of this Indenture or any indenture supplemental hereto, in each case whether now owned or hereafter acquired, being collectively referred to herein as the “Collateral”):

 

(1)                                 (A) the right, title and interest as a holder of the Issuer Class C Units, including the Issuer Class C Units and any and all of the economic rights and governance, voting and other consensual rights that may arise as holder of the Issuer Class C Units under the TRC LLC Agreement, (B) the Collection Account established under this Indenture, (C) all amounts from time to time on deposit in or otherwise credited to the Collection Account, (D) all cash, financial assets and other investment property, instruments, documents, chattel paper, general intangibles, accounts and other property from time to time credited to the Collection Account or representing investments and reinvestments of amounts credited to the Collection Account and (E) all interest, principal payments, dividends and other distributions payable on or with respect to, and all proceeds of, (i) all property so credited or representing such investments and reinvestments and (ii) the Collection Account;

 

(2)                                 the right to enforce the representations, warranties and covenants made by the Transferor and Theravance Biopharma under the Sale and Contribution Agreement;

 

(3)                                 the right to enforce the representations, warranties and covenants made by the Servicer under the Servicing Agreement;

 

(4)                                 all other property and assets of the Issuer with respect to which a security interest can be created under Article 9 of the UCC, including all goods, deposit accounts, investment property, financial assets, letter-of-credit rights, supporting obligations, commercial tort claims, accounts, contract rights and general intangibles and all other cash;

 

(5)                                 all rights of the Issuer (contractual and otherwise) constituting, arising under, connected with or in any way related to any or all of the foregoing property;

 

 

(6)                                 all books, records, ledger cards, files, correspondence, computer programs, tapes, disks and related data processing software owned by the Issuer that at any time evidence or contain information relating to any of the foregoing property or are otherwise necessary or helpful in the collection thereof or realization thereupon;

 

(7)                                 all documents of title, policies and certificates of insurance, securities, chattel paper and other documents or instruments evidencing or pertaining to any of the foregoing property of the Issuer; and

 

(8)                                 all proceeds and products of any and all of the foregoing property.

 

These Grants are made in order to secure (i) the prompt payment of the principal of, Premium (if any) and interest on, and all other amounts due with respect to, the Notes from time to time Outstanding hereunder, equally and ratably without prejudice, priority or distinction between any Note and any other Notes except as expressly provided herein, (ii) the payment of any fees, expenses or other amounts that the Issuer is obligated to pay under or in respect of the Notes or this Indenture, (iii) the payment and performance of all the obligations of the Issuer in respect of any amendment, modification, extension, renewal or refinancing of the Notes and (iv) the performance and observance by the Issuer of all the agreements, covenants and provisions expressed or implied herein and in the Notes for the benefit of the Secured Parties (collectively, the “Secured Obligations”), in each case in accordance with and subject to the allocation priorities and the Priority of Payments set forth in Article III, and for the uses and purposes and subject to the terms and provisions hereof.

 

The Issuer shall file, and hereby authorizes the filing of, all financing or continuation statements, and amendments thereto, in all jurisdictions and with all filing offices as are necessary or advisable to perfect the security interests in the Collateral granted to the Trustee pursuant to this Indenture.  Such financing statements may describe the Collateral in the same manner as described in any security agreement entered into by the parties in connection herewith or may contain an indication or description of Collateral that describes such property in any other manner as is necessary, advisable or prudent to ensure the perfection of the security interests in the Collateral granted to the Trustee in connection herewith, including describing such property as “all assets” or “all personal property.”  Nothing herein shall be construed as imposing a duty upon the Trustee to determine the jurisdictions or filing offices in which such filings should be made or to make such filings.

 

Except to the extent otherwise provided in this Indenture, the Issuer does hereby constitute and irrevocably appoint (until this Indenture is terminated) the Trustee its true and lawful attorney with full power (in the name of the Issuer or otherwise) to exercise the rights of the Issuer with respect to the Collateral held for the benefit and security of the Secured Parties and to ask, require, demand, receive, settle, compromise, compound and give acquittance for any and all moneys and claims for moneys due and to become due under or arising out of any of the Collateral held for the benefit and security of the Secured Parties, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings which the Trustee may deem to be necessary or advisable in the premises.  The power of attorney granted to the Trustee pursuant to this Indenture and all authority hereby conferred are granted and conferred solely to protect the Trustee’s interest in the Collateral held

 

2

 

for the benefit and security of the Secured Parties and shall not impose any duty upon the Trustee to exercise any power except as expressly provided herein or in any other Transaction Documents.  This power of attorney shall be irrevocable as one coupled with an interest prior to the payment in full of all the obligations secured hereby.

 

This Indenture shall constitute a security agreement under the laws of the State of New York applicable to agreements made and to be performed therein.  Upon the occurrence of any Event of Default with respect to the Notes, and in addition to any other rights available under this Indenture or any other instruments included in the Collateral held for the benefit and security of the Secured Party or otherwise available at law or in equity, the Trustee shall have all rights and remedies of a secured party on default under the laws of the State of New York and other Applicable Law to enforce the assignments and security interests contained herein and, in addition, shall have the right, subject to compliance with any mandatory requirements of Applicable Law, to sell or apply any rights and other interests assigned or pledged hereby in accordance with the terms hereof at public or private sale (subject, for the avoidance of doubt, to the rights of the Noteholders, as applicable, under the relevant Transaction Documents to instruct the Trustee in the exercise of such rights and remedies); provided, in no event that shall the Trustee sell or cause the sale of all or any part of the Collateral to a Restricted Party.

 

It is expressly agreed that the Issuer shall remain liable under each of the Transaction Documents and other agreements to which the Issuer is a party to perform (or to engage the Servicer (or, to the extent permitted under the Transaction Documents, other third parties) to perform on its behalf) all of its obligations thereunder, all in accordance with and pursuant to the terms and provisions thereof, and except as otherwise expressly provided herein, the Trustee shall not have any obligations or liabilities under such agreements by reason of or arising out of the Grants set forth in this Indenture, nor shall the Trustee be required or obligated in any manner to perform or fulfill any obligations of the Issuer under or pursuant to such agreements or to make any payment, to make any inquiry as to the nature or sufficiency of any payment received by it, to present or file any claim, or to take any action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may be entitled from time to time; provided, however, that, in exercising any right of the Issuer under any Transaction Document or any other contract or agreement included in the Collateral, the Trustee and the Noteholders shall be bound by, and shall comply with, the provisions thereof applicable to the Issuer in respect of the exercise of such right and the confidentiality provisions set forth therein to the extent permitted by Applicable Law.

 

The Trustee acknowledges such Grants, accepts the trusts hereunder in accordance with the provisions hereof and agrees to perform the duties herein required in accordance with, and subject to, the terms hereof.

 

Each Noteholder shall be deemed to acknowledge and agree by its acceptance of its interest in the Notes, to the terms of this Indenture and the other Transaction Documents, including the application of the proceeds of the Collateral in accordance with the Priority of Payments on each Payment Date both before and after an acceleration of the Notes and the liquidation of the Collateral following the occurrence and during continuation of an Event of Default, and will not take any actions contrary to such terms and will take such actions as may be

 

3

 

reasonably requested by the Trustee at the direction of the Noteholders, pursuant to the terms of this Indenture in furtherance of such terms.

 

Each Noteholder shall be deemed to further acknowledge and agree by its acceptance of its interest in the Notes, and each party hereto acknowledges and agrees that under no circumstance, including the occurrence of an Event of Default (i) shall there be a pledge of the GSK Agreements (or any rights thereunder) to secure the Issuer’s obligations under this Indenture; (ii) shall either the Noteholders or the Trustee on their behalf be a party to or third party beneficiaries of the GSK Agreements; and (iii) shall any Noteholder be able to assert, or the Trustee on behalf of the Noteholders be able to assert, any claim against any Person under the GSK Agreements.

 

Each Noteholder shall be deemed to further acknowledge and agree by its acceptance of its interest in the Notes, and each party hereto further acknowledges and agrees that Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable), including Theravance Biopharma R&D and the Issuer, are permitted to take any action or fail to take any action with respect to any agreement or drug program (other than the Collaboration Agreement and drug programs under the Collaboration Agreement), including the Strategic Alliance Agreement and/or any drug programs (including the MABA program) that are covered under the Strategic Alliance Agreement, including a transfer, sale, mortgage, pledge, assignment or disposal of, either directly or indirectly, in whole or in part, by operation of law or otherwise, its interest in the MABA program.

 

ARTICLE I
 GENERAL

 

Section 1.1                                    Defined Terms and Rules of Construction.  Capitalized terms used but not otherwise defined in this Indenture shall have the respective meanings given to such terms in Annex A, which is hereby incorporated by reference herein.  The rules of construction set forth in Annex A shall apply to this Indenture and are hereby incorporated by reference herein.  Not all terms defined in Annex A are used in this Indenture.

 

Section 1.2                                    Officer’s Certificates and Opinions.  Upon any application or request by the Issuer to the Trustee following the Closing Date to take any action under any provision of this Indenture, the Issuer shall furnish to the Trustee an Officer’s Certificate stating that, in the opinion of the signer thereof in his or her capacity as such, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent, if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional Officer’s Certificate or Opinion of Counsel need be furnished.

 

Every Officer’s Certificate with respect to compliance with a condition precedent or covenant provided for in this Indenture or any indenture supplemental hereto shall include:

 

4

 

(a)                                 a statement that each individual signing such certificate has read such covenant or condition precedent and the definitions in this Indenture relating thereto;

 

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

 

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

 

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

 

Section 1.3                                    Acts of Noteholders.

 

(a)                                 Any direction, consent, waiver or other action provided by this Indenture in respect of the Notes of any class to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by an agent or proxy 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 or to the Issuer.  Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Noteholders 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 under this Indenture and conclusive in favor of the Trustee or the Issuer, if made in the manner provided in this Section 1.3(a).

 

(b)                                 The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction authorized to take acknowledgments of deeds or administer oaths that the Person executing such instrument acknowledged to him or her the execution thereof, or by an affidavit of a witness to such execution sworn to before any such notary or such other officer and, where such execution is by an officer of a corporation or association, trustee of a trust or member of a partnership, on behalf of such corporation, association, trust or partnership, such certificate or affidavit shall also constitute sufficient proof of his or her 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 reasonable manner that the Trustee deems sufficient.

 

(c)                                  In determining whether the Noteholders or Beneficial Holders have given any Direction under this Indenture or any other Transaction Document, Notes owned by (i) any Noteholder or Beneficial Holder that has not delivered to the Trustee a Confidentiality Agreement or a written certification in the form attached as Exhibit H in which such Noteholder or Beneficial Holder certifies it is not a Restricted Party, (ii) any Noteholder or Beneficial Holder that has delivered the Confidentiality Agreement or the written certification referred to in clause (i) above, but is nonetheless determined in good faith after reasonable investigation by the Issuer, or the Servicer on its behalf, to be a Restricted Party or (iii) any other Non-Permitted Holder, the

 

5

 

Issuer, the Equityholder, Theravance Biopharma or any Affiliate of any such Person, shall be disregarded and deemed not to be Outstanding for purposes of any such determination.  In determining whether the Trustee shall be protected in relying upon any such Direction, only Notes and Beneficial Interests in respect of which the Trustee has received a Confidentiality Agreement or a written certification in the form attached as Exhibit H that the Noteholder or Beneficial Holder is not a Restricted Party shall be included; provided that Notes or Beneficial Interests owned by any Noteholder or Beneficial Holder that has delivered the Confidentiality Agreement or the written certification referred to in clause (i) above, but is nonetheless determined in good faith after reasonable investigation by the Issuer, or the Servicer on its behalf, to be a Restricted Party as expressly so stated in a written notice delivered to the Trustee, shall not be included.  Notwithstanding the foregoing, if Theravance Biopharma or any of its Affiliates owns 100% of the Notes of any class Outstanding, such Notes shall not be so disregarded as aforesaid.

 

(d)                                 Notwithstanding the definition of “Record Date,” the Issuer may, at its option, by delivery of Officer’s Certificate(s) to the Trustee, set a record date other than the Record Date to determine the Noteholders in respect of the Notes of any class entitled to give any Direction in respect of such Notes.  Such record date shall be the record date specified in such Officer’s Certificate, which shall be a date not more than thirty (30) days prior to the first solicitation of Noteholders in connection therewith.  If such a record date is fixed, such Direction may be given before or after such record date, but only the Noteholders of the applicable class at the close of business on such record date shall be deemed to be Noteholders for the purposes of determining whether Noteholders holding the requisite proportion of Outstanding Notes of such class have authorized, agreed or consented to such Direction, and for that purpose the Outstanding Notes of such class shall be computed as of such record date; provided, that no such Direction by the Noteholders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than one year after the record date.

 

(e)                                  Any Direction or other action by the Noteholder of any Note shall bind the Noteholder of every Note issued upon the transfer thereof, in exchange therefor or in lieu thereof, whether or not notation of such action is made upon such Note, and any Direction or other action by the Beneficial Holder of any Beneficial Interest in any Note shall bind any transferee of such Beneficial Interest.

 

ARTICLE II
 THE NOTES

 

Section 2.1                                    Amount of Notes; Terms; Form; Execution and Delivery.

 

(a)                                 Except in respect of deferred interest added to the principal balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) pursuant to Section 3.7(a), the Outstanding Principal Balance of any class of Notes that may be authenticated and delivered from time to time under this Indenture shall not exceed, with respect to the Original Notes, the initial Outstanding Principal Balance for the Original Notes in the amount of $250,000,000, or, with respect to any class (or sub-class) of Subordinated Notes or any class of Refinancing Notes, the Outstanding Principal Balance authorized in the Resolution and set forth

 

6

 

in an indenture supplemental hereto establishing such Subordinated Notes or Refinancing Notes; provided, that (i) any Refinancing Notes shall be issued in accordance with Section 2.15 and (ii) any Subordinated Notes shall be issued in accordance with Section 2.16.

 

(b)                                 There shall be issued, authenticated and delivered on the Closing Date and on the date of issuance of any Subordinated Notes or any Refinancing Notes to each of the Noteholders the Notes in the principal amounts and maturities and bearing the interest rates, in each case in registered form and, in the case of the Original Notes, substantially in the form set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 and Exhibit A-5, as applicable, or, in the case of any Subordinated Notes or any Refinancing Notes, substantially in the form set forth in any indenture supplemental hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements typewritten, printed, lithographed or engraved thereon, as may, consistently herewith, be determined by the officers executing such Notes, as evidenced by their execution of such Notes.  The Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes.  Each Note shall be dated the date of its authentication.  The terms of the Original Notes set forth in Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4, and Exhibit A-5, as applicable, are part of the terms of this Indenture.  The Trustee shall authenticate Notes and make Notes available for delivery for issue only upon the written order of the Issuer signed by a Responsible Officer of the Issuer.  Such order shall specify the aggregate principal amount and type of Notes to be authenticated, the date of issue, whether they are to be issued as Global Notes or Definitive Notes and delivery instructions.

 

The Notes will be sold initially only (A) to Persons that are both Qualified Institutional Buyers and Qualified Purchasers (“QIB/QPs”), purchasing the Beneficial Interest in the Notes for their own account or one or more other accounts with respect to which each such Person exercises sole investment discretion, each of which is a QIB/QP, in reliance on Rule 144A, (B) solely in the case of initial investors in the Notes, to Persons that are both Qualified Purchasers and Institutional Accredited Investors (“IAI/QPs”) purchasing for their own account or one or more other accounts with respect to which each such Person exercises sole investment discretion, each of which is an IAI/QP, and (C) outside the United States, to Qualified Purchasers that are Non-U.S. Persons in reliance on Regulation S (“Non-U.S. Persons/QPs”), that in the case of clauses (A) through (C) are purchasing the Definitive Notes or a Beneficial Interest in the Notes in a manner that does not involve any general solicitation or advertising (as those terms are used in Regulation D under the Securities Act) or any public offering within the meaning of the Securities Act, are not acquiring the Notes with a view to any resale or distribution thereof other than in accordance with the restrictions set forth herein, have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the purchase of the Notes and are able and prepared to bear the economic risk of investing in and holding the Notes and, in each case, are not Restricted Parties.

 

The Notes may thereafter be transferred in reliance on Rule 144A and/or Regulation S and in accordance with the procedures described herein.

 

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It is intended that the Notes be registered so as to participate in a book-entry system with DTC. Upon initial issuance, the ownership of the Notes shall be registered in the Register in the name of Cede & Co. (“Cede”), or any successor thereto, as nominee for DTC.  The Applicable Procedures shall be applicable to transfers of Beneficial Interests in the Notes.

 

Any Notes offered and sold to QIB/QPs in reliance on Rule 144A shall be issued initially in the form of one or more permanent global certificates in fully registered form without payment coupons, substantially in the form set forth in Exhibit A-1 hereto (each, a “Rule 144A Global Note”), registered in the name of Cede, as nominee of DTC, deposited with the Trustee as custodian for DTC, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.  The aggregate principal amount of each Rule 144A Global Note may from time to time be increased or decreased to reflect transfers to and from the Rule 144A Global Note by adjustments made on the books and records of the Trustee, as custodian for DTC, as hereinafter provided.

 

Any Notes offered and sold to IAI/QPs shall be issued initially in the form of one or more permanent global certificates in fully registered form without payment coupons, substantially in the form set forth in Exhibit A-2 hereto (each, an “IAI Global Note”), registered in the name of Cede, as nominee of DTC, deposited with the Trustee as custodian for DTC, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.  The aggregate principal amount of each IAI Global Note may from time to time be decreased to reflect transfers from the IAI Global Note by adjustments made on the books and records of the Trustee, as custodian for DTC, as hereinafter provided.

 

Any Notes offered and sold to Non-U.S. Persons/QPs in offshore transactions in reliance upon Regulation S shall be in each case issued initially in the form of (i) one or more temporary global Notes in registered form substantially in the form set forth in Exhibit A-3 hereto (each, a “Temporary Regulation S Global Note”), registered in the name of Cede, as nominee of DTC, deposited with the Trustee, as custodian for DTC, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided, for credit to the respective accounts at DTC of the designated agents holding on behalf of Euroclear or Clearstream or (ii) one or more Definitive Notes in registered form substantially in the form set forth in Exhibit A-5 hereto, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

 

At any time following the termination of the Restricted Period, upon delivery of a certificate in substantially the form of Exhibit E-2 hereto given by a Beneficial Holder holding a Beneficial Interest in a Temporary Regulation S Global Note, Beneficial Interests in the Temporary Regulation S Global Notes shall be exchangeable, in whole or in part, for Beneficial Interests in one or more permanent global notes in fully registered form without payment coupons, substantially in the form set forth in Exhibit A-4 hereto (each, a “Permanent Regulation S Global Note” and, together with each Temporary Regulation S Global Note, the “Regulation S Global Notes”), registered in the name of Cede, as nominee of DTC, deposited with the Trustee, as custodian for DTC, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided, and the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the Temporary Regulation S Global Note of such class in an amount equal to the principal amount of such Temporary Regulation S Global Note exchanged.  Until the termination of the Restricted Period with respect to any Temporary Regulation S Global Note,

 

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Beneficial Interests in such Temporary Regulation S Global Note may be held only through Agent Members acting for and on behalf of Euroclear and Clearstream.  The aggregate principal amount of the Temporary Regulation S Global Notes or the Permanent Regulation S Global Notes may from time to time be increased or decreased to reflect transfers to and from such Global Notes by adjustments made on the records of the Trustee, as custodian for DTC, as hereinafter provided.

 

(c)                                  Interest shall accrue on any class of Fixed Rate Notes from the date of issuance of such Fixed Rate Notes and shall be computed for each Interest Accrual Period on the basis of a 360-day year consisting of twelve 30-day months on the Outstanding Principal Balance of such Notes.  Interest shall accrue on any class of Floating Rate Notes from the date of issuance of such Floating Rate Notes and shall be computed for each Interest Accrual Period on the basis of a 360-day year and the actual number of days elapsed in such Interest Accrual Period on the Outstanding Principal Balance of such Notes.  For the avoidance of doubt, interest shall accrue on the Original Notes over the period from the Closing Date to the April 15, 2019 Payment Date as simple interest without compounding over such period.

 

(d)                                 On the date of any Refinancing, the Issuer shall issue and deliver, as provided in Section 2.15, an aggregate principal amount of Refinancing Notes having the maturities and bearing the interest rates and such other terms authorized by one or more Resolutions and set forth in any indenture supplemental hereto providing for the issuance of such Refinancing Notes or specified in the form of such Refinancing Notes, in each case in accordance with Section 2.15.

 

(e)                                  On the date of any Subordinated Note Issuance, the Issuer shall issue and deliver, as provided in Section 2.16, an aggregate principal amount of Subordinated Notes having the maturities and bearing the interest rates and such other terms authorized by one or more Resolutions and set forth in any indenture supplemental hereto providing for the issuance of such Subordinated Notes or specified in the form of such Subordinated Notes, in each case in accordance with Section 2.16.

 

(f)                                   The Notes shall be executed on behalf of the Issuer by the manual or facsimile signature of a Responsible Officer of the Issuer or any individual authorized to do so by a Responsible Officer of the Issuer.

 

(g)                                  Each Note bearing the manual or facsimile signature of any individual who at the time such Note was executed was authorized to execute such Note by a Responsible Officer of the Issuer shall bind the Issuer, notwithstanding that any such individual has ceased to hold such authority prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Note.

 

(h)                                 At any time and from time to time after the execution of any Notes, the Issuer may deliver such Notes to the Trustee for authentication and, subject to the provisions of Section 2.1(i), the Trustee shall authenticate such Notes by manual or facsimile signature upon receipt by it of a written order of the Issuer.  The Notes shall be authenticated on behalf of the Trustee by any Responsible Officer of the Trustee.

 

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(i)                                     No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless it shall have been executed on behalf of the Issuer as provided in Section 2.1(f) and authenticated by or on behalf of the Trustee as provided in Section 2.1(h).  Such signatures shall be conclusive evidence, and the only evidence that such Note has been duly executed and authenticated under this Indenture.

 

(j)                                    Application shall be made by the Issuer for the Notes to be admitted to the official list of the Cayman Islands Stock Exchange.  The Notes shall not be publicly or privately rated by any securities rating agency.  There are no other securities of the Issuer that are publicly or privately rated by any securities rating agency.

 

Section 2.2                                    Restrictive Legends.

 

(a)                                 Each Note (and all Notes issued in exchange therefor or upon registration of transfer or substitution thereof) shall bear the following legend on the face thereof:

 

THE ISSUANCE AND SALE OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER RELEVANT JURISDICTION OTHER THAN ON THE OFFICIAL LIST OF THE CAYMAN ISLANDS STOCK EXCHANGE, AND TRIPLE ROYALTY SUB LLC (THE “ISSUER”) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS NOTE OR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER OR AN AFFILIATE THEREOF, (B) TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS BOTH A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, AND NONE OF WHICH ARE (1) A DEALER OF THE TYPE DESCRIBED IN PARAGRAPH (a)(1)(ii) OF RULE 144A UNLESS IT OWNS AND INVESTS ON A DISCRETIONARY BASIS NOT LESS THAN $25,000,000 IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED TO IT, (2) FORMED OR CAPITALIZED FOR THE SPECIFIC PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER), (3) A CORPORATION, PARTNERSHIP, COMMON TRUST FUND, SPECIAL TRUST, PENSION FUND OR RETIREMENT PLAN IN WHICH THE SHAREHOLDERS, EQUITY OWNERS, PARTNERS, BENEFICIARIES, BENEFICIAL HOLDERS OR PARTICIPANTS, AS APPLICABLE, MAY DESIGNATE THE PARTICULAR INVESTMENTS TO BE MADE, (4) IF FORMED ON OR BEFORE APRIL 30, 1996, AN INVESTMENT COMPANY THAT RELIES ON THE EXCLUSION FROM THE

 

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DEFINITION OF “INVESTMENT COMPANY” PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT (OR A FOREIGN INVESTMENT COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(7) WITH RESPECT TO THOSE OF ITS HOLDERS THAT ARE U.S. PERSONS), UNLESS, WITH RESPECT TO ITS TREATMENT AS A QUALIFIED PURCHASER, IT HAS, IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, RECEIVED THE CONSENT OF ITS BENEFICIAL HOLDERS THAT ACQUIRED THEIR INTERESTS ON OR BEFORE APRIL 30, 1996 OR (5) AN ENTITY THAT, IMMEDIATELY SUBSEQUENT TO ITS PURCHASE OR OTHER ACQUISITION OF A BENEFICIAL INTEREST IN THIS NOTE, WILL HAVE INVESTED MORE THAN 40% OF ITS ASSETS IN BENEFICIAL INTERESTS IN THIS NOTE AND/OR IN OTHER SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL HOLDERS OF SUCH ENTITY’S SECURITIES ARE QUALIFIED PURCHASERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM SECURITIES ACT REGISTRATION PROVIDED BY RULE 144A, (C) SOLELY WITH RESPECT TO THE INITIAL PURCHASERS, IN THE UNITED STATES, TO AN INITIAL PURCHASER THAT IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, OR (D) OUTSIDE THE UNITED STATES, TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S, AND, IN EACH CASE, THAT ARE NOT RESTRICTED PARTIES (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR THE UNITED STATES AND ANY OTHER RELEVANT JURISDICTION.

 

BY ITS PURCHASE AND ACCEPTANCE OF THIS NOTE (INCLUDING ANY INTEREST HEREIN), EACH PURCHASER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) IT IS NOT (A) AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) SUBJECT TO TITLE I OF ERISA, (B) A PLAN (WITHIN

 

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THE MEANING OF SECTION 4975(e)(1) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) SUBJECT TO SECTION 4975 OF THE CODE OR (C) AN EMPLOYEE BENEFIT PLAN SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAWS”) (EACH OF THE FOREGOING, A “PLAN”) AND IS NOT ACTING ON BEHALF OF OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE OR (II) IT IS A PLAN OR IS ACTING ON BEHALF OF A PLAN OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE BUT THE PURCHASE AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE BY REASON OF THE APPLICATION OF ONE OR MORE STATUTORY OR ADMINISTRATIVE EXEMPTIONS OR OTHERWISE AND WILL NOT CONSTITUTE OR RESULT IN A VIOLATION OF ANY SIMILAR LAWS.  “PLAN ASSETS” HAS THE MEANING GIVEN TO IT BY SECTION 3(42) OF ERISA AND REGULATIONS OF THE U.S. DEPARTMENT OF LABOR, BUT ALSO INCLUDES ASSETS OF AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF ERISA) SUBJECT TO SIMILAR LAWS.

 

EACH INITIAL PURCHASER AND EACH SUBSEQUENT TRANSFEREE (IF NOT THE ISSUER OR AN AFFILIATE OF THE ISSUER) TAKING DELIVERY OF THIS NOTE OR AN INTEREST IN THIS NOTE WILL BE DEEMED TO HAVE MADE THE APPLICABLE REPRESENTATIONS AND AGREEMENTS REFERRED TO IN THE INDENTURE REFERRED TO HEREIN.  THIS NOTE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN, AND, IN ADDITION, EACH PERSON OR ENTITY THAT ACQUIRES OR ACCEPTS THIS NOTE OR AN INTEREST HEREIN BY SUCH ACQUISITION OR ACCEPTANCE AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET FORTH IN SUCH INDENTURE, AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS SET FORTH IN SUCH INDENTURE.

 

THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER THE CODE. FOR INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY FOR THIS NOTE, YOU SHOULD SUBMIT A WRITTEN REQUEST TO THE ISSUER AT THE FOLLOWING ADDRESS: 901 GATEWAY BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA 94080, ATTENTION: CHIEF FINANCIAL OFFICER.

 

A RESTRICTED PARTY MAY NOT BE A HOLDER OF THIS NOTE, AND IF, NOTWITHSTANDING SUCH PROHIBITION, THIS NOTE IS HELD BY A RESTRICTED PARTY, SUCH RESTRICTED PARTY SHALL NOT BE ENTITLED TO ENFORCE OR VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT.  ANY HOLDER OF THIS NOTE SEEKING TO ENFORCE OR TO VOTE TO ENFORCE THE COVENANTS OF THE

 

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ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT MUST PROVIDE A CERTIFICATE FOR THE BENEFIT OF THE ISSUER THAT SUCH HOLDER IS NOT A RESTRICTED PARTY.  THE RESTRICTIONS SET FORTH IN THE PRECEDING TWO SENTENCES AND THIS SENTENCE MAY NOT BE WAIVED OR AMENDED.

 

The Rule 144A Global Notes shall include the following additional legend:

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER (IF NOT THE ISSUER OR AN AFFILIATE OF THE ISSUER) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH THE HOLDER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, (B) IT UNDERSTANDS THAT THE ISSUER MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN THEIR NOTES FROM ONE OR MORE BOOK-ENTRY DEPOSITORIES, (C) IT WILL PROVIDE NOTICE OF THE TRANSFER RESTRICTIONS TO ANY SUBSEQUENT TRANSFEREES, (D) IT IS NOT FORMED FOR THE PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED PURCHASER AND A QUALIFIED INSTITUTIONAL BUYER) AND (E) IF IT IS A COMPANY EXCEPTED FROM THE DEFINITION OF “INVESTMENT COMPANY” BY SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT, OR A SECTION 7(d) FOREIGN INVESTMENT COMPANY RELYING ON SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT WITH RESPECT TO ITS U.S. HOLDERS, AND WAS FORMED ON OR BEFORE APRIL 30, 1996, IT HAS RECEIVED THE NECESSARY CONSENT FROM ITS BENEFICIAL HOLDERS AS REQUIRED BY THE INVESTMENT COMPANY ACT.

 

Each IAI Global Note shall include the following additional legend:

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER REPRESENTS THAT IT IS AN INITIAL PURCHASER OF THE NOTE THAT (A) IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, (B) IT UNDERSTANDS THAT THE ISSUER MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN THEIR NOTES FROM ONE OR MORE BOOK-ENTRY DEPOSITORIES, (C) IT WILL PROVIDE NOTICE OF THE TRANSFER RESTRICTIONS TO ANY SUBSEQUENT TRANSFEREES, (D) IT IS

 

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NOT FORMED FOR THE PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED PURCHASER AND A QUALIFIED INSTITUTIONAL BUYER) AND (E) IF IT IS A COMPANY EXCEPTED FROM THE DEFINITION OF “INVESTMENT COMPANY” BY SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT, OR A SECTION 7(d) FOREIGN INVESTMENT COMPANY RELYING ON SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT WITH RESPECT TO ITS U.S. HOLDERS, AND WAS FORMED ON OR BEFORE APRIL 30, 1996, IT HAS RECEIVED THE NECESSARY CONSENT FROM ITS BENEFICIAL HOLDERS AS REQUIRED BY THE INVESTMENT COMPANY ACT.

 

Each Regulation S Global Note and the Retained Notes will include the following additional legend:

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER REPRESENTS THAT IT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S.

 

Each Note will include the following additional legend as the last legend:

 

ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT AND WILL BE VOID AB INITIO AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRUSTEE OR ANY INTERMEDIARY.

 

IF THE HOLDER OF THIS NOTE (OTHER THAN FOR THIS PURPOSE ANY HOLDER THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S THAT ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S THAT IS ALSO A QUALIFIED PURCHASER) IS DETERMINED NOT TO HAVE BEEN BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, OR, SOLELY IN THE CASE OF THE INITIAL PURCHASERS OF THE NOTES, BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER AT THE TIME OF ACQUISITION OF THIS NOTE, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER THAT IS BOTH A

 

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QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON THAT IS NOT BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.

 

IF THIS NOTE WAS ACQUIRED OUTSIDE THE UNITED STATES, AND THE HOLDER IS DETERMINED NOT TO HAVE BEEN A QUALIFIED PURCHASER THAT IS (A) NOT A “U.S. PERSON” OR (B) A QUALIFIED INSTITUTIONAL BUYER AT THE TIME OF ACQUISITION OF THIS NOTE, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER WHO IS A QUALIFIED PURCHASER THAT IS (I) NOT A “U.S. PERSON” OR (II) A QUALIFIED INSTITUTIONAL BUYER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON WHO IS NOT A QUALIFIED PURCHASER AND (X) NOT A “U.S. PERSON” OR (Y) A QUALIFIED INSTITUTIONAL BUYER.

 

(b)                                 Each Global Note shall also bear the following legend on the face thereof:

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”), A NEW YORK CORPORATION, 55 WATER STREET, NEW YORK, NEW YORK 10004, OR A NOMINEE THEREOF.  THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR THE REGISTRAR, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER, CEDE & CO., HAS AN INTEREST HEREIN.

 

(c)                                  Each Temporary Regulation S Global Note and the Retained Notes shall also bear the following legend on the face thereof:

 

UNTIL 40 DAYS AFTER THE ISSUE DATE OF THE NOTES (THE “RESTRICTED PERIOD”) IN CONNECTION WITH THE OFFERING OF THE NOTES IN THE UNITED STATES FROM OUTSIDE OF THE UNITED STATES, THE SALE, PLEDGE OR TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS

 

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AND RESTRICTIONS.  THE HOLDER HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS NOTE, ACKNOWLEDGES THAT SUCH HOLDER IS A QUALIFIED PURCHASER AND THAT THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS NOTE MAY BE TRANSFERRED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY TO A QUALIFIED PURCHASER AND IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES, AND PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD, ONLY (I) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (II) PURSUANT TO AND IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT.

 

(d)                                 The required legends (collectively, the “Legend”) set forth in this Section 2.2 shall not be removed from the applicable Notes except as provided herein. Neither the Trustee nor the Registrar shall be responsible for the contents of the Legend nor any lack thereof.

 

Section 2.3                                    Registrar, Transfer Agent, Paying Agent and Calculation Agent.

 

(a)                                 With respect to each class of Notes, there shall at all times be maintained an office or agency in the location set forth in Section 12.5 where the Notes of such class may be presented or surrendered for exchange or registration of transfer (including any additional transfer agent, each, a “Transfer Agent”), where the Notes of such class may be registered, recorded and transferred (including any additional registrar, each, a “Registrar”), where the Notes of such class may be presented or surrendered for payment thereof (including any additional paying agent, each, a “Paying Agent”), and where notices and demands to or upon the Issuer in respect of such Notes may be served.  The Trustee shall be the initial Transfer Agent, the initial Paying Agent and the initial Registrar.  The Issuer shall cause each Registrar to keep a register of such class of Notes for which it is acting as Registrar and of their transfer and exchange (the “Register”).  Written notice of the location of each such other office or agency and of any change of location thereof shall be given by the Trustee to the Issuer and the Noteholders of such class of Notes.  In the event that no such office or agency shall be maintained or no such notice of location or of change of location shall be given, presentations and demands may be made and notices may be served at the Corporate Trust Office.

 

(b)                                 The Trustee shall act as the initial Calculation Agent hereunder.  If the Trustee shall no longer act as the Calculation Agent and to the extent not otherwise specifically provided herein, the Trustee shall furnish to the Calculation Agent, and the Calculation Agent shall furnish to the Trustee, upon written request such information and copies of such documents as the Trustee or the Calculation Agent may have and as are necessary for the Calculation Agent and the Trustee to perform their respective duties under Article III or otherwise.  There shall at all times be a Calculation Agent.  Upon the request of a Noteholder of Floating Rate Notes, the Calculation Agent shall provide to such Noteholder the interest rate borne by such Floating Rate Notes on the date of such request and, if determined, the interest rate borne by such Floating Rate Notes for the next Interest Accrual Period.

 

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(c)                                  Each Authorized Agent shall not be a Restricted Party and shall be a bank, trust company or corporation organized and doing business under the laws of the U.S., any state or territory thereof or of the District of Columbia, with a combined capital and surplus of at least $75,000,000 (or having a combined capital and surplus in excess of $5,000,000 and the obligations of which, whether now in existence or hereafter incurred, are fully and unconditionally Guaranteed by a bank, trust company or corporation organized and doing business under the laws of the U.S., any state or territory thereof or of the District of Columbia and having a combined capital and surplus of at least $75,000,000) and shall be authorized under the laws of the U.S., any state or territory thereof or the District of Columbia to exercise corporate trust powers, subject to supervision by federal or state authorities (such requirements, the “Eligibility Requirements”).  Each Registrar other than the Trustee shall furnish to the Trustee, at least five Business Days prior to each Payment Date, and at such other times as the Trustee may request in writing, a copy of the Register maintained by such Registrar.

 

(d)                                 Any Person into which any Authorized Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, consolidation or conversion to which any Authorized Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of any Authorized Agent (including the administration of the fiduciary relationship contemplated by this Indenture), shall be the successor of such Authorized Agent hereunder, if such successor is otherwise eligible under this Section 2.3, without the execution or filing of any paper or any further act on the part of the parties hereto or such Authorized Agent or such successor Person.

 

(e)                                  Any Authorized Agent may at any time resign by giving written notice of resignation to the Trustee and the Issuer.  The Issuer may, and at the request of the Trustee shall, at any time terminate the agency of any Authorized Agent by giving written notice of termination to such Authorized Agent and to the Trustee.  Upon the resignation or termination of an Authorized Agent or if at any time any such Authorized Agent shall cease to be eligible under this Section 2.3 (when, in either case, no other Authorized Agent performing the functions of such Authorized Agent shall have been appointed by the Trustee), the Issuer shall promptly appoint one or more qualified successor Authorized Agents, reasonably satisfactory to the Trustee, to perform the functions of the Authorized Agent that has resigned or whose agency has been terminated or who shall have ceased to be eligible under this Section 2.3.  The Issuer shall give written notice of any such appointment made by it to the Trustee, and in each case the Trustee shall send notice of such appointment to all Noteholders of the related class of Notes as their names and addresses appear on the Register for such class of Notes.

 

(f)                                   The Issuer agrees to pay, or cause to be paid, from time to time to each Authorized Agent reasonable compensation for its services and to reimburse it for its reasonable expenses to be agreed to pursuant to separate agreements with each such Authorized Agent.

 

(g)                                  Each Authorized Agent shall be entitled to all of the protections, immunities, indemnities, rights and privileges of the Trustee as set forth in this Indenture.

 

Section 2.4                                    Paying Agent to Hold Money in Trust.  The Trustee shall require each Paying Agent other than the Trustee to agree in writing that all moneys deposited with any Paying Agent for the purpose of any payment on the Notes shall be deposited and held in trust

 

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for the benefit of the Noteholders entitled to such payment, subject to the provisions of this Section 2.4.  Moneys so deposited and held in trust shall constitute a separate trust fund for the benefit of the Noteholders with respect to which such money was deposited.

 

The Trustee may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, direct any Paying Agent to pay to the Trustee all sums held in trust by 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.

 

Section 2.5                                    Method of Payment.

 

(a)                                 On each Payment Date, the Trustee shall, or shall instruct a Paying Agent to, pay, subject to Section 3.6, to the extent of the Available Collections Amount for such Payment Date, to the Noteholders all interest, principal and Premium, if any, on each class of Notes in the amounts determined by the Calculation Agent pursuant to Section 3.4.  Each payment on any Payment Date other than the final payment with respect to any class of Notes shall be made by the Trustee or the Paying Agent to the Noteholders as of the Record Date for such Payment Date.  The final payment with respect to any class of Notes, however, shall be made only upon presentation and surrender of such Note by the Noteholder or its agent at an office or agency of the Trustee or the Paying Agent in New York City.

 

(b)                                 At such time, if any, as the Notes of any class are issued in the form of Definitive Notes, payments on a Payment Date shall be made by the Trustee or the Paying Agent by check mailed to each Noteholder of a Definitive Note on the applicable Record Date at its address appearing on the Register maintained with respect to such class of Notes.  Alternatively, upon application in writing to the Trustee, not later than the applicable Record Date, by a Noteholder holding Definitive Notes, any such payments shall be made by wire transfer to an account designated by such Noteholder at a financial institution in New York City; provided, that, in each case, the final payment for any class of Notes shall be made only upon presentation and surrender of the Definitive Notes of such class by the Noteholder or its agent at an office or agency of the Trustee or the Paying Agent in New York City.  Payments in respect of the Notes represented by a Global Note (including principal, Premium, if any, and interest) shall be made by wire transfer of immediately available funds to the account specified by DTC at a financial institution in New York City.

 

(c)                                  The payment of any Interest Amount in respect of a class of Notes on a particular Payment Date shall be deemed allocated first to any unpaid Interest Amount due prior to such Payment Date (together with Additional Interest thereon) and second to any Interest Amount due on such Payment Date.

 

(d)                                 If the Final Legal Maturity Date with respect to the Original Notes is not a Business Day, the payment scheduled to be made on the Final Legal Maturity Date shall be made on the succeeding Business Day without the payment of Additional Interest.

 

Section 2.6                                    Minimum Denominations.  Each class of Notes shall be issued in minimum denominations of $250,000 and integral multiples of $1.00 in excess thereof.  After issuance, any Note may fail to be in such required minimum denomination due to the repayment

 

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of principal thereof in accordance with the Priority of Payments on any Payment Date or as a result of one or more Optional Redemptions or Mandatory Tax Redemptions.  If scheduled interest is added to the principal balance of the Notes on any Payment Date that occurs during the Interest Deferral Period pursuant to Section 3.7(a), the scheduled interest added to the principal balance of the Notes will be rounded upward or downward if necessary to the nearest $1.00 in order to maintain the integral multiple of $1.00 in excess of the minimum denomination of the Notes.

 

Section 2.7                                    Transfer and Exchange; Cancellation.  The Notes are issuable only in fully registered form without coupons.  A Noteholder or a Beneficial Holder may transfer a Note or a Beneficial Interest therein only by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Indenture.  No such transfer shall be effected until, and such proposed transferee shall succeed to the rights of a Noteholder or a Beneficial Holder only upon, final acceptance and registration of the transfer by the Registrar.

 

Prior to the due presentment for registration of transfer of a Note and satisfaction of the requirements specified in the last sentence of the preceding paragraph, the Issuer and the Trustee may deem and treat the applicable registered Noteholder as the absolute owner and holder of such Note for the purpose of receiving payment of all amounts payable with respect to such Note and for all other purposes and shall not be affected by any notice to the contrary.  The Registrar (if different from the Trustee) shall promptly notify the Trustee in writing and the Trustee shall promptly notify the Issuer of each request for a registration of transfer of a Note by furnishing the Issuer a copy of such request.

 

Furthermore, any Noteholder of a Global Note shall, by acceptance of such Global Note, agree that, subject to Section 2.10(b) and Section 2.11, transfers of Beneficial Interests in such Global Note may be effected only through a book-entry system maintained by the Noteholder of such Global Note (or its agent) and that ownership of a Beneficial Interest in such Global Note shall be required to be reflected in a book-entry system.  When Notes are presented to the Registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met (including, in the case of a transfer, that such Notes are duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and Registrar duly executed by the Noteholder thereof or by an attorney who is authorized in writing to act on behalf of the Noteholder).  To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Notes at the Registrar’s request.  Except as set forth in Section 2.8 and Section 2.9, no service charge shall be made for any registration of transfer or exchange or redemption of the Notes.

 

The Registrar shall not be required to exchange or register the transfer of any Notes as above provided during the 15-day period preceding the Final Legal Maturity Date of any such Notes or following any notice of Redemption or Mandatory Tax Redemption or Refinancing of Notes in respect of the portion of the Notes being so redeemed or refinanced.  The Registrar shall not be required to exchange or register the transfer of any Notes that have been selected, called or are being called for Redemption or Mandatory Tax Redemption or Refinancing except, in the

 

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case of any Notes where written notice has been given that such Notes are to be redeemed in part, the portion thereof not so to be redeemed.

 

Any Person (including the Issuer) at any time may deliver Notes to the Trustee for cancellation.  The Trustee and no one else shall cancel and destroy in accordance with its customary practices in effect from time to time (subject to the record retention requirements of the Exchange Act) any such Notes, together with any other Notes surrendered to it for registration of transfer, exchange or payment.  The Issuer may not issue new Notes (other than Refinancing Notes issued in connection with any Refinancing) to replace Notes it (or any other Person) has redeemed, paid or delivered to the Trustee for cancellation.

 

Section 2.8                                    Mutilated, Destroyed, Lost or Stolen Notes.  If any Note shall become mutilated, destroyed, lost or stolen, the Issuer shall, upon the written request of the Noteholder thereof and presentation of the Note or satisfactory evidence of destruction, loss or theft thereof to the Trustee or Registrar, issue, and the Trustee shall authenticate and the Trustee or Registrar shall deliver in exchange therefor or in replacement thereof, a new Note, payable to such Noteholder in the same principal amount, of the same maturity, with the same payment schedule, bearing the same interest rate and dated the date of its authentication.  If the Note being replaced has become mutilated, such Note shall be surrendered to the Trustee or the Registrar and forwarded to the Issuer by the Trustee or such Registrar.  If the Note being replaced has been destroyed, lost or stolen, the Noteholder thereof shall furnish to the Issuer, the Trustee and the Registrar (a) such security or indemnity as may be required by the Issuer, the Trustee and the Registrar to save each of them harmless and (b) evidence satisfactory to the Issuer, the Trustee and the Registrar of the destruction, loss or theft of such Note and of the ownership thereof (an affidavit from any QIB being satisfactory evidence).  The Noteholders shall be required to pay any Tax or other governmental charge imposed in connection with such exchange or replacement and any other expenses (including the reasonable fees and expenses of the Trustee and the Registrar) connected therewith.

 

Section 2.9                                    Payments of Transfer Taxes.  Upon the transfer of any Note or Notes pursuant to Section 2.7, the Issuer or the Trustee may require from the party requesting such new Note or Notes payment of a sum to reimburse the Issuer or the Trustee for, or to provide funds for the payment of, any transfer Tax or similar governmental charge payable in connection therewith.

 

Section 2.10                             Book-Entry Provisions.

 

(a)                                 Global Notes shall (i) be registered in the name of the Clearing Agency or a nominee of the Clearing Agency, (ii) be delivered to the Trustee as custodian for the Clearing Agency and (iii) bear the Legend (as applicable).  In accordance with the requirements of the Clearing Agency, the Issuer shall cause the Trustee to authenticate an additional Global Note or additional Global Notes in the appropriate principal amount such that no Global Note may exceed an aggregate principal amount of $500,000,000 at any time.

 

Members of, or participants in, the Clearing Agency (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Clearing Agency, or the Trustee as its custodian, or under such Global Note, and the Clearing

 

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Agency may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of such Global Note for all purposes whatsoever.

 

Whenever notice or other communication to the Noteholders or Beneficial Holders of any class of Global Notes is required under this Indenture, unless and until Definitive Notes shall have been issued pursuant to Section 2.10(b), the Trustee shall give all such notices and communications specified herein to be given to Noteholders and Beneficial Holders of such class of Global Notes to the Clearing Agency, and shall make available additional copies as requested by Agent Members, in each case to the extent that the Trustee shall have been provided with a copy of a Confidentiality Agreement executed and delivered to the Registrar by such Noteholders or Beneficial Holders.

 

Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Clearing Agency or impair, as between the Clearing Agency and its Agent Members, the operation of customary practices governing the exercise of the rights of a Noteholder under any Global Note.  Neither the Issuer nor the Trustee shall be liable for any delay by the Clearing Agency in identifying the Agent Members in respect of the Global Notes, and the Issuer and the Trustee may conclusively rely on, and shall be fully protected in relying on, instructions from the Clearing Agency for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of any Global Notes to be issued).

 

(b)                                 Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Clearing Agency, its successors or their respective nominees.  Interests of Agent Members in a Global Note may be transferred in accordance with the Applicable Procedures and the provisions of Section 2.11.  Except as set forth in Section 2.11(a), Definitive Notes shall be issued to the individual Agent Members or Beneficial Holders or their nominees in exchange for their Beneficial Interests in a Global Note with respect to any class of Notes only if (i) the Issuer advises the Trustee in writing that the Clearing Agency is no longer willing or able to properly discharge its responsibilities as depositary with respect to such class of Notes and the Trustee or the Issuer is unable to appoint a qualified successor within ninety (90) days of such notice or (ii) during the occurrence of an Event of Default with respect to such class of Notes, any Noteholder requests that all or a portion of a Global Note be exchanged for a Definitive Note.  Upon the occurrence of any event described in the preceding sentence, the Trustee shall notify all affected Noteholders of such class, through the Clearing Agency, of the occurrence of such event and of the availability of Definitive Notes of such class; provided, however, that in no event shall the Temporary Regulation S Global Note be exchanged for Definitive Notes prior to the later of (x) the termination of the Restricted Period and (y) the date of receipt by the Issuer of any certificates determined by it to be required pursuant to Rule 903 or 904 under the Securities Act.  Upon surrender to the Trustee of the Global Notes of such class held by the Clearing Agency, accompanied by registration instructions from the Clearing Agency for registration of Definitive Notes, the Issuer shall issue and the Trustee shall authenticate and deliver the Definitive Notes of such class to the Agent Members and Beneficial Holders of such class or their nominees in accordance with the instructions of the Clearing Agency.

 

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None of the Issuer, the Registrar, the Transfer Agent, the Paying Agent or the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such registration instructions.  Upon the issuance of Definitive Notes of such class, the Trustee shall recognize the Persons in whose name the Definitive Notes are registered in the Register as Noteholders hereunder.  Neither the Issuer nor the Trustee shall be liable if the Trustee or the Issuer is unable to locate a qualified successor to the Clearing Agency.

 

(c)                                  Any Beneficial Interest in one of the Global Notes as to any class that is transferred to a Person who takes delivery in the form of an interest in another Global Note shall, upon transfer, cease to be an interest in such Global Note and become an interest in such other Global Note and, accordingly, shall thereafter be subject to all transfer restrictions, if any, and other procedures applicable to Beneficial Interests in such other Global Note for as long as it remains such an interest.

 

(d)                                 Any Definitive Note delivered in exchange for an interest in a Global Note pursuant to Section 2.10(b) shall bear the Legend applicable to a Global Note.

 

Section 2.11                             Special Transfer Provisions.

 

(a)                                 A Global Note may not be transferred, in whole or in part, to any Person other than DTC, and no such transfer to any such other Person may be registered; provided, however, that this Section 2.11(a) shall not prohibit any transfer of a Note that is issued in exchange for a Global Note in accordance with Section 2.7 and shall not prohibit any transfer of a Beneficial Interest in a Global Note effected in accordance with the other provisions of this Section 2.11.

 

(b)                                 The transfer by a Beneficial Holder holding a Beneficial Interest in a Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a Beneficial Interest in the Rule 144A Global Note shall be made upon the deemed representation of the transferee that it is purchasing for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is both a Qualified Institutional Buyer and a Qualified Purchaser, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as such transferee has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

(c)                                  If a Beneficial Holder holding a Beneficial Interest in a Rule 144A Global Note or in an IAI Global Note wishes at any time to exchange its interest in such Rule 144A Global Note or in such IAI Global Note, as applicable, for an interest in the Temporary Regulation S Global Note, or to transfer its interest in a Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a Beneficial Interest in the Temporary Regulation S Global Note, such exchange or transfer may be effected, subject to the Applicable Procedures, only in accordance with the provisions of this Section 2.11(c).  Upon receipt by the Registrar of (i) written instructions given in accordance with the Applicable Procedures from a Clearing Agency Participant directing the Registrar to credit or cause to be credited to a specified Clearing

 

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Agency Participant’s account a Beneficial Interest in the Temporary Regulation S Global Note, in a principal amount equal to that of the Beneficial Interest in such Rule 144A Global Note or such IAI Global Note, as applicable, to be so exchanged or transferred, (ii) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Clearing Agency Participant (and the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Clearing Agency Participant to be debited for, such Beneficial Interest and (iii) a certificate in substantially the form set forth in Exhibit E-1 hereto given by the Beneficial Holder holding such Beneficial Interest in such Rule 144A Global Note or such IAI Global Note, as applicable, the Registrar shall instruct the Trustee, as custodian of DTC, to reduce the principal amount of the Rule 144A Global Note or the IAI Global Note, as applicable, and to increase the principal amount of the Temporary Regulation S Global Note, by the principal amount of the Beneficial Interest in such Rule 144A Global Note or such IAI Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (which shall be the Clearing Agency Participant for Euroclear or Clearstream or both, as the case may be) a Beneficial Interest in the Temporary Regulation S Global Note having a principal amount equal to the amount by which the principal amount of such Rule 144A Global Note or such IAI Global Note was reduced upon such exchange or transfer.

 

(d)                                 If a Beneficial Holder holding a Beneficial Interest in a Rule 144A Global Note or an IAI Global Note wishes at any time to exchange its interest in such Rule 144A Global Note or such IAI Global Note for an interest in the Permanent Regulation S Global Note, or to transfer its interest in a Rule 144A Global Note to a Person who wishes to take delivery thereof in the form of a Beneficial Interest in the Permanent Regulation S Global Note, such exchange or transfer may be effected, subject to the Applicable Procedures, only in accordance with the provisions of this Section 2.11(d). Upon receipt by the Registrar of (i) written instructions given in accordance with the Applicable Procedures from a Clearing Agency Participant directing the Registrar to credit or cause to be credited to a specified Clearing Agency Participant’s account a Beneficial Interest in the Permanent Regulation S Global Note in a principal amount equal to that of the Beneficial Interest in such Rule 144A Global Note or such IAI Global Note to be so exchanged or transferred, (ii) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Clearing Agency Participant (and the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Clearing Agency Participant to be debited for, such Beneficial Interest and (iii) a certificate in substantially the form of Exhibit E-2 hereto given by the Beneficial Holder holding such Beneficial Interest in such Rule 144A Global Note or such IAI Global Note, as applicable, the Registrar shall instruct the Trustee, as custodian of DTC, to reduce the principal amount of such Rule 144A Global Note or such IAI Global Note, as applicable, and to increase the principal amount of the Permanent Regulation S Global Note, by the principal amount of the Beneficial Interest in such Rule 144A Global Note or such IAI Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (which shall be the Clearing Agency Participant for Euroclear or Clearstream or both, as the case may be) a Beneficial Interest in the Permanent Regulation S Global Note having a principal amount equal to the amount by which the principal amount of such Rule 144A Global Note or such IAI Global Note was reduced upon such exchange or transfer.

 

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(e)                                  If a Beneficial Holder holding a Beneficial Interest in an IAI Global Note, a Temporary Regulation S Global Note or a Permanent Regulation S Global Note wishes at any time to exchange its interest in such IAI Global Note, such Temporary Regulation S Global Note or such Permanent Regulation S Global Note for an interest in the Rule 144A Global Note, or to transfer such interest to a Person who wishes to take delivery thereof in the form of a Beneficial Interest in the Rule 144A Global Note, such exchange or transfer may be effected, subject to the Applicable Procedures, only in accordance with the provisions of this Section 2.11(e). Upon receipt by the Registrar of (i) written instructions given in accordance with the Applicable Procedures from a Clearing Agency Participant directing the Registrar to credit or cause to be credited to a specified Clearing Agency Participant’s account a Beneficial Interest in the Rule 144A Global Note in a principal amount equal to that of the Beneficial Interest in such IAI Global Note, such Temporary Regulation S Global Note or such Permanent Regulation S Global Note, as the case may be, to be so exchanged or transferred, (ii) a written order given in accordance with the Applicable Procedures containing information regarding the account of the Clearing Agency Participant (and the Euroclear or Clearstream account, as the case may be) to be credited with, and the account of the Clearing Agency Participant to be debited for, such Beneficial Interest and (iii) with respect to an exchange of a Beneficial Interest in such IAI Global Note, or an exchange or a transfer of a Beneficial Interest in such Temporary Regulation S Global Note or such Permanent Regulation S Global Note, a certificate in substantially the form set forth in Exhibit E-3 hereto given by such Beneficial Holder holding such Beneficial Interest in such IAI Global Note, such Temporary Regulation S Global Note or such Permanent Regulation S Global Note, the Registrar shall instruct the Trustee, as custodian of DTC, to reduce the principal amount of such IAI Global Note, such Temporary Regulation S Global Note or such Permanent Regulation S Global Note, as the case may be, and to increase the principal amount of the Rule 144A Global Note, by the principal amount of the Beneficial Interest in such IAI Global Note, such Temporary Regulation S Global Note or such Permanent Regulation S Global Note to be so exchanged or transferred, and to credit or cause to be credited to the account of the Person specified in such instructions (which shall be the Clearing Agency Participant for DTC) a Beneficial Interest in the Rule 144A Global Note having a principal amount equal to the amount by which the principal amount of such IAI Global Note, such Temporary Regulation S Global Note or such Permanent Regulation S Global Note, as the case may be, was reduced upon such exchange or transfer.

 

(f)                                   In the event that a Global Note or any portion thereof is exchanged for Notes other than Global Notes, such other Notes may in turn be exchanged (upon transfer or otherwise) for Notes that are not Global Notes or for a Beneficial Interest in a Global Note (if any is then outstanding) only in accordance with such procedures as may be adopted from time to time by the Issuer and the Registrar, which shall be substantially consistent with the provisions of this Section 2.11 (including the certification requirement intended to ensure that transfers and exchanges of Beneficial Interests in a Global Note comply with Rule 144A or Regulation S under the Securities Act, as the case may be) and any Applicable Procedures.

 

(g)                                  Until the termination of the Restricted Period with respect to any Note, interests in the Temporary Regulation S Global Notes representing such Note may be held only through Clearing Agency Participants acting for and on behalf of Euroclear and Clearstream; provided that this Section 2.11(g) shall not prohibit any transfer in accordance with Section 2.11(c).  After the expiration of the Restricted Period, interests in the Permanent Regulation S

 

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Global Notes may be transferred without requiring any certifications other than those set forth in this Section 2.11.

 

(h)                                 By its acceptance of any Note bearing the Legend, each Noteholder of such Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Legend and agrees that it shall transfer such Note (or the Beneficial Interest therein) only as provided in this Indenture and in accordance with the Legend, including the requirement that each purchaser of a Beneficial Interest in the Notes and each subsequent transferee shall not be a Restricted Party.  The Registrar shall not register or reflect on its books and records a transfer of any Note (or any Beneficial Interest therein) unless such transfer complies with the restrictions on transfer of such Note set forth in this Indenture and in accordance with the Legend.  In connection with any transfer of Notes (or Beneficial Interests therein), each Noteholder (or Beneficial Holder) agrees by its acceptance of the Notes (or Beneficial Interests therein) to furnish the Trustee the certifications and legal opinions (if requested and required pursuant hereto) described herein to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act; provided, that the Trustee shall not be required to determine (but may rely on a determination made by the Issuer with respect to) the sufficiency of any such legal opinions.

 

(i)                                     The Notes shall be issued pursuant to an exemption from registration under the Securities Act.  Except as otherwise set forth in Section 2.1(j), the Issuer agrees that it shall not at any time (i) apply to list, list or list upon notice of issuance, (ii) consent to or authorize an application for the listing or the listing of, or (iii) enable or authorize the trading of, the Notes on an established securities market, including (w) a national securities exchange registered under the Exchange Act or exempted from registration because of the limited volume of transactions, (x) a foreign securities exchange that, under the law of the jurisdiction where it is organized, satisfies regulatory requirements that are analogous to the regulatory requirements under the Exchange Act applicable to exchanges described in Section 2.11(i)(iii)(w), (y) a regional or local exchange or (z) an over-the-counter market or interdealer quotation system that regularly disseminates firm buy or sell quotations by identified brokers or dealers by electronic means or otherwise, as the term “established securities market” and the other terms in this Section 2.11(i) are defined for purposes of Section 7704 of the Code.

 

(j)                                    The Trustee shall retain copies of all letters, notices and other written communications received pursuant to Section 2.10 or this Section 2.11.  The Issuer shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Trustee.

 

(k)                                 After the Closing Date with respect to the Original Notes (or the date of issuance with respect to any Subordinated Notes or any Refinancing Notes), forms of Confidentiality Agreements shall be available to Noteholders, Agent Members and Beneficial Holders and proposed transferees of the Notes (or the Beneficial Interests therein) from the Registrar, initially at the Corporate Trust Office.  The Registrar shall promptly, but in any event no later than two Business Days after receipt thereof, furnish the Trustee, the Issuer and the Servicer with a copy of each executed Confidentiality Agreement received by the Registrar.

 

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(l)                                     Notwithstanding any other provision contained in this Indenture to the contrary, any Noteholder or Beneficial Holder may assign a security interest in, or pledge, all or any portion of the Notes or Beneficial Interest held by it to a lender or a trustee or collateral agent (or other similar representative) that delivers to the Trustee a Confidentiality Agreement or a written certification in form and substance satisfactory to the Trustee that it is not a Restricted Party under any indenture, loan agreement or other similar agreement to which such Noteholder or Beneficial Holder or any of its Affiliates is party in support of any obligations of such Noteholder or Beneficial Holder or Affiliate or holders of securities or other obligations issued by such Noteholder or Beneficial Holder or Affiliate; provided, that no such assignment or pledge shall release the assigning or pledging Noteholder or Beneficial Holder from its obligations hereunder; provided, further, that the transfer of all or any portion of the Notes or the Beneficial Interest to the lender or trustee or collateral agent (or other similar representative) or any other Person shall be subject to the restrictions on transfer of the Notes or a Beneficial Interest set forth in this Indenture.

 

(m)                             Each purchaser of the Notes will be deemed to have represented and warranted by its purchase of the Notes (including any interest in a Note) that either (i) it is not a Plan and is not acting on behalf of a Plan or using Plan Assets to purchase such Notes or (ii) it is a Plan or is acting on behalf of a Plan or using Plan Assets to purchase such Notes but the purchase and holding of such Notes will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code by reason of the application of one or more statutory or administrative exemptions or otherwise and will not constitute or result in a violation of any Similar Laws.

 

(n)                                 The Global Notes shall be exchangeable in their entirety for one or more definitive notes in registered form, without interest coupons (collectively, the “Definitive Notes”) pursuant to Section 2.10(b) and this Section 2.11(n) in accordance with their terms and, upon complete exchange thereof, such Global Notes shall be surrendered to the Trustee for cancellation.  For avoidance of doubt, the Retained Notes are Definitive Notes.  Definitive Notes of any class shall be freely transferable and exchangeable for Definitive Notes of the same class at the office of the Trustee or the office of the Registrar upon compliance with the requirements set forth in this Indenture.  In the case of a transfer of only part of a holding of Definitive Notes, a new Definitive Note shall be issued to the transferee in respect of the part transferred and a new Definitive Note in respect of the balance of the holding not transferred shall be issued to the transferor and may be obtained at the office of the Registrar.

 

(o)                                 Other than as permitted by the U.S. Credit Risk Retention Rules, neither the Transferor nor any of its Affiliates may sell, transfer or hedge the Retained Notes during the Risk Retention Period; provided that the Risk Retention Period will end with respect to the Notes immediately upon the earlier of the time at which no Notes are outstanding and such time as the “sponsor” (as defined under the U.S. Credit Risk Retention Rules) of the offer and sale of the Notes, in its capacity as sponsor of such offer and sale, is no longer required by the U.S. Credit Risk Retention Rules to retain an economic interest in the Notes.

 

(p)                                 Any transfer in violation of the provisions of this Section 2.11 shall be void ab initio.

 

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Section 2.12                             Temporary Definitive Notes.  Pending the preparation of Definitive Notes of any class, the Issuer may execute and the Trustee may authenticate and deliver temporary Definitive Notes of such class that are printed, lithographed, typewritten or otherwise produced, in any denomination, containing substantially the same terms and provisions as are set forth in the applicable Exhibit or in any indenture supplemental hereto, except for such appropriate insertions, omissions, substitutions and other variations relating to their temporary nature as a Responsible Officer of the Issuer executing such temporary Definitive Notes may determine, as evidenced by his or her execution of such temporary Definitive Notes.

 

If temporary Definitive Notes of any class are issued, the Issuer shall cause such Definitive Notes of such class to be prepared without unreasonable delay.  After the preparation of Definitive Notes of such class, the temporary Definitive Notes shall be exchangeable for Definitive Notes upon surrender of such temporary Definitive Notes at the Corporate Trust Office, without charge to the Noteholder thereof.  Upon surrender for cancellation of any one or more temporary Definitive Notes of any class, the Issuer shall execute and the Trustee shall authenticate and deliver in exchange therefor Definitive Notes of like class, in authorized denominations and in the same aggregate principal amounts.  Until so exchanged, such temporary Definitive Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes.

 

Section 2.13                             Statements to Noteholders.

 

(a)                                 On each Payment Date and any other date for distribution of any payments with respect to any class of Notes then Outstanding, the Trustee shall deliver a report (which delivery may be made through electronic mail (blind carbon copy) or through a secure password-protected website), covering the information set forth in Exhibit C and prepared by the Servicer, giving effect to such payments (each, a “Distribution Report”), to (i) only each Noteholder and Beneficial Holder that has executed and delivered to the Registrar a Confidentiality Agreement, (ii) the Issuer, (iii) the Calculation Agent, (iv) the Equityholder and (v) Theravance Biopharma and to no other Person.

 

(b)                                 Each Distribution Report provided to the Noteholders and Beneficial Holders by the Trustee for each Payment Date pursuant to Section 2.13(a), commencing with the April 15, 2019 Payment Date, or other date for distribution of payments on the Notes, shall include the amounts deposited into and withdrawn from the Collection Account and information with respect to the application of funds in accordance with the Priority of Payments on the related Payment Date and shall be accompanied by a statement prepared by the Servicer setting forth an analysis of the Collection Account activity for the quarterly period ending on the Calculation Date relating to such Payment Date (provided, that such statement will not include an analysis of the source of the deposits made to the Collection Account to the extent that the confidentiality provisions of the GSK Agreements, the TRC LLC Agreement and the Master Agreement prohibit such disclosure or analysis and may show deposits on an aggregated basis, and such statement shall be required to be treated confidentially pursuant to the terms of the Confidentiality Agreement.  The Trustee shall not be responsible for the contents of the Distribution Reports.

 

(c)                                  Each Distribution Report shall include a statement to the following effect:

 

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THE INDENTURE REQUIRES THAT EACH HOLDER OF A BENEFICIAL INTEREST IN THE NOTES BE A QUALIFIED PURCHASER (AS DEFINED BELOW) THAT IS NOT A RESTRICTED PARTY (AS DEFINED IN THE INDENTURE).  EACH RESALE OF A NOTE (A) MUST BE MADE TO A PERSON OR ENTITY THAT IS A QUALIFIED PURCHASER THAT THE TRANSFEROR REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (A “QUALIFIED INSTITUTIONAL BUYER”) WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT THAT TAKES DELIVERY OF THE INTEREST IN THE NOTE IN THE FORM OF AN INTEREST IN A RULE 144A GLOBAL NOTE OR (B) OUTSIDE THE UNITED STATES MUST BE MADE TO A PERSON OR ENTITY THAT IS A QUALIFIED PURCHASER THAT IS ALSO EITHER A QUALIFIED INSTITUTIONAL BUYER OR NOT A U.S. PERSON IN AN OFFSHORE TRANSACTION IN RELIANCE ON REGULATION S, AND IN EACH CASE, SUCH PERSON OR ENTITY IS NOT A RESTRICTED PARTY (AS DEFINED IN THE INDENTURE).  A “QUALIFIED PURCHASER” IS (A) A “QUALIFIED PURCHASER” AS DEFINED IN SECTION 2(a)(51)(A) OF THE U.S. INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”), AND THE RELATED RULES THEREUNDER OR (B) A COMPANY EACH OF WHOSE BENEFICIAL HOLDERS IS A “QUALIFIED PURCHASER” AS DEFINED IN SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT AND RELATED RULES THEREUNDER.

 

EACH TRANSFEREE OF AN INTEREST IN A RULE 144A GLOBAL NOTE WILL BE DEEMED TO REPRESENT AT THE TIME OF PURCHASE THAT:  (1) IT IS BOTH A QUALIFIED INSTITUTIONAL BUYER PURSUANT TO RULE 144A AND A QUALIFIED PURCHASER PURSUANT TO SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, AND IS AWARE THAT ANY SALE OF NOTES TO IT WILL BE MADE IN RELIANCE ON RULE 144A, (2) ITS ACQUISITION OF NOTES IN ANY SUCH SALE WILL BE FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER PURSUANT TO RULE 144A AND A QUALIFIED PURCHASER PURSUANT TO SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, AND (3) NEITHER IT NOR ANY ACCOUNT FOR WHICH IT IS ACQUIRING THE BENEFICIAL INTEREST IS (I) A DEALER OF THE TYPE DESCRIBED IN PARAGRAPH (a)(1)(ii) OF RULE 144A UNLESS IT OWNS AND INVESTS ON A DISCRETIONARY BASIS NOT LESS THAN $25,000,000 IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED TO IT, (II) FORMED OR CAPITALIZED FOR THE SPECIFIC PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER), (III) A CORPORATION, PARTNERSHIP, COMMON TRUST FUND, SPECIAL TRUST, PENSION FUND OR RETIREMENT PLAN IN WHICH THE SHAREHOLDERS, EQUITY OWNERS, PARTNERS, BENEFICIARIES, BENEFICIAL HOLDERS OR PARTICIPANTS, AS APPLICABLE, MAY DESIGNATE THE PARTICULAR INVESTMENTS TO BE MADE, (IV) IF FORMED ON OR BEFORE APRIL 30, 1996, AN INVESTMENT COMPANY THAT RELIES ON THE EXCLUSION FROM THE

 

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DEFINITION OF “INVESTMENT COMPANY” PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT (OR A FOREIGN INVESTMENT COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(7) WITH RESPECT TO THOSE OF ITS HOLDERS THAT ARE U.S. PERSONS), UNLESS, WITH RESPECT TO ITS TREATMENT AS A QUALIFIED PURCHASER, IT HAS, IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, RECEIVED THE CONSENT OF ITS BENEFICIAL HOLDERS THAT ACQUIRED THEIR INTERESTS ON OR BEFORE APRIL 30, 1996, OR (V) AN ENTITY THAT, IMMEDIATELY SUBSEQUENT TO ITS PURCHASE OR OTHER ACQUISITION OF A BENEFICIAL INTEREST IN THE NOTE, WILL HAVE INVESTED MORE THAN 40% OF ITS ASSETS IN BENEFICIAL INTERESTS IN THE NOTE AND/OR IN OTHER SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL HOLDERS OF SUCH ENTITY’S SECURITIES ARE QUALIFIED PURCHASERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM SECURITIES ACT REGISTRATION PROVIDED BY RULE 144A.

 

EACH TRANSFEREE OF AN INTEREST IN A TEMPORARY REGULATION S GLOBAL NOTE OR A PERMANENT REGULATION S GLOBAL NOTE WILL BE DEEMED TO REPRESENT AT THE TIME OF PURCHASE THAT:  (1) IT WAS OUTSIDE THE UNITED STATES AND IS A QUALIFIED PURCHASER PURSUANT TO SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT AND NOT A U.S. PERSON, AND (2) ITS ACQUISITION OF NOTES IN ANY SUCH SALE WILL BE FOR ITS OWN ACCOUNT OR ONE OR MORE OTHER ACCOUNTS WITH RESPECT TO WHICH IT EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER AND NONE OF WHICH IS A U.S. PERSON.

 

THE ISSUER DIRECTS THAT THE RECIPIENT OF THIS NOTICE, AND ANY RECIPIENT OF A COPY OF THIS NOTICE, PROVIDE A COPY TO ANY PERSON HAVING AN INTEREST IN THE NOTES WITH RESPECT TO WHICH THIS DISTRIBUTION REPORT IS DELIVERED, AS INDICATED ON THE BOOKS OF THE DEPOSITORY TRUST COMPANY OR ON THE BOOKS OF A PARTICIPANT IN THE DEPOSITORY TRUST COMPANY OR ON THE BOOKS OF AN INDIRECT PARTICIPANT FOR WHICH SUCH PARTICIPANT IN THE DEPOSITORY TRUST COMPANY ACTS AS AGENT.

 

IF THE ISSUER DETERMINES THAT ANY BENEFICIAL HOLDER OF AN INTEREST IN THE NOTES ACQUIRED THE INTEREST WITHOUT BEING BOTH A QUALIFIED PURCHASER AND A QUALIFIED INSTITUTIONAL BUYER AT THE TIME OF THE PURCHASE OF THE INTEREST IN THE NOTE (OTHER THAN (X) AN INITIAL PURCHASER OF THE NOTES ON THE CLOSING DATE THAT IS BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER HOLDING A BENEFICIAL INTEREST IN THE IAI GLOBAL NOTE OR (Y) A NON-U.S. PERSON THAT ACQUIRED THE NOTES IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S THAT IS ALSO A

 

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QUALIFIED PURCHASER)  OR IF ANY PERSON THAT IS A RESTRICTED PARTY SHALL BECOME THE BENEFICIAL HOLDER OF THE INTERESTS IN THE NOTES (ANY SUCH PERSON A “NON-PERMITTED HOLDER”), THE ACQUISITION OF THE BENEFICIAL INTEREST IN THE NOTES BY SUCH NON-PERMITTED HOLDER SHALL BE NULL AND VOID AB INITIO FOR ALL PURPOSES UNDER THE INDENTURE. THE ISSUER SHALL, PROMPTLY AFTER DISCOVERY BY THE ISSUER THAT SUCH PERSON IS A NON-PERMITTED HOLDER OR UPON NOTICE TO THE ISSUER FROM THE TRUSTEE (IF A RESPONSIBLE OFFICER OF THE TRUSTEE OBTAINS ACTUAL KNOWLEDGE WHO, IN EACH CASE, AGREE TO NOTIFY THE ISSUER UPON OBTAINING ACTUAL KNOWLEDGE, IF ANY), SEND NOTICE TO SUCH NON-PERMITTED HOLDER DEMANDING THAT SUCH NON-PERMITTED HOLDER TRANSFER THE BENEFICIAL INTEREST IN THE NOTES HELD BY SUCH NON-PERMITTED HOLDER TO A PERSON THAT IS NOT A NON-PERMITTED HOLDER WITHIN THIRTY (30) DAYS AFTER THE DATE OF SUCH NOTICE.  IF SUCH NON-PERMITTED HOLDER FAILS TO SO TRANSFER THE BENEFICIAL INTEREST IN THE NOTES WITHIN SUCH THIRTY (30) DAY PERIOD, THE ISSUER SHALL HAVE THE RIGHT, WITHOUT FURTHER NOTICE TO THE NON-PERMITTED HOLDER, TO SELL THE BENEFICIAL INTEREST IN THE NOTES TO A PURCHASER OR PURCHASERS SELECTED BY THE ISSUER THAT IS NOT A NON-PERMITTED HOLDER ON SUCH TERMS AS THE ISSUER MAY CHOOSE.  THE ISSUER MAY SELECT THE PURCHASER OR PURCHASERS BY SOLICITING ONE OR MORE BIDS FROM ONE OR MORE BROKERS OR OTHER MARKET PROFESSIONALS THAT REGULARLY DEAL IN SECURITIES SIMILAR TO THE NOTES AND SELL SUCH NOTES TO THE HIGHEST SUCH BIDDER. HOWEVER, THE ISSUER MAY SELECT THE PURCHASER OR PURCHASERS BY ANY OTHER MEANS DETERMINED BY IT IN ITS SOLE DISCRETION.  THE BENEFICIAL HOLDER OF EACH NOTE, THE NON-PERMITTED HOLDER AND EACH OTHER PERSON IN THE CHAIN OF TITLE FROM THE BENEFICIAL HOLDER TO THE NON-PERMITTED HOLDER, BY ITS ACCEPTANCE OF A BENEFICIAL INTEREST IN THE NOTES, AGREE TO COOPERATE WITH THE ISSUER AND THE TRUSTEE TO EFFECT SUCH TRANSFERS.  THE PROCEEDS OF SUCH SALE, NET OF ANY COMMISSIONS, EXPENSES AND TAXES DUE IN CONNECTION WITH SUCH SALE SHALL BE REMITTED TO THE NON-PERMITTED HOLDER.  THE TERMS AND CONDITIONS OF ANY SALE UNDER THIS PARAGRAPH SHALL BE DETERMINED IN THE SOLE DISCRETION OF THE ISSUER, AND NEITHER THE ISSUER NOR THE TRUSTEE SHALL BE LIABLE TO ANY PERSON HAVING A BENEFICIAL INTEREST IN THE NOTES SOLD AS A RESULT OF ANY SUCH SALE OR THE EXERCISE OF SUCH DISCRETION.

 

(d)                                 After the end of each calendar year but not later than the latest date permitted by Applicable Law, the Trustee shall (or shall instruct any Paying Agent to) furnish to each Person who at any time during such calendar year was a Noteholder of any class of Notes a statement (for example, a Form 1099 or any other means required by Applicable Law) prepared by the Trustee containing the sum of the amounts determined pursuant to the information covered by Exhibit C with respect to the class of Notes for such calendar year or, in the event

 

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such Person was a Noteholder of any class of Notes during only a portion of such calendar year, for the applicable portion of such calendar year, and such other items as are readily available to the Trustee and that a Noteholder shall reasonably request as necessary for the purpose of such Noteholder’s preparation of its U.S. federal income or other tax returns.  So long as any of the Notes are registered in the name of DTC or its nominee, such report and such other items shall be prepared on the basis of such information supplied to the Trustee by DTC and the Agent Members and shall be delivered by the Trustee to DTC and by DTC to the applicable Beneficial Holders in the manner described above.  In the event that any such information has been provided by any Paying Agent directly to such Person through other tax-related reports or otherwise, the Trustee in its capacity as Paying Agent shall not be obligated to comply with such request for information.

 

(e)                                  At such time, if any, as the Notes of any class are issued in the form of Definitive Notes, the Trustee shall prepare and deliver the information described in Section 2.13(d) to each Noteholder of a Definitive Note of such class for the relevant period of registered ownership of such Definitive Note as appears on the books and records of the Trustee.

 

(f)                                   The Trustee shall be at liberty to sanction any method of giving notice to the Noteholders of any class if, in its opinion, such method is reasonable, having regard to the number and identity of the Noteholders of such class and/or to market practice then prevailing, is in the best interests of the Noteholders of such class, and any such notice shall be deemed to have been given on such date as the Trustee may approve; provided, that notice of such method is given to the Noteholders of such class in such manner as the Trustee shall require.

 

Section 2.14                             Identification Numbers.  The Issuer in issuing the Notes may use CUSIP, CINS, ISIN, private placement or other identification numbers (if then generally in use), and, if so, the Trustee shall use such CUSIP, CINS, ISIN, private placement or other identification numbers, as the case may be, in notices of redemption or exchange as a convenience to Noteholders; provided, that any such notice shall 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 redemption or exchange and that reliance may be placed only on the other identification numbers printed on the Notes; provided, further, that failure to use CUSIP, CINS, ISIN, private placement or other identification numbers in any notice of redemption or exchange shall not affect the validity or sufficiency of such notice.

 

Section 2.15                             Refinancing Notes.

 

(a)                                 Subject to Section 2.15(b), Section 2.15(c) and Section 2.15(d), the Issuer may issue Refinancing Notes pursuant to this Indenture solely for the purpose of refinancing in whole, but not part, the Outstanding Principal Balance (plus accrued and unpaid interest) of any class of Notes (including a refinancing of Refinancing Notes).  Each refinancing of any class of Notes with the proceeds of an offering of Refinancing Notes (a “Refinancing”) shall be authorized pursuant to one or more Resolutions.  Each Refinancing Note shall be designated generally as a Note for all purposes under this Indenture, with such further designations added or incorporated in such title as specified in the related Resolution and set forth in any indenture supplemental hereto providing for the issuance of such Notes or specified in the form of such Notes, as the case may be.  The Refinancing Notes may, at the option of the Issuer, rank equal in

 

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priority relative to the class of Notes being refinanced.  Refinancing Notes may be issued on any Business Day.

 

(b)                                 On the date of any Refinancing, the Issuer shall issue and sell an aggregate principal amount of Refinancing Notes (when added to the Available Collections Amount to be used in connection with such Refinancing) resulting in proceeds in an amount sufficient to pay in full the applicable Redemption Price of the Notes being refinanced in whole thereby plus the Refinancing Expenses relating thereto.  The proceeds of each sale of Refinancing Notes shall be used to the extent necessary to make the deposit required by Section 3.9 and to pay such Refinancing Expenses.  Subject to Section 3.9(b), once a notice of a Redemption in respect of any Refinancing is published in accordance with Section 3.9(a), each class of Notes to which such notice applies shall become due and payable on the Redemption Date stated in such notice at their Redemption Price.

 

(c)                                  Each Refinancing Note shall contain such terms as may be established in or pursuant to the related Resolution (subject to Section 2.1(d)) and set forth in any indenture supplemental hereto providing for the issuance of such Notes or specified in the form of such Notes to the extent permitted below.  Prior to the issuance of any Refinancing Notes, any or all of the following, as applicable, with respect to the related issue of Refinancing Notes shall have been determined by the Issuer and set forth in such Resolution and in any indenture supplemental hereto providing for the issuance of such Notes or specified in the form of such Notes, as the case may be:

 

(i)                                     the class of Notes to be refinanced by such Refinancing Notes;

 

(ii)                                  the aggregate principal amount of each class of Refinancing Notes that may be issued in respect of such Refinancing;

 

(iii)                               the proposed date of such Refinancing;

 

(iv)                              the Final Legal Maturity Date of each class of such Refinancing Notes;

 

(v)                                 the rate at which such Refinancing Notes shall bear interest or the method by which such rate shall be determined;

 

(vi)                              the denomination or denominations in which any class of such Refinancing Notes shall be issuable;

 

(vii)                           whether such Refinancing Notes shall be subject to redemption pursuant to Section 3.8(c);

 

(viii)                        whether any such Refinancing Notes are to be issuable initially in temporary or permanent global form and, if so, whether Beneficial Holders of interests in any such permanent global Refinancing Note may exchange such interests for Refinancing Notes of such class and of like tenor and of any authorized form and denomination and the circumstances under which any such exchanges may occur, if other than in the manner provided in Section 2.7, and the circumstances under which and the

 

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place or places where any such exchanges may be made and the identity of any initial depositary therefor;

 

(ix)                              the ranking in priority of such Refinancing Notes relative to any other classes (or sub-classes) of Notes; and

 

(x)                                 any other terms, conditions, rights and preferences (or limitations on such rights and preferences) relating to the class of Refinancing Notes (which terms shall comply with Applicable Law and not violate any restrictions of this Indenture).

 

(d)                                 If any of the terms of any issue of Refinancing Notes are established by action taken pursuant to one or more Resolutions, such Resolutions shall be delivered to the Trustee setting forth the terms of such Refinancing Notes.

 

Section 2.16                             Subordinated Notes.

 

(a)                                 Subject to Section 2.16(b), Section 2.16(c), Section 2.16(d) and Section 2.16(e), the Issuer may issue Subordinated Notes pursuant to this Indenture (each, a “Subordinated Note Issuance”) for any purpose, including, at the option of the Issuer, for the purpose of funding a redemption of the Original Notes (or any Refinancing Notes in respect of the Original Notes), in whole or in part.  Each Subordinated Note Issuance shall be authorized pursuant to one or more Resolutions.  Each Subordinated Note shall be designated generally as a Note for all purposes under this Indenture.  Each Subordinated Note shall have such further designations added or incorporated in such title as specified in the related Resolution and set forth in any indenture supplemental hereto providing for the issuance of such Notes or specified in the form of such Notes, as the case may be.  There are no limitations on the use of proceeds from the issuance of any such Subordinated Notes, including making distributions to the Equityholder and redeeming the Original Notes (or any Refinancing Notes in respect of the Original Notes) in whole or in part.

 

(b)                                 If the proceeds of the Subordinated Notes are being used to redeem any of the Notes, on the date of any Subordinated Note Issuance, the Issuer shall issue and sell an aggregate principal amount of Subordinated Notes in an amount not less than the amount sufficient to pay in full the applicable Redemption Price of the Notes being redeemed thereby plus the Transaction Expenses relating thereto.  The proceeds of each sale of such Subordinated Notes shall be used to make the deposit required by Section 3.9, to the extent applicable, to pay such Transaction Expenses and/or for such other purposes, if any, as shall be specified in the Resolution authorizing the issuance of such Subordinated Notes.  Subject to Section 3.9(b), once a notice of Redemption in respect of any Subordinated Note Issuance is published in accordance with Section 3.9(a), each class of Notes to which such notice applies shall become due and payable on the Redemption Date stated in such notice at their Redemption Price.

 

(c)                                  Each Subordinated Note shall contain such terms as may be established in or pursuant to the related Resolution (subject to Section 2.1(e)) and set forth in any indenture supplemental hereto providing for the issuance of such Notes or specified in the form of such Notes to the extent permitted herein, shall rank in priority relative to any other classes (or sub-classes) of Subordinated Notes as specified in such Resolution and set forth in an indenture

 

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supplemental hereto and, in any event, shall be subordinate to the Original Notes (and any Refinancing Notes in respect of the Original Notes) to the extent provided in this Indenture.  Prior to the issuance of any such Subordinated Notes, any or all of the following, as applicable, with respect to the related Subordinated Note Issuance shall have been determined by the Issuer and set forth in such Resolution and in any indenture supplemental hereto or specified in the form of such Subordinated Notes, as the case may be, with respect to such Subordinated Notes to be issued:

 

(i)                                     the aggregate principal amount of any such Subordinated Notes that may be issued;

 

(ii)                                  the proposed date of such Subordinated Note Issuance;

 

(iii)                               the Final Legal Maturity Date of any such Subordinated Notes;

 

(iv)                              whether any such Subordinated Notes are to have the benefit of any reserve account and, if so, the amount and terms thereof;

 

(v)                                 the rate at which such Subordinated Notes shall bear interest or the method by which such rate shall be determined;

 

(vi)                              the denomination or denominations in which such Subordinated Notes shall be issuable;

 

(vii)                           whether such Subordinated Notes shall be subject to redemption pursuant to Section 3.8(c);

 

(viii)                        whether any such Subordinated Notes are to be issuable initially in temporary or permanent global form and, if so, whether Beneficial Holders of interests in any such permanent global Subordinated Note may exchange such interests for Subordinated Notes of like tenor and of any authorized form and denomination and the circumstances under which any such exchanges may occur, if other than in the manner provided in Section 2.7, and the circumstances under which and the place or places where any such exchanges may be made and the identity of any initial depositary therefor;

 

(ix)                              the ranking in priority of such Subordinated Notes relative to any other classes (or sub-classes) of Notes;

 

(x)                                 the use of proceeds of such Subordinated Note Issuance; and

 

(xi)                              any other terms, conditions, rights and preferences (or limitations on such rights and preferences) relating to such Subordinated Notes (which terms shall comply with Applicable Law and not violate any restrictions of this Indenture).

 

(d)                                 If any of the terms of any issue of Subordinated Notes are established by action taken pursuant to one or more Resolutions, such Resolutions shall be delivered to the Trustee setting forth the terms of such Subordinated Notes.

 

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(e)                                  Any Subordinated Notes shall be subordinated to the Original Notes (and any Refinancing Notes in respect of the Original Notes) pursuant to the Priority of Payments, and no payments of principal, interest or Premium, if any, may be made on such Subordinated Notes from the Available Collections Amount until the Original Notes (and any Refinancing Notes in respect of the Original Notes) have been paid in full.  In addition, while any Original Notes (or any Refinancing Notes in respect of the Original Notes) are Outstanding, the Issuer may redeem the Subordinated Notes solely with monies that are received by the Issuer pursuant to Section 3.7(b)(ii).

 

Section 2.17                             Section 3(c)(7) Procedures.

 

(a)                                 The Issuer shall, upon two (2) Business Days’ prior written notice, cause the Registrar to send, and the Registrar hereby agrees to send on at least an annual basis, a notice from the Issuer to DTC in substantially the form of Exhibit G hereto (the “Important Section 3(c)(7) Notice”), with a request that DTC forward each such notice to the relevant DTC participants for further delivery to the Beneficial Holders.  If DTC notifies the Issuer or the Registrar that it will not forward such notices, the Issuer will request DTC to deliver to the Issuer a list of all DTC participants holding an interest in the Notes and the Registrar and Paying Agent will send the Important Section 3(c)(7) Notice directly to such participants.

 

(b)                                 The Issuer shall direct DTC to take the following steps in connection with the Global Notes:

 

(i)                                     The Issuer shall direct DTC to include the marker “3c7” in the DTC 20-character security descriptor and the 48-character additional descriptor for the Global Notes in order to indicate that sales are limited to Qualified Purchasers.

 

(ii)                                  The Issuer shall direct DTC to cause each physical deliver order ticket that is delivered by DTC to purchasers to contain the 20-character security descriptor.  The Issuer shall direct DTC to cause each deliver order ticket that is delivered by DTC to purchasers in electronic form to contain a “3c7” indicator and a related user manual for participants.  Such user manual shall contain a description of the relevant restrictions imposed by Section 3(c)(7) of the Investment Company Act.

 

(iii)                               On or prior to the Closing Date, the Issuer shall instruct DTC to send the Important Section 3(c)(7) Notice to all DTC participants in connection with the offering of the Global Notes.

 

(iv)                              In addition to the obligations of the Registrar set forth in Section 2.7, the Issuer shall from time to time (upon the request of the Trustee) make a request to DTC to deliver to the Issuer a list of all DTC participants holding an interest in the Global Notes.

 

(v)                                 The Issuer shall cause each CUSIP number obtained for a Global Note to have a fixed field containing “3c7” and “144A” indicators, as applicable, attached to such CUSIP number.

 

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(c)                                  The Issuer shall from time to time request all third-party vendors to include on screens maintained by such vendors appropriate legends regarding Rule 144A and Section 3(c)(7) restrictions on the Global Notes under the Investment Company Act.  Without limiting the foregoing, the Issuer shall request that all third-party vendors include the following legends on each screen containing information about the Notes:

 

(i)                                     Bloomberg

 

(1)                                 “Iss’d Under 144A/3c7”, to be stated in the “Note Box” on the bottom of the “Security Display” page describing the Global Notes;

 

(2)                                 a flashing red indicator stating “See Other Available Information” located on the “Security Display” page;

 

(3)                                 a link to an “Additional Security Information” page on such indicator stating that the Global Notes are being offered in reliance on the exemption from registration under Rule 144A to Persons that are both (i) Qualified Institutional Buyers and (ii) Qualified Purchasers; and

 

(4)                                 a statement on the “Disclaimer” page for the Global Notes that the Notes shall not be and have not been registered under the Securities Act, that the Issuer has not been registered under the Investment Company Act and that the Global Notes may only be offered or sold in accordance with Section 3(c)(7) of the Investment Company Act.

 

(ii)                                  Reuters

 

(1)                                 a “144A — 3c7” notation included in the security name field at the top of the Reuters Instrument Code screen;

 

(2)                                 a “144A3c7Disclaimer” indicator appearing on the right side of the Reuters Instrument Code screen; and

 

(3)                                 a link from such “144A3c7Disclaimer” indicator to a disclaimer screen containing the following language:  “These Notes may be sold or transferred only to Persons who are both (i) Qualified Institutional Buyers, as defined in Rule 144A under the Securities Act, and (ii) Qualified Purchasers, as defined under Section 3(c)(7) of the Investment Company Act.”

 

Section 2.18                             Beneficial Holder Representations and Warranties.  Each Person who is an initial purchaser or a subsequent transferee of a Beneficial Interest in the Notes will be deemed to represent, warrant and agree on the date such Person acquires the Beneficial Interest in the Notes as follows:

 

(a)                                 With respect to any sale of Notes pursuant to Rule 144A, it is both a QIB pursuant to Rule 144A and a Qualified Purchaser pursuant to Section 2(a)(51) of the Investment Company Act, and is aware that any sale of Notes to it will be made in reliance on Rule 144A.  Its acquisition of Notes in any such sale will be for its own account or one or more accounts with

 

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respect to which it exercises sole investment discretion, each of which is both a QIB pursuant to Rule 144A and a Qualified Purchaser pursuant to Section 2(a)(51) of the Investment Company Act,  and neither it nor any account for which it is acquiring the Beneficial Interest is (1) a dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on a discretionary basis not less than $25,000,000 in securities of issuers that are not affiliated to it, (2) formed or capitalized for the specific purpose of investing in the Issuer (except where each Beneficial Holder is both a QIB and a Qualified Purchaser), (3) a corporation, partnership, common trust fund, special trust, pension fund or retirement plan in which the shareholders, equity owners, partners, beneficiaries, Beneficial Holders or participants, as applicable, may designate the particular investments to be made, (4) if formed on or before April 30, 1996, an investment company that relies on the exclusion from the definition of “investment company” provided by Section 3(c)(7) of the Investment Company Act (or a foreign investment company under Section 7(d) thereof relying on Section 3(c)(7) with respect to those of its holders that are U.S. Persons), unless, with respect to its treatment as a Qualified Purchaser, it has, in the manner required by Section 2(a)(51)(C) of the Investment Company Act and the rules and regulations thereunder, received the consent of its Beneficial Holders that acquired their interests on or before April 30, 1996 or (5) an entity that, immediately subsequent to its purchase or other acquisition of a Beneficial Interest in the Note, will have invested more than 40% of its assets in Beneficial Interests in the Note and/or in other securities of the Issuer (unless all of the Beneficial Holders of such entity’s securities are Qualified Purchasers) to whom notice is given that the resale, pledge or other transfer is being made in reliance on the exemption from Securities Act registration provided by Rule 144A.

 

(b)                                 With respect to any initial sale of Notes to an Institutional Accredited Investor, it is both an Institutional Accredited Investor and a Qualified Purchaser pursuant to Section 2(a)(51) of the Investment Company Act, and is acquiring the Notes for its own account (and not for the accounts of others), pursuant to an exemption from the registration requirements of the Securities Act.  Its acquisition of Notes in any such sale will be for its own account or one or more accounts with respect to which it exercises sole investment discretion, each of which is both an Institutional Accredited Investor and a Qualified Purchaser pursuant to Section 2(a)(51) of the Investment Company Act.

 

(c)                                  With respect to any sale of Notes pursuant to Regulation S, at the time the buy order for such Notes was originated, it was outside the United States and is a Qualified Purchaser and not a U.S. Person.  Its acquisition of Notes in any such sale will be for its own account or one or more other accounts with respect to which it exercises sole investment discretion, each of which is a Qualified Purchaser and none of which is a U.S. Person.

 

(d)                                 It has not and will not, at any time, offer to buy or offer to sell the Notes by any form of general solicitation or advertising (as those terms are used in Regulation D under the Securities Act), including any advertisement, article, notice or other communication published in any newspaper, magazine or similar medium or broadcast over television or radio or seminar or meeting whose attendees have been invited by general solicitations or advertising, or any public offering within the meaning of the Securities Act.

 

(e)                                  It has not been formed for the purpose of investing in the Notes, except where each Beneficial Holder is (i) both a QIB and a Qualified Purchaser, (ii) both an

 

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Institutional Accredited Investor that is also a Qualified Purchaser or (iii) both a Qualified Purchaser and not a U.S. Person (for the Notes acquired outside the United States).

 

(f)                                   It is not a Restricted Party and will not transfer an interest in the Notes to a transferee that is a Restricted Party.

 

(g)                                  It will, and each account for which it is purchasing will, hold and transfer the Notes in the minimum denomination of $250,000 and integral multiples of $1.00 in excess thereof as adjusted to reflect the repayment of principal thereof in accordance with the Priority of Payments on any Payment Date or as a result of one or more Optional Redemptions or Mandatory Tax Redemptions.  If scheduled interest is added to the principal balance of the Notes on any Payment Date that occurs during the Interest Deferral Period, the scheduled interest added to the principal balance of the Notes will be rounded upward or downward if necessary to the nearest $1.00 in order to maintain the integral multiple of $1.00 in excess of the minimum denomination of the Notes.

 

(h)                                 It understands that the Issuer and the Servicer may receive a list of participants holding positions in the Notes from one or more book-entry depositories.

 

(i)                                     It will provide to each Person to whom it transfers Notes notices of any restrictions on transfer of such Notes.

 

(j)                                    If it is a Section 3(c)(1) or Section 3(c)(7) investment company, or a Section 7(d) foreign investment company relying on Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act with respect to its U.S. holders, and was formed on or before April 30, 1996, it has received the necessary consent from its Beneficial Holders as required by the Investment Company Act.

 

(k)                                 It understands that (i) the Notes have not been and will not be registered under the Securities Act or with any securities regulatory authority in any jurisdiction other than on the official list of the Cayman Islands Stock Exchange and may not be offered, sold, pledged or otherwise transferred except as set forth in this Indenture, and that it will not resell or otherwise pledge or transfer the Notes except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act or other applicable securities laws, including the Investment Company Act, in the manner set forth in this Indenture, (ii) no representation is made by the Issuer or the Placement Agent as to the availability of any exemption under the Securities Act or any state or foreign securities laws for resale of the Notes, (iii) the Notes may be offered, sold, pledged or otherwise transferred only (A) to the Issuer, the Equityholder, Theravance Biopharma or any of their respective subsidiaries, (B) to a Person that the seller reasonably believes is a QIB/QP purchasing for its own account or one or more accounts with respect to which it exercises sole investment discretion, each of which is a QIB/QP, in a transaction meeting the requirements of Rule 144A, (C) solely in the case of initial investors in the Notes, to a Person that is an IAI/QP, acquiring the Notes for its own account or one or more accounts with respect to which it exercises sole investment discretion, each of which is an IAI/QP, pursuant to an exemption from the registration requirements of the Securities Act or (D) outside the United States to a Person that is a Qualified Purchaser and not a U.S. Person purchasing the Notes for its own account or one or more other accounts with respect to which it

 

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exercises sole investment discretion, each of which is a Qualified Purchaser and none of which is a U.S. Person in an offshore transaction meeting the requirements of Regulation S, in each such case in accordance with this Indenture and any applicable securities laws of any state of the United States and (iv) it will, and each subsequent holder of a Note is required to, notify any subsequent purchaser of a Note of the resale restrictions set forth in clause (iii) above.

 

(l)                                     It acknowledges and agrees that the transactions contemplated by the Transaction Documents are exempt from the registration requirements of the Securities Act and may not comply in important respects with SEC rules that would apply to a public offering of securities.

 

(m)                             It understands that the certificates evidencing the Global Notes will bear legends substantially similar to those set forth in Section 2.2(a), Section 2.2(b) and, where applicable, Section 2.2(c) of this Indenture.

 

(n)                                 It has sufficient knowledge and experience in financial, business and tax matters to render it capable of assessing the merits of and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of purchasing the Notes.

 

(o)                                 It acknowledges that no representation or warranty is made by the Issuer, any other Person from whom the Note is transferred or any Person representing the Issuer or such other Person as to the accuracy or completeness of such materials; and it acknowledges that an investment in the Notes involves certain risks, including the risk of loss of a substantial part of its investment under certain circumstances, and that it has had access to such financial and other information concerning the Issuer and the Notes (which if it is an initial purchaser of the Notes includes such information contained in a dataroom) as it has deemed necessary in connection with its decision to purchase any of the Notes, including an opportunity to ask questions of, and request information from, the Issuer and such other Persons (except to the extent the Issuer is restricted from disclosing such information pursuant to the confidentiality provisions of the GSK Agreements, the TRC LLC Agreement and the Master Agreement).

 

(p)                                 It acknowledges that it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisers to the extent it has deemed necessary and that it has made its own investment decisions (including decisions regarding the suitability of any transaction pursuant to the documentation for the Notes) based upon its own judgment and upon any advice from such advisers as it has deemed necessary and not upon any view expressed by the Issuer, the Placement Agent or any of their respective affiliates; it acknowledges that it has determined that the rates, prices or amounts and other terms of the purchase and sale of the Notes reflect those in the relevant market for similar transactions and it is purchasing the Notes with a full understanding of all of the terms, conditions and risks thereof (economic and otherwise), and it is capable of assuming and willing to assume (financially and otherwise) those risks; and it is a sophisticated investor familiar with transactions similar to its investment in the Notes.

 

(q)                                 Either (i) it is not a Plan and is not acting on behalf of a Plan or using the Plan Assets to purchase the Notes or (ii) it is a Plan or is acting on behalf of a Plan or using the Plan Assets to purchase the Notes but the purchase and holding of such Notes will not constitute

 

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or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code by reason of the application of one or more statutory or administrative exemptions or otherwise and will not constitute or result in a violation of any Similar Laws.

 

(r)                                    It represents and warrants that it agrees to treat the Notes as indebtedness for all purposes (including tax purposes) and will not take any action contrary to such characterization, including filing any tax returns or financial statements.

 

(s)                                   It represents, warrants and agrees that it is purchasing the Notes for investment purposes and not with a view to resale or distribution thereof in contravention of the requirements of the Securities Act.

 

(t)                                    It acknowledges and agrees that the Issuer, the Trustee, any other Person from whom a Note is being transferred and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements, and agree that, if any of the acknowledgments, representations or warranties deemed to have been made by it by its purchase of a Note are no longer accurate, it shall promptly notify the Issuer and any such other Person from whom a Note is being transferred and, if it is acquiring any Notes as a fiduciary or agent for one or more investor accounts, it represents and warrants that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations, warranties and agreements on behalf of each such account and that each such investor account is eligible to purchase the Notes.

 

(u)                                 It understands that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth herein and it agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with such restrictions and conditions and the Securities Act.

 

Section 2.19                             Non-Permitted Holders.

 

(a)                                 Notwithstanding anything to the contrary elsewhere herein, any sale or transfer of a Note or a Beneficial Interest to (i) a Person that is not a QIB/QP (other than an initial purchaser of the Notes that is both an Institutional Accredited Investor and a Qualified Purchaser holding a Beneficial Interest in the IAI Global Note), (ii) any other Person that did not acquire the Note or the Beneficial Interest in an offshore transaction in accordance with Regulation S or (iii) a Person that is a Restricted Party (any such Person described in clauses (i) through (iii) being referred to herein as a “Non-Permitted Holder”) shall be null and void ab initio for all purposes of this Indenture and the Notes.  Any such purported transfer of which the Issuer or the Trustee shall have notice may be disregarded by the Issuer and the Trustee for all purposes under this Indenture.

 

(b)                                 If any Person is a Non-Permitted Holder, the Issuer shall, promptly after the actual knowledge of a Responsible Officer of the Issuer or the Trustee that such Person is a Non-Permitted Holder (for which purpose the Trustee shall deliver written notice to the Issuer if a Responsible Officer of the Trustee has actual knowledge that any Person is a Non-Permitted Holder), send written notice to such Non-Permitted Holder directing such Non-Permitted Holder to transfer its beneficial interest in the Note to a Person that is not a Non-Permitted Holder within

 

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thirty (30) days of the date of such written notice.  If such Non-Permitted Holder fails to so transfer the Beneficial Interest in the Notes within such thirty (30) day period, the Issuer shall have the right, without further notice to the Non-Permitted Holder, to sell the Beneficial Interest in the Notes to a purchaser or purchasers selected by the Issuer that is not a Non-Permitted Holder on such terms as the Issuer may choose.  The Issuer may select the purchaser or purchasers by soliciting one or more bids from one or more brokers or other market professionals that regularly deal in securities similar to the Notes and sell such Notes to the highest such bidder.  However, the Issuer may select the purchaser or purchasers by any other means determined by it in its sole discretion.  The Beneficial Holder of each Note, the Non-Permitted Holder and each other Person in the chain of title from the Beneficial Holder to the Non-Permitted Holder, by its acceptance of a Beneficial Interest in the Notes, agree to cooperate with the Issuer and the Trustee to effect such transfers.  The proceeds of such sale, net of any commissions, expenses and taxes due in connection with such sale, shall be remitted to the Non-Permitted Holder.  The terms and conditions of any sale under this sub-section shall be determined in the sole discretion of the Issuer, and neither the Issuer nor the Trustee shall be liable to any Person having a Beneficial Interest in the Notes sold as a result of any such sale or the exercise of such discretion.

 

(c)                                  Each initial purchaser of the Notes on the Closing Date shall provide a certification that it is not a Restricted Party.  If any Restricted Party owns any interest in the Notes on or after the occurrence of an Event of Default, such Restricted Party shall not be entitled to participate in the exercise of remedies or receive any payments or distributions resulting from the exercise of remedies associated with the Event of Default.  The Trustee shall request that each Noteholder or Beneficial Holder provide a certification in the form attached as Exhibit H to this Indenture that it is not a Restricted Party or otherwise a Non-Permitted Holder prior to the exercise of remedies following an Event of Default.  The restriction set forth in this subsection may not be waived or amended.

 

ARTICLE III
 ACCOUNTS; PRIORITY OF PAYMENTS

 

Section 3.1                                    Establishment of Accounts.

 

(a)                                 Pursuant to the terms of the Servicing Agreement, the Issuer shall cause the Servicer, acting on behalf of the Issuer, to establish and maintain with the Trustee on its books and records in the name of the Issuer for the benefit of the Secured Parties, subject to the Lien of this Indenture, (i) a collection account (the “Collection Account”) and (ii) any additional accounts the establishment of which is set forth in a Resolution delivered by the Issuer to the Servicer and the Trustee, in each case at such time as is set forth in this Section 3.1 or in such Resolution.  Each Account shall be established and maintained as an Eligible Account so as to create, perfect and establish the priority of the Liens established under this Indenture in such Account and all cash, Eligible Investments and other property from time to time deposited therein and otherwise to effectuate the Liens under this Indenture.

 

(b)                                 If, at any time, any Account ceases to be an Eligible Account, the Issuer shall cause the Servicer or an agent thereof to, within ten Business Days, establish a new Account meeting the conditions set forth in this Section 3.1 in respect of such Account and transfer any cash or investments in the existing Account to such new Account, and, from the date

 

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such new Account is established, it shall have the same designation as the existing Account.  If the Trustee should change at any time, then the Issuer shall cause the Servicer, acting on behalf of the Issuer, to thereupon promptly establish replacement Accounts as necessary at the successor Trustee and transfer the balance of funds in each Account then maintained at the former Trustee pursuant to the terms of the Servicing Agreement to such successor Trustee.

 

(c)                                  The Issuer shall cause the Servicer to maintain the Collection Account at the Trustee not later than the Closing Date.  The Collection Account shall bear a designation clearly indicating that the funds or other assets deposited therein are held for the benefit of the Trustee.  Except as otherwise expressly provided herein, all Class C Distributions shall be deposited to the Collection Account and transferred therefrom in accordance with the terms of the Servicing Agreement and this Indenture.

 

Section 3.2                                    Investments of Cash.

 

(a)                                 So long as no Event of Default has occurred and is continuing, the Servicer (on behalf of the Issuer) may direct the Trustee in writing to invest and reinvest the funds on deposit in the Collection Account in Eligible Investments, to the extent such Eligible Investments are available to the Trustee, and advise the Trustee in writing of any depositary institution or trust company described in the proviso to the definition of Eligible Investments; provided, however, that, so long as an Event of Default has occurred and is continuing, the Trustee shall invest such amount in Eligible Investments described in clause (a) of the definition thereof from the time of receipt thereof until such time as such amounts are required to be distributed pursuant to the terms of this Indenture.  In the absence of written direction delivered to the Trustee from the Servicer, the Trustee shall invest any funds in Eligible Investments described in clause (a) of the definition thereof.  The Trustee shall make such investments and reinvestments in accordance with the terms of the following provisions:

 

(i)                                     the Eligible Investments shall have maturities and other terms such that sufficient funds shall be available to make required payments pursuant to this Indenture on the Business Day preceding the first succeeding scheduled Payment Date after such investment is made;

 

(ii)                                  if any funds to be invested are received in the Accounts after 1:00 p.m., New York City time, on any Business Day, such funds shall, if possible, be invested in overnight Eligible Investments;

 

(iii)                               all interest and earnings on Eligible Investments held in the Accounts shall be invested in Eligible Investments on an overnight basis and credited to the appropriate Account until the next Payment Date; and

 

(iv)                              the Issuer acknowledges that regulations of the U.S. Comptroller of the Currency grant the Issuer the right to receive confirmations of security transactions as they occur, and the Issuer specifically waives receipt of such confirmations to the extent permitted by Applicable Law and acknowledges that the Trustee shall instead furnish monthly cash transaction statements that shall detail all investment transactions as set forth in this Indenture.

 

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(b)                                 Except as otherwise expressly provided herein, the net investment income earned from the investment of amounts on deposit in the Collection Account in Eligible Investments in the manner provided in this Section 3.2 shall be deposited by the Trustee to the Collection Account and transferred therefrom in accordance with the terms of the Servicing Agreement and this Indenture.

 

Section 3.3                                    Payments and Transfers In Connection with Issuance of Notes.

 

(a)                                 On the Closing Date, the Trustee shall, subject to the receipt of written direction from the Issuer, upon receipt of the Note Purchase Price in the Trustee Closing Account established pursuant to Section 3.1 of the Note Purchase Agreements, make the following payments from such proceeds in the amounts so directed in writing by the Issuer:

 

(i)                                     to such Persons and in such amounts as shall be specified by the Issuer, such Transaction Expenses as shall be due and payable in connection with the issuance and sale of the Notes; and

 

(ii)                                  to the Transferor, in accordance with the Sale and Contribution Agreement, the amount by which the Note Purchase Price exceeds the sum of such Transaction Expenses.

 

(b)                                 On the date of issuance of any Subordinated Notes or any Refinancing Notes, the Trustee shall, subject to the receipt of written direction from the Issuer and upon receipt of the proceeds of the sale of such Notes, make such payments and transfers as shall be specified in this Indenture, the related Resolution and any indenture supplemental hereto in respect of such Notes, copies of which Resolution and indenture supplemental hereto shall be attached to such written direction.

 

(c)                                  The Trustee shall hold all funds received on or prior to the Closing Date from the Note Purchasers in trust for the Note Purchasers pending the Closing Date.  Upon receipt by the Trustee of the aggregate Note Purchase Price (as identified in the Issuer’s written direction pursuant to Section 3.3(a)) from all Note Purchasers, the Trustee shall disburse the Note Purchase Price in accordance with this Section 3.3.  If the aggregate Note Purchase Price shall not have been received by the Trustee by 3:30 p.m. (New York City time) on the Closing Date, or if the closing of the transactions contemplated by the Note Purchase Agreements shall not otherwise be capable of being consummated by 3:30 p.m. (New York City time) on the Closing Date, then each Note Purchaser who has paid its respective portion of the Note Purchase Price shall have the right to instruct the Trustee in writing at or after 3:30 p.m. (New York City time) on the Closing Date to return such portion of the Note Purchase Price to such Note Purchaser prior to the close of business on the Closing Date or as soon thereafter as reasonably practicable.

 

Section 3.4                                    Calculation Date Calculations.

 

(a)                                 As soon as reasonably practicable after each Calculation Date (a “Relevant Calculation Date”), but in no event later than 12:00 noon (New York City time) on the third Business Day immediately preceding the related Payment Date, the Calculation Agent shall, based on the Calculation Date Information received by the Calculation Agent, and based on

 

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information known to it or Relevant Information provided to it, make the following determinations and calculations (and each of the Trustee and the Issuer (for itself and on behalf of the Servicer) agrees to provide any Relevant Information reasonably requested by the Calculation Agent for the purpose of making such determinations and calculations):

 

(i)                                     the Available Collections Amount for the related Payment Date;

 

(ii)                                  (x) the amount of interest and earnings (net of losses and investment expenses), if any, on investments of funds on deposit in the Collection Account from the day following the preceding Calculation Date to and including such Relevant Calculation Date, (y) the amount, if any, withdrawn from the Collection Account from the day following the preceding Calculation Date to and including such Relevant Calculation Date in accordance with Section 3.10 and (z) the amount, if any, to be withdrawn from the Collection Account on such Payment Date in accordance with Section 3.7 and as calculated pursuant to Section 3.4(a)(ix);

 

(iii)                               the balance of funds on deposit in each Account other than the Collection Account on such Relevant Calculation Date and the amount of interest and earnings (net of losses and investment expenses), if any, on investments of funds on deposit therein from the day immediately following the Calculation Date that preceded such Relevant Calculation Date and ending on such Relevant Calculation Date;

 

(iv)                              the balance of funds on deposit in the Collection Account on such Relevant Calculation Date;

 

(v)                                 Taxes owed by the Issuer;

 

(vi)                              (x) all other Administrative Expenses due and payable on such Payment Date and not previously paid or reimbursed, and to be paid or reimbursed, pursuant to Section 3.6(a)(iii) and Section 3.6(a)(v), in the amounts shown on all supporting documentation therefor and attached to the Calculation Date Information received by the Calculation Agent, and (y) all Administrative Expenses previously reimbursed and paid to the Issuer in respect of Administrative Expenses pursuant to Section 3.6(c) from the day immediately following the Calculation Date that preceded such Relevant Calculation Date and ending on such Relevant Calculation Date;

 

(vii)                           the applicable interest rate on each class of Floating Rate Notes (if any) determined on the Reference Date for the Interest Accrual Period beginning on such Payment Date and the Interest Amount (including any Additional Interest) on each class of Floating Rate Notes and Fixed Rate Notes for such Payment Date;

 

(viii)                        (A) if such Payment Date is a Redemption Date on which a Redemption of Notes is scheduled to occur, the amount necessary to pay the Redemption Price (and related Administrative Expenses) of the Notes to be repaid on such Redemption Date and the Redemption Premium, if any, to be paid as part of such Redemption Price, and (B) if such Payment Date is a date on which a Mandatory Tax Redemption is scheduled to occur, the amount necessary to pay the redemption price (and

 

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related Administrative Expenses) of the Notes to be repaid in connection with such Mandatory Tax Redemption on such date;

 

(ix)                              (A) the Interest Amount due to Noteholders of each class of Notes on such Payment Date and the difference, if any, between the Interest Amount due to the Noteholders of each class of Notes on such Payment Date and the Available Collections Amount for such Payment Date, after giving effect to the payment of all amounts to be paid or reimbursed on such Payment Date pursuant to Section 3.6(a)(i), Section 3.6(a)(ii) and Section 3.6(a)(iii) (such difference, an “Interest Shortfall”), and, with respect to each Interest Shortfall, the amount to be withdrawn from the Collection Account determined as provided in Section 3.7(b)(i) and (B) the amount, if any, of scheduled interest to be added to the principal balance of the Notes on such Payment Date pursuant to Section 3.7(a) if such Payment Date falls within the Interest Deferral Period;

 

(x)                                 the Outstanding Principal Balance of each class of Notes on such Payment Date immediately prior to any principal payment with respect to the Outstanding Principal Balance on such Payment Date and the amount of any principal payment with respect to the Outstanding Principal Balance to be made in respect of each class of Notes on such Payment Date, taking into account the other payments to be made as principal payments on such Payment Date entitled to priority pursuant to Section 3.6;

 

(xi)                              the amounts, if any, distributable to the Issuer on such Payment Date pursuant to Section 3.6(a)(ix); and

 

(xii)                           any other information, determinations and calculations reasonably required in order to give effect to the terms of this Indenture and the other Transaction Documents.

 

(b)                                 Following the calculations and determinations by the Calculation Agent described in Section 3.4(a), and not later than 1:00 p.m., New York City time, on the second Business Day prior to the succeeding Payment Date, the Calculation Agent shall provide to each of the Issuer, the Servicer and the Trustee a calculation report (a “Calculation Report”) listing the determinations and calculations set forth in Section 3.4(a).  All calculations made by the Calculation Agent shall, in the absence of manifest error, be binding and conclusive for all purposes upon the Noteholders, the Beneficial Holders, the Servicer, the Issuer and the Trustee.

 

Section 3.5                                    Payment Date First Step Transfers.  On each Payment Date, the Trustee shall transfer from any Account (other than the Collection Account) to the Collection Account the amount of interest and earnings (net of losses and investment expenses), if any, earned as a result of investments of funds on deposit therein from the day immediately following the Calculation Date that preceded the Relevant Calculation Date and ending on the Relevant Calculation Date.

 

Section 3.6                                    Payment Date Second Step Withdrawals.

 

(a)                                 On each Payment Date, after the applicable transfers provided for in Section 3.5 have been made, based solely on the information contained in the Distribution Report prepared by the Servicer in respect of that Payment Date, the Trustee shall distribute (or instruct

 

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the Paying Agent to distribute) from the Collection Account the amounts set forth below in the order of priority set forth below but, in each case, only to the extent that all amounts then required to be paid ranking prior thereto have been paid in full (the “Priority of Payments”):

 

(i)                                     first, to pay accrued and unpaid government taxes, filing fees and registration fees payable by the Issuer to any federal, state, local or foreign government entities (excluding in each case federal, state, local and foreign income taxes);

 

(ii)                                  second, (a) to pay any accrued and unpaid Servicing Fee in respect of such Payment Date and any previously accrued and unpaid Servicing Fee with respect to prior Payment Dates or (b) if a Servicer Termination Event has occurred and the Issuer is designated as the replacement Servicer under the Servicing Agreement, to pay the expenses of the Issuer in respect of such Payment Date and any previously accrued and unpaid similar expenses related to the hiring and retention of employees to perform the duties and obligations of the Servicer under the Servicing Agreement in an amount not to exceed $25,000;

 

(iii)                               third, to pay accrued and unpaid Administrative Expenses in the order of priority set forth in the definition of Administrative Expenses in an amount not to exceed (x) $50,000 minus (y) all amounts paid pursuant to Section 3.6(c) since the day following the immediately preceding Payment Date;

 

(iv)                              fourth, to the Trustee for distribution to the Noteholders, the accrued and unpaid interest on the Original Notes (or any Refinancing Notes in respect of the Original Notes), including any accrued interest due on prior Payment Dates and not previously paid, together with interest on any previously accrued and unpaid interest to the extent legally permissible;

 

(v)                                 fifth, to pay all accrued and unpaid Administrative Expenses in the order of priority set forth in the definition of Administrative Expenses in excess of the cap set forth in clause (iii) above;

 

(vi)                              sixth, to the Trustee for distribution to the Noteholders, the outstanding principal balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes), pro rata according to the principal balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) held by each Noteholder;

 

(vii)                           seventh, following the payment in full of the Original Notes (or any Refinancing Notes in respect of the Original Notes), to the Trustee for distribution to the Noteholders of the Subordinated Notes, if any, the principal of, any premium on and any accrued and unpaid interest on the Subordinated Notes in accordance with the terms of the Subordinated Notes until the Subordinated Notes have been paid in full;

 

(viii)                        eighth, following the payment in full of the Original Notes (or any Refinancing Notes in respect of the Original Notes), to the ratable payment of all other accrued and unpaid obligations of the Issuer under the Transaction Documents until all such amounts are paid in full; and

 

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(ix)          ninth, following the payment in full of the Original Notes (or any Refinancing Notes in respect of the Original Notes), to or at the direction of the Issuer, all remaining amounts.

 

(b)           To the extent the Issuer receives amounts from the Trustee from the Collection Account pursuant to Section 3.6(a)(ix), such amounts may be distributed by the Issuer to the Equityholder (or as otherwise directed by the Equityholder or any Person designated by the Equityholder to give such directions) in its sole discretion.  The provisions contained in this Section 3.6(b) may not be amended, modified, waived or terminated (including pursuant to any termination of this Indenture) without the prior written consent of the Equityholder, and the provisions contained in this Section 3.6(b) shall survive the termination of this Indenture.  The parties hereto specifically agree that the Equityholder (i) is and shall be an express third-party beneficiary of the provisions of this Section 3.6(b) and (ii) shall have the right to enforce any provision of this Section 3.6(b).

 

(c)           Notwithstanding anything herein to the contrary, so long as no Event of Default has occurred and is continuing, the Calculation Agent shall, on the 15th day of each calendar month (other than any month in which a Payment Date falls) or, if such 15th day is not a Business Day, the next Business Day, reimburse and pay to the Issuer (or such other appropriate Person identified at the written instruction of the Issuer), from the Collection Account, an amount equal to the lesser of (i) all Administrative Expenses not previously paid or reimbursed and (ii) the balance of the Collection Account, in either case upon delivery to the Calculation Agent by the Issuer, not less than three (3) Business Days prior to such 15th day or next Business Day, as the case may be, of a written notice as to the amount of such Administrative Expenses; provided, however, that the aggregate of all amounts reimbursed and paid pursuant to this Section 3.6(c) in respect of any period ending on a Payment Date and beginning on the day immediately following the preceding Payment Date (or, in the case of the first Payment Date, the Closing Date) shall not exceed $50,000.

 

Section 3.7            Interest Shortfalls:  Interest Deferral Period, Voluntary Capital Contributions.

 

(a)           To the extent there are insufficient funds to pay scheduled interest on the Original Notes (or any Refinancing Notes in respect of the Original Notes) in accordance with the Priority of Payments on any Payment Date from and including the April 15, 2019 Payment Date to and including the October 15, 2020 Payment Date (the period from and including the April 15, 2019 Payment Date to and including the October 15, 2020 Payment Date being referred to herein as the “Interest Deferral Period”), the scheduled interest (to the extent of such insufficient funds) shall be added to the principal balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) and shall bear interest at the Note Interest Rate.  The failure to pay scheduled interest on the Original Notes (or any Refinancing Notes in respect of the Original Notes) in cash because of insufficient funds for such purpose in accordance with the Priority of Payments on any Payment Date during the Interest Deferral Period shall not be an Event of Default under this Indenture.

 

(b)           The Equityholder may, but is not obligated to, make capital contributions to the Issuer for deposit to the Collection Account that may be withdrawn from the Collection

 

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Account and used by the Issuer (i) to pay all or part of the accrued and unpaid interest then due and payable on the Original Notes (or any Refinancing Notes in respect of the Original Notes) (including any accrued and unpaid interest due on prior Payment Dates and not previously paid, and any accrued and unpaid interest on such unpaid interest) in respect of up to six (6) Payment Dates in total and not more than four (4) consecutive Payment Dates, whether on a Payment Date or on any other Business Day and (ii) to redeem, at any time and from time to time, all or a portion of the outstanding principal amount of the Original Notes (or any Refinancing Notes in respect of the Original Notes) or any Subordinated Notes (or any Refinancing Notes in respect of such Subordinated Notes) in an Optional Redemption in whole on any Business Day or in part on any Payment Date in the manner described in Section 3.8 or in a Mandatory Tax Redemption in the manner described in Section 3.8(e).

 

(c)           If there are insufficient funds to pay the accrued and unpaid interest on the Original Notes (or any Refinancing Notes in respect of the Original Notes) in full on any Payment Date following the Interest Deferral Period (including any accrued and unpaid interest due on prior Payment Dates and not previously paid, and any accrued and unpaid interest on such unpaid interest), the shortfall in interest shall accrue interest to the extent legally enforceable at the Note Interest Rate compounded quarterly.  If such unpaid shortfall (and interest thereon) in the case of any Payment Date other than the Final Legal Maturity Date is not paid in full on or prior to the Payment Date following the Payment Date on which such interest was first payable, an Event of Default shall occur on such succeeding Payment Date (but not before such date).

 

Section 3.8            Redemptions.

 

(a)           On any Redemption Date, the Trustee shall distribute the amounts in the Collection Account as provided herein and in the applicable Resolution, including:

 

(i)            to the extent Subordinated Notes or Refinancing Notes were issued for the purpose of funding such Redemption, paying to such Persons as shall be specified by the Issuer such Transaction Expenses as shall be due and payable in connection with the issuance and sale of the applicable Subordinated Notes or Refinancing Notes;

 

(ii)           remitting to the Noteholders of the class of Notes to be redeemed, in accordance with the Resolution authorizing such Redemption (and, if such Redemption Date is a Payment Date, after application of Section 3.6 and Section 3.7), an amount equal to the Redemption Price plus Premium, if any, allocated, in the event of a Redemption of such Notes in part, pro rata in proportion to the Outstanding Principal Balance of such Notes held by such Noteholders; and

 

(iii)          making such other distributions and payments as shall be authorized and directed by the Resolution and indentures supplemental hereto executed in connection with such Redemption.

 

(b)           Subject to the provisions of Section 3.8(c) and Section 3.9, on any Redemption Date (and, if such Redemption Date is a Payment Date, to the extent that any class of Notes shall remain Outstanding after application of Section 3.6 and Section 3.7), the Issuer

 

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may optionally redeem such class of Notes, in whole, but not in part, out of the proceeds of any Refinancing Notes, or, in whole or in part, out of amounts available in the Collection Account for such purpose, if any, including the proceeds of any Subordinated Notes, in each case, at the Redemption Price (any such redemption, an “Optional Redemption”).  The Issuer shall give written notice of any such Optional Redemption to the Trustee and the Servicer not later than five (5) Business Days prior to the date on which notice is to be given to Noteholders in accordance with Section 3.9(a) (unless the Trustee and any such Servicer agree to waive or limit the requirement for such notice).  Such written notice to the Trustee shall include a copy of the Resolution authorizing such Optional Redemption and shall set forth the relevant information regarding such Optional Redemption, including the information to be included in the notice given pursuant to Section 3.9(a).

 

(c)           An indenture supplemental hereto providing for the issuance of any Subordinated Notes or Refinancing Notes may authorize one or more redemptions, in whole or in part, of such Notes, on such terms and subject to such conditions as shall be specified in such indenture supplemental hereto; provided, that, while any Original Notes (or any Refinancing Notes in respect of the Original Notes) are Outstanding, the Issuer may redeem the Subordinated Notes solely with monies that are received by the Issuer pursuant to Section 3.7(b)(ii).

 

(d)           The application of the Class C Distributions (as part of the Available Collections Amount), together with the investment earnings on funds on deposit in the Collection Account to principal payments on any Original Notes (or any Refinancing Notes in respect of the Original Notes) pursuant to the Priority of Payments shall not be treated as an Optional Redemption under this Indenture.  A Mandatory Tax Redemption of the Original Notes will also not be treated as an Optional Redemption under this Indenture.

 

(e)           If the Issuer determines that the Original Notes would otherwise constitute “applicable high yield discount obligations” within the meaning of Section 163(i)(1) of the Code, at the end of each accrual period ending on or after the fifth anniversary of the issuance of the Original Notes (each, an “AHYDO Redemption Date”), the Issuer shall be required to redeem for cash a portion of each Original Note then Outstanding equal to the “mandatory principal redemption amount” (such redemption, a “Mandatory Tax Redemption”).  The redemption price for the portion of each Original Note redeemed pursuant to a Mandatory Tax Redemption shall be 100% of the principal amount of such portion plus any accrued interest thereon to the date of redemption without payment of a prepayment penalty.  The “mandatory principal redemption amount” means the portion of an Original Note required to be redeemed to prevent such Original Note from being treated as an “applicable high yield discount obligation” within the meaning of Section 163(i)(1) of the Code.  No partial redemption of the Original Notes prior to any AHYDO Redemption Date pursuant to any other provision of this Indenture shall alter the Issuer’s obligations to make the Mandatory Tax Redemption with respect to any Original Notes that remain Outstanding on any AHYDO Redemption Date.  The Issuer shall deliver written notice in respect of any Mandatory Tax Redemption to each Noteholder at least five (5) Business Days but not more than thirty (30) days before the date scheduled for redemption, which written notice shall be delivered by the Issuer to the Trustee for the Trustee to deliver to the Noteholders at the sole cost and expense of the Issuer through DTC, Euroclear or Clearstream for the Beneficial Holders and by regular mail, postage prepaid for the Noteholders holding Definitive Notes.  For

 

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the avoidance of doubt, a Mandatory Tax Redemption shall not be subject to the procedures that apply to an Optional Redemption set forth in Section 3.9.

 

Section 3.9            Procedure for Redemptions.

 

(a)           The Issuer shall deliver written notice in respect of any Redemption of any class of Notes under Section 3.8 to each Noteholder at least five (5) Business Days (in case of an Optional Redemption in whole) or three (3) Business Days (in case of an Optional Redemption in part of the Original Notes (or any Refinancing Notes in respect of the Original Notes)) but not more than 30 days before the date scheduled for such redemption, which written notice shall be delivered by the Issuer to the Trustee at least five (5) Business Days (or such shorter period as may be agreed to by the Trustee) prior to the date on which such notice is required to be delivered to Noteholders, for the Trustee to deliver to the Noteholders at the sole cost and expense of the Issuer through DTC, Euroclear or Clearstream for the Beneficial Holders and by regular mail, postage prepaid for the Noteholders holding Definitive Notes.  Each notice in respect of a Redemption given pursuant to this Section 3.9(a) shall state (i) the expected applicable Redemption Date, (ii) the projected Redemption Price of the Notes to be redeemed, (iii) in the case of a Redemption of the Notes in part, the portion of the Outstanding Principal Balance of the Notes that is expected to be redeemed, (iv) that the Notes to be redeemed in a Redemption in whole must be surrendered (which action may be taken by any Noteholder or its authorized agent) to the Trustee to collect the Redemption Price on such Notes, (v) that, unless the Issuer fails to pay the Redemption Price, interest on the Notes called for Redemption in whole shall cease to accrue on and after the Redemption Date and (vi) if such Redemption is conditional upon the occurrence of any event or condition, including the issuance and sale of Subordinated Notes or Refinancing Notes, such event or condition.  If mailed in the manner herein provided, the notice shall be conclusively presumed to have been given whether or not the Noteholder receives such notice.

 

(b)           If, at the time of the delivery of any notice in respect of a Redemption, the Issuer shall not have irrevocably directed the Trustee to apply funds then on deposit with the Trustee or held by the Issuer and available to be used for such Redemption to redeem all of the Notes called for Redemption, such notice, at the election of the Issuer, may state that such Redemption is conditional upon the occurrence of any event, including the receipt of the redemption moneys in an amount sufficient to pay the principal of and Premium, if any, and interest on the Notes being redeemed and related Transaction Expenses by the Trustee on or before the Redemption Date and that such notice shall be of no force and effect, and the Issuer shall not be required to redeem such Notes, unless such event has occurred.

 

(c)           If notice in respect of a Redemption for any Notes shall have been given as provided in Section 3.9(a) and such notice shall not contain the language permitted at the Issuer’s option under Section 3.9(b), such Notes shall become due and payable on the Redemption Date at the Corporate Trust Office at the applicable Redemption Price, and, unless there is a default in the payment of the applicable Redemption Price, interest on such Notes shall cease to accrue on and after the Redemption Date.  Upon presentation and surrender of such Notes at the Corporate Trust Office, such Notes shall be paid and redeemed at the applicable Redemption Price.  On or before any Redemption Date in respect of such a Redemption, the Issuer shall, to the extent an amount equal to the Redemption Price of such Notes (and any

 

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Transaction Expenses relating thereto as of the Redemption Date) is not then held by the Issuer or on deposit in the Collection Account, deposit or cause to be deposited into the Collection Account an amount in immediately available funds so that the total amount in the Collection Account shall be sufficient to pay such Redemption Price (and any Transaction Expenses relating thereto as of the Redemption Date).

 

(d)           If notice in respect of a Redemption for any Notes shall have been given as provided in Section 3.9(a) and such notice shall contain the language permitted at the Issuer’s option under Section 3.9(b), such Notes shall become due and payable on the Redemption Date at the Corporate Trust Office at the applicable Redemption Price and interest on such Notes shall cease to accrue on and after the Redemption Date; provided, that, in each case, the Issuer shall have deposited in the Collection Account on or prior to 11:00 a.m. (New York City time) on the Redemption Date an amount sufficient to pay the Redemption Price (and any Transaction Expenses relating thereto as of the Redemption Date).  Upon the Issuer making such deposit and presentation and surrender of such Notes at the Corporate Trust Office, such Notes shall be paid and redeemed at the applicable Redemption Price.  If the Issuer shall not make such deposit on or prior to 11:00 a.m. (New York City time) on the Redemption Date, the notice in respect of Redemption shall be of no force and effect, and the principal on such Notes or specified portions thereof shall continue to bear interest as if such notice in respect of Redemption had not been given.

 

(e)           All Notes that are redeemed shall be surrendered to the Trustee for cancellation and may not be reissued or resold.

 

Section 3.10          Additional Capital Contributions from the Issuer to TRC LLC.  Each Noteholder shall be deemed to acknowledge and agree by its acceptance of its interest in the Notes, and each party hereto acknowledges and agrees that (i) if there is a negative net cash flow forecast for TRC LLC for a particular fiscal quarter, Innoviva, as the manager of TRC LLC pursuant to the TRC LLC Agreement, has the right to request the members of TRC LLC to each make a capital contribution in the amount of its proportionate share of such shortfall based on its respective ownership interest and (ii) the Servicer, on behalf of the Issuer, is permitted to withdraw the amount requested of the Issuer, as a member of TRC LLC, from the Collection Account to pay the specified amount of such required capital contribution in respect of the Issuer Class C Units.

 

ARTICLE IV
 DEFAULT AND REMEDIES

 

Section 4.1            Events of Default.  Each of the following events or occurrences shall constitute an “Event of Default” hereunder with respect to any class of Notes (except for clauses (a), (b), (c) and (d) below in which the potential events or occurrences that would constitute an Event of Default are specific to certain classes of Notes, in which case such Event of Default shall be constituted only with respect to such classes of Notes (and not all classes of Notes)), and each such Event of Default shall be deemed to exist and continue so long as, but only so long as, it shall not have been waived or remedied, as applicable:

 

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(a)           (i) the failure to pay interest on the Original Notes (or any Refinancing Notes in respect of the Original Notes) due on any Payment Date (other than the Final Legal Maturity Date) in full within five Business Days of such Payment Date, but only to the extent of the amount available in the Collection Account as of such Payment Date for interest payments pursuant to the Priority of Payments, (ii) the failure to pay interest on the Original Notes (or any Refinancing Notes in respect of the Original Notes) due on any Payment Date (other than the Final Legal Maturity Date) that occurs following the Interest Deferral Period in full on or prior to the succeeding Payment Date, together with any additional accrued and unpaid interest on any interest not paid on the Payment Date on which it was originally due, regardless of whether or not funds are then available therefor in the Collection Account, (iii) to the extent the amount available in the Collection Account as of such Payment Date for interest payments pursuant to the Priority of Payments is insufficient to pay scheduled interest on the Original Notes (or any Refinancing Notes in respect of the Original Notes) in accordance with the Priority of Payments on any Payment Date during the Interest Deferral Period, the failure to add the scheduled but unpaid interest to the principal balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) on such Payment Date, or (iv) in the case of any Subordinated Notes (or any Refinancing Notes in respect of the Subordinated Notes), except as provided in the related Resolutions and set forth in any indenture supplemental to this Indenture providing for the issuance of such Subordinated Notes (or any Refinancing Notes in respect of the Subordinated Notes) pursuant to Section 2.15 or Section 2.16, failure to pay interest on any Subordinated Notes (or any Refinancing Notes in respect of the Subordinated Notes) of such class on the Payment Date that such interest is due, regardless of whether or not funds are then available therefor in the Collection Account;

 

(b)           the failure to pay principal of the Original Notes (or any Refinancing Notes in respect of the Original Notes) due on any Payment Date (other than the Final Legal Maturity Date or any Redemption Date) within five Business Days of such Payment Date, but only to the extent of amounts in the Collection Account as of such Payment Date available for principal payments after giving effect to the amounts that are payable senior to the payment of principal of the Original Notes (or any Refinancing Notes in respect of the Original Notes) in accordance with the Priority of Payments on such Payment Date;

 

(c)           the failure to pay principal of and Premium, if any, and accrued and unpaid interest on the Original Notes, any Subordinated Notes or any Refinancing Notes on the Final Legal Maturity Date (or other applicable maturity date with respect to any Subordinated Notes or any Refinancing Notes in respect of the Subordinated Notes) or, if all conditions to the Redemption have been satisfied and subject to the provisions described in Section 3.9(b), failure to pay the Redemption Price when due on any Redemption Date;

 

(d)           the failure to pay any other amount in respect of the Original Notes, any Subordinated Notes or any Refinancing Notes when due and payable under this Indenture and the continuance of such default for a period of 30 or more days after written notice thereof is given to the Issuer by the Trustee;

 

(e)           the failure by the Issuer to comply with the covenants set forth in this Indenture (other than a payment default for which provision is made in clause (a), (b), (c) or (d) above), including pursuant to Section 5.2(y), that would result in a Material Adverse Change

 

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(except in respect of a covenant already qualified in respect of Material Adverse Change); provided, that, if the consequences of the failure can be cured, such failure continues for a period of 30 days or more after written notice thereof has been given to the Issuer by the Trustee at the direction of the Controlling Party;

 

(f)            the Issuer becomes subject to a Voluntary Bankruptcy or an Involuntary Bankruptcy;

 

(g)           the rendering of one or more final judgments or orders for the payment of money in excess of $5,000,000 shall be rendered against the Issuer and remain unstayed, undischarged and unsatisfied for thirty (30) days after such judgment(s) becomes nonappealable, unless adequate funds have been reserved or set aside by the Equityholder for the payment thereof;

 

(h)           a default resulting in the acceleration of indebtedness for borrowed money of the Issuer other than the Original Notes (or any Refinancing Notes in respect of the Original Notes) of more than $5,000,000;

 

(i)            any representation, warranty or certification made or deemed to be made by or on behalf of the Issuer, the Transferor, Theravance Biopharma or the Servicer in any Transaction Document is incorrect when made in any material respect (except to the extent such representation, warranty or certification is qualified by materiality, in which case, in any respect); provided, that, if the consequences of the defect can be cured, such failure continues for a period of 30 days or more after written notice thereof has been given to the Issuer by the Trustee at the Direction of the Controlling Party;

 

(j)            the Issuer is classified as a corporation or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes;

 

(k)           the Issuer becomes an investment company required to be registered under the Investment Company Act;

 

(l)            the Transferor or Theravance Biopharma shall have failed to perform any of its covenants under the Sale and Contribution Agreement where, except in respect of a covenant already qualified in respect of Material Adverse Change, such failure is a Material Adverse Change; provided, that, if the consequences of the failure can be cured, such failure continues for a period of 30 days or more after written notice thereof has been given to the Issuer by the Trustee at the direction of the Controlling Party;

 

(m)          the Equityholder shall have failed to perform any of its covenants under the Pledge and Security Agreement where, except in respect of a covenant already qualified in respect of Material Adverse Change, such failure is a Material Adverse Change; provided, that, if the consequences of the failure can be cured, such failure continues for a period of 30 days or more after written notice thereof has been given to the Issuer by the Trustee at the direction of the Controlling Party; or

 

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(n)           the Trustee fails to have a first-priority perfected security interest in the Collateral, in any of the Issued Pledged Equity or in any material portion of the other Issuer Pledged Collateral.

 

Section 4.2            Acceleration, Rescission and Annulment.

 

(a)           If an Event of Default with respect to the Notes (other than an Acceleration Default) occurs and is continuing, the Controlling Party or the Senior Trustee may, and, upon the Direction of the Controlling Party, shall, give an Acceleration Notice to the Issuer; provided, that such Direction shall be void ab initio unless the Controlling Party delivers a certification that none of the Noteholders that are seeking acceleration of the Notes and the liquidation of the Collateral is a Restricted Party.  Upon delivery of such an Acceleration Notice (and so long as such Acceleration Notice has not been rescinded and annulled pursuant to this Indenture), the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon shall be immediately due and payable.  At any time after the Senior Trustee or such Noteholders have so declared the Outstanding Principal Balance of the Notes to be immediately due and payable, and prior to the exercise of any other remedies pursuant to this Article IV, the Senior Trustee, upon the Direction of the Controlling Party, shall, subject to Section 4.5(a), by written notice to the Issuer, rescind and annul such declaration and thereby annul its consequences if (i) there has been paid to or deposited with the Trustee an amount sufficient to pay all overdue installments of interest on the Notes, and the principal of, and Premium, if any, on, the Notes that would have become due otherwise than by such declaration of acceleration, (ii) the rescission would not conflict with any judgment or decree and (iii) all other Defaults and Events of Default, other than non-payment of interest and Premium, if any, on and principal of the Notes that have become due solely because of such declaration of acceleration, have been cured or waived.  If an Acceleration Default occurs, the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon shall automatically become immediately due and payable without any further action by any party.

 

(b)           Notwithstanding this Section 4.2, Section 4.3 and Section 4.12, after the occurrence and during the continuation of an Event of Default, no Noteholders of any class of Notes other than the Senior Class of Notes shall be permitted to give or direct the giving of an Acceleration Notice, or to exercise any remedy in respect of such Event of Default, and no Person other than the Senior Trustee, acting at the Direction of the Controlling Party, may give an Acceleration Notice or exercise any such remedy.

 

(c)           Within thirty (30) days after the occurrence of an Event of Default in respect of any class of Notes, the Trustee shall give to the Noteholders notice of all uncured or unwaived Defaults actually known to a Responsible Officer of the Trustee on such date; provided, that the Trustee may withhold such notice with respect to a Default (other than a payment default with respect to interest, principal or Premium, if any) if it determines in good faith that withholding such notice is in the interest of the affected Noteholders.

 

Section 4.3            Other Remedies.  Subject to the provisions of this Indenture and the Pledge and Security Agreement, if an Event of Default has occurred and is continuing, then the Senior Trustee may, but only at the Direction of the Controlling Party, pursue any available remedy by proceeding at law or in equity to collect the payment of principal, Premium, if any, or

 

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interest due on the Notes or to enforce the performance of any provision of the Notes, this Indenture, the Sale and Contribution Agreement, the Servicing Agreement, the Pledge and Security Agreement or the Account Control Agreement, including any of the following, to the fullest extent permitted by Applicable Law, subject to the receipt of such Direction:

 

(a)           The Senior Trustee may obtain the appointment of a Receiver of the Collateral as provided in Section 12.7 and the Issuer consents to and waives any right to notice of any such appointment; provided, that the Receiver shall not be a Restricted Party.

 

(b)           The Senior Trustee may, without notice to the Issuer and at such time as the Senior Trustee in its sole discretion may determine, exercise any or all of the Issuer’s rights in, to and under or in any way connected with or related to any or all of the Collateral, including (i) demanding and enforcing payment and performance of, and exercising any or all of the Issuer’s rights and remedies with respect to the collection, enforcement or prosecution of, any or all of the Collateral (including the Issuer’s rights under the Sale and Contribution Agreement), in each case by legal proceedings or otherwise, (ii) settling, adjusting, compromising, extending, renewing, discharging and releasing any or all of, and any legal proceedings brought to collect or enforce any or all of, the Collateral and otherwise under the Transaction Documents and (iii) preparing, filing and signing the name of the Issuer on (A) any proof of claim or similar document to be filed in any bankruptcy or similar proceeding involving the Collateral and (B) any notice of lien, assignment or satisfaction of lien, or similar document in connection with the Collateral; provided, that under no circumstance, including the occurrence of an Event of Default, shall the Senior Trustee or the Noteholders (i) be a party or third party beneficiary of the GSK Agreements or (ii) be able to assert a claim against any Person under the GSK Agreements.

 

(c)           Subject to the Account Control Agreement and the Pledge and Security Agreement (including the provisions of Section 11.1 of the Pledge and Security Agreement), the Senior Trustee may, without notice except as specified herein, and as required by Applicable Law, in accordance with Applicable Law, sell or cause the sale of all or any part of the Collateral in one or more parcels at public or private sale, at any of the Senior Trustee’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Senior Trustee may deem commercially reasonable; provided, that under no circumstance, including the occurrence of an Event of Default, shall the Senior Trustee or the Noteholders (i) be a party or third party beneficiary of the GSK Agreements or (ii) be able to assert a claim against any Person under the GSK Agreements; provided, further, that under no circumstance, including the occurrence of a Voluntary Bankruptcy or Involuntary Bankruptcy of the Issuer, shall the Senior Trustee sell or cause the sale of all or any part of the Collateral to a Restricted Party.

 

(d)           The Issuer agrees that, to the extent notice of sale shall be required by Applicable Law, at least ten (10) days’ notice to the Issuer of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Senior Trustee shall not be obligated to make any sale of all or any part of the Collateral regardless of notice of sale having been given.  The Senior Trustee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

 

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(e)           The Senior Trustee may, instead of exercising the power of sale conferred upon it by Section 4.3(c) and Applicable Law, proceed by a suit or suits at law or in equity to foreclose the Security Interest and sell all or any portion of the Collateral under a judgment or a decree of a court or courts of competent jurisdiction, provided, that, so long as the GSK Agreements or the Master Agreement remains in force, the Senior Trustee shall make any such foreclosure sale only to a Person that is a Permitted Holder.

 

(f)            The Senior Trustee may require the Issuer to, and the Issuer hereby agrees that it shall at its expense and upon request of the Senior Trustee, forthwith assemble all or part of the Collateral as directed by the Senior Trustee and make it available to the Senior Trustee at a place to be designated by the Senior Trustee that is reasonably convenient to both parties.

 

(g)           In addition to the rights and remedies provided for in this Indenture, the Senior Trustee may exercise in respect of the Collateral all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the affected property included in the Collateral) and under all other Applicable Law; provided, that, so long as the GSK Agreements, the TRC LLC Agreement or the Master Agreement remains in force, the Senior Trustee shall cause any sale of the Collateral to be made only to a Person that is a Permitted Holder.

 

(h)           The Senior Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding.

 

Section 4.4            Limitation on Suits.  Without limiting the provisions of Section 4.9 and the final sentence of Section 12.4, no Noteholder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, the Pledge and Security Agreement, the Account Control Agreement or the Notes, for the appointment of a Receiver or trustee or for any other remedy hereunder, unless:

 

(a)           such Noteholder is a holder of the Senior Class of Notes and has previously given written notice to the Senior Trustee of a continuing Event of Default;

 

(b)           the Controlling Party makes a written request to the Senior Trustee to pursue a remedy hereunder;

 

(c)           such Noteholder or Noteholders offer to the Senior Trustee an indemnity satisfactory to the Senior Trustee against any costs, expenses and liabilities to be incurred in complying with such request;

 

(d)           the Senior Trustee does not comply with such request within 60 days after receipt of the request and the offer of indemnity;

 

(e)           during such 60-day period, the Controlling Party does not give the Senior Trustee a Direction inconsistent with such request; and

 

(f)            such Noteholder is not a Restricted Party.

 

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No one or more Noteholders may use this Indenture to affect, disturb or prejudice the rights of another Noteholder or to obtain or seek to obtain any preference or priority not otherwise created by this Indenture and the terms of the Notes over any other Noteholder or to enforce any right under this Indenture, except in the manner herein provided.

 

Section 4.5            Waiver of Existing Defaults.

 

(a)           The Senior Trustee, upon the Direction of the Controlling Party, by written notice to the Issuer may waive any existing Default (or Event of Default) hereunder and its consequences, except a Default (or Event of Default) (i) in the payment of the interest on, principal of and Premium, if any, on any Note or (ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of the Noteholder of each Note affected thereby.  Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Default (or Event of Default) or impair any right consequent thereon.

 

(b)           Any written waiver of a Default or an Event of Default given by the Senior Trustee to the Issuer in accordance with the terms of this Indenture shall be binding upon the Senior Trustee and the other parties hereto.  Unless such writing expressly provides to the contrary, any waiver so granted shall extend only to the specific event or occurrence that gave rise to the Default or Event of Default so waived and not to any other similar event or occurrence that occurs subsequent to the date of such waiver.

 

Section 4.6            Restoration of Rights and Remedies.  If the Senior Trustee or any Noteholder of the Senior Class of Notes (excluding any Noteholder that is a Restricted Party) 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 Senior Trustee or such Noteholder, then in every such case the Issuer, the Senior Trustee and the Noteholders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Senior Trustee and the Noteholders shall continue as though no such proceeding has been instituted.

 

Section 4.7            Remedies Cumulative.  Each and every right, power and remedy herein given to the Trustee specifically or otherwise in this Indenture shall be cumulative and shall, to the extent permitted by Applicable Law, be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Trustee, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or thereafter any other right, power or remedy.  No delay or omission by the Trustee in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any such right, power or remedy or be construed to be a waiver of any Default on the part of the Issuer or to be an acquiescence.

 

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Section 4.8            Authority of Courts Not Required.  The parties hereto agree that, to the greatest extent permitted by Applicable Law, the Trustee shall not be obliged or required to seek or obtain the authority of, or any judgment or order of, the courts of any jurisdiction in order to exercise any of its rights, powers and remedies under this Indenture, and the parties hereby waive any such requirement to the greatest extent permitted by Applicable Law.

 

Section 4.9            Rights of Noteholders to Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Noteholder to receive payment of interest on, principal of, or Premium, if any, on any Note on or after the respective due dates therefor expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Noteholder unless such Noteholder is a Restricted Party.

 

Section 4.10          Trustee May File Proofs of Claim.  The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of any Noteholder allowed in any judicial proceedings relating to any obligor on the Notes, its creditors or its property.

 

Section 4.11          Undertaking for Costs.  All parties to this Indenture agree, and each Noteholder by its acceptance hereof shall be deemed to have agreed, that, in any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defense made by the party litigant.  This Section 4.11 does not apply to a suit instituted by the Trustee, a suit instituted by any Noteholder for the enforcement of the payment of interest, principal, or Premium, if any, on any Note on or after the respective due dates expressed in such Note or a suit by any Noteholder or Noteholders holding at least 10% of the Outstanding Principal Balance of the Notes.

 

Section 4.12          Control by Noteholders.  Subject to this Article IV and to the rights of the Trustee hereunder, the Controlling Party 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, right or power conferred on the Trustee under any Transaction Document; provided, that:

 

(a)           such Direction shall not be in conflict with any Applicable Law or with this Indenture and would not involve the Trustee in personal liability or unindemnified expense;

 

(b)           the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Noteholders of such class not taking part in such Direction;

 

(c)           the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such Direction;

 

(d)           the Noteholders shall have given the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense which may be incurred by such Direction; and

 

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(e)           each of the Noteholders seeking to exercise the provisions set forth in this Section 4.12 shall have delivered a certification that none of such Noteholders is a Restricted Party.

 

Section 4.13          Senior Trustee.  The Trustee irrevocably agrees (and the Noteholders (other than the Noteholders represented by the Senior Trustee) shall be deemed to agree by virtue of their purchase of the Notes) that the Senior Trustee shall have all of the rights granted to it under this Indenture, including the right to direct the Trustee to take certain action as provided for in this Indenture, and the Trustee hereby agrees to act in accordance with each such authorized direction of the Senior Trustee.

 

Section 4.14          Application of Proceeds.  All cash proceeds received by the Senior Trustee in respect of any sale of, collection from or other realization upon all or any part of the Collateral shall be deposited in the Collection Account and distributed, first, to pay to the Trustee all unpaid amounts due and owing to the Trustee under this Indenture, including the fees and expenses associated with the exercise of remedies, and then as provided in Section 3.6(a).  Any surplus of such cash proceeds held and remaining after payment in full of all Secured Obligations shall be paid over to the Issuer or whomsoever may be lawfully entitled to receive such surplus as provided in Section 3.6.  Any amount received for any sale or sales conducted in accordance with the terms of Section 4.3 shall to the extent permitted by Applicable Law be deemed conclusive and binding on the Issuer and the Noteholders.

 

Section 4.15          Waivers of Rights Inhibiting Enforcement.  The Issuer waives (a) any claim that, as to any part of the Collateral, a private or public sale, should the Senior Trustee elect so to proceed, is, in and of itself, not a commercially reasonable method of sale for such part of the Collateral, (b) except as otherwise provided in any of the Transaction Documents, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE OR JUDICIAL HEARING IN CONNECTION WITH THE TRUSTEE’S TAKING POSSESSION OR DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE ISSUER WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE U.S. OR OF ANY STATE, AND ALL OTHER REQUIREMENTS AS TO THE TIME, PLACE AND TERMS OF SALE OR OTHER REQUIREMENTS WITH RESPECT TO THE ENFORCEMENT OF THE TRUSTEE’S RIGHTS HEREUNDER, (c) all rights of redemption, appraisement, valuation, stay and extension or moratorium and (d) except as otherwise provided in any of the Transaction Documents, all other rights the exercise of which would, directly or indirectly, prevent, delay or inhibit the enforcement of any of the rights or remedies under this Indenture or the absolute sale of the Collateral, now or hereafter in force under any Applicable Law, and the Issuer, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such Applicable Laws and rights; provided, that any waivers by the Issuer set forth in this Section 4.15 shall not apply to claims or rights asserted by or on behalf of  Noteholders that are Restricted Parties.

 

Section 4.16          Security Interest Absolute.  Unless asserted by or on behalf of Noteholders that are Restricted Parties, all rights of the Trustee and security interests hereunder, and all obligations of the Issuer hereunder, shall be absolute and unconditional irrespective of, and the

 

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Issuer hereby irrevocably waives, any defenses it may now have or may hereafter acquire in any way relating to, any or all of the following:

 

(a)           any lack of validity or enforceability of any of the Transaction Documents or any other agreement or instrument relating thereto (other than against the Trustee);

 

(b)           any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Transaction Documents or any other agreement or instrument relating thereto;

 

(c)           any taking, exchange, surrender, release or non-perfection of any Collateral or any other collateral, or any release or amendment or waiver of or consent to any departure from any guaranty, for all or any of the Secured Obligations;

 

(d)           any manner of application of any Collateral or any other collateral, or proceeds thereof, to all or any of the Secured Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Secured Obligations or any other obligations of the Issuer under or in respect of the Transaction Documents or any other assets of the Issuer;

 

(e)           any change, restructuring or termination of the limited liability company structure or existence of the Issuer;

 

(f)            the failure of any other Person to execute this Indenture or any other agreement or the release or reduction of liability of the Issuer or other grantor or surety with respect to the Secured Obligations; or

 

(g)           any other circumstance (including any statute of limitations) or any existence of or reliance on any representation by the Trustee that might otherwise constitute a defense available to, or a discharge of, the Issuer.

 

Section 4.17          Observer.

 

(a)           If an Event of Default with respect to the Notes has occurred and is continuing and the Trustee has received written notice of (or a Responsible Officer of the Trustee otherwise has actual knowledge of) such Event of Default, the Trustee shall, subject to the proviso in Section 4.2(c), within thirty (30) days following receipt of such notice, give to the Noteholders and Beneficial Holders that have executed and delivered to the Registrar a Confidentiality Agreement written notice (the “Initial Notice”) of such Event of Default advising that each Noteholder and Beneficial Holder that is not also a Restricted Party has the right to nominate a Person (the “Nominee”) to be appointed as an observer of all meetings of the governing body (and committees thereof) of the Issuer (the “Observer”); provided, that the Observer shall not be a Restricted Party.  Each Noteholder and Beneficial Holder that is not also a Restricted Party may, but is not required to, nominate one Nominee by written notice received by the Trustee within ten Business Days of the date of the Initial Notice (the “Nomination Period”).  Each such notice shall contain at least the following information: (i) the identity of such Nominee and reasonable detail about the Person nominated; (ii) the identity of the

 

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nominating Noteholder or Beneficial Holder with respect to such Nominee, together with the Outstanding Principal Balance of Notes held by such Noteholder or the amount of Beneficial Interests held by such Beneficial Holder;  (iii) a statement confirming that such Nominee is willing to serve as Observer if appointed; and (iv) a certificate confirming that that the nominating Noteholder or Beneficial Holder is a not a Restricted Party.

 

 

(b)           If no Nominee is nominated within the Nomination Period, the Trustee shall promptly notify the Issuer, with a copy to the Noteholders and Beneficial Holders that have executed and delivered to the Registrar a Confidentiality Agreement, that no Nominee has been nominated.

 

(c)           If any Nominee is nominated within the Nomination Period, the Trustee shall, within three Business Days following the end of the Nomination Period, give to the Noteholders and Beneficial Holders that have executed and delivered to the Registrar a Confidentiality Agreement written notice (the “Solicitation Notice”) setting forth (i) the identity of each Nominee and the details relating to each such Nominee provided to the Trustee, (ii) the identity of the nominating Noteholder or Beneficial Holder with respect to each Nominee, together with the Outstanding Principal Balance of Notes held by such Noteholder or the amount of Beneficial Interests held by such Beneficial Holder, (iii) a statement confirming that each Nominee is willing to serve as Observer if appointed and (iv) that each Noteholder shall have ten Business Days after the date of the Solicitation Notice (the “Solicitation Period”) to indicate by written notice to the Trustee the Nominee (and no more than one Nominee) from the list of Nominees specified in the Solicitation Notice that it wishes to have appointed as Observer.  Immediately following the end of the Solicitation Period, the Trustee shall calculate, based upon the written notices it received during the Solicitation Period, for each Nominee, the Outstanding Principal Balance of the Notes selecting such Nominee.  The Nominee that is selected by the largest Outstanding Principal Balance of the Notes shall be designated as Observer (and, in the event that two or more Nominees are selected by the largest Outstanding Principal Balance of the Notes, then the Trustee shall furnish a new Solicitation Notice within three Business Days thereof setting forth only such Nominees selected by such largest Outstanding Principal Balance of the Notes, and the process set forth above shall be repeated therefrom to select an Observer).  The Trustee shall give written notice to the Issuer, the Servicer and the Noteholders and Beneficial Holders that have executed and delivered to the Registrar a Confidentiality Agreement of the results of the solicitation, and the Issuer shall (A) provide the Observer with notice of any meeting of the governing body (or any committee thereof) of the Issuer in accordance with the Issuer Organizational Documents (as if the Observer were a member of the governing body or committee thereof, as the case may be), (B) furnish to the Observer any materials distributed to any other participant in any such meeting at the same time as such materials are distributed to such other participant(s), (C) permit the Observer to attend and observe any such meeting and (D) cause the Issuer’s officers or other representatives to promptly, accurately and in good faith respond to any inquiries of the Observer.

 

(d)           At any time, the Controlling Party may remove the Observer by written notice to the Trustee, the Issuer and the Noteholders.  Upon removal of the Observer, the Trustee shall request the nomination and selection of a replacement Observer using the procedures described in this Section 4.17.

 

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(e)           The Observer (i) must, prior to exercising any right or discharging any duty under this Section 4.17, execute and deliver to the Registrar a Confidentiality Agreement and (ii) shall provide to the Trustee, for inclusion with the next Distribution Reports, a report summarizing its observations from each meeting of the governing body (or any committee thereof) of the Issuer that it shall have attended.

 

ARTICLE V
 REPRESENTATIONS AND WARRANTIES AND COVENANTS

 

Section 5.1            Representations and Warranties.  The Issuer represents and warrants to the Trustee, as of the date of this Indenture, as follows:

 

(a)           The Issuer is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has all limited liability company powers and authority to execute and deliver, and perform its obligations under, this Indenture.

 

(b)           Each Transaction Document to which the Issuer is a party has been duly authorized, executed and delivered by the Issuer and constitutes the legal, valid and binding obligation of the Issuer, enforceable against the Issuer in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.

 

(c)           The Issuer has good and marketable title to the assets and property constituting the Collateral, free and clear of any Liens other than Permitted Liens.

 

(d)           The execution and delivery of any Transaction Document to which the Issuer is a party, and the performance of obligations under any Transaction Document to which the Issuer is a party, by the Issuer do not require any consent or approval of, registration or filing with or any other action by any Governmental Authority, except for the filing of UCC financing statements, those previously obtained and those the failure of which to be obtained or made would not be a Material Adverse Change.

 

(e)           This Indenture creates in favor of the Trustee, for the benefit of the Noteholders, a valid and enforceable security interest in the Collateral, and, when financing statements in appropriate form are filed in the applicable filing offices, the security interest created under this Indenture shall constitute a fully perfected security interest in all right, title and interest of the Issuer in the Collateral to the extent perfection can be obtained by filing UCC financing statements.

 

Section 5.2            Covenants.  The Issuer covenants with the Trustee that, so long as any Notes are Outstanding, it shall perform and comply with each of the following covenants and not engage in any activity prohibited by this Indenture without the prior written consent of the Trustee pursuant to Section 9.1 or Section 9.2, as applicable, authorizing the Issuer not to perform any such covenants or to engage in any such activity prohibited by this Indenture, in each case on such terms and conditions, if any, as shall be specified in such prior written consent:

 

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(a)           The Issuer shall maintain this Indenture in conformity with the other Transaction Documents.  Except as described under Article IX or Article XI or otherwise as specifically permitted by the terms or provisions of any of the Transaction Documents, the Issuer shall not (i) take any action, whether orally or in writing, that would amend, waive, modify, supplement, restate, cancel or terminate, or discharge or prejudice the validity or effectiveness of, the Issuer Organizational Documents, this Indenture, the Notes, the Servicing Agreement, the Pledge and Security Agreement or the Account Control Agreement in any respect, or (ii) permit any party to any such document to be released from its obligations thereunder (unless, in each case, expressly permitted thereunder).

 

(b)           The Issuer shall not incur or suffer to exist any Lien over or with respect to the Collateral, other than any Permitted Lien.

 

(c)           The Issuer shall not incur, create, issue, assume, Guarantee or otherwise become liable for or with respect to, or become responsible for, the payment or performance of, contingently or otherwise, whether present or future, indebtedness for borrowed money or similar monetary obligations; provided, however, that the Issuer may incur indebtedness in respect of the Original Notes, any Subordinated Notes (or any Refinancing Notes in respect of the Original Notes or the Subordinated Notes).

 

(d)           The Issuer shall not commingle its assets with assets of any other Person.

 

(e)           Except as expressly permitted by the Transaction Documents, the Issuer shall not liquidate or dissolve and shall not consolidate with, merge with or into, sell, transfer, convey, lease or otherwise dispose of any or all of the Collateral, or the right to receive any Class C Distributions, or all or substantially all of its assets to, any other Person, or permit any other Person to merge with or into, or consolidate or otherwise combine with, the Issuer.

 

(f)            The Issuer may maintain a sufficient number of employees in light of its contemplated business operations.

 

(g)           The Issuer shall not, without the written consent of the Independent Managers, take any action that would constitute a Voluntary Bankruptcy.  The Issuer shall promptly provide the Trustee with written notice of the institution of any proceeding by or against the Issuer seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of its debts under any Applicable Law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its property.

 

(h)           The Issuer shall comply with the Issuer Organizational Documents.  The Issuer shall not take any action to waive, repeal, amend, vary, supplement or otherwise modify Section 10(j) of the limited liability company agreement of the Issuer or any other provision of the Issuer Organizational Documents in a manner that would adversely affect (x) the rights, remedies, privileges or preferences of the Noteholders or (y) the validity, perfection or priority of the Lien on any Collateral or any Issuer Pledged Collateral, except to the extent expressly permitted by the Issuer Organizational Documents.

 

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(i)            The Issuer shall duly and punctually pay principal with respect to the Outstanding Principal Balance, Premium, if any, and Interest Amount on the Notes in Dollars in accordance with the terms of this Indenture and such Notes; provided, that the Issuer shall be in compliance with this covenant with respect to any Payment Date (other than the Final Legal Maturity Date or any Redemption Date) if any such interest in excess of the portion of the Available Collections Amount available to pay such interest on the relevant Payment Date and funds in the Collection Account (subject to Section 3.7) are paid in full not later than the succeeding Payment Date (together with Additional Interest thereon).

 

(j)            The Issuer (i) shall perform and comply in all material respects with its duties and obligations (if any) under the Sale and Contribution Agreement, (ii) shall not assign, amend, modify, waive, cancel or terminate (or consent to any cancellation or termination of), in whole or in part, the Sale and Contribution Agreement, (iii) shall not breach any of the provisions of the Sale and Contribution Agreement, (iv) shall not consent to an assignment of the Sale and Contribution Agreement by the Transferor (unless the assignee thereof has acquired all or substantially all of the assets of the Transferor, including all of the shares of the Issuer and all of the Issuer’s rights and obligations under the Transaction Documents) or Theravance Biopharma and (v) shall not agree to do any of the foregoing.

 

(k)           The Issuer shall at all times use its commercially reasonable efforts to exercise and enforce its rights and remedies under the Sale and Contribution Agreement, and the Servicing Agreement, in each case, in a timely and commercially reasonable manner; provided, that, following the occurrence and continuation of an Event of Default and subject to the confidentiality provisions under the GSK Agreements, the TRC LLC Agreement and the Master Agreement, the Issuer will give notice to the Trustee on behalf of the Noteholders of any contemplated enforcement of such rights and remedies and will follow any Direction regarding enforcement of such rights and remedies provided by the Controlling Party (or the Senior Trustee on its behalf) that it has received to the extent not inconsistent with this Indenture.

 

(l)            The Issuer shall maintain its existence separate and distinct from its member and any other Person in all material respects, including using its commercially reasonable efforts to comply with the separateness covenants set forth in the Issuer Organizational Documents.

 

(m)          The Issuer shall not enter into any agreement prohibiting the right of the Trustee or any Noteholder to amend or otherwise modify any Transaction Document; provided, that the foregoing prohibition shall not apply to restrictions contained in any Transaction Document or the TRC LLC Agreement, including the “Defined Covenants” (as defined in the TRC LLC Agreement).

 

(n)           The Issuer shall not change, amend or alter its exact legal name at any time except following thirty (30) days’ notice given by the Issuer to the Trustee.  The Issuer shall not change its accounting policies or reporting practices except as permitted by the Issuer Organizational Documents.

 

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(o)           The Issuer shall not assign or pledge, so long as the assignment hereunder shall remain in effect and has not been terminated pursuant to Section 11.1, any of its right, title or interest in the Collateral hereby assigned to anyone other than the Trustee.

 

(p)           The Issuer agrees that, at any time and from time to time, at the Issuer’s expense, the Issuer shall promptly and duly execute and deliver or cause to be duly executed and delivered any and all such further instruments and documents, and take all further action, that may be necessary and within the control of the Issuer, in order to perfect the security interest in the Collateral, or as may be reasonably requested by the Trustee (acting at the Direction of the Controlling Party), and to carry out the provisions of this Indenture and the Account Control Agreement or to enable the Trustee to exercise and enforce its rights and remedies under this Indenture and the Account Control Agreement with respect to any Collateral.  The Issuer also agrees that, at any time and from time to time, at the Issuer’s expense, the Issuer shall file (or cause to be filed) such UCC continuation statements and such other instruments or notices as may be necessary, or that the Trustee may reasonably request, including UCC financing statements or amendments thereto, in order to perfect and preserve the security interests and other rights granted or purported to be granted to the Trustee by this Indenture.  With respect to the foregoing and the grant of the security interest under this Indenture, the Issuer hereby authorizes the Trustee to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral.

 

(q)           The Issuer shall maintain in the Borough of Manhattan, The City of New York, an office or agency of the Trustee, Registrar, Transfer Agent, and Paying Agent where Notes may be presented or surrendered for payment, where Notes may be surrendered for registration of transfer, exchange or purchase and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served.  Each of the Corporate Trust Office and each office or agency of the Trustee in the Borough of Manhattan, The City of New York shall initially be one such office or agency for all of the aforesaid purposes.  The Issuer shall give prompt written notice to the Trustee of the location, and of any change in the location, of any such office or agency (other than a change in the location of the office of the Trustee).  If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.5.  The Issuer may also from time to time designate one or more other offices or agencies 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 Issuer of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes.

 

(r)            The Issuer shall use commercially reasonable efforts to file any form (or comply with any other administrative formalities) required for an exemption from or a reduction of any withholding tax for which it is eligible.  The Issuer shall maintain its status as an entity that is not classified as a corporation or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes.  The Issuer shall maintain its status as either (i) an entity that is disregarded as separate from the Equityholder if there is one Equityholder for U.S. federal income tax purposes or (ii) a partnership if there is more than one Equityholder for U.S. federal income tax purposes, in each case for U.S. federal income tax purposes and, to the extent

 

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permitted by Applicable Law, state and local tax purposes; provided, however, that prior to having more than one Equityholder for U.S. federal income tax purposes, the Issuer shall have provided to the Trustee an opinion of nationally recognized U.S. tax counsel satisfactory to the Trustee to the effect that any change from a disregarded entity to a partnership for U.S. federal income tax purposes should not cause a “significant modification” of the Notes for such purposes.  The Issuer shall not file any tax return or report under any name other than its exact legal name.  The Issuer shall treat the Notes as debt for U.S. federal income tax purposes.  Neither the Issuer nor the Trustee shall treat any Noteholder or Beneficial Holder as a “partner” of the Issuer for U.S. federal income tax purposes with respect to the ownership of the Notes.  The Issuer and the Trustee shall treat all interest paid or otherwise accruing on the Notes as interest for U.S. federal income tax purposes.  The Issuer shall prepare and file all tax returns of the Issuer consistent with the covenants set forth in this Section 5.2(r) and shall not take any inconsistent position in any communication or agreement with any taxing authority unless required by a final “determination” of a court of law within the meaning of Section 1313(a)(1) of the Code.  The Issuer shall not enter into or incur any express or implied obligation to indemnify any other Person with respect to Taxes.  The Issuer shall file (or cause to be filed) all tax returns and reports required by Applicable Law to be filed by it and pay all Taxes required to be paid by it.  In the event the listing of the Original Notes on the Cayman Islands Stock Exchange is not approved or maintained or the Cayman Islands Stock Exchange is no longer treated as a “recognized stock exchange” by the HMRC within the meaning of section 1005 of the U.K. Income Tax Act 2007, the Issuer shall use commercially reasonable efforts to list the Original Notes on a “recognized stock exchange” for such purposes.

 

(s)            The Issuer shall comply with all Applicable Laws with respect to the Transaction Documents, the Collateral and all ancillary agreements related thereto, the violation of which would be a Material Adverse Change.

 

(t)            The Issuer shall (i) preserve and maintain its existence, (ii) preserve and maintain its rights (charter or statutory), franchises, permits, licenses, approvals and privileges and (iii) qualify and remain qualified in good standing in each jurisdiction, in each case where the failure to preserve and maintain such existence, rights, franchises, permits, licenses, approvals, privileges and qualifications would be a Material Adverse Change.  The Issuer shall appoint and employ such agents or attorneys in each jurisdiction where it shall be necessary to take any action under this Indenture or the Account Control Agreement.

 

(u)           If TRC LLC, Innoviva or any other Person makes any Class C Distributions to the Issuer directly and not to the Collection Account, then the Issuer promptly, and in any event no later than two (2) Business Days following the receipt by the Issuer of such payment or distribution, shall remit such payment or distribution to the Collection Account in the exact form received with all necessary endorsements.

 

(v)           During any period in which Theravance Biopharma, the Equityholder or the Issuer is not subject to Section 13 or 15(d) of the Exchange Act, the Issuer shall make available to any Noteholder or Beneficial Holder in connection with any sale of any or all of its Notes and any prospective purchaser of such Notes from such Noteholder or Beneficial Holder the information required by Rule 144A (d)(4) under the Securities Act.

 

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(w)          The Issuer shall not, and shall not permit any of its Affiliates to, directly or indirectly, pay or cause to be paid any consideration of any type or form (whether in cash, property, by way of interest or fee or otherwise) to or for the benefit of any Noteholder or Beneficial Holder for or as an inducement to any forbearance, consent, waiver or amendment of any of the terms or provisions hereof or of the Notes, or any agreement in respect thereof, unless such consideration is, on the same terms and conditions, offered to all Noteholders and Beneficial Holders and paid to all Noteholders and Beneficial Holders that agree to such forbearance, consent, waiver or amendment, or agreement in respect thereof.

 

(x)           The Issuer shall use commercially reasonable efforts to avoid being treated as engaged in a U.S. trade or business.

 

(y)           (i) The Issuer shall perform and comply with the TRC LLC Agreement and shall not take any action, or fail to take any action, that breaches, violates or could reasonably be expected to breach or violate the TRC LLC Agreement.

 

(ii) (A) The Issuer shall enforce the TRC LLC Agreement and its rights under the TRC LLC Agreement, in each case to the extent that the failure to do so under this clause (A) would be reasonably expected to have a direct or indirect material and adverse effect on Theravance Biopharma’s or its permitted transferees’, successors’ and permitted assigns’ (as applicable), including Theravance Biopharma R&D’s and the Issuer’s rights or obligations under the Master Agreement (if applicable) or the TRC LLC Agreement, in each case to the extent relating to the Issuer Class C Units, and (B) the Issuer shall not amend, modify, supplement, waive, cancel, terminate or grant any consent under the TRC LLC Agreement , or take any other action or fail to take any action having the effect of the foregoing, or agree to do any of the foregoing directly or indirectly, in whole or in part, to the TRC LLC Agreement or any rights under the TRC LLC Agreement, in each case to the extent that such action or inaction referred to in this clause (B) would be reasonably expected to have a direct or indirect material and adverse effect on the rights or obligations of Theravance Biopharma or its permitted transferees, successors and permitted assigns (as applicable), including Theravance Biopharma R&D and the Issuer, under the Master Agreement (if applicable) or the TRC LLC Agreement, in each case to the extent relating to the Issuer Class C Units.

 

(iii) The Issuer shall not take any action to, directly or indirectly, adversely impact, delay, forgive, release or compromise any amount owed to or becoming owing to Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable), including Theravance Biopharma R&D and the Issuer in respect of the Class C Distributions under the TRC LLC Agreement.

 

(iv) Notwithstanding anything to the contrary in the foregoing subclauses (i), (ii) and (iii) of this Section 5.2(y), the Issuer is permitted to take any action or fail to take any action with respect to any agreement or drug program (other than the Collaboration Agreement and drug programs under the Collaboration Agreement), including the Strategic Alliance Agreement and/or any drug programs (including the MABA program) that are covered under the Strategic Alliance Agreement, including a transfer, sale, mortgage, pledge, assignment or disposal of, either directly or indirectly, in whole or in part, by operation of law or otherwise, its interest in the MABA program.

 

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(z)           The Issuer shall not, directly or indirectly, (i) declare or make any distribution on its Capital Securities, whether in cash, property, securities or a combination thereof, to the Equityholder or otherwise with respect to any ownership of the Issuer’s Capital Securities, except that the Issuer may distribute to the Equityholder (x) all or any portion of any amounts transferred to the Issuer under Section 3.6(a)(ix) or Section 3.6(b) or (y) any proceeds from an issuance of Notes or Capital Securities in accordance with this Indenture, (ii) purchase, redeem, retire or otherwise acquire for value any issued Capital Securities of the Issuer, except that the Issuer may purchase, redeem, retire or otherwise acquire for value any issued Capital Securities of the Issuer with all or any portion of any amounts transferred to the Issuer under Section 3.6(a)(ix) or Section 3.6(b) or (iii) make any loan or advance to any Person, any purchase or other acquisition of any beneficial interest, Capital Securities, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person (other than Eligible Investments, any Transferred Assets and any such items received by the Issuer in connection with the Issuer’s ownership and management of Eligible Investments or the Transferred Assets).  The foregoing shall not restrict the Equityholder or its Affiliates (other than the Issuer) from making open market purchases or otherwise acquiring or purchasing Notes.

 

(aa)         The Issuer shall not, directly or indirectly, transfer, issue, deliver or sell, or consent to transfer, issue, deliver or sell, any Capital Securities of the Issuer unless (i) such Capital Securities are pledged to the Trustee pursuant to the Pledge and Security Agreement and (ii) after giving effect to such transfer, issuance, delivery and sale, the Equityholder is not subject to U.S. federal withholding tax in respect of the Class C Distributions  Notwithstanding the foregoing, the Issuer is permitted to accept capital contributions from the Equityholder after the Closing Date provided such amount is used only as permitted by this Indenture.

 

(bb)         The Issuer shall not engage in any business or activity other than entering into the Transaction Documents, purchasing or otherwise acquiring, owning, holding, managing, servicing, pledging and otherwise dealing with the Eligible Investments and the Transferred Assets, collecting the Class C Distributions and any other payments in respect of the Transferred Assets or the Eligible Investments, issuing Notes, issuing Capital Securities (subject to the provisions of Section 5.2(aa)), undertaking any action contemplated by the Transaction Documents or necessary or reasonably appropriate to maintain, enforce or enjoy the full benefit of any current or residual rights granted by or arising out of the Transferred Assets and the Transaction Documents and entering into, remaining a party to, and otherwise performing any of the obligations contemplated by, and exercising any right or remedy granted to the Issuer pursuant to or arising out of, the Transaction Documents, the Transferred Assets and the TRC LLC Agreement and other matters reasonably related thereto.

 

Section 5.3            Reports and Other Deliverables by the Issuer.

 

(a)           Subject to the confidentiality provisions under the GSK Agreements, the TRC LLC Agreement and the Master Agreement, the Issuer shall furnish to the Trustee, within one-hundred twenty (120) days after the end of each fiscal year commencing with the fiscal year ending December 31, 2019, a certificate from a Responsible Officer of the Issuer as to his or her knowledge of the Issuer’s compliance with all of its obligations under this Indenture (it being understood that, for purposes of this Section 5.3, such compliance shall be determined without

 

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regard to any period of grace or requirement of notice provided under this Indenture but shall reflect any Interest Amount paid on the Original Notes (and any Refinancing Notes in respect of the Original Notes) (other than on the Final Legal Maturity Date) by the Payment Date immediately following the Payment Date on which such Interest Amount was first payable as contemplated by the proviso to Section 5.2(i) as have been timely paid).

 

(b)           Subject to the confidentiality provisions under the GSK Agreements, the TRC LLC Agreement and the Master Agreement, the Issuer shall deliver a written notice to the Trustee of the occurrence of any Default or Event of Default under this Indenture promptly and in any event within five Business Days of a Responsible Officer of the Issuer (including any Manager) becoming aware of such Default or Event of Default, which shall be labeled “Notice of Default” or “Notice of Event of Default”.

 

(c)           The Issuer shall promptly (and in any event within five (5) Business Days of receipt thereof) provide to the Trustee and the Servicer copies of written materials that the Issuer receives from the Transferor pursuant to the Sale and Contribution Agreement or from TRC LLC pursuant to the TRC LLC Agreement (except to the extent the Issuer is restricted from disclosing such information pursuant to the confidentiality provisions of the GSK Agreements, the TRC LLC Agreement or the Master Agreement).

 

(d)           Within 120 days after the beginning of each fiscal year commencing with the fiscal year beginning January 1, 2020, the Issuer shall furnish to the Trustee an opinion of its legal counsel, which opinion shall state either that (i) in the opinion of such counsel, all action has been taken with respect to any filing, re-filing, recording or re-recording with respect to the Collateral as is necessary to maintain the security interest in the Collateral in favor of the Trustee for the benefit of the Noteholders, or (ii) in the opinion of such counsel, no such action is necessary to maintain such security interest.

 

Section 5.4            Development and Commercialization of Products.  Notwithstanding anything to the contrary contained herein, the parties hereto hereby acknowledge and agree, and each Noteholder and Beneficial Holder by its acceptance of its interest in the Notes is hereby deemed to acknowledge and agree, that neither the Transferor nor the Issuer shall have any obligation or liability with respect to the allocations of resources, scope, intensity and duration of efforts or decisions and judgments made in connection with development and commercialization (including acts or omissions that result in or increase the likelihood of, greater or lesser commercial success): (i) with respect to, or as among, any Products or (ii) as among any one or more Products, on the one hand, and other products or therapeutically active components, on the other hand.

 

ARTICLE VI
 THE TRUSTEE

 

Section 6.1            Acceptance of Trusts and Duties.  Except during the continuance of an Event of Default, the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; provided, that, to the extent those duties are qualified, limited or otherwise affected by the provisions of any other Transaction Document, the Trustee shall be

 

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required to perform those duties only as so qualified, limited or otherwise affected.  The duties and responsibilities of the Trustee shall be as provided by the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture) and as set forth herein, except with respect to the obligation to exercise rights and remedies following an Event of Default, which right and remedies shall be performed by the Trustee acting solely upon the Direction of the Controlling Party in accordance with Article IV.  The Trustee accepts the trusts hereby created and applicable to it and agrees to perform the same but only upon the terms of this Indenture and the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture) and agrees to receive and disburse all moneys received by it in accordance with the terms hereof.  The Trustee in its individual capacity shall not be answerable or accountable under any circumstances except for its own willful misconduct or negligence or breach of any of its representations or warranties set forth in this Indenture and made expressly in its individual capacity, as determined by the non-appealable decision of a court of competent jurisdiction, and the Trustee shall not be liable for any action or inaction of the Issuer or any other parties to any of the Transaction Documents.  Any amounts received by or due to the Trustee under this Indenture, including the fees, out-of-pocket expenses and indemnities of the Trustee, shall be Administrative Expenses of the Issuer paid in accordance with the Priority of Payments.  The Trustee shall not be liable to any Person for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including lost profits), even if the Trustee has been advised of the likelihood of such loss or damage.

 

The Issuer does hereby constitute and appoint the Trustee the true and lawful attorney of the Issuer, irrevocably, granted for good and valuable consideration and coupled with an interest and with full power of substitution, and with full power (in the name of the Issuer or otherwise), to ask, require, demand, receive, compound and give acquittance for any and all monies and claims for monies (in each case including insurance and requisition proceeds) due and to become due under or arising out of any Transaction Document and all other property that now or hereafter constitutes part of the Collateral, to endorse any checks or other instruments or orders in connection therewith and to file any claims or take any action or institute any proceedings that the Trustee may deem to be necessary or advisable in the premises; provided, that the Trustee shall not exercise any such rights except upon the occurrence and during the continuance of an Event of Default hereunder in accordance with Section 4.3.

 

Section 6.2            Copies of Documents and Other Notices.

 

(a)           The Trustee, upon written request, shall furnish to each requesting Noteholder or Beneficial Holder that has executed and delivered to the Registrar a Confidentiality Agreement and the Servicer, promptly upon receipt thereof, duplicates or copies of all reports, Notices, requests, demands, certificates, financial statements and other instruments furnished to the Trustee under or in connection with this Indenture.

 

(b)           The Trustee shall furnish to the Servicer and Noteholders and Beneficial Holders that have executed and delivered to the Registrar a Confidentiality Agreement any reports or notices received from any of the Issuer, TRC LLC, Theravance Biopharma and the Equityholder promptly after receipt thereof from the Issuer.  The Trustee may rely conclusively on the validity of any Confidentiality Agreement delivered to it, and may assume that each Beneficial Holder that has delivered a Confidentiality Agreement continues to beneficially own

 

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the Notes and is entitled to receive the information requested in accordance with this Section 6.2 absent receipt by the Trustee of written notice to the contrary.

 

Section 6.3            Representations and Warranties.  The Trustee does not make and shall not be deemed to have made any representation or warranty as to the validity, legality or enforceability of this Indenture, the Notes or any other document or instrument or as to the correctness of any statement contained in any thereof, except that the Trustee in its individual capacity hereby represents and warrants as follows:

 

(a)           The Trustee is a duly authorized national banking association and is validly existing and in good standing under the laws of the United States of America.

 

(b)           The Trustee has all requisite right, power and authority to execute and deliver this Indenture and its related documents and to perform all of its duties as Trustee hereunder and thereunder.

 

(c)           The execution and delivery by the Trustee of this Indenture and the other Transaction Documents to which it is a party, and the performance by the Trustee of its duties hereunder and thereunder, have been duly authorized by all necessary corporate proceedings, and no further approvals or filings, including any governmental approvals, with respect to its banking and trust powers, are required for the valid execution and delivery by the Trustee, or the performance by the Trustee, of this Indenture and such other Transaction Documents to which it is a party.

 

(d)           The execution, delivery and performance by the Trustee of this Indenture and the other Transaction Documents to which it is a party (i) to the best of the Trustee’s knowledge and without independent inquiry or investigation into the facts thereto, do not violate any provision of any Applicable Law governing its banking or trust powers and (ii) do not violate any provision of its articles of association or by-laws.

 

(e)           The execution, delivery and performance by the Trustee of this Indenture and the other Transaction Documents to which it is a party, to the best of the Trustee’s knowledge and without independent inquiry or investigation into the facts thereto, do not require the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any action in respect of, any Governmental Authority governing its banking or trust powers.

 

(f)            The Trustee has duly executed and delivered this Indenture and each other Transaction Document to which it is a party, and each of this Indenture and each such other Transaction Document constitutes the legal, valid and binding obligation of the Trustee in accordance with its terms, except as (i) such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar Applicable Laws relating to or affecting the enforcement of creditors’ rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability.

 

(g)           The Trustee meets the requirements of Section 6.9 and is an Eligible Institution.

 

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(h)           The Trustee is not a Restricted Party.

 

Section 6.4            Reliance; Agents; Advice of Counsel.  The Trustee shall incur no liability to anyone acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper believed by it to be genuine and believed by it to be signed by the proper party or parties.  The Trustee may accept a copy of a resolution of the governing body of any party to any Transaction Document (including the Issuer), certified in an accompanying Officer’s Certificate as duly adopted and in full force and effect, as conclusive evidence that such resolution has been duly adopted and that the same is in full force and effect.  As to any fact or matter the manner of ascertainment of which is not specifically described herein, the Trustee shall be entitled to receive and may for all purposes hereof conclusively rely on a certificate, signed by an officer of any duly authorized Person, as to such fact or matter, and such certificate shall constitute full protection to the Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon.  To the extent not otherwise specifically provided herein, the Trustee shall assume, and shall be fully protected in assuming, that the Issuer is authorized by the Issuer Organizational Documents to enter into this Indenture and to take all action permitted to be taken by it pursuant to the provisions hereof and shall not be required to inquire into the authorization of the Issuer with respect thereto.  To the extent not otherwise specifically provided herein, the Trustee shall furnish to the Issuer or the Servicer upon written request such information and copies of such documents as the Trustee may have and as are necessary for the Issuer or any such Servicer to perform its duties under Section 3.1 of the Servicing Agreement and Section 2.13 and Article III hereof or otherwise.

 

The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers or for any action it takes or omits to take in accordance with the Direction of the Noteholders in accordance with Section 4.12 relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust, right or power conferred upon the Trustee, under any Transaction Document.

 

The Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder or under any other Transaction Document either directly or by or through agents or attorneys or a custodian or nominee, and the Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder.

 

The Trustee may consult with counsel as to any matter relating to this Indenture or any other Transaction Document and any opinion of counsel or any advice of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion of counsel.

 

The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture or any other Transaction Document, or to institute, conduct or defend any litigation hereunder or in relation hereto, at the request, order or Direction of any of the Noteholders, pursuant to the provisions of this Indenture or any other Transaction Document, unless such Noteholders shall have offered to the Trustee security or indemnity satisfactory to it against the costs, expenses and liabilities that may be incurred therein or thereby.

 

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The Trustee shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or under any other Transaction Document, or in the exercise of any of its rights or powers, if the repayment of such funds or indemnity satisfactory to it against such risk or liability is not reasonably assured to it, and none of the provisions contained in this Indenture or any other Transaction Document shall in any event require the Trustee to perform, or be responsible or liable for the manner of performance of, any obligations of the Issuer or the Servicer under this Indenture or any of the other Transaction Documents.

 

The Trustee shall not be liable for any Losses or Taxes (except for Taxes relating to any compensation, fees or commissions of any entity acting in its capacity as Trustee hereunder) or in connection with the selection of Eligible Investments or for any investment losses resulting from Eligible Investments.

 

When the Trustee incurs expenses or renders services in connection with an Acceleration Default, such expenses (including the fees and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any Applicable Law relating to bankruptcy matters or Applicable Law relating to creditors’ rights generally.

 

The Trustee shall not be charged with knowledge of an Event of Default unless a Responsible Officer of the Trustee obtains actual knowledge of such event or has received written notice of such event at its Corporate Trust Office from the Issuer, the Servicer or Noteholders holding not less than 10% of the Outstanding Principal Balance of the Notes, which shall be labeled “Notice of Default” or “Notice of Event of Default”.

 

The Trustee shall have no duty to monitor the performance of the Issuer, the Servicer or any other party to the Transaction Documents, or to confirm the accuracy of any information or calculation required to be provided by such parties to the Trustee under the Transaction Documents, nor shall it have any liability in connection with the malfeasance or nonfeasance by any other party to the Transaction Documents.

 

Whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action to be taken hereunder or under any other Transaction Document, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a Responsible Officer of the Issuer and delivered to the Trustee, and such certificate shall be full warrant to the Trustee for any action taken, suffered or omitted by it under the provisions of this Indenture or any other Transaction Document upon the faith thereof.

 

Except as provided expressly hereunder, the Trustee shall have no obligation to invest and reinvest any cash held in the Accounts in the absence of timely and specific written investment direction by or on behalf of the Issuer.  In no event shall the Trustee be liable for the selection of investments or for investment losses incurred thereon.  The Trustee shall have no liability in respect of losses incurred as a result of the liquidation of any investment prior to its stated maturity or the failure of the Issuer to provide timely written investment direction.

 

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

 

Section 6.5            Not Acting in Individual Capacity.  The Trustee acts hereunder solely as trustee unless otherwise expressly provided, and all Persons, other than the Noteholders to the extent expressly provided in this Indenture, having any claim against the Trustee by reason of the transactions contemplated hereby shall look, subject to the lien and priorities of payment as provided herein or in any other Transaction Document, only to the property of the Issuer for payment or satisfaction thereof.

 

Section 6.6            Compensation of Trustee.  The Trustee agrees that it shall have no right against the Noteholders or, except as provided in Section 3.6(a), the property of the Issuer, for any fee as compensation for its services hereunder.  The Issuer shall pay to the Trustee from time to time such compensation as is agreed in writing between the two parties.  The priority of such compensation shall be subject to Section 3.6(a).

 

Section 6.7            Notice of Defaults.  As promptly as practicable after, and in any event within 30 days after, the occurrence of any Default hereunder, the Trustee shall send to the Issuer, the Servicer and the Noteholders of the related class, in accordance with Section 313(c) of the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture), notice of such Default hereunder actually known to a Responsible Officer of the Trustee, unless such Default shall have been cured or waived; provided, that the Trustee shall not be deemed to have any fiduciary duty to the Issuer or the Servicer by reason of this Section 6.7, and the Trustee shall not be liable to the Issuer or the Servicer for any failure to comply with this Section 6.7; provided, further, that, except in the case of a Default on the payment of the interest, principal or Premium, if any, on any Note, the Trustee shall be fully protected in withholding such notice if and so long as a trust committee of Responsible Officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the Noteholders of the related class.

 

Section 6.8            May Hold Notes.  The Trustee, any Transfer Agent, any Paying Agent, the Registrar or any of their Affiliates or any other agent in their respective individual or any other capacity may become the owner or pledgee of the Notes so long as it is not a Restricted Party and, subject to Sections 310(b) and 311 of the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture), may otherwise deal with the Issuer with the same rights it would have if it were not the Trustee, Transfer Agent, Paying Agent, Registrar or such other agent.

 

Section 6.9            Corporate Trustee Required; Eligibility.  There shall at all times be a Trustee that shall (a) be eligible to act as a trustee under Section 310(a) of the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture), (b) meet the requirements of Rule 3a-7(a)(4)(i) under the Investment Company Act and (c) meet the Eligibility Requirements.  If such corporation publishes reports of conditions at least annually, pursuant to Applicable Law or

 

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to the requirements of any federal, state, foreign, territorial or District of Columbia supervising or examining authority, then, for the purposes of this Section 6.9, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of conditions so published.

 

In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.9 to act as Trustee, the Trustee shall resign immediately as Trustee in the manner and with the effect specified in Section 7.1.

 

Section 6.10          Reports by the Trustee.  Within sixty (60) days after May 15 of each year commencing with the first full calendar year following the issuance of any class of Notes, the Trustee shall, if required by Section 313(a) of the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture), transmit to the Noteholders of each class, as provided in Section 313(c) of the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture), a brief report describing, among other things, any changes in eligibility and qualifications of the Trustee and any Subordinated Note Issuance.

 

Section 6.11          Account Control Agreement, Pledge and Security Agreement and Other Transaction Documents.  The Trustee shall enter into the Account Control Agreement with the Issuer and the Servicer on the Closing Date and shall hold the collateral pledged thereunder as part of the Collateral for purposes of this Indenture.  The Trustee shall enter into the Pledge and Security Agreement with the Equityholder on the Closing Date and shall hold the collateral pledged thereunder as collateral for the Secured Obligations.  The provisions of this Article VI shall apply to the Trustee’s exercise of rights and remedies under the Account Control Agreement and the Pledge and Security Agreement, mutatis mutandis.  In addition, the Trustee shall enter into such other Transaction Documents on the Closing Date to which it is party.

 

Section 6.12          Collateral.

 

(a)           The Trustee shall hold such of the Collateral as consists of instruments, deposit accounts, negotiable documents, money, goods, letters of credit and advices of credit in the State of New York.  The Trustee shall hold such of the Collateral as constitutes investment property through a securities intermediary, which securities intermediary shall agree with the Trustee (which agreement shall be governed by the laws of the State of New York) that (a) such investment property shall at all times be credited to a securities account of the Trustee, (b) such securities intermediary shall treat the Trustee as entitled to exercise the rights that comprise each financial asset credited to such securities account, (c) all property credited to such securities account shall be treated as a financial asset, (d) such securities intermediary shall comply with entitlement orders originated by the Trustee without the further consent of any other Person, (e) such securities intermediary shall not agree with any Person other than the Trustee to comply with entitlement orders originated by such other Person and (f) such securities account and the property credited thereto shall not be subject to any lien, security interest or right of set-off in favor of such securities intermediary or anyone claiming through it (other than the Trustee).  Except as permitted by this Section 6.12 or as otherwise permitted by any Transaction Document, the Trustee shall not hold any part of the Collateral through an agent or a nominee.

 

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(b)           The Trustee shall not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the liens in any of the Collateral, for the validity or sufficiency of the Collateral, for the validity of the title of the Issuer or the Equityholder to the Collateral, for insuring the Collateral or for the payment of Taxes, charges, assessments or liens upon the Collateral.  Notwithstanding anything to the contrary in the Transaction Documents, the Trustee shall have no responsibility for recording, filing, re-recording or re-filing any financing statement, continuation statement, document, instrument or other notice in any public office at any time or times or to otherwise take any action to perfect or maintain the perfection of any security interest granted to it under the Transaction Documents.

 

Section 6.13          Preservation and Disclosure of Noteholder Lists.  The Registrar shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Noteholders received by it.  In any case where either (a) three or more Noteholders that have executed and delivered to the Registrar a Confidentiality Agreement and have certified in such Confidentiality Agreement(s) (or otherwise) that none of such Noteholders are Restricted Parties or (b) one or more Noteholders holding at least 25% of the Outstanding Principal Balance of the Senior Class of Notes that have executed and delivered to the Registrar a Confidentiality Agreement (in each case, “Applicants”) apply in writing to the Registrar and furnish to the Registrar reasonable proof that each such Applicant has owned a Note for a period of at least three (3) months preceding the date of such application, and such application states that the Applicants desire to communicate with other Noteholders with respect to their rights under this Indenture or under the Notes and such application is accompanied by a copy of the form of proxy or other communication that such Applicants propose to transmit, then the Registrar shall, within five (5) Business Days after the receipt of such application, inform such Applicants as to the approximate number of Noteholders whose names and addresses appear in such information and as to the approximate cost of mailing to such Noteholders the form of proxy or other communication, if any, specified in such application.  The Registrar shall, upon the written request of such Applicants, mail to each Noteholder whose name and address appears in such information a copy of the form of proxy or other communication that is specified in such request, with reasonable promptness after a tender to the Registrar of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing.  Each and every Noteholder, by receiving and holding the same, agrees with the Issuer and the Registrar that neither the Registrar nor any agent of the Issuer or the Registrar shall be held accountable by reason of mailing any material pursuant to a request made under this Section 6.13.

 

Section 6.14          Compliance with Applicable Anti-Terrorism and Anti-Money Laundering Regulations.  In order to comply with Applicable Laws in effect from time to time applicable to banking institutions, including those relating to the funding of terrorist activities and money laundering, the Trustee is required to obtain, verify and record certain information relating to Persons that maintain a business relationship with the Trustee.  Accordingly, the Issuer agrees to provide to the Trustee upon its request from time to time such identifying information and documentation as may be available for the Issuer in order to enable the Trustee to comply with such Applicable Laws.

 

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Section 6.15          Jurisdiction of Trustee.  Each of the Issuer and the Trustee agrees that the State of New York shall be the Trustee’s jurisdiction for purposes of Sections 8-110, 9-304 and 9-305 of the UCC.

 

Section 6.16          Notice of Event of Default to the Servicer and the Equityholder.  If an Event of Default of which the Trustee has been provided with written notice or of which a Responsible Officer of the Trustee has actual knowledge has occurred and is continuing, the Trustee shall deliver written notice to the Servicer and the Equityholder, in accordance with the notice information provided in the Account Control Agreement and the Pledge and Security Agreement, respectively, of the occurrence and continuance of such Event of Default promptly and in any event within five (5) Business Days of a Responsible Officer of the Trustee so becoming aware of such Event of Default; provided, that the Trustee shall not be deemed to have any fiduciary duty to the Servicer or the Equityholder by reason of this Section 6.16, and the Trustee shall not be liable to the Servicer or the Equityholder for any failure to comply with this Section 6.16.

 

ARTICLE VII
 SUCCESSOR TRUSTEES, REGISTRARS, TRANSFER AGENTS, PAYING AGENTS AND CALCULATION AGENTS

 

Section 7.1            Resignation and Removal of Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent.  Any of the Trustee, the Registrar, the Transfer Agent, the Paying Agent and the Calculation Agent may resign as to all or any of the classes of Notes at any time without cause by giving at least thirty (30) days’ prior written notice to the Issuer, the Servicer and the Noteholders.  Noteholders holding a majority of the Outstanding Principal Balance of any class of Notes may at any time remove one or more of the Trustee, the Registrar, the Transfer Agent, the Paying Agent and the Calculation Agent as to such class without cause, with the consent of the Issuer (such consent not to be unreasonably withheld) if no Event of Default shall have occurred and be continuing, by an instrument in writing delivered to the Issuer, the Servicer and the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent being removed.  In addition, the Issuer may remove the Trustee, the Registrar, the Transfer Agent, the Paying Agent or the Calculation Agent as to any class of Notes if (a) such Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent fails to comply with Section 310 of the Trust Indenture Act (as if the Trust Indenture Act applied to this Indenture) after written request therefor by the Issuer or the Noteholders of the related class who have been bona fide Noteholders for at least six (6) months, (b) such Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent fails to comply with Section 7.2(d) or any other provision hereof, (c) such Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent is adjudged a bankrupt or an insolvent, (d) a receiver or public officer takes charge of such Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent or its property or (e) such Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent becomes incapable of acting.  References to the Trustee, Registrar, Transfer Agent, Paying Agent and Calculation Agent in this Indenture include any successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, as the case may be, as to all or any of the classes of Notes appointed in accordance with this Article VII.  Any resignation or removal of the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent pursuant to this Section 7.1 shall not be effective until a successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, as the case may be, shall have

 

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been duly appointed and vested as Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, as the case may be, pursuant to Section 7.2.

 

Section 7.2            Appointment of Successor.

 

(a)           In the case of the resignation or removal of the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent as to any class of Notes under Section 7.1, the Issuer shall promptly appoint a successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent as to such class.  If a successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent as to any class of Notes shall not have been appointed and accepted its appointment hereunder within sixty (60) days after the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, as the case may be, gives notice of resignation as to such class, the retiring Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, as the case may be, the Issuer, the Servicer or a majority of the Outstanding Principal Balance of such class of Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent as to such class.

 

(b)           Any successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent as to any class of Notes, however appointed, shall execute and deliver to the Issuer, the Servicer and the predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent as to such class an instrument accepting such appointment, and thereupon such successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, without further act, shall become vested with all the estates, properties, rights, powers, duties and trusts of such predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent hereunder in the trusts hereunder applicable to it with like effect as if it was named the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent as to such class herein; provided, that, upon the written request of such successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, such predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent shall, upon payment of all amounts due and owing to it, execute and deliver an instrument transferring to such successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, upon the trusts herein expressed applicable to it, all the estates, properties, rights, powers and trusts of such predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, and such predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent shall duly assign, transfer, deliver and pay over to such successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent all moneys or other property then held by such predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent hereunder solely for the benefit of such class of Notes.

 

(c)           If a successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent is appointed with respect to one or more (but not all) classes of the Notes, the Issuer, the predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent and each successor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent with respect to each class of Notes shall execute and deliver an indenture supplemental hereto that shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent with respect to the classes of Notes as to which the predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent is not retiring shall

 

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continue to be vested in the predecessor Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Notes hereunder by more than one Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent.

 

(d)           Each Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent shall be an Eligible Institution and shall meet the Eligibility Requirements and the requirements of Section 6.9, if there be such an institution willing, able and legally qualified to perform the duties of a Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent hereunder.

 

(e)           Any Person into which the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent shall be a party, or any Person to which all or substantially all of the corporate trust business of the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent (including the administration of the trust created by this Indenture) may be transferred, shall, subject to the terms of Section 7.2(c) and Section 7.2(d), be the Trustee, Registrar, Transfer Agent, Paying Agent or Calculation Agent, as the case may be, under this Indenture without the execution or filing of any paper with any party hereto or any further act on the part of any party hereto, except where an instrument of transfer or assignment is required by Applicable Law to effect such succession, anything herein to the contrary notwithstanding.

 

ARTICLE VIII
 INDEMNITY

 

Section 8.1            Indemnity.  The Issuer shall indemnify and defend the Trustee (and its officers, directors, managers, employees and agents) for, and hold it harmless from and against, and reimburse the Trustee for, any loss, liability or expense incurred by it without gross negligence or willful misconduct on its part in connection with the acceptance or administration of this Indenture and its performance of its duties under this Indenture and the Notes or any other Transaction Document, including the costs and expenses of enforcing the provisions of this Section 8.1 and in defending itself against any claim or liability and of complying with any process served upon it or any of its officers in connection with the exercise or performance of any of its powers or duties, and hold it harmless against any loss, liability or reasonable expense incurred without gross negligence or willful misconduct on its part, arising out of or in connection with actions taken or omitted to be taken in reliance on any Officer’s Certificate furnished hereunder, or the failure to furnish any such Officer’s Certificate required to be furnished hereunder.  The Trustee shall notify the Issuer promptly of any claim asserted against the Trustee for which it may seek indemnity; provided, however, that failure to provide such notice shall not invalidate any right to indemnity hereunder unless, and only to the extent that, the Issuer is actually prejudiced by such omission.  The Issuer shall defend any such claim and the Trustee shall cooperate in the defense thereof.  The Trustee may have separate counsel and the Issuer shall pay the reasonable fees and expenses of one separate outside counsel, and one local counsel, to the extent required, for the Trustee.  The Issuer need not pay for any settlements made without its consent.  The Issuer need not reimburse any expense or provide any indemnity

 

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against any loss, liability or expense incurred by the Trustee through gross negligence or willful misconduct.

 

Section 8.2            Survival.  The provisions of Section 8.1 shall survive the termination of this Indenture or the earlier resignation or removal of the Trustee.

 

ARTICLE IX
 MODIFICATION

 

Section 9.1            Modification with Consent of Noteholders.  Subject to Section 3.6(b), with the consent of Noteholders holding a majority of the Outstanding Principal Balance of the Notes (together with any other class of Notes voting or acting as a single class), the Trustee may agree to amend, modify or waive any provision of (or consent to the amendment, modification or waiver of) this Indenture, the Notes or the Pledge and Security Agreement; provided, however, that if there shall be Notes of more than one class Outstanding and if a proposed amendment, modification, consent or waiver shall directly affect the rights of Noteholders of one or more, but less than all, of such classes, then the consent only of the Noteholders holding a majority of the Outstanding Principal Balance of each affected class of Notes, each voting or acting as a single class, shall be required; provided, further, however, that no such amendment, modification, consent or waiver may, without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby:

 

(a)           reduce the percentage of any such class of Notes required to take or approve any action hereunder or thereunder;

 

(b)           reduce the amount or change the time of payment of any amount owing or payable with respect to any such class of Notes (including pursuant to any Redemption or any Mandatory Tax Redemption) or change the rate of interest or change the manner of calculation of interest payable with respect to any such class of Notes;

 

(c)           alter or modify in any adverse respect the provisions of this Indenture with respect to the Collateral, the provisions of the Pledge and Security Agreement with respect to the Issuer Pledged Collateral or the manner of payment or the order of priority in which payments or distributions hereunder shall be made as between the Noteholders of such Notes and the Issuer or as among the Noteholders (including pursuant to Section 3.6) (except, with respect to Subordinated Notes or as among classes of Subordinated Notes, alterations or modifications to Section 3.6(a)(vii), at the time such Subordinated Notes are established, provided such alterations or modifications do not change the order of priority as between the Original Notes (or any Refinancing Notes in respect of the Original Notes) and the Subordinated Notes);

 

(d)           consent to any assignment of the Issuer’s rights to a party other than the Trustee for the benefit of the Noteholders; or

 

(e)           alter the provisions relating to the Collection Account in a manner adverse to any Noteholder;

 

provided, that the Controlling Party, by written notice to the Trustee, may waive any Default or Event of Default to the extent provided in Section 4.5.

 

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It shall not be necessary for the consent of the Noteholders under this Section 9.1 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.  Any such modification approved by the required Noteholders of any class of Notes shall be binding on the Noteholders of the relevant class of Notes and each party to this Indenture.

 

After an amendment under this Section 9.1 becomes effective, the Issuer or, at the direction of the Issuer, the Trustee shall mail to the Noteholders a notice briefly describing such amendment.  Any failure of the Issuer or the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.

 

After an amendment under this Section 9.1 becomes effective, it shall bind every Noteholder, whether or not notation thereof is made on any Note held by such Noteholder.

 

Section 9.2            Modification Without Consent of Noteholders.  Subject to Section 3.6(b), the Trustee may, without the consent of any Noteholder, agree to amend, modify or waive any provision of (or consent to the amendment, modification or waiver of) this Indenture, the Notes or the Pledge and Security Agreement to:

 

(a)           establish the terms of any Refinancing Notes or Subordinated Notes pursuant to Section 2.15 and Section 2.16, respectively (including, with respect to Subordinated Notes or as among classes of Subordinated Notes, modifications to Section 3.6(a)(vii));

 

(b)           evidence the succession of a successor to the Trustee, Registrar, Paying Agent, Transfer Agent or Calculation Agent, the removal of the Trustee, Registrar, Paying Agent, Transfer Agent or Calculation Agent or the appointment of any separate or additional trustee or trustees or co-trustees and to define the rights, powers, duties and obligations conferred upon any such separate trustee or trustees or co-trustees;

 

(c)           correct, confirm or amplify the description of any property at any time subject to the lien of this Indenture or to assign, transfer, convey, mortgage or pledge any property to or with the Trustee;

 

(d)           correct or supplement any defective or inconsistent provision of this Indenture or the Notes;

 

(e)           grant or confer upon the Trustee for the benefit of the Noteholders any additional rights, remedies, powers, authority or security that may be lawfully granted or conferred and that are not contrary to this Indenture;

 

(f)            add to the covenants or agreements to be observed by the Issuer for the benefit of the Noteholders, add Events of Default for the benefit of the Noteholders or surrender any right or power conferred upon the Issuer in this Indenture;

 

(g)           comply with the requirements of the SEC or any other regulatory body or any Applicable Law; or

 

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(h)           effect any indenture supplemental hereto or any other amendment, modification, supplement, waiver or consent with respect to this Indenture, the Notes or the Pledge and Security Agreement; provided, that such indenture supplemental hereto, amendment, modification, supplement, waiver or consent shall not adversely affect the interests of the Noteholders in any material respect as confirmed in an Officer’s Certificate of the Issuer.

 

After an amendment under this Section 9.2 becomes effective, the Issuer or, at the direction of the Issuer, the Trustee shall mail to the Noteholders a notice briefly describing such amendment.  Any failure of the Issuer or the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment.

 

After an amendment under this Section 9.2 becomes effective, it shall bind every Noteholder, whether or not notation thereof is made on any Note held by such Noteholder.

 

Section 9.3            Subordination; Priority of Payments.  The subordination provisions contained in Article X may not be amended or modified without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby.  In no event shall the provisions set forth in Section 3.6 relating to the priority of payment of Administrative Expenses be amended or modified.

 

Section 9.4            Execution of Amendments by Trustee.  In executing, or accepting the additional trusts created by, any amendment or modification to this Indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Officer’s Certificate and an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Indenture.  The Trustee may, but shall not be obligated to, enter into any such amendment that affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise.

 

ARTICLE X
 SUBORDINATION

 

Section 10.1          Subordination of the Notes.

 

(a)           Each of the Issuer and the Trustee (on behalf of the Noteholders) covenants and agrees, and each Noteholder, by its acceptance of a Note, covenants and agrees, that the Notes of each class shall be issued subject to the provisions of this Article X.  Each Noteholder, by its acceptance of a Note, further agrees that all amounts payable on any Note shall, to the extent provided in Section 3.6 and in the manner set forth in this Article X, be subordinated in right of payment to the prior payment in full of all accrued and unpaid government taxes, filing fees and registration fees to any federal, state or local government entities (excluding in each case federal, state and local income taxes) owed by the Issuer (if any) and all Administrative Expenses payable to the Service Providers pursuant to this Indenture and the other Transaction Documents.  Each Noteholder of a Subordinated Note, by its acceptance of a Subordinated Note, further agrees that all amounts payable on any Subordinated Note shall, to the extent provided in Section 3.6 and in the manner set forth in this Article X, be subordinated in right of payment to the payment in full of the Original Notes (and any Refinancing Notes in respect of the Original Notes).  Any claim to payment so stated to be subordinated is referred to

 

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as a “Subordinated Claim”; each claim to payment to which another claim to payment is a Subordinated Claim is referred to as a “Senior Claim” with respect to such Subordinated Claim.

 

(b)           If, prior to the payment in full of all Senior Claims then due and payable, the Trustee or any Noteholder of a Subordinated Claim shall have received any payment or distribution in respect of such Subordinated Claim in excess of the amount to which such Noteholder was then entitled under Section 3.6, then such payment or distribution shall be received and held in trust by such Person and paid over or delivered to the Trustee for application as provided in Section 3.6.

 

(c)           If any Service Provider, the Equityholder, the Trustee or any Noteholder of any Senior Claim receives any payment in respect of any Senior Claim that is subsequently invalidated, declared preferential, set aside and/or required to be repaid to a trustee, receiver or other party, then, to the extent such payment is so invalidated, declared preferential, set aside and/or required to be repaid, such Senior Claim shall be revived and continue in full force and effect and shall be entitled to the benefits of this Article X, all as if such payment had not been received.

 

(d)           The Trustee (on its own behalf and on behalf of the Noteholders) and the Issuer each confirm that the payment priorities specified in Section 3.6 shall apply in all circumstances.

 

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

 

(f)            If payment on the Notes is accelerated as a result of an Event of Default, the Issuer shall promptly notify the holders of the Senior Claims of such acceleration.

 

(g)           After all Senior Claims are paid in full and until the Subordinated Claims are paid in full, and to the extent that such Senior Claims shall have been paid with funds that would, but for the subordination pursuant to this Article X, have been paid to and retained by such holders of Subordinated Claims, the holders of Subordinated Claims shall be subrogated to the rights of holders of Senior Claims to receive payments applicable to Senior Claims.  A payment made under this Article X to holders of Senior Claims that otherwise would have been made to the holders of Subordinated Claims is not, as between the Issuer and the holders of Subordinated Claims, a payment by the Issuer.

 

(h)           No right of any holder of any Senior Claim to enforce the subordination of any Subordinated Claim shall be impaired by an act or failure to act by the Issuer or the Trustee or by any failure by either the Issuer or the Trustee to comply with this Indenture.

 

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(i)            Each Noteholder 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 Claim, whether such Senior Claim was created or acquired before or after the issuance of such Noteholder’s claim, to acquire and continue to hold such Senior Claim, and such holder of any Senior Claim shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold such Senior Claim.  Each holder of a Subordinated Claim agrees to comply with the provisions of Article IV.

 

ARTICLE XI
 DISCHARGE OF INDENTURE; SURVIVAL

 

Section 11.1          Discharge of Indenture; Survival.

 

(a)           When (i) all outstanding Secured Obligations (other than contingent indemnity and expense reimbursement obligations for which no claim has been made) have been satisfied and the Issuer delivers to the Trustee all Outstanding Notes (other than Notes that have been replaced pursuant to Section 2.8) for cancellation or (ii) all Outstanding Notes have become due and payable, whether at maturity or as a result of the mailing of a notice of an Optional Redemption pursuant to Section 3.8(b) or any other Redemption pursuant to Section 3.8(c), in each case that is subject to Section 3.9(c), and the Issuer irrevocably deposits in the Collection Account funds sufficient to pay all remaining Administrative Expenses accrued and payable through such date and to pay all principal of and interest and Premium (if any) on Outstanding Notes at maturity or upon redemption all Outstanding Notes, including interest and any Premium thereon to maturity or the Redemption Date (other than Notes replaced pursuant to Section 2.8), and if in either case the Issuer pays all other sums payable hereunder by the Issuer, then this Indenture shall, subject to Section 11.1(b), cease to be of further effect and the Security Interest granted to the Trustee hereunder in the Collateral shall terminate.  The Trustee shall acknowledge satisfaction and discharge of this Indenture, file all UCC termination statements and similar documents prepared by the Issuer and take other actions in order to terminate the Security Interest, on demand of the Issuer accompanied by an Officer’s Certificate and an Opinion of Counsel, at the cost and expense of the Issuer, to the effect that any conditions precedent to a discharge of this Indenture have been met.

 

(b)           Notwithstanding Section 11.1(a), the Issuer’s obligations in Section 3.6(b) and Section 8.1, and the Trustee’s obligations in Section 12.13 and Section 12.14 shall survive the satisfaction and discharge of this Indenture.

 

Section 11.2          Release of Security Interest in Certain Collateral.  Upon distribution or transfer of (a) cash amounts permitted to be distributed or transferred by Article III and (b) cash proceeds from the Notes issued in accordance with this Indenture, the Security Interest in such cash amounts or such cash proceeds, as the case may be, shall terminate, and such item(s) of Collateral shall be released therefrom, immediately upon such distribution or transfer, without any further action by the Trustee; provided, however, that such release shall not apply to any other Collateral.  The Trustee shall, at the expense of the Issuer, acknowledge the termination of any such Security Interest and the release of any such item(s) of Collateral therefrom and take other actions in order to evidence and confirm such termination and release, on demand of the

 

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Issuer accompanied by an Officer’s Certificate to the effect that any conditions precedent to such termination and release have been met.

 

ARTICLE XII
 MISCELLANEOUS

 

Section 12.1          Right of Trustee to Perform.  If the Issuer for any reason fails to observe or punctually to perform any of its obligations to the Trustee, whether under this Indenture, under any of the other Transaction Documents or otherwise, the Trustee shall have the power (but shall have no obligation), on behalf of or in the name of the Issuer or otherwise, to perform such obligations or cause performance of such obligations and to take any steps that the Trustee may, but shall not have the obligation to, in its absolute discretion, consider appropriate with a view to remedying, or mitigating the consequences of, such failure by the Issuer, in which case the reasonable expenses of the Trustee, including the reasonable fees and expenses of its counsel, incurred in connection therewith shall be payable by the Issuer under Section 8.1; provided, that no exercise or failure to exercise this power by the Trustee shall in any way prejudice the Trustee’s other rights under this Indenture or any of the other Transaction Documents.

 

Section 12.2          Waiver.  Any waiver by any party of any provision of this Indenture or any right, remedy or option hereunder shall only prevent and estop such party from thereafter enforcing such provision, right, remedy or option if such waiver is given in writing and only as to the specific instance and for the specific purpose for which such waiver was given.  The failure or refusal of any party hereto to insist in any one or more instances, or in a course of dealing, upon the strict performance of any of the terms or provisions of this Indenture by any party hereto or the partial exercise of any right, remedy or option hereunder shall not be construed as a waiver or relinquishment of any such term or provision, but the same shall continue in full force and effect.  No failure on the part of the Trustee to exercise, and no delay on its part in exercising, any right or remedy under this Indenture shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.  The rights and remedies provided in this Indenture are cumulative and not exclusive of any rights or remedies provided by Applicable Law.

 

Section 12.3          Severability.  In the event that any provision of this Indenture or the application thereof to any party hereto or to any circumstance or in any jurisdiction governing this Indenture shall, to any extent, be invalid or unenforceable under any Applicable Law, then such provision shall be deemed inoperative to the extent that it is invalid or unenforceable, and the remainder of this Indenture, and the application of any such invalid or unenforceable provision to the parties, jurisdictions or circumstances other than to whom or to which it is held invalid or unenforceable, shall not be affected thereby nor shall the same affect the validity or enforceability of this Indenture.  The parties hereto further agree that the holding by any court of competent jurisdiction that any remedy pursued by the Trustee hereunder is unavailable or unenforceable shall not affect in any way the ability of the Trustee to pursue any other remedy available to it.

 

Section 12.4          Restrictions on Exercise of Certain Rights.  The Trustee and, during the continuance of a payment Default with respect to the Senior Class of Notes, the Senior Trustee,

 

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except as otherwise provided in Section 4.4, Section 4.9 and Section 4.11, may sue for recovery or take any other steps for the purpose of recovering any of the obligations hereunder or any other debts or liabilities whatsoever owing to it by the Issuer.  Each of the Noteholders shall at all times be deemed to have agreed by virtue of the acceptance of the Notes that only the Trustee and, during the continuance of a payment Default with respect to the Senior Class of Notes, the Senior Trustee, except as provided in Section 4.4, Section 4.9 and Section 4.11, may take any steps for the purpose of procuring the appointment of an administrative receiver, examiner, receiver or similar officer or the making of an administration order or for instituting any bankruptcy, reorganization, arrangement, insolvency, winding-up, liquidation, composition, examination or any like proceedings under Applicable Law.

 

Section 12.5          Notices.  All Notices shall be in writing and shall be effective (a) upon receipt when sent through the mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (b) upon receipt when sent by an overnight courier, (c) on the date personally delivered to an authorized officer of the party to which sent, (d) on the date transmitted by facsimile or other electronic transmission with a confirmation of receipt (which shall not include confirmation by automated response) or (e) in the case of reports under Article III and any other report that is of a routine nature, on the date sent by first class mail or overnight courier or transmitted by facsimile, in all cases, with a copy emailed to the recipient at the applicable address, addressed to the recipient as follows:

 

if to the Issuer, to:

Triple Royalty Sub LLC
 c/o Theravance Biopharma US, Inc.
 901 Gateway Boulevard
 South San Francisco, CA 94080
 Attention:  Brett A. Grimaud, Vice President and Assistant Secretary

Telephone: (650) 808-3785
 Facsimile: (650) 808-6095
 Email: BGrimaud@theravance.com

 

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square 
 New York, NY 10036
 Attention:  Andrew M. Faulkner

Telephone: (212) 735-2853
 Facsimile: (917) 777-2853
 E-Mail:  andrew.faulkner@skadden.com

 

Skadden, Arps, Slate, Meagher & Flom LLP
 525 University Ave

Palo Alto, CA 94301
 Attention:  Amr Razzak

 

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Telephone: (650) 470-4533
 Facsimile: (650) 798-6504
 E-Mail:  amr.razzak@skadden.com

 

if to the Trustee, the Registrar, the Transfer Agent, the Paying Agent or the Calculation Agent, to:

 

U.S. Bank National Association
  One Federal Street, 3rd Floor
 Boston, Massachusetts 02110
 Attention: Corporate Trust Services (Triple Royalty Sub LLC)
 Telephone: 617-603-6553
 Facsimile: 617-603-6683

 

A copy of each notice given hereunder to any party hereto shall also be given to each of the other parties hereto.  Each party hereto may, by notice given in accordance herewith to each of the other parties hereto, designate any further or different address to which subsequent Notices shall be sent.

 

Section 12.6          Assignments.  This Indenture shall be a continuing obligation of the Issuer and shall (a) be binding upon the Issuer and its successors and assigns and (b) inure to the benefit of and be enforceable by the Trustee and by its successors, transferees and assigns and, as and to the extent provided in Section 3.6(b), the Equityholder.  The Issuer may not assign any of its obligations under this Indenture or delegate any of its duties hereunder.

 

Section 12.7          Application to Court.  The Trustee may at any time after the service of an Acceleration Notice apply to any court of competent jurisdiction for an order that the terms of this Indenture be carried into execution under the direction of such court and for the appointment of a Receiver of the Collateral or any part thereof and for any other order in relation to the administration of this Indenture as the Trustee shall deem fit, and it may assent to or approve any application to any court of competent jurisdiction made at the instigation of any of the Noteholders and shall be indemnified by the Issuer against all costs, charges and expenses incurred by it in relation to any such application or proceedings.

 

Section 12.8          GOVERNING LAW.  THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

Section 12.9          Jurisdiction.

 

(a)           Each of the parties hereto agrees that the U.S. federal and State of New York courts located in the Borough of Manhattan, The City of New York shall have jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Indenture and, for such purposes, submits to the jurisdiction of

 

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such courts.  Each of the parties hereto waives any objection that it might now or hereafter have to the U.S. federal or State of New York courts located in the Borough of Manhattan, The City of New York being nominated as the forum to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Indenture and agrees not to claim that any such court is not a convenient or appropriate forum.  Each of the parties hereto irrevocably consents to service of process in the manner provided for notices in Section 12.5.  Each of the parties hereto waives personal service of any summons, complaint or other process, which may be made by any other means permitted by New York law.  Nothing herein shall in any way be deemed to limit the ability of the Issuer or the Trustee and the Noteholders, as the case may be, to serve any such legal process, summons, notices and documents in any other manner permitted by Applicable Law or to obtain jurisdiction over such party or bring suits, actions or proceedings against such party in such other jurisdictions, and in such manner, as may be permitted by Applicable Law.

 

(b)           The submission to the jurisdiction of the courts referred to in Section 12.9(a) shall not (and shall not be construed so as to) limit the right of the Trustee to take proceedings against the Issuer in any other court of competent jurisdiction, nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

 

(c)           Each of the parties hereto hereby consents generally in respect of any legal action or proceeding arising out of or in connection with this Indenture to the giving of any relief or the issue of any process in connection with such action or proceeding, including the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment that may be made or given in such action or proceeding.

 

(d)           If, for the purpose of obtaining a judgment or order in any court, it is necessary to convert a sum due hereunder to any Noteholder from Dollars into another currency, the Issuer has agreed, and each Noteholder by holding a Note shall be deemed to have agreed, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, such Noteholder could purchase Dollars with such other currency in the Borough of Manhattan, The City of New York on the Business Day preceding the day on which final judgment is given.

 

(e)           The obligation of the Issuer in respect of any sum payable by it to a Noteholder shall, notwithstanding any judgment or order in a currency other than Dollars (the “Judgment Currency”), be discharged only to the extent that, on the Business Day following receipt by such Noteholder of such security of any sum adjudged to be so due in the Judgment Currency, such Noteholder may in accordance with normal banking procedures purchase Dollars with the Judgment Currency.  If the amount of Dollars so purchased is less than the sum due to such Noteholder in the Judgment Currency (determined in the manner set forth in Section 12.9(d)), the Issuer agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Noteholder against such loss, and, if the amount of the Dollars so purchased exceeds the sum due to such Noteholder, such Noteholder agrees to remit to the Issuer such excess, provided that such Noteholder shall have no obligation to remit any such excess as long as the Issuer shall have failed to pay such Noteholder any obligations due and payable under the Notes of such Noteholder, in which case such excess may be applied to such obligations of the

 

88

 

Issuer under such Notes in accordance with the terms thereof.  The foregoing indemnity shall constitute a separate and independent obligation of the Issuer and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.

 

(f)            EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE OR ANY MATTER ARISING HEREUNDER.

 

Section 12.10       Counterparts.  This Indenture may be executed in one or more counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.  Any counterpart may be executed by facsimile or other electronic transmission, and such facsimile or other electronic transmission shall be deemed an original.

 

Section 12.11       Table of Contents and Headings.  The Table of Contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

 

Section 12.12       Trust Indenture Act.  This Indenture shall not be qualified under the Trust Indenture Act and shall not be subject to the provisions of the Trust Indenture Act.

 

Section 12.13       Confidential Information.  The Trustee, in its individual capacity and as Trustee, agrees and acknowledges that all information (including Confidential Information) provided to the Trustee by the Servicer, the Equityholder or the Issuer may be considered to be proprietary and confidential information under the GSK Agreements, the TRC LLC Agreement and the Master Agreement.  The Trustee agrees to take reasonable precautions necessary to keep such information confidential, which precautions shall be no less stringent than those that the Trustee employs to protect its own confidential information.  The Trustee shall not disclose to any third party other than as set forth herein, and shall not use for any purpose other than the exercise of the Trustee’s rights and the performance of its obligations under this Indenture, any such information without the prior written consent of the disclosing party.  The Trustee shall limit access to such information received hereunder to (a) its directors, officers, managers and employees and its legal advisors or (b) to the extent required by Applicable Law, in each case to each of whom disclosure of such information is necessary for the purposes described above.

 

Each of the Calculation Agent, the Transfer Agent, the Paying Agent and the Registrar agrees to be bound by this Section 12.13 to the same extent as the Trustee.

 

Section 12.14       Limited Recourse.  Each of the parties hereto accepts that the enforceability against the Issuer of the obligations of the Issuer hereunder and under the Notes shall be limited to the Collateral and the Issuer Pledged Collateral.  Once all of the Collateral and the Issuer Pledged Collateral has been realized and applied in accordance with Article III, any outstanding obligations of the Issuer shall be extinguished.  For the avoidance of doubt, this Section 12.14 does not affect the obligations of the Servicer under the Account Control Agreement or the obligations of the Equityholder under the Pledge and Security Agreement or

 

89

 

the ability of the Trustee or any Noteholder to exercise any rights or remedies it may have under the Pledge and Security Agreement.  Each of the parties hereto further agrees that it shall take no action against any employee, director, officer or administrator of the Issuer, the Equityholder or the Trustee in relation to this Indenture; provided, that nothing herein shall limit the Issuer (or its permitted successors or assigns, including any party hereto that becomes such a successor or assign) from pursuing claims, if any, against any such Person.  The provisions of this Section 12.14 shall survive termination of this Indenture; provided, further, that the foregoing shall not in any way limit, impair or otherwise affect any rights of the Trustee or the Noteholders to proceed against any such Person (a) for intentional and willful fraud or intentional and willful misrepresentations on the part of or by such Person or (b) for the receipt of any distributions or payments to which the Issuer or any successor in interest is entitled, other than distributions expressly permitted pursuant to this Indenture and the other Transaction Documents.

 

Section 12.15       Tax Matters.

 

(a)           The Issuer has entered into this Indenture, and the Notes shall be issued, with the intention that, for all Tax purposes, the Notes shall qualify as indebtedness.  The Issuer, by entering into this Indenture, and each Noteholder and Beneficial Holder, agree to treat the Notes as indebtedness for all Tax purposes.  The Issuer shall treat interest on the Notes as foreign source interest unless otherwise required by Applicable Law.  The Issuer shall notify the Trustee if interest on the Notes becomes treated as U.S. source income.

 

(b)           The Issuer shall not be obligated to pay any additional amounts to the Noteholders or Beneficial Holders as a result of any withholding or deduction for, or on account of, any present or future Taxes imposed on payments in respect of the Notes.  If a Global Note is issued, in accordance with the procedures of DTC, the Issuer shall (or shall direct the Trustee in writing to) request the Notes to be coded (to the extent permitted by the procedures of DTC) as foreign source income. If interest becomes treated as U.S. source income, the Issuer shall (or shall direct the Trustee in writing to) request the Notes to be coded (to the extent permitted by the procedures of DTC) as eligible for the “portfolio interest exemption”.  Unless otherwise required by Applicable Law, if Definitive Notes are issued, so long as a Person shall have delivered to the Issuer a properly completed IRS Form W-9, IRS Form W-8BEN, IRS Form W-8BEN-E, IRS Form W-8ECI or other applicable IRS form evidencing an exemption from U.S. backup withholding, neither the Issuer nor the Trustee shall withhold Taxes on payments of interest made to any such Person and, if interest on the Notes becomes treated as U.S. source income, so long as a Person shall have delivered to the Issuer a properly completed IRS Form W-9, IRS Form W-8BEN claiming a complete exemption under an applicable income tax treaty, IRS Form W-8BEN-E claiming a complete exemption under an applicable income tax treaty, IRS Form W-8ECI or other applicable IRS form or, in the case of a Person claiming the exemption from U.S. federal withholding tax under Section 871(h) of the Code or Section 881(c) of the Code with respect to payments of “portfolio interest”, the appropriate properly completed IRS form together with a certificate substantially in the form of Exhibit F, neither the Issuer nor the Trustee shall withhold Taxes on payments of interest made to any such Person.  Any such IRS Form W-8BEN or IRS Form W-8BEN-E shall specify whether the Noteholder or Beneficial Holder to whom the form relates is entitled to the benefits of any applicable income tax treaty.

 

90

 

(c)           Provided that the Issuer complies with Section 5.2(r), Section 12.15(a) and Section 12.15(b), if Definitive Notes are issued, (i) if any withholding Tax is imposed on the Issuer’s payment under the Notes to any Noteholder or Beneficial Holder, such Tax shall reduce the amount otherwise distributable to such Noteholder or Beneficial Holder, as the case may be, (ii) the Trustee is hereby authorized and directed to retain from amounts otherwise distributable to any Noteholder or Beneficial Holder sufficient funds for the payment of any withholding Tax that is legally owed by the Issuer (but such authorization shall not prevent the Trustee from contesting any such withholding Tax in appropriate proceedings and withholding payment of such Tax, if permitted by Applicable Law, pending the outcome of such proceedings) and (iii) the amount of any withholding Tax imposed with respect to any Noteholder or Beneficial Holder shall be treated as cash distributed to such Noteholder or Beneficial Holder, as the case may be, at the time it is withheld by the Trustee and remitted to the appropriate taxing authority.  Provided that the Issuer complies with Section 5.2(r), Section 12.15(a) and Section 12.15(b), if there is a possibility that withholding Tax is payable with respect to a payment under the Notes, the Trustee may (but shall have no obligation to) withhold such amounts in accordance with this Section 12.15.  Nothing herein shall impose an obligation on the part of the Trustee to determine the amount of any Tax or withholding obligation on the part of the Issuer or in respect of the Notes.

 

Section 12.16       Waiver.  The Issuer waives any right to contest or otherwise assert that the Sale and Contribution Agreement is other than a true, absolute and irrevocable sale and assignment by the Transferor to the Issuer of the Collateral under Applicable Law.

 

Section 12.17       Distribution Reports.  Each party hereto acknowledges and agrees that the Trustee may effect delivery of any Distribution Report (including the materials accompanying such Distribution Report) by making such Distribution Report and accompanying materials available by posting such Distribution Report and accompanying materials on Debt Domain or a substantially similar electronic transmission system; provided, however, that, upon written notice to the Trustee, any Noteholder may decline to receive such Distribution Report and accompanying materials via Debt Domain or a substantially similar electronic transmission system, in which case such Distribution Report and accompanying materials shall be provided as otherwise set forth in the Transaction Documents.  Subject to the conditions set forth in the proviso in the preceding sentence, nothing in this Section 12.17 shall prejudice the right of the Trustee to make such Distribution Report and accompanying materials available in any other manner specified in the Transaction Documents.

 

Section 12.18       No Voting Rights for Non-Permitted Holders.  In determining whether the Noteholders holding the requisite aggregate Outstanding Principal Balance of the Notes have given any request, demand, authorization, direction, notice, consent, approval or waiver under this Indenture or any other Transaction Document (which in the case of any other Transaction Document shall be as third party beneficiaries to such other Transaction Document), the Notes held by the Issuer or any Non-Permitted Holder, including any Noteholder that is a Restricted Party, shall be disregarded and deemed not to be Outstanding.  In connection therewith, as a condition to the exercise of the voting rights or remedial or other rights assigned to the Noteholders under this Indenture and the other Transaction Documents (which in the case of the other Transaction Documents shall be as third party beneficiaries to such Transaction Documents), including the remedial rights exercisable by the Noteholders following the

 

91

 

occurrence and during the continuation of an Event of Default, each Noteholder shall be required to deliver to the Trustee a Confidentiality Agreement or a certification in the form attached as Exhibit H to this Indenture that it is not a Non-Permitted Holder, including that it is not a Restricted Party. The aggregate Outstanding Principal Balance of the Notes held by any Noteholder that does not deliver the certification will be excluded from the denominator in calculating whether Noteholders holding the requisite Outstanding Principal Balance of the Notes have consented and from the numerator in calculating whether the Noteholders holding the requisite Outstanding Principal Balance of the Notes have objected to any matter subject to the vote or approval of the Noteholders.

 

Section 12.19       U.S.A. Patriot Act.  The parties hereto acknowledge that, in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they shall provide the Trustee with information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.

 

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

92

 

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

 

 

	
 
    	
 
    	
TRIPLE ROYALTY SUB LLC,
    
	
 
    	
 
    	
as Issuer
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Brett A. Grimaud
    
	
 
    	
 
    	
 
    	
Name:
    	
Brett A. Grimaud
    
	
 
    	
 
    	
 
    	
Title:
    	
Vice President and Assistant   Secretary
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
U.S. BANK NATIONAL   ASSOCIATION,
    
	
 
    	
 
    	
as Trustee, Transfer Agent,   Paying Agent, Registrar and Calculation Agent
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Alison D.B. Nadeau
    
	
 
    	
 
    	
 
    	
Name:
    	
Alison D.B. Nadeau
    
	
 
    	
 
    	
 
    	
Title:
    	
Vice President
    

 

TRIPLE ROYALTY SUB LLC

Indenture

 

 

SCHEDULE A

 

ASSUMED AMORTIZATION SCHEDULE FOR OPTIONAL REDEMPTION IN RESPECT OF THE ORIGINAL NOTES

 

	
Payment Date
    	
 
    	
Principal Payment
    	
 
    	
Remaining Balance
   of the Original Notes
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
November 30,   2018
    	
 
    	
$
    	
0
    	
 
    	
$
    	
250 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2019
    	
 
    	
$
    	
0
    	
 
    	
$
    	
255.15 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2019
    	
 
    	
$
    	
0
    	
 
    	
$
    	
256.93 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2019
    	
 
    	
$
    	
0
    	
 
    	
$
    	
258.02 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2020
    	
 
    	
$
    	
0
    	
 
    	
$
    	
258.45 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2020
    	
 
    	
$
    	
0.35 million
    	
 
    	
$
    	
258.10 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2020
    	
 
    	
$
    	
1.21 million
    	
 
    	
$
    	
256.90 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2020
    	
 
    	
$
    	
2.30 million
    	
 
    	
$
    	
254.60 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2021
    	
 
    	
$
    	
3.57 million
    	
 
    	
$
    	
251.03 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2021
    	
 
    	
$
    	
5.50 million
    	
 
    	
$
    	
245.53 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2021
    	
 
    	
$
    	
5.67 million
    	
 
    	
$
    	
239.86 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2021
    	
 
    	
$
    	
6.67 million
    	
 
    	
$
    	
233.19 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2022
    	
 
    	
$
    	
8.96 million
    	
 
    	
$
    	
224.23 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15, 2022
    	
 
    	
$
    	
12.02 million
    	
 
    	
$
    	
212.21 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2022
    	
 
    	
$
    	
10.04 million
    	
 
    	
$
    	
202.18 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2022
    	
 
    	
$
    	
11.21 million
    	
 
    	
$
    	
190.97 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2023
    	
 
    	
$
    	
16.22 million
    	
 
    	
$
    	
174.75 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2023
    	
 
    	
$
    	
19.82 million
    	
 
    	
$
    	
154.93 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2023
    	
 
    	
$
    	
14.92 million
    	
 
    	
$
    	
140.01 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2023
    	
 
    	
$
    	
17.56 million
    	
 
    	
$
    	
122.46 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2024
    	
 
    	
$
    	
22.75 million
    	
 
    	
$
    	
99.71 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2024
    	
 
    	
$
    	
26.02 million
    	
 
    	
$
    	
73.96 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2024
    	
 
    	
$
    	
19.17 million
    	
 
    	
$
    	
54.52 million
    	
 
    

 

A-1

 

	
Payment Date
    	
 
    	
Principal Payment
    	
 
    	
Remaining Balance
   of the Original Notes
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2024
    	
 
    	
$
    	
22.56 million
    	
 
    	
$
    	
31.96 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2025
    	
 
    	
$
    	
27.79 million
    	
 
    	
$
    	
4.17 million
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2025
    	
 
    	
$
    	
4.17 million
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2025
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2025
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2026
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2026
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2026
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2026
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2027
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2027
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2027
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2027
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2028
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2028
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2028
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2028
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2029
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2029
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2029
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2029
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2030
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2030
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2030
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2030
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2031
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2031
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    

 

A-2

 

	
Payment Date
    	
 
    	
Principal Payment
    	
 
    	
Remaining Balance
   of the Original Notes
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2031
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2031
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2032
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2032
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
July 15,   2032
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
October 15,   2032
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
January 15,   2033
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
April 15,   2033
    	
 
    	
$
    	
0
    	
 
    	
$
    	
0
    	
 
    

 

A-3

 

EXHIBIT A-1

 

FORM OF RULE 144A GLOBAL NOTE

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”), A NEW YORK CORPORATION, 55 WATER STREET, NEW YORK, NEW YORK 10004, OR A NOMINEE THEREOF.  THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR THE REGISTRAR, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER, CEDE & CO., HAS AN INTEREST HEREIN.

 

THE ISSUANCE AND SALE OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER RELEVANT JURISDICTION OTHER THAN ON THE OFFICIAL LIST OF THE CAYMAN ISLANDS STOCK EXCHANGE, AND TRIPLE ROYALTY SUB LLC (THE “ISSUER”) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS NOTE OR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER OR AN AFFILIATE THEREOF, (B) TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS BOTH A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, AND NONE OF WHICH ARE (1) A DEALER OF THE TYPE DESCRIBED IN PARAGRAPH (a)(1)(ii) OF RULE 144A UNLESS IT OWNS AND INVESTS ON A DISCRETIONARY BASIS NOT LESS THAN $25,000,000 IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED TO IT, (2) FORMED OR CAPITALIZED FOR THE SPECIFIC PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER), (3) A CORPORATION, PARTNERSHIP, COMMON TRUST FUND, SPECIAL TRUST, PENSION FUND OR RETIREMENT PLAN IN WHICH THE SHAREHOLDERS, EQUITY OWNERS, PARTNERS, 

 

 

BENEFICIARIES, BENEFICIAL HOLDERS OR PARTICIPANTS, AS APPLICABLE, MAY DESIGNATE THE PARTICULAR INVESTMENTS TO BE MADE, (4) IF FORMED ON OR BEFORE APRIL 30, 1996, AN INVESTMENT COMPANY THAT RELIES ON THE EXCLUSION FROM THE DEFINITION OF “INVESTMENT COMPANY” PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT (OR A FOREIGN INVESTMENT COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(7) WITH RESPECT TO THOSE OF ITS HOLDERS THAT ARE U.S. PERSONS), UNLESS, WITH RESPECT TO ITS TREATMENT AS A QUALIFIED PURCHASER, IT HAS, IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, RECEIVED THE CONSENT OF ITS BENEFICIAL HOLDERS THAT ACQUIRED THEIR INTERESTS ON OR BEFORE APRIL 30, 1996 OR (5) AN ENTITY THAT, IMMEDIATELY SUBSEQUENT TO ITS PURCHASE OR OTHER ACQUISITION OF A BENEFICIAL INTEREST IN THIS NOTE, WILL HAVE INVESTED MORE THAN 40% OF ITS ASSETS IN BENEFICIAL INTERESTS IN THIS NOTE AND/OR IN OTHER SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL HOLDERS OF SUCH ENTITY’S SECURITIES ARE QUALIFIED PURCHASERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM SECURITIES ACT REGISTRATION PROVIDED BY RULE 144A, (C) SOLELY WITH RESPECT TO THE INITIAL PURCHASERS, IN THE UNITED STATES, TO AN INITIAL PURCHASER THAT IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, OR (D) OUTSIDE THE UNITED STATES, TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S, AND, IN EACH CASE, THAT ARE NOT RESTRICTED PARTIES (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR THE UNITED STATES AND ANY OTHER RELEVANT JURISDICTION.

 

BY ITS PURCHASE AND ACCEPTANCE OF THIS NOTE (INCLUDING ANY INTEREST HEREIN), EACH PURCHASER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) IT IS NOT (A) AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) SUBJECT 

 

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TO TITLE I OF ERISA, (B) A PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) SUBJECT TO SECTION 4975 OF THE CODE OR (C) AN EMPLOYEE BENEFIT PLAN SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAWS”) (EACH OF THE FOREGOING, A “PLAN”) AND IS NOT ACTING ON BEHALF OF OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE OR (II) IT IS A PLAN OR IS ACTING ON BEHALF OF A PLAN OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE BUT THE PURCHASE AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE BY REASON OF THE APPLICATION OF ONE OR MORE STATUTORY OR ADMINISTRATIVE EXEMPTIONS OR OTHERWISE AND WILL NOT CONSTITUTE OR RESULT IN A VIOLATION OF ANY SIMILAR LAWS.  “PLAN ASSETS” HAS THE MEANING GIVEN TO IT BY SECTION 3(42) OF ERISA AND REGULATIONS OF THE U.S. DEPARTMENT OF LABOR, BUT ALSO INCLUDES ASSETS OF AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF ERISA) SUBJECT TO SIMILAR LAWS.

 

EACH INITIAL PURCHASER AND EACH SUBSEQUENT TRANSFEREE (IF NOT THE ISSUER OR AN AFFILIATE OF THE ISSUER) TAKING DELIVERY OF THIS NOTE OR AN INTEREST IN THIS NOTE WILL BE DEEMED TO HAVE MADE THE APPLICABLE REPRESENTATIONS AND AGREEMENTS REFERRED TO IN THE INDENTURE REFERRED TO HEREIN.  THIS NOTE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN, AND, IN ADDITION, EACH PERSON OR ENTITY THAT ACQUIRES OR ACCEPTS THIS NOTE OR AN INTEREST HEREIN BY SUCH ACQUISITION OR ACCEPTANCE AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET FORTH IN SUCH INDENTURE, AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS SET FORTH IN SUCH INDENTURE.

 

THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER THE CODE. FOR INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY FOR THIS NOTE, YOU SHOULD SUBMIT A WRITTEN REQUEST TO THE ISSUER AT THE FOLLOWING ADDRESS: 901 GATEWAY BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA 94080, ATTENTION: CHIEF FINANCIAL OFFICER.

 

A RESTRICTED PARTY MAY NOT BE A HOLDER OF THIS NOTE, AND IF, NOTWITHSTANDING SUCH PROHIBITION, THIS NOTE IS HELD BY A RESTRICTED PARTY, SUCH RESTRICTED PARTY SHALL NOT BE ENTITLED TO ENFORCE OR VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT.  ANY HOLDER OF THIS NOTE SEEKING TO ENFORCE OR TO VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION 

 

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AGREEMENT MUST PROVIDE A CERTIFICATE FOR THE BENEFIT OF THE ISSUER THAT SUCH HOLDER IS NOT A RESTRICTED PARTY.  THE RESTRICTIONS SET FORTH IN THE PRECEDING TWO SENTENCES AND THIS SENTENCE MAY NOT BE WAIVED OR AMENDED.

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER (IF NOT THE  ISSUER OR AN AFFILIATE OF THE ISSUER) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH THE HOLDER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, (B) IT UNDERSTANDS THAT THE ISSUER MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN THEIR NOTES FROM ONE OR MORE BOOK-ENTRY DEPOSITORIES, (C) IT WILL PROVIDE NOTICE OF THE TRANSFER RESTRICTIONS TO ANY SUBSEQUENT TRANSFEREES, (D) IT IS NOT FORMED FOR THE PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED PURCHASER AND A QUALIFIED INSTITUTIONAL BUYER) AND (E) IF IT IS A COMPANY EXCEPTED FROM THE DEFINITION OF “INVESTMENT COMPANY” BY SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT, OR A SECTION 7(d) FOREIGN INVESTMENT COMPANY RELYING ON SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT WITH RESPECT TO ITS U.S. HOLDERS, AND WAS FORMED ON OR BEFORE APRIL 30, 1996, IT HAS RECEIVED THE NECESSARY CONSENT FROM ITS BENEFICIAL HOLDERS AS REQUIRED BY THE INVESTMENT COMPANY ACT.

 

ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT AND WILL BE VOID AB INITIO AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRUSTEE OR ANY INTERMEDIARY.

 

IF THE HOLDER OF THIS NOTE (OTHER THAN FOR THIS PURPOSE ANY HOLDER THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S THAT ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S THAT IS ALSO A QUALIFIED PURCHASER) IS DETERMINED NOT TO HAVE BEEN BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, OR, SOLELY IN THE CASE OF THE INITIAL PURCHASERS OF THE NOTES, BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER AT THE TIME OF ACQUISITION OF THIS NOTE, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO 

 

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SELL THIS NOTE TO A PURCHASER THAT IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON THAT IS NOT BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.

 

IF THIS NOTE WAS ACQUIRED OUTSIDE THE UNITED STATES, AND THE HOLDER IS DETERMINED NOT TO HAVE BEEN A QUALIFIED PURCHASER THAT IS (A) NOT A “U.S. PERSON” OR (B) A QUALIFIED INSTITUTIONAL BUYER AT THE TIME OF ACQUISITION OF THIS NOTE, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER WHO IS A QUALIFIED PURCHASER THAT IS (I) NOT A “U.S. PERSON” OR (II) A QUALIFIED INSTITUTIONAL BUYER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON WHO IS NOT A QUALIFIED PURCHASER AND (X) NOT A “U.S. PERSON” OR (Y) A QUALIFIED INSTITUTIONAL BUYER.

 

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TRIPLE ROYALTY SUB LLC

 

Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

Rule 144A Global Note

 

	
No.           
    	
 
    	
CUSIP: 89679D AA2
    

 

U.S.$

 

TRIPLE ROYALTY SUB LLC, a limited liability company organized under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal amount set forth on Schedule I hereto on or before April 15, 2033 (the “Final Legal Maturity Date”) and to pay interest quarterly on the Outstanding Principal Balance hereof at a rate per annum equal to 9.0% (the “Note Interest Rate”), from the date hereof until the Outstanding Principal Balance hereof is paid or duly provided for, which interest shall be due and payable on each Payment Date; provided, that with respect to any Payment Date (other than the Final Legal Maturity Date), any such interest in excess of the portion of the Available Collections Amount available to pay such interest on such Payment Date (subject to the immediately succeeding proviso) shall be payable in full not later than the succeeding Payment Date (together with Additional Interest thereon); provided, further, however, that, to the extent there are insufficient funds to pay scheduled interest on this Note in accordance with the Priority of Payments on any Payment Date during the Interest Deferral Period, the scheduled interest (to the extent of such insufficient funds) will be added to the principal balance of this Note and will bear interest at the Note Interest Rate.  Interest on this Note in each Interest Accrual Period shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.  The Issuer shall cause the Trustee to authenticate an additional Note or additional Notes in the appropriate principal amount such that neither this Note nor any other such Note may exceed an aggregate principal amount of U.S.$500,000,000 at any time.

 

This Note is a duly authorized issue of Notes of the Issuer, designated as its “Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033,” issued under the Indenture dated as of November 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Indenture”), by and between the Issuer and U.S. Bank National Association, a national banking association, as initial trustee (including any successor appointed in accordance with the terms of the Indenture, the “Trustee”), transfer agent, paying agent, registrar and calculation agent.  The Indenture also provides for the issuance of Refinancing Notes and Subordinated Notes.  All capitalized terms used in this Note and not defined herein shall have the respective meanings assigned to such terms in the Indenture.  Reference is made to the Indenture and all indentures supplemental thereto for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Noteholders.  This Note is subject to all terms of the Indenture.

 

The Issuer shall pay the Outstanding Principal Balance of this Note on or prior to the Final Legal Maturity Date on the Payment Date specified in the Indenture, subject to the 

 

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availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

Interests in this Note are exchangeable or transferrable in whole or in part for interests in a Temporary Regulation S Global Note or a Permanent Regulation S Global Note; provided that such transfer or exchange complies with the applicable provisions of the Indenture relating to such transfer or exchange.  Interests in this Note in certain circumstances may also be exchangeable or transferrable in whole but not in part, to the Clearing Agency, its successors or their respective nominees.

 

The indebtedness evidenced by the Original Notes (or any Refinancing Notes in respect of the Original Notes) is, to the extent and in the manner provided in the Indenture, senior in right of payment to the right of payment of the Subordinated Notes, and this Note is issued subject to such provisions.  The maturity of this Note is subject to acceleration upon the occurrence and during the continuance of the Events of Default specified in the Indenture.

 

The Issuer may redeem all or part of the Outstanding Principal Balance of this Note prior to the Final Legal Maturity Date on any Redemption Date, in the amounts and under the circumstances specified in the Indenture.

 

Any amount of Premium or interest on this Note that is not paid when due shall, to the fullest extent permitted by Applicable Law, bear interest (“Additional Interest”) at an interest rate per annum equal to the Note Interest Rate from the date when due until such amount is paid or duly provided for, compounded quarterly and payable on the succeeding Payment Date, subject to the availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

This Note is and shall be secured by the Collateral pledged as security therefor as provided in the Indenture and by the Issuer Pledged Collateral pledged as security therefor as provided in the Pledge and Security Agreement.

 

This Note shall be issued in minimum denominations of $250,000 and integral multiples of $1.00 in excess thereof.

 

Subject to and in accordance with the terms of the Indenture, there shall be distributed quarterly from the Collection Account on each Payment Date, to the Person in whose name this Note is registered at the close of business on the Record Date with respect to such Payment Date, in the manner specified in Section 3.6 of the Indenture, such Person’s pro rata share (based on the aggregate percentage of the Outstanding Principal Balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) held by such Person) of the aggregate amount distributable to all Noteholders of the Original Notes (or any Refinancing Notes in respect of the Original Notes) on such Payment Date.

 

All amounts payable in respect of this Note shall be payable in Dollars in the manner provided in the Indenture to the Noteholder hereof on the Record Date relating to such payment.  The final payment with respect to this Note, however, shall be made only upon presentation and surrender of this Note by the Noteholder or its agent at an office or agency of 

 

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the Trustee or Paying Agent in New York City.  At such time, if any, as this Note is issued in the form of one or more Definitive Notes, payments on a Payment Date shall be made by check mailed to each Noteholder of such a Definitive Note on the applicable Record Date at its address appearing on the Register maintained with respect to the Original Notes (or any Refinancing Notes in respect of the Original Notes).  Alternatively, upon application in writing to the Trustee or other Paying Agent, not later than the applicable Record Date, by a Noteholder, any such payments shall be made by wire transfer to an account designated by such Noteholder at a financial institution in New York City; provided, that, in each case, the final payment with respect to any such Definitive Note shall be made only upon presentation and surrender of such Definitive Note by the Noteholder or its agent at an office or agency of the Trustee or Paying Agent in New York City.  Notwithstanding the foregoing, payments in respect of this Note issued in the form of a Global Note (including principal, Premium, if any, and interest) shall be made by wire transfer of immediately available funds to the account specified by DTC.  Any reduction in the Outstanding Principal Balance of this Note (or any one or more predecessor Original Notes (or any Refinancing Notes in respect of the Original Notes)) effected by any payments made on any Payment Date shall be binding upon all future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not noted hereon.

 

The Noteholder of this Note agrees, by acceptance hereof, to pay over to the Trustee any money (including principal, Premium, if any, and interest) paid to it in respect of this Note in the event that the Trustee, acting in good faith, determines subsequently that such monies were not paid in accordance with the Priority of Payments or as a result of any other mistake of fact or law on the part of the Trustee in making such payment.

 

This Note is issuable only in registered form.  A Noteholder may transfer this Note only by delivery of a written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of the Indenture.  No such transfer shall be effected until, and such transferee shall succeed to the rights of a Noteholder only upon, final acceptance and registration of the transfer by the Registrar in the Register.  When this Note is presented to the Registrar with a request to register the transfer or to exchange it for an equal principal amount of Original Notes (or any Refinancing Notes in respect of the Original Notes) of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met (including, in the case of a transfer, that such Note is duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and Registrar duly executed by the Noteholder thereof or by an attorney who is authorized in writing to act on behalf of the Noteholder).  No service charge shall be made for any registration of transfer or exchange of this Note, but the party requesting such new Note or Notes may be required to pay a sum sufficient to cover any transfer Tax or similar governmental charge payable in connection therewith.

 

Prior to the registration of transfer of this Note, the Issuer and the Trustee may deem and treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the absolute holder and Noteholder hereof for the purpose of receiving payment of all amounts payable with respect to 

 

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this Note and for all other purposes, and neither the Issuer nor the Trustee shall be affected by notice to the contrary.

 

Subject to Section 3.6(b) of the Indenture, the Indenture permits the amendment or modification of the Indenture and the Notes by the Issuer with the consent of Noteholders holding a majority of the Outstanding Principal Balance of the Notes (together with any other class of Notes voting or acting as a single class); provided, however, that if there shall be Notes of more than one class Outstanding and if a proposed amendment, modification, consent or waiver shall directly affect the rights of Noteholders of one or more, but less than all, of such classes, then the consent only of the Noteholders holding a majority of the Outstanding Principal Balance of each affected class of Notes, each voting or acting as a single class, shall be required; provided, further, however, that no such amendment, modification, consent or waiver may, without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby, (i) reduce the percentage of any such class of Notes required to take or approve any action under the Indenture or the Notes, (ii) reduce the amount or change the time of payment of any amount owing or payable with respect to any such class of Notes (including pursuant to any Redemption or Mandatory Tax Redemption) or change the rate of interest or change the manner of calculation of interest payable with respect to any such class of Notes, (iii) alter or modify in any adverse respect the provisions of the Indenture with respect to the Collateral, the provisions of the Pledge and Security Agreement with respect to the Issuer Pledged Collateral or the manner of payment or the order of priority in which payments or distributions thereunder shall be made as between the Noteholders of such Notes and the Issuer or as among the Noteholders (including pursuant to Section 3.6 of the Indenture) (except, with respect to Subordinated Notes or as among classes of Subordinated Notes, alterations or modifications to Section 3.6(a)(vii) of the Indenture, at the time such Subordinated Notes are established, provided such alterations or modifications do not change the order of priority as between the Original Notes (or any Refinancing Notes in respect of the Original Notes) and the Subordinated Notes), (iv) consent to any assignment of the Issuer’s rights to a party other than the Trustee for the benefit of the Noteholders or (v) alter the provisions relating to the Collection Account in a manner adverse to any Noteholder.  Any such amendment or modification shall be binding on every Noteholder hereof, whether or not notation thereof is made upon this Note.

 

The subordination provisions contained in Article X of the Indenture may not be amended or modified without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby.

 

The Indenture also contains provisions permitting the Controlling Party to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver shall be conclusive and binding upon all present and future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not notation of such consent or waiver is made upon this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF 

 

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THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

The enforceability against the Issuer of the obligations of the Issuer under the Indenture and under the Notes shall be limited to the Collateral and the Issuer Pledged Collateral.  Once all of the Collateral and the Issuer Pledged Collateral has been realized and applied in accordance with Article III of the Indenture, any outstanding obligations of the Issuer shall be extinguished.  Each of the parties to the Indenture shall take no action against any employee, director, officer or administrator of the Issuer, the Equityholder or the Trustee in relation to the Indenture; provided, that nothing therein shall limit the Issuer (or its permitted successors or assigns, including any party thereto that becomes such a successor or assign) from pursuing claims, if any, against any such Person.  The provisions of Section 12.14 of the Indenture shall survive termination of the Indenture; provided, further, that the foregoing shall not in any way limit, impair or otherwise affect any rights of the Trustee or the Noteholders to proceed against any such Person (a) for intentional and willful fraud or intentional and willful misrepresentations on the part of or by such Person or (b) for the receipt of any distributions or payments to which the Issuer or any successor in interest is entitled, other than distributions expressly permitted pursuant to the Indenture and the other Transaction Documents.

 

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual or facsimile signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

 

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IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by a duly authorized officer.

 

 

	
Date:   [                         ],   2018
    	
 
    	
TRIPLE ROYALTY SUB LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This Note is one of the Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 designated above and referred to in the within-mentioned indenture.

 

 

	
Date:   [                         ],   2018
    	
 
    	
U.S. BANK NATIONAL ASSOCIATION,
    
	
 
    	
 
    	
as   Trustee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    

 

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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 Issuer with full power of substitution in the premises.

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Signature of Transferor
    

 

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

 

[THE FOLLOWING PROVISIONS TO BE INCLUDED ON ALL NOTES]

 

In connection with any transfer of the within-mentioned Note, the undersigned confirms without utilizing any general solicitation or general advertising that:

 

[Check One]

 

o (a)      the within-mentioned Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder

 

o (b)      the within-mentioned Note is being transferred other than in accordance with clause (a) above and documents are being furnished that comply with the conditions of transfer set forth in the within-mentioned Note and the Indenture

 

If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register the within-mentioned Note in the name of any Person other than the Noteholder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.11 of the Indenture shall have been satisfied.

 

 

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

 

A-1-12

 

TO BE COMPLETED BY PURCHASER IF CLAUSE (a) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing the within-mentioned Note for its own account or an account with respect to which it exercises sole investment discretion and that each of it and any such account is a “qualified institutional buyer” (within the meaning of Rule 144A) and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Executive Officer
    

 

A-1-13

 

SCHEDULE I

 

TRIPLE ROYALTY SUB LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

No.       

 

	
Date
    	
 
    	
Principal Amount
    	
 
    	
Notation Explaining Principal Amount Recorded
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-1-14

 

EXHIBIT A-2

 

FORM OF IAI GLOBAL NOTE

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”), A NEW YORK CORPORATION, 55 WATER STREET, NEW YORK, NEW YORK 10004, OR A NOMINEE THEREOF.  THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR THE REGISTRAR, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER, CEDE & CO., HAS AN INTEREST HEREIN.

 

THE ISSUANCE AND SALE OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER RELEVANT JURISDICTION OTHER THAN ON THE OFFICIAL LIST OF THE CAYMAN ISLANDS STOCK EXCHANGE, AND TRIPLE ROYALTY SUB LLC (THE “ISSUER”) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS NOTE OR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER OR AN AFFILIATE THEREOF, (B) TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS BOTH A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, AND NONE OF WHICH ARE (1) A DEALER OF THE TYPE DESCRIBED IN PARAGRAPH (a)(1)(ii) OF RULE 144A UNLESS IT OWNS AND INVESTS ON A DISCRETIONARY BASIS NOT LESS THAN $25,000,000 IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED TO IT, (2) FORMED OR CAPITALIZED FOR THE SPECIFIC PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER), (3) A CORPORATION, PARTNERSHIP, COMMON TRUST FUND, SPECIAL TRUST, PENSION FUND OR RETIREMENT PLAN IN WHICH THE SHAREHOLDERS, EQUITY OWNERS, PARTNERS,

 

A-2-1

 

BENEFICIARIES, BENEFICIAL HOLDERS OR PARTICIPANTS, AS APPLICABLE, MAY DESIGNATE THE PARTICULAR INVESTMENTS TO BE MADE, (4) IF FORMED ON OR BEFORE APRIL 30, 1996, AN INVESTMENT COMPANY THAT RELIES ON THE EXCLUSION FROM THE DEFINITION OF “INVESTMENT COMPANY” PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT (OR A FOREIGN INVESTMENT COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(7) WITH RESPECT TO THOSE OF ITS HOLDERS THAT ARE U.S. PERSONS), UNLESS, WITH RESPECT TO ITS TREATMENT AS A QUALIFIED PURCHASER, IT HAS, IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, RECEIVED THE CONSENT OF ITS BENEFICIAL HOLDERS THAT ACQUIRED THEIR INTERESTS ON OR BEFORE APRIL 30, 1996 OR (5) AN ENTITY THAT, IMMEDIATELY SUBSEQUENT TO ITS PURCHASE OR OTHER ACQUISITION OF A BENEFICIAL INTEREST IN THIS NOTE, WILL HAVE INVESTED MORE THAN 40% OF ITS ASSETS IN BENEFICIAL INTERESTS IN THIS NOTE AND/OR IN OTHER SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL HOLDERS OF SUCH ENTITY’S SECURITIES ARE QUALIFIED PURCHASERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM SECURITIES ACT REGISTRATION PROVIDED BY RULE 144A, (C) SOLELY WITH RESPECT TO THE INITIAL PURCHASERS, IN THE UNITED STATES, TO AN INITIAL PURCHASER THAT IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, OR (D) OUTSIDE THE UNITED STATES, TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S, AND, IN EACH CASE, THAT ARE NOT RESTRICTED PARTIES (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR THE UNITED STATES AND ANY OTHER RELEVANT JURISDICTION.

 

BY ITS PURCHASE AND ACCEPTANCE OF THIS NOTE (INCLUDING ANY INTEREST HEREIN), EACH PURCHASER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) IT IS NOT (A) AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) SUBJECT

 

A-2-2

 

TO TITLE I OF ERISA, (B) A PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) SUBJECT TO SECTION 4975 OF THE CODE OR (C) AN EMPLOYEE BENEFIT PLAN SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAWS”) (EACH OF THE FOREGOING, A “PLAN”) AND IS NOT ACTING ON BEHALF OF OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE OR (II) IT IS A PLAN OR IS ACTING ON BEHALF OF A PLAN OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE BUT THE PURCHASE AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE BY REASON OF THE APPLICATION OF ONE OR MORE STATUTORY OR ADMINISTRATIVE EXEMPTIONS OR OTHERWISE AND WILL NOT CONSTITUTE OR RESULT IN A VIOLATION OF ANY SIMILAR LAWS.  “PLAN ASSETS” HAS THE MEANING GIVEN TO IT BY SECTION 3(42) OF ERISA AND REGULATIONS OF THE U.S. DEPARTMENT OF LABOR, BUT ALSO INCLUDES ASSETS OF AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF ERISA) SUBJECT TO SIMILAR LAWS.

 

EACH INITIAL PURCHASER AND EACH SUBSEQUENT TRANSFEREE (IF NOT THE ISSUER OR AN AFFILIATE OF THE ISSUER) TAKING DELIVERY OF THIS NOTE OR AN INTEREST IN THIS NOTE WILL BE DEEMED TO HAVE MADE THE APPLICABLE REPRESENTATIONS AND AGREEMENTS REFERRED TO IN THE INDENTURE REFERRED TO HEREIN.  THIS NOTE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN, AND, IN ADDITION, EACH PERSON OR ENTITY THAT ACQUIRES OR ACCEPTS THIS NOTE OR AN INTEREST HEREIN BY SUCH ACQUISITION OR ACCEPTANCE AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET FORTH IN SUCH INDENTURE, AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS SET FORTH IN SUCH INDENTURE.

 

THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER THE CODE. FOR INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY FOR THIS NOTE, YOU SHOULD SUBMIT A WRITTEN REQUEST TO THE ISSUER AT THE FOLLOWING ADDRESS: 901 GATEWAY BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA 94080, ATTENTION: CHIEF FINANCIAL OFFICER.

 

A RESTRICTED PARTY MAY NOT BE A HOLDER OF THIS NOTE, AND IF, NOTWITHSTANDING SUCH PROHIBITION, THIS NOTE IS HELD BY A RESTRICTED PARTY, SUCH RESTRICTED PARTY SHALL NOT BE ENTITLED TO ENFORCE OR VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT.  ANY HOLDER OF THIS NOTE SEEKING TO ENFORCE OR TO VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION

 

A-2-3

 

AGREEMENT MUST PROVIDE A CERTIFICATE FOR THE BENEFIT OF THE ISSUER THAT SUCH HOLDER IS NOT A RESTRICTED PARTY.  THE RESTRICTIONS SET FORTH IN THE PRECEDING TWO SENTENCES AND THIS SENTENCE MAY NOT BE WAIVED OR AMENDED.

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER REPRESENTS THAT IT IS AN INITIAL PURCHASER OF THE NOTE THAT (A) IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, (B) IT UNDERSTANDS THAT THE ISSUER MAY RECEIVE A LIST OF PARTICIPANTS HOLDING POSITIONS IN THEIR NOTES FROM ONE OR MORE BOOK-ENTRY DEPOSITORIES, (C) IT WILL PROVIDE NOTICE OF THE TRANSFER RESTRICTIONS TO ANY SUBSEQUENT TRANSFEREES, (D) IT IS NOT FORMED FOR THE PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED PURCHASER AND A QUALIFIED INSTITUTIONAL BUYER) AND (E) IF IT IS A COMPANY EXCEPTED FROM THE DEFINITION OF “INVESTMENT COMPANY” BY SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT, OR A SECTION 7(d) FOREIGN INVESTMENT COMPANY RELYING ON SECTION 3(c)(1) OR SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT WITH RESPECT TO ITS U.S. HOLDERS, AND WAS FORMED ON OR BEFORE APRIL 30, 1996, IT HAS RECEIVED THE NECESSARY CONSENT FROM ITS BENEFICIAL HOLDERS AS REQUIRED BY THE INVESTMENT COMPANY ACT.

 

ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT AND WILL BE VOID AB INITIO AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRUSTEE OR ANY INTERMEDIARY.

 

IF THE HOLDER OF THIS NOTE (OTHER THAN FOR THIS PURPOSE ANY HOLDER THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S THAT ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S THAT IS ALSO A QUALIFIED PURCHASER) IS DETERMINED NOT TO HAVE BEEN BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, OR, SOLELY IN THE CASE OF THE INITIAL PURCHASERS OF THE NOTES, BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER AT THE TIME OF ACQUISITION OF THIS NOTE, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER, OR THE HOLDER IS DETERMINED TO HAVE BEEN A

 

A-2-4

 

RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER THAT IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON THAT IS NOT BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.

 

IF THIS NOTE WAS ACQUIRED OUTSIDE THE UNITED STATES, AND THE HOLDER IS DETERMINED NOT TO HAVE BEEN A QUALIFIED PURCHASER THAT IS (A) NOT A “U.S. PERSON” OR (B) A QUALIFIED INSTITUTIONAL BUYER AT THE TIME OF ACQUISITION OF THIS NOTE, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER WHO IS A QUALIFIED PURCHASER THAT IS (I) NOT A “U.S. PERSON” OR (II) A QUALIFIED INSTITUTIONAL BUYER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON WHO IS NOT A QUALIFIED PURCHASER AND (X) NOT A “U.S. PERSON” OR (Y) A QUALIFIED INSTITUTIONAL BUYER.

 

A-2-5

 

TRIPLE ROYALTY SUB LLC

 

Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

IAI Global Note

 

	
No.                    
    	
CUSIP: 89679D AB0
    
	
 
    	
 
    
	
U.S.$
    	
 
    

 

TRIPLE ROYALTY SUB LLC, a limited liability company organized under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal amount set forth on Schedule I hereto on or before April 15, 2033 (the “Final Legal Maturity Date”) and to pay interest quarterly on the Outstanding Principal Balance hereof at a rate per annum equal to 9.0% (the “Note Interest Rate”), from the date hereof until the Outstanding Principal Balance hereof is paid or duly provided for, which interest shall be due and payable on each Payment Date; provided, that with respect to any Payment Date (other than the Final Legal Maturity Date), any such interest in excess of the portion of the Available Collections Amount available to pay such interest on such Payment Date (subject to the immediately succeeding proviso) shall be payable in full not later than the succeeding Payment Date (together with Additional Interest thereon); provided, further, however, that, to the extent there are insufficient funds to pay scheduled interest on this Note in accordance with the Priority of Payments on any Payment Date during the Interest Deferral Period, the scheduled interest (to the extent of such insufficient funds) will be added to the principal balance of this Note and will bear interest at the Note Interest Rate.  Interest on this Note in each Interest Accrual Period shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.  The Issuer shall cause the Trustee to authenticate an additional Note or additional Notes in the appropriate principal amount such that neither this Note nor any other such Note may exceed an aggregate principal amount of U.S. $500,000,000 at any time.

 

This Note is a duly authorized issue of Notes of the Issuer, designated as its “Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033,” issued under the Indenture dated as of November 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Indenture”), by and between the Issuer and U.S. Bank National Association, a national banking association, as initial trustee (including any successor appointed in accordance with the terms of the Indenture, the “Trustee”), transfer agent, paying agent, registrar and calculation agent.  The Indenture also provides for the issuance of Refinancing Notes and Subordinated Notes.  All capitalized terms used in this Note and not defined herein shall have the respective meanings assigned to such terms in the Indenture.  Reference is made to the Indenture and all indentures supplemental thereto for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Noteholders.  This Note is subject to all terms of the Indenture.

 

The Issuer shall pay the Outstanding Principal Balance of this Note on or prior to the Final Legal Maturity Date on the Payment Date specified in the Indenture, subject to the

 

A-2-6

 

availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

Interests in this Note are exchangeable or transferrable in whole or in part for interests in a Rule 144A Global Note, a Temporary Regulation S Global Note, or a Permanent Regulation S Global Note; provided that such transfer or exchange complies with the applicable provisions of the Indenture relating to such transfer or exchange.  Interests in this Note in certain circumstances may also be exchangeable or transferrable in whole but not in part, to the Clearing Agency, its successors or their respective nominees.

 

The indebtedness evidenced by the Original Notes (or any Refinancing Notes in respect of the Original Notes) is, to the extent and in the manner provided in the Indenture, senior in right of payment to the right of payment of the Subordinated Notes, and this Note is issued subject to such provisions.  The maturity of this Note is subject to acceleration upon the occurrence and during the continuance of the Events of Default specified in the Indenture.

 

The Issuer may redeem all or part of the Outstanding Principal Balance of this Note prior to the Final Legal Maturity Date on any Redemption Date, in the amounts and under the circumstances specified in the Indenture.

 

Any amount of Premium or interest on this Note that is not paid when due shall, to the fullest extent permitted by Applicable Law, bear interest (“Additional Interest”) at an interest rate per annum equal to the Note Interest Rate from the date when due until such amount is paid or duly provided for, compounded quarterly and payable on the succeeding Payment Date, subject to the availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

This Note is and shall be secured by the Collateral pledged as security therefor as provided in the Indenture and by the Issuer Pledged Collateral pledged as security therefor as provided in the Pledge and Security Agreement.

 

This Note shall be issued in minimum denominations of $250,000 and integral multiples of $1.00 in excess thereof.

 

Subject to and in accordance with the terms of the Indenture, there shall be distributed quarterly from the Collection Account on each Payment Date, to the Person in whose name this Note is registered at the close of business on the Record Date with respect to such Payment Date, in the manner specified in Section 3.6 of the Indenture, such Person’s pro rata share (based on the aggregate percentage of the Outstanding Principal Balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) held by such Person) of the aggregate amount distributable to all Noteholders of the Original Notes (or any Refinancing Notes in respect of the Original Notes) on such Payment Date.

 

All amounts payable in respect of this Note shall be payable in Dollars in the manner provided in the Indenture to the Noteholder hereof on the Record Date relating to such payment.  The final payment with respect to this Note, however, shall be made only upon presentation and surrender of this Note by the Noteholder or its agent at an office or agency of

 

A-2-7

 

the Trustee or Paying Agent in New York City.  At such time, if any, as this Note is issued in the form of one or more Definitive Notes, payments on a Payment Date shall be made by check mailed to each Noteholder of such a Definitive Note on the applicable Record Date at its address appearing on the Register maintained with respect to the Original Notes (or any Refinancing Notes in respect of the Original Notes).  Alternatively, upon application in writing to the Trustee or other Paying Agent, not later than the applicable Record Date, by a Noteholder, any such payments shall be made by wire transfer to an account designated by such Noteholder at a financial institution in New York City; provided, that, in each case, the final payment with respect to any such Definitive Note shall be made only upon presentation and surrender of such Definitive Note by the Noteholder or its agent at an office or agency of the Trustee or Paying Agent in New York City.  Notwithstanding the foregoing, payments in respect of this Note issued in the form of a Global Note (including principal, Premium, if any, and interest) shall be made by wire transfer of immediately available funds to the account specified by DTC.  Any reduction in the Outstanding Principal Balance of this Note (or any one or more predecessor Original Notes (or any Refinancing Notes in respect of the Original Notes)) effected by any payments made on any Payment Date shall be binding upon all future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not noted hereon.

 

The Noteholder of this Note agrees, by acceptance hereof, to pay over to the Trustee any money (including principal, Premium, if any, and interest) paid to it in respect of this Note in the event that the Trustee, acting in good faith, determines subsequently that such monies were not paid in accordance with the Priority of Payments or as a result of any other mistake of fact or law on the part of the Trustee in making such payment.

 

This Note is issuable only in registered form.  A Noteholder may transfer this Note only by delivery of a written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of the Indenture.  No such transfer shall be effected until, and such transferee shall succeed to the rights of a Noteholder only upon, final acceptance and registration of the transfer by the Registrar in the Register.  When this Note is presented to the Registrar with a request to register the transfer or to exchange it for an equal principal amount of Original Notes (or any Refinancing Notes in respect of the Original Notes) of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met (including, in the case of a transfer, that such Note is duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and Registrar duly executed by the Noteholder thereof or by an attorney who is authorized in writing to act on behalf of the Noteholder).  No service charge shall be made for any registration of transfer or exchange of this Note, but the party requesting such new Note or Notes may be required to pay a sum sufficient to cover any transfer Tax or similar governmental charge payable in connection therewith.

 

Prior to the registration of transfer of this Note, the Issuer and the Trustee may deem and treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the absolute holder and Noteholder hereof for the purpose of receiving payment of all amounts payable with respect to

 

A-2-8

 

this Note and for all other purposes, and neither the Issuer nor the Trustee shall be affected by notice to the contrary.

 

Subject to Section 3.6(b) of the Indenture, the Indenture permits the amendment or modification of the Indenture and the Notes by the Issuer with the consent of Noteholders holding a majority of the Outstanding Principal Balance of the Notes (together with any other class of Notes voting or acting as a single class); provided, however, that if there shall be Notes of more than one class Outstanding and if a proposed amendment, modification, consent or waiver shall directly affect the rights of Noteholders of one or more, but less than all, of such classes, then the consent only of the Noteholders holding a majority of the Outstanding Principal Balance of each affected class of Notes, each voting or acting as a single class, shall be required; provided, further, however, that no such amendment, modification, consent or waiver may, without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby, (i) reduce the percentage of any such class of Notes required to take or approve any action under the Indenture or the Notes, (ii) reduce the amount or change the time of payment of any amount owing or payable with respect to any such class of Notes (including pursuant to any Redemption or Mandatory Tax Redemption) or change the rate of interest or change the manner of calculation of interest payable with respect to any such class of Notes, (iii) alter or modify in any adverse respect the provisions of the Indenture with respect to the Collateral, the provision of the Pledge and Security Agreement with respect to the Issuer Pledged Collateral or the manner of payment or the order of priority in which payments or distributions thereunder shall be made as between the Noteholders of such Notes and the Issuer or as among the Noteholders (including pursuant to Section 3.6 of the Indenture) (except, with respect to Subordinated Notes or as among classes of Subordinated Notes, alterations or modifications to Section 3.6(a)(vii) of the Indenture, at the time such Subordinated Notes are established, provided such alterations or modifications do not change the order of priority as between the Original Notes (or any Refinancing Notes in respect of the Original Notes) and the Subordinated Notes), (iv) consent to any assignment of the Issuer’s rights to a party other than the Trustee for the benefit of the Noteholders or (v) alter the provisions relating to the Collection Account in a manner adverse to any Noteholder.  Any such amendment or modification shall be binding on every Noteholder hereof, whether or not notation thereof is made upon this Note.

 

The subordination provisions contained in Article X of the Indenture may not be amended or modified without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby.

 

The Indenture also contains provisions permitting the Controlling Party to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver shall be conclusive and binding upon all present and future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not notation of such consent or waiver is made upon this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF

 

A-2-9

 

THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

The enforceability against the Issuer of the obligations of the Issuer under the Indenture and under the Notes shall be limited to the Collateral and the Issuer Pledged Collateral.  Once all of the Collateral and the Issuer Pledged Collateral has been realized and applied in accordance with Article III of the Indenture, any outstanding obligations of the Issuer shall be extinguished.  Each of the parties to the Indenture shall take no action against any employee, director, officer or administrator of the Issuer, the Equityholder or the Trustee in relation to the Indenture; provided, that nothing therein shall limit the Issuer (or its permitted successors or assigns, including any party thereto that becomes such a successor or assign) from pursuing claims, if any, against any such Person.  The provisions of Section 12.14 of the Indenture shall survive termination of the Indenture; provided, further, that the foregoing shall not in any way limit, impair or otherwise affect any rights of the Trustee or the Noteholders to proceed against any such Person (a) for intentional and willful fraud or intentional and willful misrepresentations on the part of or by such Person or (b) for the receipt of any distributions or payments to which the Issuer or any successor in interest is entitled, other than distributions expressly permitted pursuant to the Indenture and the other Transaction Documents.

 

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual or facsimile signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

 

A-2-10

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by a duly authorized officer.

 

 

	
Date:   [                         ],   2018
    	
 
    	
TRIPLE ROYALTY SUB LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This Note is one of the Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 designated above and referred to in the within-mentioned indenture.

 

 

	
Date:   [                         ],   2018
    	
 
    	
U.S. BANK NATIONAL   ASSOCIATION,
    
	
 
    	
 
    	
as   Trustee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    

 

A-2-11

 

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 Issuer with full power of substitution in the premises.

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Signature of Transferor
    

 

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

 

[THE FOLLOWING PROVISIONS TO BE INCLUDED ON ALL NOTES]

 

In connection with any transfer of the within-mentioned Note, the undersigned confirms without utilizing any general solicitation or general advertising that:

 

[Check One]

 

o (a)                  the within-mentioned Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder

 

o (b)                  the within-mentioned Note is being transferred other than in accordance with clause (a) above and documents are being furnished that comply with the conditions of transfer set forth in the within-mentioned Note and the Indenture

 

If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register the within-mentioned Note in the name of any Person other than the Noteholder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.11 of the Indenture shall have been satisfied.

 

 

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

 

A-2-12

 

TO BE COMPLETED BY PURCHASER IF CLAUSE (a) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing the within-mentioned Note for its own account or an account with respect to which it exercises sole investment discretion and that each of it and any such account is a “qualified institutional buyer” (within the meaning of Rule 144A) and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Executive Officer
    

 

A-2-13

 

SCHEDULE I

 

TRIPLE ROYALTY SUB LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

No.        

 

	
Date
    	
 
    	
Principal Amount
    	
 
    	
Notation Explaining Principal Amount Recorded
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-2-14

 

EXHIBIT A-3

 

FORM OF TEMPORARY REGULATION S GLOBAL NOTE

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”), A NEW YORK CORPORATION, 55 WATER STREET, NEW YORK, NEW YORK 10004, OR A NOMINEE THEREOF.  THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR THE REGISTRAR, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER, CEDE & CO., HAS AN INTEREST HEREIN.

 

UNTIL 40 DAYS AFTER THE ISSUE DATE OF THE NOTES (THE “RESTRICTED PERIOD”) IN CONNECTION WITH THE OFFERING OF THE NOTES IN THE UNITED STATES FROM OUTSIDE OF THE UNITED STATES, THE SALE, PLEDGE OR TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS.  THE HOLDER HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS NOTE, ACKNOWLEDGES THAT SUCH HOLDER IS A QUALIFIED PURCHASER AND THAT THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS NOTE MAY BE TRANSFERRED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY TO A QUALIFIED PURCHASER AND IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES, AND PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD, ONLY (I) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (II) PURSUANT TO AND IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT.

 

THE ISSUANCE AND SALE OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER RELEVANT JURISDICTION OTHER THAN ON THE OFFICIAL LIST OF THE CAYMAN ISLANDS STOCK EXCHANGE, AND TRIPLE ROYALTY SUB LLC (THE “ISSUER”) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS NOTE OR ANY INTEREST HEREIN MAY BE

 

A-3-1

 

OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER OR AN AFFILIATE THEREOF, (B) TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS BOTH A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, AND NONE OF WHICH ARE (1) A DEALER OF THE TYPE DESCRIBED IN PARAGRAPH (a)(1)(ii) OF RULE 144A UNLESS IT OWNS AND INVESTS ON A DISCRETIONARY BASIS NOT LESS THAN $25,000,000 IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED TO IT, (2) FORMED OR CAPITALIZED FOR THE SPECIFIC PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER), (3) A CORPORATION, PARTNERSHIP, COMMON TRUST FUND, SPECIAL TRUST, PENSION FUND OR RETIREMENT PLAN IN WHICH THE SHAREHOLDERS, EQUITY OWNERS, PARTNERS, BENEFICIARIES, BENEFICIAL HOLDERS OR PARTICIPANTS, AS APPLICABLE, MAY DESIGNATE THE PARTICULAR INVESTMENTS TO BE MADE, (4) IF FORMED ON OR BEFORE APRIL 30, 1996, AN INVESTMENT COMPANY THAT RELIES ON THE EXCLUSION FROM THE DEFINITION OF “INVESTMENT COMPANY” PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT (OR A FOREIGN INVESTMENT COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(7) WITH RESPECT TO THOSE OF ITS HOLDERS THAT ARE U.S. PERSONS), UNLESS, WITH RESPECT TO ITS TREATMENT AS A QUALIFIED PURCHASER, IT HAS, IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, RECEIVED THE CONSENT OF ITS BENEFICIAL HOLDERS THAT ACQUIRED THEIR INTERESTS ON OR BEFORE APRIL 30, 1996 OR (5) AN ENTITY THAT, IMMEDIATELY SUBSEQUENT TO ITS PURCHASE OR OTHER ACQUISITION OF A BENEFICIAL INTEREST IN THIS NOTE, WILL HAVE INVESTED MORE THAN 40% OF ITS ASSETS IN BENEFICIAL INTERESTS IN THIS NOTE AND/OR IN OTHER SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL HOLDERS OF SUCH ENTITY’S SECURITIES ARE QUALIFIED PURCHASERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM SECURITIES ACT REGISTRATION PROVIDED BY RULE 144A, (C) SOLELY WITH RESPECT TO THE INITIAL PURCHASERS, IN THE UNITED STATES, TO AN INITIAL PURCHASER THAT IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, OR (D) OUTSIDE THE UNITED STATES, TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS A QUALIFIED PURCHASER AND NOT A

 

A-3-2

 

“U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S, AND, IN EACH CASE, THAT ARE NOT RESTRICTED PARTIES (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR THE UNITED STATES AND ANY OTHER RELEVANT JURISDICTION.

 

BY ITS PURCHASE AND ACCEPTANCE OF THIS NOTE (INCLUDING ANY INTEREST HEREIN), EACH PURCHASER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) IT IS NOT (A) AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) SUBJECT TO TITLE I OF ERISA, (B) A PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) SUBJECT TO SECTION 4975 OF THE CODE OR (C) AN EMPLOYEE BENEFIT PLAN SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAWS”) (EACH OF THE FOREGOING, A “PLAN”) AND IS NOT ACTING ON BEHALF OF OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE OR (II) IT IS A PLAN OR IS ACTING ON BEHALF OF A PLAN OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE BUT THE PURCHASE AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE BY REASON OF THE APPLICATION OF ONE OR MORE STATUTORY OR ADMINISTRATIVE EXEMPTIONS OR OTHERWISE AND WILL NOT CONSTITUTE OR RESULT IN A VIOLATION OF ANY SIMILAR LAWS.  “PLAN ASSETS” HAS THE MEANING GIVEN TO IT BY SECTION 3(42) OF ERISA AND REGULATIONS OF THE U.S. DEPARTMENT OF LABOR, BUT ALSO INCLUDES ASSETS OF AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF ERISA) SUBJECT TO SIMILAR LAWS.

 

EACH INITIAL PURCHASER AND EACH SUBSEQUENT TRANSFEREE (IF NOT THE ISSUER OR AN AFFILIATE OF THE ISSUER) TAKING DELIVERY OF THIS NOTE OR AN INTEREST IN THIS NOTE WILL BE DEEMED TO HAVE MADE THE APPLICABLE REPRESENTATIONS AND AGREEMENTS REFERRED TO IN THE INDENTURE REFERRED TO HEREIN.  THIS NOTE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN, AND, IN ADDITION, EACH PERSON OR ENTITY THAT ACQUIRES OR ACCEPTS THIS NOTE OR AN INTEREST HEREIN BY SUCH ACQUISITION OR ACCEPTANCE AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET FORTH IN SUCH INDENTURE,

 

A-3-3

 

AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS SET FORTH IN SUCH INDENTURE.

 

THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER THE CODE. FOR INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY FOR THIS NOTE, YOU SHOULD SUBMIT A WRITTEN REQUEST TO THE ISSUER AT THE FOLLOWING ADDRESS: 901 GATEWAY BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA 94080, ATTENTION: CHIEF FINANCIAL OFFICER.

 

A RESTRICTED PARTY MAY NOT BE A HOLDER OF THIS NOTE, AND IF, NOTWITHSTANDING SUCH PROHIBITION, THIS NOTE IS HELD BY A RESTRICTED PARTY, SUCH RESTRICTED PARTY SHALL NOT BE ENTITLED TO ENFORCE OR VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT.  ANY HOLDER OF THIS NOTE SEEKING TO ENFORCE OR TO VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT MUST PROVIDE A CERTIFICATE FOR THE BENEFIT OF THE ISSUER THAT SUCH HOLDER IS NOT A RESTRICTED PARTY.  THE RESTRICTIONS SET FORTH IN THE PRECEDING TWO SENTENCES AND THIS SENTENCE MAY NOT BE WAIVED OR AMENDED.

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER REPRESENTS THAT IT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S.

 

ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT AND WILL BE VOID AB INITIO AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRUSTEE OR ANY INTERMEDIARY.

 

IF THE HOLDER OF THIS NOTE (OTHER THAN FOR THIS PURPOSE ANY HOLDER THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S THAT ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S THAT IS ALSO A QUALIFIED PURCHASER) IS DETERMINED NOT TO HAVE BEEN BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, OR, SOLELY IN THE CASE OF THE INITIAL PURCHASERS OF THE NOTES, BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A

 

A-3-4

 

QUALIFIED PURCHASER AT THE TIME OF ACQUISITION OF THIS NOTE, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER THAT IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON THAT IS NOT BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.

 

IF THIS NOTE WAS ACQUIRED OUTSIDE THE UNITED STATES, AND THE HOLDER IS DETERMINED NOT TO HAVE BEEN A QUALIFIED PURCHASER THAT IS (A) NOT A “U.S. PERSON” OR (B) A QUALIFIED INSTITUTIONAL BUYER AT THE TIME OF ACQUISITION OF THIS NOTE, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER WHO IS A QUALIFIED PURCHASER THAT IS (I) NOT A “U.S. PERSON” OR (II) A QUALIFIED INSTITUTIONAL BUYER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON WHO IS NOT A QUALIFIED PURCHASER AND (X) NOT A “U.S. PERSON” OR (Y) A QUALIFIED INSTITUTIONAL BUYER.

 

A-3-5

 

TRIPLE ROYALTY SUB LLC

 

Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

Temporary Regulation S Global Note

 

	
No.               
    	
CUSIP: U8967H AA1
    
	
 
    	
 
    
	
U.S.$                
    	
 
    

 

TRIPLE ROYALTY SUB LLC, a limited liability company organized under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal amount set forth on Schedule I hereto on or before April 15, 2033 (the “Final Legal Maturity Date”) and to pay interest quarterly on the Outstanding Principal Balance hereof at a rate per annum equal to 9.0% (the “Note Interest Rate”), from the date hereof until the Outstanding Principal Balance hereof is paid or duly provided for, which interest shall be due and payable on each Payment Date; provided, that with respect to any Payment Date (other than the Final Legal Maturity Date), any such interest in excess of the portion of the Available Collections Amount available to pay such interest on such Payment Date (subject to the immediately succeeding proviso) shall be payable in full not later than the succeeding Payment Date (together with Additional Interest thereon); provided, further, however, that, to the extent there are insufficient funds to pay scheduled interest on this Note in accordance with the Priority of Payments on any Payment Date during the Interest Deferral Period, the scheduled interest (to the extent of such insufficient funds) will be added to the principal balance of this Note and will bear interest at the Note Interest Rate.  Interest on this Note in each Interest Accrual Period shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.  The Issuer shall cause the Trustee to authenticate an additional Note or additional Notes in the appropriate principal amount such that neither this Note nor any other such Note may exceed an aggregate principal amount of U.S.$500,000,000 at any time.

 

This Note is a duly authorized issue of Notes of the Issuer, designated as its “Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033,” issued under the Indenture dated as of November 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Indenture”), by and between the Issuer and U.S. Bank National Association, a national banking association, as initial trustee (including any successor appointed in accordance with the terms of the Indenture, the “Trustee”), transfer agent, paying agent, registrar and calculation agent.  The Indenture also provides for the issuance of Refinancing Notes and Subordinated Notes.  All capitalized terms used in this Note and not defined herein shall have the respective meanings assigned to such terms in the Indenture.  Reference is made to the Indenture and all indentures supplemental thereto for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Noteholders.  This Note is subject to all terms of the Indenture.

 

The Issuer shall pay the Outstanding Principal Balance of this Note on or prior to the Final Legal Maturity Date on the Payment Date specified in the Indenture, subject to the

 

A-3-6

 

availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

Interests in this Note are exchangeable or transferrable in whole or in part for interests in a Rule 144A Global Note and exchangeable in whole for a Permanent Regulation S Global Note; provided that such transfer or exchange complies with the applicable provisions of the Indenture relating to such transfer or exchange.  Interests in this Note in certain circumstances may also be exchangeable or transferrable in whole but not in part, to the Clearing Agency, its successors or their respective nominees.

 

The indebtedness evidenced by the Original Notes (or any Refinancing Notes in respect of the Original Notes) is, to the extent and in the manner provided in the Indenture, senior in right of payment to the right of payment of the Subordinated Notes, and this Note is issued subject to such provisions.  The maturity of this Note is subject to acceleration upon the occurrence and during the continuance of the Events of Default specified in the Indenture.

 

The Issuer may redeem all or part of the Outstanding Principal Balance of this Note prior to the Final Legal Maturity Date on any Redemption Date, in the amounts and under the circumstances specified in the Indenture.

 

Any amount of Premium or interest on this Note that is not paid when due shall, to the fullest extent permitted by Applicable Law, bear interest (“Additional Interest”) at an interest rate per annum equal to the Note Interest Rate from the date when due until such amount is paid or duly provided for, compounded quarterly and payable on the succeeding Payment Date, subject to the availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

This Note is and shall be secured by the Collateral pledged as security therefor as provided in the Indenture and by the Issuer Pledged Collateral pledged as security therefor as provided in the Pledge and Security Agreement.

 

This Note shall be issued in minimum denominations of $250,000 and integral multiples of $1.00 in excess thereof.

 

Subject to and in accordance with the terms of the Indenture, there shall be distributed quarterly from the Collection Account on each Payment Date, to the Person in whose name this Note is registered at the close of business on the Record Date with respect to such Payment Date, in the manner specified in Section 3.6 of the Indenture, such Person’s pro rata share (based on the aggregate percentage of the Outstanding Principal Balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) held by such Person) of the aggregate amount distributable to all Noteholders of the Original Notes (or any Refinancing Notes in respect of the Original Notes) on such Payment Date.

 

All amounts payable in respect of this Note shall be payable in Dollars in the manner provided in the Indenture to the Noteholder hereof on the Record Date relating to such payment.  The final payment with respect to this Note, however, shall be made only upon presentation and surrender of this Note by the Noteholder or its agent at an office or agency of

 

A-3-7

 

the Trustee or Paying Agent in New York City.  At such time, if any, as this Note is issued in the form of one or more Definitive Notes, payments on a Payment Date shall be made by check mailed to each Noteholder of such a Definitive Note on the applicable Record Date at its address appearing on the Register maintained with respect to the Original Notes (or any Refinancing Notes in respect of the Original Notes).  Alternatively, upon application in writing to the Trustee or other Paying Agent, not later than the applicable Record Date, by a Noteholder, any such payments shall be made by wire transfer to an account designated by such Noteholder at a financial institution in New York City; provided, that, in each case, the final payment with respect to any such Definitive Note shall be made only upon presentation and surrender of such Definitive Note by the Noteholder or its agent at an office or agency of the Trustee or Paying Agent in New York City.  Notwithstanding the foregoing, payments in respect of this Note issued in the form of a Global Note (including principal, Premium, if any, and interest) shall be made by wire transfer of immediately available funds to the account specified by DTC.  Any reduction in the Outstanding Principal Balance of this Note (or any one or more predecessor Original Notes (or any Refinancing Notes in respect of the Original Notes)) effected by any payments made on any Payment Date shall be binding upon all future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not noted hereon.

 

The Noteholder of this Note agrees, by acceptance hereof, to pay over to the Trustee any money (including principal, Premium, if any, and interest) paid to it in respect of this Note in the event that the Trustee, acting in good faith, determines subsequently that such monies were not paid in accordance with the Priority of Payments or as a result of any other mistake of fact or law on the part of the Trustee in making such payment.

 

This Note is issuable only in registered form.  A Noteholder may transfer this Note only by delivery of a written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of the Indenture.  No such transfer shall be effected until, and such transferee shall succeed to the rights of a Noteholder only upon, final acceptance and registration of the transfer by the Registrar in the Register.  When this Note is presented to the Registrar with a request to register the transfer or to exchange it for an equal principal amount of Original Notes (or any Refinancing Notes in respect of the Original Notes) of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met (including, in the case of a transfer, that such Note is duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and Registrar duly executed by the Noteholder thereof or by an attorney who is authorized in writing to act on behalf of the Noteholder).  No service charge shall be made for any registration of transfer or exchange of this Note, but the party requesting such new Note or Notes may be required to pay a sum sufficient to cover any transfer Tax or similar governmental charge payable in connection therewith.

 

Prior to the registration of transfer of this Note, the Issuer and the Trustee may deem and treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the absolute holder and Noteholder hereof for the purpose of receiving payment of all amounts payable with respect to

 

A-3-8

 

this Note and for all other purposes, and neither the Issuer nor the Trustee shall be affected by notice to the contrary.

 

Subject to Section 3.6(b) of the Indenture, the Indenture permits the amendment or modification of the Indenture and the Notes by the Issuer with the consent of Noteholders holding a majority of the Outstanding Principal Balance of the Notes (together with any other class of Notes voting or acting as a single class); provided, however, that if there shall be Notes of more than one class Outstanding and if a proposed amendment, modification, consent or waiver shall directly affect the rights of Noteholders of one or more, but less than all, of such classes, then the consent only of the Noteholders holding a majority of the Outstanding Principal Balance of each affected class of Notes, each voting or acting as a single class, shall be required; provided, further, however, that no such amendment, modification, consent or waiver may, without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby, (i) reduce the percentage of any such class of Notes required to take or approve any action under the Indenture or the Notes, (ii) reduce the amount or change the time of payment of any amount owing or payable with respect to any such class of Notes (including pursuant to any Redemption or Mandatory Tax Redemption) or change the rate of interest or change the manner of calculation of interest payable with respect to any such class of Notes, (iii) alter or modify in any adverse respect the provisions of the Indenture with respect to the Collateral, the provisions of the Pledge and Security Agreement with respect to the Issuer Pledged Collateral or the manner of payment or the order of priority in which payments or distributions thereunder shall be made as between the Noteholders of such Notes and the Issuer or as among the Noteholders (including pursuant to Section 3.6 of the Indenture) (except, with respect to Subordinated Notes or as among classes of Subordinated Notes, alterations or modifications to Section 3.6(a)(vii) of the Indenture, at the time such Subordinated Notes are established, provided such alterations or modifications do not change the order of priority as between the Original Notes (or any Refinancing Notes in respect of the Original Notes) and the Subordinated Notes), (iv) consent to any assignment of the Issuer’s rights to a party other than the Trustee for the benefit of the Noteholders or (v) alter the provisions relating to the Collection Account in a manner adverse to any Noteholder.  Any such amendment or modification shall be binding on every Noteholder hereof, whether or not notation thereof is made upon this Note.

 

The subordination provisions contained in Article X of the Indenture may not be amended or modified without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby.

 

The Indenture also contains provisions permitting the Controlling Party to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver shall be conclusive and binding upon all present and future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not notation of such consent or waiver is made upon this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF

 

A-3-9

 

THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

The enforceability against the Issuer of the obligations of the Issuer under the Indenture and under the Notes shall be limited to the Collateral and the Issuer Pledged Collateral.  Once all of the Collateral and the Issuer Pledged Collateral has been realized and applied in accordance with Article III of the Indenture, any outstanding obligations of the Issuer shall be extinguished.  Each of the parties to the Indenture shall take no action against any employee, director, officer or administrator of the Issuer, the Equityholder or the Trustee in relation to the Indenture; provided, that nothing therein shall limit the Issuer (or its permitted successors or assigns, including any party thereto that becomes such a successor or assign) from pursuing claims, if any, against any such Person.  The provisions of Section 12.14 of the Indenture shall survive termination of the Indenture; provided, further, that the foregoing shall not in any way limit, impair or otherwise affect any rights of the Trustee or the Noteholders to proceed against any such Person (a) for intentional and willful fraud or intentional and willful misrepresentations on the part of or by such Person or (b) for the receipt of any distributions or payments to which the Issuer or any successor in interest is entitled, other than distributions expressly permitted pursuant to the Indenture and the other Transaction Documents.

 

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual or facsimile signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

 

A-3-10

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by a duly authorized officer.

 

 

	
Date:   [                         ],   2018
    	
 
    	
TRIPLE ROYALTY SUB LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This Note is one of the Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 designated above and referred to in the within-mentioned indenture.

 

 

	
Date:   [                         ],   2018
    	
 
    	
U.S. BANK NATIONAL ASSOCIATION,
    
	
 
    	
 
    	
as   Trustee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    

 

A-3-11

 

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 Issuer with full power of substitution in the premises.

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Signature of Transferor
    

 

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

 

[THE FOLLOWING PROVISIONS TO BE INCLUDED ON ALL NOTES]

 

In connection with any transfer of the within-mentioned Note, the undersigned confirms without utilizing any general solicitation or general advertising that:

 

[Check One]

 

o (a)                  the within-mentioned Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder

 

o (b)                  the within-mentioned Note is being transferred other than in accordance with clause (a) above and documents are being furnished that comply with the conditions of transfer set forth in the within-mentioned Note and the Indenture

 

If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register the within-mentioned Note in the name of any Person other than the Noteholder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.11 of the Indenture shall have been satisfied.

 

 

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

 

A-3-12

 

TO BE COMPLETED BY PURCHASER IF CLAUSE (a) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing the within-mentioned Note for its own account or an account with respect to which it exercises sole investment discretion and that each of it and any such account is a “qualified institutional buyer” (within the meaning of Rule 144A) and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Executive Officer
    

 

A-3-13

 

SCHEDULE I

 

TRIPLE ROYALTY SUB LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

No.       

 

	
Date
    	
 
    	
Principal Amount
    	
 
    	
Notation Explaining Principal Amount Recorded
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-3-14

 

EXHIBIT A-4

 

FORM OF PERMANENT REGULATION S GLOBAL NOTE

 

THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”), A NEW YORK CORPORATION, 55 WATER STREET, NEW YORK, NEW YORK 10004, OR A NOMINEE THEREOF.  THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER OF THIS NOTE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN DTC OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR THE REGISTRAR, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC, ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL BECAUSE THE REGISTERED OWNER, CEDE & CO., HAS AN INTEREST HEREIN.

 

THE ISSUANCE AND SALE OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER RELEVANT JURISDICTION OTHER THAN ON THE OFFICIAL LIST OF THE CAYMAN ISLANDS STOCK EXCHANGE, AND TRIPLE ROYALTY SUB LLC (THE “ISSUER”) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS NOTE OR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER OR AN AFFILIATE THEREOF, (B) TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS BOTH A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, AND NONE OF WHICH ARE (1) A DEALER OF THE TYPE DESCRIBED IN PARAGRAPH (a)(1)(ii) OF RULE 144A UNLESS IT OWNS AND INVESTS ON A DISCRETIONARY BASIS NOT LESS THAN $25,000,000 IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED TO IT, (2) FORMED OR CAPITALIZED FOR THE SPECIFIC PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER), (3) A CORPORATION, PARTNERSHIP, COMMON TRUST FUND, SPECIAL TRUST, PENSION FUND OR RETIREMENT PLAN IN WHICH THE SHAREHOLDERS, EQUITY OWNERS, PARTNERS, 

 

A-4-1

 

BENEFICIARIES, BENEFICIAL HOLDERS OR PARTICIPANTS, AS APPLICABLE, MAY DESIGNATE THE PARTICULAR INVESTMENTS TO BE MADE, (4) IF FORMED ON OR BEFORE APRIL 30, 1996, AN INVESTMENT COMPANY THAT RELIES ON THE EXCLUSION FROM THE DEFINITION OF “INVESTMENT COMPANY” PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT (OR A FOREIGN INVESTMENT COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(7) WITH RESPECT TO THOSE OF ITS HOLDERS THAT ARE U.S. PERSONS), UNLESS, WITH RESPECT TO ITS TREATMENT AS A QUALIFIED PURCHASER, IT HAS, IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, RECEIVED THE CONSENT OF ITS BENEFICIAL HOLDERS THAT ACQUIRED THEIR INTERESTS ON OR BEFORE APRIL 30, 1996 OR (5) AN ENTITY THAT, IMMEDIATELY SUBSEQUENT TO ITS PURCHASE OR OTHER ACQUISITION OF A BENEFICIAL INTEREST IN THIS NOTE, WILL HAVE INVESTED MORE THAN 40% OF ITS ASSETS IN BENEFICIAL INTERESTS IN THIS NOTE AND/OR IN OTHER SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL HOLDERS OF SUCH ENTITY’S SECURITIES ARE QUALIFIED PURCHASERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM SECURITIES ACT REGISTRATION PROVIDED BY RULE 144A, (C) SOLELY WITH RESPECT TO THE INITIAL PURCHASERS, IN THE UNITED STATES, TO AN INITIAL PURCHASER THAT IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, OR (D) OUTSIDE THE UNITED STATES, TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S, AND, IN EACH CASE, THAT ARE NOT RESTRICTED PARTIES (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR THE UNITED STATES AND ANY OTHER RELEVANT JURISDICTION.

 

BY ITS PURCHASE AND ACCEPTANCE OF THIS NOTE (INCLUDING ANY INTEREST THEREIN), EACH PURCHASER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) IT IS NOT (A) AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) SUBJECT 

 

A-4-2

 

TO TITLE I OF ERISA, (B) A PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) SUBJECT TO SECTION 4975 OF THE CODE OR (C) AN EMPLOYEE BENEFIT PLAN SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAWS”) (EACH OF THE FOREGOING, A “PLAN”) AND IS NOT ACTING ON BEHALF OF OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE OR (II) IT IS A PLAN OR IS ACTING ON BEHALF OF A PLAN OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE BUT THE PURCHASE AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE BY REASON OF THE APPLICATION OF ONE OR MORE STATUTORY OR ADMINISTRATIVE EXEMPTIONS OR OTHERWISE AND WILL NOT CONSTITUTE OR RESULT IN A VIOLATION OF ANY SIMILAR LAWS.  “PLAN ASSETS” HAS THE MEANING GIVEN TO IT BY SECTION 3(42) OF ERISA AND REGULATIONS OF THE U.S. DEPARTMENT OF LABOR, BUT ALSO INCLUDES ASSETS OF AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF ERISA) SUBJECT TO SIMILAR LAWS.

 

EACH INITIAL PURCHASER AND EACH SUBSEQUENT TRANSFEREE (IF NOT THE ISSUER OR AN AFFILIATE OF THE ISSUER) TAKING DELIVERY OF THIS NOTE OR AN INTEREST IN THIS NOTE WILL BE DEEMED TO HAVE MADE THE APPLICABLE REPRESENTATIONS AND AGREEMENTS REFERRED TO IN THE INDENTURE REFERRED TO HEREIN.  THIS NOTE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN, AND, IN ADDITION, EACH PERSON OR ENTITY THAT ACQUIRES OR ACCEPTS THIS NOTE OR AN INTEREST HEREIN BY SUCH ACQUISITION OR ACCEPTANCE AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET FORTH IN SUCH INDENTURE, AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS SET FORTH IN SUCH INDENTURE.

 

THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER THE CODE. FOR INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY FOR THIS NOTE, YOU SHOULD SUBMIT A WRITTEN REQUEST TO THE ISSUER AT THE FOLLOWING ADDRESS: 901 GATEWAY BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA 94080, ATTENTION: CHIEF FINANCIAL OFFICER.

 

A RESTRICTED PARTY MAY NOT BE A HOLDER OF THIS NOTE, AND IF, NOTWITHSTANDING SUCH PROHIBITION, THIS NOTE IS HELD BY A RESTRICTED PARTY, SUCH RESTRICTED PARTY SHALL NOT BE ENTITLED TO ENFORCE OR VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT.  ANY HOLDER OF THIS NOTE SEEKING TO ENFORCE OR TO VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION 

 

A-4-3

 

AGREEMENT MUST PROVIDE A CERTIFICATE FOR THE BENEFIT OF THE ISSUER THAT SUCH HOLDER IS NOT A RESTRICTED PARTY.  THE RESTRICTIONS SET FORTH IN THE PRECEDING TWO SENTENCES AND THIS SENTENCE MAY NOT BE WAIVED OR AMENDED.

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER REPRESENTS THAT IT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S.

 

ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT AND WILL BE VOID AB INITIO AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRUSTEE OR ANY INTERMEDIARY.

 

IF THE HOLDER OF THIS NOTE (OTHER THAN FOR THIS PURPOSE ANY HOLDER THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S THAT ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S THAT IS ALSO A QUALIFIED PURCHASER) IS DETERMINED NOT TO HAVE BEEN BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, OR, SOLELY IN THE CASE OF THE INITIAL PURCHASERS OF THE NOTES, BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER AT THE TIME OF ACQUISITION OF THIS NOTE, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER THAT IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON THAT IS NOT BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.

 

IF THIS NOTE WAS ACQUIRED OUTSIDE THE UNITED STATES, AND THE HOLDER IS DETERMINED NOT TO HAVE BEEN A QUALIFIED PURCHASER THAT IS (A) NOT A “U.S. PERSON” OR (B) A QUALIFIED INSTITUTIONAL BUYER AT THE TIME OF ACQUISITION OF THIS NOTE, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO 

 

A-4-4

 

SELL THIS NOTE TO A PURCHASER WHO IS A QUALIFIED PURCHASER THAT IS (I) NOT A “U.S. PERSON” OR (II) A QUALIFIED INSTITUTIONAL BUYER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON WHO IS NOT A QUALIFIED PURCHASER AND (X) NOT A “U.S. PERSON” OR (Y) A QUALIFIED INSTITUTIONAL BUYER.

 

A-4-5

 

TRIPLE ROYALTY SUB LLC

 

Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

Permanent Regulation S Global Note

 

	
No. 
    	
 
    	
CUSIP: U8967H AA1
    
	
 
    	
 
    	
 
    
	
U.S.$
    	
 
    	
 
    

 

TRIPLE ROYALTY SUB LLC, a limited liability company organized under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal amount set forth on Schedule I hereto on or before April 15, 2033 (the “Final Legal Maturity Date”) and to pay interest quarterly on the Outstanding Principal Balance hereof at a rate per annum equal to 9.0% (the “Note Interest Rate”), from the date hereof until the Outstanding Principal Balance hereof is paid or duly provided for, which interest shall be due and payable on each Payment Date; provided, that with respect to any Payment Date (other than the Final Legal Maturity Date), any such interest in excess of the portion of the Available Collections Amount available to pay such interest on such Payment Date (subject to the immediately succeeding proviso) shall be payable in full not later than the succeeding Payment Date (together with Additional Interest thereon); provided, further, however, that, to the extent there are insufficient funds to pay scheduled interest on this Note in accordance with the Priority of Payments on any Payment Date during the Interest Deferral Period, the scheduled interest (to the extent of such insufficient funds) will be added to the principal balance of this Note and will bear interest at the Note Interest Rate.  Interest on this Note in each Interest Accrual Period shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.  The Issuer shall cause the Trustee to authenticate an additional Note or additional Notes in the appropriate principal amount such that neither this Note nor any other such Note may exceed an aggregate principal amount of U.S.$500,000,000 at any time.

 

This Note is a duly authorized issue of Notes of the Issuer, designated as its “Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033,” issued under the Indenture dated as of November 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Indenture”), by and between the Issuer and U.S. Bank National Association, a national banking association, as initial trustee (including any successor appointed in accordance with the terms of the Indenture, the “Trustee”), transfer agent, paying agent, registrar and calculation agent.  The Indenture also provides for the issuance of Refinancing Notes and Subordinated Notes.  All capitalized terms used in this Note and not defined herein shall have the respective meanings assigned to such terms in the Indenture.  Reference is made to the Indenture and all indentures supplemental thereto for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Noteholders.  This Note is subject to all terms of the Indenture.

 

The Issuer shall pay the Outstanding Principal Balance of this Note on or prior to the Final Legal Maturity Date on the Payment Date specified in the Indenture, subject to the 

 

A-4-6

 

availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

Interests in this Note are exchangeable or transferrable in whole or in part for interests in a Rule 144A Global Note; provided that such transfer or exchange complies with the applicable provisions of the Indenture relating to such transfer or exchange.  Interests in this Note in certain circumstances may also be exchangeable or transferrable in whole but not in part, to the Clearing Agency, its successors or their respective nominees.

 

The indebtedness evidenced by the Original Notes (or any Refinancing Notes in respect of the Original Notes) is, to the extent and in the manner provided in the Indenture, senior in right of payment to the right of payment of the Subordinated Notes, and this Note is issued subject to such provisions.  The maturity of this Note is subject to acceleration upon the occurrence and during the continuance of the Events of Default specified in the Indenture.

 

The Issuer may redeem all or part of the Outstanding Principal Balance of this Note prior to the Final Legal Maturity Date on any Redemption Date, in the amounts and under the circumstances specified in the Indenture.

 

Any amount of Premium or interest on this Note that is not paid when due shall, to the fullest extent permitted by Applicable Law, bear interest (“Additional Interest”) at an interest rate per annum equal to the Note Interest Rate from the date when due until such amount is paid or duly provided for, compounded quarterly and payable on the succeeding Payment Date, subject to the availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

This Note is and shall be secured by the Collateral pledged as security therefor as provided in the Indenture and by the Issuer Pledged Collateral pledged as security therefor as provided in the Pledge and Security Agreement.

 

This Note shall be issued in minimum denominations of $250,000 and integral multiples of $1.00 in excess thereof.

 

Subject to and in accordance with the terms of the Indenture, there shall be distributed quarterly from the Collection Account on each Payment Date, to the Person in whose name this Note is registered at the close of business on the Record Date with respect to such Payment Date, in the manner specified in Section 3.6 of the Indenture, such Person’s pro rata share (based on the aggregate percentage of the Outstanding Principal Balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) held by such Person) of the aggregate amount distributable to all Noteholders of the Original Notes (or any Refinancing Notes in respect of the Original Notes) on such Payment Date.

 

All amounts payable in respect of this Note shall be payable in Dollars in the manner provided in the Indenture to the Noteholder hereof on the Record Date relating to such payment.  The final payment with respect to this Note, however, shall be made only upon presentation and surrender of this Note by the Noteholder or its agent at an office or agency of the Trustee or Paying Agent in New York City.  At such time, if any, as this Note is issued in the 

 

A-4-7

 

form of one or more Definitive Notes, payments on a Payment Date shall be made by check mailed to each Noteholder of such a Definitive Note on the applicable Record Date at its address appearing on the Register maintained with respect to the Original Notes (or any Refinancing Notes in respect of the Original Notes).  Alternatively, upon application in writing to the Trustee or other Paying Agent, not later than the applicable Record Date, by a Noteholder, any such payments shall be made by wire transfer to an account designated by such Noteholder at a financial institution in New York City; provided, that, in each case, the final payment with respect to any such Definitive Note shall be made only upon presentation and surrender of such Definitive Note by the Noteholder or its agent at an office or agency of the Trustee or Paying Agent in New York City.  Notwithstanding the foregoing, payments in respect of this Note issued in the form of a Global Note (including principal, Premium, if any, and interest) shall be made by wire transfer of immediately available funds to the account specified by DTC.  Any reduction in the Outstanding Principal Balance of this Note (or any one or more predecessor Original Notes (or any Refinancing Notes in respect of the Original Notes)) effected by any payments made on any Payment Date shall be binding upon all future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not noted hereon.

 

The Noteholder of this Note agrees, by acceptance hereof, to pay over to the Trustee any money (including principal, Premium, if any, and interest) paid to it in respect of this Note in the event that the Trustee, acting in good faith, determines subsequently that such monies were not paid in accordance with the Priority of Payments or as a result of any other mistake of fact or law on the part of the Trustee in making such payment.

 

This Note is issuable only in registered form.  A Noteholder may transfer this Note only by delivery of a written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of the Indenture.  No such transfer shall be effected until, and such transferee shall succeed to the rights of a Noteholder only upon, final acceptance and registration of the transfer by the Registrar in the Register.  When this Note is presented to the Registrar with a request to register the transfer or to exchange it for an equal principal amount of Original Notes (or any Refinancing Notes in respect of the Original Notes) of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met (including, in the case of a transfer, that such Note is duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and Registrar duly executed by the Noteholder thereof or by an attorney who is authorized in writing to act on behalf of the Noteholder).  No service charge shall be made for any registration of transfer or exchange of this Note, but the party requesting such new Note or Notes may be required to pay a sum sufficient to cover any transfer Tax or similar governmental charge payable in connection therewith.

 

Prior to the registration of transfer of this Note, the Issuer and the Trustee may deem and treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the absolute holder and Noteholder hereof for the purpose of receiving payment of all amounts payable with respect to this Note and for all other purposes, and neither the Issuer nor the Trustee shall be affected by notice to the contrary.

 

A-4-8

 

Subject to Section 3.6(b) of the Indenture, the Indenture permits the amendment or modification of the Indenture and the  Notes by the Issuer with the consent of Noteholders holding a majority of the Outstanding Principal Balance of the Notes (together with any other class of Notes voting or acting as a single class); provided, however, that if there shall be Notes of more than one class Outstanding and if a proposed amendment, modification, consent or waiver shall directly affect the rights of Noteholders of one or more, but less than all, of such classes, then the consent only of the Noteholders holding a majority of the Outstanding Principal Balance of each affected class of Notes, each voting or acting as a single class, shall be required; provided, further, however, that no such amendment, modification, consent or waiver may, without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby, (i) reduce the percentage of any such class of Notes required to take or approve any action under the Indenture or the Notes, (ii) reduce the amount or change the time of payment of any amount owing or payable with respect to any such class of Notes (including pursuant to any Redemption or Mandatory Tax Redemption) or change the rate of interest or change the manner of calculation of interest payable with respect to any such class of Notes, (iii) alter or modify in any adverse respect the provisions of the Indenture with respect to the Collateral, the provisions of the Pledge and Security Agreement with respect to the Issuer Pledged Collateral or the manner of payment or the order of priority in which payments or distributions thereunder shall be made as between the Noteholders of such Notes and the Issuer or as among the Noteholders (including pursuant to Section 3.6 of the Indenture) (except, with respect to Subordinated Notes or as among classes of Subordinated Notes, alterations or modifications to Section 3.6(a)(vii) of the Indenture, at the time such Subordinated Notes are established, provided such alterations or modifications do not change the order of priority as between the Original Notes (or any Refinancing Notes in respect of the Original Notes) and the Subordinated Notes), (iv) consent to any assignment of the Issuer’s rights to a party other than the Trustee for the benefit of the Noteholders or (v) alter the provisions relating to the Collection Account in a manner adverse to any Noteholder.  Any such amendment or modification shall be binding on every Noteholder hereof, whether or not notation thereof is made upon this Note.

 

The subordination provisions contained in Article X of the Indenture may not be amended or modified without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby.

 

The Indenture also contains provisions permitting the Controlling Party to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver shall be conclusive and binding upon all present and future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not notation of such consent or waiver is made upon this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

A-4-9

 

The enforceability against the Issuer of the obligations of the Issuer under the Indenture and under the Notes shall be limited to the Collateral and the Issuer Pledged Collateral.  Once all of the Collateral and the Issuer Pledged Collateral has been realized and applied in accordance with Article III of the Indenture, any outstanding obligations of the Issuer shall be extinguished.  Each of the parties to the Indenture shall take no action against any employee, director, officer or administrator of the Issuer, the Equityholder or the Trustee in relation to the Indenture; provided, that nothing therein shall limit the Issuer (or its permitted successors or assigns, including any party thereto that becomes such a successor or assign) from pursuing claims, if any, against any such Person.  The provisions of Section 12.14 of the Indenture shall survive termination of the Indenture; provided, further, that the foregoing shall not in any way limit, impair or otherwise affect any rights of the Trustee or the Noteholders to proceed against any such Person (a) for intentional and willful fraud or intentional and willful misrepresentations on the part of or by such Person or (b) for the receipt of any distributions or payments to which the Issuer or any successor in interest is entitled, other than distributions expressly permitted pursuant to the Indenture and the other Transaction Documents.

 

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual or facsimile signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

 

A-4-10

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by a duly authorized officer.

 

 

	
Date:   [                         ],   2018
    	
 
    	
TRIPLE ROYALTY SUB LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This Note is one of the Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 designated above and referred to in the within-mentioned indenture.

 

 

	
Date: [                         ],   2018
    	
 
    	
U.S. BANK NATIONAL   ASSOCIATION,
    
	
 
    	
 
    	
as   Trustee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    

 

A-4-11

 

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 Issuer with full power of substitution in the premises.

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Signature of Transferor
    

 

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

 

[THE FOLLOWING PROVISIONS TO BE INCLUDED ON ALL NOTES]

 

In connection with any transfer of the within-mentioned Note, the undersigned confirms without utilizing any general solicitation or general advertising that:

 

[Check One]

 

o (a)      the within-mentioned Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder

 

o (b)      the within-mentioned Note is being transferred other than in accordance with clause (a) above and documents are being furnished that comply with the conditions of transfer set forth in the within-mentioned Note and the Indenture

 

If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register the within-mentioned Note in the name of any Person other than the Noteholder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.11 of the Indenture shall have been satisfied.

 

 

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

 

A-4-12

 

TO BE COMPLETED BY PURCHASER IF CLAUSE (a) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing the within-mentioned Note for its own account or an account with respect to which it exercises sole investment discretion and that each of it and any such account is a “qualified institutional buyer” (within the meaning of Rule 144A) and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Executive Officer
    

 

A-4-13

 

SCHEDULE I

 

TRIPLE ROYALTY SUB LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

No.

 

	
Date
    	
 
    	
Principal Amount
    	
 
    	
Notation Explaining Principal Amount Recorded
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-4-14

 

EXHIBIT A-5

 

FORM OF RETAINED NOTES

 

THE ISSUANCE AND SALE OF THIS NOTE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER RELEVANT JURISDICTION OTHER THAN ON THE OFFICIAL LIST OF THE CAYMAN ISLANDS STOCK EXCHANGE, AND TRIPLE ROYALTY SUB LLC (THE “ISSUER”) HAS NOT BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE “INVESTMENT COMPANY ACT”).  THIS NOTE OR ANY INTEREST HEREIN MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE ISSUER OR AN AFFILIATE THEREOF, (B) TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS BOTH A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”) AND A “QUALIFIED PURCHASER” UNDER SECTION 2(a)(51)(A) OF THE INVESTMENT COMPANY ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, AND NONE OF WHICH ARE (1) A DEALER OF THE TYPE DESCRIBED IN PARAGRAPH (a)(1)(ii) OF RULE 144A UNLESS IT OWNS AND INVESTS ON A DISCRETIONARY BASIS NOT LESS THAN $25,000,000 IN SECURITIES OF ISSUERS THAT ARE NOT AFFILIATED TO IT, (2) FORMED OR CAPITALIZED FOR THE SPECIFIC PURPOSE OF INVESTING IN THE ISSUER (EXCEPT WHERE EACH BENEFICIAL HOLDER IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER), (3) A CORPORATION, PARTNERSHIP, COMMON TRUST FUND, SPECIAL TRUST, PENSION FUND OR RETIREMENT PLAN IN WHICH THE SHAREHOLDERS, EQUITY OWNERS, PARTNERS, BENEFICIARIES, BENEFICIAL HOLDERS OR PARTICIPANTS, AS APPLICABLE, MAY DESIGNATE THE PARTICULAR INVESTMENTS TO BE MADE, (4) IF FORMED ON OR BEFORE APRIL 30, 1996, AN INVESTMENT COMPANY THAT RELIES ON THE EXCLUSION FROM THE DEFINITION OF “INVESTMENT COMPANY” PROVIDED BY SECTION 3(c)(7) OF THE INVESTMENT COMPANY ACT (OR A FOREIGN INVESTMENT COMPANY UNDER SECTION 7(d) THEREOF RELYING ON SECTION 3(c)(7) WITH RESPECT TO THOSE OF ITS HOLDERS THAT ARE U.S. PERSONS), UNLESS, WITH RESPECT TO ITS TREATMENT AS A QUALIFIED PURCHASER, IT HAS, IN THE MANNER REQUIRED BY SECTION 2(a)(51)(C) OF THE INVESTMENT COMPANY ACT AND THE RULES AND REGULATIONS THEREUNDER, RECEIVED THE CONSENT OF ITS BENEFICIAL HOLDERS THAT ACQUIRED THEIR INTERESTS ON OR BEFORE APRIL 30, 1996 OR (5) AN ENTITY THAT, IMMEDIATELY SUBSEQUENT TO ITS PURCHASE OR OTHER ACQUISITION OF A BENEFICIAL INTEREST IN THIS NOTE, WILL HAVE INVESTED MORE THAN 40% OF ITS ASSETS IN BENEFICIAL INTERESTS IN THIS NOTE AND/OR IN OTHER SECURITIES OF THE ISSUER (UNLESS ALL OF THE BENEFICIAL HOLDERS OF SUCH ENTITY’S 

 

A-5-1

 

SECURITIES ARE QUALIFIED PURCHASERS) TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON THE EXEMPTION FROM SECURITIES ACT REGISTRATION PROVIDED BY RULE 144A, (C) SOLELY WITH RESPECT TO THE INITIAL PURCHASERS, IN THE UNITED STATES, TO AN INITIAL PURCHASER THAT IS BOTH A QUALIFIED PURCHASER AND AN INSTITUTIONAL “ACCREDITED INVESTOR” MEETING THE REQUIREMENTS OF RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION UNDER THE SECURITIES ACT, ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS BOTH AN INSTITUTIONAL “ACCREDITED INVESTOR” AND A QUALIFIED PURCHASER, OR (D) OUTSIDE THE UNITED STATES, TO AN INITIAL PURCHASER OR A SUBSEQUENT TRANSFEREE THAT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S, AND, IN EACH CASE, THAT ARE NOT RESTRICTED PARTIES (AS DEFINED IN THE INDENTURE REFERRED TO HEREIN) IN COMPLIANCE WITH THE CERTIFICATIONS AND OTHER REQUIREMENTS SPECIFIED IN THE INDENTURE REFERRED TO HEREIN AND ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR THE UNITED STATES AND ANY OTHER RELEVANT JURISDICTION.

 

UNTIL 40 DAYS AFTER THE ISSUE DATE OF THE NOTES (THE “RESTRICTED PERIOD”) IN CONNECTION WITH THE OFFERING OF THE NOTES IN THE UNITED STATES FROM OUTSIDE OF THE UNITED STATES, THE SALE, PLEDGE OR TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS.  THE HOLDER HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS NOTE, ACKNOWLEDGES THAT SUCH HOLDER IS A QUALIFIED PURCHASER AND THAT THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREES FOR THE BENEFIT OF THE ISSUER THAT THIS NOTE MAY BE TRANSFERRED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY TO A QUALIFIED PURCHASER AND IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES, AND PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD, ONLY (I) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT OR (II) PURSUANT TO AND IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT.

 

BY ITS PURCHASE AND ACCEPTANCE OF THIS NOTE (INCLUDING ANY INTEREST HEREIN), EACH PURCHASER WILL BE DEEMED TO HAVE REPRESENTED AND WARRANTED THAT EITHER (I) IT IS NOT (A) AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF THE UNITED STATES EMPLOYEE 

 

A-5-2

 

RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”)) SUBJECT TO TITLE I OF ERISA, (B) A PLAN (WITHIN THE MEANING OF SECTION 4975(e)(1) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”)) SUBJECT TO SECTION 4975 OF THE CODE OR (C) AN EMPLOYEE BENEFIT PLAN SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAWS OR REGULATIONS THAT ARE SUBSTANTIALLY SIMILAR TO TITLE I OF ERISA OR SECTION 4975 OF THE CODE (“SIMILAR LAWS”) (EACH OF THE FOREGOING, A “PLAN”) AND IS NOT ACTING ON BEHALF OF OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE OR (II) IT IS A PLAN OR IS ACTING ON BEHALF OF A PLAN OR USING “PLAN ASSETS” OF A PLAN TO PURCHASE THIS NOTE BUT THE PURCHASE AND HOLDING OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF THE CODE BY REASON OF THE APPLICATION OF ONE OR MORE STATUTORY OR ADMINISTRATIVE EXEMPTIONS OR OTHERWISE AND WILL NOT CONSTITUTE OR RESULT IN A VIOLATION OF ANY SIMILAR LAWS.  “PLAN ASSETS” HAS THE MEANING GIVEN TO IT BY SECTION 3(42) OF ERISA AND REGULATIONS OF THE U.S. DEPARTMENT OF LABOR, BUT ALSO INCLUDES ASSETS OF AN EMPLOYEE BENEFIT PLAN (WITHIN THE MEANING OF SECTION 3(3) OF ERISA) SUBJECT TO SIMILAR LAWS.

 

EACH INITIAL PURCHASER AND EACH SUBSEQUENT TRANSFEREE (IF NOT THE ISSUER OR AN AFFILIATE OF THE ISSUER) TAKING DELIVERY OF THIS NOTE OR AN INTEREST IN THIS NOTE WILL BE DEEMED TO HAVE MADE THE APPLICABLE REPRESENTATIONS AND AGREEMENTS REFERRED TO IN THE INDENTURE REFERRED TO HEREIN.  THIS NOTE MAY NOT BE RESOLD OR TRANSFERRED EXCEPT AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN, AND, IN ADDITION, EACH PERSON OR ENTITY THAT ACQUIRES OR ACCEPTS THIS NOTE OR AN INTEREST HEREIN BY SUCH ACQUISITION OR ACCEPTANCE AGREES TO COMPLY WITH THE TRANSFER RESTRICTIONS SET FORTH IN SUCH INDENTURE, AND FURTHER ACKNOWLEDGES AND AGREES TO THE PROVISIONS SET FORTH IN SUCH INDENTURE.

 

THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT UNDER THE CODE. FOR INFORMATION REGARDING THE ISSUE PRICE, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE ISSUE DATE, AND THE YIELD TO MATURITY FOR THIS NOTE, YOU SHOULD SUBMIT A WRITTEN REQUEST TO THE ISSUER AT THE FOLLOWING ADDRESS: 901 GATEWAY BOULEVARD, SOUTH SAN FRANCISCO, CALIFORNIA 94080, ATTENTION: CHIEF FINANCIAL OFFICER.

 

A RESTRICTED PARTY MAY NOT BE A HOLDER OF THIS NOTE, AND IF, NOTWITHSTANDING SUCH PROHIBITION, THIS NOTE IS HELD BY A RESTRICTED PARTY, SUCH RESTRICTED PARTY SHALL NOT BE ENTITLED TO ENFORCE OR VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT.  ANY HOLDER OF THIS NOTE SEEKING TO ENFORCE OR TO VOTE TO ENFORCE THE COVENANTS OF THE ISSUER UNDER THE INDENTURE OR THE 

 

A-5-3

 

COVENANTS OF THE TRANSFEROR UNDER THE SALE AND CONTRIBUTION AGREEMENT MUST PROVIDE A CERTIFICATE FOR THE BENEFIT OF THE ISSUER THAT SUCH HOLDER IS NOT A RESTRICTED PARTY.  THE RESTRICTIONS SET FORTH IN THE PRECEDING TWO SENTENCES AND THIS SENTENCE MAY NOT BE WAIVED OR AMENDED.

 

BY ITS ACQUISITION OR ACCEPTANCE HEREOF, THE HOLDER REPRESENTS THAT IT IS A QUALIFIED PURCHASER AND NOT A “U.S. PERSON” AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT (“REGULATION S”), ACTING FOR ITS OWN ACCOUNT OR ONE OR MORE ACCOUNTS WITH RESPECT TO WHICH SUCH INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE EXERCISES SOLE INVESTMENT DISCRETION, EACH OF WHICH IS A QUALIFIED PURCHASER, AND NONE OF WHICH IS A U.S. PERSON, IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S.

 

ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT AND WILL BE VOID AB INITIO AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE INITIAL PURCHASER OR SUBSEQUENT TRANSFEREE, NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE TRUSTEE OR ANY INTERMEDIARY.

 

IF THE HOLDER OF THIS NOTE (OTHER THAN FOR THIS PURPOSE ANY HOLDER THAT IS NOT A U.S. PERSON AS DEFINED IN REGULATION S THAT ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S THAT IS ALSO A QUALIFIED PURCHASER) IS DETERMINED NOT TO HAVE BEEN BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, OR, SOLELY IN THE CASE OF THE INITIAL PURCHASERS OF THE NOTES, BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER AT THE TIME OF ACQUISITION OF THIS NOTE, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH AN INSTITUTIONAL ACCREDITED INVESTOR AND A QUALIFIED PURCHASER, OR THE HOLDER IS DETERMINED TO HAVE BEEN A RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER THAT IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON THAT IS NOT BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER, ACTING FOR ITS OWN ACCOUNT OR THE ACCOUNTS OF ONE OR MORE OTHER PERSONS EACH OF WHICH IS BOTH A QUALIFIED INSTITUTIONAL BUYER AND A QUALIFIED PURCHASER.

 

IF THIS NOTE WAS ACQUIRED OUTSIDE THE UNITED STATES, AND THE HOLDER IS DETERMINED NOT TO HAVE BEEN A QUALIFIED PURCHASER THAT IS (A) NOT A “U.S. PERSON” OR (B) A QUALIFIED INSTITUTIONAL BUYER AT THE TIME OF ACQUISITION OF THIS NOTE, OR THE HOLDER IS DETERMINED TO HAVE BEEN A 

 

A-5-4

 

RESTRICTED PARTY, THE ISSUER HAS THE RIGHT TO REQUIRE SUCH HOLDER TO SELL THIS NOTE TO A PURCHASER WHO IS A QUALIFIED PURCHASER THAT IS (I) NOT A “U.S. PERSON” OR (II) A QUALIFIED INSTITUTIONAL BUYER.  THE ISSUER ALSO HAS THE RIGHT TO REFUSE TO HONOR A TRANSFER TO A PERSON WHO IS NOT A QUALIFIED PURCHASER AND (X) NOT A “U.S. PERSON” OR (Y) A QUALIFIED INSTITUTIONAL BUYER.

 

A-5-5

 

 

TRIPLE ROYALTY SUB LLC

 

Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

Retained Note

 

	
No. R-1
    	
 
    	
CUSIP: U8967H AA1
    
	
 
    	
 
    	
 
    
	
U.S.$ 12,500,000

 
    	
 
    	
 
    

 

TRIPLE ROYALTY SUB LLC, a limited liability company organized under the laws of the State of Delaware (herein referred to as the “Issuer”), for value received, hereby promises to pay to THERAVANCE BIOPHARMA R&D, INC., a Cayman Islands exempted company, the principal amount set forth on Schedule I hereto on or before April 15, 2033 (the “Final Legal Maturity Date”) and to pay interest quarterly on the Outstanding Principal Balance hereof at a rate per annum equal to 9.0% (the “Note Interest Rate”), from the date hereof until the Outstanding Principal Balance hereof is paid or duly provided for, which interest shall be due and payable on each Payment Date; provided, that with respect to any Payment Date (other than the Final Legal Maturity Date), any such interest in excess of the portion of the Available Collections Amount available to pay such interest on such Payment Date (subject to the immediately succeeding proviso) shall be payable in full not later than the succeeding Payment Date (together with Additional Interest thereon); provided, further, however, that, to the extent there are insufficient funds to pay scheduled interest on this Note in accordance with the Priority of Payments on any Payment Date during the Interest Deferral Period, the scheduled interest (to the extent of such insufficient funds) will be added to the principal balance of this Note and will bear interest at the Note Interest Rate.  Interest on this Note in each Interest Accrual Period shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.  The Issuer shall cause the Trustee to authenticate an additional Note or additional Notes in the appropriate principal amount such that neither this Note nor any other such Note may exceed an aggregate principal amount of U.S.$500,000,000 at any time.

 

This Note is a duly authorized issue of Notes of the Issuer, designated as its “Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033,” issued under the Indenture dated as of November 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time in accordance with the terms thereof, the “Indenture”), by and between the Issuer and U.S. Bank National Association, a national banking association, as initial trustee (including any successor appointed in accordance with the terms of the Indenture, the “Trustee”), transfer agent, paying agent, registrar and calculation agent.  The Indenture also provides for the issuance of Refinancing Notes and Subordinated Notes.  All capitalized terms used in this Note and not defined herein shall have the respective meanings assigned to such terms in the Indenture.  Reference is made to the Indenture and all indentures supplemental thereto for a statement of the respective rights and obligations thereunder of the Issuer, the Trustee and the Noteholders.  This Note is subject to all terms of the Indenture.

 

The Issuer shall pay the Outstanding Principal Balance of this Note on or prior to the Final Legal Maturity Date on the Payment Date specified in the Indenture, subject to the 

 

A-5-6

 

availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

Interests in this Note are exchangeable or transferrable in whole or in part for interests in a Rule 144A Global Note; provided that such transfer or exchange complies with the applicable provisions of the Indenture relating to such transfer or exchange.  Interests in this Note in certain circumstances may also be exchangeable or transferrable in whole but not in part, to the Clearing Agency, its successors or their respective nominees.

 

The indebtedness evidenced by the Original Notes (or any Refinancing Notes in respect of the Original Notes) is, to the extent and in the manner provided in the Indenture, senior in right of payment to the right of payment of the Subordinated Notes, and this Note is issued subject to such provisions.  The maturity of this Note is subject to acceleration upon the occurrence and during the continuance of the Events of Default specified in the Indenture.

 

The Issuer may redeem all or part of the Outstanding Principal Balance of this Note prior to the Final Legal Maturity Date on any Redemption Date, in the amounts and under the circumstances specified in the Indenture.

 

Any amount of Premium or interest on this Note that is not paid when due shall, to the fullest extent permitted by Applicable Law, bear interest (“Additional Interest”) at an interest rate per annum equal to the Note Interest Rate from the date when due until such amount is paid or duly provided for, compounded quarterly and payable on the succeeding Payment Date, subject to the availability of the Available Collections Amount therefor after making payments entitled to priority under Section 3.6 of the Indenture.

 

This Note is and shall be secured by the Collateral pledged as security therefor as provided in the Indenture and by the Issuer Pledged Collateral pledged as security therefor as provided in the Pledge and Security Agreement.

 

This Note shall be issued in minimum denominations of $250,000 and integral multiples of $1.00 in excess thereof.

 

Subject to and in accordance with the terms of the Indenture, there shall be distributed quarterly from the Collection Account on each Payment Date, to the Person in whose name this Note is registered at the close of business on the Record Date with respect to such Payment Date, in the manner specified in Section 3.6 of the Indenture, such Person’s pro rata share (based on the aggregate percentage of the Outstanding Principal Balance of the Original Notes (or any Refinancing Notes in respect of the Original Notes) held by such Person) of the aggregate amount distributable to all Noteholders of the Original Notes (or any Refinancing Notes in respect of the Original Notes) on such Payment Date.

 

All amounts payable in respect of this Note shall be payable in Dollars in the manner provided in the Indenture to the Noteholder hereof on the Record Date relating to such payment.  The final payment with respect to this Note, however, shall be made only upon presentation and surrender of this Note by the Noteholder or its agent at an office or agency of the Trustee or Paying Agent in New York City.  At such time, as this Note is issued in the form 

 

A-5-7

 

of one or more Definitive Notes, payments on a Payment Date shall be made by check mailed to each Noteholder of such a Definitive Note on the applicable Record Date at its address appearing on the Register maintained with respect to the Original Notes (or any Refinancing Notes in respect of the Original Notes).  Alternatively, upon application in writing to the Trustee or other Paying Agent, not later than the applicable Record Date, by a Noteholder, any such payments shall be made by wire transfer to an account designated by such Noteholder at a financial institution in New York City; provided, that, in each case, the final payment with respect to any such Definitive Note shall be made only upon presentation and surrender of such Definitive Note by the Noteholder or its agent at an office or agency of the Trustee or Paying Agent in New York City.  Any reduction in the Outstanding Principal Balance of this Note (or any one or more predecessor Original Notes (or any Refinancing Notes in respect of the Original Notes)) effected by any payments made on any Payment Date shall be binding upon all future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not noted hereon.

 

The Noteholder of this Note agrees, by acceptance hereof, to pay over to the Trustee any money (including principal, Premium, if any, and interest) paid to it in respect of this Note in the event that the Trustee, acting in good faith, determines subsequently that such monies were not paid in accordance with the Priority of Payments or as a result of any other mistake of fact or law on the part of the Trustee in making such payment.

 

This Note is issuable only in registered form.  A Noteholder may transfer this Note only by delivery of a written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of the Indenture.  No such transfer shall be effected until, and such transferee shall succeed to the rights of a Noteholder only upon, final acceptance and registration of the transfer by the Registrar in the Register.  When this Note is presented to the Registrar with a request to register the transfer or to exchange it for an equal principal amount of Original Notes (or any Refinancing Notes in respect of the Original Notes) of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met (including, in the case of a transfer, that such Note is duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and Registrar duly executed by the Noteholder thereof or by an attorney who is authorized in writing to act on behalf of the Noteholder).  No service charge shall be made for any registration of transfer or exchange of this Note, but the party requesting such new Note or Notes may be required to pay a sum sufficient to cover any transfer Tax or similar governmental charge payable in connection therewith.

 

Prior to the registration of transfer of this Note, the Issuer and the Trustee may deem and treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the absolute holder and Noteholder hereof for the purpose of receiving payment of all amounts payable with respect to this Note and for all other purposes, and neither the Issuer nor the Trustee shall be affected by notice to the contrary.

 

Subject to Section 3.6(b) of the Indenture, the Indenture permits the amendment or modification of the Indenture and the  Notes by the Issuer with the consent of Noteholders holding a majority of the Outstanding Principal Balance of the Notes (together with any other 

 

A-5-8

 

class of Notes voting or acting as a single class); provided, however, that if there shall be Notes of more than one class Outstanding and if a proposed amendment, modification, consent or waiver shall directly affect the rights of Noteholders of one or more, but less than all, of such classes, then the consent only of the Noteholders holding a majority of the Outstanding Principal Balance of each affected class of Notes, each voting or acting as a single class, shall be required; provided, further, however, that no such amendment, modification, consent or waiver may, without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby, (i) reduce the percentage of any such class of Notes required to take or approve any action under the Indenture or the Notes, (ii) reduce the amount or change the time of payment of any amount owing or payable with respect to any such class of Notes (including pursuant to any Redemption or Mandatory Tax Redemption) or change the rate of interest or change the manner of calculation of interest payable with respect to any such class of Notes, (iii) alter or modify in any adverse respect the provisions of the Indenture with respect to the Collateral, the provisions of the Pledge and Security Agreement with respect to the Issuer Pledged Collateral or the manner of payment or the order of priority in which payments or distributions thereunder shall be made as between the Noteholders of such Notes and the Issuer or as among the Noteholders (including pursuant to Section 3.6 of the Indenture) (except, with respect to Subordinated Notes or as among classes of Subordinated Notes, alterations or modifications to Section 3.6(a)(vii) of the Indenture, at the time such Subordinated Notes are established, provided such alterations or modifications do not change the order of priority as between the Original Notes (or any Refinancing Notes in respect of the Original Notes) and the Subordinated Notes), (iv) consent to any assignment of the Issuer’s rights to a party other than the Trustee for the benefit of the Noteholders or (v) alter the provisions relating to the Collection Account in a manner adverse to any Noteholder.  Any such amendment or modification shall be binding on every Noteholder hereof, whether or not notation thereof is made upon this Note.

 

The subordination provisions contained in Article X of the Indenture may not be amended or modified without the consent of Noteholders holding 100% of the Outstanding Principal Balance of the class of Notes affected thereby.

 

The Indenture also contains provisions permitting the Controlling Party to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver shall be conclusive and binding upon all present and future Noteholders of this Note and of any Note issued upon the registration of transfer of, in exchange or in lieu of or upon the refinancing of this Note, whether or not notation of such consent or waiver is made upon this Note.

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

The enforceability against the Issuer of the obligations of the Issuer under the Indenture and under the Notes shall be limited to the Collateral and the Issuer Pledged Collateral.  Once all of the Collateral and the Issuer Pledged Collateral has been realized and applied in 

 

A-5-9

 

accordance with Article III of the Indenture, any outstanding obligations of the Issuer shall be extinguished.  Each of the parties to the Indenture shall take no action against any employee, director, officer or administrator of the Issuer, the Equityholder or the Trustee in relation to the Indenture; provided, that nothing therein shall limit the Issuer (or its permitted successors or assigns, including any party thereto that becomes such a successor or assign) from pursuing claims, if any, against any such Person.  The provisions of Section 12.14 of the Indenture shall survive termination of the Indenture; provided, further, that the foregoing shall not in any way limit, impair or otherwise affect any rights of the Trustee or the Noteholders to proceed against any such Person (a) for intentional and willful fraud or intentional and willful misrepresentations on the part of or by such Person or (b) for the receipt of any distributions or payments to which the Issuer or any successor in interest is entitled, other than distributions expressly permitted pursuant to the Indenture and the other Transaction Documents.

 

Unless the certificate of authentication hereon has been executed by the Trustee whose name appears below by manual or facsimile signature, this Note shall not be entitled to any benefit under the Indenture, or be valid or obligatory for any purpose.

 

A-5-10

 

IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by a duly authorized officer.

 

 

	
Date:   [                         ],   2018
    	
 
    	
TRIPLE ROYALTY SUB LLC
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

This Note is one of the Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 designated above and referred to in the within-mentioned indenture.

 

 

	
Date:   [                         ],   2018
    	
 
    	
U.S. BANK NATIONAL   ASSOCIATION,
    
	
 
    	
 
    	
as   Trustee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Authorized Signatory
    

 

A-5-11

 

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 Issuer with full power of substitution in the premises.

 

	
 
    	
 
    	
 
    
	
Date
    	
 
    	
Signature of Transferor
    

 

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

 

In connection with any transfer of the within-mentioned Note, the undersigned confirms without utilizing any general solicitation or general advertising that:

 

[Check One]

 

o (a)      the within-mentioned Note is being transferred in compliance with the exemption from registration under the Securities Act provided by Rule 144A thereunder

 

o (b)      the within-mentioned Note is being transferred other than in accordance with clause (a) above and documents are being furnished that comply with the conditions of transfer set forth in the within-mentioned Note and the Indenture

 

If neither of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register the within-mentioned Note in the name of any Person other than the Noteholder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.11 of the Indenture shall have been satisfied.

 

 

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

 

A-5-12

 

TO BE COMPLETED BY PURCHASER IF CLAUSE (a) ABOVE IS CHECKED.

 

The undersigned represents and warrants that it is purchasing the within-mentioned Note for its own account or an account with respect to which it exercises sole investment discretion and that each of it and any such account is a “qualified institutional buyer” (within the meaning of Rule 144A) and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Executive Officer
    

 

A-5-13

 

SCHEDULE I

 

TRIPLE ROYALTY SUB LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

No.

 

	
Date
    	
 
    	
Principal Amount
    	
 
    	
Notation Explaining Principal Amount Recorded
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-5-14

 

EXHIBIT B

 

FORM OF CONFIDENTIALITY AGREEMENT

 

Triple Royalty Sub LLC
 c/o Theravance Biopharma US, Inc.
  901 Gateway Boulevard
 South San Francisco, California 94080

 

CONFIDENTIALITY AGREEMENT

 

In connection with our possible interest in the purchase of the Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 (the “Notes”) of Triple Royalty Sub LLC, a Delaware limited liability company (the “Company”) (the “Transaction”), we have requested copies of the Summary of Terms relating to the Notes (the “Summary of Terms”).  In addition to receiving the Summary of Terms, we may also request that you or your directors, officers, managers, members, partners, employees, affiliates, assigns, representatives (including, without limitation, Morgan Stanley & Co. LLC (“Morgan Stanley”) in its capacity as your representative, and all of your other financial advisors, attorneys and accountants), investors, agents or similar persons or entities (collectively, “your Representatives”) furnish us or our directors, officers, managers, members, partners, employees, affiliates, assigns, representatives (including, without limitation, financial advisors, attorneys and accountants), investors, agents or similar persons or entities (collectively, “our Representatives”) with certain information relating to the Company and its affiliates, the Transaction and the assets being contributed and sold to the Company by Theravance Biopharma R&D, Inc., a Cayman Islands exempted company (“Theravance Biopharma R&D”), subject in each case to the confidentiality requirements that exist with third parties in respect of such information.  All such information (whether written, visual or oral, and whether tangible or electronic) furnished on or after the date hereof by you or your Representatives (including, without limitation, the research report (or reports) of L.E.K. Consulting LLC and such other information made available in a dataroom via IntraLinks or otherwise) to us or our Representatives (without regard to whether it is at our request), including, without limitation, the Summary of Terms and any materials containing, based on or derived from any such information (including, without limitation, intellectual property analyses, any financial models or other analyses, compilations, forecasts, studies or other documents based thereon) prepared by us or our Representatives or Morgan Stanley in connection with our or our Representatives’ review of, or our interest in, the Transaction is hereinafter referred to as the “Information.”  The term Information will not, however, include information that we can demonstrate (i) is already known by us at the time that such information is disclosed (unless such information was disclosed to us under a confidentiality agreement or other obligation of confidentiality), (ii) is or thereafter becomes available in the public domain, other than as a result of any breach by us or our Representatives of our obligations hereunder or under any other obligation of confidentiality, (iii) is obtained by us from another source without, to our knowledge after reasonable inquiry, breach of such source’s obligations of confidentiality or (iv) is independently developed by our Representatives who have not had access to the Information.

 

As a condition to receiving the Information, we hereby agree as follows:

 

B-1

 

1.                                      We hereby agree, and agree to cause our Representatives, (i) to keep the Information confidential, (ii) to use the Information solely for the purpose of evaluating, entering into, monitoring or enforcing the Transaction and (iii) not to, without your prior written consent, disclose any Information in any manner whatsoever; provided, however, that we may reveal the Information to (a) our Representatives who need to know the Information for the purpose of evaluating, entering into, monitoring or enforcing the Transaction or (b) governmental authorities or regulatory agencies in order to comply with any applicable law, rule, regulation or legal process or pursuant to requests of governmental authorities or regulatory agencies having oversight over us or our Representatives, and only after compliance with paragraph 3 below, provided, that all of such persons and entities listed in clause (a) above shall agree to keep such Information confidential, and only to use such Information, on terms that are substantially the same as the terms we are subject to herein, and, provided, further, that we shall be wholly responsible for the full compliance of such confidentiality agreement by any of the persons or entities listed in clause (a) above to which we disclosed Information.  Notwithstanding and without limitation of the foregoing, we and our Representatives agree not to reveal Information to advisors who are principally engaged in the business of investment banking, capital markets or securitization of financial assets without the prior written consent of Morgan Stanley in its capacity as one of your Representatives.

 

2.                                      We hereby agree, and agree to cause our Representatives, whether or not the Transaction is consummated, not to (except as required by applicable law, rule, regulation or legal process or pursuant to requests of governmental authorities or regulatory agencies having oversight over us or our Representatives, and only after compliance with paragraph 3 below), without your prior written consent, disclose to any person or entity the fact that the Information or the Transaction exists or has been made available, that we are considering the Transaction, that (if prior to consummation of the Transaction) you are considering the Transaction, or that discussions or negotiations are taking or have taken place concerning the Transaction or any term, condition or other fact relating to the Transaction or such discussions or negotiations, including, without limitation, the status thereof.

 

3.                                      In the event that we or any of our Representatives are required by applicable law, rule, regulation or legal process or pursuant to requests of governmental authorities or regulatory agencies having oversight over us or our Representatives to disclose any of the Information, we agree to notify you promptly (unless such notice is not permitted by applicable law, rule or regulation) so that you may seek, at your own expense (and we will cooperate in good faith and use all commercially reasonable efforts to assist with your efforts to seek), a protective order or other appropriate remedy or, in your sole discretion, waive compliance with the terms of this agreement (this “Confidentiality Agreement”).  In the event that no such protective order or other remedy is obtained, or that you do not waive compliance with the terms of this Confidentiality Agreement, we agree to furnish only that portion of the Information that we are advised by counsel (which may be internal counsel) is legally required and will exercise all commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded the Information.

 

4.                                      If we determine not to proceed with the Transaction or we cease to have an interest arising from the Transaction, we will promptly inform you of that decision or event 

 

B-2

 

and, in that case, and at any time upon your request or the request of any of your Representatives, we and our Representatives agree to (i) promptly deliver to you all copies of the Information in our possession (except as described in the following proviso), (ii) promptly destroy all copies of any written Information (whether in tangible or electronic form, or otherwise) that we and our Representatives have created, including, without limitation, any notes we have taken on any discussions with you or your Representatives, and upon your request such return and destruction shall be certified in writing (including, without limitation, via email) to you by a responsible officer supervising such return and destruction (provided in each case that an appropriate person within our organization may retain one copy of the Information, subject to the provisions of this Confidentiality Agreement, if required to comply with internal record retention policies or regulatory considerations, in which case, regardless of paragraph 16 below, the confidentiality provisions and restrictions on use set forth in this Confidentiality Agreement will continue to apply to such Information for so long as it is retained by such person or any other of our Representatives) and (iii) certify that clauses (i) and (ii) above have been complied with.  Any visual, oral or other Information not returned to you or destroyed in accordance with the preceding sentence will continue to be subject to the terms of this Confidentiality Agreement, regardless of paragraph 16 below.

 

5.                                      We acknowledge that you have not updated, and have no obligation to update, the Summary of Terms in any respect for events, developments or circumstances.  We further acknowledge that neither you nor any of your Representatives, nor any of your or their respective officers, directors, managers, members, partners, employees, agents or controlling persons within the meaning of Section 20 of the U.S. Securities Exchange Act of 1934, as amended, makes any express or implied representation or warranty as to the accuracy or completeness of the Information, and we agree that no such person or entity will have any liability relating to the Information or for any errors therein or omissions therefrom.  We further agree that we are not entitled to rely on the accuracy or completeness of the Information.

 

6.                                      We acknowledge that we are aware of the restrictions imposed by the United States securities laws on the purchase or sale of securities of an issuer or an affiliate or controlling person of the issuer while in possession of material, non-public information and on the communication of such information to any other person or entity.  We represent that we maintain effective internal procedures with respect to maintaining the confidentiality and use of the Information and that we will not use the Information for any purpose in violation of United States securities laws or any other applicable laws.  We further represent that we are a qualified purchaser within the meaning of the U.S. Investment Company Act of 1940, as amended, that is also (i) a qualified institutional buyer (as defined in Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”)), (ii) an institutional accredited investor (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or (iii) a non-U.S. person within the meaning of Regulation S under the Securities Act and acknowledge and agree that, by our purchase of any Notes, we will be deemed to have made the representations, agreements and acknowledgments set forth in the Indenture (the “Indenture”) dated as of November 30, 2018 between the Company, as the issuer, and the initial trustee, transfer agent, paying agent, registrar and calculation agent named therein, relating to the Notes.

 

B-3

 

7.                                      We hereby certify that we are not a Restricted Party.  For purposes of this Confidentiality Agreement, “Restricted Party” means any of Almirall, AstraZeneca, Boehringer Ingelheim, Innoviva, Chiesi, Forest Laboratories, Merck, Mylan, Novartis, Sandoz, Teva and any other pharmaceutical or biotechnology company with a product either being developed or commercialized for the treatment of respiratory disease, and their respective Restricted Party Affiliates; provided, that Theravance Biopharma, Inc. or any of its affiliates shall not be deemed as a Restricted Party. For purposes of this Confidentiality Agreement, a “Restricted Party Affiliate” with respect to any person means any other person, whether de jure or de facto, which directly or indirectly controls, is controlled by, or is under common control with such person for so long as such control exists, where “control” means the decision-making authority as to such other person, or with respect to the investment in the Notes by such other person and, further, where such control shall be presumed to exist where such other 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 the entity.

 

8.                                      We agree that, at any time prior to your consummation of the Transaction, (i) you reserve the right, in your sole discretion, to change the terms of the Transaction at any time without prior notice to us or any other person or entity, to reject any and all proposals or offers made by us or any of our Representatives with regard to the Transaction, and to terminate discussions and negotiations with us at any time and for any reason, and (ii) you will not have any liability to us with respect to the Transaction, whether by virtue of this Confidentiality Agreement, any other written or oral expression with respect to the Transaction or otherwise.

 

9.                                      We acknowledge that remedies at law may be inadequate to protect you against any actual or threatened breach of this Confidentiality Agreement by us or our Representatives, and, without prejudice to any other rights and remedies otherwise available to you, we agree to the granting of injunctive relief in your favor without proof of actual damages or the posting of any bond.

 

10.                               We acknowledge and agree that each of Theravance Biopharma R&D and Morgan Stanley is a third party beneficiary of this Confidentiality Agreement and shall have the right to enforce any provision of this Confidentiality Agreement.

 

11.                               We acknowledge and agree that neither this Confidentiality Agreement nor any disclosure of Information made hereunder by you shall be construed, deemed or interpreted, by implication or otherwise, to vest in us or our Representatives any license or other ownership rights in, to or under any of such Information or other copyrights, intellectual property, know-how, moral rights, trade secrets, trademark rights or other proprietary rights whatsoever.

 

12.                               We agree that no failure or delay by you in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder.

 

13.                               This Confidentiality Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

 

B-4

 

14.                               This Confidentiality Agreement shall be governed by, and construed, interpreted and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflicts of law thereof (other than the provisions of Section 5-1401 of the General Obligations Law of the State of New York).

 

15.                               This Confidentiality Agreement contains the entire agreement between you and us, and supersedes all prior agreements and understandings, whether written or oral, between you and us, concerning the confidentiality and use of the Information, and no modifications of this Confidentiality Agreement or waiver of the terms and conditions hereof will be binding upon you or us, unless approved in writing by each of you and us.

 

16.                               This Confidentiality Agreement will terminate (i) if we do not proceed with the Transaction, 24 months after the date hereof, and (ii) if we do proceed with the Transaction, 24 months from the date we cease to have an interest arising from the Transaction, whether through a sale of our interest, the maturity or repayment of our interest or otherwise.

 

17.                               If we propose to purchase, transfer, sell or otherwise dispose of any of our interest at any time, we agree to (i) abide by any transfer restrictions set forth in the Indenture, (ii) inform any proposed transferee of such interest of any such transfer restrictions, including, without limitation, any requirement that such proposed transferee execute a confidentiality agreement, and (iii) not furnish any Information to such proposed transferee.  We acknowledge that the servicer for the Transaction shall be responsible for the delivery of all Information to any such prospective transferee following execution by such prospective transferee of an appropriate confidentiality agreement.

 

18.                               Notwithstanding anything expressed or implied to the contrary in this Confidentiality Agreement, the Summary of Terms and the documents referred to therein, we, and each of our employees, representatives and agents, may disclose to any and all persons and entities, without limitation of any kind, the tax treatment and the tax structure of the transactions contemplated by the Summary of Terms and the agreements and instruments referred to therein and all materials of any kind (including opinions or other tax analyses) that are provided to us relating to such tax treatment and tax structure; provided, however, that we (and none of our employees, representatives or other agents) shall not disclose any other information that is not relevant to understanding the tax treatment and tax structure of such transactions (including the identity of any party and any information that could lead another to determine the identity of any party) or any other information to the extent that such disclosure could reasonably result in a violation of any federal or state securities law.  For these purposes, the tax treatment of the transactions contemplated by the Summary of Terms and the agreements and instruments referred to therein means the purported or claimed U.S. federal or state tax treatment of such transactions.  Moreover, the tax structure of the transactions contemplated by the Summary of Terms and the agreements and instruments referred to therein includes any fact that may be relevant to understanding the purported or claimed U.S. federal or state tax treatment of such transactions.

 

19.                               This Confidentiality Agreement may be executed by facsimile signature and such facsimile signature shall be deemed an original.  This Confidentiality Agreement may 

 

B-5

 

be executed in one or more counterparts by the parties hereto, and each such counterpart shall be considered an original and all such counterparts shall constitute one and the same instrument.

 

20.                               In the event of any dispute arising hereunder, we agree to submit to the exclusive jurisdiction of courts of the State of New York and of the United States located in the County of New York.  Each of the parties to this Confidentiality Agreement hereby irrevocably waives, to the fullest extent permitted by law, all rights to trial by jury in any action, proceeding or counterclaim (whether based upon contract, tort or otherwise) arising out of or relating to this Confidentiality Agreement.  Any notice by either party to the other pursuant to this Confidentiality Agreement shall be delivered in writing by fax or electronic mail or regular first class mail, in each case in accordance with the information set forth on the signature page hereto.

 

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

B-6

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[Please insert prospective   purchaser’s name on line above]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
Address:
    
	
 
    	
 
    	
Fax Number:
    
	
 
    	
 
    	
Email Address:
    
	
 
    	
 
    	
Date:
    

 

Accepted and agreed as of the date
 first written above:

 

 

	
TRIPLE   ROYALTY SUB LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
Date:
    	
 
    

 

 

Address:  Triple Royalty Sub LLC
 c/o Theravance Biopharma US, Inc.
 901 Gateway Boulevard
 South San Francisco, California 94080
 Attention:  Brett A. Grimaud, [Secretary]

Telephone: (650) 808-3785
 Facsimile: (650) 808-6095
 Email: BGrimaud@theravance.com

 

with copies of all notices to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square 
 New York, New York 10036
 Attention:  Andrew M. Faulkner

Telephone: (212) 735-2853
 Facsimile: (917) 777-2853
 E-Mail:  andrew.faulkner@skadden.com

 

B-7

 

EXHIBIT C

 

COVERAGE OF DISTRIBUTION REPORT

 

(a)                                 Analysis of activity in each Account from the Calculation Date preceding the prior Payment Date (or, with respect to the first Payment Date, from the Closing Date) (the “Preceding Calculation Date”) to the Calculation Date preceding the current Payment Date (the “Current Calculation Date”):

 

(i)                                   Balance on deposit in each Account on the Preceding Calculation Date

(ii)                                Deposits into each Account from but excluding the Preceding Calculation Date to and including the Current Calculation Date

(iii)                             Withdrawals from each Account from but excluding the Preceding Calculation Date to and including the Current Calculation Date, including identification of any payments of Administrative Expenses pursuant to Section 3.6(c) of the Indenture

(iv)                            Balance on deposit in each Account on the Current Calculation Date

 

(b)                                 Amount of (i) interest to be added to the principal balance of the Notes (if any) during the Interest Deferral Period and (ii) voluntary capital contributions (if any) to be transferred from the Collection Account on the current Payment Date pursuant to Section 3.7(b) of the Indenture

 

(c)                                  Payments on the current Payment Date:

 

(i)                                   Taxes, if any

(ii)                                Servicing Fee

(iii)                             Administrative Expense payments (including normal and routine bank fees) payable on the Current Calculation Date

(iv)                            Interest Amount

(v)                               Additional Interest, if any

(vi)                            Principal payments, if any

 

(d)                                 Outstanding Principal Balance:

 

(i)                                   Opening Outstanding Principal Balance

(ii)                                Principal payments, if any, made on the current Payment Date

(iii)                             Closing Outstanding Principal Balance (including to reflect any additions described in clause (b)(i) above)

 

(e)                                  Amount distributed to the Issuer from the Collection Account, if any, with respect to the current Payment Date

 

(f)                                   A withholding obligation may be included

 

C-1

 

(g)                                  Appropriate modifications shall be made to contemplate any Refinancing Notes and/or Subordinated Notes

 

C-2

 

EXHIBIT D

 

UCC FINANCING STATEMENTS

 

1.                                      A Form UCC-1 Financing Statement shall be filed with the Secretary of State of the State of Delaware naming the Issuer as debtor and the Trustee as secured party.

 

D-1

 

EXHIBIT E-1

 

FORM OF TRANSFEREE CERTIFICATE FOR TRANSFERS TO TEMPORARY REGULATION S GLOBAL NOTE

 

U.S. Bank National Association,

      as Trustee

One Federal Street, 3rd Floor

Boston, Massachusetts 02110

Attention: Corporate Trust Services (Triple Royalty Sub LLC)

 

Re:                             Triple Royalty Sub LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

Reference is hereby made to the Indenture, dated as of November 30, 2018 (the “Indenture”), between Triple Royalty Sub LLC, as issuer (the “Issuer”), and U.S. Bank National Association, as initial trustee (the “Trustee”), transfer agent, paying agent, registrar and calculation agent.  Capitalized terms used but not defined herein shall have the meanings assigned to them or incorporated by reference pursuant to Annex A of the Indenture.

 

This letter relates to U.S. $             initial aggregate outstanding principal amount of Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 which are held in the form of an interest in a [Rule 144A Global Note] [IAI Global Note] with DTC (CUSIP (CINS) No. [89679D AA2/89679D AB0]) (the “Notes”) for the benefit of                    [name of transferor] (the “Transferor”) who wishes to effect the transfer of the Notes in exchange for an equivalent beneficial interest in a Temporary Regulation S Global Note for the benefit of                    [name of transferee] (the “Transferee”).

 

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with (i) the applicable transfer restrictions set forth in the Indenture and (ii) Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “Securities Act”), and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

 

In addition, the Transferor hereby represents, warrants and covenants for the benefit of the Issuer, Theravance Biopharma R&D, the Trustee, the Registrar, the Transfer Agent, the Placement Agent and their respective Affiliates that:

 

1.                        the offer of the Notes was not made to a Person in the United States;

 

2.                        at the time the buy order was originated, the Transferee was outside the United States;

 

3.                        no directed selling efforts have been made in contravention of the requirements of Rule 903 or 904 of Regulation S, as applicable;

 

4.                        the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act;

 

E-1-1

 

5.                        the Transferee is not a U.S. Person as defined in Regulation S;

 

6.                        if the sale is made during a restricted period and the provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1) of Regulation S are applicable thereto, the Transferor confirms that such sale has been made in accordance with the applicable provisions of Rule 903(b)(2) or (3) or Rule 904(b)(1), as the case may be;

 

7.                        the Transferee is not a Restricted Party;

 

8.                        the Transferee is a Qualified Purchaser; and

 

9.                        the Transferee, and any account on behalf of which the Transferee is purchasing an interest in the Notes, will, with respect to the date of purchase, be deemed to represent and warrant that (i) it is not a Plan and is not acting on behalf of a Plan or using Plan Assets to purchase such Notes or (ii) it is a Plan or is acting on behalf of a Plan or using Plan Assets to purchase such Notes but the purchase and holding of such Notes will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code by reason of the application of one or more statutory or administrative exemptions or otherwise and will not constitute or result in a violation of any Similar Laws.

 

The Transferor understands that the Issuer, Theravance Biopharma R&D, the Trustee, the Registrar, the Transfer Agent, the Placement Agent and their respective Affiliates will rely upon the accuracy and truth of the foregoing representations, and the Transferor hereby consents to such reliance.

 

 

	
 
    	
[Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
Dated:                               ,
    	
 
    

 

	
Taxpayer   Identification Number:
    	
 
    	
Address for   Notices to Transferee:
    
	
Wire Instructions   for Payments to Transferee:
    	
 
    	
 
    
	
Bank:
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    
	
Bank ABA #:
    	
 
    	
Tel:
    
	
Account No.:
    	
 
    	
Fax:
    
	
FAO:
    	
 
    	
Attn.:
    
	
Attention:
    	
 
    	
 
    

 

Registered Name (if Nominee) of Transferee:

 

E-1-2

 

cc:           Triple Royalty Sub LLC

 

E-1-3

 

EXHIBIT E-2

 

FORM OF TRANSFEREE CERTIFICATE FOR TRANSFERS TO PERMANENT REGULATION S GLOBAL NOTE

 

U.S. Bank National Association,
       as Trustee
 One Federal Street, 3rd Floor

Boston, Massachusetts 02110

Attention: Corporate Trust Services (Triple Royalty Sub LLC)

 

Re:                             Triple Royalty Sub LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

Reference is hereby made to the Indenture, dated as of November 30, 2018 (the “Indenture”), between Triple Royalty Sub LLC, as issuer (the “Issuer”), and U.S. Bank National Association, as initial trustee (the “Trustee”), transfer agent, paying agent, registrar and calculation agent.  Capitalized terms used but not defined herein shall have the meanings assigned to them or incorporated by reference pursuant to Annex A of the Indenture.

 

This letter relates to U.S. $               initial aggregate outstanding principal amount of Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 which are held in the form of an interest in a [Rule 144A Global Note] [IAI Global Note] [Temporary Regulation S Global Note] with DTC (CUSIP (CINS) No. [89679D AA2/89679D AB0/U8967H AA1]) (the “Notes”)  for the benefit of                    [name of transferor] (the “Transferor”) who wishes to effect the transfer of the Notes in exchange for an equivalent beneficial interest in a Permanent Regulation S Global Note for the benefit of                    [name of transferee] (the “Transferee”).

 

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such Notes are being transferred  in accordance with (i) the applicable transfer restrictions set forth in the Indenture and (ii) Regulation S (“Regulation S”) under the United States Securities Act of 1933, as amended (the “Securities Act”), and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

 

In addition, the Transferor hereby represents, warrants and covenants for the benefit of the Issuer, Theravance Biopharma R&D, the Trustee, the Registrar, the Transfer Agent, the Placement Agent and their respective Affiliates that:

 

1.                        the offer of the Notes was not made to a Person in the United States;

 

2.                        at the time the buy order was originated, the Transferee was outside the United States or the Transferor and any person acting on its behalf reasonably believed that the Transferee was outside the United States;

 

3.                        no directed selling efforts have been made in contravention of the requirements of Rule 903 or 904 of Regulation S, as applicable;

 

E-2-1

 

4.                        the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act;

 

5.                        the Transferee is not a “U.S. Person” as defined in Regulation S;

 

6.                        the Transferee is a Qualified Purchaser;

 

7.                        the Transferee is not a Restricted Party; and

 

8.                        the Transferee, and any account on behalf of which the Transferee is purchasing an interest in the Notes, will, with respect to the date of purchase, be deemed to have represented and warranted that either (i) it is not a Plan and is not acting on behalf of a Plan or using Plan Assets to purchase such Notes or (ii) it is a Plan or is acting on behalf of a Plan or using Plan Assets to purchase such Notes but the purchase and holding of such Notes will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code by reason of the application of one or more statutory or administrative exemptions or otherwise and will not constitute or result in a violation of any Similar Laws.

 

The Transferor understands that the Issuer, Theravance Biopharma R&D, the Trustee, the Registrar, the Transfer Agent, the Placement Agent, and their respective Affiliates will rely upon the accuracy and truth of the foregoing representations, and the Transferor hereby consents to such reliance.

 

 

	
 
    	
[Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
Dated:                             ,
    	
 
    

 

	
Taxpayer   Identification Number:
    	
 
    	
Address for   Notices to Transferee:
    
	
Wire Instructions   for Payments to Transferee:
    	
 
    	
 
    
	
Bank:
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    
	
Bank ABA #:
    	
 
    	
Tel:
    
	
Account No.:
    	
 
    	
Fax:
    
	
FAO:
    	
 
    	
Attn.:
    
	
Attention:
    	
 
    	
 
    

 

Registered Name (if Nominee) of Transferee:

 

cc:           Triple Royalty Sub LLC

 

E-2-2

 

EXHIBIT E-3

 

FORM OF TRANSFEREE CERTIFICATE FOR TRANSFERS TO RULE 144A GLOBAL NOTE

 

U.S. Bank National Association,
       as Trustee
 One Federal Street, 3rd Floor

Boston, Massachusetts 02110

Attention: Corporate Trust Services (Triple Royalty Sub LLC)

 

Re:                             Triple Royalty Sub LLC
 Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

 

Reference is hereby made to the Indenture, dated as of November 30, 2018 (the “Indenture”), between Triple Royalty Sub LLC, as issuer (the “Issuer”), and U.S. Bank National Association, as initial trustee (the “Trustee”), transfer agent, paying agent, register agent and calculation agent.  Capitalized terms used but not defined herein shall have the meanings assigned to them or incorporated by reference pursuant to Annex A of the Indenture.

 

This letter relates to U.S. $          initial aggregate outstanding principal amount of Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 which are held in the form of an interest in a [Temporary Regulation S Global Note] [Permanent Regulation S Global Note] [IAI Global Note] with DTC (CUSIP (CINS) No. [U8967H AA1/89679D AB0]) (the “Notes”) for the benefit of                    [name of transferor] (the “Transferor”) who wishes to effect the transfer of the Notes in exchange for an equivalent beneficial interest in a Rule 144A Global Note for the benefit of                    [name of transferee] (the “Transferee”).

 

In connection with such request, and in respect of such Notes, the Transferor does hereby certify that such Notes are being transferred in accordance with (i) the applicable transfer restrictions set forth in the Indenture and (ii) Rule 144A (“Rule 144A”) under the United States Securities Act of 1933, as amended, and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction, and that the Transferee is purchasing the Notes for its own account or one or more accounts with respect to which the Transferee exercises sole investment discretion, and, unless the Transferee is the Issuer or any Affiliate of the Issuer, the Transferee and any such account (A) is both a QIB and a QP, (B) is not a Restricted Party, (C) is aware that the sale to it is being made in reliance on Rule 144A, (D) is acquiring such Notes for its own account or for the account of a QIB (who is also a QP) over which it exercises sole investment discretion, (E) is not (and any such account is not) a pension, profit-sharing or other retirement trust fund or plan in which the partners, beneficiaries or participants, as applicable, may designate the particular investments to be made, (F) is not (x) a broker dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on a discretionary basis not less than U.S. $25,000,000 in securities of issuers that are not affiliated to it, (y) a participant-directed employee plan, such as a 401(k) plan, or any other type of plan referred to in 

 

E-3-1

 

paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or (z) a trust fund referred to in paragraph (a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, unless investment decisions with respect to the plan are made solely by the fiduciary, trustee or sponsor of such plan, (G) was not formed or capitalized for the specific purpose of investing in the Issuer (except where each beneficial holder is both a QIB and a QP), (H) is not a (w) corporation, (x) partnership, (y) common trust fund or (z) special trust, pension fund or retirement plan in which the shareholders, equity owners, partners, beneficiaries, beneficial holders or participants, as applicable, may designate the particular investments to be made, (I) if formed on or before April 30, 1996, is not an investment company that relies on the exclusion from the definition of “investment company” provided by Section 3(c)(7) of the Investment Company Act (or a foreign investment company under Section 7(d) thereof relying on Section 3(c)(7) with respect to those of its holders that are U.S. Persons), unless, with respect to its treatment as a QP, it has, in the manner required by Section 2(a)(51)(C) of the Investment Company Act and the rules and regulations thereunder, received the consent of its beneficial holders that acquired their interests on or before April 30, 1996, and (J) is not an entity that, immediately subsequent to its purchase or other acquisition of an interest in the Notes, will have invested more than 40% of its assets in beneficial interests in the Notes and/or in other securities of the Issuer (unless all of the beneficial holders of such entity’s securities are QPs).

 

Further, the Transferor hereby certifies, represents and warrants that the Transferee, and any account on behalf of which the Transferee is purchasing an interest in the Notes, will, with respect to the date of purchase, be deemed to represent and warrant that (i) it is not a Plan and is not acting on behalf of a Plan or using Plan Assets to purchase such Notes or (ii) it is a Plan or is acting on behalf of a Plan or using Plan Assets to purchase such Notes but the purchase and holding of such Notes will not constitute or result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code by reason of the application of one or more statutory or administrative exemptions or otherwise and will not constitute or result in a violation of any Similar Laws.

 

The Transferor understands that the Issuer, Theravance Biopharma R&D, the Trustee, the Registrar, the Transfer Agent, the Placement Agent and their respective Affiliates will rely upon the accuracy and truth of the foregoing representations, and the Transferor hereby consents to such reliance.

 

 

	
 
    	
[Name of Transferor]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
Dated:                               ,
    	
 
    

 

E-3-2

 

	
Taxpayer Identification Number:
    	
 
    	
Address for   Notices to Transferee:
    
	
Wire Instructions for Payments to Transferee:
    	
 
    	
 
    
	
Bank:
    	
 
    	
 
    
	
Address:
    	
 
    	
 
    
	
Bank ABA #:
    	
 
    	
Tel:
    
	
Account No.:
    	
 
    	
Fax:
    
	
FAO:
    	
 
    	
Attn.:
    
	
Attention:
    	
 
    	
 
    

 

Registered Name (if Nominee) of the Transferee:

 

cc:           Triple Royalty Sub LLC

 

E-3-3

 

EXHIBIT F

 

FORM OF PORTFOLIO INTEREST CERTIFICATE

 

                                                      hereby certifies that:

 

1.                                      It is (one must be checked):

 

(1)                                 o  a natural individual person;

 

(2)                                 o  treated as a corporation for U.S. federal income tax purposes;

 

(3)                                 o  disregarded for U.S. federal income tax purposes (in which case a copy of this certificate is completed and signed by its sole beneficial holder); or

 

(4)                                 o  treated as a partnership for U.S. federal income tax purposes (in which case each partner also has completed as to itself and signed a copy of this certificate and an appropriate IRS Form W-8, a copy of each of which is attached, or, if applicable, has completed as to itself and signed an IRS Form W-9, a copy of which is attached).

 

2.                                      It is not a bank, as such term is used in Section 881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

3.                                      It is not a 10-percent shareholder of Triple Royalty Sub LLC (the “Issuer”) or Theravance Biopharma R&D, Inc. (the “Equityholder”) within the meaning of Section 871(h)(3) of the Code or Section 881(c)(3)(B) of the Code.

 

4.                                      It is not a controlled foreign corporation that is related to the Issuer or the Equityholder within the meaning of Section 881(c)(3)(C) of the Code.

 

5.                                      Amounts received by it on the Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033 are not effectively connected with its conduct of a trade or business in the United States.

 

 

	
 
    	
 
    
	
 
    	
[Fill in name of holder]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
Date:
    

 

F-1

 

EXHIBIT G

 

FORM OF IMPORTANT SECTION 3(c)(7) NOTICE

 

TRIPLE ROYALTY SUB LLC

 

DATE:                                                          [   ], 20[   ]

 

TO:                                                                           All Clearing Agency Participants

 

FROM:                                                       Triple Royalty Sub LLC (the “Issuer”)

 

Re.:                                                                          Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033

(Rule 144A CUSIP No. 89679D AA2; Temporary Regulation S CUSIP (CINS) No. U8967H AA1; Permanent Regulation S CUSIP (CINS) No. U8967H AA1; IAI CUSIP No. 89679D AB0)

(collectively, the “Notes”)

 

The Issuer referred to above is putting the participants in the Clearing Agency on notice that they are required to follow these purchase and transfer restrictions with regard to the above-referenced Notes.

 

In order to qualify for the exemption provided by Section 3(c)(7) under the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the exemption provided by Rule 144A (“Rule 144A”) under the Securities Act of 1933, as amended (the “Securities Act”), offers, sales and resales of the above-referenced Notes may only be made to persons that are (i) “qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A that are also “qualified purchasers” (“QPs”) within the meaning of the Investment Company Act, and (ii) not U.S. Persons (“U.S. Persons”) as defined in Regulation S (“Regulation S”) under the Securities Act (“Non-U.S. Persons”) in offshore transactions in accordance with Regulation S that are also QPs.

 

Each purchaser of the Notes that is acquiring an interest in the Notes pursuant to Rule 144A represents to and agrees with the Issuer that, unless the purchaser is the Issuer or any Affiliate of the Issuer, the purchaser (1) is both a QIB and a QP, (2) is not a Restricted Party, (3) is aware that the sale to it is being made in reliance on Rule 144A, (4) is acquiring such Notes for its own account or for the account of a QIB (who is also a QP) over which it exercises sole investment discretion, (5) is not (and any such account is not) a pension, profit-sharing or other retirement trust fund or plan in which the partners, beneficiaries or participants, as applicable, may designate the particular investments to be made, (6) is not (x) a broker dealer of the type described in paragraph (a)(1)(ii) of Rule 144A unless it owns and invests on a discretionary basis not less than U.S. $25,000,000 in securities of issuers that are not affiliated to it, (y) a participant-directed employee plan, such as a 401(k) plan, or any other type of plan referred to in paragraph (a)(1)(i)(D) or (a)(1)(i)(E) of Rule 144A, or (z) a trust fund referred to in paragraph 

 

G-1

 

(a)(1)(i)(F) of Rule 144A that holds the assets of such a plan, unless investment decisions with respect to the plan are made solely by the fiduciary, trustee or sponsor of such plan, (7) was not formed or capitalized for the specific purpose of investing in the Issuer (except where each beneficial holder is both a QIB and a QP), (8) is not a (w) corporation, (x) partnership, (y) common trust fund or (z) special trust, pension fund or retirement plan in which the shareholders, equity owners, partners, beneficiaries, beneficial holders or participants, as applicable, may designate the particular investments to be made, (9) if formed on or before April 30, 1996, is not an investment company that relies on the exclusion from the definition of “investment company” provided by Section 3(c)(7) of the Investment Company Act (or a foreign investment company under Section 7(d) thereof relying on Section 3(c)(7) with respect to those of its holders that are U.S. Persons), unless, with respect to its treatment as a QP, it has, in the manner required by Section 2(a)(51)(C) of the Investment Company Act and the rules and regulations thereunder, received the consent of its beneficial holders that acquired their interests on or before April 30, 1996, and (10) is not an entity that, immediately subsequent to its purchase or other acquisition of an interest in the Notes, will have invested more than 40% of its assets in beneficial interests in the Notes and/or in other securities of the Issuer (unless all of the beneficial holders of such entity’s securities are QPs).

 

Each purchaser of the Notes that is acquiring an interest in the Notes pursuant to Regulation S (i) represents to and agrees with the Issuer that the purchaser is (A) not a U.S. Person and is purchasing the Notes outside the United States in an offshore transaction in reliance on Regulation S and (B) a QP and (ii) acknowledges that the Issuer has not been registered under the Investment Company Act and the Notes have not been registered under the Securities Act and represents to and agrees with the Issuer that, for so long as the Notes are outstanding, it will not offer, resell, pledge or otherwise transfer the Notes in the United States or to a U.S. Person except to a QIB that is also a QP in a transaction meeting the requirements of Rule 144A.  Each purchaser further understands that the Notes will bear a legend with respect to such transfer restrictions.

 

The Indenture, dated as of November 30, 2018, entered into between the Issuer and U.S. Bank National Association, as initial trustee, transfer agent, paying agent, registrar and calculation agent permits the Issuer to compel any non-permitted holder of an interest in the Notes to sell its interest in the Notes or may sell such interest in the Notes on behalf of such owner.  In connection therewith, the Indenture permits the Issuer to require that the holder of (i) any interest in a Rule 144A Global Note or a holder who was sold such interest who is determined not to have been both a Qualified Institutional Buyer and a Qualified Purchaser at the time of acquisition of such interest in a Rule 144A Global Note, in each case other than the Issuer or any Affiliate of the Issuer, or who is determined to be a Restricted Party, (ii) any interest in a Regulation S Global Note held by a holder that is a U.S. Person, a holder that is not a Qualified Purchaser or a holder who was sold such interest in the United States, in each case at the time of the acquisition of such interest, in each case other than the Issuer or any Affiliate of the Issuer, or who is determined to be a Restricted Party, or (iii) any interest in a Global Note to a Person that otherwise breaches any other ERISA-related representations, warranties or covenants deemed or required to be made by a Person holding an interest in such Global Note pursuant to this Indenture, to sell such interest to a transferee that is permitted under the Indenture and, if the 

 

G-2

 

holder does not comply with such demand within thirty (30) days thereof, the Issuer may sell such holder’s interest in the applicable Global Note on such terms as the Issuer may choose.

 

The Issuer will request that the restrictions on transfer required by it (outlined above) will be reflected under the notation “3c7” in, but not limited to, the Clearing Agency’s user manual and in upcoming editions of the Clearing Agency’s Reference Directory.

 

 

	
 
    	
TRIPLE ROYALTY SUB LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

G-3

 

EXHIBIT H

 

FORM OF NOTEHOLDER CERTIFICATION

 

U.S. Bank National Association

One Federal Street, 3rd Floor

Boston, Massachusetts 02110

Attention: Corporate Trust Services (re: Triple Royalty Sub LLC)

 

Pursuant to Section 2.19(c) or Section 12.18 of the Indenture, dated as of November 30, 2018, by and between Triple Royalty Sub LLC, a Delaware limited liability company, and U.S. Bank National Association, a national banking association, as initial trustee, transfer agent, paying agent, registrar and calculation agent (the “Indenture”) as a prerequisite to the exercise of the voting rights or remedial or other rights assigned to the undersigned under the Indenture and the other Transaction Documents (which in the case of the other Transaction Documents shall be as a third party beneficiary to such Transaction Documents), the undersigned hereby certifies and agrees to the following conditions.  Capitalized terms used herein but not otherwise defined herein shall have the respective meanings ascribed thereto in Annex A to the Indenture.

 

1.           The undersigned is a Noteholder or Beneficial Holder of Triple PhaRMASM 9.0% Fixed Rate Term Notes due 2033.

 

2.           The undersigned is not a Restricted Party or otherwise a Non-Permitted Holder.

 

IN WITNESS WHEREOF, the undersigned has caused its name to be signed hereto by its duly authorized officer.

 

	
[Name of Noteholder or Beneficial Holder]
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
Date:
    	
 
    
	
 
    	
Name:
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

H-1

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