PURCHASE AGREEMENT dated April 30, 2018 among VIVUS, INC. and THE PURCHASERS NAMED HEREIN 10.375% SENIOR SECURED NOTES DUE 2024

Exhibit 10.3

PURCHASE AGREEMENT

dated April 30, 2018

among

VIVUS, INC.

and

THE PURCHASERS  NAMED HEREIN

10.375%  SENIOR SECURED NOTES DUE 2024

 

 

 

Table of Contents

Page

 

 

 

PURCHASE AGREEMENT

April 30, 2018

To the Purchasers  named in Schedule 1

Ladies and Gentlemen:

VIVUS, Inc.,  a  Delaware corporation (the  “Issuer”),  hereby covenants  and agrees  with you as follows:

ARTICLE I

INTRODUCTORY

Section 1.1       Introductory. The Issuer proposes, subject to the terms and conditions stated herein, to issue and sell to the purchasers  named in Schedule 1  (each a  “Purchaser”  and, collectively, the  “Purchasers”) (a) on the Initial Closing Date, the Original Notes and the Warrants, and (b) on the Subsequent Closing Date, the Additional Notes. The principal amounts  of Notes to be purchased by the Purchasers  pursuant to this Purchase Agreement, and the number of shares of the Issuer’s Common Stock that may be purchased pursuant to the Warrants, are set forth opposite the Purchasers’  names  in Schedule 1. The Notes to be sold to the Purchasers are to be issued on the applicable Closing Date pursuant to, and subject to the terms and conditions of, the Indenture.

The Notes,  the Guarantees and the Warrants will be offered and sold to the Purchasers in transactions exempt from or not subject to the registration requirements of the Securities Act, in reliance upon exemptions from registration thereunder provided by Section 4(a)(2) of the Securities Act or Regulation D of the Securities Act or outside of the United States in reliance upon Regulation S under the Securities Act.

ARTICLE II

RULES OF CONSTRUCTION AND DEFINED TERMS

Section 2.1      Rules of Construction and Defined Terms.  The rules of construction set forth in Annex A shall apply to this Purchase Agreement and are hereby incorporated by reference into this Purchase Agreement as if set forth fully in this Purchase Agreement. Capitalized terms used but not otherwise defined in this Purchase Agreement shall have the respective meanings given to such terms in Annex A, which is hereby incorporated by reference into this Purchase Agreement as if set forth fully in this Purchase Agreement.

ARTICLE III

SALE AND PURCHASE OF NOTES AND WARRANTS; CLOSINGS; ALLOCATION OF PURCHASE PRICE

Section 3.1      Closings.  The closing of the purchase and sale of the Original Notes and the Warrants shall be at or before 10:00 a.m. New York City time on the Business Day after all of the conditions to closing specified in Article VI are either satisfied or waived (other than

 

conditions that, by their nature, are to be satisfied on the day of such closing) (the  “Initial Closing Date”), or such other day as determined by mutual agreement of the parties hereto.

Section 3.2       Sale and Purchase of Notes and Warrants; Closings. On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Purchase Agreement and the Indenture, the Issuer will issue and sell to each Purchaser, and each Purchaser will purchase, (a) on the Initial Closing Date, the principal amount of Original Notes, and a  Warrant to purchase the number of shares of Common Stock of the Issuer set forth opposite such Purchaser’s name in Schedule 1, and (b) on a date selected by the Issuer in accordance with Section 2.01(c) of the Indenture (the  “Subsequent Closing Date”)  and subject to the conditions set forth herein and therein, the principal amount of Additional Notes set forth opposite such Purchaser’s name in Schedule 1. It is acknowledged and agreed that Additional Notes shall not be issued, and the Subsequent Closing Date shall not occur, if the conditions set forth in Section 2.01(c) of the Indenture (without giving effect to any amendments thereof after the Initial Closing Date) are not capable of being satisfied.  Each Purchaser will purchase the applicable principal amount of Original Notes,  and the Warrants to purchase the number of shares of Common Stock of the Issuer,  set forth in Schedule 1 on the Initial Closing Date at a purchase price equal to 99% of the principal amount of the Original Notes (the  “Initial Closing Purchase Price”), and each Purchaser will purchase the applicable principal amount of Additional Notes set forth in Schedule 1 on the Subsequent Closing Date at a purchase price equal to 100% of the principal amount of such Additional Notes, plus accrued and unpaid interest on such Additional Notes from the Initial Closing Date or, if interest has already been paid on the Original Notes, from the date interest was most recently paid on the Original Notes to but excluding the Subsequent Closing Date (but, as to such interest, only to the extent such Additional Notes have the same CUSIP number as the Original Notes) (the  “Subsequent Closing Purchase Price”  and, collectively with the Initial Closing Purchase Price, the  “Purchase Price”). No Purchaser shall be required to purchase any of the Notes or the Warrants except upon satisfaction or waiver of the respective terms and conditions hereunder.

On the applicable Closing Date, the Issuer will deliver one or more Global Securities  for the account of DTC, as well as any Definitive Securities to the relevant Purchasers, evidencing the aggregate principal amount of Notes to be acquired by all Purchasers pursuant to this Purchase Agreement on such Closing Date,  against payment by each such Purchaser of its respective portion of the applicable aggregate Purchase Price for its beneficial interest therein by wire transfer of immediately available funds to an account held at U.S. Bank National Association identified in writing to the Purchasers at least two Business Days prior to the intended funding date (which funds, in the case of the Original Notes, shall be available on the Business Day immediately prior to the Initial Closing Date). On the Initial Closing Date, the Issuer will deliver to each Purchaser a Warrant dated the Initial Closing Date and registered in the name of such Purchaser, evidencing the right of such Purchaser to purchase the number of shares of the Issuer’s Common Stock set forth opposite such Purchaser’s name on Schedule 1.  The Issuer shall cause U.S. Bank National Association, as custodian under the Custodian Agreement (the “Custodian”), to hold all such funds in respect of the Initial Closing Date in trust for the Purchasers pursuant to the Custodian Agreement pending completion of the applicable closing of the transactions contemplated by this Purchase Agreement. The Issuer shall cause U.S. Bank National Association, as trustee under the Indenture (the  “Trustee”), to hold all such funds in respect of the Subsequent Closing Date in trust for the Purchasers pending completion of the

 

applicable closing of the transactions contemplated by this Purchase Agreement.  Upon receipt by the Custodian or the Trustee, as the case may be, of the applicable Purchase Price and the satisfaction of the applicable conditions to closing set forth in Article VI in respect of the related Closing Date,  the Issuer shall cause the Custodian or the Trustee, as the case may be, to disburse the applicable Purchase Price in accordance with the Custodian Agreement (in the case of the Initial Closing Date) or written instructions provided by the Issuer to the Trustee (in the case of the Subsequent Closing Date). If, in the case of the Subsequent Closing Date, the closing of the transactions contemplated by this Purchase Agreement shall not otherwise be capable of being consummated by 5:00 p.m. (New York City time) on the Subsequent Closing Date, then the Trustee shall return, and the Issuer shall cause the Trustee to return, such portion of the applicable Purchase Price to such Purchaser prior to the close of business on the Subsequent Closing Date (or such later time as may be mutually agreed by the parties hereto) or as soon thereafter as reasonably practicable, in which case such Purchaser shall, at its election, be relieved of all obligations (other than confidentiality obligations) under this Purchase Agreement in respect of such Subsequent Closing Date;  provided, that the failure to close such transactions shall not be due to the breach of any of the provisions of this Purchase Agreement by any Purchaser or the failure of any Purchaser (or, in the case of Section 6.3, special counsel to the Purchasers) to satisfy any condition to closing applicable to it.

Section 3.3       Allocation of Purchase Price. The Issuer and the Purchasers  hereby acknowledge and agree that the Original Notes and the Warrants to be issued to the Purchasers  on the Initial Closing Date constitute an  “investment unit”  for purposes of Section 1273(c)(2) of the Code. In accordance with Section 1273(b)(2) of the Code and Section 1273(c)(2)(A) of the Code, the issue price of the investment unit shall be 99% of the principal amount of such Original Notes, and such issue price shall be allocated between such Original Notes and such Warrant based on their relative fair market values as of the issue date of such investment unit, as required by Section 1273(c)(2)(B) of the Code and U.S. Treasury Regulations Section 1.1273-2(h)(1).  On or prior to the Initial Closing Date, the Issuer shall provide its fair market valuation of the Warrants to the Purchasers, based on a Black-Scholes valuation and its determination of the issue price of the Original Notes and purchase price of the Warrants as required by the previous sentence. The Issuer and the Purchasers  agree to prepare their respective U.S. federal income tax returns, including statements and reports related thereto, as the case may be, in a manner consistent with the foregoing determination, to the extent such returns, statements and reports are required to be filed.

ARTICLE IV

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF PURCHASERS

Each Purchaser agrees and acknowledges that the Obligors,  counsel to the Obligors and counsel to the Purchasers may rely upon the accuracy of and performance of obligations under the representations, warranties and agreements of such Purchaser contained in this Article IV.

Section 4.1      Purchase for Investment and Restrictions on Resales.  Each Purchaser:

(a)    acknowledges that (i) none of the Notes,  the Warrants or the Guarantees have been or will be registered under the Securities Act or the Laws of any U.S. state or other jurisdiction relating to securities matters and (ii) neither the Notes nor the Warrants may be

 

offered, sold, pledged or otherwise transferred except as set forth in the Transaction Documents and the legend regarding transfers on the Notes;

(b)   agrees that, if it should resell or otherwise transfer the Notes or the Warrants, in whole or in part, it will do so only pursuant to an exemption from, or in a transaction not subject to, registration under the Securities Act, the Laws of any applicable state or other jurisdiction relating to securities matters and in accordance with the restrictions and requirements of the provisions of the Transaction Documents and the legend regarding transfers on the Notes and only to a Person whom it reasonably believes, at the time any buy order for such Notes or Warrants is originated, is (i) the Issuer or a Subsidiary of the Issuer, (ii) for so long as such Notes or Warrants are eligible for resale pursuant to Rule 144A, a QIB that purchases for its own account or for the account of a QIB,  to which notice is given that the transfer is being made in reliance on Rule 144A, (iii) a Person outside the United States in an offshore transaction in compliance with Rule 903 or 904 of Regulation S (if available) or (iv) an Accredited Investor that is purchasing such Notes or Warrants for its own account or for the account of an Accredited Investor for investment purposes and not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act, in each case unless consented to by the Issuer in writing;

(c)    acknowledges the restrictions and requirements contained in the Transaction Documents applicable to transfers of the Notes and Warrants and the legend regarding transfers on the Notes and agrees that it will only offer or sell the Notes and the Warrants in accordance with such restrictions and requirements; and

(d)   represents that it is purchasing the Notes and the Warrants for investment purposes and not with a view to resale or distribution thereof in contravention of the requirements of the Securities Act; however, such Purchaser reserves the right to sell the Notes or the Warrants at any time in accordance with applicable Laws, the restrictions and requirements contained in the Transaction Documents applicable to transfer of the Notes and the Warrants, the legend regarding transfer of the Notes and its investment objectives.

Section 4.2      Purchaser Status.  Each Purchaser represents and warrants that, as of the date hereof, it is (a) a QIB and is purchasing the Notes and the Warrants for its own account or for the account of a QIB, (b) a Person outside the United States purchasing the Notes and the Warrants in an “offshore transaction”  in compliance with Regulation S or (c) an Accredited Investor.

Section 4.3      Source of Funds; ERISA Matters.

(a)    Each Purchaser represents, warrants and covenants that at least one of the following statements is an accurate representation as to each source of funds (a  “Source”) to be used by such Purchaser to pay the purchase price of any Notes  or Warrants to be purchased by such Purchaser under the Transaction Documents and with respect to its holding of such Notes  or such Warrants:

(i)         the Source either (A) does not and will not include Plan Assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA,

 

or (B) includes and will include only assets that are not considered Plan Assets by reason of being held in a separate account of an insurance company that is maintained solely in connection with fixed contractual obligations of the insurance company under which the amounts payable,  or credited,  to the plan and to any participant or beneficiary of the plan (including an annuitant) are not affected in any manner by the investment performance of the separate account;

(ii)       the Source is a governmental plan; or

(iii)      the Source does include Plan Assets of an employee benefit plan subject to ERISA, but the use of such Plan Assets to purchase and hold one or more Notes or Warrants will not constitute a non-exempt prohibited transaction within the meaning of Section 406 or 407 of ERISA or Section 4975 of the Code, and one of the following applies:

(w)       (A) the Source is an  “insurance company general account”  within the meaning of United States Department of Labor Prohibited Transaction Exemption (“PTE”) 95-60 (issued July 12, 1995, as subsequently amended), (B) there is no employee benefit plan, treating as a single plan, all plans maintained by the same employer or employee organization, with respect to which the amount of the general account reserves and liabilities for all contracts held by or on behalf of such plan exceeds 10% of the total reserves and liabilities of such general account (exclusive of separate account liabilities) plus surplus, as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile,  and (C) the purchase and holding of Notes or Warrants is exempt under the provisions of PTE 95-60;

(x)        the Source is either (A) an insurance company pooled separate account, within the meaning of ▇▇▇ ▇▇-▇ (▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇), ▇▇ (▇) a bank collective investment fund, within the meaning of PTE 91-38 (issued July 12, 1991, as subsequently amended), and,  except as disclosed by such Purchaser to the Issuer in writing pursuant to this clause (x), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund, and the purchase and holding of Notes or Warrants is covered by either PTE 90-1 or PTE 91-38, as applicable;

(y)        the Source constitutes assets of an  “investment fund”  (within the meaning of Part VI of the QPAM Exemption) managed by a  “qualified professional asset manager”  or  “QPAM”  (within the meaning of Part VI of the QPAM Exemption), and the conditions of Part I of the QPAM Exemption are satisfied; or

(z)        the Source constitutes assets of a  “plan(s)”  (within the meaning of Part IV of PTE 96-23 (the  “INHAM Exemption”)) managed

 

by an  “in-house asset manager”  or  “INHAM”  (within the meaning of Part IV of the INHAM Exemption), and the conditions of Part I of the INHAM Exemption are satisfied.

As used in this Section 4.3(a), the terms  “employee benefit plan”,  “governmental plan”  and  “separate account”  shall have the respective meanings assigned to such terms in Section 3 of ERISA.

(b)   Each Purchaser represents, warrants and covenants that, if any Source to be used by such Purchaser to pay the purchase price of any Notes  or Warrants under the Transaction Documents consists of assets of a benefit plan that is not subject to ERISA, either (i) such benefit plan is not a governmental plan, non-U.S. plan (as described in Section 4(b) of ERISA), church plan or other plan subject to Law that is substantially similar to Section 406 or 407 of ERISA or Section 4975 of the Code (“Similar Law”) or (ii) its purchase and holding of Notes and Warrants will not constitute a violation of Similar Law.

Section 4.4      Due Diligence.  Each Purchaser  acknowledges that, prior to the Initial Closing Date,  (a)  it has made, either alone or together with its advisors, such separate and independent investigation of the Obligors and their respective businesses, financial condition, prospects and managements  as such Purchaser deems to be, or such advisors have advised to be, necessary or advisable in connection with the purchase of the Notes and the Warrants pursuant to the transactions contemplated by this Purchase Agreement, (b) it and its advisors have received all information and data that it and such advisors reasonably believe to be necessary in order to reach an informed decision as to the advisability of the purchase of the Notes and the Warrants pursuant to the transactions contemplated by this Purchase Agreement and has had adequate time to review all such materials, (c) it understands the nature of the potential risks and potential rewards of the purchase of the Notes and the Warrants, (d) it is a sophisticated investor with investment experience and has the ability to bear complete loss of its investment,  whether as a result of an Event of Default on the Notes or any insolvency, liquidation or winding up of any Obligor or otherwise, (e) it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of purchasing the Notes and the Warrants and can bear the economic risks of investing in the Notes and the Warrants for an indefinite period of time, including the complete loss of its investment, and (f) the Issuer has not given any guarantee or representation as to the potential success, return, effect or benefit of an investment in the Notes and the Warrants or made any representation to such Purchaser regarding the legality of an investment in the Notes and the Warrants.  Such Purchaser acknowledges that it has obtained its own attorneys, business advisors and tax advisors as to legal, business and tax advice (or has decided not to obtain such advice) and has not relied in any respect on any Obligor for such advice.  Such Purchaser has had a reasonable time prior to the date of this Purchase Agreement to ask questions and receive answers concerning the Obligors and their businesses and the terms and conditions of the offering of the Notes and the Warrants and the transactions contemplated hereby and to obtain any additional information that the Obligors possess or could acquire without unreasonable effort or expense, and has generally such knowledge and experience in business and financial matters and with respect to investments in securities as to enable such Purchaser to understand and evaluate the risks of such investment and form an investment decision with respect thereto. Except for (i)  the representations, warranties and covenants made by the Obligors in the Transaction Documents and (ii)  the legal opinions provided to the

 

Purchasers in connection with the transactions contemplated by the Transaction Documents, such Purchaser is relying on its own investigation and analysis in entering into the transactions contemplated hereby.

Section 4.5      No Governmental Review. Each Purchaser acknowledges that no Governmental Authority has passed on or made any recommendation or endorsement of the Notes and the Warrants or the merits of the offering thereof or the fairness or suitability of the investment in the Notes and the Warrants.

Section 4.6     Enforceability of this Purchase Agreement. This Purchase Agreement has been duly authorized, executed and delivered by each Purchaser and constitutes the valid, legally binding and enforceable obligation of such Purchaser, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’  rights generally and by general principles of equity.

Section 4.7      Tax Matters.

(a)    Except as otherwise required by Law, each Purchaser agrees to treat, and shall treat, the Notes as indebtedness of the Issuer for U.S. federal income tax purposes.

(b)   Each Purchaser understands and acknowledges that if Definitive Securities are issued, failure to provide the Issuer, the Trustee or any Paying Agent with the applicable U.S. federal income tax certifications (generally, on IRS Form W-9 (or successor applicable form) in the case of a Purchaser that is a United States person or on an appropriate IRS Form W-8 (or successor applicable form) in the case of a Purchaser that is not a United States person) may result in U.S. federal back-up withholding from payments in respect of the Definitive Securities.

(c)    Each Purchaser represents and warrants that (i) it has not relied upon any Obligor for any tax advice or disclosure of tax consequences arising from the purchase, ownership or disposition of the Notes and the Warrants and (ii) it has relied upon its own tax counsel or advisors with respect to any tax consequences arising from the purchase, ownership or disposition of the Notes and the Warrants.

Section 4.8      Reliance for Opinions.  Each Purchaser acknowledges and agrees that the Obligors and, for purposes of the opinions to be delivered to such Purchaser pursuant to Sections 6.2  and 6.3, counsel for the Obligors and counsel for the Purchasers, respectively, may rely, without any independent verification thereof, upon the accuracy of the representations and warranties of such Purchaser, and compliance by such Purchaser with its agreements, contained in Section 4.1,  Section 4.2, Section 4.3 and Section 4.4, and such Purchaser hereby consents to such reliance.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE ISSUER

The Issuer represents  and warrants  to the Purchasers  as of the date hereof and as of each Closing Date as follows:

 

Section 5.1      Securities Laws.

(a)    No securities of the same class (within the meaning of Rule 144A(d)(3)(i) under the Securities Act) as the Notes,  the Guarantees or the Warrants, other than as set forth in Schedule 5.1,  have been issued and sold by any Obligor within the six-month period immediately prior to the date hereof.

(b)   Assuming the accuracy of the representations and warranties of the Purchasers in this  Purchase Agreement,  no Obligor or any affiliate (as defined in Rule 144 under the Securities Act) of such Obligor has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of any security (as defined in the Securities Act) that is or will be integrated with the sale of the Notes, the Guarantees or the Warrants in a manner that would require the registration under the Securities Act of the Notes, the Guarantees or the Warrants,  (ii) engaged in any form of general solicitation or general advertising in connection with the offering of the Notes, the Guarantees or the Warrants (as those terms are used in Regulation D under the Securities Act), or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act, including publication or release of articles, notices or other communications published in any newspaper, magazine or similar medium or broadcast over television, radio or internet, or any seminar or meeting whose attendees have been invited by any general solicitation or general advertising, or (iii) engaged in any directed selling efforts within the meaning of Rule 902(c) of Regulation S.

(c)    Assuming the accuracy of the representations and warranties of the Purchasers this Purchase Agreement, (i) the Indenture is not required to be qualified under the U.S. Trust Indenture Act of 1939, as amended, and (ii) no registration under the Securities Act of the Notes, the Guarantees or the Warrants is required in connection with the sale thereof to the Purchasers as contemplated by the Transaction Documents.

Section 5.2     Exchange Act Document; Financial Statements.  The Issuer’s reports filed under the Exchange Act since December 31, 2017 (excluding any documents or portions thereof furnished to, rather than filed with, the Commission) (such documents, the  “Exchange Act Documents”), when they were filed with the Commission,  conformed in all material respects to the requirements of the Exchange Act, and none of such reports, as of the respective dates thereof, contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.  There are no Laws, contracts or other documents that are required to be described in the Exchange Act Documents that are not so described in the Exchange Act Documents. The financial statements (including the related notes thereto) of the Issuer and its consolidated Subsidiaries included in the Issuer’s most recent Annual Report on Form 10-K and any other Exchange Act Documents filed subsequent thereto comply in all material respects with the applicable requirements of the Exchange Act and present fairly the financial position of the Issuer and its consolidated Subsidiaries as of the dates indicated and the results of their operations and the changes in their cash flows for the periods specified. Such financial statements (including the related notes thereto) have been prepared in conformity with GAAP applied on a consistent basis throughout the periods covered thereby, and any supporting schedules included in such Exchange Act Documents present fairly the information required to be stated therein. Any other financial information included in such Exchange Act Documents has

 

been derived from the accounting records of the Issuer and its consolidated Subsidiaries and presents fairly the information shown thereby.

Section 5.3      No Material Adverse Change. Since the date of the most recent financial statements of the Issuer included in the Exchange Act Documents, except as otherwise disclosed in the Exchange Act Documents, (a) there has not been any change in the Capital Stock (other than the issuance of shares of Common Stock upon exercise of stock options and warrants described as outstanding in, and the grant of options and awards under existing equity incentive plans described in, the Exchange Act Documents and as set forth in Schedule 5.1), short-term debt or long-term debt of the Issuer or any of its Subsidiaries, or any dividend or distribution of any kind declared, set aside for payment, paid or made by the Issuer on any class of Capital Stock, or any material adverse change, or any development involving a prospective material adverse change, in or affecting the business, properties, management, financial position, stockholders’  equity or results of operations of the Issuer and its Subsidiaries taken as a whole,  (b) neither the Issuer nor any of its Subsidiaries has entered into any transaction or agreement (whether or not in the ordinary course of business) that is material to the Issuer and its Subsidiaries taken as a whole or incurred any liability or obligation, direct or contingent, that is material to the Issuer and its Subsidiaries taken as a whole,  and (c) neither the Issuer nor any of its Subsidiaries has sustained any loss or interference with its business that is material to the Issuer and its Subsidiaries taken as a whole and that is from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor disturbance or dispute or any action, order or decree of any Governmental Authority or before or by any self-regulatory organization or other non-governmental regulatory authority (including Nasdaq).

Section 5.4      Organization and Good Standing. The Issuer has been duly organized and is validly existing and in good standing under the laws of the State of Delaware,  is duly qualified to do business and is in good standing in each jurisdiction in which it owns or leases  property or in which the conduct of its business requires such qualification, and has all power and authority necessary to own or hold its properties and to conduct the business in which it is engaged, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a  Material Adverse Effect. The Issuer does not own or control, directly or indirectly, any Person other than the Subsidiaries listed in Exhibit 21.1 to the Issuer’s Annual Report on Form 10-K for the year ended December 31, 2017 or Schedule 5.4 or as otherwise disclosed in an Exchange Act Document filed subsequent to the date of this Purchase Agreement notified in writing by the Issuer to the Purchasers with specific reference to this Section 5.4.

Section 5.5      Capitalization.  Schedule 5.5 sets forth a complete and accurate list of each Obligor showing, as of the date of this Purchase Agreement (as to each), the jurisdiction of its organization, the address of its principal office and its U.S. taxpayer identification number (where applicable) and, in the case of each Subsidiary of the Issuer, the percentage of the Capital Stock of such Subsidiary owned directly by the Issuer or any other Subsidiary of the Issuer and the identity of each such owner. All the outstanding shares of Capital Stock of the Issuer have been duly and validly authorized and issued and are fully paid and non-assessable and are not subject to any pre-emptive or similar rights. Except as described in the Exchange Act Documents, there are no outstanding rights (including pre-emptive rights), warrants or options to acquire, or instruments convertible into or exchangeable for, any shares of Capital Stock in the

 

Issuer or any of its Subsidiaries, or any contract, commitment, agreement, understanding or arrangement of any kind relating to the issuance of any Capital Stock of the Issuer or any such Subsidiary, any such convertible or exchangeable securities or any such rights, warrants or options. All the outstanding shares of Equity Interests of each Subsidiary owned, directly or indirectly, by the Issuer have been duly and validly authorized and issued, are fully paid and non-assessable (except, in the case of any non-U.S. Subsidiary, for directors’  qualifying shares) and are owned directly or indirectly by the Issuer, free and clear of any Lien or restriction on voting or transfer or any other claim of any third party.

Section 5.6      Due Authorization; Enforceability.  As of the applicable Closing Date, each of the Obligors will have full right, power and authority to execute and deliver each Transaction Document to which it is a party and to perform its obligations hereunder or thereunder. As of the applicable Closing Date, all action required to be taken for the due and proper authorization, execution and delivery by each Obligor of each Transaction Document to which it is a party and the consummation by it of the transactions contemplated by each such Transaction Document will have been duly and validly taken. Each Transaction Document to be entered into as of the applicable Closing Date to which any Obligor will be a party will be duly authorized, executed and delivered by such Obligor and will constitute the valid, legally binding and, assuming due authorization, execution and delivery by all other parties thereto,  enforceable obligation of such Obligor, except that the enforcement thereof may be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or hereafter in effect relating to creditors’ rights generally and (b) general principles of equity and the discretion of the court before which any proceeding therefor may be brought (collectively, the “Enforceability Exceptions”).

Section 5.7      Purchase Agreement.  This Purchase Agreement has been duly authorized, executed and delivered by the Issuer and constitutes the valid, legally binding and, assuming due authorization, execution and delivery by all other parties hereto, enforceable obligation of the Issuer, except that the enforcement hereof may be subject to the Enforceability Exceptions.

Section 5.8      Common Stock. The shares of Common Stock of the Issuer to be issued upon the exercise of the Warrants have been reserved by the Issuer and, upon exercise of the Warrants in accordance with their terms, will be validly issued, fully paid and non-assessable.

Section 5.9      No Violation or Default.  Neither the Issuer nor any of its Subsidiaries is (a) in violation of its charter or bylaws or similar organizational documents,  (b) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound or to which any of the property or assets of the Issuer or any of its Subsidiaries is subject,  or (c) in violation of any Law or any judgment, order, enforcement action, rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including the rules and regulations of Nasdaq to the extent not already disclosed in the Exchange Act Documents),  except, in the case of clauses (b) and (c) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect other than as set

 

forth in Section 5.20.  As of the applicable Closing Date, there exists no Event of Default under the Indenture.

Section 5.10   Termination or Nonrenewal of Contracts.  Except as would not, individually or the aggregate, have a Material Adverse Effect, neither the Issuer nor any of its Subsidiaries has sent or received any communication regarding termination of, or intent not to renew, any of the contracts or agreements to which the Issuer or its Subsidiaries are a party referred to or described in the Exchange Act Documents, and, to the Issuer’s  knowledge, no such termination or nonrenewal has been threatened by any other party to any such contract or agreement.

Section 5.11    No Conflicts. The execution and delivery of and performance of obligations under each Transaction Document by each Obligor that is a party hereto or thereto and the consummation of the transactions contemplated hereby and thereby (including the issuance and sale of the Notes and the Warrants to the Purchasers) will not (a) conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any Lien upon any property or assets of the Issuer or any of its Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Issuer or any of its Subsidiaries is a party or by which the Issuer or any of its Subsidiaries is bound or to which any of the property or assets of the Issuer or any of its Subsidiaries is subject, (b) result in any violation of the provisions of the charter or bylaws or similar organizational documents of the Issuer or any of its Subsidiaries or (c) result in the violation of any Law or any judgment, order, rule or regulation of any self-regulatory organization or other non-governmental regulatory authority (including the rules and regulations of Nasdaq), except, in the case of clauses (a) and (c) above, for any such conflict, breach, violation,  default, creation or imposition that would not, individually or in the aggregate, have a Material Adverse Effect.

Section 5.12    No Consents Required. No consent, approval, authorization, order, license, registration,  qualification or filing of or with any Governmental Authority,  self-regulatory organization or other non-governmental regulatory authority (including Nasdaq), the stockholders of the Issuer or any other third party is required for (a) the execution and delivery of and performance of obligations under any Transaction Document by any Obligor that is a party hereto or thereto, (b) the issuance and sale of the Notes and the Warrants to the Purchasers, (c) the consummation of the transactions contemplated by the Transaction Documents, (d) the grant by the Obligors of the Liens granted or purported to be granted by them pursuant to the Security Documents or (e) the perfection of the Liens created under the Security Documents, other than (i) any necessary filings under the securities or blue sky Laws of the various jurisdictions in which the Notes are being offered, (ii) the filing of financing statements under the UCC and any other recordings (including in any applicable non-U.S. jurisdiction) to the extent required to perfect a security interest in, or other Lien on, the Collateral and (iii) such consents, approvals, authorizations, orders, licenses, registrations, qualifications, filings and other actions the failure of which to take, give, make or obtain would not reasonably be expected to have a Material Adverse Effect.

Section 5.13     Legal Proceedings. Except as described in the Exchange Act Documents, there are no legal, governmental or regulatory investigations, actions, suits or proceedings

 

pending to which the Issuer or any of its Subsidiaries is or may be a party or to which any property of the Issuer or any of its Subsidiaries is or may be the subject that, individually or in the aggregate, if determined adversely to the Issuer or any of its Subsidiaries, could reasonably be expected to have a Material Adverse Effect.  Except as described in Section 5.20, no such investigations, actions, suits or proceedings are threatened or, to the knowledge of the Issuer, contemplated by any Governmental Authority or any self-regulatory organization or other non-governmental regulatory authority (including Nasdaq to the extent not already disclosed in the Exchange Act Documents) or any third party. There are no current or pending legal, governmental or regulatory actions, suits or proceedings that are required to be described in the Exchange Act Documents that are not so described in the Exchange Act Documents.

Section 5.14   Title to Real and Personal Property. The Issuer and its Subsidiaries have valid and marketable rights to lease or otherwise use all items of real and personal property and assets that are material to the respective businesses of the Issuer and its Subsidiaries, in each case free and clear of all Liens and defects and imperfections of title except those that (a) do not materially interfere with the use made and proposed to be made of such property by the Issuer and its Subsidiaries or (b) could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. The Exchange Act Documents disclose all material leases of real property to which any Obligor is party (whether as lessor, lessee or otherwise). To the knowledge of the Issuer, any real property held by any Obligor under lease constitutes the valid, legally binding and enforceable obligation of all parties thereto (except that, in each case, the enforcement thereof may be subject to the Enforceability Exceptions) except as would not have a Material Adverse Effect.

Section 5.15    Intellectual Property.

(a)    The Issuer and its Subsidiaries own, or have obtained valid and enforceable licenses for, or other rights to use, all patents, patent applications, trade and service marks, trade and service ▇▇▇▇ registrations, trade names, trade secrets and other intellectual property (collectively, “Intellectual Property”) described in the Exchange Act Documents as either being owned or licensed by them or necessary for the conduct of their respective businesses as currently conducted (including the commercialization of products in development), except where the failure to own, license or have such rights would not, individually or in the aggregate, have a Material Adverse Effect. To the knowledge of the Issuer, there is no infringement, misappropriation or violation by third parties of any such Intellectual Property that would have a Material Adverse Effect. There is no pending or, to the knowledge of the Issuer, threatened action, suit, proceeding or claim by others challenging the rights of the Issuer or its Subsidiaries in or to any such Intellectual Property.

(b)   The Intellectual Property owned by or licensed to the Issuer and its Subsidiaries has not been adjudicated invalid or unenforceable, in whole or in part. There is no pending or, to the knowledge of the Issuer, threatened action, suit, proceeding or claim by others challenging the validity or scope of any such Intellectual Property.

(c)    There is no pending or, to the knowledge of the Issuer, threatened action, suit, proceeding or claim by others that the Issuer or its Subsidiaries infringes, misappropriates or otherwise violates any Intellectual Property of others. Neither the Issuer nor any of its

 

Subsidiaries has received any written notice of any such claim. The Issuer is not aware of any facts that it believes would form a reasonable basis for a successful claim of any such infringement, misappropriation or violation that would have a Material Adverse Effect.

(d)   To the knowledge of the Issuer, none of the Issuer’s employees is in material violation of any term of any employment, patent disclosure, invention assignment, non-competition, non-solicitation or non-disclosure agreement or any restrictive covenant to or with a former employer where the basis of such violation relates to such employee’s employment with the Issuer or any of its Subsidiaries or actions undertaken by the employee while employed with the Issuer or any of its Subsidiaries.

Section 5.16    Investment Company Act. The Issuer is not and, after giving effect to the offering and sale of the Notes and the Warrants and the application of the proceeds thereof, will not be required to register as an  “investment company”  or an entity  “controlled”  by an  “investment company”  within the meaning of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder.

Section 5.17    Taxes.  Except for matters that would not, individually or in the aggregate, have a Material Adverse Effect, (a) the Issuer and its Subsidiaries have filed all tax returns required to be filed by the Issuer and its Subsidiaries,  (b) such returns are accurate in all material respects and (c) the Issuer and its Subsidiaries have paid all U.S. federal, state, local and non-U.S. taxes required to have been paid through the date of this representation and warranty. Except as otherwise disclosed in the Exchange Act Documents, there is no tax deficiency that has been, or to the Issuer’s  knowledge could reasonably be expected to be, asserted against the Issuer or any of its Subsidiaries or any of their respective properties or assets, which deficiency would, individually or in the aggregate, have a Material Adverse Effect.

Section 5.18    Licenses and Permits. The Issuer and its Subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate U.S. federal, state, local or non-U.S. Governmental Authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses as described in the Exchange Act Documents, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect. Except as described in the Exchange Act Documents, neither the Issuer nor any of its Subsidiaries has received notice of any revocation or modification of any such license, certificate, permit or authorization or has any knowledge that any such license, certificate, permit or authorization will not be renewed in the ordinary course.

Section 5.19    No Labor Disputes. No labor disturbance by or dispute with employees of the Issuer or any of its Subsidiaries exists or, to the knowledge of the Issuer, is contemplated or threatened, and the Issuer is not aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of its or its Subsidiaries’  principal suppliers, contractors or customers, as described in the Exchange Act Documents and except as would not have a Material Adverse Effect. Except for matters that would not, individually or in the aggregate, have a Material Adverse Effect, (a) none of the Issuer or any of its Subsidiaries is knowingly engaged in any unfair labor practice and (b) there has been no knowing violation of any applicable U.S. federal, state, local or non-U.S. Law relating to discrimination in the hiring,

 

promotion or pay of employees of the Issuer or any of its Subsidiaries, any applicable wage or hour Laws or any similar applicable non-U.S. Law concerning the employees of the Issuer or any of its Subsidiaries.

Section 5.20    Compliance with Applicable Product Laws; Product Authorizations.  Except as described in the Exchange Act Documents, the Issuer and its Subsidiaries (a) are and at all times have been in compliance with all Laws applicable to the ownership, testing, development, manufacture, packaging, processing, use, distribution, marketing, labeling, promotion, sale, offer for sale, storage, import, export or disposal of any product manufactured or distributed by the Issuer (“Applicable Product Laws”), except for such non-compliance as would not, individually or in the aggregate, have a Material Adverse Effect,  (b) have not received any FDA Form 483, written notice of adverse finding, warning letter, untitled letter or other correspondence or written notice from any Governmental Authority,  self-regulatory organization or other non-governmental regulatory authority (including Nasdaq) or third party alleging or asserting non-compliance with any Applicable Product Laws or any licenses, exemptions, certificates, approvals, clearances, authorizations, permits and supplements or amendments thereto required by any such Applicable Product Laws (“Product Authorizations”), except for such non-compliance as would not, individually or in the aggregate, have a Material Adverse Effect, (c) possess all material Product Authorizations,  and such Product Authorizations are valid and in full force and effect and are not in violation of any term of any such Product Authorizations, except for such violations as would not, individually or in the aggregate, have a Material Adverse Effect and as set forth on Schedule 5.20,  (d) have not received written notice of any claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action from any Governmental Authority,  self-regulatory organization,  other non-governmental regulatory authority or third party alleging that any product operation or activity is in violation of any Applicable Product Laws or Product Authorizations, and, to the Issuer’s knowledge,  no such claim, action, suit, proceeding, hearing, enforcement, investigation, arbitration or other action is threatened, (e) have not received written notice that any Governmental Authority,  self-regulatory organization or other non-governmental regulatory authority has taken, is taking or intends to take action to materially limit, suspend, modify or revoke any Product Authorizations, and, to the Issuer’s knowledge,  no such limitation, suspension, modification or revocation is threatened, and (f) have filed, obtained, maintained or submitted all material reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments as required by any Applicable Product Laws or Product Authorizations,  and all such reports, documents, forms, notices, applications, records, claims, submissions and supplements or amendments were complete and correct on the date filed in all material respects (or were corrected or supplemented by a subsequent submission).

Section 5.21     Clinical Trials.  The clinical and pre-clinical trials conducted by or on behalf of or sponsored by the Issuer or any of its Subsidiaries, or in which the Issuer or any of its Subsidiaries has participated, that are described in the Exchange Act Documents or the results of which are referred to in the Exchange Act Documents and that were submitted to Regulatory Authorities as a basis for product approval, were conducted in all material respects in accordance with standard medical and scientific research procedures and all applicable Laws of the FDA and comparable drug regulatory agencies outside of the United States to which it is subject (collectively, the  “Regulatory Authorities”), including 21 C.F.R. Parts 50, 54, 56, 58 and 312, and current good clinical practices and good laboratory practices. The descriptions in the

 

Exchange Act Documents of the results of such studies and tests are accurate and complete in all material respects and fairly present the data derived from such trials. The Issuer has no knowledge of any other trials the results of which are inconsistent with or otherwise call into question the results described or referred to in the Exchange Act Documents. The Issuer and its Subsidiaries have operated and are currently in compliance in all material respects with all applicable Laws of the Regulatory Authorities. None of the Issuer or any of its Subsidiaries has received any written notices, correspondence or other communication from the Regulatory Authorities or any other Governmental Authority that could lead to the termination or suspension of any clinical or pre-clinical trials that are described in the Exchange Act Documents or the results of which are referred to in the Exchange Act Documents, and, to the Issuer’s knowledge, there are no reasonable grounds for same.

Section 5.22    Compliance with and Liability under Environmental Laws.  The Issuer and its Subsidiaries (a) are, and at all prior times were, in compliance with any and all applicable U.S. federal, state, local and non-U.S. Laws, requirements and decisions and the common law relating to pollution or the protection of the environment, natural resources or occupational health or safety (to the extent relating to exposure to Hazardous Materials), including those relating to the generation, storage, treatment, use, handling, transportation, Release or threat of Release of Hazardous Materials (collectively,  “Environmental Laws”), (b) have received and are in compliance with all permits, licenses, certificates or other authorizations or approvals required of them under applicable Environmental Laws to conduct their respective businesses, (c) have not received notice of any actual or potential liability under or relating to, or actual or potential violation of, any Environmental Laws, including for the investigation or remediation of any Release or threat of Release of Hazardous Materials, and have no knowledge of any event or condition that would reasonably be expected to result in any such notice, (d) are not conducting or paying for, in whole or in part, any investigation, remediation or other corrective action pursuant to any Environmental Law at any location and (e) are not a party to any order, decree or agreement that imposes any obligation or liability under any Environmental Law, except in each case for any such matter as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. There are no costs or liabilities associated with Environmental Laws of or relating to the Issuer or its Subsidiaries, except in each case for any such matter as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as described in Exchange Act Documents, (i) there are no proceedings that are pending, or to the Issuer’s knowledge contemplated, against the Issuer or any of its Subsidiaries under any Environmental Laws in which a governmental entity is also a party, other than such proceedings regarding which it is reasonably believed no fines, penalties or similar monetary sanctions of $100,000 or more will be imposed, (ii) the Issuer is not aware of any facts or issues regarding compliance by the Issuer or any of its Subsidiaries with Environmental Laws, or liabilities or other obligations of the Issuer or any of its Subsidiaries under Environmental Laws, including the Release or threat of Release of Hazardous Materials, that could reasonably be expected to have a material and adverse effect on the capital expenditures, earnings or competitive position of the Issuer and its Subsidiaries, and (iii) none of the Issuer or any of its Subsidiaries currently anticipates material capital expenditures relating to any Environmental Laws.

Section 5.23    Hazardous Materials.  Except as disclosed in the Exchange Act Documents, there has been no storage, generation, transportation, use, handling, treatment,

 

Release or threat of Release of Hazardous Materials by, relating to or caused by the Issuer or any of its Subsidiaries (or, to the knowledge of the Issuer, any other Person (including any predecessor) for whose acts or omissions the Issuer or any of its Subsidiaries is or could reasonably be expected to be liable) at, on, under or from any property or facility now or previously owned, operated or leased by the Issuer or any of its Subsidiaries, or at, on, under or from any other property or facility, in violation of any Environmental Laws or in a manner or amount or to a location that could reasonably be expected to result in any liability under any Environmental Law, except for any violation or liability that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 5.24    Compliance with ERISA.  Except as disclosed in the Exchange Act Documents, (a) each employee benefit plan, within the meaning of Section 3(3) of ERISA, for which the Issuer or any member of its Controlled Group would have any liability (each, a  “Plan”) has been maintained in compliance with its terms and the requirements of any applicable Laws, including ERISA and the Code, (b) no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan,  (c) for each Plan that is subject to the funding rules of Section 412 of the Code or Section 302 of ERISA, the minimum funding standard of Section 412 of the Code or Section 302 of ERISA, as applicable, has been satisfied (without taking into account any waiver thereof or extension of any amortization period) and is reasonably expected to be satisfied in the future (without taking into account any waiver thereof or extension of any amortization period), (d) the fair market value of the assets of each Plan exceeds the present value of all benefits accrued under such Plan (determined based on those assumptions used to fund such Plan), (e)  a  “reportable event”  (within the meaning of Section 4043(c) of ERISA) has not occurred and is not reasonably expected to occur,  (f) neither the Issuer nor any member of the Controlled Group has incurred, or reasonably expects to incur, any liability under Title IV of ERISA (other than contributions to the Plan or premiums to the Pension Benefit Guaranty Corporation, in the ordinary course and without default) in respect of a Plan (including a  “multiemployer plan”, within the meaning of Section 4001(a)(3) of ERISA) and (g) there is no pending audit or investigation by the IRS, the U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other Governmental Authority with respect to any Plan, except in the case of each of clauses (a) through (g) above that would not reasonably be expected to have a Material Adverse Effect.

Section 5.25    Disclosure Controls.  Except as disclosed in the Exchange Act Documents, the Issuer and its Subsidiaries maintain an effective system of  “disclosure controls and procedures”  (as defined in Rule 13a-15(e) of the Exchange Act) that complies with the requirements of the Exchange Act and that has been designed to ensure that information required to be disclosed by the Issuer in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Issuer’s management as appropriate to allow timely decisions regarding required disclosure. The Issuer and its Subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15 under the Exchange Act.

Section 5.26    Accounting Controls. Except as disclosed in the Exchange Act Documents, the Issuer and its Subsidiaries maintain systems of  “internal control over financial

 

reporting”  (as defined in Rule 13a-15(f) under the Exchange Act) that comply with the requirements of the Exchange Act and have been designed by, or under the supervision of, their respective principal executive and principal financial officers, or persons performing similar functions, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, including internal accounting controls sufficient to provide reasonable assurance that (a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability,  (c) access to assets is permitted only in accordance with management’s general or specific authorization,  (d) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences and (e) interactive data in eXtensible Business Reporting Language included in the Exchange Act Documents fairly presents the information called for in all material respects and is prepared in accordance with the Commission’s rules and guidelines applicable thereto. Except as disclosed in the Exchange Act Documents, there are no material weaknesses in the Issuer’s internal controls. The Issuer’s auditors and the audit committee of the board of directors of the Issuer have been advised of (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that have adversely affected or are reasonably likely to adversely affect the Issuer’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Issuer’s internal controls over financial reporting.

Section 5.27   Insurance. The Issuer and its Subsidiaries have insurance covering their respective properties, operations, personnel and businesses, including business interruption insurance, which insurance is in amounts and insures against such losses and risks as are adequate in accordance with customary industry practice to protect the Issuer and its Subsidiaries and their respective businesses. All such insurance is fully in force. None of the Issuer or any of its Subsidiaries has (a) received notice from any insurer or agent of such insurer that capital improvements or other expenditures are required or necessary to be made in order to continue such insurance or (b) any knowledge or reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage at reasonable cost from similar insurers as may be necessary to continue its business.

Section 5.28    No Unlawful Payments.  None of the Issuer,  any of its Subsidiaries,  any director, officer or employee of the Issuer or any of its Subsidiaries or, to the knowledge of the Issuer, any agent, affiliate or other person associated with or acting on behalf of the Issuer or any of its Subsidiaries has (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity,  (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds,  (c) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977, as amended, or any other applicable anti-bribery or anti-corruption Law or (d) made, offered,  agreed, requested or taken any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. The Issuer and its Subsidiaries have instituted, maintain and enforce, and will continue to maintain and enforce,  policies and procedures designed to promote compliance with all applicable anti-bribery and anti-corruption Laws.

 

Section 5.29    Compliance with Money Laundering Laws.  The operations of the Issuer and its Subsidiaries are and have been conducted at all times in material compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering Laws of all jurisdictions and any related or similar Laws or guidelines issued, administered or enforced by any Governmental Authority (collectively, the  “Money Laundering Laws”),  and no action, suit or proceeding by or before any Governmental Authority involving the Issuer or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Issuer, threatened.

Section 5.30    Compliance with OFAC.  None of the Issuer, any of its Subsidiaries, any director, officer or employee of the Issuer or any of its Subsidiaries or, to the knowledge of the Issuer, any agent, affiliate or other person acting on behalf of the Issuer or any of its Subsidiaries is currently the target of any U.S. sanctions administered by OFAC (“Sanctions”). None of the Issuer or any of its Subsidiaries is located, organized or resident in a country or territory that is the subject or target of Sanctions, as of the date of this Purchase Agreement,  Crimea, Cuba, Iran, North Korea and Syria (each, a  “Sanctioned Country”). The Issuer will not directly or, to its knowledge, indirectly use the proceeds of the offering of the Notes and the Warrants, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, for the purpose of financing the activities of any Person currently subject to any U.S. sanctions administered by OFAC. For the past five years, the Issuer and its Subsidiaries have not knowingly engaged in and are not now knowingly engaged in any dealings or transactions with any Person that at the time of the dealing or transaction is or was the subject or the target of Sanctions or with any Sanctioned Country.

Section 5.31     No Restrictions on Subsidiaries.  No Subsidiary of the Issuer is currently prohibited, directly or indirectly, under any agreement or other instrument to which it is a party or is subject, from paying any dividends to the Issuer, from making any other distribution on such Subsidiary’s  Capital Stock, from repaying to the Issuer any loans or advances to such Subsidiary from the Issuer or from transferring any of such Subsidiary’s properties or assets to the Issuer or any other Subsidiary of the Issuer.

Section 5.32    No Brokers’ Fees. None of the Issuer or any of its Subsidiaries is a party to any contract, agreement or understanding with any Person that would give rise to a valid claim against the Issuer, any of its Subsidiaries or any Purchaser for a brokerage commission, finder’s fee or like payment in connection with the offering and sale of the Notes and the Warrants.

Section 5.33    ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. There is and has been no failure on the part of the Issuer or, to the knowledge of the Issuer, any of the Issuer’s directors or officers, in their capacities as such, to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in connection therewith (the  “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”), including Section 402 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act related to loans and Sections 302 and 906 of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act related to certifications.

Section 5.34     Margin Rules. None of the Issuer, any of its Subsidiaries or any agent acting on their behalf has taken or will take any action that might cause this Purchase Agreement

 

or the sale of the Notes or the Warrants to violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

Section 5.35    Solvency. No step has been taken or is currently intended by any Obligor or, to the knowledge of the Issuer, any other Person for the winding-up, liquidation, dissolution or administration or for the appointment of a receiver or administrator of any Obligor for all or any of such Obligor’s properties or assets.

Section 5.36    Existing Indebtedness.  The Exchange Act Documents disclose all of the following types of material outstanding third-party indebtedness of each Obligor: (a) indebtedness in respect of borrowed money; (b) any other obligation of such Obligor to be liable for, or to pay, as obligor, guarantor or otherwise, on the indebtedness for borrowed money of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and (c) to the extent not otherwise included, indebtedness for borrowed money of another Person secured by a Lien on any asset owned by such Person (whether or not such indebtedness for borrowed money is assumed by such Person). The Convertible Senior Notes are not guaranteed by, or secured by the assets or property of, any Person.

Section 5.37    Security Documents. The representations and warranties of each Obligor in each Security Document are true and correct as of the applicable Closing Date, except to the extent that any such untrue or incorrect statement, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the Collateral  or on the rights and remedies of the Collateral Agent with respect thereto.

Section 5.38    Certain Repayments.  The Issuer has paid in full all obligations under that certain purchase and sale agreement dated as of March 25, 2013 by and between the Issuer and BioPharma Secured Investments III Holdings Cayman LP, and such purchase and sale agreement has been terminated.

Section 5.39   M&A Agreement.  With respect to information relating to the parties to the M&A Agreement (other than the Issuer), to the Issuer’s knowledge,  (a) all written information (other than projections and other forward-looking information and information of a general economic industry nature) that has been or will be made available to the Purchasers by or on behalf of the Issuer in connection with the transactions contemplated by the M&A Agreement is and will be (when furnished), when taken as a whole with all other information made available (taken in combination with the information contained in the Issuer’s  filings with the Commission), true and correct in all material respects and does not and will not (when furnished), when taken as a whole with all other information made available (taken in combination with the information contained in the Issuer’s  filings with the Commission), contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not materially misleading in light of the circumstances under which such statements are made (after giving effect to all supplements and updates with respect thereto),  and (b) the projections and other forward-looking information that have been or will be made available to the Purchasers by or on behalf of the Issuer have been and will be prepared in good faith based upon assumptions that are believed by the preparer thereof to be reasonable when made. The Issuer agrees  that if at any time prior to the applicable Closing Date any of the

 

representations in the preceding sentence would be incorrect in any material respect if made at such time, then the Issuer will promptly supplement, or cause to be supplemented, the information underlying such representations so that such representations will be correct in all material respects at such time.

Section 5.40     Assets of Subsidiaries.  As of the applicable Closing Date, no Subsidiary of the Issuer (other than a Guarantor (as will be defined in the Indenture) or a New Grantor (as will be defined in the Collateral Agreement) (a) has any material operations, (b) holds any Intellectual Property or (c) holds any cash or other assets in excess of $250,000, in each case other than as set forth on Schedule 5.40.

ARTICLE VI

CONDITIONS TO CLOSING

The obligations of the Purchasers  hereunder on each Closing Date are subject to the accuracy in all material respects (except for such representations and warranties qualified by materiality or Material Adverse Effect, which shall be accurate in all respects) of the representations and warranties of the Issuer contained herein as of such Closing Date (subject to the Schedules permitted to be updated pursuant to Section 6.4 in respect of the Subsequent Closing Date), to the accuracy of the statements of the Obligors and their respective officers or other representatives made in any certificates delivered pursuant hereto in respect of such Closing Date, to the performance by the Issuer of its obligations hereunder as of such Closing Date and to the satisfaction of or waiver by the Purchasers  of each of the following additional terms and conditions applicable on such Closing Date (and the obligations of the Issuer hereunder on the Initial Closing Date are also subject to the satisfaction of or waiver by the Issuer of Section 6.16):

Section 6.1      M&A Agreement Transactions.  All of the conditions to closing set forth in the M&A Agreement shall have been satisfied or the transactions contemplated by the M&A Agreement shall be consummated substantially simultaneously with the issuance of the Original Notes and the Warrants, in all material respects in accordance with the M&A Agreement (and no provision of the M&A Agreement shall have been waived, amended, supplemented or otherwise modified (including any obligation to obtain consents) in a manner material and adverse to the Purchasers without the consent of the Purchasers (such consent not to be unreasonably withheld, delayed or conditioned)) (it being understood that any increase in the purchase price consideration greater than 5% shall be deemed material and adverse to the Purchasers, but that any decrease in the purchase price consideration shall not be deemed material and adverse to the Purchasers).

Section 6.2      Obligors’ Counsel Opinion. Weil, Gotshal & ▇▇▇▇▇▇ LLP,  special U.S. counsel to the Obligors, shall have furnished to the Purchasers their opinion, addressed to the Purchasers and dated the applicable Closing Date, in form and substance reasonably satisfactory to the Purchasers.

Section 6.3      Purchasers’ Counsel Opinion. Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, special counsel to the Purchasers, shall have furnished to the Purchasers their opinion,  addressed

 

to the Purchasers and dated the applicable Closing Date, in form and substance reasonably satisfactory to the Purchasers.

Section 6.4     Certification as to Transaction Documents. Each Obligor shall have furnished to the Purchasers a certificate, dated the applicable Closing Date, of its respective Responsible Officer, stating that, as of such Closing Date, the representations and warranties of such Obligor in the Transaction Documents to which it is party are true and correct in all material respects (except for such representations and warranties qualified by materiality or Material Adverse Effect, which are true and correct in all respects) and such Obligor has complied in all material respects with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied under the Transaction Documents on or before such Closing Date; provided,  however, that any such certificate in respect of the Subsequent Closing Date may update Schedule 5.5 or any exhibit provided pursuant to the Collateral Agreement.

Section 6.5      Authorizations. Each Obligor shall have furnished to the Purchasers, as of the applicable Closing Date, (a) a copy of the resolutions, consents or other documents, certified by a Responsible Officer of such Obligor, duly authorizing the execution and delivery of, and performance of obligations under, the Transaction Documents to which it is a party and any other documents to be executed on or prior to such Closing Date by or on behalf of it in connection with the transactions contemplated hereby and thereby and, in the case of the Issuer, the issuance and sale of the applicable Notes and Warrants,  and a certification that such resolutions, consents or other documents have not been modified, rescinded or amended and are in full force and effect, (b) certified copies of its respective organizational documents, (c) a certification by a Responsible Officer of such Obligor as to the incumbency and specimen signatures of each officer or other representative executing any Transaction Document or any other document delivered in connection herewith or therewith on behalf of such Obligor (together with a certification of another Responsible Officer of such Obligor as to the incumbency and specimen signature of the first-mentioned Responsible Officer) and (d) a certificate of good standing (or equivalent) of such Obligor as of a recent date from the Secretary of State (or other applicable Governmental Authority) of its jurisdiction of organization.

Section 6.6      CUSIP Numbers. Standard & Poor’s CUSIP Service Bureau, as agent for the National Association of Insurance Commissioners, shall have issued CUSIP numbers and ISIN numbers for the Notes to be issued on the applicable Closing Date.

Section 6.7      Further Information.  On or prior to the applicable Closing Date, the Obligors shall have furnished to the Purchasers  such further information, certificates and documents as the Purchasers  may reasonably request in connection with this Purchase Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby.

Section 6.8      Consummation of Transactions. All of the transactions contemplated by the Transaction Documents to be completed on or before the applicable Closing Date shall have been consummated or shall be consummated concurrently with the transactions contemplated hereby, including the execution and delivery of the Indenture and the issuance of the Warrants to the Purchasers, and the Purchasers  shall have received executed copies of the Transaction Documents (which shall be in full force and effect).

 

Section 6.9      No Actions. No action shall have been taken and no Law shall have been enacted, adopted or issued by any Governmental Authority  that would, as of the applicable Closing Date, prevent the issuance or sale of the applicable Notes or Warrants, and no injunction, restraining order or order of any other nature by any court of competent jurisdiction shall have been issued as of the applicable Closing Date that would prevent the issuance or sale of the applicable Notes or Warrants.

Section 6.10    Collateral Requirements.  The Collateral Agent shall have received with respect to the Collateral, on or prior to the Initial Closing Date:

(a)    all certificates, agreements or instruments, to the extent they exist, representing or evidencing the Equity Interests of the Subsidiary Guarantors referred to in the Security Documents accompanied by instruments of transfer and stock powers undated and endorsed in blank;

(b)   all other certificates, agreements or instruments necessary to perfect the Collateral Agent’s security interest in, or other Lien on, all chattel paper, all instruments, all deposit accounts and all investment property of each Obligor (to the extent required by any Transaction Document);

(c)    evidence of the filing of financing statements under the UCC and other recordings (including in any applicable non-U.S. jurisdiction) required to be made to perfect a security interest in, or other Lien on, the Collateral, including those specified in the Security Documents; and

(d)   certified copies of UCC, PTO, United States Copyright Office, tax, judgment lien, bankruptcy and pending lawsuit searches or equivalent reports or searches, each as of a recent date and listing all effective financing statements, lien notices or comparable documents that name any Obligor as debtor and that are filed in the jurisdiction in which such Obligor is organized or maintains its principal place of business, and such searches or reports reveal no Liens on any of the Collateral except for (i) Liens discharged on or prior to the Initial Closing Date pursuant to documentation reasonably satisfactory to the Purchasers and (ii) other Liens reasonably satisfactory to the Purchasers.

Section 6.11    Insurance. The Collateral Agent shall have received on or prior to the Initial Closing Date evidence that all insurance required to be maintained pursuant to the Transaction Documents by the Obligors has been obtained and is in effect together with the certificates of insurance, naming the Collateral Agent, on behalf of all Persons in whose name the Notes are registered from time to time in the register with respect to the Notes, as an additional insured or loss payee, as the case may be, under all insurance policies maintained with respect to the properties and assets that constitute Collateral.

Section 6.12     Use of Proceeds. The Issuer will apply the proceeds from the issuance and sale of the Notes and the Warrants (a) to pay fees, costs and expenses arising in connection with the issuance and sale thereof, (b) to pay the fee contemplated by Section 6.15,  (c) to fund part of the consideration to acquire assets in respect of Pancreaze® and (d) for general corporate purposes.

 

Section 6.13    No Other Issuances.  Except for any Notes, Guarantees and Warrants issued and sold pursuant to this Purchase Agreement, no securities of the same class (within the meaning of Rule 144A(d)(3)(i) under the Securities Act) as the Notes, the Guarantees or the Warrants have been issued and sold by any Obligor since the date of this Purchase Agreement.

Section 6.14    Fair Market Valuation of Warrants.  On or prior to the Initial Closing Date, the Issuer shall provide its fair market valuation of the Warrants to the Purchasers pursuant to Section 3.3.

Section 6.15    Payment of Commitment Fee.  The Issuer shall cause to be paid to the Purchasers on the Initial Closing Date, out of the proceeds of the issuance of the Original Notes and the Warrants, a fee equal to $100,000.

Section 6.16    Convertible Notes Transaction.  On or prior to the Initial Closing Date, the Purchasers and/or their Affiliates shall sell to the Issuer $60,000,000 aggregate principal amount of the Convertible Senior Notes for the purchase price set forth in the agreement of the parties hereto dated April 4, 2018 (including for the avoidance of doubt any accrued but unpaid interest thereon to the date of such sale); provided,  however, that any Purchaser may elect to exchange all or part of such Purchaser’s Convertible Senior Notes for Original Notes and Warrants (plus any accrued but unpaid interest thereon to the date of such exchange), in which case the Issuer and such Purchaser intend for any such exchange to be treated as a recapitalization within the meaning of Section 368(a)(1)(E) of the Code and in which case such Purchaser shall not be required to pay the cash portion of the purchase price in respect of the Original Notes and Warrants attributable to such exchanged Convertible Senior Notes.

ARTICLE VII

ADDITIONAL COVENANTS

Section 7.1      DTC. The Issuer will use reasonable best efforts to comply with the agreements set forth in any representation letter of the Issuer to DTC relating to the approval of any Notes by DTC for  “book-entry”  transfer.

Section 7.2      Certain Expenses.  The Issuer agrees to pay or cause to be paid from the proceeds of the issuance of the Notes and the Warrants all reasonable, documented fees and expenses of Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, acting as special counsel to the Purchasers (it being understood that the Issuer shall not be obligated to pay any such fees and expenses up to and including the Initial Closing Date in excess of $250,000),  it being understood that the Issuer will not reimburse any other expenses of any Purchasers (including expenses of any other counsel).

Section 7.3      Right of First Offer. In connection with the proposed issuance, if any, of Optional Secured Notes, the Issuer will grant to each Purchaser the right to purchase an aggregate amount of such Optional Secured Notes in an amount equal to the same proportion that the principal amount of Original Notes set forth opposite such Purchaser’s name on Schedule 1 bears to the aggregate principal amount of Original Notes to be issued on the Initial Closing Date to the Purchasers  and at a purchase price specified by the Issuer (which purchase price shall not be more than the purchase price being offered to other investors), with such right

 

to purchase being exercised by such Purchaser by written notice to the Issuer no later than 10 days after being notified of such proposed issuance by the Issuer. To the extent that any Purchaser decline to exercise its right to purchase any Optional Secured Notes (in whole or in part), the Issuer will promptly notify the other Purchasers  (only if such Purchasers  exercised their right to purchase Optional Secured Notes in full pursuant to the preceding sentence),  and such other Purchasers  will have the right to purchase such remaining Optional Secured Notes (subject to proportional reduction to the extent of the relative initial principal amount of Optional Secured Notes purchased by other Purchasers exercising the same right) on the same terms as any Optional Secured Notes it previously exercised the right to purchase pursuant to the preceding sentence, with such right to purchase being exercised by such Purchaser by written notice to the Issuer no later than two days after being notified of the opportunity to purchase such remaining Optional Secured Notes by the Issuer.

Section 7.4     Confidentiality. Except as otherwise required by Law or judicial or administrative proceedings (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigation demand or similar process) or the rules and regulations of the Commission or any securities exchange or trading system or any other Governmental Authority or pursuant to requests from regulatory agencies having oversight over any of the Obligors and except as otherwise set forth in this Section 7.4, the Issuer will, and will cause each of its Subsidiaries, other Affiliates, directors, officers, employees, agents, representatives and similarly situated persons who receive such information to, treat and hold as confidential and not disclose to any Person any and all Confidential Information furnished to it by the Purchasers, as well as the information on Schedule 1, and to use any such Confidential Information and other information only in connection with this Purchase Agreement and any other Transaction Document and the transactions contemplated hereby and thereby. Notwithstanding the foregoing, the Issuer may disclose such information solely on a need-to-know basis and solely to its members, directors, employees, managers, officers, agents, brokers, advisors, lawyers, bankers, trustees, representatives, investors, co-investors, insurers, insurance brokers, underwriters and financing parties; provided, however, that such Persons shall be informed of the confidential nature of such information and shall be obligated to keep such Confidential Information and other information confidential pursuant to obligations of confidentiality no less onerous than those set forth herein.

ARTICLE VIII

INDEMNIFICATION

Section 8.1      Indemnification.

(a)    In consideration of the Purchasers’ execution and delivery of this Purchase Agreement, the issuance of the Notes under the Indenture and the issuance of the Warrant and of acquiring the Notes and the Warrant pursuant hereto and in addition to all of the other obligations of the Issuer under this Purchase Agreement, the Issuer shall defend, protect, indemnify and hold harmless the Purchasers and the Purchasers’ equityholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives, including those retained in connection with the transactions contemplated by this Purchase Agreement (each, a “Purchaser Indemnitee” and, collectively, the “Purchaser Indemnitees”), as incurred, from and against any and all actions,

 

causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Purchaser Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable and documented attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Purchaser Indemnitee as a result of, arising out of or relating to any misrepresentation or breach of any representation or warranty made by the Issuer in this Purchase Agreement or in any certificate, instrument or other document contemplated hereby. To the extent that the foregoing undertaking by the Issuer may be unenforceable for any reason, the Issuer shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. Notwithstanding the foregoing, this Section 8.1(a) shall not apply to the extent that the Indemnified Liabilities result from any misrepresentation or breach described in Section 8.1(b).

(b)   Each Purchaser, severally and not jointly, acknowledges that such Purchaser understands the meaning and legal consequences of the representations, warranties and restrictions contained in this Purchase Agreement and that the truth of these representations and warranties will be relied upon by the Issuer and its agents, officers and affiliates. With regard to the representations and warranties contained in this Purchase Agreement, each Purchaser, severally and not jointly, hereby agrees to defend, protect, indemnify and hold harmless the Issuer and the Issuer’s stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (each, an  “Issuer Indemnitee” and, collectively, the “Issuer Indemnitees”), as incurred, from and against the Indemnified Liabilities incurred by any Issuer Indemnitee as a result of any misrepresentation or breach of any representation or warranty made by such Purchaser in this Purchase Agreement or in any certificate, instrument or other document contemplated hereby. To the extent that the foregoing undertaking by such Purchaser may be unenforceable for any reason, such Purchaser, severally and not jointly, shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.

(c)    Promptly after receipt by an indemnitee under this Article VIII of notice of any claim or the commencement of any action or proceeding (including any governmental investigation), such indemnitee will, if a claim for indemnification in respect thereof is to be made against the indemnifying party, notify the indemnifying party in writing of the commencement thereof, but the omission to so notify will not relieve the indemnifying party from any liability it may have to any indemnitee to the extent the indemnifying party is not materially prejudiced as a result thereof. In case any such action or proceeding is brought against any indemnitee and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may elect, by written notice delivered to such indemnitee promptly after receiving the aforesaid notice from such indemnitee, to assume the defense thereof, with counsel reasonably satisfactory to such indemnitee; provided,  however, that if the defendants (including any impleaded parties) in any such action include both the indemnitee and the indemnifying party and the indemnitee shall have reasonably concluded that there may be legal defenses available to it and/or other indemnitees that are different from or additional to those available to the indemnifying party, the indemnitee or indemnitees shall have the right to select separate counsel to defend such action on behalf of such indemnitee or indemnitees. Upon receipt of notice from the indemnifying party to such indemnitee of its election to so appoint counsel to defend such action and reasonable

 

approval by the indemnitee of such counsel, the indemnifying party will not be liable to such indemnitee under this Article VIII for any legal or other expenses subsequently incurred by such indemnitee in connection with the defense thereof unless: (A) the indemnitee shall have employed separate counsel in accordance with the proviso to the preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expense of more than one separate counsel (in addition to any local counsel), approved by the indemnitee representing the indemnitees who are parties to such action); (B) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnitee to represent the indemnitee within a reasonable time after notice or commencement of the action; (C) the indemnifying party shall have authorized the employment of counsel for the indemnitee at the expense of the indemnifying party; or (D) the use of counsel chosen by the indemnifying party to represent the indemnitee would present such counsel with a conflict of interest.

(d)   The indemnifying party and the indemnitees will not, without the prior written consent of the applicable indemnitees, or the indemnifying party, as applicable, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not such indemnitees are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnitee, or the indemnifying party, as applicable, from all liability arising out of such claim, action, suit or proceeding and does not include an admission of guilt of, or failure to act by, the indemnitee, or include any injunctive relief against any indemnitee. The indemnifying party shall not be liable for any settlement or compromise or the consent to the entry of judgment in connection with any such action effected without its written consent, but if settled with its written consent or if there be a final judgment for the plaintiff in any such action other than a judgment entered with the consent of such indemnitee, then the indemnifying party shall indemnify and hold harmless any indemnitee from and against any loss or liability by reason of such settlement or judgment.

(e)    Each indemnitee shall furnish such information regarding itself or the claim in question as the indemnifying party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation arising therefrom.

(f)    Notwithstanding anything to the contrary herein, the provisions of this Article VIII are intended solely for the benefit of the parties to this Purchase Agreement and not for the benefit of, nor may any provision hereby be enforced by, any other Person.

ARTICLE IX

SURVIVAL OF CERTAIN PROVISIONS

Section 9.1      Survival of Certain Provisions. The representations, warranties, covenants and agreements contained in this Purchase Agreement shall survive (a) the execution and delivery of this Purchase Agreement, the Notes,  the Guarantees and the Warrants and (b) the purchase or transfer by any Purchaser of any Note or Warrant or portion thereof or interest therein. All such provisions are binding upon and may be relied upon by any subsequent holder or beneficial owner of a Note or Warrant, regardless of any investigation made at any time by or on behalf of any Purchaser or any other holder or beneficial owner of a Note or Warrant.  All

 

statements contained in any certificate or other instrument delivered by or on behalf of any party hereto pursuant to this Purchase Agreement shall be deemed to have been relied upon by each other party hereto and shall survive the consummation of the transactions contemplated hereby regardless of any investigation made by or on behalf of any such party. The Transaction Documents embody the entire agreement and understanding among the parties hereto and supersede all prior agreements and understandings relating to the subject matter hereof.

ARTICLE X

TERMINATION

Section 10.1   Termination.  This Purchase Agreement (a) shall be terminated automatically without further notice or action by any party hereto if the M&A Agreement has been terminated prior to the Initial Closing Date, (b) may be terminated by the Purchasers if the Initial Closing Date has not occurred by the date that is 60 days after the date of this Purchase Agreement and (c) may be terminated upon the mutual written agreement of all parties hereto.

ARTICLE XI

NOTICES

Section 11.1    Notices. All statements, requests, notices and agreements hereunder shall be in writing and delivered by hand, mail, electronic mail, overnight courier or telefax as follows:

(a)    if to any Purchaser,  in accordance with Schedule 1; and

(b)   if to the Issuer, to:

VIVUS, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer and General Counsel
Electronic mail: ▇▇▇@▇▇▇▇▇.▇▇▇;
                          ▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

ARTICLE XII

SUCCESSORS AND ASSIGNS

Section 12.1    Successors and Assigns. This Purchase Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors, permitted assignees and permitted transferees.  So long as any of the Notes or Warrants are outstanding, the Issuer may not assign any of its rights or obligations hereunder or any interest herein without the prior written consent of the Purchasers  except as permitted in accordance with the Indenture and the Warrants, as applicable.

 

ARTICLE XIII

SEVERABILITY

Section 13.1    Severability.  If any term, covenant, restriction or provision of this Purchase Agreement is held by a court of competent jurisdiction to be invalid, illegal, void, prohibited or unenforceable, the remainder of the terms, covenants, restrictions and provisions set forth herein shall remain in full force and effect and shall in no way be invalidated, rendered illegal, made void, prohibited or made unenforceable, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, covenant, restriction or provision. It is hereby stipulated and declared to be the intention of the parties hereto that they would have executed the remaining terms, covenants, restrictions and provisions without including any of such that may be hereafter invalidated, rendered illegal, made void, prohibited or made unenforceable.

ARTICLE XIV

WAIVER OF JURY TRIAL

Section 14.1    WAIVER OF JURY TRIAL.  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PURCHASER AND THE ISSUER HEREBY WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS PURCHASE AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

ARTICLE XV

GOVERNING LAW; CONSENT TO JURISDICTION

Section 15.1    Governing Law; Consent to Jurisdiction. THIS PURCHASE AGREEMENT 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 OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. To the extent permitted by applicable Law, the parties hereto hereby submit to the non-exclusive jurisdiction of the U.S. federal and state courts of competent jurisdiction in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Purchase Agreement or the transactions contemplated hereby.

ARTICLE XVI

COUNTERPARTS

Section 16.1    Counterparts. This Purchase Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Purchase Agreement. Any counterpart may be executed by facsimile or other electronic transmission, and such facsimile or other electronic transmission shall be deemed due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original.

 

ARTICLE XVII

TABLE OF CONTENTS AND HEADINGS

Section 17.1    Table of Contents and Headings. The Table of Contents and headings of the Articles and Sections of this Purchase Agreement 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.

{SIGNATURE PAGES FOLLOW}

 

 

If the foregoing is in accordance with your understanding of this Purchase Agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement among us and you in accordance with its terms.

 

 

 

 

ANNEX A

RULES OF CONSTRUCTION AND DEFINED TERMS

Unless the context otherwise requires, in this Annex A and each Transaction Document (or other document) to which this Annex A is attached:

(a)        A term has the meaning assigned to it and an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP, unless any Transaction Document (or other document) otherwise provides.

(b)       Where any payment is to be made, any funds are to be applied or any calculation is to be made under any Transaction Document (or other document) on a day that is not a Business Day, unless any Transaction Document (or other document) otherwise provides, such payment shall be made, such funds shall be applied and such calculation shall be made on the succeeding Business Day, and payments shall be adjusted accordingly, including interest unless otherwise specified.

(c)       Words of the masculine, feminine or neuter gender shall mean and include the correlative words of other genders.

(d)       The definitions of terms shall apply equally to the singular and plural forms of the terms defined.

(e)       The terms  “include”,  “including”  and similar terms shall be construed as if followed by the phrase  “without limitation”.

(f)       The word  “or”  is not exclusive.

(g)       Unless otherwise specified, references to an agreement or other document include references to such agreement or document as from time to time amended, restated, reformed, supplemented or otherwise modified in accordance with the terms thereof (subject to any restrictions on such amendments, restatements, reformations, supplements or modifications set forth in this Annex A or any Transaction Document (or other document)) and include any Annexes, Exhibits and Schedules attached thereto.

(h)       Unless otherwise specified, references to any Law shall include such Law as from time to time in effect, including any amendment, modification, codification, replacement or reenactment thereof or any substitution therefor.

(i)        References to any Person shall be construed to include such Person’s successors and permitted assigns (subject to any restrictions on assignment, transfer or delegation set forth in this Annex A or any Transaction Document (or other document)), and any reference to a Person in a particular capacity excludes such Person in other capacities.

(j)        The word  “will”  shall be construed to have the same meaning and effect as the word  “shall”.

 

(k)       The words “hereof”,  “herein”,  “hereunder”  and similar terms when used in this Annex A or any Transaction Document (or other document) shall refer to this Annex A or such Transaction Document (or other document) as a whole and not to any particular provision hereof or thereof, and references to Articles, Sections, Annexes, Schedules and Exhibits herein and therein are references to Articles and Sections of, and Annexes, Schedules and Exhibits to, the relevant Transaction Document (or other document) unless otherwise specified.

(l)        In the computation of a period of time from a specified date to a later specified date, the word “from”  means “from and including”  and each of the words “to”  and “until”  means “to but excluding”.

(m)      References to any action, remedy or method of judicial proceeding for the enforcement of the rights of creditors or of security shall be deemed to include, in respect of any jurisdiction other than the State of New York, references to such action, remedy or method of judicial proceeding for the enforcement of the rights of creditors or of security available or appropriate in such jurisdiction as shall most nearly approximate such action, remedy or method of judicial proceeding described or referred to in the relevant Transaction Document (or other document).

(n)       References to any term having the meaning set forth in the Indenture shall mean the meaning set forth in the Indenture as of the Initial Closing Date.

 

“$”  means lawful money of the United States.

“Accredited Investor”  means an  “accredited investor”  as defined in Rule 501(a)(1), (a)(2), (a)(3) or (a)(7) under the Securities Act that is not (i) a QIB or (ii) a Person other than a U.S. person (as defined in Regulation S) that acquires Notes in reliance on Regulation S.

“Additional Notes”  means the 10.375% Senior Secured Notes due 2024  of the Issuer in the initial Outstanding Principal Balance of up to $10,000,000 that may be issued on the Subsequent Closing Date pursuant to Section 2.01(c) of the Indenture and Section 3.2.

“Affiliate”  means, with respect to any specified Person, another Person that directly,  or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the specified Person. For purposes of this definition,  “control”  means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a  Person, whether through the ownership of Voting Stock, by contract or otherwise, and  “controlled”  has a meaning correlative thereto.

“Applicable Product Laws”  has the meaning set forth in Section 5.20.

“Business Day”  means any day other than a Saturday, a  Sunday or any other day on which banking institutions are authorized or required by Law to close in New York City or the city in which the Trustee’s corporate trust office is located.

“Capital Stock”  means (a) in the case of a corporation, corporate stock or shares, (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited) and membership rights, and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, in each case to the extent treated as equity in accordance with GAAP, but excluding from all of the foregoing any debt securities convertible into or exchangeable for Capital Stock whether or not such debt securities include any right of participation with Capital Stock.

“Closing Date”  means each of the Initial Closing Date and the Subsequent Closing Date.

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

“Collateral”  means all property subject, or purported to be subject from time to time, to a Lien under the Security Documents.

“Collateral Agent”  means U.S. Bank National Association in its capacity as  “Collateral Agent”  under the Indenture and under the Security Documents and any successor thereto in such capacity.

“Collateral Agreement”  means that certain collateral agreement, to be dated as of the Initial Closing Date,  to which the Issuer, the Trustee and the Collateral Agent will be party.

 

“Commission”  means the U.S. Securities and Exchange Commission or any successor thereto.

“Common Stock” means (i) the Issuer’s common stock, par value $0.001 per share, and (ii) any other capital stock into which such common stock is reclassified or reconstituted.

“Confidential Information”  means, as it relates to any Purchaser (or its Affiliates), all information (whether written or oral, or in electronic or other form) furnished to the Issuer or its Affiliates at any time concerning such Purchaser or its Affiliates (including any of its equityholders), including any and all information regarding any aspect of such Purchaser’s business, including its owners, funds, strategy, market views, structure, investors or potential investors. Such Confidential Information includes any IRS Form W-9 or W-8 (or any similar type of form) provided by such Purchaser to the Issuer. Notwithstanding the foregoing definition,  “Confidential Information”  shall not include information that is (v) independently developed or discovered by the Issuer without use of or access to any information described in the second preceding sentence, as demonstrated by documentary evidence, (w) already in the public domain at the time the information is disclosed or has become part of the public domain after such disclosure through no breach of this Purchase Agreement, (x) lawfully obtainable from other sources, (y) required to be disclosed in any document to be filed with any Governmental Authority or otherwise required to be disclosed under applicable Law or judicial or administrative proceedings (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigation demand or similar process) or pursuant to requests from regulatory agencies having oversight over the Issuer or (z) required to be disclosed by court or administrative order or under securities Laws applicable to any party to this Purchase Agreement or pursuant to the rules and regulations of any stock exchange or stock market on which securities of the Issuer or such Purchaser or its respective Affiliates may be listed for trading.

“Controlled Group” means any organization that is a member of a controlled group of corporations within the meaning of Section 414 of the Code.

“Convertible Senior Notes” means the Issuer’s 4.50% Convertible Senior Notes due May 1, 2020.

“Custodian” has the meaning set forth in Section 3.2.

“Custodian Agreement” means that certain Custodian Agreement to be entered into between the Issuer, the Custodian and the Purchasers in respect of the Initial Closing Date.

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

“Definitive Security”  has the meaning set forth in the Indenture.

“DTC”  means The Depository Trust Company (including its nominees).

“Enforceability Exceptions”  has the meaning set forth in Section 5.6.

“Environmental Laws”  has the meaning set forth in Section 5.22.

 

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

“ERISA”  means the U.S. Employee Retirement Income Security Act of 1974, as amended.

“Event of Default”  has the meaning set forth in the Indenture.

“Exchange Act”  means the U.S. Securities Exchange Act of 1934, as amended.

“Exchange Act Documents”  has the meaning set forth in Section 5.2.

“FDA”  means the U.S. Food and Drug Administration or any successor thereto.

“GAAP”  means generally accepted accounting principles as in effect in the United States from time to time.

“Global Security”  has the meaning set forth in the Indenture.

“Governmental Authority”  means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, arbitrator, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guarantee”  means any guarantee of the obligations of the Issuer under the Indenture and the Notes by any Person in accordance with the provisions of the Indenture.

“Hazardous Materials” means any material, chemical, substance, waste, pollutant, contaminant, compound, mixture or constituent thereof, in any form or amount, including petroleum (including crude oil or any fraction thereof) and petroleum products, natural gas liquids, asbestos and asbestos containing materials, naturally occurring radioactive materials, brine and drilling mud, or that can give rise to liability under any Environmental Law.

“Indemnified Liabilities” has the meaning set forth in Section 8.1(a).

“Indenture”  means that certain indenture for the Notes,  to be dated as of the Initial Closing Date, among the Issuer,  any Subsidiary Guarantors, the Trustee and the Collateral Agent, in the form attached as Exhibit B.

“INHAM Exemption”  has the meaning set forth in Section 4.3(a)(iii)(z).

“Initial Closing Date”  has the meaning set forth in Section 3.1.

“Initial Closing Purchase Price” has the meaning set forth in Section 3.2.

“Intellectual Property” has the meaning set forth in Section 5.15(a).

 

“IRS”  means the U.S. Internal Revenue Service or any successor thereto.

“Issuer”  has the meaning set forth in the preamble hereto.

“Issuer Indemnitee” has the meaning set forth in Section 8.1(b).

“Issuer Indemnitees” has the meaning set forth in Section 8.1(b).

“Laws”  means, collectively, all international, foreign, federal, state and local laws, statutes, treaties, rules, guidelines, regulations, ordinances, judgments, orders, writs, injunctions, decrees, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

“Lien”  means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable Law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the UCC (or equivalent statutes) of any jurisdiction); provided, that in no event shall an operating lease be deemed to constitute a Lien.

“M&A Agreement” means that certain Asset Purchase Agreement dated as of April 30, 2018 between ▇▇▇▇▇▇▇ Pharmaceuticals, Inc. and the Issuer.

“Material Adverse Effect”  means a material adverse effect on (a) the business, properties, management, financial position, stockholders’  equity or results of operations of the Issuer and its Subsidiaries taken as a whole, (b) on the ability of the Obligors to perform their obligations under the Transaction Documents, including the issuance and sale of the Notes and the Warrants, or (c) the validity or enforceability of the Transaction Documents.

“Money Laundering Laws”  has the meaning set forth in Section 5.29.

“Nasdaq”  means the NASDAQ Global Select Market.

“Notes”  means the 10.375% Senior Secured Notes due 2024 of the Issuer, substantially in the form of Exhibit A to the Indenture, and shall include, for the avoidance of doubt, the Original Notes and the Additional Notes, as and to the extent issued pursuant to the terms and conditions of the Indenture and this Purchase Agreement.

“Obligors” means, collectively, the Issuer and the Subsidiary Guarantors.

“OFAC”  means the Office of Foreign Assets Control of the U.S. Department of the Treasury or other relevant U.S. sanctions authority.

“Optional Secured Notes”  has the meaning set forth in the Indenture.

 

“Original Notes”  means the 10.375% Senior Secured Notes due 2024 of the Issuer in the initial Outstanding Principal Balance of $110,000,000 to be issued on the Initial Closing Date pursuant to Section 2.01(b) of the Indenture and Section 3.2.

“Outstanding Principal Balance”  means, with respect to any Note or other evidence of indebtedness outstanding, the total principal amount of such Note or other evidence of indebtedness unpaid and outstanding at any time.

“Pancreaze®”  means the product referred to as Pancreaze® (whether marketed under such name or any other name and including any authorized generic).

“Paying Agent”  means an office or agency where Notes may be presented for payment maintained by the Issuer in accordance with the Indenture.

“Person”  means an individual, corporation, company, partnership, association, limited liability company, unincorporated organization, trust, joint stock company or joint venture, a Governmental Authority or any other entity.

“Plan”  has the meaning set forth in Section 5.24.

“Plan Assets”  has the meaning given to such term by Section 3(42) of ERISA and regulations issued by the U.S. Department of Labor.

“Product Authorizations” has the meaning set forth in Section 5.20.

“PTE”  has the meaning set forth in Section 4.3(a)(iii)(w).

“PTO”  means the U.S. Patent and Trademark Office.

“Purchase Agreement”  means this agreement.

“Purchase Price”  has the meaning set forth in Section 3.2.

“Purchaser”  has the meaning set forth in Section 1.1.

“Purchaser Indemnitee” has the meaning set forth in Section 8.1(a).

“Purchaser Indemnitees” has the meaning set forth in Section 8.1(a).

“Purchasers”  has the meaning set forth in Section 1.1.

“QIB”  means a qualified institutional buyer within the meaning of Rule 144A.

“QPAM Exemption”  means PTE 84-14 (issued December 21, 1982, as subsequently amended).

“Regulation S”  means Regulation S under the Securities Act.

“Regulatory Authorities”  has the meaning set forth in Section 5.21.

 

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing or migrating in, into or through the environment or in, into, from or through any building or structure.

“Responsible Officer”  means, with respect to any Obligor, any manager, director or officer of such Obligor.

“Rule 144A”  means Rule 144A under the Securities Act.

“Sanctioned Country”  has the meaning set forth in Section 5.30.

“Sanctions” has the meaning set forth in Section 5.30.

“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”  has the meaning set forth in Section 5.33.

“Securities Act”  means the U.S. Securities Act of 1933, as amended.

“Security Documents”  means the security agreements, pledge agreements, mortgages, collateral assignments and related agreements, as amended, supplemented, restated, renewed, refunded, replaced, restructured, repaid, refinanced or otherwise modified from time to time, creating, perfecting or otherwise evidencing the security interests in, or other Liens on, the Collateral as contemplated by the Indenture.

“Similar Law”  has the meaning set forth in Section 4.3(b).

“Source”  has the meaning set forth in Section 4.3(a).

“Subsequent Closing Date”  has the meaning set forth in Section 3.2.

“Subsequent Closing Purchase Price” has the meaning set forth in Section 3.2.

“Subsidiary”  means, with respect to any Person, (a) any corporation, association or other business entity (other than a partnership, joint venture or limited liability company) of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, and (b) any partnership, joint venture or limited liability company of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (y) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity. For purposes of clarity, a Subsidiary of a Person shall not include any Person that is under common control with the first Person solely by virtue of having directors, managers or trustees in common and shall not include any Person that is solely under common control with the first Person (i.e., a sister company with a common parent).

 

“Subsidiary Guarantors”  means any Subsidiary of the Issuer that is party to the Indenture as of the applicable Closing Date (if any).

“Transaction Documents”  means this Purchase Agreement, the Indenture, the Notes, the Warrants,  the Guarantees, the Security Documents and each other agreement pursuant to which the Collateral Agent (or its agent) is granted a Lien to secure the obligations under the Indenture,  the Notes or the Guarantees.

“Trustee”  has the meaning set forth in Section 3.2.

“UCC”  means the Uniform Commercial Code as in effect in the State of New York; provided, that, if perfection, the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code (or equivalent Law) as in effect in a jurisdiction other than the State of New York, then  “UCC”  means the Uniform Commercial Code (or equivalent Law) as in effect from time to time in such other jurisdiction for purposes of the provisions relating to such perfection, effect of perfection or non-perfection or priority.

“U.S.”  or  “United States”  means the United States of America, its 50 states, each territory thereof and the District of Columbia.

“Voting Stock”  of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the board of directors of such Person.

“Warrants” means that certain warrant or warrants, to be dated the Initial Closing Date, executed by the Issuer and acknowledged by the Purchasers named therein, in the form attached as Exhibit A.

 

 

 

EXHIBIT A

FORM OF WARRANT

See attached.

 

 

FORM OF ATHYRIUM WARRANT

THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THIS COMMON STOCK PURCHASE WARRANT AND THE SHARES THAT MAY BE PURCHASED HEREUNDER MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND REGISTRATION OR QUALIFICATION UNDER ANY OTHER SECURITIES LAWS OF ANY APPLICABLE STATE OR OTHER JURISDICTION OR (B) AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

VIVUS, INC.

COMMON STOCK PURCHASE WARRANT

WHEREAS, capitalized terms used herein shall have the meanings ascribed to such terms in Section 11 hereof;

WHEREAS, the Company and the Holder and certain other parties thereto have entered into that certain Purchase Agreement (as amended, modified or supplemented, the “Purchase Agreement”) pursuant to which the Company will issue to the Holder the Company’s 10.375% Senior Secured Notes due 2024 (the “Senior Notes”);

WHEREAS, in connection with the issuance of the Senior Notes to the Holder, the Company also wishes to issue this Warrant to the Holder; and

WHEREAS, the Company and the Holder desire to set forth herein the rights and obligations of the Company and the Holder both prior to and following the exercise of this Warrant;

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company hereby issues this Warrant to the Holder, and the Company and the Holder hereby agree as follows:

 

THIS IS TO CERTIFY that [          ] and its permitted transferees, successors and assigns (the “Holder”) is the holder of this Warrant (this “Warrant”) entitling the Holder to purchase from VIVUS, Inc., a Delaware corporation (the “Company”), at the price of $0.3951 per share (the “Exercise Price”), at any time after the date hereof (the “Commencement Date”) and expiring on June 8, 2024 (the “Expiration Date”), up to [       ] shares of the fully paid and non-assessable common stock, par value $0.001 per share, of the Company (as such number may be adjusted as provided herein). The maximum number of shares of Common Stock that may be purchased pursuant to this Warrant is referred to herein as the “Aggregate Number”. The Aggregate Number and Exercise Price set forth above shall also be adjusted under certain conditions specified in Section 5 hereof.

 

SECTION 1.  This Warrant; Transfer and Exchange.

(a)        This Warrant. This Warrant and the rights and privileges of the Holder under this Warrant may be exercised by the Holder in whole or in part as provided herein, shall survive any termination of the Purchase Agreement and, as more fully set forth in Section 1(b) hereof and Section 7 hereof, may, subject to the terms of this Warrant, be transferred by the Holder to any other Person or Persons who meet the requirements set forth herein at any time or from time to time, in whole or in part, regardless of whether the Holder retains any or all rights under the Purchase Agreement.

(b)        Transfer and Exchanges. The Company shall initially record this Warrant on a register to be maintained by the Company and, subject to Section 7 hereof, from time to time thereafter shall reflect the transfer of this Warrant on such register when surrendered for transfer in accordance with the terms of this Warrant and properly endorsed, accompanied by appropriate instructions, and further accompanied by payment in cash or by check, bank draft or money order payable to the order of the Company, in United States currency, of an amount equal to any stamp or other tax or governmental charge or fee required to be paid in connection with the transfer of this Warrant. Upon any such transfer, a new warrant or warrants shall be issued to the transferee (and the Holder in the event this Warrant is only partially transferred), and the surrendered warrant shall be cancelled. This Warrant may be exchanged at the option of the Holder, when surrendered at the Principal Office, for another warrant or other warrants of like tenor and representing in the aggregate the right to purchase a like number of shares of Common Stock. Any attempt to transfer this Warrant in violation of the provisions of this Section 1(b) shall be null and void and the Company shall not register or effect any such transfer.

SECTION 2.  Exercise.

(a)        Right to Exercise. At any time after the Commencement Date and on or before the Expiration Date, the Holder, in accordance with the terms hereof, may exercise this Warrant, in whole at any time or in part from time to time, by delivering this Warrant to the Company during normal business hours on any Business Day at the Principal Office, together with the notice of exercise in the form attached hereto as Exhibit A and made a part hereof (the “Notice of Exercise”), duly executed, and payment of the Exercise Price per share for each share purchased, as specified in the Notice of Exercise. The aggregate amount (the “Aggregate Exercise Price”) to be paid for the shares to be purchased (the “Exercise Amount”) shall equal the product of (i) the Exercise Amount multiplied by (ii) the Exercise Price. If the Expiration Date is not a Business Day, then this Warrant may be exercised on the next succeeding Business Day.

(b)        Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made to the Company in cash or other immediately available funds or as provided in Section 2(c) hereof or a combination thereof. In the case of payment of all or a portion of the Aggregate Exercise Price pursuant to Section 2(c) hereof, the direction by the Holder to make a “Cashless Exercise” shall serve as accompanying payment for that portion of the Aggregate Exercise Price.

(c)        Cashless Exercise. If the Company shall receive written notice from the Holder at the time of exercise of this Warrant that the Holder elects to make a “Cashless Exercise”

 

of this Warrant, the Company shall deliver to the Holder (without payment by the Holder of any Exercise Price in cash) that number of Warrant Shares computed using the following formula:

where

X =      the number of Warrant Shares to be issued to the Holder;

Y =     the number of Warrant Shares purchasable under this Warrant (at the date of such calculation) or, if only a portion of this Warrant is being exercised, the number of Warrant Shares purchasable under the portion of this Warrant being exercised (at the date of such calculation);

A =      the Fair Market Value Per Share; and

B =      the Exercise Price (as adjusted to the date of such calculation).

(d)        Issuance of Shares of Common Stock. Upon receipt by the Company of this Warrant at the Principal Office in proper form for exercise, and accompanied by the Notice of Exercise and payment of the Aggregate Exercise Price as aforesaid, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that certificates representing such shares of Common Stock may not then be actually delivered. Within 10 Business Days after such surrender of this Warrant, delivery of the Notice of Exercise and payment of the Aggregate Exercise Price as aforesaid, the Company shall cause its transfer agent to issue the Warrant Shares so purchased to the Holder in book-entry form. Any reference in this Warrant to the issuance of a certificate or certificates representing the Warrant Shares shall also be deemed a reference to the book-entry issuance of such Warrant Shares.

(e)        Fractional Shares. The Company may, but shall not be required to, deliver fractions of shares of Common Stock upon exercise of this Warrant. If any fraction of a share of Common Stock would be deliverable upon an exercise of this Warrant, the Company may, in lieu of delivering such fraction of a share of Common Stock, make a cash payment to the Holder in an amount equal to the same fraction of the Fair Market Value Per Share.

(f)        Partial Exercise. In the event of a partial exercise of this Warrant, the Company shall issue to the Holder a Warrant in like form for the unexercised portion thereof that has not expired.

(g)        Deemed Automatic Exercise. If, on the Expiration Date, this Warrant remains unexercised (in whole or in part) and the Fair Market Value Per Share is greater than the Exercise Price, then this Warrant shall (automatically and without any action on the part of the Holder) be deemed exercised in full in a “Cashless Exercise” in accordance with Section 2(a) hereof, Section 2(b) hereof and Section 2(c) hereof.

SECTION 3.  Payment of Taxes. The Company shall pay all stamp taxes attributable to

 

the initial issuance of shares or other securities issuable upon the exercise of this Warrant or issuable pursuant to Section 5 hereof, excluding any tax or taxes that may be payable because of a transfer involved in the issuance or delivery of any certificates for shares or other securities issued or delivered upon exercise of this Warrant in a name other than that of the Holder surrendered upon the exercise of this Warrant, and the Company shall not be required to issue or deliver Warrant Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

SECTION 4.   Replacement Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of an affidavit of loss by the Holder to the Company in customary form, and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall issue and deliver in exchange and substitution for and upon cancellation of the mutilated Warrant, or in lieu of and in substitution for the Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing an equivalent right or interest.

SECTION 5.  Adjustments to the Aggregate Number and the Exercise Price.

(a)        Adjustments to Exercise Price. The Exercise Price shall be subject to adjustment from time to time as provided in this Section 5 (without duplication, but in each case after taking into consideration any prior adjustments pursuant to this Section 5) upon the occurrence of any of the following events:

(i)         The issuance of Common Stock as a dividend or distribution to all holders of Common Stock, or a subdivision, combination, split, reverse split or reclassification of the outstanding Common Stock into a greater or smaller number of Common Stock, in which event the Exercise Price shall be adjusted based on the following formula:

▇_▇

▇_▇ = E₀ x ---------------

N₁

where:

E₁  =          the Exercise Price in effect immediately after (i) in the case of a dividend or distribution, the start of business on the first date on which the Common Stock can be traded without the right to receive such dividend or distribution (the “Ex-Date”), or (ii) the consummation of the transaction in the case of a subdivision, combination, split, reverse split or reclassification;

E₀  =          the Exercise Price in effect immediately prior to (i) the start of business on the Ex-Date in the case of a dividend or distribution or (ii) the consummation of the transaction in the case of a subdivision, combination, split, reverse split or reclassification;

N₀  =         the number of outstanding shares of Common Stock (including any shares issuable on exercise or conversion of outstanding options, warrants and convertible securities, but excluding any shares held by the Company or any of its subsidiaries) (together, “Common Stock Deemed Outstanding”) immediately prior to (i) the start of business on the record date in the case of a dividend or distribution or (ii) the consummation of the transaction in the case of a subdivision, combination, split, reverse split or reclassification; and

 

N₁  =         the number of shares of Common Stock equal to (i) in the case of a dividend or distribution, the sum of the Common Stock Deemed Outstanding immediately prior to the start of business on the record date for such dividend or distribution plus the total number of shares of Common Stock issued pursuant to such dividend or distribution, or (ii) in the case of a subdivision, combination, split, reverse split or reclassification, the shares of Common Stock Deemed Outstanding immediately after such subdivision, combination, split, reverse split or reclassification.

Such adjustment shall become effective immediately after (i) the start of business on the Ex-Date in the case of a dividend or distribution or (ii) the consummation of the transaction in the case of a subdivision, combination, split, reverse split or reclassification. If any dividend or distribution or subdivision, combination, split, reverse split or reclassification of the type described in this Section 5(a) is declared or announced but not so paid or made, the Exercise Prices shall again be adjusted to the applicable Exercise Prices that would then be in effect if such dividend or distribution or subdivision, combination, split, reverse split or reclassification had not been declared or announced, as the case may be.

(ii)       The issuance as a dividend or distribution to all holders of Common Stock of evidences of indebtedness, securities (including convertible securities) of the Company or any other Person (other than Common Stock), cash or other property (excluding any dividend or distribution covered by clause (i) above), in which event the Exercise Price will be adjusted based on the following formula:

P-FMV

E₁ = E₀  x ---------------

P

where:

E₁  =          the Exercise Price in effect immediately after the start of business on the Ex-Date for such dividend or distribution;

E₀  =          the Exercise Price in effect immediately prior to the start of business on the Ex-Date for such dividend or distribution;

P =           the Fair Market Value Per Share as of immediately prior to the start of business on the second Business Day preceding the Ex-Date for such dividend or distribution; and

FMV =   the Fair Value of the portion of such dividend or distribution applicable to one share of Common Stock as of the start of business on the date of such dividend or distribution.

Such decrease shall become effective immediately after the start of business on the Ex-Date for such dividend or distribution. In the event that such dividend or distribution is declared or announced but not so paid or made, the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such dividend or distribution had not been declared or announced.

(iii)      The payment in respect of any tender offer or exchange offer by the Company for shares of Common Stock, where the cash and Fair Value of any other consideration included in the payment per share of Common Stock exceeds the Fair Market Value Per Share as of the start of business on the second Business Day preceding the

 

expiration date of the tender or exchange offer (the “Offer Expiration Date”), in which event the Exercise Price will be adjusted based on the following formula:

(N₀ x P) - A

E₁ = E₀  x -----------------

(P x N₁)

where:

E₁  =          the Exercise Price in effect immediately after the start of business on the Offer Expiration Date;

E₀  =          the Exercise Price in effect immediately prior to the start of business on the Offer Expiration Date;

N₀  =         the number of shares of Common Stock Deemed Outstanding immediately prior to the expiration of the tender or exchange offer (prior to giving effect to the purchase or exchange of Common Stock);

N₁  =         the number of shares of Common Stock Deemed Outstanding immediately after the expiration of the tender or exchange offer (prior to giving effect to the purchase or exchange of Common Stock);

A=          the aggregate cash and Fair Value of any other consideration payable for the shares of Common Stock purchased in such tender offer or exchange offer; and

P =           the Fair Market Value Per Share as of the start of business on the second Business Day preceding the Offer Expiration Date.

An adjustment, if any, to the Exercise Price pursuant to this clause (iii) shall become effective immediately after the close of business on the Offer Expiration Date. In the event that the Company or a subsidiary of the Company is obligated to purchase shares of Common Stock pursuant to any such tender offer or exchange offer, but the Company or such subsidiary is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Exercise Price shall again be adjusted to be the Exercise Price which would then be in effect if such tender offer or exchange offer had not been made. Except as set forth in the preceding sentence, if the application of this clause (iii) to any tender offer or exchange offer would result in an increase in the Exercise Price, no adjustment shall be made for such tender offer or exchange offer under this clause (iii).

(iv)       If any single action would require adjustment of the Exercise Price pursuant to more than one subsection of this Section 5(a), only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value relative to the rights and interests of the Holder.

(v)        Notwithstanding this Section 5(a) or any other provision of this Warrant, if an Exercise Price adjustment becomes effective on any Ex-Date, and a Warrant has been exercised on or after such Ex-Date and on or prior to the related record date resulting in the Person issued Common Stock being treated as the record holder of such Common Stock on or prior to the record date, then, notwithstanding the Exercise Price adjustment provisions in this Section 5(a), the Exercise Price adjustment relating to such Ex-Date will not be made. Instead, such Person will be treated as if it were the record owner

 

of such Common Stock on an un-adjusted basis and participate in the related dividend, distribution or other event giving rise to such adjustment.

(b)        Adjustments to Aggregate Number. Concurrently with any adjustment to the Exercise Price under Section 5(a), the Aggregate Number will be adjusted such that the Aggregate Number in effect immediately following the effectiveness of such adjustment will be equal to the Aggregate Number in effect immediately prior to such adjustment, multiplied by a fraction, (i) the numerator of which is the Exercise Price in effect immediately prior to such adjustment and (ii) the denominator of which is the Exercise Price in effect immediately following such adjustment.

(c)        Certain Distributions of Rights and Warrants.

(i)         Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase the Company’s securities (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (a “Trigger Event”):

(1)        are deemed to be transferred with such Common Stock;

(2)        are not exercisable; and

(3)        are also issued in respect of future issuances of Common Stock,

shall be deemed not to have been distributed for purposes of this Section 5 (and no adjustment to the Exercise Price or the Aggregate Number under this Section 5 will be made) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Exercise Price and the Aggregate Number shall be made under this Section 5 (subject in all respects to Section 5(d) below).

(ii)       If any such right or warrant is subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights or warrants with such rights (subject in all respects to Section 5(d) below).

(iii)      In addition, except as set forth in Section 5(d), in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in clause (ii) above) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Exercise Price and the Aggregate Number under this Section 5 was made (including any adjustment contemplated in Section 5(d)):

(1)        in the case of any such rights or warrants that shall all have been redeemed or repurchased without exercise by the holders thereof, the Exercise Price and the Aggregate Number shall be readjusted upon such final redemption or

 

repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a distribution under Section 5(a)(ii), equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase; and

(2)        in the case of such rights or warrants that shall have expired or been terminated without exercise by the holders thereof, the Exercise Price and the Aggregate Number shall be readjusted as if such rights and warrants had not been issued or distributed.

(d)        Stockholder Rights Plans. If the Company has a stockholder rights plan in effect with respect to the Common Stock, upon exercise of this Warrant the Holder shall be entitled to receive, in addition to the Common Stock, the rights under such stockholder rights plan, unless, prior to such exercise, such rights have separated from the Common Stock.

(e)        Restrictions on Adjustments.

(i)         Except in accordance with Sections 5(a) and 5(b), the Exercise Price and the Aggregate Number will not be adjusted for the issuance of Common Stock or other securities of the Company.

(ii)       For the avoidance of doubt, except as otherwise provided in Sections 5(a) and 5(b), neither the Exercise Price nor the Aggregate Number will be adjusted:

(1)        upon the issuance of any shares of Common Stock or other securities or any payments pursuant to any other equity incentive plan of the Company;

(2)        upon any issuance of any shares of Common Stock pursuant to the exercise of this Warrant;

(3)        upon the offer and sale of shares of Common Stock by the Company in a primary offering at a price that is less than Fair Market Value Per Share at the time of such offer and sale; and

(4)        upon the issuance of shares of Common Stock or other securities of the Company in connection with a business acquisition transaction.

(iii)      No adjustment shall be made to the Exercise Price or the Aggregate Number for any of the transactions described in Section 5(a) if the Company makes provisions for participation in any such transaction with respect to the Holder of this Warrant without exercise of this Warrant on the same basis as with respect to the shares of Common Stock issuable hereunder with notice that the Company’s board of directors determines in good faith to be fair and appropriate

 

(f)        Certificate as to Adjustment. As promptly as reasonably practicable following (i) any adjustment of the Exercise Price or the Aggregate Number or (ii) the receipt by the Company of a written request by the Holder, but in each case in any event not later than ten Business Days thereafter, the Company shall furnish to the Holder a certificate of an executive officer certifying the Exercise Price then in effect and the Aggregate Number or the amount, if any, of other shares of stock or other securities or assets then issuable upon exercise of this Warrant, including in the case of clause (i) above setting forth in reasonable detail any adjustment and the facts upon which it is based.

(g)        Treatment of Warrant upon a Cash/Public Change of Control. In the event of a Change of Control in which the consideration to be received by the Company’s stockholders consists solely of cash, Marketable Securities or a combination thereof (a “Cash/Public Change of Control”), if this Warrant is outstanding immediately prior to such Cash/Public Change of Control, then (i) if the Fair Market Value Per Share is greater than the then applicable Exercise Price, this Warrant shall be automatically exchanged without exercise for the same amount and kind of securities, cash or property as the Holder would have been entitled to receive upon the occurrence of such Cash/Public Change of Control if this Warrant had been exercised in full pursuant to Section 2(c) hereof immediately prior to such Cash/Public Change of Control, and (ii) if the Fair Market Value Per Share is less than or equal to the then applicable Exercise Price, this Warrant will expire immediately prior to the consummation of such Change of Control. If this Warrant is exchanged in accordance with clause (i) above, the Company shall pay or deliver to the Holder the securities, cash or property so contemplated promptly following the consummation of the Cash/Public Change of Control.

(h)        Treatment of Warrant upon a Non-Cash/Public Change of Control. If, at any time while this Warrant is outstanding, the Company consummates a Change of Control that is not a Cash/Public Change of Control, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant (in whole at any time or in part from time to time), the same amount and kind of securities, cash or property as the Holder would have been entitled to receive upon the occurrence of such Change of Control if it had been, immediately prior to such Change of Control, a holder of the number of Warrant Shares then issuable upon such exercise of this Warrant (the “Alternate Consideration”). The Company shall not effect any such Change of Control unless, prior to or simultaneously with the consummation thereof, any successor to the Company, any surviving entity or the Person purchasing or otherwise acquiring such assets or other appropriate Person shall assume the obligation to deliver to the Holder such Alternate Consideration as, in accordance with the foregoing provisions, the Holder may be entitled to receive and the other obligations under this Warrant.

SECTION 6.  Purchase Rights and Right of Offer.

(a)        Purchase Rights. If at any time the Company grants, issues or sells any shares of Common Stock, options, convertible securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of Common Stock (the “Purchase Rights”), then the Holder shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights that the Holder would have acquired if the Holder had held the number of Warrant Shares acquirable upon complete exercise of this Warrant immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights

 

or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. Anything herein to the contrary notwithstanding, the Holder shall not be entitled to the Purchase Rights granted herein with respect to any issuance or sale by the Company of (i) shares of Common Stock issued upon the exercise of this Warrant, (ii) shares of Common Stock issued directly or upon the exercise of options to directors, officers, employees or consultants of the Company in connection with their service as directors of the Company, their employment by the Company or their retention as consultants by the Company, in each case authorized by the Company’s board of directors and issued pursuant to an equity incentive plan of the Company, or (iii) shares of Common Stock issued upon the conversion or exercise of options, warrants or convertible securities issued prior to the Commencement Date, provided, that such securities are not amended after the Commencement Date to increase the number of shares of Common Stock issuable thereunder or to lower the exercise or conversion price thereof.

(b)        Right of Offer. If at any time while this Warrant is outstanding the Holder should desire to transfer this Warrant (but not, for the avoidance of doubt, the Warrant Shares) to a non-affiliated Person, the Holder shall so notify the Company. If the Company wishes to offer to purchase this Warrant for cash, it shall in good faith determine the current fair value of this Warrant and shall so notify the Holder within five Business Days after the Holder’s notice of intent to transfer is received by the Company. In this regard, the Company shall use a Black-Scholes valuation model with (i) a six-month trailing realized volatility, (ii) a maturity-matched U.S. Treasury curve risk-free interest rate, (iii) the actual remaining term on this Warrant and (iv) the 15-day volume weighted average price for the current price (for the 15 trading days preceding the date that the Holder’s notice of intent to transfer is received by the Company). The Holder may, at its option and in its sole discretion, accept the Company’s offer within five Business Days after the Holder’s receipt of such offer.

SECTION 7.  Transfers of this Warrant and the Warrant Shares.

(a)        Generally. Subject to compliance with applicable U.S. federal and state securities Laws, the right of offer set forth in Section 6(b) hereof and the restrictions set forth in this Section 7, the Holder may transfer this Warrant and the Warrant Shares in whole or in part to any Person, and, upon the reasonable request of the Holder, the Company agrees that it shall use commercially reasonable efforts to promptly assist the Holder in making any such transfer in compliance with any applicable U.S. federal and state securities Laws. This Warrant has not been, and the Warrant Shares at the time of their issuance may not be, registered under the Securities Act. For a transfer of this Warrant as an entirety by the Holder, upon surrender of this Warrant to the Company, together with the notice of assignment in the form attached hereto as Exhibit B duly completed and executed on behalf of the Holder, the Company shall issue a new Warrant of the same denomination to the assignee. For a transfer of this Warrant with respect to a portion of the Warrant Shares purchasable hereunder, upon surrender of this Warrant to the Company, together with the notice of assignment in the form attached hereto as Exhibit B duly completed and executed on behalf of the Holder, the Company shall issue a new Warrant to the assignee, in such denomination as shall be requested by the Holder, and shall issue to the Holder a new Warrant covering the number of Warrant Shares in respect of which this Warrant shall not have been transferred.

 

(b)        Representations by the Holder. The Holder, by its acceptance of this Warrant, represents and warrants to the Company as follows:

(i)         this Warrant has been acquired by the Holder, and any Warrant Shares to be acquired by the Holder will be acquired, for the account of the Holder for investment purposes for its own account and not with a view to or for sale in connection with any distribution or reselling thereof in a transaction that would violate the Securities Act or the securities laws of any state of the United States or any other applicable jurisdiction;

(ii)        the Holder is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act;

(iii)       the Holder is experienced in evaluating and investing in companies engaged in businesses similar to that of the Company;

(iv)       the Holder understands that investment in this Warrant (and any Warrant Shares that the Holder acquires) involves substantial risks;

(v)        the Holder has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in this Warrant (and any Warrant Shares that the Holder acquires) and is able to bear the economic risk of that investment; and

(vi)       the Holder understands that this Warrant is, and the Warrant Shares may be, characterized as “restricted securities” under the U.S. federal securities Laws inasmuch as they are being (or may be) acquired from the Company in a transaction not involving a public offering and that under such Laws this Warrant and the Warrant Shares may be resold without registration under the Securities Act only in certain limited circumstances and, accordingly, the Holder represents that it is familiar with Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

(c)        Covenant by the Holder. The Holder, by its acceptance of this Warrant, covenants with the Company that, prior to and as a condition to the sale or transfer of the Warrant Shares issuable upon exercise of this Warrant, the Holder shall furnish to the Company such customary certificates, representations, agreements and other information as the Company or the Company’s transfer agent may reasonably require to confirm that such sale or transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act, unless such Warrant Shares are being sold or transferred pursuant to an effective registration statement.

(d)        Transfer Restrictions Regarding This Warrant. This Warrant (or any warrants represented hereby) may only be sold, in whole or in part, (i) pursuant to an effective registration statement covering the resale by the Holder of this Warrant under the Securities Act or (ii) pursuant to an exemption from registration under the Securities Act and, if reasonably required by the Company, upon delivery to the Company of a customary opinion of legal counsel

 

(which may rely on customary certificates and representations), certifications or other evidence to establish that such registration is not required under the Securities Act.

(e)        Transfer Restrictions Regarding Warrant Shares. If the Warrant Shares are not registered at the time of issuance, then any Warrant Shares may only be sold (i) pursuant to an effective registration statement under the Securities Act or (ii) pursuant to an exemption from registration under the Securities Act and upon delivery to the Company of a customary opinion of legal counsel (which may rely on customary certificates and representations), certifications or other evidence as may reasonably be required by the Company in order to determine that such registration is not required under the Securities Act. The Holder acknowledges that the Company may place a restrictive legend on any Warrant Shares issued upon exercise in order to comply with applicable securities Laws, unless such Warrant Shares are sold pursuant to an effective registration statement or are otherwise freely tradable under Rule 144.

SECTION 8.  Covenants. Until the later of (i) the Expiration Date and (ii) the date as of which this Warrant has been exercised in full, the Company hereby covenants to the Holder as set forth in this Section 8.

(a)        Validly Issued Shares. All shares of Common Stock that may be issued upon exercise of this Warrant, assuming full payment of the Aggregate Exercise Price, shall, upon delivery by the Company, be duly authorized and validly issued, fully paid and non-assessable, free from all stamp taxes, liens and charges with respect to the issue or delivery thereof and otherwise free of all other security interests, encumbrances and claims (other than security interests, encumbrances and claims to which the Holder is subject prior to or upon the issuance of the applicable Warrant Shares, restrictions under applicable U.S. federal and/or state securities Laws and other transfer restrictions described herein).

(b)        Reservation of Shares. The Company shall at all times reserve and keep available out of the aggregate of its authorized but unissued Common Stock or its authorized and issued Common Stock held in its treasury, free of preemptive rights, such number of its duly authorized shares of Common Stock as shall be sufficient to enable the Company to issue the shares of Common Stock issuable upon exercise in full of this Warrant.

(c)        Affirmative Actions to Permit Exercise and Realization of Benefits. If any shares of Common Stock reserved or to be reserved for the purpose of the exercise of this Warrant, or any shares or other securities reserved or to be reserved for the purpose of issuance pursuant to Section 5 hereof, require registration with or approval of any Governmental Authority under any U.S. federal or state Law (other than securities Laws) before such shares or other securities may be validly delivered upon exercise of this Warrant, then the Company covenants that it will, at its sole expense, secure such registration or approval, as the case may be (including, without limitation, approvals or expirations of waiting periods required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended).

(d)        Integration. The Company shall not, and shall use its commercially reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of this Warrant in a manner that

 

would require the registration under the Securities Act of the sale of this Warrant to the Holder or any assignee of the Holder.

SECTION 9. Representations and Warranties by the Company. The Company represents and warrants to the Holder as of the Commencement Date as set forth in this Section 9.

(a)        Organizational Matters. The Company (i) is duly organized and validly existing under the Laws of the State of Delaware, (ii) has all requisite corporate power, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its assets and carry on its business as now being or as proposed to be conducted except to the extent that failure to have the same would not reasonably be expected to have a material adverse effect, (iii) is qualified to do business and is in good standing in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would (either individually or in the aggregate) reasonably be expected to have a material adverse effect, (iv) has full power, authority and legal right to issue this Warrant and the Warrant Shares and to perform its obligations hereunder and (v) is in material compliance with all applicable Laws to which it is subject.

(b)        Enforceability. The making, entry into, issuance and sale of this Warrant and the performance of the Company’s obligations hereunder are within the Company’s corporate powers and have been duly authorized by all necessary corporate action. This Warrant has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or similar Laws of general applicability affecting the enforcement of creditors’ rights and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(c)        No Conflicts. The making, entry into, issuance and sale of this Warrant and the performance of the Company’s obligations hereunder (i) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any third party, except for such as have been obtained or made and are in full force and effect, (ii) will not violate any applicable Law or the charter, bylaws or other organizational documents of the Company or any order of any Governmental Authority, (iii) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Company, any of its subsidiaries or the Company’s or its subsidiaries’ assets or give rise to a right thereunder to require any payment to be made by any such Person and (iv) will not result in the creation or imposition of any lien on any asset of any of the Company or any of its subsidiaries.

(d)        No Registration. Assuming the accuracy of the representations made by the Holder herein, the offer and sale by the Company of this Warrant and the delivery of the Warrant Shares upon exercise hereof are not required to be registered pursuant to the provisions of Section 5 of the Securities Act.

(e)        Capitalization. The authorized capital stock of the Company consists of 205,000,000 shares, of which 200,000,000 shares are designated as common stock and 5,000,000 shares are designated as preferred stock. As of April 13, 2018, (i) 106,041,014 shares of common

 

stock of the Company are issued and outstanding, (ii) no shares of common stock of the Company are held in treasury and (iii) no shares of preferred stock of the Company are issued and outstanding or held in treasury. All of the outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable.

(f)        Taxes. All taxes (other than any taxes that may be payable because of a transfer involved in the issuance or delivery of any certificates for shares or other securities issued or delivered upon exercise of this Warrant in a name other than that of the Holder) imposed on the Company in connection with the issuance, sale and delivery of the Warrant Securities have been or will be timely and fully paid, and all Laws imposing such taxes have been or will be fully complied with by the Company.

SECTION 10.            Registration Rights.

(a)        Piggyback Rights. The Company agrees that it shall notify the Holder in writing at least 10 days prior to the filing of any registration statement under the Securities Act for purposes of a public offering of Common Stock of the Company (including, without limitation, registration statements relating to secondary offerings of securities of the Company, but excluding any Special Registration Statement) that would be filed at any time during which this Warrant is still outstanding, and the Company will afford the Holder an opportunity to include in such registration statement all or part of the Warrant Shares subject to the provisions hereof (such registration statement, the “Piggyback Registration Statement”). If the Holder desires to include in any such Piggyback Registration Statement all or any part of the Warrant Shares held by it, the Holder shall, within seven days after the above-described notice from the Company, so notify the Company in writing and shall thereafter furnish the Company with such information as the Company reasonably requires to effect the registration of such Warrant Shares. The Company will use its commercially reasonable efforts to cause such Warrant Shares as to which inclusion shall have been so requested to be included in the Piggyback Registration Statement. The Holder shall be entitled to sell the Warrant Shares included in a Piggyback Registration Statement in accordance with the method of distribution requested by it; provided that, if the Piggyback Registration Statement relates to an underwritten offering, then (i) the Company shall be entitled to select the underwriters in its sole discretion and (ii) the Holder must sell all Warrant Shares included on the Piggyback Registration Statement in such underwritten offering pursuant to an underwriting agreement containing terms and conditions that are customary for secondary offerings. In the event the managing underwriter shall be of the opinion that the number of such securities, when taken together with the Warrant Shares requested to be included in a public primary offering pursuant to a piggyback registration request under this Section 10(a), alone or taken together with the equity securities of the Company to be included therein, would adversely affect the marketing of such offering (including the price at which the securities of the Company may be sold), then the number of securities of the Company to be included in such underwritten offering will be reduced (an “Underwriter Cutback”), with the securities of the Company to be included in such offering based on the following priority: (x) first, the number of securities that the Company seeks to include in the offering, up to the number that, in the opinion of the managing underwriter, would not adversely affect the marketing of the offering (including the price at which such securities of the Company may be sold); (y) second, the number of the securities of the Company requested to be included by the Holder and any other Person(s) who has (have) elected to include securities pursuant to written agreements with the Company, in each case, up to the number that, in the

 

opinion of the managing underwriter, would not adversely affect the marketing of the offering (including the price at which the securities (including the Warrant Shares) may be sold); and (z) third, in addition to securities of the Company included pursuant to the preceding clause (x) and the Warrant Shares of the Holder and the securities of any other Person included pursuant to the preceding clause (y), the number of securities of the Company requested to be included by any other Person(s) in the offering with the permission of the Company, up to the number that, in the opinion of the managing underwriter, would not adversely affect the marketing of the offering (including the price at which the securities of the Company may be sold). The Underwriter Cutbacks described in the immediately preceding clause (y) shall be allocated pro rata among the participating Persons, including the Holder, on the basis of the number of securities requested to be included in such registration by such Persons. The Company may withdraw a Piggyback Registration Statement prior to its being declared effective without incurring any liability to the Holder and shall not be required to keep a Piggyback Registration Statement effective for longer than the period contemplated by the intended manner of distribution for the securities of the Company to be sold by the Company as described in the prospectus included in the Piggyback Registration Statement. The expenses of such registration (other than any underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Warrant Shares) shall be borne by the Company. If the Holder decides not to include all of its Warrant Securities in any registration statement thereafter filed by the Company, the Holder shall nevertheless continue to have the right to include any Warrant Securities in any subsequent registration statement or registration statements (other than any Special Registration Statement) as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

(b)        Listing of the Warrant Shares. To the extent applicable, the Company shall promptly secure the listing of the Warrant Shares on whichever market is at the time the principal trading exchange or market for the Common Stock, based upon share volume, after such time as the Warrant Shares are no longer required to contain the legend referred to in Section 7 hereof, and the Company shall provide to the Holder evidence of such listing.

(c)        Compliance with Rule 144. The Company shall timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. As long as the Holder owns any Warrant Securities, if the Company is not required to file reports pursuant to such Laws, the Company will prepare and furnish to the Holder and make publicly available in accordance with Rule 144 such information as is required for the Holder to sell Warrant Securities under Rule 144. So long as the Warrant Securities are not registered under an effective registration statement, the Company further covenants that it will take such further action as the Holder may reasonably request and is within the Company’s control, all to the extent required from time to time to enable the Holder to sell such Warrant Securities without registration under the Securities Act within the limits of the exemptions provided by Rule 144.

SECTION 11.             Definitions. As used herein, the following terms shall have the following meanings.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common

 

control with the Person specified.

“Aggregate Exercise Price” has the meaning set forth in Section 2(a) hereof.

“Aggregate Number” has the meaning set forth in the preamble hereto.

“Alternate Consideration” has the meaning set forth in Section 5(h) hereof.

“Bloomberg” means Bloomberg Financial Markets (or a comparable reporting service of national reputation selected by the Company and reasonably acceptable to the Holder if Bloomberg Financial Markets is not then reporting sales prices of the Common Stock).

“Business Day” means a day (other than a Saturday or Sunday) on which commercial banks are not authorized or required to close in New York City.

“Cash/Public Change of Control” has the meaning set forth in Section 5(g) hereof.

“Change of Control” means (i) the sale, assignment, transfer, conveyance or other disposal of all or substantially all of the assets or all or a majority of the outstanding voting shares of capital stock of the Company, (ii) a purchase, tender or exchange offer accepted by the holders of a majority of the outstanding voting shares of capital stock of the Company or (iii) a “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of a majority of the voting power of the capital stock of the Company including pursuant to any merger, consolidation or other business combination.

“Common Stock Deemed Outstanding” has the meaning set forth in Section 5(a)(i) hereof.

“Commencement Date” has the meaning set forth in the preamble hereto.

“Commission” means the Securities and Exchange Commission, or any Governmental Authority succeeding to any of its principal functions.

“Common Stock” means (i) the Company’s common stock, par value $0.001 per share, and (ii) any other capital stock into which such common stock is reclassified or reconstituted.

“Company” has the meaning set forth in the preamble hereto.

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

“Ex-Date” has the meaning set forth in Section 5(a)(i) hereof.

“Exercise Amount” has the meaning set forth in Section 2(a) hereof.

“Exercise Price” has the meaning set forth in the preamble hereto.

“Expiration Date” has the meaning set forth in the preamble hereto.

 

“Fair Market Value Per Share” means (as of immediately before the date of a Notice of Exercise) (i) the last reported sale price or, if there are no sales, the last reported bid price of the Common Stock on the Business Day immediately prior to the date of exercise on the NASDAQ Global Select Market as reported by Bloomberg, (ii) if clause (i) above does not apply, the last sales price of the Common Stock in the over-the-counter market on the pink sheets or bulletin board for such security on the Business Day immediately prior to the date of exercise as reported by Bloomberg or, if there are no sales, the last reported bid price of the Common Stock on the Business Day immediately prior to the date of exercise as reported by Bloomberg or (iii) if fair market value cannot be calculated as of such date on the basis of either clause (i) or clause (ii) above, the price determined in good faith by the Company’s board of directors or upon the advice of an independent investment banking, financial advisory or valuation firm or appraiser as selection by the Company’s board of directors.

“Fair Value” means the fair value of any securities or other distributed property determined as follows:

(i)         in the case of securities listed on the New York Stock Exchange or the NASDAQ Stock Market, the volume weighted average price (“VWAP”) of a single unit of such security for the 20 trading days ending on, but excluding, the date of valuation (or if the security has been listed for fewer than 20 trading days, the VWAP for such lesser period of time);

(ii)       in the case of securities not listed on the New York Stock Exchange or the NASDAQ Stock Market, the VWAP of a single unit of such security in composite trading for the principal United States national or regional securities exchange on which such securities are then listed for the 20 trading days ending on, but excluding, the date of valuation (or if the security has been listed for fewer than 20 trading days, the VWAP for such lesser period of time); or

(iii)      in all other cases, the fair value as of a date not earlier than 10 Business Days preceding the specified date as determined in good faith by the Company’s board of directors or upon the advice of an independent investment banking, financial advisory or valuation firm or appraiser as selection by the Company’s board of directors;

provided, however, that notwithstanding the foregoing, if the Company’s board of directors determines in good faith that the application of clause (i) or (ii) of this definition would result in a VWAP based on the trading prices of a thinly-traded security such that the price resulting therefrom may not represent an accurate measurement of the fair value of such security, the board of directors at its election may apply the provisions of clause (iii) of this definition in lieu of the applicable clause (i) or (ii) with respect to the determination of the fair value of such security.

“Governmental Authority” means any nation, government, branch of power (whether executive, legislative or judicial), state, province or municipality or other political subdivision thereof or any entity exercising executive, legislative, judicial, monetary, regulatory or administrative functions of or pertaining to government, including, without limitation, regulatory authorities, governmental departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals and dispute settlement panels, and other law-making, rule-making or regulation-making organizations or entities of any state, territory, county, city or other political subdivision of the United States.

 

“Holder” has the meaning set forth in the preamble hereto.

“Laws” means, collectively, all international, foreign, federal, state, provincial, territorial, municipal and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority.

“Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and is then current in its filing of all required reports and other information under the Securities Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by the Holder in connection with the Change of Control were the Holder to exercise this Warrant on or prior to the closing thereof is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market; and (iii) following the closing of such Change of Control, the Holder would not be restricted from publicly re-selling all of the issuer’s shares and/or other securities that would be received by the Holder in such Change of Control were the Holder to exercise or convert this Warrant in full on or prior to the closing of such Change of Control, except to the extent that any such restriction (x) arises solely under U.S. federal or state securities Laws, (y) does not extend beyond six months from the closing of such Change of Control or (z) relates to the Holder’s status as an affiliate of such issuer prior to such Change of Control.

“Notice of Exercise” has the meaning set forth in Section 2(a) hereof.

“Offer Expiration Date” has the meaning set forth in Section 5(a)(iii) hereof.

“Person” means any individual, corporation, company, voluntary association, partnership, limited liability company, joint venture, trust, unincorporated organization or Governmental Authority or other entity of whatever nature.

“Piggyback Registration Statement” has the meaning set forth in Section 10(a) hereof.

“Principal Office” means the Company’s principal office as set forth in Section 16 hereof or such other principal office of the Company in the United States of America the address of which first shall have been set forth in a notice to the Holder.

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

“Purchase Rights” has the meaning set forth in Section 6(a) hereof.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule 144 may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule 144.

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

 

“Senior Notes” has the meaning set forth in the recitals hereto.

“Special Registration Statement” means (i) a registration statement relating to any employee benefit plan, (ii) with respect to any corporate reorganization or transaction under Rule 145 promulgated under the Securities Act, any registration statement related solely to the issuance or resale of securities issued in such a transaction, (iii) a registration statement related solely to stock issued upon conversion of debt securities, (iv) any registration statement filed under Rule 462(b) promulgated under the Securities Act or (v) any registration statement on Form S-4 or Form S-8 not contemplated by clauses (i) – (iv) hereof.

“Trigger Event” has the meaning set forth in Section 5(c) hereof.

“Underwriter Cutback” has the meaning set forth in Section 10(a) hereof.

“Warrant” has the meaning set forth in the preamble hereto.

“Warrant Securities” means, collectively, this Warrant and the Warrant Shares.

“Warrant Shares” means (i) the shares of Common Stock issued or issuable upon exercise of this Warrant in accordance with its terms and (ii) all other shares of the Company’s capital stock issued with respect to such shares by way of stock dividend, stock split or other reclassification or in connection with any merger, consolidation, recapitalization or other reorganization affecting the Company’s capital stock.

SECTION 12.            Survival of Provisions. Upon the full exercise by the Holder of its rights to purchase Common Stock under this Warrant, all of the provisions of this Warrant shall terminate (other than the provisions of Sections 7,  8,  10,  11,  12,  13,  14,  15,  16,  17,  18,  19,  20,  21,  22 and 23 hereof, which shall expressly survive such exercise until the later of (a) the Expiration Date and (b) the time when the Holder no longer holds any Warrant Shares).

SECTION 13.            Delays, Omissions and Indulgences. It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Holder upon any breach or default of the Company under this Warrant shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on the Holder’s part of any breach or default under this Warrant, or any waiver on the Holder’s part of any provisions or conditions of this Warrant, must be in writing and that all remedies under this Warrant, by Law or otherwise afforded to the Holder shall be cumulative and not alternative.

SECTION 14.            Rights of Transferees. Subject to Section 7 hereof, the rights granted under this Warrant to the Holder shall pass to and inure to the benefit of all subsequent transferees of all or any portion of this Warrant (provided, that the Holder and any transferee shall hold such rights in proportion to their respective ownership of this Warrant and the Warrant Shares) until extinguished pursuant to the terms hereof.

SECTION 15.            Captions. The section headings and other captions appearing herein

 

are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Warrant.

SECTION 16.            Notices. All notices, requests, instructions, directions and other communications provided for herein (including any modifications of, or waivers, requests or consents under, this Warrant) shall be given or made in writing (including by email with PDF attachment) delivered to the applicable addresses specified below or at such other address as shall be designated by the Company or the Holder, as applicable, in a notice to the other. Except as otherwise provided in this Warrant, all such communications shall be deemed to have been duly given upon receipt of a legible copy thereof (except in the case of an email with PDF attachment not given during normal business hours for the recipient, which shall be deemed to have been given at the opening of business on the next Business Day for the recipient), in each case given or addressed as aforesaid.

(a)        If to the Company:

VIVUS, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer and General Counsel
Electronic mail: ▇▇▇@▇▇▇▇▇.▇▇▇;
                          ▇▇▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇

with a copy to:

Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇.▇▇▇

 

(b)        if to the Holder:

[            ]
c/o Athyrium Capital Management, LP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇

with a copy to:

Pillsbury ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Email: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇

SECTION 17.            Successors and Assigns. This Warrant shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, provided, that the Company shall have no right to assign its rights, or to delegate its obligations, hereunder without the prior written consent of the Holder. The Company shall not require the Holder to provide an opinion of counsel if any transfer by the Holder is to an Affiliate of the Holder; provided, that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Securities Act and the Holder and such transferee each comply in all respects with the transfer procedures set forth in Section 7 hereof, as applicable.

SECTION 18.             Amendments. Neither this Warrant nor any term hereof may be amended, changed, waived, discharged or terminated without the prior written consent of the Holder and the Company to such action.

SECTION 19.           Severability. If any provision hereof is found by a court to be invalid or unenforceable, to the fullest extent permitted by applicable Law the parties hereto agree that such invalidity or unenforceability shall not impair the validity or enforceability of any other provision hereof.

SECTION 20.            Governing Law. This Warrant and the rights and obligations of the Holder and the Company hereunder shall be governed by, and construed in accordance with, the Law of the State of New York, without regard to principles of conflicts of laws that would result in the application of the Laws of any other jurisdiction; provided, that Section 5-1401 of the New York General Obligations Law shall apply.

SECTION 21.            Entire Agreement. This Warrant, together with the Purchase Agreement and the other documents contemplated thereby, are intended by the parties as a final expression of their agreement and are intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.

SECTION 22.            Rules of Construction. Unless the context otherwise requires, “or” is not exclusive, and references to sections or subsections refer to sections or subsections of this

 

Warrant. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

SECTION 23.            No Effect Upon Lending Relationship. Notwithstanding anything herein to the contrary, nothing contained in this Warrant shall affect, limit or impair the rights and remedies of the Holder or any of its Affiliates in its capacity as a lender to the Company pursuant to any agreement under which the Company has borrowed money from the Holder or any of its Affiliates, including, without limitation, the Purchase Agreement and the Senior Notes. Without limiting the generality of the foregoing, neither the Holder nor any Affiliate of the Holder, in exercising its rights as a lender, including making its decision on whether to foreclose on any collateral security, will have any duty to consider (a) its status or the status of any of its Affiliates as a direct or indirect equity holder of the Company, (b) the equity of the Company or (c) any duty it may have to any other direct or indirect equity holder of the Company, except as may be required by commercial Law applicable to creditors generally.

{Remainder of Page Intentionally Left Blank}

 

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be issued and executed in its corporate name by a duly authorized officer as of the date first written above.

 

Accepted and agreed:

[Holder]

 

 

 

EXHIBIT A

Form of

NOTICE OF EXERCISE

To:       VIVUS, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer and General Counsel

1.         The undersigned, pursuant to the provisions of the attached Warrant, hereby elects to exercise this Warrant with respect to __________ shares of Common Stock (the “Exercise Amount”). Capitalized terms used but not otherwise defined herein have the meanings ascribed thereto in the attached Warrant.

2.         The undersigned herewith tenders payment for such shares in the following manner (please check type, or types, of payment and indicate the portion of the Exercise Price to be paid by each type of payment):

            Exercise for Cash

            Cashless Exercise

3.         Please issue a certificate or certificates representing the shares issuable in respect hereof under the terms of the attached Warrant, as follows:

 

and deliver such certificate or certificates to the following address:

 

4.         The undersigned represents that the aforesaid shares are being acquired for the account of the undersigned for investment purposes and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

5.         The undersigned represents that, as of the date hereof, the undersigned (together with the undersigned’s affiliates, and any other persons acting as a group together with the undersigned or any of the undersigned’s affiliates) owns __________ shares of Common Stock (as such ownership is calculated pursuant to the rules of the NASDAQ Global Select Market).

6.         If the Exercise Amount is less than all of the shares of Common Stock purchasable under the attached Warrant, please issue a new warrant representing the remaining balance of such shares, as follows:

 

 

and deliver such warrant to the following address:

 

 

 

 

EXHIBIT B

Form of

NOTICE OF ASSIGNMENT

FOR VALUE RECEIVED, the Holder (the “Assignor”) hereby sells, assigns and transfers all of the rights of the undersigned Assignor under the attached Warrant with respect to the number of shares of common stock of VIVUS, Inc. (the “Company”) covered thereby set forth below, to the following “Assignee” and, in connection with such transfer, represents and warrants to the Company that the transfer is in compliance with Section 7 of the Warrant and applicable U.S. federal and state securities laws:

______________________________

(Name of Assignee)

______________________________

(Address of Assignee)

______________________________

(Number of Shares)

______________________________

(Dated)

______________________________

(Signature)

ASSIGNEE ACKNOWLEDGMENT

The undersigned Assignee acknowledges that it has reviewed the attached Warrant and by its signature below it hereby represents and warrants that it is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933, as amended, and agrees to be bound by the terms and conditions of the Warrant as of the date hereof, including Section 7 thereof.

 

 

 

 

EXHIBIT B

FORM OF INDENTURE

See attached.

 

 

 

 

VIVUS, INC.,

as Issuer,

and any Guarantor that becomes party hereto pursuant to Section 4.12 hereof

10.375% Senior Secured Notes due 2024

________________________

INDENTURE

Dated as of  [     ], 2018

________________________

U.S. BANK NATIONAL ASSOCIATION,

as Trustee and as Collateral Agent

 

 

 

TABLE OF CONTENTS

Page

 

 

 

 

 

 

INDENTURE dated as of June 8, 2018 among VIVUS, Inc., a Delaware corporation with an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the “Issuer”), any Guarantor that becomes party hereto pursuant to Section 4.12, and U.S. Bank National Association, a national banking association, as trustee (as more fully defined in Section 1.01, the “Trustee”) and as collateral agent (as more fully defined in Section 1.01, the “Collateral Agent”).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Issuer’s 10.375% Senior Secured Notes due 2024 (as more fully defined in Section 1.01, the “Securities”).

ARTICLE 1

 

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01.          Definitions.

“Accredited Investors” means “accredited investors” as defined in Rule 501(a)(1), (a)(2), (a)(3) or (a)(7) of Regulation D under the Securities Act.

“Acquired Indebtedness” means, with respect to any specified Person:

(1)        Indebtedness of any other Person existing at the time such other Person is merged, amalgamated or consolidated with or into or became a Restricted Subsidiary of such specified Person; and

(2)        Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Additional Conditional Securities” means the Issuer’s 10.375% Senior Secured Notes due 2024 that may be issued after the Issue Date pursuant to Section 2.01(c).

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

“Applicable Premium” means, with respect to any Security (or portion thereof) to be redeemed on any redemption date, the amount, if any, by which (a) the sum of (1) 105% of the amount of principal of such Security to be redeemed plus (2) the present value at such redemption date of all required interest payments due on the amount of principal of such Security to be redeemed through the First Call Date (excluding accrued but unpaid interest, if any, to the redemption date), computed using a discount rate equal to the Treasury Rate in respect of such redemption date plus 50 basis points, exceeds (b) the amount of principal of such Security to be

 

redeemed. The Trustee shall have no duty to calculate or verify the calculation of the Applicable Premium.

“Article 9 Collateral” means Collateral with respect to which a Lien thereon may be perfected by the filing of (i) a UCC-1 financing statement pursuant to the Uniform Commercial Code as adopted in any applicable jurisdiction or (ii) any similar or comparable filing in a non-U.S. jurisdiction.

“Average Monthly Balance” means, with respect to any Indebtedness incurred by the Issuer or the Restricted Subsidiaries under a revolving credit facility, the quotient of (i) the sum of each Individual Monthly Balance for each fiscal month ended on or prior to the relevant date of determination and included in the applicable Reference Period divided by (ii) 12.

“Board of Directors” means, as to any Person, the board of directors, board of managers or similar governing body, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof. References in this Indenture to directors (on a Board of Directors) shall also be deemed to refer to managers (on a Board of Managers).

“Business Day” means a day other than a Saturday, Sunday or other day on which banking institutions are authorized or required by law to close in New York City or the city in which the Corporate Trust Office is located.

“Capital Stock” means:

(1)        in the case of a corporation or company, corporate stock or shares;

(2)        in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3)        in the case of a partnership or limited liability company, partnership interests (whether general or limited) and membership interests; and

(4)        any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person;

in each case to the extent treated as equity in accordance with GAAP.

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease (or a finance lease upon adoption by the Issuer of ASU No. 2016-02, Leases (Topic 842)) that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP.

“Cash Equivalents” means:

 

(1)        U.S. Dollars, Canadian dollars, pounds sterling, euros or the national currency of any member state in the European Union;

(2)        securities issued or directly and fully guaranteed or insured by the U.S. government, Canada, the United Kingdom or any country that is a member of the European Union or any agency or instrumentality thereof, in each case maturing not more than two years from the date of acquisition;

(3)        certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $250,000,000 and whose long-term debt is rated “A” or the equivalent thereof by ▇▇▇▇▇’▇ or S&P (or reasonably equivalent ratings of another nationally recognized statistical rating organization);

(4)        repurchase obligations for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

(5)        commercial paper issued by a Person (other than an Affiliate of the Issuer) rated at least “A-1” or the equivalent thereof by ▇▇▇▇▇’▇ or S&P (or reasonably equivalent ratings of another nationally recognized statistical rating organization), and in each case maturing within one year after the date of acquisition;

(6)        readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either ▇▇▇▇▇’▇ or S&P (or reasonably equivalent ratings of another nationally recognized statistical rating organization), in each case with maturities not exceeding two years from the date of acquisition;

(7)        Indebtedness issued by Persons (other than an Affiliate of the Issuer) with a rating of “A” or higher from S&P or “A-2” or higher from ▇▇▇▇▇’▇ (or reasonably equivalent ratings of another nationally recognized statistical rating organization), in each case with maturities not exceeding two years from the date of acquisition; and

(8)        investment funds investing at least 95% of their assets in securities of the types described in clauses (1) through (7) above.

“CFC” means a “controlled foreign corporation” within the meaning of Section 957 of the Code.

“CFC Holdco” means (a) any direct or indirect Domestic Subsidiary that has no material assets other than the Capital Stock or Indebtedness of one or more CFCs and (b) any direct or indirect Domestic Subsidiary that has no material assets other than the Capital Stock or Indebtedness of one or more Persons of the type described in the immediately preceding clause (a).

“Change of Control” means the occurrence of any of the following events:

 

(i)         the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of the Issuer and its Subsidiaries, taken as a whole, to a Person other than any of the Issuer or its Restricted Subsidiaries;

(ii)       the Issuer becomes aware (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) of the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act or any successor provision), in a single transaction or in a related series of transactions, by way of merger, amalgamation, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of more than 50% of the total voting power of the issued and outstanding Voting Stock of the Issuer; or

(iii)      the adoption of a plan relating to the Issuer’s dissolution or liquidation in accordance with the Issuer’s organizational documents.

Notwithstanding the foregoing, the acquisition, directly or indirectly, of 100% of the total voting power of the issued and outstanding Voting Stock of the Issuer by any Person who, immediately after such acquisition, has no material assets other than the Capital Stock of the Issuer or its direct or indirect parent company will not, by itself, constitute a Change of Control.

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

“Collateral” means all property subject, or purported to be subject from time to time, to a Lien under any Security Documents. The Collateral does not include the Excluded Assets.

“Collateral Agent” means U.S. Bank National Association in its capacity as “Collateral Agent” under this Indenture and under the Security Documents and any successor thereto in such capacity.

“Collateral Agreement” means the Collateral Agreement dated as of the date hereof among the Issuer, the Guarantors party thereto from time to time, the Trustee and the Collateral Agent, as may be amended, extended, renewed, restated, supplemented, waived or otherwise modified from time to time.

“Consolidated First Lien Indebtedness” means, as at any date of determination, an amount equal to (i) Consolidated Total Indebtedness as of such date, minus (ii) Consolidated Total Indebtedness that is secured on a junior basis to the Securities as of such date, minus (iii) Consolidated Total Indebtedness that is unsecured as of such date.

“Consolidated First Lien Leverage Ratio” means, with respect to any Person, at any date (the “Consolidated First Lien Leverage Calculation Date”), the ratio of (i) Consolidated First Lien Indebtedness of such Person and its Restricted Subsidiaries as of the Consolidated First Lien Leverage Calculation Date (determined on a consolidated basis in accordance with

 

GAAP) to (ii) EBITDA of such Person for the most recent four full fiscal quarters ended on the last day of the most recent fiscal quarter for which internal financial statements are available immediately preceding such Consolidated First Lien Leverage Calculation Date. In the event that the Issuer or any of its Restricted Subsidiaries Incurs, repays, repurchases, defeases or redeems any Indebtedness subsequent to such last day but prior to the Consolidated First Lien Leverage Calculation Date, then the Consolidated First Lien Leverage Ratio shall be calculated giving pro forma effect to such Incurrence, repayment, repurchase, defeasance or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period; provided that the Issuer may elect pursuant to an Officers’ Certificate delivered to the Trustee to treat all or any portion of the commitment under any agreement evidencing Indebtedness as being Incurred on the first day of the applicable four-quarter measurement period, in which case any subsequent Incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an Incurrence at such subsequent time; provided,  further, that any Cash Equivalent proceeds received in connection with or as a result of such Incurrence or other transaction for which the Consolidated First Lien Leverage Ratio is being calculated shall not be subtracted from Indebtedness for purposes of calculating the Consolidated First Lien Leverage Ratio.

For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (as determined in accordance with GAAP), in each case with respect to a business, a division or an operating unit of a business, as applicable, that the Issuer or any of its Restricted Subsidiaries has determined to make or made during the applicable four-quarter measurement period or subsequent to such measurement period and on or prior to or simultaneously with the Consolidated First Lien Leverage Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (and the change of any associated Indebtedness and the change in EBITDA resulting therefrom) had occurred on the first day of the applicable four-quarter measurement period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation, in each case, with respect to a business, a division or an operating unit of a business, as applicable, that would have required adjustment pursuant to this definition, then the Consolidated First Lien Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation had occurred on the first day of the applicable four-quarter measurement period.

For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Issuer in accordance with the SEC’s Regulation S-X. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuer in accordance with the SEC’s Regulation S-X, to reflect operating expense reductions, cost savings and other operating improvements or synergies reasonably expected to result from the applicable event; provided, that, notwithstanding anything herein to the contrary, the amount of any such expected operating expense reductions, cost savings, operating improvements or synergies shall not increase EBITDA by more than 20% in the

 

aggregate for the most recent four full fiscal quarters ended on the last day of the most recent fiscal quarter for which internal financial statements are available immediately preceding the Consolidated First Lien Leverage Calculation Date.

For purposes of this definition, any amount in a currency other than U.S. Dollars will be converted to U.S. Dollars based on the average exchange rate for such currency for the most recent four full fiscal quarters immediately prior to the date of determination in a manner consistent with that used in calculating EBITDA for the applicable period.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(1)        consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount, the interest component of Capitalized Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations, amortization of deferred financing fees, debt issuance costs, commissions, fees and expenses, non-cash interest expense, all commissions, discounts and other fees and charges owed with respect to letters of credit or bankers acceptances and expensing of any bridge, commitment or other financing fees); plus

(2)        consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued; minus

(3)        interest income for such period.

For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Issuer to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

“Consolidated Leverage Ratio” means, with respect to any Person, at any date (the “Consolidated Leverage Calculation Date”), the ratio of (i) Indebtedness of such Person and its Restricted Subsidiaries as of the Consolidated Leverage Calculation Date (determined on a consolidated basis in accordance with GAAP) to (ii) EBITDA of such Person for the most recent four full fiscal quarters ended on the last day of the most recent fiscal quarter for which internal financial statements are available immediately preceding such Consolidated Leverage Calculation Date. In the event that the Issuer or any of its Restricted Subsidiaries Incurs, repays, repurchases, defeases or redeems any Indebtedness subsequent to such last day but prior to the Consolidated Leverage Calculation Date, then the Consolidated Leverage Ratio shall be calculated giving pro forma effect to such Incurrence, repayment, repurchase, defeasance or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period; provided that the Issuer may elect pursuant to an Officers’ Certificate delivered to the Trustee to treat all or any portion of the commitment under any agreement evidencing Indebtedness as being Incurred on the first day of the applicable four-quarter measurement period, in which case any subsequent Incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an Incurrence at such subsequent time;

 

provided,  further, that any Cash Equivalent proceeds received in connection with or as a result of such Incurrence or other transaction for which the Consolidated Leverage Ratio is being calculated shall not be subtracted from Indebtedness for purposes of calculating the Consolidated Leverage Ratio.

For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (as determined in accordance with GAAP), in each case with respect to a business, a division or an operating unit of a business, as applicable, that the Issuer or any of its Restricted Subsidiaries has determined to make or made during the applicable four-quarter measurement period or subsequent to such measurement period and on or prior to or simultaneously with the Consolidated Leverage Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (and the change of any associated Indebtedness and the change in EBITDA resulting therefrom) had occurred on the first day of the applicable four-quarter measurement period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation, in each case, with respect to a business, a division or an operating unit of a business, as applicable, that would have required adjustment pursuant to this definition, then the Consolidated Leverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation had occurred on the first day of the applicable four-quarter measurement period.

For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Issuer in accordance with the SEC’s Regulation S-X. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuer in accordance with the SEC’s Regulation S-X, to reflect operating expense reductions, cost savings and other operating improvements or synergies reasonably expected to result from the applicable event; provided, that, notwithstanding anything herein to the contrary, the amount of any such expected operating expense reductions, cost savings, operating improvements or synergies shall not increase EBITDA by more than 20% in the aggregate for the most recent four full fiscal quarters ended on the last day of the most recent fiscal quarter for which internal financial statements are available immediately preceding the Consolidated Leverage Calculation Date.

For purposes of this definition, any amount in a currency other than U.S. Dollars will be converted to U.S. Dollars based on the average exchange rate for such currency for the most recent four full fiscal quarters immediately prior to the date of determination in a manner consistent with that used in calculating EBITDA for the applicable period.

“Consolidated Net Income” means, with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis; provided,  however, that:

 

(1)        any net after-tax extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto) shall be excluded;

(2)        effects of purchase accounting adjustments (including the effects of such adjustments pushed down to such Person and such Subsidiaries) in amounts required or permitted by GAAP, resulting from the application of purchase accounting in relation to any consummated acquisition or the amortization or write-off of any amounts thereof, net of taxes, shall be excluded;

(3)        the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period;

(4)        any net after-tax income or loss from disposed, abandoned, transferred, closed or discontinued operations and any net after-tax gains or losses on disposal of disposed, abandoned, transferred, closed or discontinued operations shall be excluded;

(5)        any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to business dispositions or asset dispositions other than in the ordinary course of business (as determined in good faith by the Issuer) shall be excluded;

(6)        any net after-tax gains or losses (less all fees and expenses or charges relating thereto) attributable to the early extinguishment of Indebtedness, and any unrealized gains and losses relating to Hedging Obligations or other derivative instruments, shall be excluded;

(7)        the Net Income for such period of any Person that is not a Subsidiary of such Person, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be included only to the extent of the amount of dividends or distributions or other payments paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period;

(8)        any impairment charges or asset write-offs, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP shall be excluded;

(9)        any non-cash expense realized or resulting from stock option plans, employee benefit plans or post-employment benefit plans, or grants or sales of stock, stock appreciation or similar rights, stock options, restricted stock, preferred stock or other rights shall be excluded;

(10)      any one-time non-cash compensation charges shall be excluded;

(11)      accruals and reserves that are established or adjusted within 12 months after the Issue Date and that are so required to be established or adjusted in accordance with GAAP or as a result of adoption or modification of accounting policies shall be excluded;

 

(12)      non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations shall be excluded;

(13)      any currency translation gains and losses related to currency remeasurements of Indebtedness, and any net loss or gain resulting from Hedging Obligations, shall be excluded;

(14)      solely for the purposes of calculating Restricted Payments, if positive, any permanent difference (but excluding, for the avoidance of doubt, any temporary difference the Issuer reasonably expects to be paid in cash in any future tax period) of (A) the Consolidated Taxes of the Issuer calculated in accordance with GAAP over (B) the actual Consolidated Taxes paid in cash by the Issuer during such period shall be excluded;

(15)      any non-cash after-tax interest expense resulting from the application of Accounting Standards Codification Topic 470-20 “Debt — Debt With Conversion and Other Options” shall be excluded;

(16)      to the extent covered by insurance and actually reimbursed, or, so long as such Person has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (a) not denied by the applicable carrier in writing and (b) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within 365 days), such loss or expense amounts as are so reimbursed, or reimbursable, by insurance providers in respect of liability or casualty events or business interruption shall be excluded; and

(17)      to the extent covered by fees, costs, expenses and losses that are, or (without duplication) are required to be, covered by contractual indemnities, guaranty obligations, purchase price adjustments, insurance policies or other contractual reimbursement obligations of third parties, to the extent actually indemnified or reimbursed or with respect to which the Issuer has determined that a reasonable basis exists for indemnification or reimbursement, but only to the extent that such amount is actually indemnified or reimbursed within 365 days of such determination (with a deduction in the applicable future period of any amount so added back to the extent not so indemnified or reimbursed within such 365 days), shall be excluded.

“Consolidated Non-cash Charges” means, with respect to any Person for any period, the aggregate depreciation, amortization and other non-cash expenses of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person for such period on a consolidated basis and otherwise determined in accordance with GAAP, but excluding any such charge that consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period.

“Consolidated Taxes” means, with respect to any Person for any period, the provision for taxes for such Person and its Restricted Subsidiaries based on income, profits or

 

capital, including state, franchise, property and similar taxes and foreign withholding taxes (including penalties and interest related to such taxes or arising from tax examinations).

“Consolidated Total Indebtedness” means, as at any date of determination, an amount equal to the sum of (1) the aggregate amount of all outstanding Indebtedness of the Issuer and the Restricted Subsidiaries on a consolidated basis consisting of Indebtedness for borrowed money, Obligations in respect of Capitalized Lease Obligations and debt obligations evidenced by promissory notes and similar instruments and (2) the aggregate amount of all outstanding Disqualified Stock of the Issuer and all Preferred Stock of the Restricted Subsidiaries on a consolidated basis, with the amount of such Disqualified Stock and Preferred Stock equal to the greater of their respective voluntary or involuntary liquidation preferences and maximum fixed repurchase prices, in each case determined on a consolidated basis in accordance with GAAP; provided, that Indebtedness of the Issuer and the Restricted Subsidiaries under any revolving credit facility as at any date of determination shall be determined using the Average Monthly Balance of such Indebtedness for the most recently ended four fiscal quarters for which internal financial statements are available as of such date of determination (the “Reference Period”). For purposes hereof, the maximum fixed repurchase price of any Disqualified Stock or Preferred Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or Preferred Stock as if such Disqualified Stock or Preferred Stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or Preferred Stock, such fair market value shall be determined in good faith by the Issuer.

“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases, dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent:

(1)        to purchase any such primary obligation or any property constituting direct or indirect security therefor;

(2)        to advance or supply funds:

(a)        for the purchase or payment of any such primary obligation; or

(b)        to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; or

(3)        to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

“Convertible Notes” means the Issuer’s 4.50% Convertible Senior Notes due May 1, 2020.

 

“Corporate Trust Office” means the address of the Trustee specified in Section 12.01 or such other address as to which the Trustee may give notice to the Holders and the Issuer.

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

“Disposition” means the sale, conveyance, transfer, license or other disposition (whether in a single transaction or a series of related transactions) of property or assets (including by way of a Sale/Leaseback Transaction) of the Issuer or any Restricted Subsidiary of the Issuer.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person that, by its terms (or by the terms of any security into which it is convertible or for which it is redeemable or exchangeable), or upon the happening of any event:

(1)        matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than solely as a result of change of control, asset sale, casualty, condemnation or eminent domain provisions);

(2)        is convertible or exchangeable for Indebtedness or Disqualified Stock of such Person; or

(3)        is redeemable at the option of the holder thereof, in whole or in part (other than solely as a result of change of control, asset sale, casualty, condemnation or eminent domain provisions),

in each case prior to 91 days after the earlier of the Stated Maturity of the Securities and the date the Securities are no longer outstanding; provided,  however, that only the portion of Capital Stock that so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date shall be deemed to be Disqualified Stock; provided,  further,  however, that if such Capital Stock is issued to any employee or to any plan for the benefit of employees of the Issuer or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Issuer in order to satisfy applicable statutory or regulatory obligations or as a result of such employee’s termination, death or disability; provided,  further, that any class of Capital Stock of such Person that by its terms authorizes such Person to satisfy its obligations thereunder by delivery of Capital Stock that is not Disqualified Stock shall not be deemed to be Disqualified Stock.

“Disregarded Domestic Person” means any direct or indirect Domestic Subsidiary that (a) did not become a Subsidiary of the Issuer until after the Issue Date, (b) is not a CFC Holdco, (c) is treated as a disregarded entity for U.S. federal income tax purposes and (d) holds (directly or through another Disregarded Domestic Person) equity in one or more Foreign Subsidiaries that are CFCs.

 

“Domestic Subsidiary” means any Restricted Subsidiary of the Issuer incorporated or organized under the laws of the United States, any state thereof or the District of Columbia.

“EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication, to the extent the same was deducted (or otherwise not included) in calculating Consolidated Net Income:

(1)        Consolidated Taxes; plus

(2)        Consolidated Interest Expense plus all cash dividend payments (excluding items eliminated in consolidation) on a series of Preferred Stock or Disqualified Stock of such Person and its Subsidiaries; plus

(3)        Consolidated Non-cash Charges; plus

(4)        Consolidated Net Income attributable to, or adding to the losses attributable to, the minority equity interests of third parties in any Restricted Subsidiary that is not a Wholly Owned Restricted Subsidiary of such Person, except to the extent of dividends declared or paid with respect to such period or any prior period on the shares of Capital Stock of such Restricted Subsidiary held by such third parties;

less, without duplication,

(5)        non-cash items increasing Consolidated Net Income for such period (excluding the recognition of deferred revenue or any items that represent the reversal of any accrual of, or cash reserve for, anticipated cash charges that reduced EBITDA in any prior period and any items for which cash was received in a prior period).

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

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

“Excluded Assets” means, subject to Section 4.13, (i) any license, contract, permit or agreement of the Issuer or any of the Guarantors, if and only for so long as and to the extent that the grant of a security interest therein under the Security Documents would result in a breach or default under, or abandonment, invalidation or unenforceability of, that license, contract, permit or agreement (except (a) to the extent the relevant term that would result in such breach, default, abandonment, invalidation or unenforceability is rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or equivalent statutes of any jurisdiction) or any other applicable law or (b) any such license, contract, permit or agreement between the Issuer and any Subsidiary of the Issuer or between Subsidiaries of the Issuer) (such licenses, contracts, permits and agreements, the “Excluded Agreements”), (ii) (a) any fee interest in real property (excluding fixtures) if the greater of the cost and the book value of such interest is less than $500,000 or (b) any leasehold interest in real property if the annual base rent is less

 

than $500,000, (iii) any asset or property to the extent that the grant of a security interest in such asset or property is prohibited by any applicable law or requires a consent not obtained of any Governmental Authority pursuant to applicable law (except to the extent the law prohibiting such grant or requiring such consent is rendered ineffective pursuant to Section 9-406, 9-407, 9-408 or 9-409 of the Uniform Commercial Code (or equivalent statutes of any jurisdiction) or any other applicable law), (iv) any assets or property as to which the Issuer or the Collateral Agent (at the direction of the Holders of a majority in principal amount of the Securities then outstanding) reasonably determines in good faith that the costs of obtaining such a security interest are excessive in relation to the value of the security to be afforded thereby, (v) any Equity Interests of any Unrestricted Subsidiaries, (vi) any payroll accounts, payroll withholding tax accounts, pension and pension reserve accounts and employee benefit accounts to the extent funded or maintained in accordance with prudent business practice or as required by law, (vii) any Intellectual Property of the Issuer or any of its Subsidiaries unless and until a Lien on such Intellectual Property is granted in favor of the Collateral Agent pursuant to Section 4.13, (viii) any net operating losses of the Issuer, (ix) any vehicle that is (a) subject to a certificate of title and (b) obtained and used in the ordinary course of business and (x) the Capital Stock of any Foreign Subsidiary, CFC Holdco and/or Disregarded Domestic Person, in each case (a) in excess of 65% of the issued and outstanding Voting Stock and 100% of the other Capital Stock of any such Person or (b) to the extent such Person is not a first-tier Subsidiary of the Issuer or of any Restricted Subsidiary of the Issuer. Notwithstanding the foregoing, the inclusion of net operating losses within the definition of Excluded Assets shall not, and shall not be deemed to, impair or adversely affect the exercise of any right or remedy otherwise available to the Collateral Agent hereunder or under any Security Document.

“Fair Market Value” means, with respect to any asset or property, the price (after taking into account any liabilities related to such asset or property) that could be negotiated in an arm’s-length transaction, for cash, between a willing seller and a willing and able buyer, neither of whom is under undue pressure or compulsion to complete the transaction.

“FDA” means the United States Food and Drug Administration or any successor thereto.

“Federal Deposit Insurance Corporation” means the Federal Deposit Insurance Corporation or any successor thereto.

“First Amortization Date” means, with respect to any security, the date specified in such security as the fixed date on which the first payment of principal of such security is due and payable.

“Fixed Charge Coverage Ratio” means, with respect to any Person, at any date (the “Fixed Charge Coverage Calculation Date”), the ratio of (i) EBITDA of such Person for the most recent four full fiscal quarters ended on the last day of the most recent fiscal quarter for which internal financial statements are available immediately preceding such Fixed Charge Coverage Calculation Date to (ii) Fixed Charges of such Person for the most recent four full fiscal quarters ended on the last day of the most recent fiscal quarter for which internal financial statements are available immediately preceding such Fixed Charge Coverage Calculation Date. In the event that the Issuer or any of its Restricted Subsidiaries Incurs, repays, repurchases,

 

defeases or redeems any Indebtedness subsequent to such last day but prior to the Fixed Charge Coverage Calculation Date, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect to such Incurrence, repayment, repurchase, defeasance or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four-quarter period; provided that the Issuer may elect pursuant to an Officers’ Certificate delivered to the Trustee to treat all or any portion of the commitment under any agreement evidencing Indebtedness as being Incurred on the first day of the applicable four-quarter measurement period, in which case any subsequent Incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an Incurrence at such subsequent time; provided,  further, that any Cash Equivalent proceeds received in connection with or as a result of such Incurrence or other transaction for which the Fixed Charge Coverage Ratio is being calculated shall not be subtracted from Indebtedness for purposes of calculating the Fixed Charge Coverage Ratio.

For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (as determined in accordance with GAAP), in each case with respect to a business, a division or an operating unit of a business, as applicable, that the Issuer or any of its Restricted Subsidiaries has determined to make or made during the applicable four-quarter measurement period or subsequent to such measurement period and on or prior to or simultaneously with the Fixed Charge Coverage Calculation Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, amalgamations, consolidations and discontinued operations (and the change of any associated Indebtedness and the change in EBITDA resulting therefrom) had occurred on the first day of the applicable four-quarter measurement period. If since the beginning of such period any Person that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period shall have made any Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation, in each case, with respect to a business, a division or an operating unit of a business, as applicable, that would have required adjustment pursuant to this definition, then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, amalgamation, consolidation or discontinued operation had occurred on the first day of the applicable four-quarter measurement period.

For purposes of this definition, whenever pro forma effect is to be given to any event, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Issuer in accordance with the SEC’s Regulation S-X. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuer in accordance with the SEC’s Regulation S-X, to reflect operating expense reductions, cost savings and other operating improvements or synergies reasonably expected to result from the applicable event; provided, that notwithstanding anything herein to the contrary, the amount of any such expected operating expense reductions, cost savings, operating improvements or synergies shall not increase EBITDA by more than 20% in the aggregate for the most recent four full fiscal quarters ended on the last day of the most recent fiscal quarter for which internal financial statements are available immediately preceding the Fixed Charge Coverage Calculation Date.

 

For purposes of this definition, any amount in a currency other than U.S. Dollars will be converted to U.S. Dollars based on the average exchange rate for such currency for the most recent four full fiscal quarters immediately prior to the date of determination in a manner consistent with that used in calculating EBITDA for the applicable period.

“Fixed Charges” means, with respect to any period, the sum, without duplication, of:

(1)        Consolidated Interest Expense for such period;

(2)        all cash dividends or other distributions paid (excluding items eliminated in consolidation) on any series of Preferred Stock by the Issuer and the Restricted Subsidiaries during such period; and

(3)        all cash dividends or other distributions paid (excluding items eliminated in consolidation) on any series of Disqualified Stock by the Issuer and the Restricted Subsidiaries during such period.

“Foreign Subsidiary” means any Restricted Subsidiary that is not a Domestic Subsidiary.

“GAAP” means generally accepted accounting principles in the United States that are in effect on the Issue Date set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession.

“Governmental Authority” means the government of the United States or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“guarantee” means a guarantee or other provision of credit support (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any manner (including letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations, including by providing security therefor or by becoming a co-obligor with respect thereto. The term “guarantee”, when used as a verb, shall mean to provide a guarantee.

“Guarantee” means any guarantee of the obligations of the Issuer under this Indenture and the Securities by any Person in accordance with the provisions of this Indenture.

“Guarantor” means any Person that Incurs a Guarantee pursuant to Section 4.12; provided,  however, that upon the release or discharge of such Person from its Guarantee in accordance with this Indenture, such Person ceases to be a Guarantor.

 

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under:

(1)        currency exchange, interest rate or commodity swap agreements, currency exchange, interest rate or commodity cap agreements and currency exchange, interest rate or commodity collar agreements; and

(2)        other agreements or arrangements designed to protect such Person against fluctuations in currency exchange, interest rates or commodity prices or to otherwise manage interest rate risk or currency exchange risk.

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

“Incur” means issue, assume, guarantee, incur or otherwise become liable for; provided,  however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Subsidiary; and “Incurrence” has a correlative meaning.

“Indebtedness” means, with respect to any Person:

(1)        the principal and premium (if any) of any indebtedness of such Person, whether or not contingent, (a) in respect of borrowed money, (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without duplication, reimbursement agreements in respect thereof), (c) representing the deferred and unpaid purchase price of any property (except (i) any such balance that constitutes a trade payable or similar obligation to a trade creditor Incurred in the ordinary course of business and (ii) any liabilities accrued in the ordinary course of business), which purchase price is due more than six months after the date of placing the property in service or taking delivery and title thereto, (d) in respect of Capitalized Lease Obligations or (e) representing any Hedging Obligations, if and to the extent that any of the foregoing indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability on a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

(2)        to the extent not otherwise included, any obligation of such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the Indebtedness of another Person (other than by endorsement of negotiable instruments for collection in the ordinary course of business); and

(3)        to the extent not otherwise included, Indebtedness of another Person secured by a Lien on any asset owned by such Person (whether or not such Indebtedness is assumed by such Person); provided,  however, that the amount of such Indebtedness will be the lesser of: (a) the Fair Market Value (as determined in good faith by the Issuer) of such asset at such date of determination; and (b) the amount of such Indebtedness of such other Person;

 

provided,  however, that notwithstanding the foregoing, Indebtedness shall be deemed not to include: (i) Contingent Obligations incurred in the ordinary course of business and not in respect of borrowed money; (ii) deferred or prepaid revenues; (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller; or (iv) any earn-out obligations, purchase price adjustments, deferred purchase money amounts, milestone or bonus payments (whether performance or time-based), and royalty, licensing, revenue or profit sharing arrangements, in each case, characterized as such and arising expressly out of purchase and sale contracts, development arrangements or licensing arrangements.

Notwithstanding anything in this Indenture to the contrary, Indebtedness shall not include, and shall be calculated without giving effect to, the effects of Accounting Standards Codification section 815 and related interpretations to the extent such effects would otherwise increase or decrease the amount of Indebtedness deemed outstanding for purposes of this Indenture (so that such outstanding amount differs from the principal amount of such Indebtedness payable at maturity) as a result of accounting for any embedded derivatives created by the terms of such Indebtedness; and any such amounts that would have constituted Indebtedness under this Indenture but for the application of this sentence shall not be deemed an Incurrence of Indebtedness under this Indenture.

“Indenture” means this Indenture, as amended, restated or supplemented from time to time.

“Independent Financial Advisor” means an accounting, appraisal or investment banking firm or consultant, in each case of recognized standing in the United States, that is, in the good faith determination of the Issuer, qualified to perform the task for which it has been engaged.

“Individual Monthly Balance” means, with respect to any Indebtedness incurred by the Issuer or the Restricted Subsidiaries under a revolving credit facility during any fiscal month of the Issuer, the quotient of (x) the sum of the aggregate outstanding principal amount of all such Indebtedness at the end of each day of such fiscal month divided by (y) the number of days in such fiscal month.

“Intellectual Property” means, with respect to any Person, all intellectual property and proprietary rights in any jurisdiction throughout the world, including: (i) all inventions (whether or not patentable or reduced to practice), all improvements thereto, and all patents, patent applications, industrial designs, industrial design applications, and patent disclosures, together with all reissues, continuations, continuations-in-part, revisions, divisionals, extensions, and reexaminations in connection therewith; (ii) all trademarks, trademark applications, trade names, service marks, service ▇▇▇▇ applications, trade dress, logos and designs, business names, company names, Internet domain names, and all other indicia of origin, all applications, registrations, and renewals in connection therewith, and all goodwill associated with any of the foregoing; (iii) all copyrights and other works of authorship, database rights and moral rights, and all applications, registrations, and renewals in connection therewith; (iv) all trade secrets, technologies, processes, techniques, new drug applications, abbreviated new drug applications, biologic license applications or 351(k) biologic license applications (or equivalent non-U.S.

 

applications of any of the foregoing), protocols, methods, industrial models, designs, drawings, plans, specifications, research and development, and confidential information (including technical data, customer and supplier lists, manufacturing processes, pricing and cost information, and business and marketing plans and proposals); (v) all software (including source code, executable code, data, databases, and related documentation); and (vi) all copies and tangible embodiments of any of the foregoing (in whatever form or medium).

“Investment Grade Securities” means:

(1)        securities issued or directly and fully guaranteed or insured by the U.S. government or any agency or instrumentality thereof (other than Cash Equivalents);

(2)        securities that have a rating equal to or higher than “Baa3” (or equivalent) by Moody’s or “BBB-” (or equivalent) by S&P, or an equivalent rating by any other Rating Agency, but excluding any debt securities or loans or advances between and among the Issuer and its Subsidiaries;

(3)        investments in any fund that invests exclusively in investments of the type described in clauses (1) and (2) above, which fund may also hold immaterial amounts of cash pending investment or distribution; and

(4)        corresponding instruments in countries other than the United States customarily utilized for high quality investments and in each case with maturities not exceeding two years from the date of acquisition.

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit and advances to customers and commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet of the Issuer in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. Except as otherwise provided in this Indenture, the outstanding amount of any Investment shall be deemed to be the initial cost of such Investment when made, purchased or acquired (without giving effect to any adjustments for subsequent increases or decreases in value), but giving effect to any repayments, interest, returns, profits, dividends, distributions, proceeds, fees, income and other amounts actually received by the Issuer or any Restricted Subsidiary of the Issuer in respect of such Investment and determined without regard to any write-downs or write-offs of any investments, loans or advances in connection therewith. For purposes of the definition of “Unrestricted Subsidiary” and Section 4.04:

(1)        “Investments” shall include the portion (proportionate to the Issuer’s equity interest in such Subsidiary) of the Fair Market Value (as determined in good faith by the Issuer) of the net assets of a Subsidiary of the Issuer at the time that such Subsidiary is designated an Unrestricted Subsidiary or ceases to be a Subsidiary (to the extent the Issuer retains an Investment in such Person); and

 

(2)        any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value (as determined in good faith by the Issuer) at the time of such transfer, in each case as determined in good faith by the Board of Directors of the Issuer.

“IRS” means the U.S. Internal Revenue Service.

“Issue Date” means [    ], 2018.

“Issuer” has the meaning set forth in the preamble hereof but, for the avoidance of doubt, shall not include any of its Subsidiaries.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law (including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell, or give a security interest in, such asset and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes of any jurisdiction)); provided that in no event shall an operating lease be deemed to constitute a Lien.

“Moody’s” means ▇▇▇▇▇’▇ Investors Service, Inc. or any successor to the rating agency business thereof.

“Net Income” means, with respect to any Person, the net income (loss) of such Person and its Subsidiaries, determined in accordance with GAAP and before any reduction in respect of Preferred Stock dividends.

“Noteholder Obligations” means the Obligations under this Indenture and the Securities.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and bankers’ acceptances), damages and other liabilities payable under the documentation governing any Indebtedness; provided,  however, that Obligations with respect to the Securities shall not include fees or indemnifications in favor of the Trustee and the Collateral Agent.

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

“Officers’ Certificate” means a certificate signed on behalf of the Issuer by two Officers of the Issuer, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer that meets the requirements set forth in this Indenture.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee and may be an employee of or counsel to the Issuer or the Trustee.

 

“Original Securities” means the Issuer’s 10.375% Senior Secured Notes due 2024 issued on the Issue Date pursuant to Section 2.01(b).

“Pancreaze®” means the product referred to as Pancreaze® (whether marketed under such name or any other name and including any authorized generic).

“Pancreaze® Assets” means the Intellectual Property in respect of Pancreaze® and any other business, operations or assets (including contractual rights, licenses and related payments and any Excluded Agreements, but excluding any such contractual rights, licenses and related payments for purposes of distributing or commercializing Pancreaze® in Canada) related to Pancreaze®.

“Pancreaze® Net Sales” means for any period the gross sales of Pancreaze® in arm’s length sales by the Issuer, any of its Affiliates or their licensees, sublicensees, assignees, transferees or other commercial partners (or any of their respective Affiliates) to independent, unrelated third parties, less the following deductions from such gross amounts that are actually incurred, allowed, accrued or specifically allocated in such period: (i) credits, price adjustments or allowances for damaged products (to the extent not covered by insurance), defective goods, returns or rejections of Pancreaze®; (ii) normal and customary trade, cash and quantity discounts, allowances, rebates, coupons and credits (other than price discounts granted at the time of invoicing that have been already reflected in the gross amount invoiced); (iii) chargeback payments, rebates and similar allowances (or the equivalent thereof) granted to group purchasing organizations, managed health care organizations, distributors or wholesalers or to federal, state/provincial, local and other governments, including their agencies, or to trade customers; (iv) any fees paid to any third party logistics providers, wholesalers and distributors; (v) any freight, postage, shipping, insurance and other transportation charges incurred by the selling Person in connection with shipping Pancreaze® to third party logistics providers, wholesalers and distributors and to customers; (vi) adjustments for billing errors or recalls; (vii) sales, value-added (to the extent not refundable in accordance with applicable law), excise and other Taxes (including annual fees due under Section 9008 of the United States Patient Protection and Affordable Care Act of 2010 (Pub. L. No. 111-48) and other comparable laws) levied on, absorbed, determined or imposed with respect to such sale (but not including Taxes assessed against the income derived from such sale); and (viii) amounts written off by reason of uncollectible debt, provided that if the debt is thereafter paid, the corresponding amount shall be added to the Pancreaze® Net Sales of the period during which it is paid. Pancreaze® Net Sales, as set forth in this definition, shall be calculated applying, in accordance with GAAP, the standard accounting practices the selling Person customarily applies to other branded products sold by it or its Affiliates under similar trade terms and conditions. For purposes of this definition and for the avoidance of doubt, no sale of a particular unit of Pancreaze® following the first arm’s length sale of such unit to an independent, unrelated third party shall be included within such definition.

“Permitted Asset Sale” means:

(a)        a Disposition of (i) Cash Equivalents or Investment Grade Securities, (ii) obsolete, damaged or worn-out assets, property or equipment in the ordinary course of business (including the abandonment or other Disposition of Intellectual Property that is,

 

in the reasonable judgment of the Issuer, no longer economically practicable or commercially reasonable to maintain or useful in any material respect, taken as a whole, in the conduct of the business of the Issuer and its Restricted Subsidiaries taken as a whole) (but in any case other than Intellectual Property in respect of Pancreaze®), (iii) Inventory (as defined in the Uniform Commercial Code) or goods, products or services (or other assets) held for sale in the ordinary course of business or (iv) equipment or other assets as part of a trade-in for replacement equipment;

(b)        the Disposition of all or substantially all of the assets of the Issuer in a manner permitted pursuant to Section 5.01 or any Disposition that constitutes a Change of Control;

(c)        any Restricted Payment that is permitted to be made, and is made, under Section 4.04 or any Permitted Investment;

(d)        any Disposition of assets or issuance or sale of Equity Interests of the Issuer or any Restricted Subsidiary, which assets or Equity Interests so Disposed or issued have an aggregate Fair Market Value (as determined in good faith by the Issuer) of less than $1,000,000 (but in any case other than Pancreaze® Assets);

(e)        any Disposition of property or assets, or the issuance of securities, by (i) a Restricted Subsidiary of the Issuer to the Issuer, (ii) by the Issuer or a Restricted Subsidiary of the Issuer to a Guarantor (or to an entity that will become a Guarantor in accordance with Section 4.12) or (iii) by a Restricted Subsidiary of the Issuer that is not a Guarantor (and will not become a Guarantor pursuant to Section 4.12) to another Restricted Subsidiary of the Issuer that is not a Guarantor (and will not become a Guarantor pursuant to Section 4.12);

(f)        any exchange of assets (including a combination of assets and Cash Equivalents) (other than Intellectual Property) for assets related to a Similar Business of comparable or greater market value or usefulness to the business of the Issuer and its Restricted Subsidiaries as a whole, as determined in good faith by the Issuer, which in the event of an exchange of assets with a Fair Market Value in excess of (A) $1,000,000 shall be evidenced by an Officers’ Certificate and (B) $5,000,000 shall be set forth in a resolution approved by a majority of the Board of Directors of the Issuer, evidenced by an Officers’ Certificate certifying as to such approval (but in any case other than Pancreaze® Assets);

(g)        foreclosure on assets of the Issuer or any of its Restricted Subsidiaries;

(h)        any sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(i)         the lease, assignment or sublease of any real or personal property in the ordinary course of business;

(j)         any non-exclusive license (other than with respect to exclusivity for specific geographic locations and, with respect to licenses relating to Pancreaze® or

 

Qsymia®, exclusivity for specific geographic locations outside the United States or otherwise subject to compliance with Section 4.22), collaboration agreement, strategic alliance or similar arrangement in the ordinary course of business providing for the licensing of Intellectual Property or the development or commercialization of Intellectual Property that, at the time of such non-exclusive license, collaboration agreement, strategic alliance or similar arrangement, does not materially and adversely affect the business of the Issuer and its Restricted Subsidiaries taken as a whole (but in any case other than in respect of Pancreaze® Assets);

(k)        any surrender or waiver of contract rights or the settlement of, release of, recovery on or surrender of contract, tort or other claims of any kind;

(l)         in the ordinary course of business, any swap of assets, or lease, assignment or sublease of any real or personal property, in each case, other than Intellectual Property, in exchange for services (including in connection with any outsourcing arrangements) of comparable or greater value or usefulness to the business of the Issuer and its Restricted Subsidiaries taken as a whole, as determined in good faith by the Issuer;

(n)        the incurrence of Permitted Liens;

(o)        any Disposition of Capital Stock of any Restricted Subsidiary pursuant to an agreement or other obligation with or to a Person (other than the Issuer or a Restricted Subsidiary of the Issuer) from whom such Restricted Subsidiary was acquired or from whom such Restricted Subsidiary acquired its business and assets (having been newly formed in connection with such acquisition), made as part of such acquisition and in each case comprising all or a portion of the consideration in respect of such sale or acquisition;

(p)        Dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar arrangements;

(q)        the issuance of Disqualified Stock pursuant to Section 4.03;

(r)        the Disposition resulting from any involuntary loss of title or damage to, involuntary loss or destruction of, or condemnation or other taking of, any property or assets of the Issuer or any Restricted Subsidiary; and

(s)        any Disposition contemplated by clause (3) of the definition of “Special Proceeds”; provided, that such Disposition does not materially or adversely affect the Issuer’s business, condition (financial or otherwise) or prospects or the value of the Collateral taken as a whole; provided,  further, that if the cash payments or other proceeds described in such clause (3) are less than $5,000,000, the Issuer has determined in good faith that such transaction is fair to the Issuer or the applicable Restricted Subsidiary of the Issuer from a financial point of view.

“Permitted Investments” means:

 

(1)        any Investment (a) existing on the Issue Date in the Issuer or any Restricted Subsidiary or (b) made after the Issue Date (i) in the Issuer or any Guarantor (or in an entity that will become a Guarantor in accordance with Section 4.12) or (ii) by a Restricted Subsidiary of the Issuer that is not a Guarantor (and will not become a Guarantor pursuant to Section 4.12) in another Restricted Subsidiary of the Issuer that is not a Guarantor (and will not become a Guarantor pursuant to Section 4.12);

(2)        any Investment in Cash Equivalents or Investment Grade Securities;

(3)        any Investment by the Issuer or any Restricted Subsidiary of the Issuer in a Person if as a result of such Investment (a) such Person becomes a Guarantor in accordance with Section 4.12 or (b) such Person, in one transaction or a series of related transactions, is merged, amalgamated or consolidated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into, the Issuer or a Guarantor (or an entity that will become a Guarantor in accordance with Section 4.12);

(4)        any Investment in securities or other assets not constituting Cash Equivalents and received in connection with a Permitted Asset Sale;

(5)        any Investment existing on, or made pursuant to binding commitments existing on, the Issue Date or an Investment consisting of any extension, modification or renewal of any Investment existing on the Issue Date; provided that the amount of any such Investment may be increased as required by the terms of such Investment as in existence on the Issue Date;

(6)        advances to employees not in excess of $100,000 outstanding at any one time in the aggregate;

(7)        any Investment acquired by the Issuer or any of its Restricted Subsidiaries (a) in exchange for any other Investment or accounts receivable held by the Issuer or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (b) as a result of a foreclosure by the Issuer or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(8)        Hedging Obligations permitted under Section 4.03(b)(viii);

(9)        Investments (but in any case not relating to the Disposition of Pancreaze® Assets) by the Issuer or any of its Restricted Subsidiaries having an aggregate Fair Market Value, taken together with all other Investments made pursuant to this clause (9) that are at that time outstanding, not to exceed $1,000,000 (with the Fair Market Value of each Investment being measured at the time made and without giving effect to subsequent changes in value); provided,  however, that if any Investment pursuant to this clause (9) is made in any Person that is not a Restricted Subsidiary at the date of the making of such Investment and such Person becomes a Restricted Subsidiary after such date, such Investment shall thereafter be deemed to have been made pursuant to clause