Form 10-Q for period ending 06/30/2003

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RblCBtbbfk0TWExhdq6+dh0rF0jPp2zFWkC0bEOopEaUk7bmTGVCoU+aBrHCfBFN wb3JDhF81m0pJVnkZvVVfg== 0001193125-03-033269.txt : 20030812 0001193125-03-033269.hdr.sgml : 20030812 20030811191618 ACCESSION NUMBER: 0001193125-03-033269 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOMARIN PHARMACEUTICAL INC CENTRAL INDEX KEY: 0001048477 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 680397820 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26727 FILM NUMBER: 03835673 BUSINESS ADDRESS: STREET 1: 371 BEL MARIN KEYS BLVD STREET 2: STE 210 CITY: NOVATO STATE: CA ZIP: 94949 BUSINESS PHONE: 4158846700 MAIL ADDRESS: STREET 1: 371 BEL MARIN KEYS BLVD STREET 2: STE 210 CITY: NOVATO STATE: CA ZIP: 94949 10-Q 1 d10q.htm FORM 10-Q FOR PERIOD ENDING 06/30/2003 Form 10-Q for period ending 06/30/2003

United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-Q

(Mark One)


x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2003
	Or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ______ to _________.

Commission file number: 000-26727

BIOMARIN PHARMACEUTICAL INC.
(Exact name of registrant issuer as specified in its charter)


Delaware		68-0397820
(State of other jurisdiction of Incorporation or organization)		(I.R.S. Employer Identification No.)

371 Bel Marin Keys Blvd., #210, Novato,
California		94949
(Address of principal executive offices)		(Zip Code)


	Registrant’s telephone number: (415) 884-6700

	(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of The Exchange Act).

Yes x No o

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes x No o

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 63,763,999 shares common stock, par value $0.001, outstanding as of July 31, 2003.

BIOMARIN PHARMACEUTICAL INC.

TABLE OF CONTENTS


	Page
PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)	1

Consolidated Balance Sheets	1
Consolidated Statements of Operations	2
Consolidated Statements of Cash Flows	4
Notes to Consolidated Financial Statements	5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3. Quantitative and Qualitative Disclosure about Market Risk	32

Item 4. Controls and Procedures	32

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	33

Item 2. Changes in Securities and Uses of Proceeds	33

Item 3. Defaults upon Senior Securities	33

Item 4. Submission of Matters to a Vote of Security Holders	33

Item 5. Other Information	34

Item 6. Exhibits and Reports on Form 8-K	34

SIGNATURE	35

Item 1. Consolidated Financial Statements

BioMarin Pharmaceutical Inc. and Subsidiaries

Consolidated Balance Sheets
(In thousands, except share and per share data)


	December 31, 2002 (1)			June 30, 2003
Assets					(unaudited)
Current assets:
Cash and cash equivalents	$	33,638		$	221,772
Short-term investments		40,340			44,588
Investment in and advances to BioMarin/Genzyme LLC		4,955			6,494
Other current assets		2,139			2,198

Total current assets		81,072			275,052
Property and equipment, net		28,206			24,900
Other assets		1,338			6,433

Total assets	$	110,616		$	306,385

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	3,930		$	12,123
Other current liabilities		2,917			3,128

Total current liabilities		6,847			15,251
Convertible debt		—			125,000
Other long-term liabilities		5,226			3,697

Total liabilities		12,073			143,948

Stockholders’ equity:
Common stock, $0.001 par value: 150,000,000 shares authorized, 53,782,426 and 63,754,999 shares issued and outstanding December 31, 2002 and June 30, 2003, respectively		54			64
Additional paid-in capital		319,038			411,605
Warrants		5,219			5,219
Deferred compensation		(47	)		—
Notes receivable from stockholders		(468	)		(332	)
Accumulated other comprehensive income		327			241
Accumulated deficit		(225,580	)		(254,360	)

Total stockholders’ equity		98,543			162,437

Total liabilities and stockholders’ equity	$	110,616		$	306,385

(1) December 31, 2002 balances were obtained from audited financial statements.

See accompanying notes to consolidated financial statements.

BioMarin Pharmaceutical Inc. and Subsidiaries

Consolidated Statements of Operations
For the Three Months Ended June 30, 2002 and 2003
(In thousands, except per share data, unaudited)


	Three Months Ended June 30,
	2002			2003
Milestone revenue	$	—		$	12,100

Operating expenses:
Research and development		6,615			11,731
General and administrative		2,937			4,460
Equity in the loss of BioMarin/Genzyme LLC		5,884			5,386

Total operating expenses		15,436			21,577

Loss from operations		(15,436	)		(9,477	)
Interest income		1,024			593
Interest expense		(161	)		(213	)

Net loss from continuing operations		(14,573	)		(9,097	)
Income from discontinued operations		172			—
Loss on disposal of discontinued operations		(10	)		—

Net loss	$	(14,411	)	$	(9,097	)

Net loss per share, basic and diluted:
Net loss from continuing operations	$	(0.27	)	$	(0.14	)
Income from discontinued operations		—			—
Loss on disposal of discontinued operations		—			—

Net loss	$	(0.27	)	$	(0.14	)

Weighted average common shares outstanding		53,407			63,494

See accompanying notes to consolidated financial statements.

BioMarin Pharmaceutical Inc. and Subsidiaries

Consolidated Statements of Operations
For the Six Months Ended June 30, 2002 and 2003
(In thousands, except per share data, unaudited)


	Six Months Ended June 30,
	2002			2003
Milestone revenue	$	—		$	12,100

Operating expenses:
Research and development		12,368			22,722
General and administrative		6,745			7,259
Equity in the loss of BioMarin/Genzyme LLC		11,973			12,139
In-process research and development		11,223			—

Total operating expenses		42,309			42,120

Loss from operations		(42,309	)		(30,020	)
Interest income		1,404			1,006
Interest expense		(252	)		(343	)

Net loss from continuing operations		(41,157	)		(29,357	)
Income from discontinued operations		294			—
Gain (loss) on disposal of discontinued operations		(151	)		577

Net loss	$	(41,014	)	$	(28,780	)

Net loss per share, basic and diluted:
Net loss from continuing operations	$	(0.78	)	$	(0.49	)
Income from discontinued operations		0.01			—
Gain (loss) on disposal of discontinued operations		—			0.01

Net loss	$	(0.77	)	$	(0.48	)


Weighted average common shares outstanding		52,973			60,247

See accompanying notes to consolidated financial statements.

BioMarin Pharmaceutical Inc. and Subsidiaries

Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2002 and 2003
(In thousands, unaudited)


	Six Months Ended June 30,
	2002			2003
Cash flows from operating activities:
Net loss from continuing operations	$	(41,157	)	$	(29,357	)
Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:
In-process research and development		10,286			—
Depreciation and amortization		4,239			4,125
Other		206			77
Changes in operating assets and liabilities:
Investment in and advances to BioMarin/Genzyme LLC		(1,211	)		(1,539	)
Other current assets		2,769			108
Other assets		(350	)		(725	)
Accounts payable and accrued liabilities		(2,498	)		8,193
Other current liabilities		1,150			(195	)

Net cash used in continuing operations		(26,566	)		(19,313	)
Net cash provided by discontinued operations		53			140

Net cash used in operating activities		(26,513	)		(19,173	)

Cash flows from investing activities:
Purchase of property and equipment		(3,858	)		(772	)
Proceeds from sale of equipment		—			28
Purchase of Synapse Technologies, Inc.		(1,028	)		—
Sale of short-term investments		117,934			50,066
Purchase of short-term investments		(80,302	)		(54,447	)

Net cash provided by (used in) investing activities		32,746			(5,125	)

Cash flow from financing activities:
Net proceeds from public offering of common stock		—			80,530
Net proceeds from sale of common stock to Acqua Wellington		—			7,950
Net proceeds from convertible debt offering		—			120,900
Proceeds from exercise of stock options		487			3,661
Proceeds from notes payable		894			—
Repayment of notes payable and capital lease obligations		(899	)		(1,123	)
Issuance of common stock for ESPP, and other		149			467

Net cash provided by financing activities		631			212,385

Effect of foreign currency translation on cash		(29	)		47
Net increase in cash		6,835			188,134
Cash and cash equivalents:
Beginning of period		12,528			33,638

End of period	$	19,363		$	221,772

See accompanying notes to consolidated financial statements.

BioMarin Pharmaceutical Inc. and Subsidiaries

Notes To Consolidated Financial Statements
June 30, 2003
(Unaudited)

(1) NATURE OF OPERATIONS AND BUSINESS RISKS

BioMarin Pharmaceutical Inc. (the Company or BioMarin) is a biopharmaceutical company specializing in the development of enzyme therapies to treat serious life-threatening diseases and conditions. The Company has devoted substantially all of its efforts to research and development activities, including preclinical studies and clinical trials, the establishment of laboratory, clinical and commercial scale manufacturing facilities, clinical and commercial manufacturing, and related administrative activities. The Company and its joint venture partner, Genzyme Corporation (Genzyme), received marketing approval for Aldurazyme® (laronidase) in the United States on April 30, 2003 and in the European Union on June 11, 2003. Prior to 2003, the Company was considered a development stage company. The Company is incorporated in the state of Delaware.

Through June 30, 2003, the Company had accumulated losses of approximately $254.4 million. Based on current plans, management expects to incur further losses for the foreseeable future. Management believes that the Company’s cash, cash equivalents, and short-term investments at June 30, 2003 will be sufficient to meet the Company’s obligations through the end of 2005. Until the Company can generate sufficient levels of cash from its operations, the Company expects to continue to finance future cash needs primarily through proceeds from equity or debt financing, equipment loans and collaborative agreements with corporate partners.

The Company is subject to a number of risks, including: its ability to successfully commercialize Aldurazyme; the uncertainty of the Company’s research and development efforts resulting in successful commercial products; obtaining regulatory approval for such products; access to adequate insurance coverage; reliance on the proprietary technology of others; the possible need for additional financing; dependence on key personnel; uncertain patent protection; significant competition from larger organizations; dependence on corporate partners and collaborators; and possible restrictions on reimbursement, as well as other changes in the healthcare industry.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



	(a) Basis of Presentation

These unaudited consolidated financial statements include the accounts of BioMarin and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated. These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC requirements for interim reporting. However, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation have been included.

Operating results for the three and six months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. These consolidated financial statements should be read in conjunction with the consolidated financial statements and footnotes thereto for the year ended December 31, 2002 included in the Company’s Annual Report on Form 10-K.



	(b) Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect

the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.



	(c) Investment In and Advances to BioMarin/Genzyme LLC and Equity in the Loss of BioMarin/Genzyme LLC

Under the Aldurazyme joint venture agreement with Genzyme, the Company and Genzyme each provide 50% of the funding for the joint venture. All manufacturing, research and development, sales and marketing, and other services performed by Genzyme and the Company on behalf of the joint venture are billed to the joint venture at cost. Any profits or losses of the joint venture are shared equally by the two parties.

The Company accounts for its investment in the joint venture using the equity method. Accordingly, the Company records an increase in its investment for contributions to the joint venture, and a reduction in its investment for its 50% share of the loss of the joint venture. Equity in the loss of BioMarin/Genzyme LLC includes the Company’s 50% share of the joint venture’s loss for the period. The investment in and advances to BioMarin/Genzyme LLC includes the current receivable from the joint venture for the reimbursement related to services provided to the joint venture by the Company during the most recent month.

See Note 6(b) for discussion of the Company’s change in presentation of the joint venture results of operations.



	(d) Accounts Payable and Accrued Liabilities



	Accounts payable and accrued liabilities consist of the following (in thousands):


	December 31, 2002		June 30, 2003
Accounts payable	$	141	$	4,273
Accrued liabilities		2,701		6,426
Accrued vacation		814		964
Accrued payroll and benefits		274		460

	$	3,930	$	12,123



	(e) Net Loss Per Share

Net loss per share is calculated by dividing net loss by the weighted average shares of common stock outstanding during the period. Diluted net loss per share is calculated by dividing net loss by the weighted average shares of common stock outstanding and potential shares of common stock during the period. Potential shares of common stock include dilutive stock issuable upon the exercise of outstanding common stock options, warrants, convertible debt and contingent issuances of common stock. For all periods presented, such potential shares of common stock were excluded from the computation of diluted net loss per share, as their effect is antidilutive.

Potentially dilutive securities include (in thousands):


	June 30,
	2002	2003
Options to purchase common stock	7,753	7,569
Common stock issuable under convertible debt	—	8,920
Warrants to purchase common stock	780	780

Total	8,533	17,269



	(f) Milestone Revenue

Milestone revenue is recognized in full when the related substantive milestone performance goal is achieved. Milestone revenue is typically not recurring in nature.



	(g) Stock Option Plans

The Company has three stock-based compensation plans. The Company accounts for those plans under APB Opinion No. 25, Accounting for Stock Issued to Employees, whereby no stock-based compensation cost is reflected in net loss for options issued to employees with exercise prices at or above the market price on the date of issuance. The following table illustrates the effect on net loss and net loss per share as if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123), to stock-based compensation (in thousands).


	Three Months ended June 30,						Six Months ended June 30,
	2002			2003			2002			2003
Net loss as reported	$	(14,411	)	$	(9,097	)	$	(41,014	)	$	(28,780	)
Deduct: Total stock-based compensation expense determined under fair value based method for all awards		(4,088	)		(3,455	)		(7,310	)		(6,740	)

Pro forma net loss	$	(18,499	)	$	(12,552	)	$	(48,324	)	$	(35,520	)

Net loss per share as reported, basic and diluted	$	(0.27	)	$	(0.14	)	$	(0.77	)	$	(0.48	)
Pro forma net loss per share, basic and diluted		(0.35	)		(0.20	)		(0.91	)		(0.59	)

The Company recognizes as an expense the fair value of options granted to nonemployees and nondirectors.



	(h) Recent Accounting Pronouncements

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149 has not had an impact on the Company’s consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity (SFAS 150). SFAS 150 has not had an impact on the Company’s consolidated financial statements.



	(i) Reclassifications

Certain items in the 2002 consolidated financial statements have been reclassified to conform to the 2003 presentation. See Note 6(b) for discussion of the Company’s joint venture presentation changes.

(3) STOCKHOLDERS’ EQUITY

In 2001, the Company signed an agreement with Acqua Wellington for an equity investment in the Company. Under the terms of the agreement, the Company has the option to request that Acqua Wellington invest in the Company through sales of registered common stock at a small discount to market price, subject to certain conditions. As of June 30, 2003, the Company may request a maximum additional aggregate investment of the lesser of $7.2 million or 389,990 shares, dependent upon the purchase price per share. Under this agreement, Acqua Wellington may also purchase stock and receive similar terms of any other equity financing by the Company. This agreement terminates on October 15, 2003. During the first and second quarters of 2003, Acqua Wellington purchased 500,000 and 265,816 shares for $5.0 and $3.0 million, respectively, net of issuance costs.

In June 2003, the Company amended its articles of incorporation to increase the number of authorized shares of common stock from 75 million shares to 150 million shares.



(4)	CONVERTIBLE DEBT

On June 23, 2003, in a private placement to qualified institutional investors, the Company sold $125 million of convertible debt due on June 15, 2008. The debt was issued at face value and bears interest at the rate of 3.5% per annum, payable semi-annually in cash. The debt is convertible, at the option of the holder, at any time prior to maturity or redemption, into shares of Company common stock at a conversion price of approximately $14.01 per share, subject to adjustment in certain circumstances. On or after June 20, 2006, the Company may, at its option, redeem the notes, in whole or in part, at predetermined prices, plus any accrued and unpaid interest to the redemption date.

In connection with the placement of the debt, the Company paid approximately $4.1 million in issue costs, which have been deferred and are included in other assets. They are being amortized as interest expense over the life of the debt.



(5)	MILESTONE REVENUE

During May 2003, the Company received $12.1 million from Genzyme for the one-time milestone payment related to the marketing approval of Aldurazyme. The milestone payment is included as revenue in the accompanying consolidated statements of operations.



(6)	JOINT VENTURE



	(a)	Joint Venture Financial Data

For the three and six months ended June 30, 2003, the results of the joint venture’s operations were as follows (in thousands):


	Three Months ended June 30,						Six Months ended June 30,
	2002			2003			2002			2003
Revenue	$	—		$	1,117		$	—		$	1,450
Cost of goods sold		—			179			—			179

Gross margin		—			938			—			1,271
Operating expenses		5,574			9,922			11,289			17,616

Loss from operations		(5,574	)		(8,984	)		(11,289	)		(16,345	)
Other income		40			15			70			38

Net loss		(5,534	)		(8,969	)		(11,219	)		(16,307	)

Differences in basis (1):
Decrease in cost of goods sold		—			179			—			179
Increase in operating expenses		(6,234	)		(1,982	)		(12,727	)		(8,150	)

Adjusted basis net loss	$	(11,768	)	$	(10,772	)	$	(23,946	)	$	(24,278	)

Equity in the loss of BioMarin/Genzyme LLC	$	(5,884	)	$	(5,386	)	$	(11,973	)	$	(12,139	)


	(1)	The difference in basis primarily represents the difference in inventory capitalization policies between the joint venture and the Company. The Company began capitalizing Aldurazyme inventory costs in May 2003 after United States regulatory approval was obtained. The joint venture began capitalizing Aldurazyme inventory costs in January 2002 when inventory



	production for commercial sale began. The difference in inventory capitalization policies resulted in greater operating expense recognized by the Company prior to regulatory approval compared to the joint venture and will result in less cost of goods sold recognized by the Company when the previously expensed product is sold by the joint venture. The adjustment will be eliminated when all of the product produced prior to obtaining regulatory approval has been sold.

At December 31, 2002 and June 30, 2003, the summarized assets and liabilities of the joint venture are as follows (in thousands):


	December 31, 2002			June 30, 2003
Assets	$	27,929		$	41,597
Liabilities		(5,007	)		(7,662	)

Net equity		22,922			33,935

Difference in basis (see (1) above)		(17,286	)		(25,259	)

Adjusted basis net equity	$	5,636		$	8,676

50% share of net equity	$	2,818		$	4,338
Due from BioMarin/Genzyme LLC		2,137			2,156

Investment in and advances to BioMarin/Genzyme LLC	$	4,955		$	6,494


	(b)	Change in Joint Venture Presentation on the Consolidated Statements of Operations

With the commercial launch of Aldurazyme during the second quarter of 2003, the Company changed its presentation of the results of operations of the joint venture under the equity method. Previously, the Company recorded revenue to the extent that the services performed by the Company on behalf of the joint venture were funded by Genzyme. Costs incurred by the Company on behalf of the joint venture were recorded as operating expenses in the consolidated statements of operations. Equity in the loss of BioMarin/Genzyme LLC previously represented 50% of the joint venture net loss that related to costs not incurred by the Company on behalf of the joint venture.

In the new presentation on the consolidated statements of operations, the equity in the loss of BioMarin/Genzyme LLC represents the Company’s 50% share of the joint venture’s net loss. Costs incurred by the Company on behalf of the joint venture are included in the financial statements of the joint venture. This change in presentation had no effect on the Company’s loss from operations or net loss for all periods presented. Both the prior presentation and the new presentation are acceptable under the equity method of accounting.

The Company’s consolidated statements of operations for prior periods have been reclassified to conform to the new presentation. The following table shows the previously presented results of operations of the Company and the current presentation for the three and six months ended June 30, 2002 (in thousands):


	Three Months Ended June 30, 2002
	Prior Presentation			Reclassifications			New Presentation
Revenue from BioMarin/Genzyme LLC	$	3,423		$	(3,423	)	$	—
Operating expenses:
Research and development		13,336			(6,721	)		6,615
General and administrative		3,062			(125	)		2,937
Equity in the loss of BioMarin/Genzyme LLC		2,461			3,423			5,884

Total operating expenses		18,859			(3,423	)		15,436

Loss from operations	$	(15,436	)	$	—		$	(15,436	)


	Six Months Ended June 30, 2002
	Prior Presentation			Reclassifications			New Presentation
Revenue from BioMarin/Genzyme LLC	$	7,215		$	(7,215	)	$	—
Operating expenses:
Research and development		26,554			(14,186	)		12,368
General and administrative		6,988			(243	)		6,745
Equity in the loss of BioMarin/Genzyme LLC		4,759			7,214			11,973
In-process research and development		11,223			—			11,223

Total operating expenses		49,524			(7,215	)		42,309

Loss from operations	$	(42,309	)	$	—		$	(42,309	)


	(c)	Discussion of Joint Venture Results of Operations

See Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three and six months ended June 30, 2003 and 2002 for discussion of the results of operations of BioMarin/Genzyme LLC.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Form 10-Q contains “forward-looking statements” as defined under securities laws. Many of these statements can be identified by the use of terminology such as “believes,” “expects,” “anticipates,” “plans,” “may,” “will,” “projects,” “continues,” “estimates,” “potential,” “opportunity” and so on. These forward-looking statements may be found in the “Factors That May Affect Future Results,” and other sections of this Quarterly Report on Form 10-Q. Our actual results or experience could differ significantly from the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in “Factors That May Affect Future Results,” as well as those discussed elsewhere in this Form 10-Q. You should carefully consider that information before you make an investment decision.

You should not place undue reliance on these statements, which speak only as of the date that they were made. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may issue in the future. We do not undertake any obligation to release publicly any revisions to these forward-looking statements after completion of the filing of this Form 10-Q to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

Overview

We develop enzyme therapies to treat serious, life-threatening diseases and conditions. We leverage our expertise in enzyme biology to develop product candidates for the treatment of genetic diseases, as well as other critical care situations such as cardiovascular surgery and serious burns. Our first commercial product and our product candidates address markets for which no products are currently available or where current products have been associated with major deficiencies.

Our first product, Aldurazyme^® (laronidase), has been approved for marketing in the United States by the United States Food and Drug Administration (FDA), in the European Union by the European Medicines Evaluation Agency (EMEA) and other countries for the treatment of mucopolysaccharidosis I (MPS I) disease. MPS I is a debilitating and life-threatening genetic disease caused by the deficiency of (alpha)-L-iduronidase, an enzyme responsible for breaking down certain carbohydrates. MPS I is a progressive disease that afflicts patients from birth and frequently leads to severe disability and early death. As the first drug ever approved for MPS I, Aldurazyme has been granted orphan drug status in the United States and the European Union, which gives Aldurazyme seven years of market exclusivity in the United States and ten years of market exclusivity in the European Union for (alpha)-L-iduronidase for the treatment of MPS I. We have developed Aldurazyme through a joint venture with Genzyme Corporation (Genzyme).

We are developing our second product candidate, Neutralase™, for reversal of anticoagulation by heparin. Heparin is a carbohydrate drug commonly used as an anticoagulant in a range of surgical procedures such as coronary artery bypass graft (CABG) surgery and angioplasty. Neutralase is a carbohydrate-modifying enzyme that cleaves heparin, allowing coagulation of blood and potentially aiding patient recovery following surgery. We believe that Neutralase has the potential to address a broad market with multiple potential medical indications. Our first target indication for Neutralase is for the reversal of anticoagulation by heparin in CABG surgery. We began enrolling patients in the first of two Phase 3 trials of Neutralase for the reversal of heparin in CABG surgery in February 2003 and we anticipate that this trial will be completed in the first quarter of 2004. If the trial is successful, we expect to initiate the second Phase 3 trial. We also plan to evaluate Neutralase in interventional cardiology procedures such as angioplasty, and in other procedures such as hip and knee surgeries, where heparin or heparin-like anticoagulants such as Lovenox^® (a low molecular weight heparin) or Arixtra^® (a pentasacharride) are used. We have retained all worldwide commercial rights to Neutralase.

In addition to Aldurazyme and Neutralase, we are developing other enzyme-based therapeutics for the treatment of a variety of diseases and conditions. In March 2002, we began a Phase 2 trial of

Aryplase™ for the treatment of mucopolysaccharidosis VI (MPS VI), another seriously debilitating genetic disease for which no drug treatment currently exists. The six-month treatment phase of the Phase 2 trial ended in January 2003, and we announced positive data from this trial in March 2003. Patients from the Phase 2 trial and the previous Phase 1 trial are continuing to receive Aryplase as part of an extension phase of the trials. We began enrolling patients in a Phase 3 clinical trial of Aryplase in July 2003. We have received orphan drug designation for Aryplase in the United States and the European Union. We also are developing Vibrilase™, a topical enzyme product for use in removing burned skin tissue in preparation for skin grafting or other therapy. We initiated a Phase 1 clinical trial of this product in the United Kingdom in the second quarter of 2002 and we expect to complete this trial in 2003. In addition, we are pursuing preclinical development of several other enzyme product candidates for genetic and other diseases. We have retained all worldwide commercial rights to all of our product candidates.

Results of Operations

With the commercial launch of Aldurazyme during the second quarter of 2003, we changed our presentation of the results of operations of the Aldurazyme joint venture under the equity method of accounting. Previously, we recorded revenue to the extent that the services performed by us on behalf of the joint venture were funded by Genzyme. Costs incurred by us on behalf of the joint venture were recorded as operating expenses in the consolidated statements of operations. Equity in the loss of BioMarin/Genzyme LLC previously represented 50% of the joint venture net loss that related to costs not incurred by the Company on behalf of the joint venture.

In the new presentation of our consolidated statements of operations, the equity in the loss of BioMarin/Genzyme LLC represents our 50% share of the joint venture’s net loss. Costs incurred by us on behalf of the joint venture are included in the financial statements of the joint venture and are not directly reflected in our operating expenses. This change in presentation had no effect on our loss from operations or net loss for all periods presented. Both the prior presentation and the new presentation are acceptable under the equity method of accounting. See Note 6(b) of the accompanying consolidated financial statements for further discussion of this change.

All of the activities related to the manufacture, distribution and sale of Aldurazyme are reported in the results of the joint venture. Because of this change in presentation, we have divided our discussion of the Results of Operations into two sections, BioMarin and BioMarin/Genzyme LLC. The discussion of the joint venture’s operations include the total amounts for the joint venture, not just our 50% interest in the operations.

Quarters Ended June 30, 2003 and 2002

BioMarin

Our net loss for the second quarter of 2003 as compared to the second quarter of 2002 decreased from $14.4 million to $9.1 million. The decrease was the result of a one-time, $12.1 million milestone payment received from Genzyme, partially offset by increased research and development expenses and general and administrative expenses. Milestone revenue in the second quarter of 2003 represents the $12.1 million milestone payment received from Genzyme related to the FDA marketing approval of Aldurazyme.

Research and development expenses in the second quarter of 2003 increased by $5.1 million to $11.7 million from $6.6 million in the second quarter of 2002. The major factors causing the increase include $2.5 million of costs associated with the Neutralase Phase 3 clinical trial, $1.1 million for manufacturing costs of Neutralase, $0.5 million of increased costs associated with the Aryplase clinical trials, and $0.6 million of quality control costs.

General and administrative expenses increased to $4.5 million in the second quarter of 2003 from $2.9 million in the second quarter of 2002. The major factors for the increase include $0.4 million of facility costs, $0.3 million of recruiting and relocation fees, $0.3 million of commercial planning costs and $0.2 million of increased insurance costs.

Equity in the loss of BioMarin/Genzyme LLC was $5.4 million in the second quarter of 2003 compared to $5.9 million in the second quarter of 2002. The decrease in the loss primarily resulted from the margin generated by Aldurazyme sales during the second quarter of 2003 and the capitalization of inventory upon the regulatory approval of Aldurazyme.

Interest income decreased to $0.6 million in the second quarter of 2003 from $1.0 million in the second quarter of 2002 primarily due to the decrease in available interest rates. The convertible debt offering that we completed on June 23, 2003, had little effect on interest income during the second quarter of 2003.

Interest expense was $213,000 and $161,000 in the second quarter of 2003 and the second quarter of 2002, respectively. The increase is due to accrued interest expense from June 23 through June 30, 2003 on the convertible debt. Based on the currently outstanding amount of convertible debt, we expect to incur $1.1 million of interest expense per quarter related to the convertible debt.

Income from discontinued operations in the second quarter of 2002 represents net receipts from the Glyko, Inc. analytics business.

BioMarin/Genzyme LLC

The discussion below gives effect to the inventory capitalization policy that we use for inventory held by the joint venture, which is different from the joint venture’s inventory capitalization policy. We began capitalizing Aldurazyme inventory costs in May 2003 after United States regulatory approval was obtained. The joint venture began capitalizing Aldurazyme inventory costs in January 2002 when inventory production for commercial sale began. The difference in inventory capitalization policies, as presented below, results in a greater operating expense realized by us prior to regulatory approval, and lower cost of goods sold and higher gross margins realized by us as the previously expensed product is sold by the joint venture. This adjustment will be eliminated when all of the product produced prior to regulatory approval has been sold. See Note 6(b) of the accompanying consolidated financial statements for further discussion of the difference in inventory cost basis between us and the joint venture.

We and our joint venture partner, Genzyme, received marketing approval for Aldurazyme in the United States on April 30, 2003, and in the European Union on June 11, 2003. We have subsequently received marketing approval in other countries. Aldurazyme was launched commercially in May 2003 in the United States and in June 2003 in the European Union. The joint venture recognized $1.1 million of revenue during the second quarter of 2003. Gross margin for the second quarter of 2003 was $1.1 million since all product sold was previously expensed. BioMarin/Genzyme LLC recognized no revenue during 2002.

Operating expenses of BioMarin/Genzyme LLC totaled $11.9 million for the second quarter of 2003, including $5.0 million of sales and marketing expenses associated with the commercial launch of Aldurazyme and $5.6 million of research and development costs. Research and development of the joint venture included $2.0 million of Aldurazyme production before regulatory approval was obtained and $3.6 million of costs associated with the ongoing clinical trials and continued research and development efforts.

Operating expenses of the joint venture for the second quarter of 2002 totaled $11.8 million including $1.4 million of sales and marketing expenses related to the commercialization of Aldurazyme and $9.9 million of research and development. Research and development of the joint venture included $6.2 million for the production of Aldurazyme and $3.7 million of clinical trial costs. Research and development decreased in the second quarter of 2003 compared to the second quarter of 2002 due to the capitalization of inventory in May 2003 after regulatory approval was obtained. Sales and marketing expenses increased in the second quarter of 2003 due to increased commercialization activities in preparation for the Aldurazyme commercial launch.

Six Months Ended June 30, 2003 and 2002

BioMarin

Our net loss for the first half of 2003 as compared to the first half of 2002 decreased from $41.0 million to $28.8 million. The decrease was the result of a one-time, $12.1 million milestone payment received from Genzyme, partially offset by increased research and development expenses and general and administrative expenses. Milestone revenue in the first half of 2003 represents the $12.1 million milestone payment received from Genzyme related to the FDA marketing approval of Aldurazyme.

Research and development expenses in the first half of 2003 increased by $10.3 million to $22.7 million from $12.4 million in the first half of 2002. The major factors causing the increase include $5.0 million for manufacturing costs of Neutralase, $2.8 million of costs associated with the Neutralase Phase 3 clinical trial, $0.5 million of increased costs associated with the Aryplase clinical trials, $0.6 million of quality control costs and $0.3 million of costs related to our preclinical programs.

General and administrative expenses increased to $7.3 million in the first half of 2003 from $6.7 million in the first half of 2002. Included in the expenses for the first half of 2002 are reorganization costs associated with the acquisition of Glyko Biomedical Ltd. of $0.8 million and other compensation costs associated with the termination of a former officer of $0.3 million. After adjusting for these one-time charges in 2002, the major factors causing the increase in general and administrative expenses for 2003 include $0.4 million of facility costs, $0.3 million of recruiting and relocation fees, $0.3 million of commercial planning costs, $0.2 million of increased insurance costs and higher overall compensation expense in the first half of 2003.

In-process research and development expense of $11.2 million in the first half of 2002 represents the purchase price of all of the outstanding stock of Synapse Technologies, Inc. (Synapse) in March 2002 plus related expenses.

Equity in the loss of BioMarin/Genzyme LLC was $12.1 million in the first half of 2003 compared to $12.0 million in the first half of 2002. The increase is due principally to sales and marketing expenses incurred by the joint venture for the commercial launch of Aldurazyme offset by the margin generated by Aldurazyme sales in the first half of 2003 and the capitalization of inventory upon the regulatory approval of Aldurazyme.

Interest income decreased to $1.0 million in the first half of 2003 from $1.4 million in the first half of 2002 primarily due to the decrease in available interest rates. The convertible debt offering that we completed on June 23, 2003, had little effect on interest income during the first half of 2003.

Interest expense was $343,000 and $252,000 in the first half of 2003 and 2002, respectively. The increase is due to accrued interest expense from June 23 through June 30, 2003 on the convertible debt. Based on the currently outstanding amount of convertible debt, we expect to incur $1.1 million of interest expense per quarter related to the convertible debt.

Income from discontinued operations in the first half of 2002 represents net receipts from the Glyko, Inc. analytics business subsequent to the decision to discontinue this business.

Gain from disposal of discontinued operations in the first half of 2003 of $0.6 million represents proceeds from the sale of Glyko, Inc. assets. In January 2003, we sold certain assets of Glyko, Inc. to a third party for a total sales price of up to $1.5 million. The sales price was comprised of cash totaling $0.2 million, a note receivable payable in quarterly installments through 2006 totaling $0.5 million and quarterly royalties based upon future sales of certain Glyko, Inc. products through 2008 up to a maximum of $0.8 million. The proceeds from the sale of the Glyko, Inc. assets, including the discounted note receivable of $0.4 million, was recorded as a gain from discontinued operations in the first quarter of 2003, net of transaction costs, and the royalties will be recorded when earned. The loss from disposal of discontinued

operations in the first half of 2002 of $0.2 million represents the Glyko, Inc. closure expense.

BioMarin/Genzyme LLC

We and our joint venture partner, Genzyme, received marketing approval for Aldurazyme in the United States on April 30, 2003, and in the European Union on June 11, 2003. We have subsequently received marketing approval in other countries. Aldurazyme was launched commercially in May 2003 in the United States and in June 2003 in the European Union. The joint venture recognized $1.5 million of revenue during the first half of 2003. Gross margin for the first half of 2003 was $1.5 million since all product sold was previously expensed. BioMarin/Genzyme LLC recognized no revenue during 2002.

Operating expenses of BioMarin/Genzyme LLC totaled $25.8 million for the first half of 2003, including $8.1 million of sales and marketing expenses associated with the commercial launch of Aldurazyme and $15.3 million of research and development costs. Research and development of the joint venture for the first half of 2003 included $8.2 million of costs associated with production of Aldurazyme prior to regulatory approval and $7.1 million of costs associated with the ongoing clinical trials and continued research and development efforts.

Operating expenses of the joint venture for the first half of 2002 totaled $24.0 million including $2.0 million of sales and marketing expenses related to the commercialization of Aldurazyme and $21.2 million of research and development expenses. Research and development of the joint venture for the first half of 2002 included $12.7 million of costs associated with the production of Aldurazyme and $8.5 million of clinical trial costs and research and development activities. Research and development decreased in the first half of 2003 compared to the first half of 2002 due to the capitalization of inventory in May 2003 after regulatory approval was obtained. Sales and marketing expenses increased in the first half of 2003 due to increased commercialization activities in preparation for the Aldurazyme commercial launch.

Liquidity and Capital Resources

We have financed our operations by the issuance of common stock, convertible debt, equipment financing and the related interest income earned on cash balances available for short-term investment. During the first half of 2003, we raised net proceeds of $80.5 million from a public offering of our common stock, $8.0 million from the sale of our common stock to Acqua Wellington in February, March and April and net proceeds of $120.9 million from a convertible debt offering in June.

As of June 30, 2003, our combined cash, cash equivalents and short-term investments totaled $266.4 million, an increase of $192.4 million from $74.0 million at December 31, 2002. The primary uses of cash during the six months ended June 30, 2003 were to finance operations and fund the joint venture with Genzyme. The primary sources of cash during the first half of 2003 were net proceeds from the public stock offering completed in February of $80.5 million, net proceeds from the Acqua Wellington equity financings of $8.0 million in February, March and April, the milestone payment from Genzyme of $12.1 million, net proceeds from the convertible debt offering of $120.9 million in June and the issuance of common stock pursuant to the exercise of stock options under our stock compensation plans of approximately $3.7 million.

For the six months ended June 30, 2003, our research and development expense of $22.7 million was allocated $10.1 million to Neutralase, $7.4 million to Aryplase, $0.4 million to Vibrilase and $4.8 million to research and development costs not allocated to specific major projects.

In the quarter ended June 30, 2003, our research and development expense of $11.7 million was allocated $4.9 million to Neutralase, $4.2 million to Aryplase, $0.2 million to Vibrilase and $2.4 million to research and development costs not allocated to specific major projects.

We expect to fund our operations with our cash, cash equivalents and short-term investments and supplement our cash, cash equivalents and short-term investments through proceeds from equity or debt financing, equipment loans or collaborative agreements with corporate partners. We expect our current funds, including the proceeds from our recently completed public offering, convertible debt offering and the milestone payment from Genzyme, to meet our operating and capital requirements through the end of 2005.

We do not expect to generate positive cash flow from operations for the foreseeable future because we expect to continue to incur operational expenses and continue our research and development activities, including:

•		preclinical studies and clinical trials;
•		process development, including quality systems for product manufacture;
•		regulatory processes in the United States and international jurisdictions;
•		clinical and commercial scale manufacturing capabilities; and
•		expansion of sales and marketing activities.

We also expect to incur costs related to increased marketing and manufacturing of Aldurazyme to satisfy the product demands associated with its commercial launch.

Our $125 million of 3.5% convertible debt will impact our liquidity due to the semi-annual cash interest payments and the repayment of the notes in 2008. Should we redeem the debt after June 2006, at our option according to the debt terms, we will be subject to premiums upon redemption ranging from 0.7% to 1.4%, dependent upon the time the debt is redeemed. We also must repay the debt if there is a qualifying change in control or termination of trading of our common stock, each according to the debt terms.

We expect that the proceeds from equity or debt financing, equipment loans or collaborative agreements will be used to fund operating costs, capital expenditures and working capital requirements, which may include costs associated with the commercialization of Aldurazyme; additional clinical trials and the manufacturing of Aryplase and Neutralase; preclinical studies and clinical trials for our other product candidates; potential licenses and other acquisitions of complementary technologies, products and companies; general corporate purposes; and working capital.

We plan to continue our policy of investing available funds in government and other investment grade, interest-bearing securities. We do not invest in derivative financial instruments. There are two current arrangements that are available to provide us with additional sources of financing in the future:

•

In 2001, we signed an agreement with Acqua Wellington for an equity investment in us. Under this agreement, we have the option to request that Acqua Wellington invest in us through sales of registered common stock at a small discount to market price, subject to certain conditions. This agreement terminates on October 15, 2003. Under this agreement, Acqua Wellington may also purchase stock and receive similar terms of any other equity financing by us. During the first half of 2003, Acqua Wellington purchased a total of $8.0 million of our common stock, net of issuance costs. At June 30, 2003, we may request a maximum additional aggregate investment of the lesser of $7.2 million or 389,990 shares, dependent upon the purchase price per share.

•

We have entered into several agreements for loans secured by certain equipment with an aggregate outstanding balance totaling $4.7 million at June 30, 2003. The notes bear interest ranging from 8.06% to 9.33% and are secured by certain manufacturing and laboratory equipment. Additionally, the agreements have covenants that require us to maintain a minimum unrestricted cash balance of $35 million. Should the unrestricted cash balance fall below $35 million, we can either provide the lender with an irrevocable letter of credit for the amount of the total notes outstanding or repay the notes with prepayment penalties. We expect to enter into similar facilities as we acquire additional equipment and expand our operations.

We anticipate a need for additional financing to fund our future operations, including the commercialization of our drug products currently under development. We cannot provide assurance that additional financing will be obtained or, if obtained, will be available on reasonable terms or in a timely manner.

Our future capital requirements will depend on many factors, including, but not limited to:

•		our ability to successfully commercialize Aldurazyme;
•		the progress, timing and scope of our preclinical studies and clinical trials;
•		the time and cost necessary to obtain regulatory approvals;
•		the time and cost necessary to develop commercial manufacturing processes, including quality systems and to build or acquire manufacturing capabilities;
•		the time and cost necessary to respond to technological and market developments;
•		any changes made to or new developments in our existing collaborative, licensing and other commercial relationships or any new collaborative, licensing and other commercial relationships that we may establish; and
•		Whether our convertible debt is converted to common stock in the future.

We have contractual and commercial obligations under our debt, operating and capital leases and other commitments related to research and development activities, licenses and sales royalties with annual minimums. Information about these commitments as of June 30, 2003 is presented in the table below (in thousands).


	Payments Due by Period
	Total		Remainder of 2003		2004		2005-2006		2007-2008		Thereafter
Equipment loans	$	4,702	$	1,344	$	2,704	$	654	$	—		—
Operating leases		30,945		1,570		3,881		7,303		6,991		11,200
Capital leases		68		43		25		—		—		—
Research and development and license commitments		2,928		2,123		805		—		—		—
Convertible debt and related interest		146,790		2,285		4,375		8,750		131,380		—
Annual royalty commitments		1,775		125		330		660		660		—

Total	$	187,208	$	7,490	$	12,120	$	17,367	$	139,031		11,200

We are also subject to contingent payments totaling approximately $14.2 million upon achievement of certain regulatory and licensing milestones if they occur before certain dates in the future.

Critical Accounting Policies

Equity in the loss of BioMarin/Genzyme LLC

We account for our investment in the joint venture using the equity method. Accordingly, we record an increase in our investment for contributions to the joint venture, and a reduction in our investment for our 50% share of the loss of the joint venture. Equity in the loss of BioMarin/Genzyme LLC includes our 50% share of the joint venture’s loss for the period. The investment in and advances to BioMarin/Genzyme LLC also includes the current receivable from the joint venture for the reimbursement related to services provided to the joint venture by us. See Note 6(b) of the accompanying consolidated financial statements for discussion of our change in presentation of the joint venture results of operations.

Impairment of Long-Lived Assets

We regularly review long-lived assets and identifiable intangibles. We evaluate the recoverability of long-lived assets by measuring the carrying amount of the assets against the estimated undiscounted future cash flows associated with them. At the time such evaluations indicate that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the carrying value of such assets, the assets are adjusted to their fair values.

Income taxes

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We have recorded a full valuation allowance against our net deferred tax asset, the principal amount of which is the tax effect of net operating loss carryforwards, of approximately $108.5 million at December 31, 2002. Future taxable income and ongoing prudent and feasible tax planning strategies have been considered in assessing the need for the valuation allowance. An adjustment to the valuation allowance would increase or decrease income in the period such adjustment was made.

Research and Development

Research and development expenses include: expenses associated with contract research and development provided by third parties; manufacturing, clinical and regulatory costs; and internal research and development costs. All research and development costs are expensed as incurred. Inventory costs for product candidates are expensed until regulatory approval is obtained, at which time inventory is capitalized at the lower of cost or market value.

Stock Option Plans

We have three stock-based compensation plans. We account for those plans under APB Opinion No. 25, Accounting for Stock Issued to Employees whereby generally no stock-based compensation cost is reflected in our net loss for options issued to employees with exercise prices at or above the market price on the date of issuance. We recognize as an expense the fair value of options granted to nonemployees and nondirectors.

FACTORS THAT MAY AFFECT FUTURE RESULTS

An investment in our securities involves a high degree of risk. We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties. The risks and uncertainties described below are not the only ones we face. Other risks and uncertainties, including those that we do not currently consider material, may impair our business. If any of the risks discussed below actually occur, our business, financial condition, operating results or cash flows could be materially adversely affected. This could cause the trading price of our securities to decline, and you may lose all or part of your investment.

If we continue to incur operating losses for a period longer than anticipated, we may be unable to continue our operations at planned levels and be forced to reduce or discontinue operations.

Since we began operations in March 1997, we have been engaged primarily in research and development and have operated at a net loss for the entire time. Our first product, Aldurazyme, was only recently approved for commercial sale in the United States and the European Union and has only generated nominal sales revenue to date. We have no sales revenues from our product candidates. As of June 30, 2003, we had an accumulated deficit of approximately $254.4 million. We expect to continue to operate at a net loss for the foreseeable future. Our future profitability depends on the successful commercialization of Aldurazyme by our joint venture partner, Genzyme, and our receiving regulatory approval of our product candidates and our ability to successfully manufacture and market any approved drugs, either by ourselves or jointly with others. The extent of our future losses and the timing of profitability are highly uncertain. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations.

If we fail to obtain the capital necessary to fund our operations, we will be unable to complete our product development programs.

In the future, we may need to raise substantial additional capital to fund operations. We may be unable to raise additional financing when needed due to a variety of factors, including our financial condition, the status of our product programs, and the general condition of the financial markets. If we fail to raise additional financing as we need such funds, we will have to delay or terminate some or all of our product development programs.

We expect to continue to spend substantial amounts of capital for our operations for the foreseeable future. The amount of capital we will need depends on many factors, including:

•		our ability to successfully commercialize Aldurazyme;
•		the progress, timing and scope of our preclinical studies and clinical trials;
•		the time and cost necessary to obtain regulatory approvals;
•		the time and cost necessary to develop commercial manufacturing processes, including quality systems and to build or acquire manufacturing capabilities;
•		the time and cost necessary to respond to technological and market developments; and
•		any changes made or new developments in our existing collaborative, licensing and other commercial relationships or any new collaborative, licensing and other commercial relationships that we may establish.

Moreover, our fixed expenses such as rent, license payments and other contractual commitments are substantial and will increase in the future. These fixed expenses will increase due to the payment of interest on our convertible debt and because we may enter into:

•		additional leases for new facilities and capital equipment;
•		additional licenses and collaborative agreements;
•		additional contracts for consulting, maintenance and administrative services;
•		additional contracts for product manufacturing; and
•		additional asset-based financing facilities.

We believe that our cash, cash equivalents and short-term investment securities balances at June 30, 2003, will be sufficient to meet our operating and capital requirements through the end of 2005. These estimates are based on assumptions and estimates, which may prove to be wrong. As a result, we may need or choose to obtain additional financing during that time.

If we fail to obtain or maintain regulatory approval to commercially manufacture or sell our future drug products, or if approval is delayed, we will be unable to generate revenue from the sale of these products, our potential for generating positive cash flow will be diminished and the capital necessary to fund our operations will be increased.

We must obtain regulatory approval before marketing or selling our drug products in the United States and in foreign jurisdictions. In the United States, we must obtain FDA approval for each drug that we intend to commercialize. The FDA approval process is typically lengthy and expensive, and approval is never certain. Products distributed abroad are also subject to foreign government regulation. Only one of our drug products has received regulatory approval to be commercially marketed and sold in the United States and the European Union. If we fail to obtain regulatory approval for our other drugs, we will be unable to market and sell those drug products. Because of the risks and uncertainties in biopharmaceutical development, our drug products could take a significantly longer time to gain regulatory approval than we expect or may never gain approval. After any of our products receive regulatory approval, they remain subject to ongoing FDA regulation, including, for example, changes to the product labeling, new or revised regulatory requirements for manufacturing practices, reporting adverse reactions and other information, and product recall. The FDA can withdraw a product’s approval under some circumstances, such as the failure to comply with existing or future regulatory requirements, or unexpected safety issues. If regulatory approval is delayed, or withdrawn, our management’s credibility, the value of our company and our operating results will be adversely affected. Additionally, we will be unable to generate revenue from the sale of these products, our potential for generating positive cash flow will be diminished and the capital necessary to fund our operations will be increased.

To obtain regulatory approval to market our products, preclinical studies and costly and lengthy clinical trials will be required and the results of the studies and trials are highly uncertain.

As part of the regulatory approval process, we must conduct, at our own expense, preclinical studies in the laboratory on animals and clinical trials on humans for each drug product. We expect the number of preclinical studies and clinical trials that the regulatory authorities will require will vary depending on the drug product, the disease or condition the drug is being developed to address and regulations applicable to the particular drug. We may need to perform multiple preclinical studies using various doses and formulations before we can begin clinical trials, which could result in delays in our ability to market any of our drug products. Furthermore, even if we obtain favorable results in preclinical studies on animals, the results in humans may be significantly different.

After we have conducted preclinical studies in animals, we must demonstrate that our drug products are safe and efficacious for use on the target human patients in order to receive regulatory approval for commercial sale. Adverse or inconclusive clinical results would stop us from filing for regulatory approval of our drug products. Additional factors that can cause delay or termination of our clinical trials include:

•		slow or insufficient patient enrollment;
•		slow recruitment of, and completion of necessary institutional approvals at, clinical sites;
•		longer treatment time required to demonstrate efficacy;
•		lack of sufficient supplies of the product candidate;
•		adverse medical events or side effects in treated patients;
•		lack of effectiveness of the product candidate being tested; and
•		regulatory requests for additional clinical trials.

Typically, if a drug product is intended to treat a chronic disease, as is the case with some of the product candidates we are developing, safety and efficacy data must be gathered over an extended period of time, which can range from six months to three years or more.

The fast track designation for our product candidates may not actually lead to a faster review process and a delay in the review process or approval of our products will delay revenue from the sale of the products and will increase the capital necessary to fund these programs.

Aryplase has obtained fast track designation, which provides certain advantageous procedures and guidelines with respect to the review by the FDA of the Common Technical Document (CTD) for this product and which may result in our receipt of an initial response from the FDA earlier than would be received if this product had not received a fast track designation. However, these procedures and guidelines do not guarantee that the total review process will be faster or that approval will be obtained, if at all, earlier than would be the case if the product had not received fast track designation. If the review process or approval for Aryplase is delayed, realizing revenue from the sale of Aryplase will be delayed and the capital necessary to fund this program will be increased.

We will not be able to sell our products if we fail to comply with manufacturing regulations.

Before we can begin commercial manufacture of our products, we must obtain regulatory approval of our manufacturing facilities and processes. In addition, manufacture of our drug products must comply with the FDA’s current Good Manufacturing Practices regulations, commonly known as cGMP. The cGMP regulations govern facility compliance, quality control and documentation policies and procedures. Our manufacturing facilities are continuously subject to inspection by the FDA, the State of California and foreign regulatory authorities, before and after product approval. Our Galli Drive and our Bel Marin Keys Boulevard manufacturing facilities have been inspected and licensed by the State of California for clinical pharmaceutical manufacture and our Galli Drive facility has been approved by the FDA and the EMEA for the commercial manufacture of Aldurazyme.

Due to the complexity of the processes used to manufacture our products, we may be unable to pass federal or international regulatory inspections in a cost effective manner. For the same reason, any potential third party manufacturer of our drug products may be unable to comply with cGMP regulations in a cost effective manner. If we are unable to comply with manufacturing regulations, we will not be able to sell our products.

If we fail to obtain or maintain orphan drug exclusivity for some of our products, our competitors may sell products to treat the same conditions and our revenues will be reduced.

As part of our business strategy, we intend to develop some drugs that may be eligible for FDA and European Community orphan drug designation. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, defined as a patient population of less than 200,000 in the United States. The company that first obtains FDA approval for a designated orphan drug for a given rare disease receives marketing exclusivity for use of that drug for the stated condition for a period of seven years. Orphan drug exclusive marketing rights may be lost if the FDA later determines that the request for designation was materially defective, or if the manufacturer is unable to assure sufficient quantity of the drug. Similar regulations are available in the European Community with a ten-year period of market exclusivity.

Because the extent and scope of patent protection for some of our drug products is particularly limited, orphan drug designation is particularly important for our products that are eligible for orphan drug designation. For eligible drugs, we plan to rely on the exclusivity period under the orphan drug designation to maintain a competitive position. If we do not obtain orphan drug exclusivity for our drug products that do not have patent protection, our competitors may then sell the same drug to treat the same condition.

Even though we have obtained orphan drug designation for certain of our product candidates and even if we obtain orphan drug designation for other products we develop, due to the uncertainties associated with developing pharmaceutical products, we may not be the first to obtain marketing approval

for any orphan indication. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs can be approved for the same condition. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process.

Because the target patient populations for some of our products are small, we must achieve significant market share and obtain high per-patient prices for our products to achieve profitability.

Two of our lead product programs, Aldurazyme and Aryplase, target diseases with small patient populations. As a result, our per-patient prices must be relatively high in order to recover our development costs and achieve profitability. Aldurazyme targets patients with MPS I and Aryplase targets patients with MPS VI. We estimate that there are approximately 3,400 patients with MPS I and 1,100 patients with MPS VI in the developed world. We believe that we will need to market worldwide to achieve significant market share. In addition, we are developing other drug candidates to treat conditions, such as other genetic diseases and serious burn wounds, with small patient populations. Due to the expected costs of treatment for Aldurazyme and Aryplase, we may be unable to obtain sufficient market share for our drug products at a price high enough to justify our product development efforts.

If we fail to obtain an adequate level of reimbursement for our drug products by third-party payers, the sales of our drugs would be adversely affected or there may be no commercially viable markets for our products.

The course of treatment for patients with MPS I using Aldurazyme and for patients with MPS VI using Aryplase is expected to be expensive. We expect patients to need treatment throughout their lifetimes. We expect that most families of patients will not be capable of paying for this treatment themselves. There will be no commercially viable market for Aldurazyme or Aryplase without reimbursement from third-party payers. Additionally, even if there is a commercially viable market, if the level of reimbursement is below our expectations, our revenue and gross margins will be adversely affected.

Third-party payers, such as government or private health care insurers, carefully review and increasingly challenge the prices charged for drugs. Reimbursement rates from private companies vary depending on the third-party payer, the insurance plan and other factors. Reimbursement systems in international markets vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis.

We currently have no expertise obtaining reimbursement. We are relying on the expertise of our joint venture partner Genzyme to obtain reimbursement for the costs of Aldurazyme. In addition, we will need to develop our own reimbursement expertise for future drug candidates unless we enter into collaborations with other companies with the necessary expertise. For our future products, we will not know what the reimbursement rates will be until we are ready to market the product and we actually negotiate the rates. If we are unable to obtain sufficiently high reimbursement rates, our products may not be commercially viable or our future revenues and gross margins may be adversely affected.

We expect that, in the future, reimbursement will be increasingly restricted both in the United States and internationally. The escalating cost of health care has led to increased pressure on the health care industry to reduce costs. Governmental and private third-party payers have proposed health care reforms and cost reductions. A number of federal and state proposals to control the cost of health care, including the cost of drug treatments, have been made in the United States. In some foreign markets, the government controls the pricing, which would affect the profitability of drugs. Current government regulations and possible future legislation regarding health care may affect reimbursement for medical treatment by third-party payers, which may render our products not commercially viable or may adversely affect our future revenues and gross margins.

If we are unable to protect our proprietary technology, we may not be able to compete as effectively.

Where appropriate, we seek patent protection for certain aspects of our technology. Patent protection may not be available for some of the products we are developing. If we must spend significant time and money protecting our patents, designing around patents held by others or licensing, for large fees, patents or other proprietary rights held by others, our business and financial prospects may be harmed.

The patent positions of biotechnology products are complex and uncertain. The scope and extent of patent protection for some of our products are particularly uncertain because key information on some of the products we are developing has existed in the public domain for many years. Other parties have published the structure of the enzymes and compounds, the methods for purifying or producing the enzymes and compounds or the methods of treatment. The composition and genetic sequences of animal and/or human versions of Aldurazyme and many of our product candidates have been published and are believed to be in the public domain. The composition and genetic sequences of other MPS enzymes that we intend to develop as products have also been published. Publication of this information may prevent us from obtaining composition-of-matter patents, which are generally believed to offer the strongest patent protection.

For enzymes or compounds with no prospect of broad composition-of-matter patents, other forms of patent protection or orphan drug status may provide us with a competitive advantage. As a result of these uncertainties, investors should not rely on patents as a means of protecting our products or product candidates, including Aldurazyme.

We own or license patents and patent applications related to Aldurazyme and certain of our product candidates. However, these patents and patent applications do not ensure the protection of our intellectual property for a number of other reasons, including the following:




	•	We do not know whether our patent applications will result in issued patents. For example, we may not have developed a method for treating a disease before others developed similar methods.




	•	Competitors may interfere with our patent process in a variety of ways. Competitors may claim that they invented the claimed invention prior to us. Competitors may also claim that we are infringing on their patents and therefore cannot practice our technology as claimed under our patent. Competitors may also contest our patents by showing the patent examiner that the invention was not original, was not novel or was obvious. In litigation, a competitor could claim that our issued patents are not valid for a number of reasons. If a court agrees, we would lose that patent. As a company, we have no meaningful experience with competitors interfering with our patents or patent applications.




	•	Enforcing patents is expensive and may absorb significant time of our management. Management would spend less time and resources on developing products, which could increase our research and development expenses and delay product programs.




	•	Receipt of a patent may not provide much practical protection. If we receive a patent with a narrow scope, then it will be easier for competitors to design products that do not infringe on our patent.

In addition, competitors also seek patent protection for their technology. Due to the number of patents in our field of technology, we cannot be certain that we do not infringe on those patents or that we will not infringe on patents granted in the future. If a patent holder believes our product infringes on their patent, the patent holder may sue us even if we have received patent protection for our technology. If someone else claims we infringe on their technology, we would face a number of issues, including the following:




	•	Defending a lawsuit takes significant time and can be very expensive.




	•	If the court decides that our product infringes on the competitor’s patent, we may have to pay substantial damages for past infringement.




	•	The court may prohibit us from selling or licensing the product unless the patent holder licenses the patent to us. The patent holder is not required to grant us a license. If a license is available, we may have to pay substantial royalties or grant cross-licenses to our patents.




	•	Redesigning our product so it does not infringe may not be possible or could require substantial funds and time.

It is also unclear whether our trade secrets are adequately protected. While we use reasonable efforts to protect our trade secrets, our employees or consultants may unintentionally or willfully disclose our information to competitors. Enforcing a claim that someone else illegally obtained and is using our trade secrets, like patent litigation, is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. Our competitors may independently develop equivalent knowledge, methods and know-how.

We may also support and collaborate in research conducted by government organizations or by universities. These government organizations and universities may be unwilling to grant us any exclusive rights to technology or products derived from these collaborations prior to entering into the relationship.

If we do not obtain required licenses or rights, we could encounter delays in product development while we attempt to design around other patents or even be prohibited from developing, manufacturing or selling products requiring these licenses. There is also a risk that disputes may arise as to the rights to technology or products developed in collaboration with other parties.

The United States Patent and Trademark Office has issued three patents to a third party that relate to (alpha)-L-iduronidase. If we are not able to successfully challenge these patents, we may be prevented from producing Aldurazyme in the United States unless and until we obtain a license.

The United States Patent and Trademark Office has issued three patents to a third party that include composition-of-matter, isolated genomic nucleotide sequences, vectors including the sequences, host cells containing the vectors, and method of use claims for human recombinant (alpha)-L-iduronidase. Our lead drug product, Aldurazyme, is based on human recombinant (alpha)-L-iduronidase. We believe that these patents are invalid or not infringed on a number of grounds. A corresponding patent application was filed in the European Patent Office claiming composition-of-matter for human recombinant (alpha)-L-iduronidase, and it was rejected over prior art and withdrawn and cannot be re-filed. However, corresponding applications are still pending in Canada and Japan, and these applications are being prosecuted by the applicants. We do not know whether any of these applications will issue as patents or the scope of the claims that would issue from these applications. In addition, under United States law, issued patents are entitled to a presumption of validity, and our challenges to the United States patents may be unsuccessful. Even if we are successful, challenging the United States patents may be expensive, require our management to devote significant time to this effort and may adversely impact commercialization of Aldurazyme in the United States.

The holder of the patents described above has granted an exclusive license for products relating to these patents to one of our competitors. If we are unable to successfully challenge the patents, we may be unable to produce Aldurazyme in the United States (or in Canada or Japan, should patents issue in these countries) unless we can obtain a sublicense from the current licensee. The current licensee is not required to grant us a license and even if a license is available, we may have to pay substantial license fees, which could adversely affect our business and operating results.

If our joint venture with Genzyme were terminated, we could be barred from commercializing Aldurazyme or our ability to successfully commercialize Aldurazyme would be delayed or diminished.

We are relying on Genzyme to apply the expertise it has developed through the launch and sale of other enzyme-based products to the marketing of Aldurazyme. We have no experience selling, marketing or obtaining reimbursement for pharmaceutical products. In addition, without Genzyme we would be

required to pursue foreign regulatory approvals. We have no experience in seeking foreign regulatory approvals.

Either Genzyme or we may terminate the joint venture for specified reasons, including if the other party is in material breach of the agreement or has experienced a change of control or has declared bankruptcy and also is in breach of the agreement. Although we are not currently in breach of the joint venture agreement and we believe that Genzyme is not currently in breach of the joint venture agreement, there is a risk that either party could breach the agreement in the future. Either party may also terminate the agreement upon one-year prior written notice for any reason.

If the joint venture is terminated for breach, the non-breaching party would be granted, exclusively, all of the rights to Aldurazyme and any related intellectual property and regulatory approvals and would be obligated to buy out the breaching party’s interest in the joint venture. If we are the breaching party, we would lose our rights to Aldurazyme and the related intellectual property and regulatory approvals. If the joint venture is terminated without cause, the non-terminating party would have the option, exercisable for one year, to buy out the terminating party’s interest in the joint venture and obtain all rights to Aldurazyme exclusively. In the event of termination of the buy out option without exercise by the non-terminating party as described above, all right and title to Aldurazyme is to be sold to the highest bidder, with the proceeds to be split equally between Genzyme and us.

If the joint venture is terminated by either party because the other declared bankruptcy and is also in breach of the agreement, the terminating party would be obligated to buy out the other and would obtain all rights to Aldurazyme exclusively. If the joint venture is terminated by a party because the other party experienced a change of control, the terminating party shall notify the other party, the offeree, of its intent to buy out the offeree’s interest in the joint venture for a stated amount set by the terminating party at its discretion. The offeree must then either accept this offer or agree to buy the terminating party’s interest in the joint venture on those same terms. The party who buys out the other would then have exclusive rights to Aldurazyme.

If we were obligated, or given the option, to buy out Genzyme’s interest in the joint venture, and gain exclusive rights to Aldurazyme, we may not have sufficient funds to do so and we may not be able to obtain the financing to do so. If we fail to buy out Genzyme’s interest we may be held in breach of the agreement and may lose any claim to the rights to Aldurazyme and the related intellectual property and regulatory approvals. We would then effectively be prohibited from developing and commercializing the product.

Termination of the joint venture in which we retain the rights to Aldurazyme could cause us significant difficulties in obtaining third-party reimbursement and delays or failure to obtain foreign regulatory approval, any of which could hurt our business and results of operations. Since Genzyme funds 50% of the joint venture’s product inventory and operating expenses, the termination of the joint venture would double our financial burden and reduce the funds available to us for other product programs.

If we are unable to manufacture our drug products in sufficient quantities and at acceptable cost, we may be unable to meet demand for our products and lose potential revenues or have reduced margins.

Although we have successfully manufactured Aldurazyme at commercial scale and within our cost parameters, due to the complexity of manufacturing our products we may not be able to manufacture any other drug product successfully with a commercially viable process or at a scale large enough to support their respective commercial markets or at acceptable margins.

Our manufacturing processes may not meet initial expectations and we may encounter problems with any of the following if we attempt to increase the scale or size or improve the commercial viability of our manufacturing processes:


	•	design, construction and qualification of manufacturing facilities that meet regulatory requirements;


	•	schedule;


	•	reproducibility;


	•	production yields;


	•	purity;


	•	costs;


	•	quality control and assurance systems;


	•	shortages of qualified personnel; and


	•	compliance with regulatory requirements.

Improvements in manufacturing processes typically are very difficult to achieve and are often very expensive and may require extended periods of time to develop. If we contract for manufacturing services with an unproven process, our contractor is subject to the same uncertainties, high standards and regulatory controls.

The availability of suitable contract manufacturing at scheduled or optimum times is not certain. The cost of contract manufacturing is greater than internal manufacturing and therefore our manufacturing processes must be of higher productivity to result in equivalent margins.

The manufacture of Neutralase involves the fermentation of a bacterial species. We have never used a bacterial production process for the production of any commercial product. We have contracted with a third party for the manufacture of Neutralase. We expect to use a third party for the manufacture of additional quantities of Neutralase.

We have built-out approximately 54,000 square feet at our Novato facilities for manufacturing capability for Aldurazyme including related quality control laboratories, materials capabilities, and support areas. We expect to add additional capabilities in stages over time, which could create additional operational complexity and challenges. We expect that the manufacturing process of all of our new drug products, including Aryplase and Neutralase, will require significant time and resources before we can begin to manufacture them (or have them manufactured by third parties) in commercial quantity at an acceptable cost.

In order to achieve our product cost targets, we must develop efficient manufacturing processes either by:


	•	improving the product yield from our current cell lines, which are colonies of cells that have a common genetic makeup;


	•	improving the manufacturing processes licensed from others; or


	•	developing more efficient, lower cost recombinant cell lines and production processes.

A recombinant cell line is a cell line with foreign DNA inserted that is used to produce an enzyme or other protein that it would not have otherwise produced. The development of a stable, high production cell line for any given enzyme is difficult, expensive and unpredictable and may not result in adequate yields. In addition, the development of protein purification processes is difficult and may not produce the high purity required with acceptable yield and costs or may not result in adequate shelf-lives of the final products. If we are not able to develop efficient manufacturing processes, the investment in manufacturing capacity sufficient to satisfy market demand will be much greater and will place heavy financial demands

upon us. If we do not achieve our manufacturing cost targets, we will have lower margins and reduced profitability in commercial production and larger losses in manufacturing start-up phases.

In addition, our manufacturing processes subject us to a variety of federal, state and local laws and regulations governing the use, generation, manufacture, storage, handling and disposal of hazardous materials and wastes resulting from their use. We may incur significant costs in complying with these laws and regulations.

Our sole manufacturing facility for Aldurazyme is located near known earthquake fault zones, and the occurrence of an earthquake or other catastrophic disaster could cause damage to our facility and equipment, which could materially impair our ability to manufacture Aldurazyme.

Our Novato, California facility is our only manufacturing facility for Aldurazyme. It is located in the San Francisco Bay area near known earthquake fault zones and is vulnerable to significant damage from earthquakes. We are also vulnerable to damage from other types of disasters, including fires, floods, power loss and similar events. If any disaster were to occur, our ability to manufacture Aldurazyme could be seriously, or potentially completely, impaired, we could incur delays in our commercialization efforts and our revenue from the sale of Aldurazyme could be seriously impaired. The insurance we maintain may not be adequate to cover our losses resulting from disasters or other business interruptions.

If we are unable to create marketing and distribution capabilities or to enter into agreements with third parties to do so, our ability to generate revenues will be diminished.

If we cannot expand our marketing and distribution capabilities either by developing our own sales and marketing organization or by entering into agreements with others, we may be unable to successfully sell our products. We believe that developing an internal sales and distribution capability will be expensive and time consuming. Alternatively, we may enter into agreements with third parties to market our products. For example, under our joint venture with Genzyme, Genzyme is responsible for marketing and distributing Aldurazyme. However, these third parties may not be capable of successfully selling any of our drug products.

Neutralase is an enzyme product that has a significantly larger potential patient population than Aldurazyme and Aryplase and will be marketed and sold to different target audiences with different therapeutic and financial requirements and needs. As a result, we will be competing with other pharmaceutical companies with experienced and well-funded sales and marketing operations targeting these specific physician and institutional audiences. We may not be able to develop our own sales and marketing force at all, or of a size that would allow us to compete with these other companies. If we elect to enter into third-party marketing and distribution agreements in order to sell into these markets, we may not be able to enter into these agreements on acceptable terms, if at all. If we cannot compete effectively in these specific physician and institutional markets, it would adversely affect sales of Neutralase.

If we fail to compete successfully with respect to product sales, we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product.

Our competitors may develop, manufacture and market products that are more effective or less expensive than ours. They may also obtain regulatory approvals for their products faster than we can obtain them (including those products with orphan drug designation) or commercialize their products before we do. With respect to Aryplase, if our competitors successfully commercialize a product that treats MPS VI before we do, we may effectively be precluded from developing a product to treat that disease because the patient population of the disease is so small. If one of our competitors gets orphan drug exclusivity, we could be precluded from marketing our version for seven years in the United States and ten years in the European Union. However, different drugs can be approved for the same condition. If we do not compete successfully, we may be unable to generate sufficient sales to recover our expenses related to the development of a product program or to justify continued marketing of a product.

If we fail to compete successfully with respect to acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to develop new products and to continue to expand our product pipeline.

Our competitors compete with us to attract organizations for acquisitions, joint ventures, licensing arrangements or other collaborations. To date, several of our product programs have been acquired through acquisitions, such as Neutralase and NeuroTrans, and several of our product programs have been developed through licensing or collaborative arrangements, such as Aldurazyme, Aryplase and Vibrilase. These collaborations include licensing proprietary technology from, and other relationships with, academic research institutions. If our competitors successfully enter into partnering arrangements or license agreements with academic research institutions, we will then be precluded from pursuing those specific opportunities. Since each of these opportunities is unique, we may not be able to find a substitute. Several pharmaceutical and biotechnology companies have already established themselves in the field of enzyme therapeutics, including Genzyme, our joint venture partner. These companies have already begun many drug development programs, some of which may target diseases that we are also targeting, and have already entered into partnering and licensing arrangements with academic research institutions, reducing the pool of available opportunities.

Universities and public and private research institutions also compete with us. While these organizations primarily have educational or basic research objectives, they may develop proprietary technology and acquire patents that we may need for the development of our drug products. We will attempt to license this proprietary technology, if available. These licenses may not be available to us on acceptable terms, if at all. If we are unable to compete successfully with respect to acquisitions, joint venture and other collaboration opportunities, we may be limited in our ability to develop new products and to continue to expand our product pipeline.

If we do not achieve our projected development goals in the time frames we announce and expect, the commercialization of our products may be delayed and the credibility of our management may be adversely affected and, as a result, our stock price may decline.

For planning purposes, we estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies and clinical trials and the submission of regulatory filings. From time to time, we publicly announce the expected timing of some of these milestones. All of these milestones are based on a variety of assumptions. The actual timing of these milestones can vary dramatically compared to our estimates, in many cases for reasons beyond our control. If we do not meet these milestones as publicly announced, the commercialization of our products may be delayed and the credibility of our management may be adversely affected and, as a result, our stock price may decline.

If we fail to manage our growth or fail to recruit and retain personnel, our product development programs may be delayed.

Our rapid growth has strained our managerial, operational, financial and other resources. We expect this growth to continue. Based on the recent approval of Aldurazyme by the FDA and European Union, and other countries, we expect that our joint venture with Genzyme will be required to devote additional resources in the immediate future to support the commercialization of Aldurazyme.

To manage expansion effectively, we need to continue to develop and improve our research and development capabilities, manufacturing and quality capacities, sales and marketing capabilities and financial and administrative systems. Our staff, financial resources, systems, procedures or controls may be inadequate to support our operations and our management may be unable to manage successfully future market opportunities or our relationships with customers and other third parties.

Our future growth and success depend on our ability to recruit, retain, manage and motivate our employees. The loss of key scientific, technical and managerial personnel may delay or otherwise harm our

product development programs. Any harm to our research and development programs would harm our business and prospects.

Because of the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. In particular, the loss of Fredric D. Price, our Chairman and Chief Executive Officer, or Emil D. Kakkis, M.D., Ph.D., our Senior Vice President of Business Operations or Christopher M. Starr, Ph.D., our Senior Vice President of Scientific Operations, could be detrimental to us if we cannot recruit suitable replacements in a timely manner. While Mr. Price, Dr. Kakkis and Dr. Starr are parties to employment agreements with us, these agreements do not guarantee that they will remain employed with us in the future. In addition, these agreements do not restrict their ability to compete with us after their employment is terminated. The competition for qualified personnel in the biopharmaceutical field is intense. Due to this intense competition, we may be unable to continue to attract and retain qualified personnel necessary for the development of our business.

Changes in methods of treatment of disease could reduce demand for our products.

Even if our drug products are approved, doctors must use treatments that require using those products. If doctors elect a different course of treatment from that which includes our drug products, this decision would reduce demand for our drug products. For example if in the future gene therapy becomes widely used as a treatment of genetic diseases, the use of enzyme replacement therapy, like Aldurazyme, in MPS diseases could be greatly reduced. Changes in treatment method can be caused by the introduction of other companies’ products or the development of new technologies or surgical procedures which may not directly compete with ours, but which have the effect of changing how doctors decide to treat a disease. For example, Neutralase is being developed for heparin reversal in CABG surgery. It is possible that alternative non-surgical methods of treating heart disease could be developed. If so, then the demand for Neutralase would likely decrease.

If product liability lawsuits are successfully brought against us, we may incur substantial liabilities.

We are exposed to the potential product liability risks inherent in the testing, manufacturing and marketing of human pharmaceuticals. The BioMarin/Genzyme LLC maintains clinical liability insurance for Aldurazyme with aggregate loss limits of $5.0 million and has obtained additional coverage in connection with the commercialization of Aldurazyme. We have obtained insurance against product liability lawsuits with aggregate loss limits of $15.0 million. Pharmaceutical companies must balance the cost of insurance with the level of coverage based on estimates of potential liability. Historically, the potential liability associated with product liability lawsuits for pharmaceutical products has been unpredictable. Although we believe that our current insurance is a reasonable estimate of our potential liability and represents a commercially reasonable balancing of the level of coverage as compared to the cost of the insurance, we may be subject to claims in connection with our current clinical trials for Aldurazyme, Aryplase, Vibrilase and Neutralase for which our insurance coverage is not adequate.

The product liability insurance we will need to obtain in connection with the commercial sales of our product candidates if and when they receive regulatory approval may be unavailable in meaningful amounts or at a reasonable cost. In addition, while we take, and continue to take what we believe are appropriate precautions, we may be unable to avoid significant liability if any product liability lawsuit is brought against us. If we are the subject of a successful product liability claim that exceeds the limits of any insurance coverage we obtain, we may incur substantial liabilities that would adversely affect our earnings and require the commitment of capital resources that might otherwise be available for the development and commercialization of our product programs.

Our stock price may be volatile, and an investment in our stock could suffer a decline in value.

Our valuation and stock price since the beginning of trading after our initial public offering have had no meaningful relationship to current or historical earnings, asset values, book value or many other

criteria based on conventional measures of stock value. The market price of our common stock will fluctuate due to factors including:


	•	product sales and profitability of Aldurazyme;


	•	progress of Neutralase, Aryplase and our other lead drug products through the regulatory process;


	•	results of clinical trials, announcements of technological innovations or new products by us or our competitors;


	•	government regulatory action affecting our drug products or our competitors’ drug products in both the United States and foreign countries;


	•	developments or disputes concerning patent or proprietary rights;


	•	general market conditions and fluctuations for the emerging growth and biopharmaceutical market sectors; economic conditions in the United States or abroad;


	•	actual or anticipated fluctuations in our operating results;


	•	broad market fluctuations in the United States or in Europe, which may cause the market price of our common stock to fluctuate; and


	•	changes in company assessments or financial estimates by securities analysts.

In addition, the value of our common stock may fluctuate because it is listed on both the Nasdaq National Market and the Swiss Exchange’s SWX New Market. Listing on both exchanges may increase stock price volatility due to:


	•	trading in different time zones;


	•	different ability to buy or sell our stock;


	•	different market conditions in different capital markets; and


	•	different trading volume.

In the past, following periods of large price declines in the public market price of a company’s securities, securities class action litigation has often been initiated against that company. Litigation of this type could result in substantial costs and diversion of management’s attention and resources, which would hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.

Anti-takeover provisions in our charter documents, our stockholders’ rights plan and under Delaware law may make an acquisition of us, which may be beneficial to our stockholders, more difficult.

We are incorporated in Delaware. Certain anti-takeover provisions of Delaware law and our charter documents as currently in effect may make a change in control of our company more difficult, even if a change in control would be beneficial to the stockholders. Our anti-takeover provisions include provisions in the certificate of incorporation providing that stockholders’ meetings may only be called by the board of directors and a provision in the bylaws providing that the stockholders may not take action by written consent. Additionally, our board of directors has the authority to issue an additional 249,886 shares of preferred stock and to determine the terms of those shares of stock without any further action by the stockholders. The rights of holders of our common stock are subject to the rights of the holders of any preferred stock that may be issued. The issuance of preferred stock could make it more difficult for a third party to acquire a majority of our outstanding voting stock. Delaware law also prohibits corporations from

engaging in a business combination with any holders of 15% or more of their capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. Our board of directors may use these provisions to prevent changes in the management and control of our company. Also, under applicable Delaware law, our board of directors may adopt additional anti-takeover measures in the future.

In September 2002, our board of directors authorized a stockholder rights plan and related dividend of one preferred share purchase right for each share of our common stock outstanding at that time. In connection with an increase in our authorized common stock, our board approved an amendment to this plan in June 2003. As long as these rights are attached to our common stock, we will issue one right with each new share of common stock so that all shares of our common stock will have attached rights. When exercisable, each right will entitle the registered holder to purchase from us one two-hundredth of a share of our Series B Junior Participating Preferred Stock at a price of $35.00 per two-hundredth of a Preferred Share, subject to adjustment.

The rights are designed to assure that all of our stockholders receive fair and equal treatment in the event of any proposed takeover of us and to guard against partial tender offers, open market accumulations and other abusive tactics to gain control of us without paying all stockholders a control premium. The rights will cause substantial dilution to a person or group that acquires 15% or more of our stock on terms not approved by our board of directors. However, the rights may have the effect of making an acquisition of us, which may be beneficial to our stockholders, more difficult, and the existence of such rights may prevent or reduce the likelihood of a third party making an offer for an acquisition of us.

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio. By policy, we place our investments with highly rated credit issuers and limit the amount of credit exposure to any one issuer. As stated in our policy, we seek to improve the safety and likelihood of preservation of our invested funds by limiting default risk and market risk. We have no investments denominated in foreign country currencies and therefore are not subject to foreign exchange risk.

We mitigate default risk by investing in high credit quality securities and by positioning our portfolio to respond appropriately to a significant reduction in a credit rating of any investment issuer or guarantor. The portfolio includes only marketable securities with active secondary or resale markets to ensure portfolio liquidity.

Based on our investment portfolio and interest rates at June 30, 2003, we believe that a 100 basis point change in interest rates would result in a decrease or increase of approximately $0.4 million, respectively, in the fair value of the investment portfolio. Changes in interest rates may affect the fair value of the investment portfolio; however, we will not recognize such gains or losses unless the investments are sold.

The table below presents the carrying value of our investment portfolio, which approximates fair value at June 30, 2003 (in thousands):


	Carrying Value
Cash and cash equivalents	$	221,772	*
Short-term investments		44,588	**

Total	$	266,360


	* 30% of cash and cash equivalents invested in money market funds, 54% in taxable municipal debt securities, 15% in A1/P1 rated commercial paper and 1% of uninvested cash.


	** 37% of short-term investments invested in United States agency securities, 17% in taxable municipal debt securities, 7% in A1/P1 rated commercial paper and 39% in corporate bonds.

Our debt obligations consist of our convertible debt, equipment-based loans and capital lease obligations, which carry fixed interest rates and, as a result, we are not exposed to interest rate market risk on our debt. The carrying value of our convertible debt and equipment loans approximates their fair value at June 30, 2003.

Item 4. Controls and Procedures

As of June 30, 2003, our management, including our Chief Executive Officer and Chief Financial Officer, have conducted an evaluation of the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in ensuring timely collection and evaluation of all information potentially subject to disclosure in our periodic filings with the Securities and Exchange Commission. There have been no significant changes in our internal controls or in the factors that could significantly affect our internal controls during the fiscal quarter to which this report relates or subsequent to the date our Chief Executive Officer and Chief Financial Officer completed their evaluation.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings. None.

Item 2. Changes in Securities and Uses of Proceeds.

On June 12, 2003, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to increase the number of authorized shares of our common stock from 75,000,000 to 150,000,000. The Amendment to the Certificate of Incorporation was filed with the Delaware Secretary of State on June 12, 2003. Other than the potential dilution associated with the possible future issuance of this additional common stock, this amendment did not affect the rights of the common stockholders.

On June 23, 2003, we issued and sold an aggregate of $125,000,000 of 3.5% convertible subordinated notes due 2008 in a private placement in reliance on an exemption from registration under Section 4(2) of the Securities Act. The initial purchasers of the notes in that offering were UBS Securities LLC and CIBC World Markets Corp. These initial purchasers purchased the convertible notes at an aggregate purchase price equal to 97% of the aggregate principal amount of the convertible notes. The initial purchaser then resold the notes in offering in reliance on an exemption from registration under Rule 144A of the Securities Act. The notes are convertible into 71.3572 shares of our common stock, par value $0.001 per share, per $1,000 principal amount of notes and subject to adjustment in certain circumstances. This results in an initial conversion price of approximately $14.01 per share.

Item 3. Defaults upon Senior Securities. None.

Item 4. Submission of Matters to a Vote of Security Holders.

The annual meeting of our stockholders was held on June 12, 2003, at which the following actions were taken:


	a)	The following directors were elected to serve until the next annual meeting and until their successors are elected:


Director Elected	Vote For	Withheld

Fredric D. Price	39,728,893	1,725,313
Franz L. Cristiani	29,348,249	12,105,957
Elaine J. Heron, Ph.D.	39,735,382	1,718,824
Erich Sager	36,707,140	4,747,066
Vijay B. Samant	36,710,255	4,743,951
Gwynn R. Williams	29,353,623	12,100,583


	b)	The selection of KPMG LLP as independent auditors was ratified by a vote of 40,861,978 shares in favor; 587,371 shares against; and 4,857 shares withheld.


	c)	The amendment of the Company’s Certificate of Incorporation to increase the number of shares of common stock was approved by a vote of 37,783,966 shares in favor; 3,662,295 shares against; and 7,915 shares withheld.


	d)	The amendment of the Company’s Certificate of Incorporation to increase the number of shares of preferred stock was not approved by a vote of 18,368,739 shares against; 9,381,122 shares in favor; and 13,704,345 shares withheld.


	e)	The amendment of the Company’s 1997 Stock Plan was not approved by a vote of 19,575,999 shares against; 8,172,532 shares in favor; and 13,705,675 shares withheld.

Item 5. Other Information. None.

Item 6. Exhibits and Reports on Form 8-K.


	(a)	The following documents are filed as part of this report.

	3.1	Amended and Restated Certificate of Incorporation, as amended June 12, 2003, previously filed with the Commission on June 23, 2003 as Exhibit 3.1 to the Company ’s Current Report on Form 8-K, and incorporated herein by reference.
	4.1	Indenture dated June 23, 2003, by and between BioMarin Pharmaceutical Inc. and Wilmington Trust Company.
	4.2	3.50% Convertible Subordinated Note due 2003, in the principal amount of $125,000,000, dated June 23, 2003.
	4.3	Registration Rights Agreement dated June 23, 2003 by and among, UBS Securities LLC and CIBC World Markets Corp., as Initial Purchasers, and BioMarin Pharmaceutical Inc.
	10.1	Amendment No. 2 to 1998 Director Option Plan, as adopted June 12, 2003 and July 21, 2003.
	10.2	Bayview Business Park Standard Lease dated June 16, 2003 by and between BioMarin Pharmaceutical Inc. and Bayview Ignacio, LLC.
	10.3	Note Purchase Agreement dated June 18, 2003 by and among UBS Securities LLC and CIBC World Markets Corp., as Initial Purchasers, and BioMarin Pharmaceutical Inc.
	31.1 *	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	*	This Certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of The Securities Exchange Act of 1934, as amended.

	(b)	Reports on Form 8-K.

On April 1, 2003, we filed a Current Report on Form 8-K regarding a press release related to various events, including the status of the regulatory approval of Aldurazyme and the Vibrilase clinical program.

On May 1, 2003 we filed a Current Report on Form 8-K regarding the FDA approval of the marketing application for Aldurazyme in the United States.

On May 6, 2003, we filed a Current Report on Form 8-K regarding our financial results for the quarter ended March 31, 2003.

On May 16, 2003, we filed a Current Report on Form 8-K regarding the announcement of the commercial availability of Aldurazyme in the United States.

On June 12, 2003, we filed a Current Report on Form 8-K regarding the EMEA approval of the marketing application for Aldurazyme in the European Union.

On June 16, 2003, we filed a Current Report on Form 8-K regarding our intention to offer $125 million of convertible notes.

On June 18, 2003, we filed a Current Report on Form 8-K regarding the pricing of the offering of $125 million of convertible notes.

On June 23, 2003, we filed a Current Report on Form 8-K regarding the amendment to our Certificate of Incorporation to increase the number of authorized shares of common stock.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.


	BIOMARIN PHARMACEUTICAL INC.



Dated: August 11, 2003	By:	/s/ LOUIS DRAPEAU

		Louis Drapeau, Chief Financial Officer, Vice President, Finance and Secretary (On behalf of the registrant and as principal financial officer)

Exhibit Index

3.1		Amended and Restated Certificate of Incorporation, as amended June 12, 2003, previously filed with the Commission on June 23, 2003 as Exhibit 3.1 to the Company’s Current Report on Form 8-K, and incorporated herein by reference.
4.1		Indenture dated June 23, 2003, by and between BioMarin Pharmaceutical Inc. and Wilmington Trust Company.
4.2		3.50% Convertible Subordinated Note due 2003, in the principal amount of $125,000,000, dated June 23, 2003.
4.3		Registration Rights Agreement dated June 23, 2003 by and among, UBS Securities LLC and CIBC World Markets Corp., as Initial Purchasers, and BioMarin Pharmaceutical Inc.
10.1		Amendment No. 2 to 1998 Director Option Plan, as adopted June 12, 2003 and July 21, 2003.
10.2		Bayview Business Park Standard Lease dated June 16, 2003 by and between BioMarin Pharmaceutical Inc. and Bayview Ignacio, LLC.
10.3		Note Purchase Agreement dated June 18, 2003 by and among UBS Securities LLC and CIBC World Markets Corp., as Initial Purchasers, and BioMarin Pharmaceutical Inc.
31.1	*	Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	*	This Certification accompanies this report and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of §18 of The Securities Exchange Act of 1934, as amended.

EX-4.1 3 dex41.htm INDENTURE DATED JUNE 23, 2003 Indenture Dated June 23, 2003

Exhibit 4.1

BIOMARIN PHARMACEUTICAL INC.

and

WILMINGTON TRUST COMPANY

as Trustee

INDENTURE

Dated as of June 23, 2003

$125,000,000 Principal Amount

3.50% CONVERTIBLE SUBORDINATED NOTES DUE 2008

CROSS-REFERENCE TABLE


	TIA Section		Indenture Section

	310(a)(1)		7.10
	(a)(2)		7.10
	(a)(3)		N.A.
	(a)(4)		N.A.
	(a)(5)		N.A.
	(b)		7.08;7.10;12.02
	(c)		N.A.
	311(a)		7.11
	(b)		7.11
	(c)		N.A.
	312(a)		2.05
	(b)		12.03
	(c)		12.03
	313(a)		7.06
	(b)(1)		N.A.
	(b)(2)		7.06
	(c)		7.06;12.02
	(d)		7.06
	314(a)		4.02
	(b)		N.A.
	(c)(1)		12.04
	(c)(2)		12.04
	(c)(3)		N.A.
	(d)		N.A.
	(e)		12.05
	(f)		N.A.
	315(a)		7.01(B)
	(b)		7.05; 12.02
	(c)		7.01(A)
	(d)		7.01(C)
	(e)		6.11
	316(a)(last sentence)		2.09
	(a)(1)(A)		6.05
	(a)(1)(B)		6.04
	(a)(2)		N.A.
	(b)		6.07
	(c)		N.A.
	317(a)(1)		6.08
	(a)(2)		6.09
	(b)		2.04
	318(a)		12.01

TABLE OF CONTENTS

		Page
I.	DEFINITIONS AND INCORPORATION BY REFERENCE	1

	1.01 Definitions	1
	1.02 Other Definitions	4
	1.03 Incorporation by Reference of Trust Indenture Act	5
	1.04 Rules of Construction	6

II.	THE SECURITIES	6

	2.01 Form and Dating	6
	2.02 Execution and Authentication	7
	2.03 Registrar, Paying Agent and Conversion Agent	7
	2.04 Paying Agent To Hold Money in Trust	8
	2.05 Securityholder Lists	8
	2.06 Transfer and Exchange	8
	2.07 Replacement Securities	9
	2.08 Outstanding Securities	9
	2.09 Securities Held by the Company or an Affiliate	10
	2.10 Temporary Securities	10
	2.11 Cancellation	10
	2.12 Defaulted Interest	11
	2.13 CUSIP Numbers	11
	2.14 Deposit of Moneys	11
	2.15 Book-Entry Provisions for Global Securities	11
	2.16 Special Transfer Provisions	12
	2.17 Restrictive Legends	13

III.	REDEMPTION	14

	3.01 Right of Redemption	14
	3.02 Notices to Trustee	14
	3.03 Selection of Securities to Be Redeemed	14
	3.04 Notice of Redemption	15
	3.05 Effect of Notice of Redemption	16
	3.06 Deposit of Redemption Price	16
	3.07 Securities Redeemed in Part	16
	3.08 Repurchase at Option of Holder upon a Repurchase Event	17
	3.09 Conversion Arrangement on Call for Redemption	21

IV.	COVENANTS	22

	4.01 Payment of Securities	22
	4.02 Maintenance of Office or Agency	22

N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture

-i-



	4.03 Reports	23
	4.04 Compliance Certificate	23
	4.05 Stay, Extension and Usury Laws	23
	4.06 Corporate Existence	23
	4.07 Notice of Default	24

V.	SUCCESSORS	24

	5.01 When Company May Merge, etc.	24
	5.02 Successor Substituted	24

VI.	DEFAULTS AND REMEDIES	24

	6.01 Events of Default	24
	6.02 Acceleration	26
	6.03 Other Remedies	27
	6.04 Waiver of Past Defaults	27
	6.05 Control by Majority	27
	6.06 Limitation on Suits	27
	6.07 Rights of Holders to Receive Payment	28
	6.08 Collection Suit by Trustee	28
	6.09 Trustee May File Proofs of Claim	28
	6.10 Priorities	29
	6.11 Undertaking for Costs	29

VII.	TRUSTEE	29

	7.01 Duties of Trustee	29
	7.02 Rights of Trustee	30
	7.03 Individual Rights of Trustee	32
	7.04 Trustee’s Disclaimer	32
	7.05 Notice of Defaults	32
	7.06 Reports by Trustee to Holders	32
	7.07 Compensation and Indemnity	32
	7.08 Replacement of Trustee	33
	7.09 Successor Trustee by Merger, etc.	34
	7.10 Eligibility; Disqualification	34
	7.11 Preferential Collection of Claims Against Company	34

VIII.	DISCHARGE OF INDENTURE	34

	8.01 Termination of the Obligations of the Company	34
	8.02 Application of Trust Money	35
	8.03 Repayment to Company	35
	8.04 Reinstatement	35

N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture

-ii-


IX.	AMENDMENTS	36

	9.01 Without Consent of Holders	36
	9.02 With Consent of Holders	36
	9.03 Compliance with Trust Indenture Act	38
	9.04 Revocation and Effect of Consents	38
	9.05 Notation on or Exchange of Securities	38
	9.06 Trustee Protected	38

X.	CONVERSION	39

	10.01 Conversion Privilege; Restrictive Legends	39
	10.02 Conversion Procedure	39
	10.03 Fractional Shares	40
	10.04 Taxes on Conversion	40
	10.05 Company to Provide Stock	40
	10.06 Adjustment of Conversion Rate	40
	10.07 No Adjustment	45
	10.08 Other Adjustments	46
	10.09 Adjustments for Tax Purposes	46
	10.10 Notice of Adjustment	46
	10.11 Notice of Certain Transactions	47
	10.12 Effect of Reclassifications, Consolidations, Mergers, Binding Share Exchanges or Sales on Conversion Privilege	47
	10.13 Trustee’s Disclaimer	48

XI.	SUBORDINATION	48

	11.01 Agreement to Subordinate	48
	11.02 Certain Definitions	49
	11.03 Liquidation; Dissolution; Bankruptcy	49
	11.04 Default on Senior Indebtedness	50
	11.05 Acceleration of Securities	51
	11.06 When Distribution Must Be Paid Over	51
	11.07 Notice by the Company	51
	11.08 Subrogation	52
	11.09 Relative Rights	52
	11.10 Subordination May Not Be Impaired by the Company	52
	11.11 Distribution or Notice to Representative	53
	11.12 Rights of Trustee and Paying Agent	53

XII.	MISCELLANEOUS	53

	12.01 Trust Indenture Act Controls	53
	12.02 Notices	53
	12.03 Communication by Holders with Other Holders	54
	12.04 Certificate and Opinion as to Conditions Precedent	54

N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture

-iii-


	12.05 Statements Required in Certificate or Opinion	55
	12.06 Rules by Trustee and Agents	55
	12.07 No Recourse Against Others	55
	12.08 Legal Holidays	55
	12.09 Duplicate Originals	55
	12.10 Governing Law	56
	12.11 No Adverse Interpretation of Other Agreements	56
	12.12 Successors	56
	12.13 Separability	56
	12.14 Table of Contents, Headings, etc.	56


Exhibit A	-	Form of Global Security
Exhibit B-1	-	Form of Private Placement Legend
Exhibit B-2	-	Form of Legend for Global Security
Exhibit C	-	Form of Notice of Transfer Pursuant to Registration Statement
Exhibit D	-	Form of Opinion of Counsel in Connection with Registration of Securities

N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture

-iv-

INDENTURE, dated as of June 23, 2003 between BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”), and Wilmington Trust Company, a Delaware banking corporation, as trustee (the “Trustee”).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of the Company’s 3.50% Convertible Subordinated Notes due 2008 (the “Securities”).

I. DEFINITIONS AND INCORPORATION BY REFERENCE

1.01 DEFINITIONS.

”Affiliate” means any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. For this purpose, “control” shall mean the power to direct the management and policies of a person through the ownership of securities, by contract or otherwise.

”Agent” means any Registrar, Paying Agent, Conversion Agent or co-registrar or other co-agent.

”Board of Directors” means the Board of Directors of the Company or any committee thereof authorized to act for it hereunder.

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

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

”Closing Sale Price” means the price of a share of Common Stock on the relevant date, determined (a) on the basis of the closing per share sale price (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on such date on the principal national securities exchange on which the Common Stock is listed; or (b) if the Common Stock is not listed on a national securities exchange, as reported by the National Association of Securities Dealers Automated Quotation System; or (c) if not so quoted, as reported by National Quotation Bureau, Incorporated or a similar organization. In the absence of a quotation, the Closing Sale Price shall be such price as the Company shall reasonably determine on the basis of such quotations as most accurately reflecting the price that a fully informed buyer, acting on his own accord, would pay to a fully informed seller, acting on his own accord in an arms-length transaction, for a share of such Common Stock.

”Common Stock” means the common stock, par value $.001 per share, of the Company, or such other Capital Stock into which the Company’s common stock is reclassified or changed.

-1-

”Company” means the party named as such above until a successor replaces it pursuant to the applicable provision hereof and thereafter means the successor.

”Company Request” or “Company Order” means a written request or order signed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, its Chief Operating Officer, its Chief Financial Officer, any Executive Vice President or any Vice President and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Conversion Notice” means a conversion notice in the form set forth in the Securities.

“Conversion Price” means, as of any date of determination, the dollar amount derived by dividing $1,000 of Principal Amount at Maturity by the Conversion Rate then in effect.

“Conversion Rate” means the number of shares of Common Stock issuable upon conversion of a Security per $1,000 of Principal Amount at Maturity, which Conversion Rate shall initially be 71.3572 shares of Common Stock per $1,000 Principal Amount at Maturity.

“Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in Section 12.02 or such other address as the Trustee may give notice of to the Company.

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

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

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

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

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

“Initial Purchasers” means UBS Securities LLC and CIBC World Markets Corp.

“Interest” includes liquidated damages, as applicable, to the extent that the Company is required to pay liquidated damages pursuant to the Registration Rights Agreement.

“Issue Date” means June 23, 2003.

“liquidated damages” has the meaning provided in the Registration Rights Agreement.

“Maturity Date” means June 15, 2008.

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

-2-

“Officers’ Certificate” means a certificate signed by two Officers or by an Officer and an Assistant Treasurer or an Assistant Secretary of the Company.

“Opinion of Counsel” means a written opinion from legal counsel reasonably acceptable to the Trustee, which legal counsel may be an employee of or counsel for the Company.

“Option” means the Initial Purchasers’ option to acquire up to $25,000,000 of additional Securities (“Additional Securities”) as provided for in the Purchase Agreement.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof.

“Principal Amount at Maturity” of a Security means the principal amount at maturity as set forth on the face of the Security.

“Purchase Agreement” means the Purchase Agreement dated as of June 18, 2003 between the Company and the Initial Purchasers.

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

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

“Redemption Date” means the date specified for redemption of the Securities in accordance with the terms of the Securities and this Indenture.

“Redemption Price” means, with respect to a Security subject to Redemption by the Company on a Redemption Date in accordance with Article III, the percentage, applicable to such Redemption Date as set forth in paragraph 6 of the Securities, of the outstanding principal amount of such Security.

“Registration Rights Agreement” means the Registration Rights Agreement dated as of June 23, 2003 between the Company and the Initial Purchasers.

“Repurchase Price” means, with respect to a Security duly tendered for purchase by the Company in accordance with Section 3.08, one hundred percent (100%) of the outstanding principal amount of such Security so tendered.

“Responsible Officer” shall mean, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture.

-3-

“Restricted Security” means a Security that constitutes a “restricted security” within the meaning of Rule 144(a)(3) under the Securities Act; provided, however, that the Trustee shall be entitled to request and conclusively rely on an Opinion of Counsel with respect to whether any Security constitutes a Restricted Security.

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

“SEC” means the Securities and Exchange Commission.

“Securities” means the 3.50% Convertible Subordinated Notes due 2008 issued by the Company pursuant to this Indenture.

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

“Significant Subsidiary” with respect to any person means any subsidiary of such person that constitutes a “significant subsidiary” within the meaning of Rule 1-02 of Regulation S-X under the Securities Act, as such regulation is in effect at the time of determination.

“Subsidiary” means (i) a corporation a majority of whose capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by the Company, by one or more subsidiaries of the Company or by the Company and one or more of its subsidiaries or (ii) any other person (other than a corporation) in which the Company, one or more its subsidiaries or the Company and one or more its subsidiaries, directly or indirectly, at the date of determination thereof, have at least majority ownership interest.

“TIA” means the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb), as in effect on the date of this Indenture, except as provided in Section 9.03.

“Trading Day” means a day during which trading in securities generally occurs on the principal national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not listed on a national or regional securities exchange, on the National Association of Securities Dealers Automated Quotation System or, if the Common Stock is not quoted on the National Association of Securities Dealers Automated Quotation System, on the principal other market on which the Common Stock is then traded.

“Trustee” means the party named as such in this Indenture until a successor replaces it in accordance with the provisions hereof and thereafter means the successor.

“Voting Stock” means the total voting power of all classes of the Company’s Capital Stock entitled to vote generally in the election of directors.

1.02 OTHER DEFINITIONS.


Term		Defined in Section
“Additional Securities”		1.01
“Bankruptcy Law”		6.01
“Business Day”		12.07
“Change in Control”		3.08

-4-

“Combined Amount”	10.06
“Commencement Date”	10.06
“Conversion Agent”	2.03
“Conversion Shares”	10.06
“Custodian”	6.01
“Determination Date”	10.06
“Distribution Declaration Date”	10.06
“Distribution Date”	10.06
“Event of Default”	6.01
“Expiration Time”	10.06
“Global Security”	2.01
“Indebtedness”	11.02
“Legal Holiday”	12.07
“Non-Payment Default”	11.04
“Notice of Default”	6.01
“Participants”	2.15
“Paying Agent”	2.03
“Payment Blockage Period”	11.04
“Payment Blockage Notice”	11.04
“Payment Default”	11.04
“Physical Securities”	2.01
“Private Placement Legend”	2.17
“Purchased Shares”	10.06
“Redemption”	3.01
“Registrar”	2.03
“Representative”	11.02
“Repurchase Date”	3.08
“Repurchase Event”	3.08
“Repurchase Event Notice”	3.08
“Repurchase Right”	3.08
“Repurchase Upon Repurchase Event”	3.01
“Resale Restriction Termination Date”	2.17
“Rights”	10.06
“Senior Indebtedness”	11.02
“Termination of Trading”	3.08
“Triggering Distribution”	10.06

1.03 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

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

The following TIA terms used in this Indenture have the following meanings:

         “Commission” means the SEC;
         “indenture securities” means the Securities;
         “indenture security holder” means a Securityholder or a Holder;

-5-

              “indenture to be qualified” means this Indenture;
              “indenture trustee” or “institutional trustee” means the Trustee; and
              “obligor” on the indenture securities means the Company or any successor.

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

1.04 RULES OF CONSTRUCTION.

Unless the context otherwise requires:

(i) a term has the meaning assigned to it;

(ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles in effect from time to time;

(iii) “or” is not exclusive;

(iv) words in the singular include the plural and in the plural include the singular;

(v) provisions apply to successive events and transactions; and

(vi) “herein”, “hereof” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

II. THE SECURITIES

2.01 FORM AND DATING.

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

Securities offered and sold in reliance on Rule 144A under the Securities Act shall be issued initially in the form of one or more Global Securities, substantially in the form set forth in Exhibit A (the “Global Security”), deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided and bearing the legends set forth in Exhibits B-1 and B-2. The aggregate principal amount of the Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, as hereinafter provided; provided, that in no event shall the aggregate principal amount of the Global Security or Securities exceed $125,000,000 (or $150,000,000 if the Initial Purchasers elect to purchase Additional Securities pursuant to the Initial Purchasers’ Option provided for in the Purchase Agreement).

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Securities issued in exchange for interests in a Global Security pursuant to Section 2.15 may, if permitted in accordance with Section 2.15, be issued in the form of permanent certificated Securities in registered form in substantially the form set forth in Exhibit A (the “Physical Securities”) and, if applicable, bearing any legends required by Section 2.17.

2.02 EXECUTION AND AUTHENTICATION.

One Officer shall sign the Securities for the Company by manual or facsimile signature.

If an Officer whose signature is on a Security no longer holds that office at the time the Security is authenticated, the Security shall nevertheless be valid.

A Security shall not be valid until authenticated by the manual signature of the Trustee. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

Upon a Company Request accompanied by an Officers’ Certificate and an Opinion of Counsel reasonably acceptable to the Trustee, the Trustee shall authenticate Securities for original issue in the aggregate principal amount of $125,000,000 and such additional principal amount, if any, as shall be determined pursuant to the next sentence of this Section 2.02. Upon receipt by the Trustee of an Officers’ Certificate stating that the Initial Purchasers have elected to purchase from the Company a specified principal amount of Additional Securities, not to exceed $25,000,000, pursuant to the Purchase Agreement, the Trustee shall authenticate and deliver such specified principal amount of Additional Securities upon a Company Request accompanied by an Opinion of Counsel reasonably acceptable to the Trustee. Such Officers’ Certificate must be received by the Trustee not later than the proposed date for delivering of such Additional Securities. The aggregate principal amount of Securities outstanding at any time may not exceed $150,000,000.

Upon a Company Request accompanied by an Officers’ Certificate and an Opinion of Counsel reasonably acceptable to the Trustee, the Trustee shall authenticate Securities not bearing the Private Placement Legend to be issued to the transferee when sold pursuant to an effective registration statement under the Securities Act as set forth in Section 2.16(B).

The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such Agent. An authenticating agent has the same rights as an Agent to deal with the Company and its Affiliates.

The Securities shall be issuable only in registered form without interest coupons and only in denominations of $1,000 principal amount and any integral multiple thereof.

2.03 REGISTRAR, PAYING AGENT AND CONVERSION AGENT.

The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (“Registrar”), an office or agency where Securities may

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be presented for payment (“Paying Agent”) and an office or agency where Securities may be presented for conversion (“Conversion Agent”). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may appoint or change one or more co-registrars, one or more additional paying agents and one or more additional conversion agents without notice and may act in any such capacity on its own behalf. The term “Registrar” includes any co-registrar; the term “Paying Agent” includes any additional paying agent; and the term “Conversion Agent” includes any additional conversion agent.

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

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

2.04 PAYING AGENT TO HOLD MONEY IN TRUST.

Subject to Section 11.04, each Paying Agent shall hold in trust for the benefit of the Securityholders or the Trustee all moneys held by the Paying Agent for the payment of the Securities, and shall notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. Upon payment over to the Trustee, the Paying Agent shall have no further liability for the money. If the Company acts as Paying Agent, it shall segregate and hold as a separate trust fund all money held by it as Paying Agent.

2.05 SECURITYHOLDER LISTS.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee at least ten (10) days before each interest payment date and at such other times as the Trustee may request in writing a list, in such form and as of such date as the Trustee may reasonably require, of the names and addresses of Securityholders and the aggregate principal amount of Securities held thereby, which list may be conclusively relied upon by the Trustee.

2.06 TRANSFER AND EXCHANGE.

Subject to Sections 2.15 and 2.16 hereof, where Securities are presented to the Registrar with a request to register their transfer or to exchange them for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange if its requirements for such transaction are met, which may include an Opinion of Counsel, transfer certificates and any documents reasonably requested by the Company. To permit registrations of transfer and exchanges, the Trustee shall authenticate Securities at the

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Registrar’s request. The Company or the Trustee, as the case may be, shall not be required (a) to issue, authenticate, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the mailing of a notice of redemption of the Securities selected for redemption under Section 3.04 and ending at the close of business on the day of such mailing or (b) to register the transfer of or exchange any Security that has been selected for redemption or for which a Purchase Notice has been delivered, and not withdrawn, in accordance with this Indenture, except the unredeemed or unrepurchased portion of Securities being redeemed or repurchased in part. No purported transfer of a Security shall be effective until and unless registered for transfer by the Registrar in accordance with this Section 2.06.

No service charge shall be made for any transfer, exchange or conversion of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer, exchange or conversion of Securities, other than exchanges pursuant to Sections 2.10, 3.07, 3.08, 9.05 or 10.02 not involving any transfer.

2.07 REPLACEMENT SECURITIES.

If the Holder of a Security claims that the Security has been mutilated, lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security upon surrender to the Trustee of the mutilated Security, or upon delivery to the Trustee of evidence of the loss, destruction or theft of the Security satisfactory to the Trustee and the Company. In the case of lost, destroyed or wrongfully taken Securities, if required by the Trustee, an indemnity bond must be provided by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee or any Agent from any loss which any of them may suffer if a Security is replaced. The Trustee may charge the Holder for the Trustee’s expenses in replacing a Security.

In case any such mutilated, lost, destroyed or wrongfully taken Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security when due.

Every replacement Security is an additional obligation of the Company only as provided in Section 2.08.

2.08 OUTSTANDING SECURITIES.

Securities outstanding at any time are all the Securities authenticated by the Trustee except for those converted, those cancelled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding. Except to the extent provided in Section 2.09, a Security does not cease to be outstanding because the Company or one of its Subsidiaries or Affiliates holds the Security.

If a Security is replaced pursuant to Section 2 .07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it, or a court holds, in a final non-appealable decision, that the replaced Security is held by a bona fide purchaser.

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If the Paying Agent (other than the Company) holds on the Redemption Date, Repurchase Date or Maturity Date, money sufficient to pay the principal amount, the Redemption Price or the Repurchase Price, as the case may be, plus, if applicable, accrued and unpaid interest, if any, payable as herein provided upon Redemption or Repurchase Upon Repurchase Event, then immediately after such date such Securities shall be deemed to be no longer outstanding, and interest on them shall cease to accrue, and such Security shall be deemed paid whether or not the Security is delivered to the Paying Agent. Thereafter, all other rights of the Holders of such Securities shall terminate with respect to such Securities, other than the right to receive the principal amount, the Redemption Price or the Repurchase Price, as the case may be, plus, if applicable, such accrued and unpaid interest.

If a Security is converted in accordance with Article X, then from and after the time of such conversion on the conversion date, such Security shall cease to be outstanding, and interest, if any, shall cease to accrue on such Security.

2.09 SECURITIES HELD BY THE COMPANY OR AN AFFILIATE.

In determining whether the Holders of the required aggregate principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or any of its Subsidiaries or an Affiliate shall be considered as though not outstanding, except that for the purposes of determining whether a Responsible Officer of the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee knows are so owned shall be so disregarded.

2.10 TEMPORARY SECURITIES.

Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon receipt of a written order of the Company in the form of an Officers’ Certificate specifying the amount of temporary Securities to be authenticated and the date on which such temporary Securities are to be authenticated. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities and so indicates in the Officers’ Certificate. Upon receipt of a written order of the Company pursuant to Section 2.02 and surrender of temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 4.02, the Company shall prepare and the Trustee shall authenticate, in each case without unreasonable delay and without charge to the Holder thereof, in exchange for the temporary Securities, definitive Securities of denominations authorized herein in like principal amount as the temporary Securities for which they are being exchanged. Until so exchanged, temporary Securities shall be entitled to the same benefits under this Indenture as definitive Securities.

2.11 CANCELLATION.

The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar, Paying Agent and Conversion Agent shall forward to the Trustee any Securities surrendered to them for transfer, exchange, payment or conversion. The Trustee shall cancel all Securities surrendered for transfer, exchange, payment, conversion or cancellation in accordance

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with its customary procedures; provided, however, that Securities delivered to the Trustee by the Company for cancellation shall be accompanied by a Company Order and Officers’ Certificate. The Company may not issue new Securities to replace Securities that it has paid or delivered to the Trustee for cancellation or that any Securityholder has converted pursuant to Article X.

2.12 DEFAULTED INTEREST.

If and to the extent the Company defaults in a payment of interest on the Securities, the Company shall pay the defaulted interest in any lawful manner plus, to the extent not prohibited by applicable statute or case law, interest payable on the defaulted interest at the rate provided in the Securities. The Company may pay the defaulted interest to the persons who are Securityholders on a subsequent special record date. The Company shall fix such record date and payment date. At least fifteen (15) days before the record date, the Company shall mail to Securityholders a notice that states the record date, payment date and amount of interest to be paid, and the Company shall notify the Trustee, concurrently with or before such mailing, of such record date, payment date and amount of interest to be paid.

2.13 CUSIP NUMBERS.

The Company in issuing the Securities may use one or more “CUSIP” numbers, and if so, the Trustee shall use the CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided, however, that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP numbers printed in the notice or on the Securities, and that reliance may be placed only on the other identification numbers printed on the Securities. The Company shall promptly notify the Trustee of any change in the CUSIP numbers.

2.14 DEPOSIT OF MONEYS.

Prior to 11:00 A.M., New York City time, on each interest payment date, Maturity Date, Redemption Date or Repurchase Date, the Company shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such interest payment date, Maturity Date, Redemption Date or Repurchase Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders on such interest payment date, Maturity Date, Redemption Date or Repurchase Date, as the case may be; provided, however, that in the event that Physical Securities are transferred to all beneficial owners in accordance with Section 2.15(B), the Company shall make such payments by wire transfer of immediately available funds to the account specified by the Holders or, at the Company’s election, by mailing a check to the Holder’s registered address, in each case prior to 11:00 A.M., New York City time, on each such interest payment date, Maturity Date, Redemption Date or Repurchase Date.

2.15 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.

(A) The Global Securities initially shall (i) be registered in the name of the Depositary or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear legends as set forth in Section 2.17.

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

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

(C) In connection with the transfer of a Global Security in its entirety to beneficial owners pursuant to Section 2.15(B), such Global Security shall be deemed to be surrendered to the Registrar for cancellation, and the Company shall execute, and the Trustee shall, upon receipt of a Company Order, authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in such Global Security, an equal aggregate principal amount of Physical Securities of authorized denominations.

(D) Any Physical Security constituting a Restricted Security delivered in exchange for an interest in a Global Security pursuant to Section 2.15(B) shall, except as otherwise provided by Section 2.16, bear the Private Placement Legend (as defined).

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

2.16 SPECIAL TRANSFER PROVISIONS.

(A) Restrictions on Transfer and Exchange of Global Securities. Notwithstanding any other provisions of this Indenture, a Global Security may not be transferred except as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(B) Private Placement Legend. Upon the transfer, exchange or replacement of Securities not bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver Securities that do not bear the Private Placement Legend. Upon the transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver only Securities that bear the Private Placement Legend unless (i) the requested

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transfer is after the second anniversary of the issue date for the Securities (provided, however, that neither the Company nor any of its Affiliates has held any beneficial interest in such Security, or portion thereof, at any time prior to or on the second anniversary of the issue date), and the Company delivers to the Trustee an Officers’ Certificate and Opinion of Counsel to that effect; (ii) there is delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the Company to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (iii) such Security has been sold pursuant to an effective registration statement under the Securities Act and the Holder selling such Securities has delivered to the Registrar or co-Registrar a notice in the form of Exhibit C hereto. Upon the effectiveness of the Shelf Registration Statement (as defined in the Registration Rights Agreement), the Company shall deliver to the Trustee a notice of effectiveness, a Security or Securities, an authentication order in accordance with Section 2.02 and an Opinion of Counsel in the form of Exhibit D hereto and, if required by the Depositary, the Company shall deliver to the Depositary a letter of representations in a form reasonably acceptable to the Depositary. An Opinion of Counsel pursuant to paragraph (i) of this Section 2.15(B) or pursuant to the fifth paragraph of Section 2.02 shall be delivered, and the Company agrees that it shall so deliver at its own expense, to the Register or co-Register within reasonable time after so requested by a Securityholder, provided that such Securityholder has provided the Company with all information the Company may reasonably request in connection with such Opinion of Counsel.

(C) General. By its acceptance of any Security bearing the Private Placement Legend, each Holder of such a Security acknowledges the restrictions on transfer of such Security set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Security only as provided in this Indenture.

The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.15 or this Section 2.16. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

(D) Transfers of Securities Held by Affiliates. Any certificate (i) evidencing a Security that has been transferred to an Affiliate of the Company within two years after the Issue Date, as evidenced by a notation on the assignment form for such transfer or in the representation letter delivered in respect thereof or (ii) evidencing a Security that has been acquired from an Affiliate (other than by an Affiliate) in a transaction or a chain of transactions not involving any public offering, shall, until two years after the last date on which the Company or any Affiliate of the Company was an owner of such Security, in each case, bear the Private Placement Legend, unless otherwise agreed by the Company (with written notice thereof to the Trustee).

2.17 RESTRICTIVE LEGENDS.

Each Global Security and Physical Security that constitutes a Restricted Security shall bear the legend (the “Private Placement Legend”) as set forth in Exhibit B-1 on the face thereof until after the second anniversary of the later of (i) the Issue Date and (ii) the last date on which the Company or any Affiliate of the Company was the owner of such Security (or any predecessor security) (or such shorter period of time as permitted by Rule 144(k) under the

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Securities Act or any successor provision thereunder) (or such longer period of time as may be required under the Securities Act or applicable state securities laws in the opinion of counsel for the Company, unless otherwise agreed between the Company and the Holder thereof) (such date, the “Resale Restriction Termination Date”); provided, however, that upon the transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver Securities that bear the Private Placement Legend, except as provided in Section 2.16(B).

Each Global Security shall also bear the legend as set forth in Exhibit B-2.

III. REDEMPTION

3.01 RIGHT OF REDEMPTION.

Redemption of the Securities, as permitted by any provision of this Indenture, shall be made in accordance with paragraphs 6 and 7 (a “Redemption”) of the Securities or, with respect to any repurchase upon a Repurchase Event, paragraph 8 (a “Repurchase Upon Repurchase Event”) of the Securities, in each case in accordance with the applicable provisions of this Article III.

The Company will comply with all federal and state securities laws in connection with any offer to sell or solicitations of offers to buy Common Stock pursuant to this Section 3.01.

Prior to June 20, 2006, the Company will not have the right to redeem any Securities. On or after June 20, 2006, the Company will have the right to redeem all or any part of the Securities at the Redemption Price plus accrued and unpaid interest, if any, to, but excluding, the Redemption Date.

3.02 NOTICES TO TRUSTEE.

If the Company elects to redeem Securities pursuant to paragraph 6 of the Securities, it shall (A) notify the Trustee at least fifteen (15) days prior to the mailing of the notice of Redemption (unless a shorter notice period shall be satisfactory to the Trustee) of the Redemption Date and the aggregate principal amount of Securities to be redeemed; and (B) mail to the Trustee, concurrently with the mailing of the notice of Redemption, an Officers’ Certificate stating that such notice of Redemption has been mailed to Securityholders.

3.03 SELECTION OF SECURITIES TO BE REDEEMED.

If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed by lot, on a pro rata basis or in accordance with any other method the Trustee considers fair and appropriate. The Trustee shall make the selection from Securities outstanding not previously called for Redemption. The Trustee may select for Redemption portions of the principal of Securities that have denominations larger than $1,000 principal amount. Securities and portions of them the Trustee selects shall be in amounts of $1,000 principal amount or integral multiples of $1,000 principal amount. The Trustee shall promptly notify the Company

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in writing of the Securities selected for Redemption and the principal amount thereof to be redeemed.

The Registrar need not transfer or exchange any Securities selected for Redemption, except the unredeemed portion of the Securities redeemed in part. Also, the Registrar need not transfer or exchange any Securities for a period of fifteen (15) days before selecting Securities to be redeemed.

3.04 NOTICE OF REDEMPTION.

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

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

(i) the Redemption Date;

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

(iii) the Conversion Rate and the Conversion Price;

(iv) the name and address of the Paying Agent and the Conversion Agent;

(v) the date on which the right to convert the principal of the Securities called for Redemption will terminate and the place or places where such Securities may be surrendered for conversion;

(vi) that Holders who want to convert Securities must satisfy the requirements in Article X of this Indenture;

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

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

(ix) that unless the Company shall default in the payment of the Redemption Price, or accrued and unpaid interest, if any, payable as herein provided upon Redemption, interest on Securities called for Redemption ceases to accrue on and after the Redemption Date, and, thereafter, all other rights of the Holders of such Securities shall terminate with respect to such Securities other than the right to receive the Redemption Price plus accrued and unpaid interest, if any, payable as herein provided upon Redemption;

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(x) that the Securities will cease to be convertible after the close of business on the Business Day immediately preceding the Redemption Date;

(xi) that, in the event that a portion of a Security is redeemed pursuant to a partial Redemption as provided herein, a new Security representing the unredeemed portion shall be issued; and

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

The date on which the right to convert the principal of the Securities called for Redemption will terminate shall be at the close of business on the Business Day immediately preceding the Redemption Date.

At the Company’s written request, upon at least five (5) Business Days’ notice (or such shorter period as shall be satisfactory to the Trustee), the Trustee shall give the notice of Redemption in the Company’s name and at the Company’s expense; provided, that (x) the form and content of such notice shall be prepared by the Company and (y) the notice required by this Section 3.04 shall state that no representation is hereby deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP numbers printed in such notice, and that reliance may be placed only on the other identification numbers printed on the Securities.

3.05 EFFECT OF NOTICE OF REDEMPTION.

Once notice of Redemption is mailed, Securities called for Redemption become due and payable on the Redemption Date at the Redemption Price plus accrued and unpaid interest to, but excluding, the Redemption Date, and, on and after such Redemption Date (unless the Company shall default in the payment of the Redemption Price or such accrued and unpaid interest), such Securities shall cease to bear interest. Upon surrender to the Paying Agent, such Securities shall be paid at the Redemption Price plus accrued interest to, but excluding, the Redemption Date, unless the Redemption Date is an interest payment date, in which case the accrued interest will be paid in the ordinary course.

3.06 DEPOSIT OF REDEMPTION PRICE.

On or before the Redemption Date, the Company shall deposit with the Paying Agent money in funds immediately available on the Redemption Date sufficient to pay the Redemption Price, plus accrued and unpaid interest to, but excluding, the Redemption Date, of all Securities to be redeemed on that date. The Paying Agent shall return to the Company, as soon as practicable, any money not required for that purpose.

3.07 SECURITIES REDEEMED IN PART.

Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder a new Security or Securities in an aggregate principal amount equal to the unredeemed portion of the Security surrendered.

If any Security selected for partial Redemption is converted in part, the converted portion of such Security shall be deemed to be the portion selected for Redemption.

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3.08 REPURCHASE AT OPTION OF HOLDER UPON A REPURCHASE EVENT.

Upon any Repurchase Event (as defined below) of the Company, each Holder of Securities shall have the right (the “Repurchase Right”), at the Holder’s option and subject to satisfaction by or on behalf of such Holder of the notice requirement set forth in this Section 3.08 to exercise the Repurchase Right, and subject to the rights of the holders of Senior Indebtedness under Article XI, to require the Company to repurchase all of such Holder’s Securities, or a portion thereof which is $1,000 in principal amount or any integral multiple thereof, on a date (the “Repurchase Date”) no later than thirty (30) days after the date the Repurchase Event Notice (as defined below) is mailed in accordance with the immediately succeeding paragraph, at the Repurchase Price plus accrued and unpaid interest, if any, to, but excluding, the Repurchase Date.

Within twenty (20) Business Days after the occurrence of a Repurchase Event of the Company, the Company shall mail to all Holders of record of the Securities at their addresses shown in the register of the Registrar, and to beneficial owners as required by applicable law, a notice (the “Repurchase Event Notice”) of the occurrence of such Repurchase Event and the Repurchase Right arising as a result thereof. The Company shall cause a copy of the Repurchase Event Notice to be published at the expense of the Company in THE NEW YORK TIMES or THE WALL STREET JOURNAL or another newspaper of national circulation. Concurrently with the mailing of the Repurchase Event Notice as provided herein, the Company shall mail to the Trustee a copy of the Repurchase Event Notice and an Officers’ Certificate stating that such Repurchase Event Notice has been mailed to Securityholders.

Each Repurchase Event Notice shall state:

(i) the events causing the Repurchase Event;

(ii) the date of such Repurchase Event;

(iii) the Repurchase Date;

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

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

(vi) the name and address of the Paying Agent and the Conversion Agent;

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

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

(ix) that a Holder will be entitled to withdraw its election if the Company (if acting as its own Paying Agent), or the Paying Agent receives, prior to the close of

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business on the Business Day immediately preceding the Repurchase Date, or such longer period as may be required by law, a letter or telegram, telex or facsimile transmission (receipt of which is confirmed and promptly followed by a letter) setting forth (I) the name of such Holder, (II) statement that such Holder is withdrawing his election to have Securities repurchased, (III) the principal amount of Securities of such Holder to be so withdrawn, which amount must be $1,000 or an integral multiple thereof, (IV) the certificate numbers of such Securities to be so withdrawn, (V) the principal amount, if any, of Securities of such Holder that remains subject to the Purchase Notice delivered by such Holder in accordance with this Section 3.08, which amount must be $1,000 or an integral multiple thereof, and (VI) that Securities with respect to which a Purchase Notice is given by such Holder may be converted, if otherwise convertible, only if the Purchase Notice has been withdrawn in accordance with the terms hereof;

(x) the Conversion Rate and any adjustments to the Conversion Rate that will result from the Repurchase Event;

(xi) that Securities with respect to which a Purchase Notice is given by a Holder may be converted, if otherwise convertible in accordance with Article X, only if such Purchase Notice has been withdrawn in accordance with this Section 3.08;

(xii) the place or places where such Securities may be surrendered for conversion; and

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

No failure of the Company to give the foregoing notice shall limit any Holder’s right to exercise a Repurchase Right.

To exercise a Repurchase Right, a Holder shall deliver to the Company (if it is acting as its own Paying Agent), or to a Paying Agent designated by the Company for such purpose in the Repurchase Event Notice, (i) no later than the close of business on third (3rd) Business Day immediately preceding the Repurchase Date, a Purchase Notice, in the form set forth in the Securities or any other form of written notice substantially similar thereto, in each case, duly completed and signed, with appropriate signature guarantee, and stating (A) the certificate number of the Security which the Holder will deliver to be repurchased, if applicable, (B) the principal amount of Securities to be repurchased, which must be $1,000 or an integral multiple thereof, and (C) that such Security is being tendered for repurchase pursuant to the terms and conditions specified in paragraph 8 of the Securities and in this Indenture; and (ii) at any time after the delivery of such Purchase Notice, such Securities with respect to which the Repurchase Right is being exercised, duly endorsed for transfer to the Company. Upon such delivery of Securities to the Company (if it is acting as its own Paying Agent) or such Paying Agent, such Holder shall be entitled to receive from the Company or such Paying Agent, as the case may be, a nontransferable receipt of deposit evidencing such delivery.

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In the event a Repurchase Right shall be exercised in accordance with the terms hereof, the Company shall pay or cause to be paid the Repurchase Price, plus accrued and unpaid interest, if any, to, but excluding, the Repurchase Date, with respect to the Securities as to which the Repurchase Right shall have been exercised to the Holder thereof promptly following the later of the Repurchase Date or the time of delivery of the Security, subject to the provisions of the immediately preceding paragraph.

On or prior to a Repurchase Date, the Company shall deposit with the Paying Agent (or, if the Company is acting as its own Paying Agent, segregate and hold in trust in accordance with Section 2.04) an amount of money (to be available on the Repurchase Date) sufficient to pay the Repurchase Price, plus accrued and unpaid interest, if any, to, but excluding, the Repurchase Date, of all of the Securities which are to be repurchased on that date.

Both the Repurchase Event Notice and the Purchase Notice having been duly given as specified in this Section 3.08, the Securities to be so repurchased shall, on the Repurchase Date, become due and payable at the Repurchase Price (plus accrued and unpaid interest, if any, to, but excluding, the Repurchase Date) applicable thereto and from and after such date (unless there shall be a default in the payment of the Repurchase Price or such accrued and unpaid interest) (x) such Securities shall cease to bear interest and shall cease to be convertible and (y) all other rights of the Holders of such Securities shall terminate with respect to such Securities, other than the right to receive, pursuant to the immediately succeeding sentence, the Repurchase Price plus accrued and unpaid interest, if any, payable as herein provided upon Repurchase Upon Repurchase Event. Upon surrender of any such Security for repurchase in accordance with such Purchase Notice, such Security shall be paid by the Company at the Repurchase Price plus accrued and unpaid interest, if any, to, but excluding, the Repurchase Date.

If any Security shall not be paid upon surrender thereof for repurchase, the principal shall, until paid, bear interest from the Repurchase Date at the rate borne by such Security on the principal amount of such Security and shall continue to be convertible.

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

There shall be no purchase of any Securities pursuant to this Section 3.08 if there has occurred (prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Repurchase Event Notice) and is continuing an Event of Default (other than a default in the payment of the Repurchase Price or accrued and unpaid interest, if any, payable as herein provided upon Repurchase Upon Repurchase Event). The Paying Agent will promptly return to the respective Holders thereof any Securities held by it during the continuance of an Event of Default (other than a default in the payment of the Repurchase Price or such accrued

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and unpaid interest) in which case, upon such return, the Repurchase Event Notice with respect thereto shall be deemed to have been withdrawn.

Notwithstanding anything herein to the contrary, if the option granted to Securityholders to require the repurchase of the Securities upon the occurrence of a Repurchase Event is determined to constitute a tender offer, the Company will comply with all applicable tender offer rules under the Exchange Act, including Rules 13e-4 and 14e-1, and file a Schedule TO or any other schedules required under the Exchange Act ..

As used in this Section 3.08 and in the Securities:

A “Repurchase Event” of the Company shall be deemed to have occurred upon the occurrence of either a “Change in Control” or a “Termination of Trading.”

A “Change in Control” of the Company shall be deemed to have occurred at such time as:


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


	(ii) at any time the following persons cease for any reason to constitute a majority of the Company’s Board of Directors:


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


	(2) any new directors whose election by the Company’s Board of Directors or whose nomination for election by the Company’s stockholders was approved by at least a majority of the directors then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved; or

(iii) The Company consolidates with, or merges with or into, another person or any person consolidates with, or merges with or into, the Company, in any such event other than pursuant to a transaction in which the persons that “beneficially owned,” directly or indirectly, the shares of the Company’s Voting Stock immediately prior to such transaction, “beneficially own” immediately after such transaction, directly or indirectly, shares of the voting stock representing not less than a majority of the total voting power of all outstanding classes of voting stock of the continuing or surviving corporation in substantially the same proportion as such ownership prior to the transaction; or


	(iv) the sale, lease, transfer or other conveyance or disposition of all or substantially all of the assets or property of the Company to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, including Rule 13d-5 under the Exchange Act); or

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


	provided, however, that a Change in Control shall not be deemed to occur if either:


	(A) the Closing Sale Price of the Company’s Common Stock for each of any five (5) Trading Days during the ten (10) Trading Days immediately preceding the Change in Control is at least equal to one hundred and five percent (105%) of the Conversion Price in effect on such Trading Day; or

(B) in the case of a merger or consolidation, at least ninety five percent (95%) of the consideration (excluding cash payments for fractional shares and cash payments pursuant to dissenters’ appraisal rights) in the merger or consolidation constituting the Change in Control consists of common stock traded on a U.S. national securities exchange or quoted on The Nasdaq National Market (or which will be so traded or quoted when issued or exchanged in connection with such Change in Control) and as a result of such transaction or transactions the Securities become convertible solely into such common stock.

A “Termination of Trading” shall occur if the Common Stock of the Company (or other common stock into which the Securities are then convertible) is neither listed for trading on a U.S. national securities exchange nor approved for trading on an established automated over-the-counter trading market in the United States.

3.09 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.

In connection with any redemption of Securities, the Company may arrange, in lieu of redemption, for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase all or a portion of such Securities by paying to the Paying Agent in trust for the Holders whose Securities are to be so purchased, on or before the close of business on the Redemption Date, an amount that, together with any amounts deposited with the Paying Agent by the Company for redemption of such Securities, is not less than the Redemption Price, together with interest, if any, accrued to the Redemption Date, of such Securities. Notwithstanding anything to the contrary contained in this Article III, the obligation of the Company to pay the Redemption Price of such Securities, including all accrued interest, if any, shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers, but no such agreement shall relieve the Company of its obligation to pay such Redemption Price or such accrued interest, if any. If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article X) surrendered by such purchasers for conversion, all as of immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it for purchase and conversion in the same manner as it

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would moneys deposited with it by the Company for the redemption of Securities. Without the prior written consent of the Trustee and Paying Agent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, rights, immunities, responsibilities or obligations of the Trustee or Paying Agent as set forth in this Indenture, and the Company agrees to indemnify the Trustee and Paying Agent from, and hold them harmless against, any and all loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses (including counsel fees and expenses) incurred by the Trustee or Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of their powers, duties, responsibilities or obligations under this Indenture except to the extent arising from its bad faith, willful misconduct or negligence.

IV. COVENANTS

4.01 PAYMENT OF SECURITIES.

The Company shall pay all amounts due with respect to the Securities on the dates and in the manner provided in the Securities. All such amounts shall be considered paid on the date due if the Paying Agent holds (or, if the Company is acting as Paying Agent, if the Company has segregated and holds in trust in accordance with Section 2.04) on that date money sufficient to pay the amount then due with respect to the Securities.

The Company shall pay interest on any overdue amount (including, to the extent permitted by applicable law, overdue interest) at the rate borne by the Securities.

4.02 MAINTENANCE OF OFFICE OR AGENCY.

The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-Registrar) where Securities may be surrendered for registration of transfer or exchange or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

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The Company hereby designates the Corporate Trust Office of the Trustee, or its designees, as an agency of the Company in accordance with Section 2.03.

4.03 REPORTS.

(A) The Company will promptly provide to the Trustee and shall, upon request, provide to any Holder or beneficial owner of Securities or prospective purchaser of Securities that so requests, the information required to be delivered pursuant to Rule 144A(d)(4) until such time as the Securities and the underlying Common Stock have been registered by the Company for resale under the Securities Act pursuant to the Registration Rights Agreement. In addition, the Company will furnish such Rule 144A(d)(4) information if, at any time while the Securities or the Common Stock issuable upon conversion of the Securities are restricted securities within the meaning of the Securities Act, the Company is not subject to the informational requirements of the Exchange Act. Delivery of such information to the Trustee is for informational purposes only, and the Trustee’s receipt thereof shall not constitute constructive notice of such information or information determinable from such information, including compliance by the Company of any covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

(B) The Company will comply with the provisions of TIA § 314(a).

4.04 COMPLIANCE CERTIFICATE.

The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company, an Officers’ Certificate stating whether or not the signers know of any Default or Event of Default by the Company in performing any of its obligations under this Indenture or the Securities. If they do know of any such Default or Event of Default, the certificate shall describe the Default or Event of Default and its status.

4.05 STAY, EXTENSION AND USURY LAWS.

The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (in each case, to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

4.06 CORPORATE EXISTENCE.

Subject to Article V, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate existence of each of its Subsidiaries in accordance with the respective organizational documents of each Subsidiary and the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however, that the Company shall not be required to preserve any such right, license or franchise, or the corporate existence of any Subsidiary, if in the judgment of the

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Board of Directors (i) such preservation or existence is not material to the conduct of business of the Company and (ii) the loss of such right, license or franchise or the dissolution of such Subsidiary does not have a material adverse impact on the Holders.

4.07 NOTICE OF DEFAULT.

In the event that any Default or Event of Default shall occur, the Company will give prompt written notice, in the form of an Officers’ Certificate, of such Default or Event of Default to the Trustee, and any remedial action proposed to be taken.

V. SUCCESSORS

5.01 WHEN COMPANY MAY MERGE, ETC.

The Company shall not consolidate with, or merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to, another person (whether in a single or series of related transactions) unless (i) such other person is a corporation organized under the laws of the United States, any State thereof or the District of Columbia; (ii) such person assumes by supplemental indenture all the obligations of the Company under the Securities and this Indenture; and (iii) immediately after giving effect to the transaction, no Default or Event of Default shall exist.

The Company shall deliver to the Trustee prior to the consummation of the proposed transaction an Officers’ Certificate to the foregoing effect and an Opinion of Counsel, which may rely upon such Officers’ Certificate as to the absence of Defaults and Events of Default, stating that the proposed transaction and such supplemental indenture will, upon consummation of the proposed transaction, comply with this Indenture.

5.02 SUCCESSOR SUBSTITUTED.

Upon any consolidation or merger or sale, conveyance, transfer, lease, or other disposition of all or substantially all of the Company’s properties and assets in accordance with Section 5.01, the successor person formed by such consolidation or into which the Company is merged or to which such sale, conveyance, transfer, lease, or other disposition is made shall succeed to, and, except in the case of a lease, be substituted for, and may exercise every right and power of, and shall assume every duty and obligation of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein. When the successor assumes all obligations of the Company hereunder, except in the case of a lease, all obligations of the predecessor shall terminate.

VI. DEFAULTS AND REMEDIES

6.01 EVENTS OF DEFAULT.


	An “Event of Default” occurs if:

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(i) the Company fails to pay the principal of or premium, if any, of any Security when the same becomes due and payable, whether at maturity, upon Redemption, on a Repurchase Date with respect to a Repurchase Upon Repurchase Event or otherwise, whether or not such payment shall be prohibited by the provisions of Article XI hereof;

(ii) the Company fails to pay an installment of interest or liquidated damages, if any, on the Securities when due, if such failure continues for thirty (30) days after the date when due, whether or not such payment shall be prohibited by the provisions of Article XI hereof;

(iii) the Company fails to timely provide a Repurchase Event Notice as required by the provisions of this Indenture;

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

(v) the Company or any of its Subsidiaries defaults in the payment when due, after the expiration of any applicable grace period, of principal of, or premium, if any, or interest on Indebtedness for money borrowed, in the aggregate principal amount then outstanding of $10,000,000 or more, or the acceleration of Indebtedness for money borrowed in such aggregate principal amount so that it becomes due and payable prior to the date on which it would otherwise become due and payable and such acceleration is not rescinded or such default is not cured within thirty (30) days after notice to the Company by the Trustee or to the Company and the Trustee by holders of not less than twenty five percent (25%) in the aggregate principal amount of the Securities then outstanding, each in accordance with this Indenture;

(vi) the Company or any of its Subsidiaries fails to pay final judgments payable in cash, the uninsured portion of which aggregates in excess of $20,000,000, and such judgments are not paid, discharged or stayed for a period of sixty (60) days;

(vii) the Company or any of its Significant Subsidiaries or any group of Subsidiaries that in the aggregate would constitute a Significant Subsidiary pursuant to, or within the meaning of, any Bankruptcy Law:

(A) commences a voluntary case,

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

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

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

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

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

(C) orders the winding up or liquidation of the Company or any of its Significant Subsidiaries or any group of Subsidiaries that in the aggregate constitute a Significant Subsidiary, and the order or decree remains unstayed and in effect for ninety (90) consecutive days.

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

A default under clause (iv) is not an Event of Default until (I) the Trustee notifies the Company or the Holders of at least twenty five percent (25%) in aggregate principal amount of the Securities then outstanding notify the Company and the Trustee of the default and (II) the default is not cured within thirty (30) days after receipt of the notice. The notice must specify the default, demand that it be remedied and state that the notice is a “Notice of Default”. If the Holders of twenty five percent (25%) in aggregate principal amount of the outstanding Securities request the Trustee to give such notice on their behalf, the Trustee shall do so. When a default is cured, it ceases.

6.02 ACCELERATION.

If an Event of Default (other than an Event of Default specified in Section 6.01(vii) or (viii) with respect to the Company) as to which the Trustee has received notice pursuant to the provisions of this Indenture occurs and is continuing, the Trustee by notice to the Company or the Holders of at least twenty five percent (25%) in principal amount of the Securities then outstanding by notice to the Company and the Trustee may declare the Securities to be due and payable. Upon such declaration such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(vii) or (viii) with respect to the Company occurs, the principal of and accrued interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. The Holders of a majority in aggregate principal amount of the Securities then outstanding by written notice to the Company and Trustee may rescind or annul an acceleration and its consequences if the rescission would not conflict with any order or

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decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of the acceleration and if all amounts due to the Trustee under Section 7.07 have been paid.

6.03 OTHER REMEDIES.

Notwithstanding any other provision of this Indenture, if an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of amounts due with respect to the Securities or to enforce the performance of any provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative.

6.04 WAIVER OF PAST DEFAULTS.

Subject to Sections 6.07 and 9.02, the Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may waive any past Default or Event of Default and its consequences; provided, however, that a Default or Event of Default in the payment of the principal of, premium, if any, or interest on any Security, or in the payment of the Redemption Price or the Repurchase Price (or accrued and unpaid interest, if any, payable as herein provided upon Redemption or Repurchase Upon Repurchase Event), a failure by the Company to convert any Securities into Common Stock following delivery of a Conversion Notice or any Default or Event of Default in respect of any provision of this Indenture or the Securities which, under Section 9.02, cannot be modified or amended without the consent of the Holder of each Security affected. When a Default or an Event of Default is waived, it is cured and ceases for every purpose of this Indenture.

6.05 CONTROL BY MAJORITY.

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

6.06 LIMITATION ON SUITS.

Except as provided in Section 6.07, a Securityholder may not pursue a remedy with respect to this Indenture or the Securities unless:

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

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

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

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

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

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

6.07 RIGHTS OF HOLDERS TO RECEIVE PAYMENT.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of all amounts due with respect to the Securities, on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder.

Notwithstanding any other provision of this Indenture, the right of any Holder to bring suit for the enforcement of the right to convert the Security in accordance with this Indenture shall not be impaired or affected without the consent of the Holder.

6.08 COLLECTION SUIT BY TRUSTEE.

If an Event of Default specified in Section 6.01(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount due with respect to the Securities, including any unpaid and accrued interest.

6.09 TRUSTEE MAY FILE PROOFS OF CLAIM.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the Trustee hereunder), any predecessor Trustee and the Securityholders allowed in any judicial proceedings relative to the Company or its creditors or properties.

The Trustee may collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to

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the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

6.10 PRIORITIES.

If the Trustee collects any money or other consideration pursuant to this Article VI, it shall pay out the money or other consideration in the following order:


	First:	to the Trustee for amounts due under Section 7.07;


	Second:	to holders of Senior Indebtedness to the extent required by Article XI;


	Third:	to Securityholders for all amounts due and unpaid on the Securities, without preference or priority of any kind, according to the amounts due and payable on the Securities; and


	Fourth:	to the Company or as a court of competent jurisdiction may direct.

The Trustee, upon prior written notice to the Company may fix a record date and payment date for any payment by it to Securityholders pursuant to this Section 6.10.

6.11 UNDERTAKING FOR COSTS.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit other than the Trustee of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than ten percent (10%) in aggregate principal amount of the outstanding Securities.

VII. TRUSTEE

7.01 DUTIES OF TRUSTEE.

(A) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

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(B) Except during the continuance of an Event of Default:


	(i) the Trustee need perform only those duties that are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(ii) in the absence of bad faith, willful misconduct or negligence on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(C) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:


	(i) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and


	(ii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(D) The duties and responsibilities of the Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article VII.

(E) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

7.02 RIGHTS OF TRUSTEE.

(A) Subject to Section 7.01, the Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document; if, however, the Trustee shall determine to make such further inquiry or investigation, it shall be entitled during normal business hours to examine the relevant books, records and premises of the Company, personally or by agent or attorney upon reasonable prior notice.

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(B) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate and/or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel.

(C) Any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution.

(D) The Trustee may consult with counsel (such counsel to be reasonably acceptable to the Company) and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(E) The Trustee may act through agents or attorneys and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care. The Trustee shall not be liable to any Person for special, indirect, consequential or punitive damages or for any lost profits.

(F) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its discretion, rights or powers conferred upon it by this Indenture.

(G) The Trustee shall have no duty to inquire as to the performance of the Company with respect to the covenants contained in Article IV. In addition, the Trustee shall not be deemed to have knowledge of an Event of Default except any Default or Event of Default of which a Responsible Officer of the Trustee shall have received written notification or obtained actual knowledge. Delivery of reports, information and documents to the Trustee under Article IV (other than Sections 4.04 and 4.07) is for informational purposes only and the Trustee’s receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

(H) The Trustee shall be under no obligation to exercise any of the rights or powers vested by this Indenture at the request or direction of any of the Holders pursuant to this Indenture unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. Any permissive right or power available to the Trustee under this Indenture shall not be construed to be a mandatory duty or obligation.

(I) The rights, privileges, protections, immunities and benefits given to the Trustee, including without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(J) The Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person

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authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

7.03 INDIVIDUAL RIGHTS OF TRUSTEE.

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or any of its Affiliates with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, must comply with Sections 7.10 and 7.11.

7.04 TRUSTEE’S DISCLAIMER.

The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities; it shall not be accountable for the Company’s use of the proceeds from the Securities; and it shall not be responsible for any statement in the Securities other than its certificate of authentication.

7.05 NOTICE OF DEFAULTS.

If a Default or Event of Default occurs and is continuing as to which the Trustee has received notice pursuant to the provisions of this Indenture, the Trustee shall mail to each Securityholder a notice of the Default or Event of Default within thirty (30) days after it occurs unless such Default or Event of Default has been cured or waived. Except in the case of a Default or Event of Default in payment of any amounts due with respect to any Security, the Trustee may withhold the notice if, and so long as it in good faith determines that, withholding the notice is in the interests of Securityholders. Notices under this Section 7.05 shall be given (i) to Holders as of a record date chosen by the Trustee with respect to the Event of Default and (ii) in the manner and to the extent provided in TIA § 313(c).

7.06 REPORTS BY TRUSTEE TO HOLDERS.

Within sixty (60) days after each May 15 beginning with May 15, 2004, the Trustee shall mail to each Securityholder if required by TIA § 313(a) a brief report dated as of such May 15 that complies with TIA § 313(c). In such event, the Trustee also shall comply with TIA § 313(b).

A copy of each report at the time of its mailing to Securityholders shall be mailed to the Company and filed by the Trustee with the SEC and each stock exchange, if any, on which the Securities are listed. The Company shall promptly notify the Trustee when the Securities are listed on any stock exchange.

7.07 COMPENSATION AND INDEMNITY.

The Company shall pay to the Trustee from time to time such compensation for its services as shall be agreed upon in writing. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable out-of-pocket expenses incurred by it. Such expenses

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shall include the reasonable compensation and out-of-pocket expenses of the Trustee’s agents and counsel.

The Company shall hold the Trustee harmless and indemnify the Trustee against any and all loss, liability, damage, claim or expense (including the reasonable fees and expenses of counsel and taxes other than those based upon the income of the Trustee) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder, including the reasonable costs and expenses of defending itself against any claim (whether asserted by the Company, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers and duties hereunder. The Company need not pay for any settlement made without its consent. The Trustee shall notify the Company promptly of any claim for which it may seek indemnification. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee through the Trustee’s negligence, bad faith or willful misconduct.

To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee in its capacity as Trustee, except money or property held in trust to pay amounts due on particular Securities.

The indemnity obligations of the Company with respect to the Trustee provided for in this Section 7.07 shall survive any resignation or removal of the Trustee, the discharge of the Company’s obligations under this Indenture and the termination of this Indenture.

When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(vii) or (viii) occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law.

7.08 REPLACEMENT OF TRUSTEE.

A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.

The Trustee may resign by so notifying the Company in writing thirty (30) days prior to such resignation. The Holders of a majority in aggregate principal amount of the Securities then outstanding may remove the Trustee by so notifying the Trustee and the Company in writing and may appoint a successor Trustee with the Company’s consent. The Company may remove the Trustee if:


	(i) the Trustee fails to comply with Section 7.10;


	(ii) the Trustee is adjudged a bankrupt or an insolvent;


	(iii) a receiver or other public officer takes charge of the Trustee or its property; or


	(iv) the Trustee becomes incapable of acting.

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If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.

If a successor Trustee does not take office within thirty (30) days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Company’s expense), the Company or the Holders of at least ten percent (10%) in aggregate principal amount of the outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Securityholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

7.09 SUCCESSOR TRUSTEE BY MERGER, ETC.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act shall be the successor Trustee, if such successor corporation is otherwise eligible hereunder.

7.10 ELIGIBILITY; DISQUALIFICATION.

There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100 million as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b).

7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

VIII. DISCHARGE OF INDENTURE

8.01 TERMINATION OF THE OBLIGATIONS OF THE COMPANY.

This Indenture shall, subject to the second, third and fourth paragraphs of Section 7.07, cease to be of further effect if (a) either (i) all outstanding Securities (other than Securities replaced pursuant to Section 2.07 hereof) have been delivered to the Trustee for cancellation or

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(ii) all outstanding Securities have or will become due and payable at their scheduled maturity within one year, or all outstanding Securities are scheduled for Redemption within one year, and in either case the Company irrevocably deposits with the Trustee or the Paying Agent (if the Paying Agent is not the Company or any of its Affiliates) cash sufficient to pay all amounts due and owing on all outstanding Securities (other than Securities replaced pursuant to Section 2.07 hereof) on the date of their scheduled maturity or Redemption; (b) the Company pays, to the Trustee, all other sums payable hereunder by the Company; (c) no Default or Event of Default with respect to the Securities shall exist on the date of such deposit; (d) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound; and (e) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture have been complied with; provided, however, that Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.15, 2.16, 2.17, 3.05, 3.08, 3.09, 4.01, 4.02, 4.05 and 7.08 and Articles VIII and X shall survive any discharge of this Indenture until such time as the Securities have been paid in full and there are no Securities outstanding.

8.02 APPLICATION OF TRUST MONEY.

The Trustee shall hold in trust money deposited with it pursuant to Section 8.01. It shall apply the deposited money through the Paying Agent and in accordance with this Indenture to the payment of the principal of and any unpaid and accrued interest on the Securities. Money and securities so held in trust are not subject to the subordination provisions of Article XI.

8.03 REPAYMENT TO COMPANY.

The Trustee and the Paying Agent shall promptly notify the Company of, and pay to the Company upon the request of the Company, any excess money or securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon the written request of the Company in the form of an Officers’ Certificate any money held by them for the payment of the principal of and any unpaid and accrued interest that remains unclaimed for two (2) years; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may, at the expense and request of the Company, cause to be published once in a newspaper of general circulation in the City of New York or cause to be mailed to each Holder, notice stating that such money remains and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Securityholders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person and all liability of the Trustee and the Paying Agent shall cease.

8.04 REINSTATEMENT.

If the Trustee or Paying Agent is unable to apply any money in accordance with Sections 8.01 and 8.02 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company under this Indenture and the Securities shall be

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revived and reinstated as though no deposit had occurred pursuant to Sections 8.01 and 8.02 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Sections 8.01 and 8.02; provided, however, that if the Company has made any payment of amounts due with respect to any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money held by the Trustee or Paying Agent.

IX. AMENDMENTS

9.01 WITHOUT CONSENT OF HOLDERS.

The Company, with the consent of the Trustee, may amend or supplement this Indenture or the Securities without notice to or the consent of any Securityholder:


	(i) to comply with Sections 5.01, 5.02 and 10.12;


	(ii) to add to the covenants of the Company described in this Indenture for the benefit of Securityholders or to surrender any right or power conferred upon the Company;


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


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


	(v) to make any changes or modifications to this Indenture necessary in connection with the registration of the Securities under the Securities Act pursuant to the Registration Rights Agreement and the qualification of the Indenture under the TIA;

provided, however, that no such amendment or supplement pursuant to paragraphs (ii), (iii), (iv) or (v) above may be entered into without the consent of the holders of a majority in principal amount of the Notes, if such amendment or supplement may materially and adversely affect the interests of the Holders.

In addition, the Company and the Trustee may enter into a supplemental indenture without the consent of Holders of the Securities to cure any ambiguity, defect, omission or inconsistency in this Indenture in a manner that does not adversely affect the rights of any Holder.

9.02 WITH CONSENT OF HOLDERS.

The Company, with the consent of the Trustee, may amend or supplement this Indenture or the Securities without notice to any Securityholder but with the written consent of the Holders of at least a majority in aggregate principal amount of the outstanding Securities. Subject to Section 6.07, the Holders of a majority in aggregate principal amount of the outstanding Securities may waive compliance by the Company with any provision of this Indenture or the Securities without notice to any other Securityholder. However, without the consent of each

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Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 6.04, may not:


	(a) change the stated maturity of the principal of, or interest on, any Security;


	(b) reduce the principal amount of, or any premium or interest or liquidated damages on, any Security;


	(c) reduce the amount of principal payable upon acceleration of the maturity of any Security;


	(d) change the place of deposit of or currency of payment of principal of, or any premium or interest or liquidated damages on, any Security;


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


	(f) modify the provisions with respect to the right of Holders pursuant to Article III to require the Company to repurchase Securities upon the occurrence of Repurchase Event in a manner adverse to Holders;


	(g) modify the provisions of Article XI in a manner adverse to Holders;


	(h) adversely affect the right of Holders to convert Securities other than as provided in or under Article X of this Indenture;


	(i) reduce the percentage of the aggregate principal amount of the outstanding Securities whose Holders must consent to a modification or amendment;


	(j) reduce the percentage of the aggregate principal amount of the outstanding Securities necessary for the waiver of compliance with certain provisions of this Indenture or the waiver of certain defaults under this Indenture; and


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

An amendment under this Section 9.02 may not make any change that adversely affects the rights under Article XI of any holder of Senior Indebtedness unless the holders of such Senior Indebtedness pursuant to its terms consent to the change.

Promptly after an amendment under Section 9.01 or this Section 9.02 becomes effective, the Company shall mail to Securityholders a notice briefly describing the amendment. Any failure of the Company to mail such notice shall not in any way impair or affect the validity of such amendment, supplement or waiver.

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It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or supplement, but it shall be sufficient if such consent approves the substance thereof.

9.03 COMPLIANCE WITH TRUST INDENTURE ACT.

Every amendment, waiver or supplement to this Indenture or the Securities shall comply with the TIA as then in effect.

9.04 REVOCATION AND EFFECT OF CONSENTS.

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

After an amendment, supplement or waiver becomes effective with respect to the Securities, it shall bind every Securityholder unless it makes a change described in Section 9.02. In that case, the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and, provided that notice of such amendment, supplement or waiver is reflected on a Security that evidences the same debt as the consenting Holder’s Security, every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security.

9.05 NOTATION ON OR EXCHANGE OF SECURITIES.

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

9.06 TRUSTEE PROTECTED.

The Trustee need not sign any amendment, supplement or waiver authorized pursuant to this Article IX that adversely affects the Trustee’s rights, duties, liabilities or immunities. The Trustee shall be entitled to receive and conclusively rely upon an Opinion of Counsel and an Officers’ Certificate that any supplemental indenture, amendment or waiver is permitted or authorized pursuant to the Indenture.

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X. CONVERSION

10.01 CONVERSION PRIVILEGE; RESTRICTIVE LEGENDS.

A Holder of a Security may convert such Security into Common Stock at any time during the period stated in paragraph 9 of the Securities upon the satisfaction of the requirements set forth in paragraph 9 of the Securities. The initial Conversion Rate is 71.3572 shares of Common Stock per $1,000 Principal Amount at the Maturity Date. The Conversion Rate is subject to adjustment in accordance with Sections 10.06 through 10.12.

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

Any shares issued upon conversion of a Security shall bear the Private Placement Legend until after the second anniversary of the later of the Issue Date and the last date on which the Company or any Affiliate of the Company was the owner of such shares or the Security (or any predecessor security) from which such shares were converted (or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provision thereunder) (or such longer period of time as may be required under the Securities Act or applicable state securities laws in the Opinion of Counsel for the Company, unless otherwise agreed by the Company and the Holder thereof); provided, however, that upon the transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Registrar or co-Registrar shall deliver Securities that bear the Private Placement Legend, except as provided in Section 2.16(B).

10.02 CONVERSION PROCEDURE.

To convert a Security, a Holder must satisfy the requirements of paragraph 9 of the Securities. The date on which the Holder satisfies all those requirements is the conversion date. As soon as practicable following the conversion date, the Company shall deliver to the Holder through the Conversion Agent a certificate for the number of full shares of Common Stock issuable upon the conversion and a check in lieu of any fractional share. The person in whose name the certificate is registered shall be treated as a stockholder of record on and after the conversion date.

Except as described below, no payment or adjustment will be made for accrued interest on, or liquidated damages with respect to, a converted Security or for dividends on any Common Stock issued on or prior to conversion. If any Holder surrenders a Security for conversion after the close of business on the record date for the payment of an installment of interest and prior to the next succeeding interest payment date, then, notwithstanding such conversion, the interest payable on such interest payment date shall be paid to the Holder of such Security on such record date; provided, however, that such Security, when surrendered for conversion, must be accompanied by payment to the Trustee on behalf of the Company of an amount equal to the interest payable on such interest payment date on the portion so converted; provided, further, however, that such payment to the Trustee described in the immediately preceding proviso shall not be required in connection with any conversion of a Security called for Redemption pursuant

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to Section 3.04 hereof if the Redemption Date with respect thereto is after such record date and on or before the business day immediately following such interest payment date.

If a Holder converts more than one Security at the same time, the number of full shares issuable upon the conversion shall be based on the total principal amount of the Securities converted.

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

If the last day on which a Security may be converted is a Legal Holiday in a place where a Conversion Agent is located, the Security may be surrendered to that Conversion Agent on the next succeeding day that is not a Legal Holiday.

10.03 FRACTIONAL SHARES.

The Company will not issue fractional shares of Common Stock upon conversion of Securities and instead will deliver a check in an amount equal to the value of such fraction computed on the basis of the Closing Sale Price on the trading day immediately preceding the date of conversion.

10.04 TAXES ON CONVERSION.

If a Holder converts its Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion. However, the Holder shall pay any such tax which is due because the shares are issued in a name other than the Holder’s name. Nothing herein shall preclude any tax withholding required by applicable law or regulation.

10.05 COMPANY TO PROVIDE STOCK.

The Company shall reserve out of its authorized but unissued Common Stock or Common Stock held in its treasury enough shares of Common Stock to permit the conversion of all of the Securities.

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

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

10.06 ADJUSTMENT OF CONVERSION RATE.

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

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(a) In case the Company shall (1) pay a dividend in shares of Common Stock to all holders of Common Stock, (2) make a distribution in shares of Common Stock to all holders of Common Stock, (3) subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or (4) combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, the Conversion Rate in effect immediately prior to such action shall be adjusted so that the holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which he would have owned immediately following such action had such Securities been converted immediately prior thereto. Any adjustment made pursuant to this Section 10.06(a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision or combination.

(b) In case the Company shall issue rights or warrants to all or substantially all holders of Common Stock, as the case may be, entitling them, for a period commencing on the record date for the determination of holders of Common Stock entitled to receive such rights or warrants and expiring not more than sixty (60) days after such record date, to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock), at a price per share less than the then current market price (as determined pursuant to Section 10.06(g)) of Common Stock on such record date, the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date, plus the number of shares of Common Stock so offered for subscription or purchase, and the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on such record date plus the number of shares of Common Stock which the aggregate of the offering price of the total number of shares of Common Stock so offered for subscription or purchase would purchase at such current market price. Such adjustments shall become effective immediately after such record date.

(c) In case the Company shall dividend or distribute to all or substantially all holders of Common Stock shares of Capital Stock of the Company other than Common Stock, evidences of indebtedness or other assets (other than cash dividends), or shall dividend or distribute to all or substantially all holders of Common Stock rights or warrants to subscribe for securities (other than those referred to in Section 10.06(b)), then in each such case the Conversion Rate shall be increased by multiplying the Conversion Rate in effect immediately prior to the close of business on the record date for the determination of shareholders entitled to such distribution by a fraction of which the numerator shall be the current market price of Common Stock (as determined pursuant to Section 10.06(g)), on such date and the denominator shall be such current market price less the fair market value (as determined by the Board of Directors whose determination shall be conclusive and described in a Board Resolution) on such date of the portion of the evidences of indebtedness, shares of Capital Stock, cash and other assets to be distributed or of such subscription rights or warrants applicable to one share of Common Stock, such increase to become effective immediately prior to the opening of business on the day following such record date. Notwithstanding the foregoing, in the event that the Company shall distribute rights or warrants (other than those referred to in Section 10.06(b)) (“Rights”)

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	pro rata to holders of Common Stock, the Company may, in lieu of making any adjustment pursuant to this Section 10.06(c), make proper provision so that each Holder of a Security who converts such Security (or any portion thereof) after the record date for such distribution and prior to the expiration or redemption of the Rights shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion (the “Conversion Shares”), a number of Rights to be determined as follows: (i) if such conversion occurs on or prior to the date for the distribution to the holders of Rights of separate certificates evidencing such Rights (the “Distribution Date”), the same number of Rights to which a holder of a number of shares of Common Stock equal to the number of shares of Conversion Shares is entitled at the time of such conversion in accordance with the terms and provisions of and applicable to the Rights; and (ii) if such conversion occurs after the Distribution Date, the same number of Rights to which a holder of the number of shares of Common Stock into which the principal amount of the Security so converted was convertible immediately prior to the Distribution Date would have been entitled on the Distribution Date in accordance with the terms and provisions of and applicable to the Rights. In the event that the Company implements a stockholders’ rights plan after the date hereof, the Company shall provide that the Holders will receive, in addition to Common Stock, the rights described therein upon conversion of the Securities (whether or not the rights have separated from the Common Stock prior to the time of conversion), subject to the limitations set forth in the stockholders’ rights plan. Any distribution of rights or warrants pursuant to a stockholders’ rights plan complying with the requirements set forth in the two preceding sentences shall not constitute a distribution of rights or warrants pursuant to this Section 10.06(c).

(d) In case the Company shall, by dividend or otherwise, at any time make a distribution (the “Triggering Distribution,” and the amount of the Triggering Distribution, together with the sum of (w) and (x) below, the “Combined Amount”) to all or substantially all holders of its Common Stock of cash (including any distributions of cash out of current or retained earnings of the Company, but excluding any cash that is distributed as part of a distribution requiring a Conversion Rate adjustment pursuant to subsection (c) above or subsection (e) below) in an aggregate amount that, together with the sum of (w) the aggregate amount of any cash and the fair market value (as determined in good faith by the Board of Directors, whose determination shall be conclusive thereof and described in a Board Resolution), as of the expiration of the tender or exchange offer referred to below, of any other consideration payable in respect of any tender or exchange offer by the Company or a Subsidiary of the Company for all or any portion of the Common Stock consummated within the twelve (12) months preceding the date of payment of the Triggering Distribution and in respect of which no Conversion Rate adjustment has been made pursuant to this Section 10.06, and (x) the aggregate amount of all other cash dividends or distributions to all or substantially all holders of Common Stock made within the twelve (12) months preceding the date of payment of the Triggering Distribution and in respect of which no Conversion Rate adjustment has been made pursuant to this Section 10.06, exceeds ten percent (10%) of the product of the current market price per share (as determined pursuant to Section 10.06(g)) of the Common Stock on the close of business, New York City time, on the Business Day (the “Distribution Declaration Date”) immediately preceding the day on which the

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	Triggering Distribution is declared by the Company and the number of shares of Common Stock outstanding on the Distribution Declaration Date (excluding shares held in the treasury of the Company), the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the effectiveness of the Conversion Rate adjustment contemplated by this subsection (d) by a fraction (y) the numerator of which shall be such current market price per share of Common Stock and (z) the denominator of which shall be (I) such current market price per share of Common Stock less (II) the number obtained by dividing the Combined Amount by such number of shares of Common Stock outstanding. Such adjustment shall become effective immediately prior to the opening of business on the day following the Distribution Declaration Date.

(e) In case a tender or exchange offer made by the Company or any of its Subsidiaries for all or any portion of the Common Stock shall expire and such tender offer or exchange offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender offer or exchange offer) of Purchased Shares (as defined below)) of an aggregate consideration having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) that, combined together with:



	(1)	the aggregate of the cash plus the fair market value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution), as of the expiration of such tender or exchange offer, of consideration payable in respect of any other tender offers or exchange offers by the Company or any of its Subsidiaries for all or any portion of the Common Stock expiring within the twelve (12) months preceding the expiration of such tender offer or exchange offer and in respect of which no adjustment pursuant to this Section 10.06 has been made, and



	(2)	the aggregate amount of any dividends or distributions to all or substantially all holders of the Company’s Common Stock made exclusively in cash within the twelve (12) months preceding the expiration of such tender offer or exchange offer and in respect of which no adjustment pursuant to this Section 10.06 has been made,



	exceeds ten percent (10%) of the product of the current market price per share (as determined pursuant to Section 10.06(g)) as of the last time (the “Expiration Time”) tenders or exchanges could have been made pursuant to such tender or exchange offer (as it may be amended) and the number of shares of Common Stock outstanding (including any tendered shares or exchanged shares) at the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Rate shall be adjusted by multiplying the Conversion Rate in effect immediately prior to the close of business on the date of the Expiration Time by a fraction:



	(i)	the numerator of which shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the

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	acceptance (up to any maximum specified in the terms of the tender offer or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the “Purchased Shares”) and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) at the Expiration Time and the current market price of the Common Stock as of the Expiration Time; and



	(ii)	the denominator of which shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) at the Expiration Time multiplied by the current market price of the Common Stock as of the Expiration Time.



	Such adjustment (if any) shall become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender offer or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such tender offer or exchange offer had not been made. If the application of this Section 10.06(e) to any tender offer or exchange offer would result in a decrease in the Conversion Rate, no adjustment shall be made for such tender offer or exchange offer under this Section 10.06(e).

(f) In addition to the foregoing adjustments in subsections (a), (b), (c), (d) and (e) above, the Company, from time to time and to the extent permitted by law, may increase the Conversion Rate by any amount for at least twenty (20) days or such longer period as may be required by law, if the Board of Directors of the Company has made a determination, which determination shall be conclusive, that such increase would be in the best interests of the Company, provided that the then effective Conversion Price is not less than the par value of a share of Common Stock. The Company shall give notice to the Trustee and cause notice of such increase to be mailed to each Holder of Securities at such Holder’s address as the same appears on the registry books of the Registrar, at least fifteen (15) days prior to the date on which such increase commences. Such Conversion Rate increase shall be irrevocable during such period.

(g) For the purpose of any computation under subsections (a), (b), (c), (d) and (e) above of this Section 10.06, the current market price per share of Common Stock on the date fixed for determination of the stockholders entitled to receive the issuance or distribution requiring such computation (the “Determination Date”) shall be deemed to be the average of the Closing Sale Prices for the ten (10) consecutive Trading Days immediately preceding the Determination Date; provided, however, that (i) if the “ex” date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d) or (e) above occurs on or after the tenth Trading Day prior to the Determination Date and prior to the “ex” date for the issuance or distribution requiring such computation, the Closing Sale Price for each Trading Day prior to the “ex” date for such other event shall be adjusted by multiplying such Closing Sale Price by the reciprocal of the fraction by

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	which the Conversion Rate is so required to be adjusted as a result of such other event, (ii) if the “ex” date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d) or (e) above occurs on or after the “ex” date for the issuance or distribution requiring such computation and on or prior to the Determination Date, the Closing Sale Price for each Business Day on and after the “ex” date for such other event shall be adjusted by multiplying such Closing Sale Price by the same fraction by which the Conversion Rate is so required to be adjusted as a result of such other event, and (iii) if the “ex” date for the issuance or distribution requiring such computation is on or prior to the Determination Date, after taking into account any adjustment required pursuant to clause (i) or (ii) of this proviso, the Closing Sale Price for each Trading Day on and after the “ex” date shall be adjusted by adding thereto the amount of any cash and the fair market value (as determined by the Board of Directors in a manner consistent with any determination of such value for the purposes of this Section 10.06, whose determination shall be conclusive and described in a Resolution of the Board of Directors) of the evidences of indebtedness, shares of Capital Stock or other securities or assets being distributed (in the distribution requiring such computation) applicable to one share of Common Stock as of the close of business on the day before such “ex” date. For the purpose of any computation under subsection (e) of this Section 10.06, the current market price per share of Common Stock at the expiration time for the tender offer requiring such computation shall be deemed to be the average of the Closing Sale Price for the ten consecutive Trading Days commencing on the Business Day immediately following the expiration time of such tender offer (the “Commencement Date”); provided, however, that if the “ex” date for any event (other than the tender offer requiring such computation) that requires an adjustment to the Conversion Rate pursuant to subsection (a), (b), (c), (d) or (e) above occurs on or after the expiration time for the tender offer requiring such computation and prior to the day in question, the Closing Sale Price for each Trading Day on or after to the “ex” date for such other event shall be adjusted by multiplying such Closing Sale Price by the same fraction by which the Conversion Rate is so required to be adjusted as a result of such other event. For purposes of this subsection, the term “ex” date, (i) when used with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Closing Sale Price was obtained without the right to receive such issuance or distribution, (ii) when used with respect to any subdivision or combination of shares of Common Stock, means the first date on which the Common Stock trades regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (iii) when used with respect to any tender offer means the first date on which the Common Stock trades regular way on such exchange or in such market after the expiration time of such tender offer (as it may be amended or extended).

10.07 NO ADJUSTMENT.

No adjustment in the Conversion Rate shall be required until cumulative adjustments amount to one percent (1%) or more of the Conversion Rate as last adjusted; provided, however, that any adjustments which by reason of this Section 10.07 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this

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Article X shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be.

If any rights, options or warrants issued by the Company as described in Section 10.06 are only exercisable upon the occurrence of certain triggering events, then the Conversion Rate will not be adjusted as provided in Section 10.06 until the earliest of such triggering event occurs. Upon the expiration or termination of any rights, options or warrants without the exercise of such rights, options or warrants, the Conversion Rate then in effect shall be adjusted immediately to the Conversion Rate which would have been in effect at the time of such expiration or termination had such rights, options or warrants, to the extent outstanding immediately prior to such expiration or termination, never been issued.

No adjustment need be made for a transaction referred to in this Article X if Securityholders are to participate in the transaction without conversion on a basis and with notice that the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction.

10.08 OTHER ADJUSTMENTS.

In the event that, as a result of an adjustment made pursuant to Section 10.06 hereof, the Holder of any Security thereafter surrendered for conversion shall become entitled to receive any shares of Capital Stock other than shares of Common Stock, thereafter the Conversion Rate of such other shares so receivable upon conversion of any Security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this Article X.

10.09 ADJUSTMENTS FOR TAX PURPOSES.

The Company may make such increases in the Conversion Rate, in addition to those required by Section 10.06 hereof, as it determines to be advisable in order that any stock dividend, subdivision of shares, distribution or rights to purchase stock or securities or distribution of securities convertible into or exchangeable for stock made by the Company or to its stockholders will not be taxable to the recipients thereof.

10.10 NOTICE OF ADJUSTMENT.

Whenever the Conversion Rate is adjusted, the Company shall promptly mail to Holders at the addresses appearing on the Registrar’s books a notice of the adjustment and file with the Trustee an Officers’ Certificate briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence of the correctness of such adjustment, and the Trustee shall be entitled to fully rely on the correctness thereof without independent investigation.

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10.11 NOTICE OF CERTAIN TRANSACTIONS.

In the event that:

(1) the Company takes any action which would require an adjustment in the Conversion Rate;

(2) the Company takes any action that would require a supplemental indenture pursuant to Section 10.12; or

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

a Holder of a Security may wish to convert such Security into shares of Common Stock prior to the record date for or the effective date of the transaction so that he may receive the rights, warrants, securities or assets which a holder of shares of Common Stock on that date may receive. Therefore, the Company shall mail to Holders at the addresses appearing on the Registrar’s books a notice, and concurrently with such mailing shall mail to the Trustee an Officers’ Certificate, in each case stating the proposed record or effective date, as the case may be, of any transaction referred to in clause (1), (2) or (3) of this Section 10.11. The Company shall mail such notice at least fifteen (15) days before such date; however, failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of this Section 10.11.

10.12 EFFECT OF RECLASSIFICATIONS, CONSOLIDATIONS, MERGERS, BINDING SHARE EXCHANGES OR SALES ON CONVERSION PRIVILEGE.

If any of the following shall occur, namely: (i) any reclassification or change in the Common Stock issuable upon conversion of Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation, merger or binding share exchange to which the Company is a party other than a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than a change in name, or par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination) in, the Common Stock, or (iii) any sale or conveyance of all or substantially all of the property or business of the Company, then the Company or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance, execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee providing that the Holder of each Security then outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance by a holder of the number of shares of Common Stock, deliverable upon conversion of such Security immediately prior to such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance. Such supplemental indenture shall provide for adjustments of the Conversion Rate which shall be as nearly equivalent as may be practicable to the adjustments of the Conversion Rate provided for in this Article X. The foregoing, however, shall not in any way affect the right a Holder of a Security may otherwise have, pursuant to

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clause (ii) of the last sentence of the first paragraph of Section 10.06(c) hereof, to receive Rights upon conversion of a Security. If, in the case of any such consolidation, merger, binding share exchange, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of Common Stock includes shares of stock or other securities and property of a corporation other than the successor or purchasing corporation, as the case may be, in such consolidation, merger, binding share exchange, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provision of this Section 10.12 shall similarly apply to successive consolidations, mergers, binding share exchanges, sales or conveyances.

In the event the Company shall execute a supplemental indenture pursuant to this Section 10.12, the Company shall promptly file with the Trustee an Officers’ Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or securities or property (including cash) receivable by Holders of the Securities upon the conversion of their Securities after any such reclassification, change, consolidation, merger, binding share exchange, sale or conveyance and any adjustment to be made with respect thereto.

10.13 TRUSTEE’S DISCLAIMER.

The Trustee has no duty to determine when an adjustment under this Article X should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of the correctness of any such adjustment, and shall be protected in relying upon the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 10.10 hereof. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the failure by the Company to comply with any provisions of this Article X.

The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 10.12, but may accept as conclusive evidence of the correctness thereof, and shall be protected in relying upon, the Officers’ Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 10.12 hereof.

XI. SUBORDINATION

11.01 AGREEMENT TO SUBORDINATE.

The Company agrees, and each Securityholder by accepting a Security agrees, that the payment of all amounts due with respect to the Securities is subordinated in right of payment, to the extent and in the manner provided in this Article XI, to the prior payment in full in cash or cash equivalents of all Senior Indebtedness (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed) and that the subordination is for the benefit of the holders of Senior Indebtedness.

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11.02 CERTAIN DEFINITIONS.

“Indebtedness” means, with respect to any person, the principal of, and premium, if any, and interest on and all other obligations in respect of (a) all indebtedness of such person for borrowed money (including all indebtedness evidenced by notes, bonds, debentures or other securities), (b) all obligations (other than trade payables) incurred by such person in the acquisition (whether by way of purchase, merger, consolidation or otherwise and whether by such person or another person) of any business, real property or other assets, (c) all reimbursement obligations of such person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such person, (d) all capital lease obligations of such person, (e) all net obligations of such person under interest rate swap, currency exchange or similar agreements of such person and (f) all obligations and other liabilities, contingent or otherwise, under any lease or related document, including a purchase agreement, conditional sale or other title retention agreement, in connection with the lease of real property or improvements thereon (or any personal property included as part of any such lease) which provides that such person is contractually obligated to purchase or cause a third party to purchase the leased property or pay an agreed-upon residual value of the leased property, including such person’s obligations under such lease or related document to purchase or cause a third party to purchase such leased property or pay an agreed-upon residual value of the leased property to the lessor, (g) guarantees by such person of indebtedness described in clauses (a) through (f) of another person, and (h) all renewals, extensions, refundings, deferrals, restructurings, amendments and modifications of any indebtedness, obligation, guarantee or liability of the kind described in clauses (a) through (g).

“Representative” means the indenture trustee or other trustee, agent or representative for an issue of Senior Indebtedness.

“Senior Indebtedness” means all Indebtedness of the Company outstanding at any time, except the Securities, Indebtedness that by its terms provides that it shall not be “senior” in right of payment to the Securities or Indebtedness that by its terms provides that it shall be “pari passu” or “junior” in right of payment to the Securities. Senior Indebtedness does not include Indebtedness for trade payables or any account payable or other accrued current liability (other than the current portion of any secured Indebtedness) or obligation incurred in the ordinary course of business in connection with the obtaining of materials or services. In addition, Senior Indebtedness does not include Indebtedness of the Company to any of its Subsidiaries.

11.03 LIQUIDATION; DISSOLUTION; BANKRUPTCY.

In the event of any insolvency or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding in connection therewith, relating to the Company or to its assets, or any liquidation, dissolution or other winding-up of the Company, whether voluntary or involuntary, or any assignment for the benefit of creditors or other marshaling of assets or liabilities of the Company (except in connection with the consolidation or merger of the Company or its liquidation or dissolution following the conveyance, transfer or lease of its properties and assets substantially upon the terms and conditions described in Article V), the holders of Senior Indebtedness will be entitled to receive payment in full in cash or cash equivalents of all Senior Indebtedness, or provision shall be made

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for such payment in full, before the Securityholders will be entitled to receive any payment or distribution of any kind or character on account of principal of, or premium, if any, or interest or liquidated damages on the Securities; and any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, by set-off or otherwise, to which the Securityholders would be entitled but for the provisions of this Article XI shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to the holders of Senior Indebtedness or their Representative or Representatives ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution to the holders of such Senior Indebtedness.

11.04 DEFAULT ON SENIOR INDEBTEDNESS

No payment or distribution of any assets of the Company of any kind or character, whether in cash, property or securities, may be made by or on behalf of the Company on account of the principal of, or premium, if any, or interest on the Securities or on account of the purchase, redemption or other acquisition of Securities, upon the occurrence of any Payment Default in respect of Senior Indebtedness until such payment default shall have been cured or waived in writing or shall have ceased to exist or such Senior Indebtedness shall have been discharged or paid in full in cash or cash equivalents. A “Payment Default” shall mean a default in payment, whether at scheduled maturity, upon a scheduled installment, by acceleration or otherwise, of principal of, or premium, if any, or interest on Senior Indebtedness beyond any applicable grace period.

No payment or distribution of any assets of the Company of any kind or character, whether in cash, property or securities, may be made by or on behalf of the Company on account of principal of, or premium, if any, or interest on the Securities or on account of the purchase, redemption or other acquisition of Securities for the period specified below (a “Payment Blockage Period”), upon the occurrence of any default or event of default with respect to any Senior Indebtedness, other than a Payment Default, pursuant to which the maturity thereof may be accelerated (a “Non-Payment Default”) and receipt by the Trustee of written notice thereof from the Company or a Representative with respect to such Senior Indebtedness (a “Payment Blockage Notice”).

The Payment Blockage Period shall mean the period (each a “Payment Blockage Period”) that shall commence upon receipt by the Trustee of the Payment Blockage Notice, and shall end on the earliest of:

(i) one hundred seventy nine (179) days thereafter, (provided that any Senior Indebtedness to which the Non-Payment Default relates shall not theretofore have been accelerated);

(ii) the date on which such Non-Payment Default is cured, waived or ceases to exist;

(iii) the date on which such Senior Indebtedness is discharged or paid in full; or

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(iv) the date on which such Payment Blockage Period shall have been terminated by written notice to the Trustee from the Representative initiating such Payment Blockage Period,

after which the Company will resume making any and all required payments in respect of the Securities, including any missed payments. In any event, not more than one Payment Blockage Period may be commenced during any period of three hundred and sixty five (365) consecutive days. No Non-Payment Default that existed or was continuing on the date of the commencement of any Payment Blockage Period will be, or can be made, the basis for the commencement of a subsequent Payment Blockage Period, unless such Non-Payment Default has been cured or waived for a period of not less than ninety (90) consecutive days subsequent to the commencement of such initial Payment Blockage Period.

11.05 ACCELERATION OF SECURITIES.

If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify holders of Senior Indebtedness of the acceleration.

11.06 WHEN DISTRIBUTION MUST BE PAID OVER.

In the event that, notwithstanding the provisions of Sections 11.03 and 11.04, any payment or distribution of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder which is prohibited by such provisions, then and in such event such payment shall be held in trust for the benefit of, and shall be paid over and delivered by such Trustee or Holder to, the trustee or Representative with respect to holders of Senior Indebtedness, as their interest may appear, for application to Senior Indebtedness remaining unpaid until all such Senior Indebtedness has been paid in full in cash or cash equivalents after giving effect to any concurrent distribution to or for the holders of Senior Indebtedness.

With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article XI, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Company or any other person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article XI, except if such payment is made as a result of the willful misconduct or gross negligence of the Trustee.

11.07 NOTICE BY THE COMPANY.

The Company shall promptly notify the Trustee and the Paying Agent of any facts known to the Company that would cause a payment of any obligations with respect to the Securities to violate this Article XI, but failure to give such notice shall not affect the subordination of the Securities to the Senior Indebtedness as provided in this Article XI.

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11.08 SUBROGATION.

After all Senior Indebtedness is paid in full and until the Securities are paid in full, Securityholders shall be subrogated (equally and ratably with all other Indebtedness that is equal in right of payment to the Securities) to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Securityholders have been applied to the payment of Senior Indebtedness. A distribution made under this Article XI, to holders of Senior Indebtedness that otherwise would have been made to Securityholders is not, as between the Company and Securityholders a payment by the Company of the Securities.

11.09 RELATIVE RIGHTS.

This Article XI, defines the relative rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Securities in accordance with their terms; (ii) affect the relative rights of Holders and creditors of Holders other than their rights in relation to holders of Senior Indebtedness; or (iii) prevent the Trustee or any Holder from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to Holders of Securities. If the Company fails because of this Article XI, to pay principal of or interest on a Security on the Maturity Date, the failure is still a Default or Event of Default.

11.10 SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY.

No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or any Holder or by the failure of the Company or any Holder to comply with this Indenture.

Without in any way limiting the generality of this Section 11.10, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Trustee or the Holders and without impairing or releasing the subordination provided in this Article XI, or the obligations hereunder of the Holders to the holders of Senior Indebtedness, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness, or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding or secured; (b) sell, exchange, release, foreclose against or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c) release any person liable in any manner for the collection of Senior Indebtedness; and (d) exercise or refrain from exercising any rights against the Company, and Subsidiary thereof or any other person.

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11.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.

Whenever a distribution is to be made or a notice given to holders of any Senior Indebtedness, the distribution may be made and the notice given to their trustee or Representative.

Upon any payment or distribution of assets of the Company referred to in this Article XI, the Trustee and the Holders of the Securities shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such representative(s) or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders for the purpose of ascertaining the Persons entitled to participate in such distribution, all holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XI.

11.12 RIGHTS OF TRUSTEE AND PAYING AGENT.

Notwithstanding the provisions of this Article XI, or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Securities, unless a Responsible Officer of the Trustee shall have received at its Corporate Trust Office of the Trustee at least three (3) Business Days prior to the date of such payment written notice of facts that would cause the payment of any obligations with respect to the Securities to violate this Article XI. Only the Company may give such notice. Nothing in this Article XI, shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07.

The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee.

XII. MISCELLANEOUS

12.01 TRUST INDENTURE ACT CONTROLS.

If any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision of the TIA shall control.

12.02 NOTICES.

Any notice or communication by the Company or the Trustee to one or both of the others is duly given if in writing and delivered in person, mailed by first-class mail or by express delivery to the other parties’ addresses stated in this Section 12.02. The Company or the Trustee by notice to the others may designate additional or different addresses for subsequent notices or communications.

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Any notice or communication to a Securityholder shall be mailed to its address shown on the register kept by the Registrar. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders.

If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

If the Company mails a notice or communication to Securityholders, it shall mail a copy to the other and to the Trustee and each Agent at the same time.

All notices or communications shall be in writing.

The Company’s address is:


	BioMarin Pharmaceutical Inc. 371 Bel Marin Keys Blvd., #210 Novato, California 94949

The Trustee’s address is:


	Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890

12.03 COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

Securityholders may communicate pursuant to TIA § 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

12.04 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

Upon any request or application by the Company to the Trustee to take any action, or refrain from taking any action, under this Indenture, the Company shall furnish to the Trustee:

(i) an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(ii) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

Each signer of an Officers’ Certificate or an Opinion of Counsel may (if so stated) rely, effectively, upon an Opinion of Counsel as to legal matters and an Officers’ Certificate as to factual matters if such signer reasonably and in good faith believes in the accuracy of the document relied upon.

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12.05 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

Each Officers’ Certificate or Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(i) a statement that the person making such certificate or opinion has read such covenant or condition;

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

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

(iv) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with.

12.06 RULES BY TRUSTEE AND AGENTS.

The Trustee may make reasonable rules for action by or at a meeting of Securityholders. The Registrar, Paying Agent or Conversion Agent may make reasonable rules and set reasonable requirements for their respective functions.

12.07 NO RECOURSE AGAINST OTHERS.

No past, present or future director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

12.08 LEGAL HOLIDAYS.

A “Legal Holiday” is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the City of New York, in the State of New York or in the city in which the Trustee administers its corporate trust business. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on that payment for the intervening period.

A “Business Day” is a day other than a Legal Holiday.

12.09 DUPLICATE ORIGINALS.

The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. Delivery of an executed

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counterpart by facsimile shall be effective as delivery of a manually executed counterpart thereof.

12.10 GOVERNING LAW.

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

12.11 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

12.12 SUCCESSORS.

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

12.13 SEPARABILITY.

In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and a Holder shall have no claim therefor against any party hereto.

12.14 TABLE OF CONTENTS, HEADINGS, ETC.

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

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


BIOMARIN PHARMACEUTICAL INC.

By:	/s/ LOUIS C DRAPEAU

	Name:	Louis C Drapeau
	Title:	Chief Financial Officer, Vice President, Finance and Secretary


WILMINGTON TRUST COMPANY

By:	/s/ MICHAEL W. DIAZ

	Name:	Michael W. Diaz
	Title:	Assistant Secretary

EXHIBIT A

[Face of Security]

BIOMARIN PHARMACEUTICAL INC.

[Certificate No. _______]

[INSERT PRIVATE PLACEMENT LEGEND AND GLOBAL SECURITY LEGEND AS REQUIRED]

3.50 % Convertible Subordinated Note due 2008
CUSIP No. ____________

BioMarin Pharmaceutical Inc., a Delaware corporation (herein called the “Company”), for value received, hereby promises to pay to Cede & Co. or registered assigns, the principal sum of one hundred twenty five million Dollars ($125,000,000) on June 15, 2008, and to pay interest thereon, as provided on the reverse hereof, until the principal and any unpaid and accrued interest is paid or duly provided for. The right to payment of the principal and all other amounts due with respect hereto is subordinated to the rights of Senior Indebtedness as set forth in the Indenture referred to on the reverse side hereof.

Interest Payment Dates: June 15 and December 15, with the first payment to be made on December 15, 2003.

Record Dates: June 1 and December 1.

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

IN WITNESS WHEREOF, BIOMARIN PHARMACEUTICAL INC. has caused this instrument to be duly signed.


	BIOMARIN PHARMACEUTICAL INC.


	By:

		Name:
		Title:


Dated:

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TRUSTEE’S CERTIFICATE OF AUTHENTICATION

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


WILMINGTON TRUST COMPANY, as Trustee


By:

	Authorized Signatory

Dated:

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[REVERSE OF SECURITY]

BIOMARIN PHARMACEUTICAL INC.

3.50% Convertible Subordinated Note due 2008

1. Interest. BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on June 15 and December 15 of each year, with the first payment to be made on December 15, 2003. Interest on the Securities will accrue on the principal amount from the most recent date to which interest has been paid or provided for or, if no interest has been paid, from June 23, 2003. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Maturity. The Securities will mature on June 15, 2008.

3. Method of Payment. The Company will pay interest on the Securities (except defaulted interest) to the persons who are registered Holders of Securities at the close of business on the record date set forth on the face of this Security next preceding the applicable interest payment date. Holders must surrender Securities to a Paying Agent to collect the principal, Redemption Price or Repurchase Price of the Securities, plus, if applicable, accrued and unpaid interest, if any, payable as herein provided upon Redemption or Repurchase Upon Repurchase Event, as the case may be. The Company will pay all amounts due with respect to the Securities in money of the United States that at the time of payment is legal tender for payment of public and private debts. If this Security is in global form, the Company will pay interest on the Securities by wire transfer of immediately available funds to the account specified by the Holder. With respect to securities held other than in global form, the Company will make payments by wire transfer of immediately available funds to the account specified by the Holders thereof or, at the Company’s election, by mailing a check to the Holder’s registered address.

4. Paying Agent, Registrar, Conversion Agent. Initially, Wilmington Trust Company, a Delaware banking corporation (the “Trustee”), will act as Paying Agent, Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice.

5. Indenture. The Company issued the Securities under an Indenture dated as of June 23, 2003 (the “Indenture”) between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb) (the “Act”), as in effect on the date of the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of such terms. The Securities are general unsecured subordinated obligations of the Company limited to $125,000,000 aggregate principal amount ($150,000,000 if the Initial Purchasers (as defined in the Indenture) have elected to exercise the Initial Purchasers’ Option (as defined in the Indenture) to purchase an additional $25,000,000 of Additional Securities), except as otherwise provided in the Indenture (except for Securities issued in substitution for destroyed, mutilated,

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lost or stolen Securities). Terms used herein which are defined in the Indenture have the meanings assigned to them in the Indenture.

6. Optional Redemption. The Securities will be redeemable prior to maturity at the option of the Company, in whole or in part, at any time on or after June 20, 2006 (the date of such time, the “Redemption Date”), at the following redemption prices (expressed as percentages of the principal amount thereof), if redeemed during the periods specified below, in each case together with accrued and unpaid interest to, but excluding, the Redemption Date:



Period	Redemption Price, as a percentage of the principal amount of Notes to be redeemed

June 20, 2006 to June 14, 2007, inclusive	101.4	%
June 15, 2007 to June 14, 2008, inclusive	100.7	%

provided that if such Redemption Date is also an interest payment date, such accrued and unpaid interest will be payable in the ordinary course to the holder of record on the relevant record date.

7. Notice of Redemption. Notice of redemption will be mailed at least thirty (30) days but not more than sixty (60) days before the Redemption Date to each Holder of Securities to be redeemed at its registered address. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in integral multiples of $1,000 principal amount. On and after the Redemption Date, interest will cease to accrue on Securities or portions of them called for redemption (except to the extent the Company defaults in the payment of the Redemption Price or accrued and unpaid interest, if any, to, but excluding, the Redemption Date).

8. Repurchase at Option of Holder Upon a Repurchase Event. In the event of a Repurchase Event, then each Holder of the Securities shall have the right, at the Holder’s option, subject to the rights of the holders of Senior Indebtedness under Article XI of the Indenture, to require the Company to repurchase such Holder’s Securities including any portion thereof which is $1,000 in principal amount or any integral multiple thereof on a date (the “Repurchase Date”) no later than thirty (30) days after the date on which notice of such Repurchase Event is mailed in accordance with the immediately succeeding paragraph, at a price equal to one hundred percent (100%) of the outstanding principal amount of such Security, plus accrued and unpaid interest to, but excluding, the Repurchase Date.

Within twenty (20) Business Days after the occurrence of the Repurchase Event, the Company is obligated to give notice of the occurrence of such Repurchase Event to each Holder. Such notice shall include, among other things, the date by which Holder must notify the Company of such Holder’s intention to exercise the Repurchase Right and of the procedure which such Holder must follow to exercise such right. To exercise the Repurchase Right, a Holder of Securities must, in accordance with the provisions of the Indenture, (i) deliver, no later than the close of business on the third (3rd) Business Day immediately preceding the Repurchase Date, written notice to the Paying Agent of the Holder’s exercise of such right; and (ii) deliver, at

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any time after the delivery of such written notice, the Securities with respect to which the Holder is exercising its Repurchase Right, duly endorsed for transfer to the Company.

A “Repurchase Event” of the Company shall be deemed to have occurred upon the occurrence of either a “Change in Control” or a “Termination of Trading”

A “Change in Control” of the Company shall be deemed to have occurred at such time as:


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


	(ii) at any time the following persons cease for any reason to constitute a majority of the Company’s Board of Directors:


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


	(2) any new directors whose election by the Company’s Board of Directors or whose nomination for election by the Company’s stockholders was approved by at least a majority of the directors then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved; or


	(iv) the sale, lease, transfer or other conveyance or disposition of all or substantially all of the assets or property of the Company to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, including Rule 13d-5 under the Exchange Act); or


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

provided, however, that a Change in Control shall not be deemed to occur if either:

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	(A) the Closing Sale Price of the Company’s Common Stock for each of any five (5) Trading Days during the ten (10) Trading Days immediately preceding the Change in Control is at least equal to one hundred and five percent (105%) of the Conversion Price in effect on such Trading Day; or

9. Conversion.

A Holder may convert his or her Security into Common Stock of the Company at any time prior to the close of business on the earlier of (i) June 15, 2008, (ii) if the Security is called for Redemption by the Company, the Business Day immediately preceding the Redemption Date or (iii) if the Security is to be repurchased by the Company pursuant to a Repurchase Event, the Business Day immediately preceding the Repurchase Date. The initial Conversion Rate is 71.3572 shares of Common Stock per $1,000 principal amount of Securities, or an effective initial Conversion Price of approximately $14.01 per share, subject to adjustment in the event of certain circumstances as specified in the Indenture. The Company will deliver a check in lieu of any fractional share. On conversion, no payment or adjustment for any unpaid and accrued interest, or liquidated damages with respect to, the Securities will be made. If a Holder surrenders a Security for conversion between the record date for the payment of interest and prior to the next interest payment date, such Security, when surrendered for conversion, must be accompanied by payment of an amount equal to the interest thereon which the registered Holder on such record date is to receive, unless the Securities have been called for redemption as described in the Indenture and the Redemption Date is after such record date and on or before the business day immediately following such interest payment date.

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

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10. Subordination. The Securities are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness. Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect.

11. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 principal amount and integral multiples of $1,000 principal amount. The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Registrar need not exchange or register the transfer of any Security selected for redemption in whole or in part, except the unredeemed portion of Securities to be redeemed in part. Also, it need not exchange or register the transfer of any Securities for a period of fifteen (15) days before the mailing of a notice of redemption of the Securities selected to be redeemed and in certain other circumstances provided in the Indenture.

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

13. Merger or Consolidation. The Company shall not consolidate with, or merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to, another person (whether in a single or series of related transactions) unless (i) such other person is a corporation organized under the laws of the United States, any State thereof or the District of Columbia; (ii) such person assumes by supplemental indenture all the obligations of the Company, under the Securities and this Indenture; and (iii) immediately after giving effect to the transaction, no Default or Event of Default shall exist.

14. Amendments, Supplements and Waivers. Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and any existing Default or Event of Default may be waived with the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding. Subject to certain exceptions, without notice to or the consent of any Securityholder, the Indenture or the Securities may be amended or supplemented to cure any ambiguity, defect or inconsistency, to comply with Sections 5.01 5.02 and 10.12 of the Indenture, to make any changes or modifications to the Indenture necessary in connection with the registration of the Securities under the Securities Act

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pursuant to the Registration Rights Agreement and the qualification of the Indenture under the TIA, to secure the obligations of the Company in respect of the Securities, or to add to covenants of the Company described in the Indenture for the benefit of Securityholders, to surrender any right or power conferred upon the Company or to make provisions with respect to adjustments to the Conversion Rate as required by the Indenture or to increase the Conversion Rate in accordance with the Indenture.

15. Defaults and Remedies. Subject to the provisions of the Indenture, an Event of Default includes the occurrence of any of the following: (i) default in payment of principal at maturity, upon Redemption or on a Repurchase Date with respect to a Repurchase Upon Repurchase Event or otherwise; (ii) default for thirty (30) days in payment of interest or liquidated damages; (iii) failure to timely provide a Repurchase Event Notice as required by the provisions of this Indenture; (iv) failure by the Company for thirty (30) days after notice is given, as specified in the Indenture, to comply with any of the Company’s other agreements in the Indenture or the Securities; (v) certain payment defaults or the acceleration of other Indebtedness, or certain payment defaults on final judgments payable in cash, of the Company and its Subsidiaries; and (vi) certain events of bankruptcy or insolvency involving the Company or its Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may declare all the Securities to be due and payable immediately, except as provided in the Indenture. If an Event of Default specified in Section 6.01(vii) or (viii) of the Indenture with respect to the Company occurs, the principal of and accrued interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity reasonably satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment) if it determines that withholding notice is in the interests of the Securityholders. The Company must furnish an annual compliance certificate to the Trustee.

16. Registration Rights. The Holders are entitled to registration rights as set forth in the Registration Rights Agreement (as defined in the Indenture). The Holders shall be entitled to receive liquidated damages in certain circumstances, all as set forth in the Registration Rights Agreement.

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

18. No Recourse Against Others. No past, present or future director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives

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and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

19. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

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

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

BioMarin Pharmaceutical Inc.

371 Bel Marin Keys Blvd., #210

Novato, California 94949

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[FORM OF ASSIGNMENT]

I or we assign to

PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER

(please print or type name and address)

the within Security and all rights thereunder, and hereby irrevocably constitutes and appoints

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

Dated:_________________________ ________________________________________________________________


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

Signature Guarantee: _________________________________________________________________________________

In connection with any transfer of this Security occurring prior to the date which is the earlier of (i) the date of the declaration by the Commission of the effectiveness of a registration statement under the Securities Act of 1933, as amended (the “Securities Act”) covering resales of this Security (which effectiveness shall not have been suspended or terminated at the date of the transfer) and (ii) the Resale Restriction Termination Date, the undersigned confirms that it has not utilized any general solicitation or general advertising in connection with transfer:

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[Check One]


(1)	____	to the Company or any Subsidiary thereof; or

(2)	____	pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or

(3)	____	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended; or

(4)	____	pursuant to the exemption from registration under the Securities Act of 1933, as amended, other than under Rule 144A or Rule 144;

(5)	____	pursuant to an effective registration statement under the Securities Act of 1933, as amended.

and unless the box below is checked, the undersigned confirms that such Security is not being transferred to an “affiliate” of the Company as defined in Rule 144 under the Securities Act of 1933, as amended (an “Affiliate”):

o The transferee is an Affiliate of the Company. (If the Security is transferred to an Affiliate, the restrictive legend must remain on the Security for two years following the date of the transfer).

Unless one of the items is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if item (3) or (4) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, in their sole discretion, such written legal opinions, certifications and other information as the Trustee or the Company have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.

If none of the foregoing items are checked, the Trustee or Registrar shall not be obligated to register this Security in the name of any person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in the Indenture shall have been satisfied.


Dated:	Signed:

		(Sign exactly as name appears on the other side of this Security)


Signature Guarantee:

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TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED

The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A and acknowledges that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.


Dated:

			NOTICE: To be executed by an executive officer

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CONVERSION NOTICE

To convert this Security into Common Stock of the, check the box: o

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

$_______________

If you want the stock certificate made out in another person’s name, fill in the form below:

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

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


Date:	Signature(s):



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

Signature(s) guaranteed by:

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

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PURCHASE NOTICE

Certificate No. of Security: ___________

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

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.08 of the Indenture, state the principal amount:


	$_____________________________
	(in an integral multiple of $1,000)


	Date:_________________________	Signature(s):__________________________


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

Signature(s) guaranteed by:

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

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SCHEDULE A

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL SECURITY^a.

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

Date of Exchange

Amount of decrease
in Principal amount
of this Global
Security

Amount of increase
in Principal amount
of this Global
Security

Principal amount of
this Global
Security following
such decrease
(or increase)

Signature or
authorized signatory
of Trustee or Note
Custodian

_________________________________

^a This is included in Global Securities only.

EXHIBIT B-1

FORM OF PRIVATE PLACEMENT LEGEND

THIS SECURITY AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE ACQUIRER

(1) REPRESENTS THAT IT AND ANY ACCOUNT FOR WHICH IT IS ACTING IS A “QUALIFIED INSTITUTIONAL BUYER” (WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT) AND THAT IT EXERCISES SOLE INVESTMENT DISCRETION WITH RESPECT TO EACH SUCH ACCOUNT, AND

(2) AGREES THAT IT WILL NOT DIRECTLY OR INDIRECTLY ENGAGE IN ANY HEDGING TRANSACTIONS INVOLVING THIS SECURITY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY UNLESS IN COMPLIANCE WITH THE SECURITIES ACT, AND

(3) AGREES FOR THE BENEFIT OF THE COMPANY THAT IT WILL NOT OFFER, SELL, PLEDGE OR OTHERWISE TRANSFER THIS SECURITY OR ANY BENEFICIAL INTEREST HEREIN, PRIOR TO THE DATE THAT IS THE LATER OF (X) TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) OR SUCH SHORTER PERIOD OF TIME AS PERMITTED BY RULE 144(K) UNDER THE SECURITIES ACT OR ANY SUCCESSOR PROVISION THEREUNDER, AND (Y) SUCH LATER DATE, IF ANY, AS MAY BE REQUIRED BY APPLICABLE LAW, EXCEPT ONLY

(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,

(B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,

(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (3)(C) ABOVE, A DULY COMPLETED AND SIGNED CERTIFICATE (THE FORM OF WHICH MAY BE OBTAINED FROM THE TRUSTEE) MUST BE DELIVERED TO THE TRUSTEE. PRIOR TO THE REGISTRATION OF ANY TRANSFER IN ACCORDANCE WITH (3)(D) ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

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EXHIBIT B-2

FORM OF LEGEND FOR GLOBAL SECURITY

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

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

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.16 OF THE INDENTURE.

B-2-1

EXHIBIT C

Form of Notice of Transfer Pursuant to Registration Statement

BioMarin Pharmaceutical Inc.
371 Bel Marin Keys Blvd., #210
Novato, California 94949
Attention: Kim Tsuchimoto, Treasurer

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration

Re: BioMarin Pharmaceutical Inc. (the “Company”) 3.50% Convertible
Subordinated Notes due 2008 (the “Securities”)

Ladies and Gentlemen:

Please be advised that _____________ has transferred $____________ aggregate principal amount of the Securities or ________ shares of the Common Stock, $.001 par value per share, of the Company issuable on conversion of the Securities (“Stock”) pursuant to an effective Shelf Registration Statement on Form S-3 (File No. 333-________).

We hereby certify that the prospectus delivery requirements, if any, of the Securities Act of 1933 as amended, have been satisfied with respect to the transfer described above and that the above-named beneficial owner of the Securities or Stock is named as a “Selling Security Holder” in the Prospectus dated _________, or in amendments or supplements thereto, and that the aggregate principal amount of the Securities, or number of shares of Stock transferred are [a portion of] the Securities or Stock listed in such Prospectus, as amended or supplemented, opposite such owner’s name.

	Very truly yours,



	(Name)

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EXHIBIT D

Form of Opinion of Counsel in Connection with Registration of Securities

Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration

Re: BioMarin Pharmaceutical Inc. (the “Company”) 3.50% Convertible
Subordinated Notes due 2008 (the “Securities”)

Ladies and Gentlemen:

Reference is made to the Securities issued pursuant to a certain indenture dated as of June 23, 2003 by and between the Company and Wilmington Trust Company, a Delaware banking corporation, as trustee (the “Trustee”). The Company issued $125,000,000 principal amount of Securities on June 23, 2003, [and an additional $___________ on _______, 2003 [IF THE INITIAL PURCHASERS’ OPTION IS EXERCISED]] in transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The Company has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-3 (File No. 333-______) (the “Registration Statement”) relating to the registration under the Securities Act of $______________ principal amount of the Securities and the shares of Common Stock of the Company (the “Shares”) issuable upon conversion of the Securities being registered.

We have acted as counsel for the Company in connection with the issuance of the Securities and the preparation and filing of the Registration Statement and are familiar with the Securities, the Indenture, the Registration Statement, the above-mentioned SEC order and such other documents as are necessary to render this opinion.

Based on the foregoing, it is our opinion that (1) based on verbal confirmation by the SEC, the Registration Statement has become effective under the Securities Act and, to our knowledge, no stop order suspending the effectiveness of the Registration Statement has been issued, (2) assuming that the Securities covered by the Registration Statement and the Shares issuable upon conversion of such Securities are sold by a relevant Holder specified in the Registration Statement in a manner specified in the Registration Statement, such sale of the Securities and Shares issuable upon conversion of the Securities will have been duly registered under the Securities Act and (3) the Indenture has been duly qualified under the Trust Indenture Act of 1939, as amended.

Yours truly,

D-1

EX-4.2 4 dex42.htm 3.50% CONVERTIBLE SUBORDINATED NOTE DUE 2003 3.50% Convertible Subordinated Note Due 2003

Exhibit 4.2

BIOMARIN PHARMACEUTICAL INC.

Certificate No. R-1

3.50% Convertible Subordinated Note due 2008

CUSIP No. 09061G AA 9

(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF,

(B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,

(D) PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT OR ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

TRANSFER IN ACCORDANCE WITH (3)(D) ABOVE, THE COMPANY AND THE TRUSTEE RESERVE THE RIGHT TO REQUIRE THE DELIVERY OF SUCH LEGAL OPINIONS, CERTIFICATIONS OR OTHER EVIDENCE AS MAY REASONABLY BE REQUIRED IN ORDER TO DETERMINE THAT THE PROPOSED TRANSFER IS BEING MADE IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. NO REPRESENTATION IS MADE AS TO THE AVAILABILITY OF ANY EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

Interest Payment Dates: June 15 and December 15, with the first payment to be made on December 15, 2003.

Record Dates: June 1 and December 1.

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

IN WITNESS WHEREOF, BIOMARIN PHARMACEUTICAL INC. has caused this instrument to be duly signed.


	BIOMARIN PHARMACEUTICAL INC.


	By:	/s/ KIM TSUCHIMOTO

		Name: Kim Tsuchimoto
		Title: Controller

Dated: June 23, 2003

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

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

WILMINGTON TRUST COMPANY, as Trustee

By:	/s/ MICHAEL W. DIAZ

	Authorized Signatory

Dated: June 23, 2003

REVERSE OF SECURITY

BIOMARIN PHARMACEUTICAL INC.

3.50% Convertible Subordinated Note due 2008

1. Interest. BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on June 15 and December 15 of each year, with the first payment to be made on December 15, 2003. Interest on the Securities will accrue on the principal amount from the most recent date to which interest has been paid or provided for or, if no interest has been paid, from June 23, 2003. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Maturity. The Securities will mature on June 15, 2008.

3. Method of Payment. The Company will pay interest on the Securities (except defaulted interest) to the persons who are registered Holders of Securities at the close of business on the record date set forth on the face of this Security next preceding the applicable interest payment date. Holders must surrender Securities to a Paying Agent to collect the principal, Redemption Price or Repurchase Price of the Securities, plus, if applicable, accrued and unpaid interest, if any, payable as herein provided upon Redemption or Repurchase Upon Repurchase Event, as the case may be. The Company will pay all amounts due with respect to the Securities in money of the United States that at the time of payment is legal tender for payment of public and private debts. If this Security is in global form, the Company will pay interest on the Securities by wire transfer of immediately available funds to the account specified by the Holder. With respect to securities held other than in global form, the Company will make payments by wire transfer of immediately available funds to the account specified by the Holders thereof or, at the Company’s election, by mailing a check to the Holder’s registered address.

4. Paying Agent, Registrar, Conversion Agent. Initially, Wilmington Trust Company, a Delaware banking corporation (the “Trustee”), will act as Paying Agent, Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice.

5. Indenture. The Company issued the Securities under an Indenture dated as of June 23, 2003 (the “Indenture”) between the Company and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code §§ 77aaa-77bbbb) (the “Act”), as in effect on the date of the Indenture. The Securities are subject to all such terms, and Securityholders are referred to the Indenture and the Act for a statement of such terms. The Securities are general unsecured subordinated obligations of the Company limited to $125,000,000 aggregate principal amount ($150,000,000 if the Initial Purchasers (as defined in the Indenture) have elected to exercise the Initial Purchasers’ Option (as defined in the Indenture) to purchase an additional $25,000,000 of Additional Securities), except as otherwise provided in the Indenture (except for Securities issued in substitution for destroyed, mutilated,

lost or stolen Securities). Terms used herein which are defined in the Indenture have the meanings assigned to them in the Indenture.

6. Optional Redemption. The Securities will be redeemable prior to maturity at the option of the Company, in whole or in part, at any time on or after June 20, 2006 (the date of such time, the “Redemption Date”), at the following redemption prices (expressed as percentages of the principal amount thereof), if redeemed during the periods specified below, in each case together with accrued and unpaid interest to, but excluding, the Redemption Date:



Period	Redemption Price, as a percentage of the principal amount of Notes to be redeemed
June 20, 2006 to June 14, 2007, inclusive	101.40	%
June 15, 2007 to June 14, 2008, inclusive	100.70	%

provided that if such Redemption Date is also an interest payment date, such accrued and unpaid interest will be payable in the ordinary course to the holder of record on the relevant record date.

7. Notice of Redemption. Notice of redemption will be mailed at least thirty (30) days but not more than sixty (60) days before the Redemption Date to each Holder of Securities to be redeemed at its registered address. Securities in denominations larger than $1,000 principal amount may be redeemed in part but only in integral multiples of $1,000 principal amount. On and after the Redemption Date, interest will cease to accrue on Securities or portions of them called for redemption (except to the extent the Company defaults in the payment of the Redemption Price or accrued and unpaid interest, if any, to, but excluding, the Redemption Date).

8. Repurchase at Option of Holder Upon a Repurchase Event. In the event of a Repurchase Event, then each Holder of the Securities shall have the right, at the Holder’s option, subject to the rights of the holders of Senior Indebtedness under Article XI of the Indenture, to require the Company to repurchase such Holder’s Securities including any portion thereof which is $1,000 in principal amount or any integral multiple thereof on a date (the “Repurchase Date”) no later than thirty (30) days after the date on which notice of such Repurchase Event is mailed in accordance with the immediately succeeding paragraph, at a price equal to one hundred percent (100%) of the outstanding principal amount of such Security, plus accrued and unpaid interest to, but excluding, the Repurchase Date.

any time after the delivery of such written notice, the Securities with respect to which the Holder is exercising its Repurchase Right, duly endorsed for transfer to the Company.

A “Repurchase Event” of the Company shall be deemed to have occurred upon the occurrence of either a “Change in Control” or a “Termination of Trading”

A “Change in Control” of the Company shall be deemed to have occurred at such time as:


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


	(ii) at any time the following persons cease for any reason to constitute a majority of the Company’s Board of Directors:


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


	(2) any new directors whose election by the Company’s Board of Directors or whose nomination for election by the Company’s stockholders was approved by at least a majority of the directors then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved; or


	(iv) the sale, lease, transfer or other conveyance or disposition of all or substantially all of the assets or property of the Company to any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, including Rule 13d-5 under the Exchange Act); or


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


	provided, however, that a Change in Control shall not be deemed to occur if either:


	(A) the Closing Sale Price of the Company’s Common Stock for each of any five (5) Trading Days during the ten (10) Trading Days immediately preceding the Change in Control is at least equal to one hundred and five percent (105%) of the Conversion Price in effect on such Trading Day; or

9. Conversion.

10. Subordination. The Securities are subordinated in right of payment, in the manner and to the extent set forth in the Indenture, to the prior payment in full of all Senior Indebtedness. Each Holder by accepting a Security agrees to such subordination and authorizes the Trustee to give it effect.

11. Denominations, Transfer, Exchange. The Securities are in registered form without coupons in denominations of $1,000 principal amount and integral multiples of $1,000 principal amount. The transfer of Securities may be registered and Securities may be exchanged as provided in the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents. No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. The Registrar need not exchange or register the transfer of any Security selected for redemption in whole or in part, except the unredeemed portion of Securities to be redeemed in part. Also, it need not exchange or register the transfer of any Securities for a period of fifteen (15) days before the mailing of a notice of redemption of the Securities selected to be redeemed and in certain other circumstances provided in the Indenture.

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

13. Merger or Consolidation. The Company shall not consolidate with, or merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets to, another person (whether in a single or series of related transactions) unless (i) such other person is a corporation organized under the laws of the United States, any State thereof or the District of Columbia; (ii) such person assumes by supplemental indenture all the obligations of the Company, under the Securities and this Indenture; and (iii) immediately after giving effect to the transaction, no Default or Event of Default shall exist.

14. Amendments, Supplements and Waivers. Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and any existing Default or Event of Default may be waived with the consent of the Holders of a majority in aggregate principal amount of the Securities then outstanding. Subject to certain exceptions, without notice to or the consent of any Securityholder, the Indenture or the Securities may be amended or supplemented to cure any ambiguity, defect or inconsistency, to comply with Sections 5.01, 5.02 and 10.12 of the Indenture, to make any changes or modifications to the Indenture necessary in connection with the registration of the Securities under the Securities Act

15. Defaults and Remedies. Subject to the provisions of the Indenture, an Event of Default includes the occurrence of any of the following: (i) default in payment of principal at maturity, upon Redemption or on a Repurchase Date with respect to a Repurchase Upon Repurchase Event or otherwise; (ii) default for thirty (30) days in payment of interest or liquidated damages; (iii) failure to timely provide a Repurchase Event Notice as required by the provisions of this Indenture; (iv) failure by the Company for thirty (30) days after notice is given, as specified in the Indenture, to comply with any of the Company’s other agreements in the Indenture or the Securities; (v) certain payment defaults or the acceleration of other Indebtedness, or certain payment defaults on final judgments payable in cash, of the Company and its Subsidiaries; and (vi) certain events of bankruptcy or insolvency involving the Company or its Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may declare all the Securities to be due and payable immediately, except as provided in the Indenture. If an Event of Default specified in Section 6.01(vii) or (viii) of the Indenture with respect to the Company occurs, the principal of and accrued interest on all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholder. Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may require indemnity reasonably satisfactory to it before it enforces the Indenture or the Securities. Subject to certain limitations, Holders of a majority in principal amount of the Securities then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Securityholders notice of any continuing Default or Event of Default (except a Default or Event of Default in payment) if it determines that withholding notice is in the interests of the Securityholders. The Company must furnish an annual compliance certificate to the Trustee.

16. Registration Rights. The Holders are entitled to registration rights as set forth in the Registration Rights Agreement (as defined in the Indenture). The Holders shall be entitled to receive liquidated damages in certain circumstances, all as set forth in the Registration Rights Agreement.

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

18. No Recourse Against Others. No past, present or future director, officer, employee or stockholder, as such, of the Company shall have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Securityholder by accepting a Security waives

and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities.

19. Authentication. This Security shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

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

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

BioMarin Pharmaceutical Inc.
371 Bel Marin Keys Blvd., #210
Novato, California 94949

[FORM OF ASSIGNMENT]

I or we assign to


PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

(please print or type name and address)

the within Security and all rights thereunder, and hereby irrevocably constitutes and appoints

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


Dated:	________________________________________________	________________________________________________________________

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

Signature Guarantee:_________________________________________________________________________________________

[Check One]


(1)	____	to the Company or any Subsidiary thereof; or

(2)	____	pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended; or

(3)	____	pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended; or

(4)	____	pursuant to the exemption from registration under the Securities Act of 1933, as amended, other than under Rule 144A or Rule 144;

(5)	____	pursuant to an effective registration statement under the Securities Act of 1933, as amended.

o The transferee is an Affiliate of the Company. (If the Security is transferred to an Affiliate, the restrictive legend must remain on the Security for two years following the date of the transfer).

Unless one of the items is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered Holder thereof; provided, however, that if item (3) or (4) is checked, the Company or the Trustee may require, prior to registering any such transfer of the Securities, in their sole discretion, such written legal opinions, certifications and other information as the Trustee or the Company have reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended.


Dated:	Signed:

		(Sign exactly as name appears on the other side of this Security)


Signature Guarantee:

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED


Dated:

	NOTICE:	To be executed by an executive officer

CONVERSION NOTICE

To convert this Security into Common Stock of the, check the box: o

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

$__________________

If you want the stock certificate made out in another person’s name, fill in the form below:

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

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

Date:__________________		Signature(s):______________________________________________________________________


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

Signature(s) guaranteed by:

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

PURCHASE NOTICE

Certificate No. of Security: ___________

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

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 3.08 of the Indenture, state the principal amount:

$ __________________________________
(in an integral multiple of $1,000)


Date:__________________		Signature(s):______________________________________________________________________


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

Signature(s) guaranteed by:

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

EX-4.3 5 dex43.htm REGISTRATION RIGHTS AGREEMENT DATED JUNE 23, 2003 Registration Rights Agreement Dated June 23, 2003

EXHIBIT 4.3

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made and entered into as of June 23, 2003, by and between BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”), and UBS Securities LLC and CIBC World Markets Corp. (collectively, the “Initial Purchasers”), for whom UBS Securities LLC is acting as representative, pursuant to that certain Purchase Agreement, dated as of June 18, 2003 (the “Purchase Agreement”) between the Company and the Initial Purchasers.

In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Company has agreed to provide the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Purchase Agreement.

The Company agrees with the Initial Purchasers (i) for their benefit as Initial Purchasers and (ii) for the benefit of the beneficial owners (including the Initial Purchasers) from time to time of the Notes (as defined herein) and the beneficial owners from time to time of the Underlying Common Stock (as defined herein) issued upon conversion of the Notes (each of the foregoing a “Holder” and together the “Holders”), as follows:

Section 1. Definitions. Capitalized terms used herein without definition shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

“Affiliate” means with respect to any specified person, an “affiliate,” as defined in Rule 144, of such person.

“Amendment Effectiveness Deadline Date” has the meaning set forth in Section 2(d) hereof.

“Applicable Conversion Price” means, as of any date of determination, $1,000 principal amount at maturity of Notes divided by the Conversion Rate then in effect as of the date of determination or, if no Notes are then outstanding, the Conversion Rate that would be in effect were Notes then outstanding.

“Business Day” means each day on which the Nasdaq National Market is open for quotation.

“Common Stock” means the shares of common stock, par value $.001 per share, of the Company and any other shares of capital stock as may constitute “Common Stock” for purposes of the Indenture, including the Underlying Common Stock.

“Conversion Rate” has the meaning assigned to such term in the Indenture.

“Damages Accrual Period” has the meaning set forth in Section 2(e) hereof.

“Damages Payment Date” means each interest payment date under the Indenture in the case of Notes, and each June 15 and December 15 in the case of the Underlying Common Stock.

“Effectiveness Deadline Date” has the meaning set forth in Section 2(a) hereof.

“Effectiveness Period” means a period (subject to extension pursuant to Section 3(i) hereof) of two years after the later of (1) the original issuance of the Notes and (2) the last date that the Company or any of its Affiliates was the owner of such Notes (or any predecessor thereto), or such shorter period of time (x) as permitted by Rule 144(k) under the Securities Act or any successor provisions thereunder or (y) that will terminate when each of the Registrable Securities covered by the Shelf Registration Statement ceases to be a Registrable Security.

“Event” has the meaning set forth in Section 2(e) hereof.

“Event Date” has the meaning set forth in Section 2(e) hereof.

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

“Filing Deadline Date” has the meaning set forth in Section 2(a) hereof.

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

“Indenture” means the Indenture, dated as of June 23, 2003, between the Company and Wilmington Trust Company, as trustee, pursuant to which the Notes are being issued.

“Initial Purchasers” has the meaning set forth in the preamble hereto.

“Initial Shelf Registration Statement” has the meaning set forth in Section 2(a) hereof.

“Issue Date” means the first date of original issuance of the Notes.

“liquidated damages” has the meaning set forth in Section 2(e).

“Liquidated Damages Amount” has the meaning set forth in Section 2(e) hereof.

“Managing Underwriters” has the meaning set forth in Section 8(a) hereof.

“NASD Rules” has the meaning set forth in Section 3(s) hereof.

“Notes” means the 3.50% Convertible Subordinated Notes due 2008 of the Company to be purchased pursuant to the Purchase Agreement.

“Notice and Questionnaire” means a written notice and questionnaire delivered to the Company containing substantially the information called for by the Selling Securityholder Notice and Questionnaire attached as Annex A to the Offering Memorandum dated June 18, 2003 relating to the Notes.

“Notice Holder” means, on any date, any Holder that has delivered a Notice and Questionnaire to the Company on or prior to such date, so long as all of such Holder’s Registrable Securities that have been registered for resale pursuant to a Notice and Questionnaire have not been sold in accordance with a Shelf Registration Statement.

“Prospectus” means the prospectus included in any Shelf Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 415 promulgated under the Securities Act), as amended or supplemented by any amendment or prospectus supplement, including post-effective amendments, and all materials incorporated by reference or deemed to be incorporated by reference in such Prospectus.

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

“Record Holder” means (i) with respect to any Damages Payment Date relating to any Notes as to which any Liquidated Damages Amount has accrued, the holder of record of such Note on the record date with respect to the interest payment date under the Indenture on which such Damages Payment Date shall occur and (ii) with respect to any Damages Payment Date relating to the Underlying Common Stock as to which any Liquidated Damages Amount has accrued, the registered holder of such Underlying Common Stock fifteen (15) days prior to such Damages Payment Date.

“Registrable Securities” means the Notes until such Notes have been converted into the Underlying Common Stock and, at all times the Underlying Common Stock and any securities into or for which such Underlying Common Stock has been converted, and any security issued with respect thereto upon any stock dividend, split or similar event until, in the case of any such security, the earliest of (x) the date on which such security has been effectively registered under the Securities Act and disposed of in accordance with the Registration Statement relating thereto and (y) the date that is two (2) years after the later of (1) the Issue Date and (2) the last date that the Company or any of its Affiliates was the owner of such Notes (or any predecessor thereto), or such shorter period of time as permitted by Rule 144(k) under the Securities Act or any successor provisions thereunder.

“Registration Expenses” has the meaning set forth in Section 5 hereof.

“Registration Statement” means any registration statement of the Company that covers any of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, all exhibits and all materials incorporated by reference or deemed to be incorporated by reference in such registration statement.

“Rule 144” means Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

“Rule 144A” means Rule 144A under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC.

“SEC” means the Securities and Exchange Commission.

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

“Shelf Registration Statement” means the Initial Shelf Registration Statement and any Subsequent Shelf Registration Statement.

“Subsequent Shelf Registration Statement” has the meaning set forth in Section 2(b) hereof.

“Subsequent Shelf Registration Statement Effectiveness Deadline Date” has the meaning set forth in Section 2(d) hereof.

“Suspension Notice” has the meaning set forth in Section 3(i) hereof.

“Suspension Period” has the meaning set forth in Section 3(i) hereof.

“TIA” means the Trust Indenture Act of 1939, as amended.

“Trustee” means the Wilmington Trust Company, the trustee under the Indenture.

“Underlying Common Stock” means the Common Stock into which the Notes are convertible or issued upon any such conversion.

Section 2. Shelf Registration. (a) The Company shall prepare and file or cause to be prepared and filed with the SEC, as soon as practicable but in any event by the date (the “Filing Deadline Date”) that is ninety (90) days after the Issue Date, a Registration Statement for an offering to be made on a delayed or continuous basis pursuant to Rule 415 of the Securities Act registering the resale from time to time by Holders thereof of all of the Registrable Securities (or, if registration of Registrable Securities not held by Notice Holders is not permitted

by the rules and regulations of the SEC, then registering all Registrable Securities held by Notice Holders) (the “Initial Shelf Registration Statement”). The Initial Shelf Registration Statement shall be on Form S-1 or S-3 or another appropriate form permitting registration of such Registrable Securities for resale by such Holders in accordance with the reasonable methods of distribution elected by the Holders, approved by the Company, and set forth in the Initial Shelf Registration Statement. The Company shall use its reasonable best efforts to cause the Initial Shelf Registration Statement to be declared effective under the Securities Act as promptly as is practicable but in any event by the date (the “Effectiveness Deadline Date”) that is one hundred eighty (180) days after the Issue Date, and to keep the Initial Shelf Registration Statement (or any Subsequent Shelf Registration Statement) continuously effective under the Securities Act until the expiration of the Effectiveness Period. At the time the Initial Shelf Registration Statement is declared effective, each Holder that became a Notice Holder prior to the date that is five (5) Business Days prior to such time of effectiveness shall be named as a selling securityholder in the Initial Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of Registrable Securities in accordance with applicable law.

(b) If the Initial Shelf Registration Statement or any Subsequent Shelf Registration Statement ceases to be effective for any reason at any time during the Effectiveness Period, the Company shall use its reasonable best efforts to obtain the prompt withdrawal of any order suspending the effectiveness thereof, and in any event shall within thirty (30) days of such cessation of effectiveness amend the Shelf Registration Statement in a manner reasonably expected to obtain the withdrawal of the order suspending the effectiveness thereof, or file an additional Shelf Registration Statement covering all of the securities that as of the date of such filing are Registrable Securities (or, if registration of Registrable Securities not held by Notice Holders is not permitted by the rules and regulations of the SEC, then registering all Registrable Securities held by Notice Holders as of such date) (a “Subsequent Shelf Registration Statement”). If a Subsequent Shelf Registration Statement is filed, the Company shall use its reasonable best efforts to cause the Subsequent Shelf Registration Statement to become effective as promptly as is practicable after such filing, but in no event later than the Subsequent Shelf Registration Statement Effectiveness Deadline, and to keep such Shelf Registration Statement (or subsequent Shelf Registration Statement) continuously effective until the end of the Effectiveness Period.

(c) The Company shall supplement and amend any Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement, if required by the Securities Act or as reasonably requested by the Initial Purchasers or by the Trustee on behalf of the Holders of the Registrable Securities covered by such Shelf Registration Statement.

(d) (i) Each Holder of Registrable Securities agrees that if such Holder wishes to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus, it will do so only in accordance with this Section 2(d) and Section 3(i). Each Holder of Registrable Securities wishing to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus agrees to deliver a completed and executed Notice and Questionnaire to the Company prior to any attempted or actual distribution of Registrable Securities under a Shelf Registration Statement. With respect to any Holder who delivers a completed and executed Notice and Questionnaire on or after the date the Initial Shelf Registration Statement is declared effective, the Company shall, as promptly as practicable after the date a Notice and Questionnaire is delivered, and in any event, subject to clause (B) below, within the later of (x) five (5) Business Days after such date or (y) five (5) Business Days after the expiration of any Suspension Period (1) in effect when the Notice and Questionnaire is delivered or (2) put into effect within five (5) Business Days of such delivery date,

(A) if required by applicable law, file with the SEC a supplement to the related Prospectus or a post-effective amendment to the Shelf Registration Statement or a Subsequent Shelf Registration Statement and any necessary supplement or amendment to any document incorporated therein by reference to the applicable Shelf Registration Statement and file any other required document with the SEC so that the Holder delivering such Notice and Questionnaire is named as a selling securityholder in a Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Registrable Securities in accordance with applicable law;

(B) if the Company shall file a post-effective amendment to the Shelf Registration Statement or file a Subsequent Shelf Registration Statement, it shall use its reasonable best efforts to cause such post-effective amendment or Subsequent Shelf Registration Statement, as the case may be, to be declared effective under the Securities Act as promptly as is practicable, but in any event by the date (the “Amendment Effectiveness Deadline Date” in the case of a post-effective amendment or the “Subsequent Shelf Registration Statement Effectiveness Deadline Date” in the case of a Subsequent Shelf Registration Statement) that is thirty (30) days after the date such post-effective amendment or Subsequent Shelf Registration Statement, as the case may be, is required by this Section 2(d) to be filed; provided, however, that if a post-effective amendment or a Subsequent Shelf Registration Statement is required by the rules and regulations of the SEC in order to permit resales by Holders submitting Notice and Questionnaires on or after the date of effectiveness of the Initial Shelf Registration Statement, the Company shall not be required to file more than one post-effective amendment or Subsequent Shelf Registration Statement for such purpose in any thirty (30) day period; provided further, that, if the Company files a post-effective amendment to the Shelf Registration Statement or files a

Subsequent Shelf Registration Statement pursuant to the terms of this Agreement, and the staff of the SEC notifies the Company that it intends to review and comment on the substance of such post-effective amendment or Subsequent Shelf Registration Statement, as the case may be, the Amendment Effectiveness Deadline Date or the Subsequent Shelf Registration Statement Effectiveness Deadline Date, as the case may be, for such filing shall be the date that is sixty (60) days after the date such post-effective amendment or Subsequent Shelf Registration Statement, as the case may be, is required by this Section 2(d) to be filed;

(C) the Company shall provide such Holder a reasonable number of copies of any documents filed pursuant to Section 2(d)(i)(A). and 2(d)(i)(B);

(D) the Company shall notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment or Subsequent Shelf Registration Statement filed pursuant to Section 2(d)(i)(A) and 2(d)(i)(B);

(E) if a Notice and Questionnaire is delivered during a Suspension Period, or a Suspension Period is put into effect within five (5) Business Days after such delivery date, the Company shall so inform the Holder delivering such Notice and Questionnaire and shall take the actions set forth in clauses (A), (B), (C) and (D) above within five (5) Business Days after expiration of the Suspension Period in accordance with Section 3(i); and

(F) if under applicable law, the Company has more than one option as to the type or manner of making any such filing, the Company shall make the required filing or filings in the manner or of a type that is reasonably expected to result in the earliest availability of a Prospectus for effecting resales of Registrable Securities.

(ii) Notwithstanding anything contained herein to the contrary, the Company shall be under no obligation to name any Holder that is not a Notice Holder as a selling securityholder in any Shelf Registration Statement or related Prospectus; provided, however, that any Holder that becomes a Notice Holder pursuant to the provisions of this Section 2(d) (whether or not such Holder was a Notice Holder at the time the Shelf Registration Statement was declared effective) shall be named as a selling securityholder in a Shelf Registration Statement or related Prospectus in accordance with the requirements of this Section 2(d).

(e) The parties hereto agree that the Holders of Registrable Securities will suffer damages, and that it would not be feasible to ascertain the extent of such damages with precision, if (i) the Initial Shelf Registration Statement has not been filed on or prior to the Filing Deadline Date, (ii) the Initial Shelf Registration Statement has not been declared effective under the Securities Act on or prior to the Effectiveness Deadline Date, (iii) either a supplement to a prospectus, a post-

effective amendment or a Subsequent Shelf Registration Statement is required to be filed and fails to be filed within the prescribed period set forth in Section 2(d) (the applicable date being an “Additional Filing Deadline Date”) or in the case of a post-effective amendment or a Subsequent Shelf Registration Statement, such post-effective amendment or Subsequent Registration Statement is not declared effective by the SEC by the Amendment Effectiveness Deadline Date or the Subsequent Shelf Registration Statement Effectiveness Deadline Date, as the case may be, or (iv) the Initial Shelf Registration Statement or any Subsequent Registration Statement is filed and declared effective but shall thereafter cease to be effective (without being succeeded immediately by a new registration statement filed and declared effective) or usable for the offer and sale of Registrable Securities for a period of time (including any Suspension Period) which shall exceed forty-five (45) days in the aggregate in any three (3) month period or ninety (90) days in the aggregate in any twelve (12) month period (each of the events of a type described in any of the foregoing clauses (i) through (iv) are individually referred to herein as an “Event,” and the Filing Deadline Date in the case of clause (i), the Effectiveness Deadline Date in the case of clause (ii), the Additional Filing Deadline Date, the Amendment Effectiveness Deadline Date or the Subsequent Shelf Registration Statement Effectiveness Deadline Date, as the case may be, in the case of clause (iii) and the date on which the duration of the ineffectiveness or unusability of the Shelf Registration Statement in any period exceeds the number of days permitted by clause (iv) hereof in the case of clause (iv), being referred to herein as an “Event Date”). Events shall be deemed to continue until the following dates with respect to the respective types of Events: the date the Initial Shelf Registration Statement is filed in the case of an Event of the type described in clause (i), the date the Initial Shelf Registration Statement is declared effective under the Securities Act in the case of an Event of the type described in clause (ii), the date a prospectus supplement or a post-effective amendment to the Initial Shelf Registration Statement or Subsequent Shelf Registration Statement, whichever is required, is filed or declared effective, as the case may be, in the case of an Event of the type described in clause (iii) and the date the Shelf Registration Statement becomes effective or usable again in the case of an Event of the type described in clause (iv).

Accordingly, commencing on (and including) any Event Date and ending on (but excluding) the next date on which there are no Events that have occurred and are continuing (a “Damages Accrual Period”), the Company agrees to pay, as liquidated damages (“liquidated damages”) and not as a penalty, an amount (the “Liquidated Damages Amount”) at the rate described below, payable periodically on each Damages Payment Date to each Notice Holder (or, with respect to liquidated damages due resulting from the Event described in clause (iii) of the foregoing paragraph, each applicable Notice Holder), to the extent of, for each such Damages Payment Date, accrued and unpaid Liquidated Damages Amount to (but excluding) such Damages Payment Date (or, if the Damages Accrual Period shall have ended prior to such Damages Payment Date, the date of the end of the Damages Accrual Period); provided that any Liquidated Damages Amount

accrued with respect to any Note or portion thereof called for redemption on a redemption date or converted into Underlying Common Stock on a conversion date prior to the Damages Payment Date, shall, in any such event, be paid instead to the Holder who submitted such Note or portion thereof for redemption or conversion on the applicable redemption date or conversion date, as the case may be, on such date (or promptly following the conversion date, in the case of conversion). The Liquidated Damages Amount shall accrue at a rate per annum equal to one-quarter of one percent (0.25%) for the first 90-day period from the Event Date, increasing with respect to each subsequent 90-day period thereafter by an additional one-quarter of one percent (0.25%), up to a maximum rate per year of three-quarters of one percent (0.75%), of (i) the principal amount of such Notes or, without duplication, (ii) in the case of Notes that have been converted into Underlying Common Stock, the Applicable Conversion Price of such shares of Underlying Common Stock, as the case may be, in each case determined as of the Business Day immediately preceding the next Damages Payment Date. Notwithstanding the foregoing, no Liquidated Damages Amounts shall accrue as to any Registrable Security from and after the earlier of (x) the date such security is no longer a Registrable Security and (y) expiration of the Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with respect to any period shall not exceed the rate provided for in this paragraph notwithstanding the occurrence of multiple concurrent Events. Following the cure of all Events requiring the payment by the Company of Liquidated Damages Amounts to the Holders of Registrable Securities pursuant to this Section, the accrual of Liquidated Damages Amounts shall cease (without in any way limiting the effect of any subsequent Event requiring the payment of Liquidated Damages Amount by the Company).

The Trustee shall be entitled, on behalf of Holders of Notes, to seek any available remedy for the enforcement of this Agreement, including for the payment of any Liquidated Damages Amount. Notwithstanding the foregoing, the parties agree that the sole compensation payable for a violation of the terms of this Agreement with respect to which compensation is expressly provided shall be such Liquidated Damages Amount.

All of the Company’s obligations set forth in this Section 2(e) that are outstanding with respect to any Registrable Security at the time such security ceases to be a Registrable Security shall survive until such time as all such obligations with respect to such security have been satisfied in full (notwithstanding termination of this Agreement pursuant to Section 9(m)).

The parties hereto agree that the liquidated damages provided for in this Section 2(e) constitute a reasonable estimate of the damages that may be incurred by Holders of Registrable Securities by reason of the failure of a Shelf Registration Statement to be filed, declared effective, amended or replaced to include the names of all Notice Holders or available for effecting resales of Registrable Securities in accordance with the provisions hereof.

Section 3. Registration Procedures. In connection with the registration obligations of the Company under Section 2 hereof, the Company shall:

(a) Prepare and file with the SEC a Shelf Registration Statement or Shelf Registration Statements on Form S-1 or S-3 or any other appropriate form under the Securities Act available for the sale of the Registrable Securities by the Holders thereof in accordance with the intended method or methods of distribution thereof, and use its reasonable best efforts to cause each such Shelf Registration Statement to become effective and remain effective as provided herein; provided that before filing any Shelf Registration Statement or Prospectus or any amendments or supplements thereto with the SEC, the Company shall furnish to the Initial Purchasers and counsel for the Holders and for the Initial Purchasers (or, if applicable, separate counsel for the Holders) copies of all such documents proposed to be filed and use its reasonable best efforts to reflect in each such document when so filed with the SEC such comments as the Initial Purchasers or such counsel reasonably shall propose within three (3) Business Days of the delivery of such copies to the Initial Purchasers and such counsel.

(b) Prepare and file with the SEC such amendments and post-effective amendments to each Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement or Subsequent Shelf Registration Statement continuously effective until the expiration of the Effectiveness Period; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and use its reasonable best efforts to comply with the provisions of the Securities Act applicable to it with respect to the disposition of all securities covered by such Shelf Registration Statement during the Effectiveness Period in accordance with the intended methods of disposition by the sellers thereof set forth in such Shelf Registration Statement as so amended or such Prospectus as so supplemented.

(c) As promptly as practicable give notice to the Notice Holders, the Initial Purchasers and counsel for the Holders and for the Initial Purchasers (or, if applicable, separate counsel for the Holders), to such counsel as the Holders or the Initial Purchasers may request, (i) when any Prospectus, Prospectus supplement, Shelf Registration Statement or post-effective amendment to a Shelf Registration Statement has been filed with the SEC and, with respect to a Shelf Registration Statement or any post-effective amendment or when the same has been declared effective, (ii) of any request, following the effectiveness of a Shelf Registration Statement under the Securities Act, by the SEC or any other federal or state governmental authority for amendments or supplements to such Shelf Registration Statement or the related Prospectus or for additional information, (iii) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of any Shelf Registration Statement or the initiation or threatening of any proceedings for that purpose, (iv) of the receipt by the Company or its legal counsel of any notification with respect to the

suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (v) of the determination by the Company that a post-effective amendment to a Shelf Registration Statement or a Subsequent Shelf Registration Statement will be filed with the SEC, which notice may, at the discretion of the Company (or as required pursuant to Section 3(i)), state that it constitutes a Suspension Notice, in which event the provisions of Section 3(i) shall apply.

(d) Use its reasonable best efforts to prevent the issuance of, and, if issued, to obtain the withdrawal of any order suspending the effectiveness of a Shelf Registration Statement or obtain the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction in which they have been qualified for sale, in either case at the earliest possible moment, and provide prompt notice to each Notice Holder and the Initial Purchasers of the withdrawal of any such order.

(e) If requested by the Initial Purchasers or any Notice Holder, as promptly as practicable incorporate in a Prospectus supplement or a post-effective amendment to a Shelf Registration Statement such information as the Initial Purchasers, such Notice Holder or counsel for the Holders and for the Initial Purchasers (or, if applicable, separate counsel for the Holders) shall determine to be required to be included therein by applicable law and make any required filings of such Prospectus supplement or such post-effective amendment; provided that the Company shall not be required to take any actions under this Section 3(e) that, in the written opinion of counsel for the Company, are not in compliance with applicable law.

(f) As promptly as practicable furnish to each Notice Holder, counsel for the Holders and for the Initial Purchasers (or, if applicable, separate counsel for the Holders), to such counsel as the Holders or the Initial Purchasers may request, without charge, at least one (1) conformed copy of any Shelf Registration Statement and any amendment thereto, including financial statements but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits (unless requested in writing to the Company by such Notice Holder, such counsel or the Initial Purchasers).

(g) During the Effectiveness Period, deliver to each Notice Holder, counsel for the Holders and for the Initial Purchasers (or, if applicable, separate counsel for the Holders), to such counsel as the Holders or the Initial Purchasers may request, in connection with any sale of Registrable Securities pursuant to a Shelf Registration Statement, without charge, as many copies of the Prospectus or Prospectuses relating to such Registrable Securities (including each preliminary prospectus) and any amendment or supplement thereto as such Notice Holder or the Initial Purchasers may reasonably request; and the Company hereby consents (except during such periods that a Suspension Notice is outstanding and has not been revoked) to the use of such Prospectus or each amendment or supplement

thereto by each Notice Holder, in connection with any offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set forth therein.

(h) Prior to any public offering of the Registrable Securities pursuant to a Shelf Registration Statement, use its reasonable best efforts to register or qualify or cooperate with the Notice Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Notice Holder reasonably requests in writing (which request may be included in the Notice and Questionnaire); prior to any public offering of the Registrable Securities pursuant to a Shelf Registration Statement, use its reasonable best efforts to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period in connection with such Notice Holder’s offer and sale of Registrable Securities pursuant to such registration or qualification (or exemption therefrom) and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of such Registrable Securities in the manner set forth in the relevant Shelf Registration Statement and the related Prospectus; provided that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it is not then so qualified or (ii) take any action that would subject it to general service of process in suits or to taxation in any such jurisdiction where it is not then so subject.

(i) Upon (A) the issuance by the SEC of a stop order suspending the effectiveness of any Shelf Registration Statement or the initiation of proceedings with respect to any Shelf Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or the existence of any fact as a result of which any Shelf Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or any Prospectus shall contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (C) the occurrence or existence of any pending corporate development that, in the reasonable discretion of the Company, makes it appropriate to suspend the availability of any Shelf Registration Statement and the related Prospectus, (i) in the case of clause (B) or (C) above, subject to the next sentence, as promptly as practicable, prepare and file, if necessary pursuant to applicable law, a post-effective amendment to such Shelf Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Shelf Registration Statement and Prospectus so that such Shelf Registration Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and such Prospectus does not contain any untrue statement

of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that the Company may rely on information provided by each Notice Holder with respect to such Notice Holder), as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, and, in the case of a post-effective amendment to a Shelf Registration Statement, subject to the next sentence, use its reasonable best efforts to cause it to be declared effective as promptly as is practicable, and (ii) give notice to the Notice Holders and counsel for the Holders and for the Initial Purchasers (or, if applicable, separate counsel for the Holders), to such counsel as the Holders or the Initial Purchasers may request, that the availability of the Shelf Registration Statement is suspended (a “Suspension Notice” ) and, upon receipt of any Suspension Notice, each Notice Holder agrees not to sell any Registrable Securities pursuant to such Shelf Registration Statement until such Notice Holder’s receipt of copies of the supplemented or amended Prospectus provided for in clause (i) above, or until it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. The Company will use its reasonable best efforts to ensure that the use of the Prospectus may be resumed (x) in the case of clause (A) above, as promptly as is practicable, (y) in the case of clause (B) above, as soon as, in the reasonable judgment of the Company, the Shelf Registration Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and the Prospectus does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (z) in the case of clause (C) above, as soon as, in the reasonable discretion of the Company, such suspension is no longer appropriate. The period during which the availability of the Shelf Registration Statement and any Prospectus may be suspended (the “Suspension Period”) without the Company incurring any obligation to pay liquidated damages pursuant to Section 2(e) shall not exceed forty-five (45) days in any three (3) month period and an aggregate of ninety (90) days in any twelve (12) month period. The Effectiveness Period shall be extended by the number of days from and including the date of the giving of the Suspension Notice to and including the date on which the Notice Holder received copies of the supplemented or amended Prospectus provided in clause (i) above, or the date on which it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus.

(j) Make available for inspection during normal business hours by representatives for the Notice Holders of such Registrable Securities and any underwriters participating in any disposition pursuant to any Shelf Registration Statement and any broker-dealers, attorneys and accountants retained by such

Notice Holders or any such underwriters, all relevant financial and other records and pertinent corporate documents and properties of the Company and its subsidiaries, and cause the appropriate officers, directors and employees of the Company and its subsidiaries to make available for inspection during normal business hours all relevant information reasonably requested by such representatives for the Notice Holders, or any such underwriters, broker-dealers, attorneys or accountants in connection with such disposition, in each case as is customary for similar “due diligence” examinations; provided, however, that such persons shall, at the Company’s request, first agree in writing with the Company that any information that is reasonably and in good faith designated by the Company in writing as confidential at the time of delivery of such information shall be kept confidential by such persons and shall be used solely for the purposes of exercising rights under this Agreement, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of governmental or regulatory authorities, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to federal securities laws in connection with the filing of any Shelf Registration Statement or the use of any Prospectus referred to in this Agreement) or necessary to defend or prosecute a claim brought against or by any such persons (e.g., to establish a “due diligence” defense), (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person or (iv) such information becomes available to any such person from a source other than the Company and such source is not bound by a confidentiality agreement or is not otherwise under a duty of trust to the Company; provided further, that the foregoing inspection and information gathering shall, to the greatest extent possible, be coordinated on behalf of all the Notice Holders and the other parties entitled thereto by the counsel referred to in Section 5.

(k) Comply with all applicable rules and regulations of the SEC and make generally available to its securityholders earning statements (which need not be audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) commencing on the first day of the first fiscal quarter of the Company commencing after the effective date of a Shelf Registration Statement, which statements shall cover said 12-month periods.

(l) Cooperate with each Notice Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities sold pursuant to a Shelf Registration Statement, which certificates shall not bear any restrictive legends, and cause such Registrable Securities to be in such denominations as are permitted by the Indenture and registered in such names as such Notice Holder may request in writing at least two (2) Business Days prior to any sale of such Registrable Securities.

(m) Provide a CUSIP number for all Registrable Securities covered by a Shelf Registration Statement not later than the effective date of the Initial Shelf Registration Statement and provide the Trustee and the transfer agent for the Common Stock with certificates for the Registrable Securities that are in a form eligible for deposit with The Depository Trust Company.

(n) Cooperate and assist in any filings required to be made with the National Association of Securities Dealers, Inc.

(o) Upon (i) the filing of the Initial Registration Statement and (ii) the effectiveness of the Initial Registration Statement, announce the same, in each case by release to PR Business Newswire.

(p) Take all actions and enter into such customary agreements (including, if requested, an underwriting agreement in customary form and reasonably acceptable to the Company) as are necessary, or reasonably requested by the holders of a majority of the Registrable Securities being sold, in order to expedite or facilitate disposition of such Registrable Securities; and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration:


	(i) the Company shall make such representations and warranties as may be reasonably requested to the Holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as has been customarily made by the Company to underwriters in similar offerings of securities of the Company;

(ii) the Company shall obtain opinions of counsel of the Company and updates thereof (which counsel and opinions (in form, scope and substance) as may be reasonably requested by and which shall be reasonably satisfactory to the managing underwriters, if any, and to the counsel to the Holders of the Registrable Securities being sold) addressed to each selling Holder and the underwriters, if any, covering the matters customarily covered in opinions requested in sales of securities or underwritten offerings of the Company;

(iii) the Company shall obtain “cold comfort” letters and updates thereof from the Company’s independent certified public accountants (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements are, or are required to be, included in any Shelf Registration Statement) addressed to the underwriters, if any, and use reasonable best efforts to have such letter addressed to the selling Holders of Registrable Securities (to the extent consistent with Statement on Auditing Standards No. 72 of the American Institute of Certified Public Accounts), such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters to underwriters in connection with similar underwritten offerings of the Company;


	(iv) the Company shall, if an underwriting agreement is entered into, cause the same to set forth indemnification provisions and procedures substantially equivalent to the indemnification provisions and procedures set forth in Section 6 hereof with respect to the underwriters and all other parties to be indemnified pursuant to said Section; and


	(v) the Company shall deliver such documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the holders of a majority of the Registrable Securities being sold and the managing underwriters, if any;


	the above to be done at (x) the effectiveness of any Shelf Registration Statement (and each post-effective amendment thereto) and (y) each closing under any underwriting or similar agreement as and to the extent required thereunder.

(q) Cause the Indenture to be qualified under the TIA not later than the effective date of the Initial Shelf Registration Statement; and in connection therewith, cooperate with the Trustee to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and execute, and use its reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner.

(r) Use its reasonable best efforts to cause the Underlying Common Stock to be listed on The Nasdaq National Market.

(s) In the event that any broker-dealer registered under the Exchange Act shall underwrite any Registrable Securities or participate as a member of an underwriting syndicate or selling group or “assist in the distribution” (within the meaning of the Conduct Rules (the “NASD Rules”) of the National Association of Securities Dealers, Inc.) thereof, whether as a Holder of such Registrable Securities or as an underwriter, a placement or sales agent or a broker or dealer in respect thereof, or otherwise, the Company will assist such broker-dealer in complying with the requirements of such NASD Rules, including, without limitation, by: (i) if such NASD Rules, including NASD Rule 2720, shall so require, engaging a “qualified independent underwriter” (as defined in NASD Rule 2720) to participate in the preparation of the Shelf Registration Statement relating to such Registrable Securities, to exercise usual standards of due diligence in respect thereof and, if any portion of the offering contemplated by such Shelf Registration Statement is an underwritten offering or is made through a placement or sales agent, to recommend the yield or price, as the case may be, of such Registrable Securities; (ii) indemnifying any such qualified independent underwriter to the extent of the indemnification of underwriters provided in Section 6 hereof; and (iii) providing such information to such broker-dealer as may be required in order for such broker-dealer to comply with the requirements of the NASD Rules.

Section 4. Holder’s Obligations. Each Holder agrees, by acquisition of the Registrable Securities, that no Holder of Registrable Securities shall be entitled to sell any of such Registrable Securities pursuant to a Shelf Registration Statement or to receive a Prospectus relating thereto, unless such Holder has furnished the Company with a Notice and Questionnaire as required pursuant to Section 2(d) hereof (including the information required to be included in such Notice and Questionnaire) and the information set forth in the next sentence. Each Notice Holder agrees promptly to furnish to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Notice Holder not misleading and any other information regarding such Notice Holder and the distribution of such Registrable Securities as the Company may from time to time reasonably request. Any sale of any Registrable Securities by any Holder shall constitute a representation and warranty by such Holder that the information relating to such Holder and its plan of distribution is as set forth in the Prospectus delivered by such Holder in connection with such disposition, that such Prospectus does not as of the time of such sale contain any untrue statement of a material fact relating to or provided by such Holder or its plan of distribution and that such Prospectus does not as of the time of such sale omit to state any material fact relating to or provided by such Holder or its plan of distribution necessary in order to make the statements in such Prospectus, in the light of the circumstances under which they were made, not misleading.

Section 5. Registration Expenses. The Company shall bear all fees and expenses incurred in connection with the performance by the Company of its obligations under Section 2 and 3 of this Agreement whether or not any of the Shelf Registration Statements are filed or declared effective. Such fees and expenses (“Registration Expenses”) shall include, without limitation, (i) all registration and filing fees and expenses (including, without limitation, fees and expenses (x) with respect to filings required to be made with the National Association of Securities Dealers, Inc. and (y) of compliance with federal securities laws and state securities or Blue Sky laws (including, without limitation, reasonable fees and disbursements of counsel for the Holders in connection with Blue Sky qualifications of the Registrable Securities under the laws of such jurisdictions as the Notice Holders of a majority of the Registrable Securities being sold pursuant to a Shelf Registration Statement may designate), (ii) all printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities in a form eligible for deposit with The Depository Trust Company and printing Prospectuses), (iii) all duplication and mailing expenses relating to copies of any Shelf Registration Statement or Prospectus delivered to any Holders hereunder, (iv) all fees and disbursements of counsel for the Company and the fees and disbursements of one counsel for the Holders in connection with the Shelf Registration Statement, (v) all fees and disbursements of the Trustee and its counsel and of the registrar and transfer agent for the Common Stock and (vi) Securities Act liability insurance obtained by the Company in its sole discretion. In addition, the Company shall pay the internal

expenses of the Company (including, without limitation, all salaries and expenses of officers and employees performing legal or accounting duties), the expense of any annual audit, the fees and expenses incurred in connection with the listing by the Company of the Registrable Securities on any securities exchange on which similar securities of the Company are then listed and the fees and expenses of any person, including special experts, retained by the Company.

Section 6. Indemnification; Contribution.

(a) The Company agrees to indemnify, defend and hold harmless each Initial Purchaser, each Holder, each person, if any, who controls any Initial Purchaser or Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (a “Controlling Person”) and the respective officers, directors, partners, employees, representatives and agents of the Initial Purchasers, the Holders or any Controlling Person (each, an “Indemnified Party”), from and against any loss, damage, expense, liability, claim or any actions in respect thereof (including the reasonable cost of investigation) which such Indemnified Party may incur or become subject to under the Securities Act, the Exchange Act or otherwise, insofar as such loss, damage, expense, liability, claim or action arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in any Shelf Registration Statement or Prospectus, including any document incorporated by reference therein, or in any amendment or supplement thereto or in any preliminary prospectus, or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated in any Shelf Registration Statement or in any amendment or supplement thereto or necessary to make the statements therein not misleading, or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements made in any Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, in the light of the circumstances under which they were made, not misleading, and the Company shall reimburse, as incurred, the Indemnified Parties for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, damage, expense, liability, claim or action in respect thereof; provided, however, that (i) insofar as any such loss, damage, expense, liability, claim or action arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission of a material fact contained in, or omitted from, and in conformity with information furnished in writing by or on behalf of an Initial Purchaser or Holder to the Company expressly for use therein, including without limitation all information, to the extent provided by such Holder, regarding such Holder and its affiliates included in a Notice and Questionnaire provided by such Holder to the Company, and (ii) with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus relating to a Shelf Registration Statement, the indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder from whom the person asserting any such losses, damages, expenses, liabilities, claims or actions purchased the Registrable Securities

concerned, to the extent that a prospectus relating to such Registrable Securities was required to be delivered by such Holder under the Securities Act in connection with such purchase and any such loss, damage, expense, liability, claim or action of such Holder results from the fact that there was not sent or given to such person, at or prior to the written confirmation of the sale of such Registrable Securities to such person, a copy of the final prospectus if the Company had previously furnished copies thereof to such Holder; provided further, however, that this indemnity agreement will be in addition to any liability which the Company may otherwise have to such Indemnified Party.

(b) Each Holder, severally and not jointly, agrees to indemnify, defend and hold harmless the Company, its directors, officers, employees, representatives, agents and any person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a “Company Indemnified Party”) from and against any loss, damage, expense, liability, claim or any actions in respect thereof (including the reasonable cost of investigation) which such Company Indemnified Party may incur or become subject to under the Securities Act, the Exchange Act or otherwise, insofar as such loss, damage, expense, liability, claim or action arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in information furnished in writing by or on behalf of such Holder to the Company expressly for use in any Shelf Registration Statement or Prospectus, including any document incorporated by reference therein, or in any amendment or supplement thereto or in any preliminary prospectus, including without limitation all information, to the extent provided by such Holder, regarding such Holder and its affiliates included in a Notice and Questionnaire provided by such Holder to the Company, or arises out of or is based upon any omission or alleged omission to state a material fact required to be stated in any Shelf Registration Statement or in any amendment or supplement thereto or necessary to make the statements therein not misleading, or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements in any Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, in the light of the circumstances under which they were made, not misleading, in connection with such information; and, subject to the limitation set forth immediately preceding this clause, each Holder shall reimburse, as incurred, the Company for any legal or other expenses reasonably incurred by the Company or any such controlling person in connection with investigating or defending any loss, damage, expense, liability, claim or action in respect thereof. This indemnity agreement will be in addition to any liability which such Holder may otherwise have to the Company or any of its controlling persons. In no event shall the liability of any selling Holder of Registrable Securities hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the Shelf Registration Statement giving rise to such indemnification obligation.

(c) If any action, suit or proceeding (each, a “Proceeding”) is brought against any person in respect of which indemnity may be sought pursuant to either subsection (a) or (b) of this Section 6, such person (the “Indemnified Party”) shall promptly notify the person against whom such indemnity may be sought (the “Indemnifying Party”) in writing of the institution of such Proceeding and the Indemnifying Party shall assume the defense of such Proceeding; provided, however, that the omission to notify such Indemnifying Party shall not relieve such Indemnifying Party from any liability which it may have to such Indemnified Party or otherwise unless materially prejudiced thereby. Such Indemnified Party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless the employment of such counsel shall have been authorized in writing by such Indemnifying Party in connection with the defense of such Proceeding or such Indemnifying Party shall not have employed counsel to have charge of the defense of such Proceeding within a reasonable amount of time following the receipt of notice thereof or such Indemnified Party shall have reasonably concluded upon the written advice of counsel that there may be one or more defenses available to it that are different from, additional to or in conflict with those available to such Indemnifying Party (in which case such Indemnifying Party shall not have the right to direct that portion of the defense of such Proceeding on behalf of the Indemnified Party, but such Indemnifying Party may employ counsel and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Indemnifying Party), in any of which events such reasonable fees and expenses shall be borne by such Indemnifying Party and paid as incurred (it being understood, however, that such Indemnifying Party shall not be liable for the expenses of more than one separate counsel in any one Proceeding or series of related Proceedings together with necessary local counsel representing the Indemnified Parties who are parties to such action). An Indemnifying Party shall not be liable for any settlement of such Proceeding effected without the written consent of such Indemnifying Party, but if settled with the written consent of such Indemnifying Party, such Indemnifying Party agrees to indemnify and hold harmless an Indemnified Party from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested an Indemnifying Party to reimburse such Indemnified Party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then such Indemnifying Party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than sixty (60) Business Days after receipt by such Indemnifying Party of the aforesaid request, (ii) such Indemnifying Party shall not have reimbursed such Indemnified Party in accordance with such request prior to the date of such settlement and (iii) such Indemnified Party shall have given such Indemnifying Party at least forty-five (45) days’ prior notice of its intention to settle. No Indemnifying Party shall, without the prior written consent of any Indemnified Party, effect any settlement of any pending or threatened Proceeding in respect of which such Indemnified Party is or could have been a party and indemnity could

have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such Indemnified Party.

(d) If the indemnification provided for in this Section 6 is unavailable to an Indemnified Party under subsections (a) and (b) of this Section 6 in respect of any losses, damages, expenses, liabilities, claims or actions referred to therein, then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, damages, expenses, liabilities, claims or actions (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Holders or the Initial Purchasers on the other hand from the offering of the Registrable Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Holders or the Initial Purchasers on the other in connection with the statements or omissions which resulted in such losses, damages, expenses, liabilities, claims or actions, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Holders or the Initial Purchasers on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Company or by the Holders or the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities, claims and actions referred to above shall be deemed to include any reasonable legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any Proceeding.

(e) The Company, the Holders and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 6 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in subsection (d) above. Notwithstanding the provisions of this Section 6, no Holder shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities sold by it were offered to the public exceeds the amount of any damages which it has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders’ respective obligations to contribute pursuant to this Section 6 are several in proportion to the

respective amount of Registrable Securities they have sold pursuant to a Shelf Registration Statement, and not joint. The remedies provided for in this Section 6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

(f) The indemnity and contribution provisions contained in this Section 6 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Holder or Initial Purchaser or any person controlling any Holder or Initial Purchaser, or the Company, or the Company’s officers or directors or any person controlling the Company and (iii) the sale of any Registrable Security by any Holder.

Section 7. Information Requirements. (a) The Company covenants that, if at any time before the end of the Effectiveness Period it is not subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder of Registrable Securities and take such further action as any Holder of Registrable Securities may reasonably request in writing (including, without limitation, making such representations as any such Holder may reasonably request), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitations of the exemptions provided by Rule 144, Rule 144A, Regulation S and Regulation D under the Securities Act and customarily taken in connection with sales pursuant to such exemptions. Upon the written request of any Holder of Registrable Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with the reporting requirements of the Exchange Act, unless such a statement has been included in the Company’s most recent report filed with the SEC pursuant to Section 13 or Section 15(d) of Exchange Act. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company to register any of its securities (other than the Common Stock) under any section of the Exchange Act.

(b) The Company shall file the reports required to be filed by it under the Exchange Act and shall comply with all other requirements set forth in the instructions to Form S-1 or Form S-3, as the case may be, in order to allow the Company to be eligible to file registration statements on Form S-1 or Form S-3.

Section 8. Underwritten Registrations.

(a) If any of the Registrable Securities covered by the Shelf Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering (“Managing Underwriters”) will be selected by the holders of a majority in aggregate principal amount of such Registrable Securities to be included in such offering (provided that holders of Common Stock issued upon conversion of the Notes shall not be deemed holders of Common Stock, but shall be deemed to be

holders of the aggregate principal amount of Notes from which such Common Stock was converted).

(b) No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person’s Registrable Securities on the basis reasonably provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

Section 9. Miscellaneous.

(a) Remedies. The Company acknowledges and agrees that any failure by the Company to comply with its obligations under this Agreement may result in material irreparable injury to the Initial Purchasers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, any Initial Purchaser or Holder may obtain such relief as may be required to specifically enforce the Company’s obligations under this Agreement. The Company further agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. This Section 9(a) shall not apply to Section 2(e).

(b) No Conflicting Agreements. The Company is not, as of the date hereof, a party to, nor shall it, on or after the date of this Agreement, enter into, any agreement with respect to its securities that conflicts with the rights granted to the Holders of Registrable Securities in this Agreement. The Company represents and warrants that the rights granted to the Holders of Registrable Securities hereunder do not in any way conflict with the rights granted to the holders of the Company’s securities under any other agreements. The Company will not take any action with respect to the Registrable Securities which would adversely affect the ability of any of the Holders to include such Registrable Securities in a registration undertaken pursuant to this Agreement, and after the date hereof, the Company shall not grant to any of its security holders (other than the Holders in such capacity) the right to include any of its securities in the Shelf Registration Statement filed pursuant to this Agreement.

(c) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of a majority in aggregate principal amount of such Registrable Securities (provided that holders of Common Stock issued upon conversion of the Notes shall not be deemed holders of Common Stock, but shall be deemed to be holders

of the aggregate principal amount of Notes from which such Common Stock was converted); provided that, no consent is necessary from any of the Holders in the event that this Agreement is amended, modified or supplemented for the purpose of curing any ambiguity, defect or inconsistency that does not adversely affect the rights of any Holders. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Securities whose securities are being sold pursuant to a Shelf Registration Statement and that does not directly or indirectly affect the rights of other Holders of Registrable Securities may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Shelf Registration Statement; provided that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 9(c), whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder.

(d) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, by telecopier, by courier guaranteeing overnight delivery or by first-class mail, return receipt requested, and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after being deposited with such courier, if made by overnight courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows:

(x) if to a Holder of Registrable Securities, at the most current address given by such Holder to the Company in a Notice and Questionnaire or any amendment thereto;

(y) if to the Company, to:


	BioMarin Pharmaceutical Inc.
	371 Bel Marin Keys Blvd., #210
	Novato, California 11788
	Attention: Louis Drapeau
	Telecopy No.: (415) 382-7889

(z) if to the Initial Purchasers, to:


	UBS Securities LLC
	CIBC World Markets Corp.
	c/o UBS Securities LLC
	299 Park Avenue


	New York, New York 10171
	Attention: Syndicate Department
	Telecopy No.: (212) 713-1205


	with a copy to (for informational purposes only):

	c/o UBS Securities LLC
	299 Park Avenue
	New York, New York 10171
	Attention: Legal Department
	Telecopy No.: (212) 821-4042


	and



	c/o UBS Securities LLC
	677 Washington Boulevard
	Stamford, Connecticut 06901
	Attention: Syndicate Department
	Telecopy No.: (203) 719-0683

or to such other address as such person may have furnished to the other persons identified in this Section 9(d) in writing in accordance herewith.

(e) Approval of Holders. Whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or its affiliates (as such term is defined in Rule 405 under the Securities Act) (other than the Initial Purchasers or subsequent Holders of Registrable Securities if such subsequent Holders are deemed to be such affiliates solely by reason of their holdings of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage.

(f) Third Party Beneficiaries. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company, on the one hand, and the Initial Purchasers, on the other hand, and shall have the right to enforce such agreements directly to the extent they may deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder.

(g) Successors and Assigns. Any person who purchases any Registrable Securities from the Initial Purchasers or from any Holder shall be deemed, for purposes of this Agreement, to be an assignee of the Initial Purchasers or such Holder, as the case may be. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties and shall inure to the benefit of and be binding upon each Holder of any Registrable Securities.

(h) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which

when so executed shall be deemed to be original and all of which taken together shall constitute one and the same agreement.

(i) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(j) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.

(k) Severability. If any term, provision, covenant or restriction of this Agreement is held to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, and the parties hereto shall use its best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law.

(l) Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and is 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 and the registration rights granted by the Company with respect to the Registrable Securities. Except as provided in the Purchase Agreement, there are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the registration rights granted by the Company with respect to the Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the parties with respect to such registration rights. No party hereto shall have any rights, duties or obligations other than those specifically set forth in this Agreement.

(m) Termination. This Agreement and the obligations of the parties hereunder shall terminate upon the end of the Effectiveness Period, except for any liabilities or obligations under Section 4, 5 or 6 hereof and the obligations to make payments of and provide for liquidated damages under Section 2(e) hereof to the extent such damages accrue prior to the end of the Effectiveness Period, each of which shall remain in effect in accordance with its terms.

(n) Submission to Jurisdiction. Except as set forth below, no Proceeding may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Company hereby consents to the jurisdiction of such courts and personal service

with respect thereto. The Company hereby consents to personal jurisdiction, service and venue in any court in which any Proceeding arising out of or in any way relating to this Agreement is brought by any third party against the Initial Purchasers. THE COMPANY HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT. The Company agrees that a final judgment in any such Proceeding brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other courts in the jurisdiction of which the Company is or may be subject, by suit upon such judgment.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.


BIOMARIN PHARMACEUTICAL INC.


By:	/s/ LOUIS C. DRAPEAU

	Name:	Louis C. Drapeau
	Title:	Chief Financial Officer, Vice President Finance and Secretary

Confirmed and accepted as of the date
first above written on behalf of itself
and the several Initial Purchasers:


UBS SECURITIES LLC


By:	/s/ SAGE KELLY

	Name:	Sage Kelly
	Title:	Executive Director


By:	/s/ ROSS DEDEYN

	Name:	Ross DeDeyn
	Title:	Associate Director

EX-10.1 6 dex101.htm AMENDMENT NO.2 TO 1998 DIRECTOR OPTION PLAN Amendment No.2 to 1998 Director Option Plan

EXHIBIT 10.1

Amendment No. 2 to

BioMarin Pharmaceutical Inc.

1998 Director Option Plan

Pursuant to the authority granted to the BioMarin Pharmaceutical Inc. (the “Company”) board of directors (the “Board”) by the terms of Section 11(a) of the Company’s 1998 Director Option Plan (the “Plan”), effective as of the dates set forth below, the Board has amended the Plan as follows:

Amendment to Section 4(c)

Effective on June 12, 2003, subsections (b) and (c) of Section 4 (Administration and Grants of Options under the Plan) of the Plan are amended to read, in their entirety:

“(b)

Each Outside Director shall be automatically granted an Option to purchase 30,000 Shares (the “First Option”) on the date on which such person first becomes an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director shall not receive a First Option.

“(c)

Each Outside Director shall automatically be granted an Option to purchase 30,000 Shares (a “Subsequent Option”) on each anniversary of the date on which such person first became an Outside Director, whether through Election by the stockholders of the Company or appointment by the Board to fill a vacancy, provided he or she is then an Outside Director.”

Amendment to Section 8(b)

Effective on July 21, 2003, Section 8(b) of the Plan (Termination of Continuous Status as a Director) is amended to read, in its entirety:

“Subject to Section 10 hereof, in the event Optionee’s status as a Director terminates (other than upon Optionee’s death or total and permanent disability (as defined in Section 22(e)(3) of the Code)), the Optionee may exercise his or her Option (i) within such period of time as specified in the Option Agreement (of at least thirty (30) days) or (ii) in the absence of a specified time in the Option Agreement, within three (3) months following the date of such termination, and, in either case, only to the extent that the Optionee was entitled to exercise the option on the date of such termination (but in no event later than the expiration of

its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of such termination, and to the extent that the Optionee does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate.”

EX-10.2 7 dex102.htm BAYVIEW BUSINESS PARK STANDARD LEASE Bayview Business Park Standard Lease

EXHIBIT 10.2

BAYVIEW BUSINESS PARK

STANDARD LEASE

BASIC LEASE INFORMATION

Date: 6/16/03

Lessor: Bayview Ignacio, LLC

P. O. Box 11068

Santa Rosa, Ca 95406

(707) 544-7050

(707) 523-7031 FAX

Lessee: BioMarin Pharmaceutical Inc.

Address for Lessee Notices: 90 Digital Drive, Novato, California 94949

Phone: (415) 884-6700

FAX: (415) 382-7885

Lessee Responsible Party: Jeffrey Landau, Vice President of Administration

Address of Responsible Party: 90 Digital Drive, Novato, California 94949

Premises: The entire premises consisting of Building “O” located at 105 Digital Drive and Building “P” located at 90 Digital Drive, Novato, California

Total: 74,825 square feet

Term: Ten full years (plus a partial month if Commencement Date is other than the 1^st of the month)

Estimated Commencement Date: November 1st, 2003 (Refer to Paragraph 3(d))

Base Term Expiration Date: October 31^st, 2013 (Based upon November 1^st, 2003 Commencement Date)

Initial Base Monthly Rent: $112,237.50

10.

Initial Security Deposit: $561,000.00

11.

Use: Administrative offices and storage. As part of the foregoing uses, Lessee may use the Premises for conference rooms, employee cafeterias and lunch rooms, boardrooms, telecommunications and data equipment rooms, training rooms, lobbies, and employee gymnasium and fitness rooms. Use of part or all of the Premises for lab is specifically excluded.

12.

Exhibits:

“A” The Building

“B” The Premises

“C” Declaration of Covenants and Protective Standards

“D” Insurance Endorsement Format

“E” Estoppel Format

“F” Lessee Hazardous Materials

“G” Initial Improvement Concept Drawings

“H” Preliminary Space Plans

“I” Complete Working Drawings

(Note: Exhibits “G,H and I” to be combined and replaced with As Built Initial Interior Plans within 24 months of Commencement Date)

“J” Exterior Preliminary Plans

“K” Exterior Permit Plans

(Note: Exhibits “J and K” to be combined and replaced with As Built Exterior Plans within 24 months of Commencement Date)

“L” Site Plan

13.

Addenda: Paragraphs 43 through 50.

In the event of conflict between any Basic Lease Information and the Lease, the former shall control.


Lessor		Lessee

BAYVIEW BUSINESS PARK

STANDARD LEASE

For and in consideration of the rents, covenants, conditions and agreements hereinafter reserved and contained, by Lessee, to be paid, kept, observed and performed, Lessor, Bayview Ignacio, LLC, leases unto Lessee and Lessee hires from Lessor the premises described in the Basic Lease Information (the Premises) together with appurtenances, situated in Buildings “O” at 105 Digital Drive and “P” at 90 Digital Drive located in Bayview Business Park (the Project or Property), in the city of Novato, county of Marin, state of California.

Said hiring and letting is upon each and every of the following terms and conditions:

BACKGROUND:

The Lessor holds a fee simple interest in the Project and represents and warrants that Lessor has right, title and authority to enter into this agreement.

LESSEE AUTHORITY:

If Lessee is a corporation, trust or general or limited partnership, or sole proprietor, each individual executing this Lease on behalf of such entity represents and warrants that he and/or she is duly authorized to execute and deliver this Lease on behalf of said entity. Lessee shall, prior to the execution of this Lease, deliver satisfactory evidence to Lessor of such authority. Failure to comply with this requirement within the time stated shall constitute a breach of the Lease.

TERM:

The term of this Lease shall be for a period of ten (10) years and one partial month (if applicable), beginning November 1st, 2003 and continuing until October 31^st, 2013. Lessee shall be tendered occupancy of the Premises as of the stated Commencement Date.

Lessor shall keep Lessee informed of any changes in the Commencement Date.

If Lessor shall not have tendered possession of the Premises to Lessee such that the occupancy date thereof would be more than ninety (90) days after the commencement date set forth in paragraph “a” above, Lessee may at Lessee’s option by notice in writing to Lessor, cancel this Lease, in which event Lessor and Lessee shall be discharged from all obligations hereunder. In the event this Lease is cancelled by Lessee due to Lessor’s failure to diligently pursue work on the Premises to be performed by it, Lessor shall be discharged from all obligations under this Lease and shall not be liable for any other costs or damages which Lessee may suffer, except for return of advance rent payments and security deposits made by Lessee.

In the event that the Lease commences on a date later than November 1^st, 2003 pursuant to the terms of Subparagraph “c” above, or as otherwise agreed to by Lessor and Lessee, the Commencement Date shall be the date when possession of the Premises is delivered by Lessor to Lessee. In such event the Commencement Date shall be memorialized in writing acknowledged by both Lessor and Lessee.

SECURITY DEPOSIT:

Lessee shall deposit with Lessor upon execution of this Lease the sum indicated on the Basic Lease Information as initial security for Lessee’s full and faithful performance of Lessee’s obligations hereunder. Such deposit does not constitute an advance payment of any rent, including last months’ rent. If Lessee fails to pay rent or other charges due hereunder or otherwise defaults with respect to any provision of this Lease, Lessor may use, apply or retain all or any portion of such deposit for payment of any rent or other charge in default, or for the payment of any other sum to which Lessor may become obligated by reason of Lessee’s default, or to compensate Lessor for any loss or damage which Lessor may suffer thereby. Should Lessor so use, apply or retain all or any portion of such deposit, Lessee shall, within five (5) days after written demand therefor, deposit certified funds with Lessor in an amount sufficient to restore such deposit to the full amount hereinabove stated, and Lessee’s failure to do so shall be a material breach of this Lease.

Lessor shall not be required or in any way obligated to keep such deposit separate from its general accounts. No trust relationship is created herein between Lessor and Lessee with respect to such deposit. If Lessee performs all of Lessee’s obligations hereunder, such deposit, or so much thereof as has not therefore been used, applied or retained by Lessor, shall be returned, without payment of interest or other increment for its use, except as otherwise set forth in Paragraph 4d below, to Lessee within twenty-one (21) days of the later of Lease expiration or Lessee’s vacating the Premises and return of keys to Lessor.

If Lessee applies to Lessor for approval of changes, additions, improvements or modifications as described in Paragraphs 13 and 14 of this Lease (except with respect to the Initial Interior and Exterior Improvements as set forth in Paragraphs 49 and 50 of Addendum 1 to this Lease), Lessor may, at its sole option, require Lessee to increase the deposit by such amounts as are, in Lessor’s commercially reasonable discretion, necessary to restore the premises to its original condition at termination of this Lease. Such additional amounts, if any, will be subject to the provisions of this Paragraph 4.

Lessor shall credit Lessee annually with interest on the Security Deposit, in the amount of the average of the Bank of America passbook rate for the previous year, against the next installment of the Base Monthly Rent due.

USE:

The Premises are hereby leased to Lessee upon the express condition that Lessee shall use said Premises ONLY for the use indicated in the Basic Lease Information.

Lessee agrees that Lessee’s business shall be established and conducted through the term hereof in a first class manner; that Lessee will not use the demised Premises for, or carry on or permit upon said Premises any unreasonably offensive, noisy, dangerous or unlawful trade, business, manufacture or occupation or any nuisance or violation of public policy, nor permit any auction sale to be held or conducted on or about said Premises; that Lessee shall not commit, or suffer to be committed, any waste upon the Premises; that Lessee shall not do or suffer anything to be done upon said Premises which will cause structural injury to said Premises or the Building of which same form a part; that said Premises will not be overloaded and that no machinery, apparatus or other appliance shall be used or operated in or upon the Premises which will in any manner injure, vibrate or shake said Premises or the Building of which it is a part; that no use will be made of the Premises which will in any way impair the efficient operation of the sprinkler system within the Building containing the Premises; that Lessee will not abandon said Premises during the term hereof unless pursuant to an assignment of this Lease or subletting of the Premises approved by Lessor in the manner described elsewhere in this Lease; and that without the advance written permission of Lessor no musical instrument of any sort, or any noise-making device will be operated or allowed upon said Premises for the purpose of attracting trade or otherwise.

Lessee further agrees not to use or permit the use of the Premises or any part thereof for any purpose prohibited by law or which will increase the existing rate of insurance upon the Building in which the Premises may be located, or cause a cancellation of any insurance policy covering said Building or any part thereof. If any act or use of Premises on the part of Lessee shall cause, directly or indirectly, any increase of Lessor’s insurance premiums said additional premiums shall be paid by Lessee to Lessor upon demand. No such payment by Lessee shall limit Lessor in the exercise of any other rights or remedies, or constitute a waiver of Lessor’s right to require Lessee to discontinue such act or use.

No use shall be made or permitted to be made of the Premises or any part thereof, and no act done therein, which may unreasonably disturb the quiet enjoyment of any other tenant in the Project or the Building of which the Premises are a part. Lessee, at Lessee’s sole cost and expense, agrees to do all things necessary to:

maintain the Premises in a clean, neat, sanitary and safe manner;

to repair and maintain the interior of the Premises forming all or part of the Building in compliance and conformity with all municipal, state, federal laws and ordinances, and with the requirements of any other governmental board or authority, present or future, in any way relating to the condition, use or occupancy of the Premises throughout the entire term of this Lease and to the perfect exoneration from liability of Lessor,

or if due to Lessee’s specific use of the Premises any governmental authority requires alterations, Lessee shall make such alterations at its sole cost and expense.

The judgment of any court or the admission of Lessee in any action or proceeding against Lessee, whether Lessor be a party thereto or not, that Lessee has violated any such law, ordinance, requirement or order in the use of the Premises, shall be conclusive of that fact between Lessor and Lessee.

Lessee shall keep at the Premises, and maintain in good working condition, a sufficient number of fire extinguishers as determined by the Novato Fire Department or other agency of authority in this regard.

Lessee shall not, without prior written consent from Lessor, use any common area of the Project or Building(s) for any purpose not specifically granted in this Lease and Attachments (if any).

ACCEPTANCE OF PREMISES BY LESSEE:

Lessor shall deliver the Premises in “broom-clean” good condition and repair upon the Commencement Date, including, without limitation, building systems (HVAC, fire life safety, mechanical, electrical, plumbing, elevators) and structural elements (roof, foundation, load bearing and exterior walls) and in compliance with applicable laws and governmental regulations (including without limitation, the Americans with Disabilities Act of 1990). Lessee has examined the Premises as of the date of this Lease and acknowledges and covenants to Lessor that same is in the condition represented by Lessor and fit and suitable for the use and purpose demised. Lessee hereby accepts the Premises “AS IS”, subject to the terms of this Lease.

RENT:

Starting with the commencement date of this Lease, Lessee shall pay to Lessor the Base Monthly Rent as indicated in the Basic Lease Information. The Base Monthly Rent shall be paid on the first (1^st) day of each month during the term thereof without notice, demand or any offset, and shall be paid in lawful money of the United States. Lessee shall pay to Lessor one month’s Base Monthly Rent upon execution of this Lease, which shall be applied to the first (1^st) month rent due hereunder.

If the commencement date does not fall on the first (1^st) of the month, or if Lessee with Lessor’s consent occupies the Premises prior to the commencement date, Lessee shall pay to Lessor rent for the first month of the term, prorated at 1/30^th of the Basic Monthly Rent thereof per day. In this case, Lessee’s anniversary date shall be considered to be the first (1^st) day of the month immediately following occupancy.

The Basic Monthly Rent hereunder shall be increased during the term of the Lease as hereinafter provided, but in no event shall any adjustment to rent result in a reduction below the initial Basic Monthly Rent or any subsequently determined rent, whichever is higher.

Rent shall be payable to Lessor at the address listed on the Basic Lease Information or to such other person(s) or at such other place(s) as Lessor may designate in writing.

COST OF LIVING ADJUSTMENT:

On each and every anniversary following the commencement of this Lease, the Basic Monthly Rent shall be adjusted for the ensuing twelve (12) months by the proportion that the Consumer Price Index All Items, All Urban Consumers in the San Francisco Bay Area, of the U.S. Department of Labor, Bureau of Labor Statistics, then most recently published, bears to the Consumer Price Index All Items, All Urban Consumers in the San Francisco Bay Area most recently published prior to the previous anniversary.

Should the U.S. Department of Labor discontinue its computation and publication of said Consumer Price Index or the publication thereof should be delayed so as to prevent its use hereunder at the times required, there shall be substituted therefor by Lessor such other index or method of ascertaining changes in the price levels as, in the opinion of the Lessor, most closely resembles the Consumer Price Index and method of arriving at the index figure by said Bureau.

The annual increase shall be not less than 3% nor more than 6%.

OPERATING EXPENSES:

Lessee shall pay to Lessor in addition to the Basic Monthly Rent during the term hereof, Lessee’s share of all Operating Expenses, as hereinafter defined, during each month of the term of this Lease. “Lessee’s share” is defined, for the purposes of this Lease, as the percentage determined by division of Lessee’s Premises square footage divided by the rentable square footage of the Project. As of the Commencement Date, “Lessee’s Share” is 100%. As improvements, additions and deletions may affect the Project square footage, and/or Lessee may add space, this percentage may change from time to time. “Operating Expenses” is defined, for the purposes of this Lease, as all costs incurred by Lessor, including, but not limited to:

the operation, repair and maintenance in neat, clean, good order and condition, of the common areas, including, but not limited to parking areas, loading and unloading areas, trash enclosures, roadways, sidewalks, parkways, driveways, landscaped areas, striping, irrigation systems, common area lighting, fences and gates;

Fire detection systems, including sprinkler maintenance, monitoring and repair;

Project management fees;

The cost of premiums for liability, property and business income insurance policies elsewhere described in this Lease to be responsibility of Lessor and any deductible portion of an insured loss covered by said policies;

Utility services to the Common Areas;

Capital expenditures such as roofing, HVAC replacement, and parking lot resurfacing, etc. pro-rated over their useful life as reasonably determined by Lessor utilizing generally accepted accounting principles and procedures (“GAAP”);

The prorata portion of a maintenance contract for the HVAC,

All costs relating to Lessor’s employees for the Project;

Other costs connected with the operation and maintenance of the Project.

The inclusion of the improvements, facilities and services set forth above shall not be deemed to impose an obligation upon Lessor to either have or provide said improvements, facilities or services unless the Project already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or some of them.

Lessor shall maintain the Common Areas and other areas of the Project for which Lessor is responsible in good condition and repair as determined by Lessor in Lessor’s good faith and reasonable determination. The manner and method of operation, maintenance, upkeep and repair thereof, however, shall be at the sole and absolute discretion of Lessor, and all costs incurred in connection therewith by Lessor in good faith shall conclusively and finally bind Lessee.

Lessee’s share of Operating Expenses shall be payable by Lessee within five (5) days after a statement of expenses is presented to Lessee by Lessor. At Lessor’s option, however, an amount may be estimated by Lessor from time to time of Lessee’s share of Operating Expenses, which estimate shall be due within five (5) days after such estimate is presented to Lessee by Lessor. Lessor shall prepare and present to Lessee an actual statement of expenses as soon as is practical after such estimate has been presented, and shall credit Lessee any over-charge or bill any short-charge as may be actually due. Lessee shall have the right to request, in writing, copies of bills, invoices, and statements supporting any Operating Expenses billed, but not provided to Lessee with such bill, and Lessor shall provide such documentation not previously provided within thirty (30) days of receipt of such request which shall indicate Lessee’s share of each such bill, invoice or statement.

The following items shall be excluded from Operating Expenses:

depreciation or payments of principal and interest on any mortgages upon the Buildings or Project,

payments of ground rent pursuant to any ground lease covering the Project,

the cost of utilities or services paid for directly by Lessee,

any cost expressly excluded from Operating Expenses in an express provision contained in this Lease,

costs resulting from Lessor’s violation of this Lease,

any of Lessor’s general overhead, and administrative costs, which are not directly related to the operation of the Premises or the Project,

costs resulting from any gross negligence or willful misconduct of Lessor or its employees or parties for which Lessor is responsible,

any costs for which Lessor is reimbursed by any lessee or occupant of the Project or by insurance carried by Lessor, Lessee or any other party, or covered by any warranty to the extent such amounts are actually received by Lessor,

the cost of services separately charged to and paid by any other lessee of the Project.

Charitable or political contributions.

costs incurred in developing, expanding, constructing, demolishing or reconstructing any tenant space or buildings in the Project other than the Premises, including, without limitation, architectural fees, engineering fees, space planning fees, construction costs, and attorney and other professional fees.

10.

UTILITIES:

Lessee shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered with other premises. Lessor’s reasonable determination thereof, in good faith, utilizing GAAP, shall be conclusive and shall be delivered to Lessee in writing. Such written statement from Lessor shall include copies of the jointly metered utilities and shall indicate the percentage charged to Lessee. Such amount shall be payable by Lessee within five (5) days of presentation of such statement.

Lessor shall have exclusive right of selection of power provider to the Premises. However, Lessee may select one or more alternative power providers to the Premises interior provided that:

Such alternative power provider(s) are authorized to provide such service within the Sate of California,

Such alternative power provider(s) require NO changes to the equipment which bring power to the Buildings,

Lessee shall notify Lessor, in writing and in advance, of the alternative power provider(s) selected and shall provide Lessor with contact information for the selected provider(s).

To the best of Lessor’s knowledge at the time this Lease is executed, only the landscape irrigation water and power and exterior lighting power are not separately metered.

11.

INSURANCE:

Liability Insurance: Lessee shall, at Lessee’s expense, obtain and keep in force throughout the term of this Lease, beginning upon Lessee taking possession of the Premises or the Commencement Date, whichever occurs first, and for a period of not less than two years following the expiration of this Lease, a policy or policies of General Liability Insurance insuring Lessor and Lessee against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall provide bodily injury, property damage, personal injury, advertising injury, contractual liability and products-completed operations coverage and shall have combined single limits in an amount not less than $2,000,000 per occurrence or offense. The policy or policies shall provide fire legal liability coverage with limits of at least $1,000,000. The policy or policies shall also insure the risks assumed by Lessee of the indemnity provisions of Paragraph 15 of this Lease. The limits of said insurance shall not, however, limit or decrease the liability of Lessee hereunder.

Additional Insured/Primary Insurance: Lessee will insure that the policy or policies required by subparagraph 11a. name Lessor as an additional insured and further provide that such insurance shall be primary to, and non-contributory with, any and all insurance maintained by Lessor. Lessee shall provide Lessor with an endorsement to the policy or policies required by subparagraph 11a. substantially identical to Exhibit “D” to this Lease.

Property Insurance: Lessee shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to its fixtures, equipment, tenant improvements, inventory and other contents stored in the Premises, whether the property of Lessee or anyone else, in the amount of the full replacement value thereof, as the same may exist from time to time. Such policy or policies shall contain a waiver of subrogation provision specifying that the insurer(s) waives any right of recovery against Lessor to recover any payments made under the policy or policies.

Insurance Policies: Insurance required hereunder shall be in companies holding a “General Policyholders Rating” of at least “A”, or such other rating as may be required by a lender having a lien on the Premises, as set forth in the most current issue of “Best’s Insurance Guide”. The insuring party shall deliver to the other party copies of policies of such insurance or certificates evidencing the existence and amounts of such insurance with loss payable clauses as required by this Paragraph. No such policy shall be cancelable or subject to reduction of coverage or other modification except after thirty (30) days prior written notice to Lessor. If Lessee is the insuring party, Lessee shall, at least thirty (30) days prior to the expiration of such policies, furnish Lessor with renewals or binders thereof, or Lessor may, at Lessor’s sole option and discretion, order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee immediately upon demand.

Waiver of Claims and Right of Subrogation: Lessor shall not be liable to Lessee, nor shall Lessor be liable to any person claiming under Lessee by lease, license, assignment or subrogation by operation of law or contract, or upon the Premises with the express, implied or constructive consent of Lessee, or for any loss of, or damage to or the destruction of the Premises, or some part or parts thereof, or any goods, furniture, fixtures or equipment thereon, for the interruption of any business, or for any injury to the person (including wrongful death)

or property of the Lessee or to any such persons claiming under Lessee, resulting from any cause whatsoever, including without limitation the sole negligence of Lessor, any broken pipe, water seepage, blocked drain, defective wiring, interruption in power, malfunction of any air conditioning, plumbing system, sewer, storm drain or the like.

Fire and Extended Coverage Insurance: At all times from and after the date of commencement of this Lease, Lessor shall keep the Building of which the Premises are a part, but not the contents of the Premises or any property of Lessee or others, insured for the mutual benefit of Lessor and Lessee against (i) loss or damage by fire and such other risks as may be included in a standard form of Extended Coverage Insurance from time to time available, in amounts sufficient to prevent Lessor or Lessee from becoming a co-insurer within the terms of the applicable policies and, in any event, in an amount not less than one hundred percent (100%) of the then full replacement value of the Building, together with an addendum thereto providing for six (6) months rental income coverage payable to Lessor, (ii) loss or damage from leakage of sprinkler systems now or hereafter installed in the Building by Lessor in such amount as Lessor shall reasonably establish, and (iii) loss or damage resulting from explosion of steam boiler, air conditioning equipment, pressure vessels or similar apparatus, now or hereinafter installed in or on the Building by Lessor, in such amount as Lessor shall reasonably establish.

Notice by Lessee: Lessee agrees to give prompt written notice to Lessor with respect to all events occurring upon the Premises which may be the subject of claims on insurance policies, whether policies are being maintained by Lessor or Lessee.

12.

TAXES:

Definition of “Real Property Tax”: As used herein the term “real property tax” shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license, fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed on the Premises by any authority having the direct or indirect power to tax including any city, state or federal government or any school, agricultural, sanitary, fire, street, drainage, lighting or other improvement district thereof, as against any legal or equitable interest of Lessor in the Premises or in the real property of which the Premises are a part, as against Lessor’s right to rent or other income therefrom, and as against Lessor’s business of leasing the Premises. The term “real property tax” shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of “real property tax”, or (ii) the nature of which was hereinabove included within the definition of “real property tax”, or (iii) which is imposed for a service or right not charged prior to June 1, 1978, or, if previously charged, has been increased since June 1, 1978, or (iv) which is imposed as a result of transfer, either partial or total, of Lessor’s interest in the Premises or which is added to a tax or charge hereinabove included within the definition of “real property tax” by reason of such transfer, or (v) which is imposed by reason of this transaction, any modification or changes hereto, or any transfers thereof.

There shall be excluded from real property taxes all income taxes, capital stock, inheritance, estate, gift, or any other taxes imposed upon or measured by Lessor’s gross income or profits unless the same is specifically included within the definition of real property taxes above or otherwise shall be imposed in lieu of real estate taxes or other ad valorem taxes. For example, assessment district fees would be included in real property taxes as items imposed in leiu of real estate taxes.

Joint Assessment: If the Premises are not separately assessed, Lessee’s liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from such information as may be reasonably available. Lessor’s determination thereof, in good faith, shall be conclusive. Lessee shall pay such proportion to Lessor within five (5) days of receipt of Lessor’s written notice thereof.

Personal Property Taxes: Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Lessee contained in the Premises or elsewhere as it may affect the Project. When possible, Lessee shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of the Lessor. If any of Lessee’s personal property shall be assessed with Lessor’s real property, Lessee shall pay the taxes attributable to Lessee within five (5) days of receipt of written notice thereof from Lessor or taxing entity.

13.

REPAIRS:

Repairs by Lessee: Lessee agrees at its sole cost and expense to maintain, repair and keep the interior of the Premises forming a part of the Building, and all appurtenances (including without limitation wiring, plumbing, sewage system, heating and air cooling installation, all glazing and doors in or bordering the Premises and any store front) in good condition and repair during the term of this Lease, excepting only the foundations and structural portions of the Premises, damage thereto by fire, earthquake, civil insurrection and act of God or the elements. Upon request from Lessor, Lessee shall provide Lessor with evidence satisfactory to Lessor of Lessee’s maintenance contracts and invoices of repair. In the event Lessee fails to make the repairs required of Lessee within thirty (30) days from delivery of Lessor’s notice to Lessee to make such repairs (provided, however, that in the event the repairs reasonably require more than thirty (30) days to accomplish, Lessee shall not be in default, and Lessor shall not avail itself of any of Lessor’s remedies relating to the required repairs, if within such thirty (30) day period, Lessee commences such repairs and thereafter diligently prosecutes the same to completion, and provides Lessor with satisfactory proof thereof), Lessor, in addition

to all other remedies available hereunder or by law, and without waiving any said alternative remedies, may make same and Lessee agrees to repay Lessor the cost thereof, plus ten percent (10%) of costs for Lessor’s administration expenses, within five (5) days of delivery of Lessor’s demand thereof. Failure by Lessee to pay same shall carry with it the same consequences as failure to pay any installment of rent. Lessee agrees during the full term of this Lease, at its sole cost and expense, to make all repairs and replacements of whatever kind or nature, to either the interior or exterior of the Premises, rendered necessary by reason of any act or omission of Lessee or its agents, servants or employees. Lessee waives all rights to make repairs at the expense of Lessor as provided for in any statute or law in effect at the time of the execution of this Lease or any amendment thereof or any other statute or law which may be hereafter enacted during the term of this Lease, or sooner termination hereof, and to surrender unto Lessor the Premises in the same condition as received, ordinary wear and tear and damage by fire, earthquake, civil insurrection, act of God or the elements alone excepted.

Repairs by Lessor: Lessor agrees, after receipt of written notice of the necessity therefor, and should same not be caused by Lessee or by reason of Lessee’s occupancy or improvements, alterations, changes or modifications to the Premises (responsibility for such repairs to be that of Lessee), to initiate necessary repairs to the fire sprinkler system, foundations and other structural portions of the Premises forming a part of the Building, the common areas, the roof, exterior walls, parking areas, landscaping, wiring to the Building, plumbing and sewage system exterior to the Premises, within thirty (30) days or as soon as is reasonably practical.

14.

ALTERATIONS; LIENS; PERMITS:

Except with respect to the Initial Interior Improvements and Initial Exterior Improvements as set forth in Paragraphs 49 and 50, the construction of which shall be pursuant to the provisions of Paragraphs 49 and 50 (and not pursuant to this Paragraph 14), Lessee agrees not to make any structural alterations of, changes in or additions to the Premises. Lessee agrees not to make any non-structural alterations of, changes in or additions to the Premises without the prior written consent of Lessor. Lessee shall be required to submit plans, specifications and a budget, as well as the name, address and license number of the general contractor performing the work, along with the application for Lessor’s consent. Notwithstanding the foregoing, Lessee agrees and acknowledges that (a) Lessor’s approval does not mean that such work is required under the Lease or has been requested by Lessor, and (b) such work will not materially enhance the value of Lessor’s property. Lessee shall provide Lessor with an estoppel statement, in a form approved by Lessor, from each of their contractors and/or sub-contractors, etc. stating that each of them agrees that Lessor has validly posted a Notice of Non-responsibility, that Lessor is NOT a participating owner (i.e., Lessee is not an agent of Lessor in performing any alterations, changes, additions or improvements. Such work is not a requirement of the Lease and does not materially enhance the value of Lessor’s property.) and that all lien rights against Lessor/owner are waived and released. Lessee’s failure to provide such estoppels shall constitute reasonable cause for Lessor to withhold approval of the contractor and/or sub-contractors, and NO work may commence unless/until Lessor approves. Lessee agrees that all non-structural alterations, changes, additions and improvements, including fixtures, made in, to or on the Premises, except unattached movable business fixtures, shall be removed by Lessee at Lessee’s sole cost on or before the termination of the Lease, and the Premises restored to substantially the same condition as existed prior to the Lease. If requested by Lessee in writing at the time of any request for Lessor’s approval of Lessee’s proposed work in and to the Premises, Lessor may agree in its sole discretion (and only in writing) to allow such alterations, changes, additions or improvements to be surrendered to Lessor at the termination of this Lease, but only subject to Lessee’s written agreement that such items have been surrendered to Lessor so that Lessee may avoid the expense of removing the same, and that such additions, changes, alterations or improvements do not materially enhance the value of Lessor’s property. Lessee agrees that if any such alterations, changes, additions or improvements are approved by Lessor, Lessee shall take all steps necessary to assure the completion of same in a good and workmanlike manner and in compliance with applicable code, and shall, at Lessee’s sole cost and expense, secure any permits or licenses which may be required by government agency. Lessee further agrees to pay for any and all taxes levied upon such alterations, changes, additions or improvements, where such taxes are levied by a duly authorized government entity.

Lessee agrees that no such alterations, changes, additions or improvements will commence until seven (7) days after Lessee’s receipt of written consent of Lessor as required by this Paragraph in order that Lessor may post appropriate notices to avoid liability on account thereof. Lessee shall also give Lessor written notice of the actual start of construction of each component of the work (i.e., each separate trade or subcontractor’s work) within 48 hours after such construction commences to permit Lessor to post Notices of Non-responsibility. Lessee agrees to indemnify and save harmless Lessor from all liens, claims or demands arising out of any work performed, materials furnished or obligations incurred by or for Lessee upon the Premises during the entire term of this Lease, and agrees not to suffer any such lien or other lien to be created.

Notwithstanding anything contained herein to the contrary, Lessee shall have the right to make non-structural alterations, changes or additions to the Premises for which a building or other permit is not required without Lessor’s written approval, and without submitting plans, specifications and budget in connection therewith. Lessee shall, however, timely provide Lessor with sufficient information in writing that Lessor shall be able to prepare and post notices of non-responsibility in connection therewith, and Lessee shall otherwise follow the other requirements of this Paragraph 14 in connection with such alterations, changes or additions. Lessee shall, if requested, provide Lessor with updated plans or specifications on completion of any such work.

15.

RELATIONSHIP OF THE PARTIES:

Neither Lessor nor Lessee intends that any relationship exists between them other than that of Lessor and Lessee under this Lease. No relationship as partners, co-venturers or principal and agent is formed other than as specifically set forth in the Lease. Specifically, and with regard to tenant improvements performed by Lessee’s contractors and/or sub-contractors, Lessor is not a participating owner and claims no ownership interest in such tenant improvements (i.e. Lessee is not an agent of Lessor in performing any alterations or improvements. Such work is not a condition of the Lease and does not materially enhance the value of Lessor’s property).

16.

HOLD HARMLESS:

This Lease is made upon the express condition that Lessee agrees to indemnify, keep save and hold Lessor free and harmless from all liability, penalties, losses, damages, costs, expenses, causes of action, claims and/or judgments arising by reason of any injury or damage to any person or persons, including without limitation, Lessee, its invitees, servants, agents and employees, or property of any kind whatsoever and to whomsoever belonging, including, without limitation, Lessee, its invitees, servants’, agents’ and employees’, from any cause or causes whatsoever, excepting the gross negligence or willful misconduct of Lessor, while in, upon, or in any way connected with said demised Premises or the Building or Project of which the Premises are a part, or its appurtenances, or the sidewalks adjacent thereto, during the term of this Lease or any occupancy hereunder, Lessee hereby covenants and agrees to defend, indemnify, protect and save Lessor harmless from all liability, loss, costs and obligations on account of or arising out of any such claims, injuries or losses, however occurring, excepting those that are a result of Lessor’s gross negligence or willful misconduct. In the event of any breach by Lessee of any of the requirements of Paragraph 11 Insurance, then Lessee’s indemnity obligations shall be extended to include any benefits to which Lessor would have been entitled under the policy or policies described in Paragraph 11 Insurance, and Lessee shall be obligated to provide Lessor with all of the benefits that would have been furnished under such policy or policies, and Lessee shall assume all of the obligations of an insurer under such policy or policies in addition to any other remedy available to Lessor, either provided in this Lease or by law. Lessee, as a material part of the consideration to be rendered to Lessor, hereby waives all claims against Lessor for damages to goods, wares and merchandise in, upon or about the Premises and for injuries to Lessee, his agents or third persons in or about the Premises from any cause arising at any time including, without limiting the generality of the foregoing, damages arising from the sole negligence of Lessor, from acts or omissions of other tenants of the Building or Project of which the Premises are a part and from failure of Lessor to make repairs.

Lessor shall indemnify, protect, defend and hold Lessee (and Lessee’s invitees, servants, agents, employees and contractors) harmless from and against any and all claims, demands, actions, obligations, losses, liabilities, damages, costs, and expenses incurred by or asserted against Lessee in connection with any claim, action, or demand for bodily injury or death or property damage arising out of any gross negligence or willful misconduct of Lessor or any of Lessor’s employees or officers occurring on or about the Common Areas, the Buildings or the Project; provided, however, that the foregoing shall not apply to the extent of any gross negligence or willful misconduct of Lessee (or Lessee’s invitees, servants, agents, employees or contractors). Lessor’s obligations and Lessee’s obligations under this Paragraph 16 shall survive the expiration or earlier termination of this Lease.

17.

ENTRY AND INSPECTION:

Lessee agrees that Lessor and his agents may enter upon the Premises to inspect same, to submit them to a prospective purchaser, lender or lessee or to make any changes, alterations or repairs which Lessor shall consider necessary for the protection, improvement or preservation thereof, or of the Building in which the Premises are situated, or to make changes in the plumbing, wiring, meters or other equipment, fixtures or appurtenances of the Building, or to post any notice provided for by law, or otherwise to protect any and all rights of Lessor. Lessor shall provide Lessee reasonable notice of intent to enter, except in case of emergency. Lessor shall have the right to erect and maintain all necessary or proper scaffolding or other structures for the making of such changes, alterations or repairs (provided the entrance to the Premises shall not be blocked thereby and that such work shall be completed with diligence and dispatch) and there shall be no liability against Lessor for damages thereby sustained by Lessee, nor shall Lessee be entitled to any abatement of rent by reason of the exercise by Lessor of any such rights herein reserved. Nothing herein contained shall be construed to obligate Lessor to make any changes, alterations or repairs. Notwithstanding anything contained in this Paragraph 17 to the contrary, Lessor shall coordinate the work which Lessor undertakes in the Premises with Lessee, and use reasonable efforts to minimize interference with Lessee’s use of the Premises or the conduct of Lessee’s business, except in case of emergency. Lessee further agrees that at any time after nine (9) months prior to the termination of this Lease, Lessor may place thereon “To Let” or “To Lease” signs.

18.

EASEMENTS:

Lessor reserves to itself the right, from time to time, to grant such easements, rights and dedications that Lessor deems necessary or desirable and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee shall sign any of the aforementioned documents upon request of Lessor and failure to do so in a timely manner shall constitute a material breach of this Lease.

Notwithstanding anything contained herein to the contrary, Lessee shall have no obligation to execute any such documents if the effect of such documents would materially and adversely effect Lessee’s use or quiet enjoyment of the Premises pursuant to the terms of the Lease. In such event, Lessee shall notify Lessor in writing and within a reasonable time of such material and adverse effects and the parties shall cooperate with each other in good faith to attempt to achieve a mutually satisfactory resolution.

19.

ESTOPPELS:

Lessee agrees, at any time and from time to time within seven (7) days of written request from Lessor to execute, acknowledge and deliver to Lessor a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified, and stating the modifications) and the dates to which rent and other charges have been paid in advance, if any, and any other matters reasonably requested by Lessor, it being intended that any such statement delivered pursuant to this Paragraph may be relied upon by any present or perspective purchasers, mortgagee or assignee(s) of any mortgagee of the Premises. Failure of Lessee to comply with any and all provisions of this Paragraph shall constitute a breach of the Lease.

Lessor agrees, at reasonable times and intervals, but not more than twice per year, within fourteen (14) business days of receipt of written request from Lessee to execute, acknowledge and send to Lessee a statement in writing certifying that this Lease is unmodified and in full force and effect (or, if there have been modifications, that the same is in full force and effect as modified, and stating the modifications) and the dates to which rent and other charges have been paid in advance, if any, it being intended that any such statement delivered pursuant to this Paragraph may be relied upon by the party requesting such estoppel. Notwithstanding the foregoing, such estoppel shall not contain any subordination terms or conditions obligating Lessor to subordinate any interest of Lessor in the Project, the Premises or the Lease.

20.

MULTIPLE TENANT BUILDING:

In the event that the Premises are a part of a larger building or group of buildings, Lessee agrees that it will abide by, keep and observe all reasonable rules and regulations which Lessor may make from time to time, including but not limited to the management, safety, operation, care and cleanliness of the Building and grounds, the parking of the vehicles and the preservation of good order therein as well as for the convenience of other occupants and tenants of the Project. Violation of any such rules and regulations shall be deemed a breach of this Lease by Lessee.

21.

SIGNS:

Lessee agrees not to inscribe, paint or affix any signs, advertisements, placards or awnings on the exterior or roof of the Premises or upon the entrance doors, windows, monuments, or the sidewalk on or adjacent to the Premises without the written consent of Lessor first obtained. Any signs so placed on the Premises shall be so placed upon the understanding and agreement that Lessee will remove same at the termination of tenancy herein created and repair any damage or injury to the Premises caused thereby, and if not so removed by Lessee, then Lessor may have same so removed at Lessee’s expense. Lessee shall not be allowed to use the name of the Project, or words to such effect in connection with any business carried on in the Premises (except as the address of the Lessee) without the written consent of Lessor. Lessor reserves the right to change the name and title of the Project and Building at any time during the term of said Lease. Lessee hereby expressly agrees to such change at the option of Lessor and waives any and all damage occasioned thereby.

22.

ABANDONMENT:

If Lessee should abandon or surrender Premises or be dispossessed by process of law, in addition to all other remedies of Lessor, Lessor, at its option, may deem that any personal property belonging to Lessee left on the Premises is abandoned and/or Lessor may at once enter upon the Premises and remove therefrom any and all equipment, fixtures and merchandise therein and may sell same at public or private sale at such price and upon such terms as Lessor may determine, without notice to or demand upon Lessee. Out of the proceeds of such sale Lessor may reimburse itself for the expense of such taking, removal and sale and for any indebtedness of Lessee to Lessor and the surplus, if any, shall be accounted for to Lessee at Lessee’s last known address.

23.

DESTRUCTION; RENEWAL:

In the event of damage or destruction to the Premises during the term hereof which Lessor is obligated to repair by the terms of this Lease, Lessor shall forthwith repair the same, provided such repairs can be made within ninety (90) days under the laws and regulations of State, Federal, County or Municipal authorities, but such destruction shall in nowise annul or void this Lease, except that Lessee shall be entitled to a proportionate reduction of rent to be based upon the extent to which the making of such repairs shall interfere with the business carried on by Lessee in the Premises. If such repairs cannot be made within ninety (90) days, Lessor may, at its option, make same within a reasonable time, in which event this Lease shall continue in full force and effect and the monthly rent shall be proportionately reduced as aforesaid in this Paragraph provided. In the event that Lessor does not so elect to make such repairs which cannot be made within one hundred eighty (180) days, this Lease may be terminated at the option of either party. In the event that the Building of which the Premises are a part is damaged or destroyed to the extent of one-third (33.33%) or more of the replacement cost thereof, Lessor may elect to terminate this Lease, whether the Premises be injured or not, provided, however, if Lessee so requests (except if the Lease is in the final twelve (12) months of its initial term) (I) if there are adequate insurance proceeds available to restore the Premises, then Lessor shall restore the Premises, and (ii) if there are insufficient insurance proceeds available to restore the Premises, but Lessee agrees to, and does, provide funds required in addition to the insufficient insurance proceeds to restore the Premises, then Lessor shall restore the Premises, or allow Lessee to restore the Premises at no cost to Lessor; provided further that Lessor shall assign or deliver the insurance proceeds to Lessee if Lessee is restoring the Premises and the insurance proceeds are payable to Lessor (but not to Lessee) under the applicable insurance policy or policies. If more than one-third (33.33%) of the Premises are damaged or destroyed, and repairs cannot be made within one hundred-eighty

(180) days, Lessee may, at its option, elect to terminate this Lease and shall notify Lessor of such election in writing.

Notwithstanding anything herein to the contrary, if, at any time during the term hereof, any governmental agency having jurisdiction over the Premises of Building(s) of which the Premises are a part, shall require the making of any repairs, improvements or alterations to said Building(s) or Premises, and Lessor determines to demolish said Building(s) or Premises rather than to make said repairs, improvements or alterations, or allow same to be made, Lessor, upon written notice to Lessee as soon as is practical, shall have the right to terminate this Lease. Upon the date specified in such notice, this Lease shall terminate and Lessor shall have no further liability to Lessee except that Lessor shall refund to Lessee any unearned rents and shall return the balance of security deposit after such offsets as may be provided in this Lease. In the event Lessor had heretofore given written consent to any leasehold improvements upon the Premises made and paid for by Lessee, and had agreed, in writing, as to the cost thereof, Lessor shall pay to Lessee upon such termination the unamortized portion of such cost as the number of full calendar months remaining in the original term of this Lease bears to the total number of calendar months is said original term.

24.

CONDEMNATION:

If any part of the Premises or of the Building of which same are a part (even if no part of the Premises be taken) be condemned for a public or quasi-public use by right of eminent domain, with or without litigation, or transferred by agreement in connection with such public or quasi-public use, this Lease, as to the part so taken, shall terminate as of the date title shall vest in the condemnor, and the rent payable hereunder shall be adjusted so that the Lessee shall be required to pay for the remainder of the term only such portion of rent as the value of the part remaining after condemnation bears to the value of the entire Premises at the date of condemnation. In such event Lessor shall have the option to terminate this Lease as of the date when title to the part so condemned vests in the condemnor. If more than one-third (33.33%) of the Premises is taken, Lessee at Lessee’s option to be exercised in writing within ten (10) days after Lessor shall have given written notice to Lessee of such taking (or in absence of such notice, within ten (10) days after the condemning authority shall have taken possession or title), terminate this Lease as of the date the condemning authority takes such possession or title.

All compensation awarded upon such condemnation or taking shall belong and be paid to Lessor and Lessee shall have no claim thereto, and Lessee hereby irrevocably assigns and transfers to Lessor any right to compensation or damages to which Lessee may become entitled during the term hereof by reason of the condemnation of all or part of the Premises.

Notwithstanding anything contained herein to the contrary, if any award includes amounts specifically allocated to Lessee’s personal property, fixtures or equipment, then Lessee shall be entitled to that portion of such award, less costs and fees reasonably incurred by Lessor in recovering such amounts (if Lessor is not otherwise compensated for such costs and fees as part of the award). Further, nothing contained herein shall prohibit Lessee from instituting its own claim for compensation against the governmental agency in the event of condemnation, in the event Lessor does not claim compensation on account of Lessee’s property.

25.

SALE OF PREMISES:

In the event of a sale or conveyance by Lessor of the Premises, the same shall operate to release Lessor from any future liability upon any of the covenants or conditions, express or implied, herein contained in favor of Lessee, and in such event Lessee agrees to look solely to the responsibility of the successor in interest of Lessor. If any security be given by Lessee to secure faithful performance of Lessee’s covenants in this Lease or any rent shall have been prepaid, Lessor may transfer same as such to the purchaser of the reversion thereon and thereupon Lessor shall be discharged from any further liability in reference thereto.

In the event of such sale, if Lessor does not transfer such security or prepaid rent remaining from that paid or provided by Lessee after deduction of amounts owing to Lessor by Lessee as provided in this Lease, if any, then Lessee shall not be liable to the successor in interest for replacement of such remaining security or rent not transferred, and Lessee may exercise its legal and equitable remedies in connection therewith if the same is not returned to Lessee at the termination or expiration of this Lease as and to the extent required by this Lease.

26.

COSTS OF SUIT:

Lessee agrees that if Lessor is involuntarily made a party defendant to any litigation concerning this Lease or the Premises by reason of any act or omission of Lessee and not because of any act or omission of Lessor, then Lessee shall hold Lessor harmless from all liability by reason thereof, including reasonable attorney’s fees incurred by Lessor in such litigation and all court costs. If legal action be brought by either party hereto for the unlawful detainer of the Premises, for the recovery of any rent due under the provisions of this Lease, or due to any breach of any term, covenant, condition or provision thereof, the party prevailing in said action (Lessor or Lessee as the case may be) shall be entitled to recover from the party not prevailing court costs and a reasonable attorney’s fee which shall be fixed by the Judge of the Court. The entry of a dismissal without prejudice shall not create a prevailing party.

Lessor agrees that if Lessee is involuntarily made a party defendant to any litigation concerning this Lease or the Premises by reason of an act or omission that is solely attributable to Lessor or parties for which Lessor is responsible, and not because of any act or omission of Lessee or any third party for which Lessor is not responsible, then Lessor shall hold Lessee harmless from all liability by reason thereof, including reasonable attorney’s fees incurred by Lessee in such litigation and all court costs.

27.

SECURITY MEASURES:

Lessee hereby acknowledges that the rent payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor has no obligation whatsoever to provide it. Lessee assumes all responsibility for the protection of Lessee, its agents and invitees, the Premises and any property on the Premises from acts of third parties.

28.

PERFORMANCE UNDER PROTEST:

If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.

29.

ASSIGNMENT AND SUBLETTING:

Lessor’s Consent Required: Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet or otherwise transfer or encumber all or any part of Lessee’s interest in this Lease or in the Premises without Lessor’s prior written consent. Lessee shall provide Lessor with documentation including, but not limited to the sublease or assignment document, the legal name of the proposed subtenant/assignee, financial statements for the proposed subtenant/assignee, proposed use of the premises, the type of business to be conducted by proposed subtenant/assignee, estimated cost of Tenant Improvements and commissions, if any, and any other documentation required by Lessor to make a reasonable determination. ( For the purposes of this section 28 it shall be deemed reasonable for Lessor to deny a tenant, subtenant or assignee to sublet or assign the Premises at less than the Base Rent payable under this Lease. ) Lessor shall respond to Lessee’s request for consent hereunder in a timely manner. Except as set forth in Subparagraph 29b below, any attempted assignment, transfer, mortgage, encumbrance or subletting without Lessor’s written consent, which shall not be unreasonably withheld, conditioned or delayed, shall be void and shall constitute a breach of this Lease.

Lessee Affiliate: Notwithstanding the provisions of Paragraph 29a above, Lessee may assign this Lease or sublet the Premises, or any portion thereof, to any corporation which controls, is controlled by or is under common control with Lessee, or to any corporation resulting from the merger or consolidation with Lessee, or to any person or entity which acquires all the assets of Lessee as a going concern of the business that is being conducted on the Premises, provided in the case of assignment that said assignee assumes, in full, the obligations of Lessee under this Lease. For the purposes of this section, Lessor’s consent shall not be required. However, Lessee agrees to notify Lessor in writing within five (5) days of such assignment or subletting, which notice shall include the legal name, contact person and contact information, type of business and current financial statements of the Lease Affiliate.

No Release of Lessee: Regardless of Lessor’s consent, no subletting or assignment shall release Lessee of Lessee’s obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of rent by Lessor from any other person or entity shall not be deemed a waiver by Lessor of any provision hereunder. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any assignee of Lessee or any successor of Lessee in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against said assignee or sub-tenant. Lessor may or may not consent to subsequent assignments or subletting of this Lease, or amendments or modifications to this Lease with assignees of Lessee, with or without notifying Lessee, or any successors of Lessee, and without obtaining its or their consent thereto and such action shall not relieve Lessee of liability under this Lease.

Attorney’s Fees: In the event Lessee shall assign or sublet the Premises or request consent of Lessor to any assignment or subletting, or if Lessee shall request the consent of Lessor for any act Lessee proposes to do, then Lessee shall pay Lessor’s attorney’s fees and any other costs incurred in connection therewith.

Lessor’s Right of Recapture: If Lessee desires any assignment or subletting pursuant to this Paragraph 29, other than to a Lessee Affiliate, Lessee shall, in writing, first offer the space to Lessor for recapture under the same terms and rate as Lessee intends to market the space. Lessor shall have fifteen (15) days to accept the space at the terms and rate offered. If Lessor does not accept the space for recapture, then Lessee may market the space. Should Lessee change the terms or rate of the space, it must again be offered to Lessor, in writing, and Lessor shall have fifteen (15) days to accept or decline the recapture. If Lessor accepts the offer, it shall do so by mailing written notice of its acceptance to Lessee within fifteen (15) days after Lessor receives Lessee’s offer. Lessee shall be entitled to withdraw its notice of intent to assign or sublet at any time until Lessor accepts Lessee’s offer. If only a portion of the Premises would be affected by a sublease or assignment, then Lessor shall have the right to reacquire the portion affected. If Lessor elects to reacquire the portion affected under this provision, Lessee shall be required to provide without charge reasonable and appropriate access to the portion affected and reasonable use of any common facilities.

Should Lessor decline the recapture and Lessee is successful in locating an approved sub-lessee as provided in this Lease, at a rate greater than the Lease rate, then Lessee shall pay to Lessor an amount equal to 50% (fifty percent) of the profit, determined after Lessee’s reasonable cost of brokerage commissions and tenant improvements required in connection with such sublease, each month in advance for the duration of the sub-lease term.

30.

CONFLICT:

Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions, where both parties have initialed such provisions.

31.

SUBORDINATION:

This Lease, at Lessor’s option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof. If any mortgagee, trustee or ground lessor shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of trust or ground lease or the date of recording thereof.

Lessee agrees to execute any documents required to effectuate an attornment, a subordination, or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be provided that any such documents contain a non-disturbance provision accepting Lessee’s tenancy under the Lease in the event of execution by the beneficiary(ies) of such documents under their rights under such documents. Lessee’s failure to execute such documents within seven (7) days after written demand shall constitute a default by Lessee hereunder.

Within sixty (60) days from the non-contingent execution of this Lease, Lessor shall use its best efforts to obtain a commercially reasonable non-disturbance agreement (“Non-Disturbance Agreement”) from the holder of any pre-existing loan secured by the Premises.

32.

SURRENDER OF LEASE:

No act or conduct of Lessor, whether consisting of the acceptance of the keys to the Premises, or otherwise, shall be deemed to be or constitute an acceptance of the surrender of the Premises by Lessee prior to the expiration of the term hereof, and such acceptance by Lessor of surrender by Lessee shall only flow from and must be evidenced by a written acknowledgement of acceptance of surrender by Lessor. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, shall not work a merger and shall, at the option of the Lessor, terminate all or any existing subleases, or subtenancies or may, at the option of the Lessor, operate as an assignment to him of any or all such subleases, or subtenancies.

33.

HOLDING OVER:

Should Lessee hold over the term hereby created with written consent of Lessor, Lessee shall become a tenant from month to month at one hundred fifty percent (150%) of the rent payable hereunder for the prior six (6) months, and otherwise upon the covenants and conditions in this Lease contained, and shall continue to be such tenant until thirty (30) days after either party hereto serves upon the other written notice of intent to terminate such monthly tenancy. Should such termination occur on any day other than the last day of the month, any unearned prepaid rent shall be prorated based on a 30 day month and shall be credited to Lessee’s account as additional security deposit, to be disbursed according to the provisions of Paragraph 4.

34.

NOTICES:

It is agreed between the parties hereto that any notice required hereunder or by law to be served upon either of the parties shall be in writing and shall be delivered personally upon the other or sent by first class mail, postage prepaid, commercial delivery service or by facsimile, addressed to the addresses listed in the Basic Lease Information or such other address as may be from time to time furnished in writing by Lessor to Lessee or by Lessee to Lessor, each of the parties waiving personal or any other service than as in this Paragraph provided for. Notice by first class mail shall be deemed to be communicated the second business day from the time of mailing. Notice by any other means shall be effective upon delivery, or refusal of delivery.

35.

DEFAULTS; REMEDIES:

Defaults: The occurrence of any one or more of the following events shall constitute a default and breach of this Lease by Lessee:

The abandonment of the Premises by Lessee or assignee or sublessee as applicable.

The failure of Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due.

The failure by Lessee to observe or perform any conditions, covenants or provisions of this Lease to be observed or performed by Lessee, other than described in (i.) above, where such failure shall continue for a period of seven (7) days after written notice thereof from Lessor to Lessee provided, however, that if the nature of Lessee’s default is such that more than seven (7) days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said seven (7) day period and thereafter diligently prosecutes such cure to completion.

The making by Lessee of any general arrangement or assignment for the benefit of creditors;

The appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within thirty (30) days; or

The attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease where such seizure is not discharged within thirty (30) days. Provided, however, in the event that any provision in this Paragraph is contrary to any applicable law, such provision shall be of no force or effect.

The discovery by Lessor that any financial information given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in interest of Lessee or any guarantor of Lessee’s obligation hereunder, and any of them, was materially false.

Remedies: In the event of any such default or breach by Lessee, Lessor may at any time thereafter, by written notice or demand and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such default or breach:

Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor. In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee’s default including, but not limited to, the cost of recovering possession of the Premises, attorney’s fees, any real estate commission actually paid, the balance remaining of unamortized tenant improvements, if any, the worth at the time of award by the court having jurisdiction thereof of the unpaid rent which had been earned at the time of termination; the worth at the time of award of the amount by which the unpaid rent would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and any other amount necessary to compensate Lessor for all the detriment proximately caused by Lessee’s failure to perform his obligations under the Lease or which in the ordinary course of things would be likely to result therefrom.

Maintain Lessee’s right to possession in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises. In such event Lessor shall be entitled to enforce all of Lessor’s rights and remedies under this Lease, including the right to recover rent as it becomes due hereunder.

Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. Unpaid installments of rent and other monetary obligations of Lessee under the terms of this Lease shall bear interest from the date due at the maximum rate then allowable by law.

Default by Lessor: Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, after written notice by Lessee to Lessor specifying wherein Lessor has failed to perform such obligations provided, however, that if the nature of Lessor’s obligations is such that more than sixty (60) days are required for performance then Lessor shall not be in default if Lessor commences performance within such sixty (60) day period and thereafter diligently pursues the same to completion.

Late Charges: Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and/or other sums due hereunder will cause Lessor to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Lessor by terms of any mortgage or trust deed covering the premises. Accordingly, if any installment of rent or any other sum due from Lessee shall not be received by Lessor (or Lessor’s designee, if applicable) within five (5) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to six percent (6%) of such overdue amount, plus accrued interest at the maximum amount allowable by law. The parties agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) installments of rent or other sum within a twenty-four (24) month period, then rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding Paragraph 8 or any other provision of this Lease to the contrary. After thirty-six (36) months of timely payments thereafter, Lessee may apply to Lessor in writing, and Lessor shall approve of Lessee’s right, to return to monthly payments, in advance, as provided in this Lease.

Impounds: In the event that a late charge is payable hereunder, whether or not collected, for three (3) installments of rent or any other sum due hereunder within a twenty-four (24) month period, Lessee shall pay to Lessor, if Lessor shall so request, in addition to any other payments required under this Lease, a monthly advance installment, due on the first (1^st) day of each month, as estimated by Lessor for the real property tax, insurance and operating expenses on the Premises which are payable by Lessee under the terms of this Lease. Such fund shall be established to insure payment when due, before delinquency, of any or all such taxes, premiums and expenses. If the amounts paid to Lessor by Lessee under the provisions of this Paragraph are insufficient to discharge the obligations of Lessee to pay such taxes, premiums and expenses as the same shall become due, Lessee shall pay to Lessor, upon Lessor’s demand, such additional sums as necessary to pay such obligations. All monies paid to Lessor under this Paragraph may be intermingled with other monies of Lessor and shall not bear interest. In the event of a default in the obligations of Lessee to perform under this Lease, then any balance remaining from the funds paid to Lessor under the provisions of this Paragraph may, at the option of Lessor, be applied to the payment of any monetary default of Lessee in lieu of being applied to the payment of taxes, premiums and/or expenses. After thirty-six (36) timely payments thereafter, Lessee may apply to Lessor in writing, and Lessor shall approve of Lessee’s right, to return to monthly payments as provided in this Lease.

36.

CUMULATIVE REMEDIES; NON-WAIVER:

The receipt by Lessor of any rent or payment with or without knowledge of the breach of any covenant hereof shall not be deemed a waiver of any such breach and no waiver by Lessor of any sum due hereunder or any provision hereof shall be deemed to have been made unless expressed in writing and signed by Lessor. No delay or omission in the exercise of any right or remedy accruing to Lessor upon any breach by Lessee under this Lease shall impair such right or remedy or be construed as a waiver of any such breach theretofore or hereafter occurring. The waiver by Lessor of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition herein contained. All rights, powers, options or remedies afforded to Lessor either hereunder or by law shall be cumulative and not alternative and the exercise of one right, power, option or remedy shall not bar other rights, powers, options or remedies allowed herein or by law.

37.

ADDITIONAL RENT:

Any monetary obligations of Lessee to Lessor under the terms of this Lease shall be deemed to be rent. Any amount due to Lessor, if not paid when due, shall bear interest from the date due until paid at the maximum amount allowable by law. Payment of interest shall not excuse or cure any default hereunder by Lessee.

38.

INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS:

This Lease contains all agreements of the parties hereto with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the Lessor nor any employees or agents of any said persons has made any oral or written warranties or representations relative to the condition or use by Lessee of the Premises and Lessee acknowledges that Lessee assumes all responsibility regarding the Occupational Safety Health Act, the legal use and adaptability of the Premises and the compliance thereof with all applicable laws and regulations in effect during the term of this Lease except as otherwise specifically state in this Lease.

39.

COMPLIANCE WITH APPLICABLE LAWS:

Lessee shall use the Premises in accordance with all applicable laws and government regulations. If any law or government regulation (such as, but not limited to, the Americans With Disabilities Act of 1990) should require renovation or alteration of the Premises, Lessee shall be responsible for such alteration or renovation and shall pay all costs and expenses required to alter or renovate the Premises to conform to any such law or governmental regulation. If any law or governmental regulation (such as, but not limited to, the Americans With Disabilities Act of 1990) should require the renovation or alteration of the Common Area(s), Lessor shall be responsible for such renovation or alteration and shall pay all costs and expenses required to alter or renovate the Common Area(s) to conform to any such law or governmental regulation. All such costs and expenses required to alter or renovate the Common Area(s) to conform to any such law or governmental regulation shall be included in the Operating Expenses as provided in Paragraph 9 of this Lease. Lessee shall indemnify and defend Lessor against any loss suffered or liability incurred by Lessor, and all actions, suits, damages or claims brought against Lessor as a result of Lessee’s failure to use the Premises in accordance with any such law or governmental regulation.

40.

ENVIRONMENTAL MATTERS:

The term “Hazardous Materials” as used herein shall mean any petroleum products, asbestos, polychlorinated biphenyls, P.C.B.’s, chemicals, compounds, materials, mixtures or substances that are now or hereinafter defined, listed in or otherwise classified as a “hazardous substance”, “hazardous material”, “hazardous waste”, “extremely hazardous waste”, “infectious waste”, “toxic substance”, “toxic pollutant”, or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity or toxicity pursuant to any federal, state or local environmental law, regulation, ordinance, resolution, order or decree relating to industrial hygiene, environmental protection or the use, analysis, generation, manufacture, storage, release, disposal or transportation of the same (“Hazardous Materials Laws”).

Lessee shall not use, manufacture, store, release, dispose or transport any Hazardous Materials in, on, under or about the Premises, the Building or the Project without giving prior written notice to Lessor and obtaining Lessor’s prior written consent, which consent Lessor may withhold in its sole discretion. Lessee shall, at its own expense, procure, maintain in effect and comply with all conditions of any and all permits, licenses and other governmental and regulatory approvals required in connection with Lessee’s generation, use, storage, disposal and transportation of Hazardous Materials. Except as discharged into the sanitary sewer in strict accordance and conformity with all applicable Hazardous Materials laws, Lessee shall cause any and all Hazardous Materials to be removed from the Premises and transported solely by duly licensed haulers to duly licensed facilities for final disposal of such materials and wastes. Regardless whether permitted under the Hazardous Materials laws, Lessee shall not maintain in, on, under or about the Premises, the Building or the Project any above or below ground storage tanks, clarifiers or sumps nor shall any wells for the monitoring of ground water, soils or subsoils be allowed. Notwithstanding anything contained in this Subparagraph to the contrary, Lessor and Lessee acknowledge that Lessee will utilize the Hazardous Materials described in Exhibit “F” attached hereto, and Lessor agrees that Lessee may utilize such materials provided that Lessee complies with the provisions of this Paragraph 40 and with the allowed uses stated elsewhere in this Lease.

Lessee shall immediately notify Lessor in writing of any enforcement, cleanup, removal or other governmental or regulatory action instituted, completed or threatened pursuant to any Hazardous Materials law; any claim made or threatened by any person or entity against Lessee or the Premises, Building and/or Project relating to damage, contribution, cost,

recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Materials; any reports, information, inquiries or demands made, ordered or received by or on behalf of Lessee which arise out of or in connection with the existence or potential existence of any Hazardous Materials in, on, under or about the Premises, the Building or the Project, including, without limitation, any complaints, notices, warnings, asserted violations, or mandatory or voluntary informational filings with any governmental agency in connection therewith, and immediately supply Lessor with copies thereof.

Lessee shall indemnify, defend (by counsel reasonably acceptable to Lessor), protect, and hold Lessor, and each of Lessor’s partners, officers, directors, partners, employees, affiliates, joint venturers, members, trustees, owners, shareholders, principals, agents, representatives, attorneys, successors and assigns free and harmless from and against any and all claims, liabilities, damages, fines, penalties, forfeitures, losses, cleanup and remediation costs or expenses (including attorney fees) or death of or injury to any person or damage to any property whatsoever, arising from or caused in whole or in part, directly or indirectly by Lessee’s use, analysis, generation, manufacture, storage, release, disposal or transportation of Hazardous Materials by Lessee, Lessee’s agents, employees, contractors, licensees or invitees to, in, on, under, about or from the Premises, the Building or the Project or Lessee’s failure to comply with any Hazardous Materials law. Lessee’s obligations hereunder shall include, without limitation, and whether foreseeable or unforeseeable, all costs of any required or necessary repair, cleanup, detoxification or decontamination of the Premises, the Building or the Project, and the preparation and implementation of any closure, remedial action or other required plans in connection therewith, and shall survive the expiration or earlier termination of this Lease.

Lessor shall have the right to enter the Premises during regular business hours upon reasonable prior notice at all times for the purposes of ascertaining compliance by Lessee with all applicable Hazardous Materials laws, provided, however, that in the instance of an emergency Lessor’s entry onto the Premises shall not be restricted to regular business hours nor shall notice be required.

Lessor shall have the option to declare a default of this Lease for the release or discharge of Hazardous Materials by Lessee, Lessee’s employees, agents, contractors or invitees on the Premises, Building or Project or in violation of law or in deviation from prescribed procedures in Lessee’s use or storage of Hazardous Materials. If Lessee fails to comply with any of the provisions under this entire Paragraph 39, Lessor shall have the right, but not the obligation, to remove or otherwise cleanup any Hazardous Materials from the Premises, the Building or the Project. In such case, the costs of any Hazardous Materials investigation, removal or other cleanup (including, without limitation, transportation, storage, disposal, attorney fees and costs) will be deemed additional rent due under this Lease, whether or not a court has ordered the cleanup, and will become due and payable on demand by Lessor.

Notwithstanding anything contained in this Paragraph 40 to the contrary, Lessee shall not be responsible for the presence or remediation of any Hazardous Materials located on, over, below or about the Premises which were present in such locations as of the Commencement Date.

41.

MISCELLANEOUS:

Lessee and Lessee’s Guarantor, if any, agree to deliver to Lessor, within thirty (30) days from written request therefore (but not more frequently than once each calendar year) a balance sheet prepared and certified by a Public Accountant or Certified Public Accountant showing the true and accurate net worth of Lessee and said Guarantor, if any, as of the close of Lessee’s and said Guarantor’s most recent accounting period.

In case there is more than one Lessee, the obligations of Lessee executing this Lease shall be joint and several. The words “Lessor” and “Lessee” as used herein shall include the plural as well as the singular. The covenants and agreements contained herein shall be binding upon and enforceable by the parties hereto and their respective heirs, executors, administrators, successors and assigns, subject to the restrictions herein imposed on assignment by Lessee.

Time is of the essence of this Lease and each and every covenant, condition and provision herein contained.

The paragraph headings are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope or intent of this agreement or any provision thereof or in any way affect this agreement.

In the event there is a Guarantor of this Lease, said Guarantor shall have the same obligations as Lessee under this Lease.

42.

ADDENDA:

Attached hereto is an addendum or addenda as indicated on the Basic Lease Information which constitute(s) a part of this Lease.

IN WITNESS WHEREOF, the parties hereto have subscribed their names, and if corporations, executed this Lease by officers thereunto duly authorized by resolution of said corporations, in duplicate, the day and year stated below.

Lessee: BioMarin Pharmaceutical Inc.		Lessor: Bayview Ignacio, LLC

/s/ Jeff Landau		/s/ Daniel Condiotti

By:		By:

Senior Vice President, Administration 6/16/03		Manager 6/16/03

Title Date		Title Date

/s/ Louis Drapeau

By:

Chief Financial Officer 6/16/03

Title Date

ADDENDUM 1

43.

Parking.

Throughout the Term of this Lease Lessee shall be entitled to the use of parking spaces on Assessor’s Parcel #157-501-68 and shall be subject to the Parking Agreement of Record on Assessor’s Parcel #157-501-67 which parcel is neither the property nor under control of Lessor, as shown on Exhibit “L”.

44.

Rent Abatement.

Provided Lessee has not been in default or material breach of this Lease at any time during the Initial Term, the first four (4) months of Base Monthly Rent on Building “P” (90 Digital Drive) and one-half of each of the fifth through twelfth months of Base Monthly Rent on Building “O” (105 Digital Drive) shall be abated. In the event of default or material breach of this Lease on the part of Lessee within the Initial Term, where such default or material breach shall continue for any duration in excess of the cure periods herein provided, if any, and unless such continued duration of default or material breach is with Lessor’s express written consent, then such previously abated amount shall become immediately due and payable by Lessee to Lessor, without offset, notice or demand.

45.

Reduction in Security Deposit.

Provided Lessee is not in material breach or default of this Lease at any time during the initial Term, Lessee may apply to Lessor in writing within the first two months of the fifth year of the Initial Term (and again within the first two months of the seventh year of the Initial Term) for a reduction for each application of up to twenty percent (20%) of the Security Deposit held by Lessor as of the date of Lessee’s Application, and Lessor shall not unreasonably deny Lessee’s request to reduce the Security Deposit. Such reduction in Security Deposit shall be applied as a credit towards the next amount due from Lessee provided, however, that in no event shall the amount being held for security for this Lease ever be less than three (3) months of the Initial Monthly Base Rent.

46.

Real Property Taxes; Value Limitation.

For the first two years of the Initial Term of this Lease, Lessee shall not be responsible for the payment of any increase in Real Property Taxes resulting from an increased property valuation due solely to a sale or transfer of the property. Following the second year of the Initial Term of this Lease, Lessee shall be responsible for increased taxes arising from a sale or transfer of the Property.

47.

Option to Renew

If Lessee has not been in material breach or default of this Lease during the Initial Term (and, subsequently, first Option Term, if exercised), Lessee shall have two (2) successive options of five (5) years each to extend this Lease upon the following conditions:

Lessee shall retain at least as much space as stated in the Basic Lease Information hereto attached, and in “As Is” condition.

Lessee shall provide Lessor with written notice of their intent to exercise such option not less than nine (9) months prior to the Lease initial expiration date and, subsequently, the expiration of the first option period if it has been exercised.

The Option(s) herein are personal to the Lessee and are not transferable to sub-tenants or assignees. The Options shall be transferable to “Lessee Affiliates” (as described in Paragraph 29 “a” of this Lease).

Lessor and Lessee agree that any brokerage fee or commission incurred relating to the Option Period(s) shall be borne by the party incurring the fee or commission.

The Base Monthly Rent for the first twelve (12) months of each option period exercised shall be at ninety-five percent (95%) of the then fair market rent for similar space in similar buildings in Novato, but shall be no more than 115% (One Hundred Fifteen Percent) of the Base Monthly Rent for the last month of the previous Lease term.

48.

Initial Improvements By Lessee

Lessee desires to make substantial changes to both the interior and exterior of the Premises, the scope and extent of which changes has not yet been determined. Lessee has provided Lessor copies of their most recent architectural concept drawings of Initial Improvements for attachment to this Lease as Exhibit “G”. It is agreed between Lessor and Lessee that all Initial Improvements, both Interior and Exterior, shall be made by Lessee under agreement with a licensed General Contractor who shall be reasonably approved by Lessor.

49.

Initial Interior Improvements

Lessee shall diligently pursue completion of the preliminary space plan drawings which shall include, in detail, the proposed Initial Interior Improvements. Lessee shall submit two (2) sets of the preliminary space plans to Lessor as soon as available for Lessor’s review.

Lessor shall have fourteen (14) days from receipt of the preliminary space plans to approve, disapprove or request reasonable modifications of the preliminary space

plans. If Lessor does not respond within fourteen (14) days of receipt of the preliminary space plans, said plans shall be deemed approved and shall be attached to this Lease as Exhibit “H”.

As long as the preliminary space plans and specifications reasonably conform with the Use provisions of the lease the Lessor shall not unreasonably refuse to approve them.

If Lessor requests modifications to conform the preliminary space plans and specifications to the Use provisions then Lessee shall have 10 days to make such modifications and resubmit to Lessor pursuant to this Paragraph 49.

Lessee shall develop working drawings from approved preliminary space plans, such drawings to include finish specifications and final draft budget (the “Complete Working Drawings”). Lessee shall submit two (2) sets of Complete Working Drawings to Lessor for Lessor’s review and comments or approval.

Lessor shall have fourteen (14) days from receipt of Complete Working Drawings to request reasonable modifications or approve the Complete Working Drawings. For the purposes of this provision, it shall be deemed reasonable for Lessor to disapprove elements of the Complete Working Drawings which deviate substantially from the approved preliminary space plans. If Lessor does not respond within fourteen (14) days of receipt of the Complete Working Drawings, said drawings shall be deemed approved. The approved Complete Working Drawings shall be attached to this Lease as Exhibit “I”.

Once the Complete Working Drawings are approved, Lessee shall have the right to submit the approved plans for issuance of the appropriate Building Permit(s).

Lessee shall provide Lessor with a copy of the General Contractor’s Agreement prior to commencement of any work on, or delivery of any materials to the Premises. It shall be a requirement of that agreement between Lessee and General Contractor to acquire the executed Estoppel form (attached as Exhibit “E”) from the General Contractor, prior to the commencement of any work on, or delivery of any materials to the Premises. Lessee or Lessee’s General Contractor will deliver the Estoppels to Lessor prior to commencement of work or delivery of materials to the Premises.

Lessee shall provide Lessor with a copy of the Building Permit(s) upon issuance and two (2) sets of plans as approved by the appropriate government agency issuing the Building Permit(s).

Lessee shall notify Lessor in writing not less than seven (7) days in advance of the commencement of any work on, or delivery of materials to the Premises so that Lessor may cause to be recorded a Notice or Notices of Non-Responsibility, or other Notice or Notices provided by law. Lessee shall further notify Lessor in writing within forty-eight (48) hours after such work commences.

Prior to the commencement of work on the Initial Interior Improvements, Lessee and the General Contractor shall provide Lessor with a Performance and Payments Bond in an amount sufficient to ensure the General Contractor will promptly and faithfully perform said contract and payments to those subcontracted entities required in California Civil Code Section 3110. The Performance Bond shall include Lessor as Additional Obligee through attached rider. Upon execution of a contract between Lessee and General Contractor for the Initial Interior Improvements Lessee will file and record, pursuant to Civil Code Section 3235, the general contract and Payments Bond with the County of Marin and shall provide Lessor with a copy of the recorded documents. Lessee will provide Lessor with the documents required in this Paragraph 49, subsection ( i ) prior to start of work. Lessor reserves the right to require an increase in Performance and/or Payments Bond upon any change orders to the original contract between Lessee and General Contractor.

Lessor shall have the right to stop work on the Initial Improvements unless and until the requirements of this Paragraph 49 are met.

Lessee shall provide Lessor with copies of all change orders to the approved Complete Working Drawings. If the change contemplated in a change order is substantially different from the approved Complete Working Drawings or involved structural modifications to the Building(s) the Lessor shall have seven (7) days from receipt of same to request modification of or approve the change orders. “Substantially different” shall include, but not be limited to, any change in square footage, reducing the quality of the approved specifications, a change in the improvements such that they no longer comply with applicable codes, or a change in the improvements such that they no longer conform to the Use. If Lessor does not respond within seven (7) days, the change order shall be deemed approved.

Upon completion of the Initial Interior Improvements, or twenty-four (24) months from the Commencement Date of this Lease, whichever occurs first, Lessee shall provide Lessor with a copy of the final, signed-off Building Permit(s) and two (2) complete sets of “As Built” plans, which shall replace Exhibits “G, H & I”.

Lessor and Lessee agree that the Initial Interior Improvements approved by Lessor pursuant to this Paragraph 49 shall not be subject to restoration under the terms of this Lease, that such Initial Interior Improvements are not required to make the Premises habitable for the use stated in this Lease, and that Lessor’s election to waive restoration of same shall not be construed to indicate Lessor as a participating owner.

All other changes, additions, deletions, modifications or improvements to the Premises not specifically included in the approved Initial Interior Improvements, or included in the approved Initial Interior Improvements but not completed within twenty-four (24) months of the Commencement Date of this Lease, shall be subject to the Terms of this Lease, Paragraphs 49 & 50 excepted.

50.

Initial Exterior Improvements

Lessee shall diligently pursue development of renderings, specifications, preliminary budget and appropriate engineering reports (the “Preliminary Exterior Plans”) for Initial Exterior Improvements and shall provide two (2) sets to Lessor as soon as available for Lessor’s review.

Lessor shall have fourteen (14) days from receipt of the Preliminary Exterior Plans to approve, disapprove or request reasonable modifications to said plans. If Lessor does not respond within fourteen (14) days, said plans shall be deemed approved, and shall be attached to this Lease as Exhibit “J”. If Lessor requests reasonable modifications to the Preliminary Exterior Plans then Lessee shall have fourteen (14) days to make such modifications and resubmit the plans to Lessor.

Lessee shall develop Exterior Permit Plans from the approved Preliminary Exterior Plans with finish specifications, final draft budget and additional engineering reports (if any) (the “Exterior Permit Plans”). Lessee shall submit two (2) sets of Exterior Permit Plans to Lessor for Lessor’s review and comments or approval.

Lessor shall have fourteen (14) days from receipt of the Exterior Permit Plans to request reasonable modifications or approve the Exterior Permit Plans. For the purpose of this provision, it shall be deemed reasonable for Lessor to disapprove any substantial structural changes between the Preliminary Exterior Plans and the Exterior Permit Plans. If Lessor does not respond within fourteen (14) days, said plans shall be deemed approved and shall be attached as Exhibit “K” to this Lease.

Once the Complete Exterior Permit Plans are approved, Lessee shall have the right to submit the approved plans for issuance of the appropriate Building Permit(s).

Lessee shall provide Lessor with a copy of the General Contractor’s Agreement prior to commencement of any work on, or delivery of any materials to the Premises. It shall be a requirement of that agreement to acquire the executed Estoppel form (attached as Exhibit “E”) from the General Contractor prior to the commencement of any work on, or delivery of any materials to the Premises. Lessee or Lessee’s General Contractor will deliver the Estoppels to Lessor prior to commencement of work or delivery of materials to the Premises.

Lessee shall provide Lessor with a copy of the Building Permit(s) upon issuance and two (2) sets of plans as approved by the appropriate government agency issuing the Building Permit(s).

Lessee shall notify Lessor in writing not less than seven days in advance of the commencement of any work on, or delivery of materials to the Premises so that Lessor may cause to be recorded a Notice or Notices of Non-Responsibility, or other Notice or Notices provided by law. Lessee shall further notify Lessor in writing within forty-eight (48) hours after such work commences.

Prior to the commencement of work on the Initial Exterior Improvements, Lessee and the General Contractor shall provide Lessor with a Performance Bond and Payments Bond in an amount sufficient to ensure the General Contractor will promptly and faithfully perform said contract and payments to those subcontracted entities required in California Civil Code Section 3110. The Performance Bond shall include Lessor as Additional Obligee through attached rider. Upon execution of a contract between Lessee and General Contractor for the Initial Exterior Improvements Lessee will file and record, pursuant to Civil Code Section 3235, the general contract and Payments Bond with the County of Marin and shall provide Lessor with a copy of the recorded documents. Lessee will provide Lessor with the documents required in this Paragraph 50, subsection ( i ) prior to start of work. Lessor reserves the right to require an increase in the Performance and/or Payments Bond(s) upon any change orders to the original contract between Lessee and General Contractor.

Lessor shall have the right to stop work on the Initial Exterior Improvements unless and until the requirements of this Paragraph 50 are met.

Lessee shall provide Lessor with copies of all change orders to the approved Exterior Permit Plans. If the change contemplated in a change order is substantially different from the approved Exterior Permit Plans or involves structural modifications to the Building(s) the Lessor shall have fourteen (14) days from receipt of same to request modification of or approve the change orders. “Substantially different” shall include, but not be limited to, any change in square footage, reducing the quality of the approved specifications, materially modifying the finish specifications, or a change in the improvements such that they no longer comply with applicable codes. If Lessor does not respond within fourteen (14) days, the change order shall be deemed approved.

Upon completion of the Initial Exterior Improvements, or twenty-four (24) months from the Commencement Date of this Lease, whichever occurs first, Lessee shall

provide Lessor with a copy of the final, signed-off Building Permit(s) and two (2) complete sets of “As Built” plans, which shall replace Exhibits “J & K”.

Lessor and Lessee agree that the Initial Exterior Improvements approved by Lessor pursuant to this Paragraph 50 shall not be subject to restoration under the terms of this Lease, that such Initial Exterior Improvements are not required to make the Premises habitable for the use stated in this Lease, and that Lessor’s election to waive restoration of same shall not be construed to indicate Lessor as a participating owner.

All other changes, additions, deletions, modifications or improvements to the Premises not specifically included in the approved Initial Exterior Improvements, or included in the approved Initial Interior Improvements but not completed within twenty-four (24) months of the Commencement Date of this Lease, shall be subject to the Terms of this Lease, Paragraphs 49 & 50 excepted.

Lessee: BioMarin Pharmaceutical Inc.		Lessor: Bayview Ignacio, LLC

/s/ Jeffrey Landau		/s/ Daniel Condiotti

By		By

Senior Vice President, Administration	6/16/03	Manager	6/16/03

Title	Date	Title	Date

/s/ Louis Drapeau

By:

Chief Financial Offiicer	6/16/03

Title	Date

ADDENDUM 2

51.) Lessee shall have the right to occupy approximately 6,585 square feet of first floor office space located at 105 Digital from July 1^st, 2003 to November 1^st, 2003 or Lease Commencement date, whichever occurs first. Lessee’s occupancy shall be subject to all Terms, Conditions, Obligations and Covenants of the Lease. Base Monthly Rent for this period shall be $6,585.
Should Lease Commencement occur after November 1^st, 2003, Lessee may continue occupancy of this space on a month-to-month basis until either party shall give 30 (thirty) days notice to the other party. Upon Lease Commencement this Paragraph shall expire.

Lessee		Lessor

/s/ JEFFREY I. LANDAU		/s/ J. WARZ

Jeffrey Landau, BioMarin Pharmaceuticals, Inc.		J. Warz, Bayview Ignacio, LLC

6/17/03		6/17/03

Date		Date

Exhibit “C”
Copy Of
DECLARATION OF COVENANTS AND PROTECTIVE STANDARDS
OF
IGNACIO INDUSTRIAL PARK, UNITS #3 AND 3A
NOVATO, CALIFORNIA

This declaration, made on January 20, 1982, is made by Debra Investment Corporation, a California corporation, and by Marvin Solland hereinafter referred to as “Declarants.”

Witnesseth:

WHEREAS, Debra Investment Corporation and Marvin Solland are the Owners of certain real property in the County of Marin, State of California, known as Ignacio Industrial Park, Units #3 and 3A, an more particularly described hereinafter; and

NOW, THEREFORE, Debra Investment Corporation and Marvin Solland hereby make the following Declaration:

Establishment of Protective Standards:

Declarant Owners of said property hereby declare that said property is now held and shall hereinafter be held, transferred, sold, conveyed and occupied subject to the protective standards herein set forth, each and all of which is and are for, and shall insure to, the benefit of and pass with each and every parcel of said property and shall apply to and bind the heirs, assignees, and successors in interest of any Owner thereof.

Description of Said Property:

Said property subject to this Declaration is described as follows, to wit: Lots 65 through 75, Lots 100 through 113, and Lots 125 through 137, all inclusive, Map of Ignacio Industrial Park, Unit #3, recorded on April 17, 1981 in Map Book 18, Page 44, Official Records of the County of Marin, County of Marin, State of California; and Lots 138 through 144 and Lots 145 through 151, inclusive, Map of Ignacio Industrial Park unit #3A, recorded on December 7, 1981 in Map Book 18 at Page 61, Official Records of the County of Marin, State of California.

ARTICLE I Purpose of Protective Standards:

The purpose of these protective standards is to insure well-planned development and proper use of said property, to protect each property Owner against such adjacent development as may depreciated the value of his parcel; to require attractive and harmonious improvements; and in general to require a high quality of improvements throughout said property in accordance with these Covenants and Protective Standards for the mutual benefit of all parcel Owners.

ARTICLE II Architectural Control Committee:

1. Formation:

Debra Investment Corporation shall form an Architectural Control Committee, hereinafter called “Committee”, which shall consist of three members. The appointment of such members shall be disclosed by a written instrument setting forth the facts of the appointment, the names and business addresses for the members, and the period for which they are appointed. Said instrument shall be signed by Declarant, acknowledged before a Notary Public, and recorded in the officer of the County Recorder, of the County of Marin, State of California. Any changes in the membership of the Committee shall be similarly acknowledged and recorded. Upon resignation of a member, Declarant may appoint a replacement for the balance of the member’s term. A majority of the Committee may designate a representative to act for it. Any authorization, approval, or power given by the Committee must be in writing, and must be signed by at least one duly appointed member.

2. Duties:

The Committee shall as soon as practicable after formation, develop basic specific design criteria, including but not limited to the following building design and site development issues:

	A.	Building Materials
	B.	Colors
	C.	Signing (Identification and directional)

	D.	Surface Treatment (walkways and paving)
	E.	Lighting (building and area)
	F.	Parking
	G.	Landscaping
	H.	Fencing

and shall utilize said design criteria in acting on projects in accordance with the procedures set forth in Article III.

3. Succession:

At any time after seventy percent of the property subject to these restrictions has been sold; based upon the number of square feet owned as compared with the total number of square feet subject to these Restrictions, control of the Committee may be relinquished by the Declarant by a duly recorded written statement, and all powers and controls, including designation of Committee membership, may be transferred to an Ignacio Industrial Park Improvement Association.

ARTICLE III Improvement Restrictions and Conditions:

1. Site Plan an Architectural Approval:

No improvements, defined as any man-made/manufactured physical feature, shall be erected, placed, altered, maintained, or permitted to remain on any building site unless and until a complete set of plans and specifications therefor, including a plot plan, floor plan, sections and exterior elevations, including colors therefor, shall have been first submitted to and approved in writing by the Architectural Control Committee, as specified in Article II. Such plans and specifications, and color scheme shall be submitted for approval over the signature of the Owner of the building site or over the signature of his authorized Agent. Approval shall be based, among other things, on adequacy of site dimensions; conformity and harmony of external design, effect of location and use of improvements on neighboring sites; relation of topography, grade and finished ground elevation of the building site being improved to that of neighboring sites; plans and specifications to the purpose and intent of these protective standards.

The Committee shall not arbitrarily or unreasonable withhold its approval of such plans and specifications, plot plan, elevation, material and/or color scheme. If the Committee shall fail to approve of disapprove the same within thirty (30) days after they have been submitted, it shall be conclusively presumed that the Committee has approved said plans and specifications, and/or color schemes, subject to these protective standards. If, after such plans, specifications, and color schemes shall have been approved, the improvements or any part thereof shall be altered, erected or maintained upon the lot or building site otherwise than so approved by the Committee, such alteration or erection shall be deemed to have been undertaken and made without the approval of the Committee as required.

Neither the Committee nor its successors or assigns shall be liable in damages to anyone submitting plans, specifications and color scheme to it for approval or to any owner of land affected by this Declaration, by reason of mistake in judgement, negligence, or non-feasance arising out of or in connection with the approval or disapproval or failure to approve the same. Every person who submits plans, specifications and color scheme to property to the Committee for approval agrees, by submission of same, and every Owner of any of said property agrees acquiring title thereof, that he will not bring any action or suit against the Committee to recover such damages.

Notwithstanding anything to the contrary contained herein, after expiration of six months from recording of the Notice of Completion by the Owner of any improvement, said improvement shall in favor of purchasers and encumbrances in good faith and for value, to be in compliance with all provisions hereof unless actual notice of such completion or non-completion executed by the Committee shall appear on record in the office of the County Recorder of Marin County, California, or unless legal proceedings shall have been instituted to enforce compliance or completion.

2. Landscaping:

Street and lot landscaping shall conform to the “Landscape Master Plan” and the “Landscape Guidelines” prepared for this industrial park by F. Furuichi and dated October 1980, revised October 1981. Copies are available at the Novato Planning Department.

All planting and irrigation plans shall be submitted to the Novato Planning Department for routine plan check and compliance to applicable standards, codes, covenants, and regulations.

3. Succession of Authority to Modify:

At any time after seventy percent of the property subject to these Restrictions has been sold, based upon the number of square feet

owned as compared to the number of square feet subject to these restrictions, Debra Investment Corporation may transfer authority for modification of this Article to an Ignacio Industrial Park Unit #3 and #3A improvement Association.

ARTICLE IV Use Restriction and Condition:

1. Permitted Uses:

The following uses may be established upon any property or site within Ignacio Industrial Park, Units #3 and #3A:

	A.	Industrial, manufacturing and business service uses, conducted entirely within an enclosed structure, not involving retail sales or personal service activities, and not having objectionable characteristics of noise, odor, dust, smoke, or glare.
	B.	Laboratories.
	C.	Sale or repair of industrial or manufacturing equipment.
	D.	Warehousing, wholesale distribution or storage uses.
	E.	Professional or administrative offices.
	F.	Retail sales which are specifically accessory to and directly related to an otherwise allowed use.
	G.	Snack bars, barer shops, and similar small convenience service uses only if scaled to the size of the complex and intended to serve the tenants/employees of the park only
	H.	Outdoor storage of goods and materials only if specifically incidental to a primary use within the building, and then only with the written consent of the Architectural Control Committee.


(Note:		Some of the above listed uses may require permits or requests for approval form government agencies: It is the business Owner’s/Operator’s responsibility for securing all such permits or approvals).

2. Prohibited Uses:

The following uses may not be established upon any property or site within Ignacio Industrial Park Units #3 and #3A:

Any use which is identifiable as one of the following:


	1. Auto wrecking/dismantling
	2. Auto repair (mechanical or electrical or body work)
	3. Auto painting
	4. Auto towing
	5. Retail sales except as allowed by IC, F and G above.
	6. Moving and storage
	7. Mini-warehousing

Any use which has any of the following characteristics:

	1.	Smoke of a shade as dark or darker than that designated as No. 1 on the Ringleman Chart, as published by the United States Bureau of Mines, for a period aggregating more than three minutes in any one hour.
	2.	Obnoxious odors
	3.	Dust, dirt, or fly ash
	4.	Noxious, toxic, or corrosive fumes or gases
	5.	Unusual fire or explosion hazards as determined by the Novato Fire District.
	6.	The disposal of garbage, refuse or objectional material within the bounds of the Industrial Park or bordering easements.
	7.	Heat and glare, whether from floodlights or high temperature processes such as combustion, welding or otherwise. This shall apply to permitted signs.
	8.	Vibrations.
	9.	Electromagnetic interference
	10.	Noise or sound that either:


a.	Exceeds seventy (70) decibels for a period(s) aggregating more than three (3) minutes in any one hour, measured at a distance of 25 fee and at a height of 6 feet; or
b.	Is objectionable due to intermittent beat, frequency or shrillness.


	11.	Store-front display of product or merchandise.
	12.	Outdoor storage unless specifically approved by the Architectural Control Committee.

ARTICLE V Maintenance Requirements:

All improvements on each site, including - without limitation - landscaping, all walks, driveways, and the exterior of all structures on each site, shall be maintained in good order, repair and condition. All exterior painted surfaces shall be maintained in a first-class condition.

If the grounds and improvements on each site are not maintained in accordance with all of the requirements of these Restrictions, the Declarant shall have the right, after 10 days to enter upon the site to perform the required maintenance and repair. The expenses of such maintenance and repair shall be a joint and several obligation of the Owner and all Occupants of the site, and shall be payable upon demand of the Declarant and shall commence to bear interest at the maximum rate permitted by law from the date of demand for payment by the Declarant until the date of payment. Entry upon a site by the Declarant or its Agents for the purpose of maintenance and repair shall not be a trespass, and the Owner and all Occupants shall be deemed to have consented thereto.

ARTICLE VI Enforcement:

1. Abatement and Suit:

Violation or breach of any restrictions herein contained shall give to Declarant, and every Owner of property subject to these Restrictions, the right to prosecute a proceeding at law or in equity against the person or persons who have violated or are attempting to violate any of these Restrictions to enjoin or prevent them from doing so, to cause said violation to be remedied or to recover damages for said violation.

The result of every action or omission whereby any restriction herein contained is violated in whole or in part is hereby declared to be and to constitute a nuisance, and every remedy allowed by law or equity against an Owner, either public or private, shall be applicable against every such result and may be exercised by Declarant, or by any Owner of property subject to these Restrictions.

In any legal or equitable proceeding for the enforcement or to restrain the violation of the Declaration or any provisions thereof. The losing party or parties shall pay the attorney’s fees of the prevailing party or parties in such amount as may be fixed by the court in such proceedings. All remedies provided herein or at law or in equity shall be cumulative and not exclusive.

2. Failure to Enforce Not a Waiver of Rights:

The failure of Declarant or any property Owner to enforce any protective standard herein contained shall in no event be deemed to be a waiver of the right to do so thereafter, of the right to enforce any other protective standard.

ARTICLE VII Miscellaneous:

1. Duration, Modification:

This Declaration, every provision hereof, and every covenant, condition, and protective standard contained herein shall continue in full force and affect for a period of thirty (30) years from the date hereof; provided, however, that this Declaration or any provision hereof, any covenant condition or protective standard contained herein, except for Article II (Architectural Control Committee) and Article III (Improvement Restrictions & Conditions), may be terminated, extended, modified or amended as to the whole of said property with the written consent of the Owners of fifty percent (50%) of the said property, based on the number of square feet owned as compared to the total number of square feet of said property. No such termination, extension, modification or amendment shall be effective until a property instrument in writing has been executed and acknowledged and recorded in the office of the Recorder of Marin County, California.

2. Easements:

Said property, lots and building sites are and shall be subject to such easements as are now matters of public record and such easements are hereby reserved for the benefit of all the Owners, present or future, or the lots and building sites in said property.

3. Assignability of Declarant’s Rights and Duties:

Any and all of the rights, powers and reservations of Declarant herein contained may be assigned by Declarant to any other person, corporation or association which will asso the duties of Declarant pertaining to particular rights, power and reservations assignee and upon any such person, corporation or association evidencing its consent in writing to accept such assignment and

assume such duties, he or it shall, to the extent of such assignment, have the same tasks and powers and be subject to the same obligations and duties as are given to an assumed by Declarant. The term “Declarant”, as used herein, includes all such assignees and their heirs, successors and assigns.

4. Constructive Notice of Acceptance:

Every person who now or hereafter owns or acquires any right, title, estate or interest in or to any portion of said property is and shall be conclusively deemed to have consented and agreed to every covenant, condition and protective standard contained herein, whether or not any reference to this Declaration is contained in the instrument by which such person acquired an interest in said property.

5. Right of Mortgagees:

All restrictions and other provisions herein contained shall be deemed subject and subordinate to all mortgage and deeds of trust now or hereafter executed upon land subject to these protective standards, and none of said protective standards shall supercede or in any way reduce the security or affect the validity of any such mortgage or deed of trust; provided, however, that if any portion of said property is sold under a foreclosure of any mortgage or under the provisions of any deed of trust, any purchaser at such sale, and his successors and assignees, shall hold any and all property so purchased subject to all of the protective standards and other provisions of this Declaration.

6. Mutuality, Reciprocity Runs With Land:

All protective standards, conditions, covenants and agreements contained herein are made for the direct, mutual and reciprocal benefit of each and every part and parcel of said property; shall create mutual, equitable servitude upon each parcel; shall create reciprocal rights and obligations between the respective Owners of all parcels, and privity of contract and estate between all grantees of said parcel, his heirs, successors and assigns; operate as covenants running with the land, for the benefit of all parcels.

7. Marginal Headings:

The marginal headings of titles to the paragraphs of the Declaration are not a part of this Declaration and shall have no effect upon the constitution or interpretation of any part thereof.

ARTICLE VII Miscellaneous:

8. Effect of Invalidation:

In any provision of this Declaration is held to be invalid by any court, the invalidity of such provision shall not affect the validity of the remaining provisions hereof.

IN WITNESS WHEREOF, the undersigned have executed this Declaration on the date first hereinabove written.


A. CONDIOTTI, President		MARVIN SOILAND
DEBRA INVESTMENT CORPORATION		OWNER OF LOTS 65 THROUGH 76,
		INCLUSIVE, of IGNACIO INDUSTRIAL PARK, UNIT #3
STATE OF CALIFORNIA)
COUNTY OF SONOMA)

On January 20, 1982, before me, the undersigned, a Notary Public in and for said County and State personally appeared A. Condiotti known to me to be the President and known to me to be the of the corporation that executed the within instrument, and known to me to be the persons who executed the within instrument on behalf of the corporation therein named and acknowledged to me that such corporation executed the within instrument pursuant to its by-laws or a resolution of its Board of Directors.

WITNESS my hand and official seal.
Notary Public in and for said County and State
My commission expires August 2, 1982.

FOUNDATION OF ARCHITECTURAL CONTROL COMMITTEE
for
IGNACIO INDUSTRIAL PARK, UNITS # 3 AND # 3A
IN ACCORDANCE WITH THE DECLARATION OF RESTRICTIONS
FOR THOSE SUBDIVISIONS

DEBRA INVESTMENT CORPORATION hereby appoints the following individuals as the members of the Architectural Committee in accordance with Article II of the Declaration for Covenants and Protective Standards for Ignacio Industrial Park, Units #3 and #3A. Novato, California.

1. Mr. A. Condiotti	2. Marvin Soiland	3. Mr. Phillip A. Trowbridge
Debra Investment Corporation	Soiland Company, Inc.	Debra Investment Corporation
P.O. Box 6855	1220 Airport Boulevard	P. O. Box 6855
Santa Rosa, CA 95406	Santa Rosa, CA 95401	Santa Rosa, CA 95406


A. Condiotti, President
Debra Investment Corporation

State of California)
County of Sonoma)

On this 20^th day of January in the year one thousand nine hundred and eighty-two, before me, Linda Tower, a Notary Public, State of California, duly commissioned and sworn, personal appeared Marvin Soiland, known to me to be the person whose name is acknowledged to me that be executed the same.

IN WITNESS WHEREOF I have herein set my hand and affixed in official seal in the County of Sonoma the day and year this certificate first above written.


	Notary Public, State of California
	My commission expires August 2, 1982

EXHIBIT 1
TO EXHIBIT “C”

PROPERTY DESCRIPTION FOR LAKEPOINT BUSINESS PARK

Description of Said Property:

Said property subject to this Declaration is described as follows, to wit: Lots 65 through 75, Lots 100 through 113, and Lots 125 through 137, all inclusive, Map of Ignacio Industrial Park, Unit #3, recorded on April 17, 1981 in Map Book 18 page 44 Official Records of the County of Marin, State of California,; and Lots 138 through 144 and Lots 145 through 151, inclusive, Map of Ignacio Industrial Park Unit #3A, recorded on December 7, 1981 in Map Book 18 page 64, Official Records of the County of Marin, State of California.

EXHIBIT “D”

POLICY NUMBER__________________________________

THIS ENDORSEMENT CHANGES THE POLICY
ADDITIONAL INSURED-LESSOR OF PREMISES

This endorsement modifies insurance provided under the following:
GENERAL LIABILITY COVERAGE

1	Designation of Premises:
	BAYVIEW BUSINESS PARK
	90 & 105 Digital Drive
	Novato, California
	Buildings “O” & “P”

2	Name of Organization—Additional Insured:
	Bayview Ignacio, LLC
	P. O. Box 11068
	Santa Rosa, California 95406-1068
	(707) 544-7050
	(707) 523-7031 Fax


		WHO IS AN INSURED is amended to include as insures the organization named above but only with respect to liability arising out of the ownership, maintenance or use of that part or parts of the Premises leased to you and designated above.


		The insurance provided to the additional insured by this policy shall be primary to, and non-contributory with, any other insurance available to the additional insured as the Named Insured, and such other insurance shall only apply in excess of this insurance.

EXHIBIT “E”

ESTOPPEL STATEMENT

The undersigned hereby acknowledges the notification and receipt of the Notice of Non-responsibility (a copy of which is attached hereto) by the property owner and Lessor, Bayview Ignacio, LLC, with respect to



		.

The undersigned is aware that the filing and posting of such Notice of Non-responsibility, as set forth in Section 3094 of the California Civil Code, has the effect of exempting Lessor’s interest in the property from any mechanics’ liens filed in connection with any alterations, changes, additions or improvements performed at the request of Lessee.

The undersigned acknowledges and understands that the Notice of Non-responsibility is the method by which a property owner exempts the property from mechanics’ liens and notifies all those who are expending labor and/or materials on a project that the property owner will not be responsible for such labor and/or materials.

The undersigned acknowledges that Lessor is NOT a PARTICIPATING OWNER (i.e., Lessee is not an agent of Lessor in performing any alterations, changes, additions or improvements. Such work is not a condition of the Lease, and does not materially enhance the value of Lessor’s property) and that no relationship exists between Lessor and Lessee other than that of landlord and tenant. The undersigned acknowledges and understands that Lessor claims no ownership interest in such tenant improvements, and any retention of such improvements as part of the Premises when they are returned to Lessor at the termination of the Lease is not a requirement under the Lease, and may occur only if Lessee desires to avoid the expense of restoring the property to its condition prior to the Lease and complies with such requirements under the Lease. Accordingly, the undersigned hereby waives and relinquishes any and all rights to assert a claim and/or file a mechanics’ lien against the Lessor’s interest in the property relating to or arising from the work described herein; provided, however, that nothing in this estoppel shall prohibit any claims from being made against the Lessee’s interest in the property and/or Lessee’s alterations, changes, additions or improvements thereto.


By:		Date

For: California Contractor’s License #

EX-10.3 8 dex103.htm NOTE PURCHASE AGREEMENT DATED JUNE 18, 2003 Note Purchase Agreement dated June 18, 2003

EXHIBIT 10.3

$125,000,000 Principal Amount

BioMarin Pharmaceutical Inc.

3.50% Convertible Subordinated Notes

due 2008

PURCHASE AGREEMENT

June 18, 2003

PURCHASE AGREEMENT

June 18, 2003

UBS SECURITIES LLC

CIBC WORLD MARKETS CORP.

c/o	UBS Securities LLC
	299 Park Avenue
	New York, New York 10171

Dear Sirs and Mesdames:

BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”), proposes to issue and sell to the initial purchasers named in Schedule A hereto (the “Initial Purchasers”) $125,000,000 aggregate principal amount of its 3.50% Convertible Subordinated Notes due 2008 (the “Firm Notes”). In addition, the Company proposes to grant to the Initial Purchasers the option to purchase from the Company up to an additional $25,000,000 aggregate principal amount of the Company’s 3.50% Convertible Subordinated Notes due 2008 (the “Additional Notes”). The Firm Notes and the Additional Notes are hereinafter collectively sometimes referred to as the “Notes.”

The Notes are to be issued pursuant to an indenture (the “Indenture”) to be dated as of June 23, 2003, between the Company and Wilmington Trust Company, as trustee (the “Trustee”). The Notes will be convertible in accordance with their terms and the terms of the Indenture into shares of the common stock (the “Common Stock”) of the Company, par value $0.001 per share (the “Shares”).

The Notes and the Shares will be offered and sold by the Initial Purchasers (the “Exempt Resales”) without being registered under the Securities Act of 1933, as amended (the “Act”), to “qualified institutional buyers” in compliance with the exemption from registration provided by Rule 144A under the Act (“Rule 144A”).

The Initial Purchasers and their direct and indirect transferees will be entitled to the benefits of a Registration Rights Agreement to be entered into at or prior to the time of purchase (as defined herein) between the Company and the Initial Purchasers (the “Registration Rights Agreement”).

In connection with the sale of the Notes, the Company has prepared a preliminary offering memorandum (the “Preliminary Memorandum”) and will prepare a final offering memorandum (the “Final Memorandum” and, with the Preliminary Memorandum, each a “Memorandum”) including or incorporating by reference a description of the terms of the Notes and the Shares, the terms of the offering and a description of the Company. As used herein, the term “Memorandum” shall include in each case the documents incorporated by reference therein, if any (the “Incorporated Documents”). The terms “supplement”, “amendment” and “amend” as used herein with respect to a Memorandum shall include all documents deemed to be incorporated by

reference in the Preliminary Memorandum or Final Memorandum, if any, that are filed subsequent to the date of such Memorandum with the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The Company and the Initial Purchasers agree as follows:

1. Sale and Purchase: Upon the basis of the warranties and representations and subject to the other terms and conditions herein set forth, the Company agrees to sell to the Initial Purchasers, and each of the Initial Purchasers, severally and not jointly, agrees to purchase from the Company, $125,000,000 aggregate principal amount of Firm Notes in such amounts set forth opposite the name of such Initial Purchaser in Schedule A hereto at a purchase price of 97.00% of the principal amount thereof (the “purchase price”).

In addition, the Company hereby grants to the several Initial Purchasers the option to purchase, and upon the basis of the representations and warranties and subject to the other terms and conditions herein set forth, the Initial Purchasers shall have the right to purchase from the Company, all or a portion of the Additional Notes at the purchase price, plus accrued interest, if any, from the time of purchase (as hereinafter defined) to the additional time of purchase (as hereinafter defined). This option may be exercised by UBS Securities LLC, on behalf of the Initial Purchasers, at any time and from time to time on or before the thirtieth day following the date hereof, by written notice to the Company. Such notice shall set forth the aggregate initial principal amount of Additional Notes as to which the option is being exercised, and the date and time when the Additional Notes are to be delivered (such date and time being herein referred to as the “additional time of purchase”); provided, however, that the additional time of purchase shall not be earlier than (i) the time of purchase or (ii) the second business day1 after the date on which the option shall have been exercised, nor later than the tenth business day after the date on which the option shall have been exercised. The principal amount of Additional Notes to be sold to each Initial Purchaser shall be the principal amount which bears the same proportion to the aggregate principal amount of Additional Notes being purchased as the principal amount of Firm Notes set forth opposite the name of such Initial Purchaser on Schedule A hereto bears to the aggregate principal amount of Firm Notes, subject to adjustment in accordance with Section 10 hereof.

2. Payment and Delivery: Payment of the purchase price for the Firm Notes shall be made to the Company by Federal (same day) funds, against delivery of the Firm Notes to you, at the offices of Dewey Ballantine LLP in New York, New York, or at such other place as may be agreed upon by the parties hereto, for the respective accounts of the Initial Purchasers. Such payment and delivery shall be made at 10:00 A.M.,

¹ As used herein “business day” shall mean a day on which the nasdaq National Market is open for quotation.

eastern daylight time, on June 23, 2003 (unless another time shall be agreed to by you and the Company). The time at which such payment and delivery are actually made is herein sometimes called the “time of purchase.”

Payment of the purchase price for the Additional Notes shall be made at the additional time of purchase in the same manner and at the same office and time of day as the payment for the Firm Notes.

Certificates for the Notes shall be in definitive form or global form, as specified by you, and registered in the names and in such denominations as you shall request in writing not later than two business days prior to the time of purchase or the additional time of purchase, as the case may be. For the purpose of expediting the checking of the certificates for the Notes by you, the Company agrees to make such certificates available to you for such purpose at least one business day preceding the time of purchase or the additional time of purchase, as the case may be.

3. Representations and Warranties of the Company: The Company represents and warrants to each of the Initial Purchasers that:

(a) (i) the Preliminary Memorandum, as of its date and as of the date of any amendment or supplement thereto did not, and as of the date hereof does not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) the Final Memorandum, as of its date will not and as may be further amended or supplemented will not, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the representations and warranties set forth in this paragraph do not apply to statements or omissions in either Memorandum based upon information relating to any Initial Purchaser furnished to the Company in writing by or on behalf of such Initial Purchaser expressly for use therein;

(b) as of the date of this Agreement, the Company’s capitalization is as set forth under the heading entitled “Actual” in the section of the Final Memorandum entitled “Capitalization” and, as of the time of purchase and the additional time of purchase, as the case may be, the Company’s capitalization shall be as set forth under the heading entitled “As Adjusted” in the section of the Final Memorandum entitled “Capitalization” (subject, in each case, to the issuance of shares of Common Stock upon exercise of stock options and warrants disclosed as outstanding in the Final Memorandum or stock options thereafter granted under the Company’s stock option plans and restricted stock granted pursuant to compensatory grants to consultants, each as disclosed in the Final Memorandum; all of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable, have been issued in compliance with all federal and state


	securities laws and were not issued in violation of any preemptive right, resale right, right of first refusal or similar right;

(c) the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with the requisite corporate power and authority to own, lease and operate its properties and conduct its business as described in the Final Memorandum;

(d) the Company is duly qualified to do business as a foreign corporation and is in good standing in the State of California, such State being the only jurisdiction where the ownership or leasing of its properties or the conduct of its business requires such qualification; the Company has no subsidiaries (as defined in the Act) other than as listed in Schedule A annexed hereto (the “Subsidiaries”); except (i) as described in the Final Memorandum and (ii) except for the exchangeable shares issued by BioMarin Delivery Canada Inc. to the former shareholders of BioMarin Pharmaceutical (Canada) Inc. (formerly known as Synapse Technologies Inc.) which have no material rights other than the right to receive future contingency milestone payments as described in the Final Memorandum, the Company owns, directly or indirectly, 100% of the outstanding capital stock of the Subsidiaries; except for the Subsidiaries or as described in the Final Memorandum, the Company does not own, directly or indirectly, any long-term debt or any equity interest in any firm, corporation, partnership, joint venture, association or other entity; complete and correct copies of the certificates or articles of incorporation and of the bylaws of the Company and each of the corporate Subsidiaries and the operating agreements of each limited liability company Subsidiary and all amendments thereto have been delivered to you;

(e) each of the Subsidiaries that is a corporation has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, with the requisite corporate power and authority to own, lease, and operate its properties and to conduct its business; each of the Subsidiaries that is a limited liability company has been duly formed and is validly existing as limited liability company in good standing under the laws of the jurisdiction of its formation, with the requisite limited liability company power and authority to own, lease, and operate its properties and to conduct its business;

(f) each of the Subsidiaries is duly qualified to do business as a foreign corporation or limited liability company and is in good standing in each jurisdiction where the ownership or leasing of the properties or the conduct of its business requires such qualification, except where the failure to so qualify could not reasonably be expected to have a material adverse effect on the business, operations, prospects, properties, condition (financial or otherwise) or results of operation of the Company and the Subsidiaries (as hereinafter defined) taken as a whole (a “Material Adverse Effect”); each of the Subsidiaries (other than BioMarin Genetics, Inc., BioMarin Holdings (Del.) Inc. and BioMarin

Acquisition (Del.) Inc.) incorporated or organized in accordance with the laws of the State of Delaware is duly qualified to do business as a foreign corporation or limited liability company, as the case may be, and is in good standing in the State of California, such State being the only jurisdiction where the ownership or leasing of the properties or the conduct of its business requires such qualification;

(g) all of the outstanding shares of capital stock of each of the corporate Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable, have been issued in compliance with all applicable securities laws and were not issued in violation of any preemptive right, right of first refusal or similar right; all capital contributions required to be made by the Company through the date hereof with respect to the outstanding membership interests of BioMarin/Genzyme LLC held by the Company have been made; all outstanding membership interests in BioMarin/Genzyme LLC were issued and sold in compliance with the applicable operating agreements of such company and all applicable federal and state securities laws, and, except as set forth in the Final Memorandum and the operating agreements of such company and the Collaboration Agreement dated as of September 4, 1998 with respect to BioMarin/Genzyme LLC, the membership interests therein held directly or indirectly by the Company are owned free and clear of all security interests, liens, encumbrances and equities and claims and the Company has not granted any options, warrants or other rights to purchase, or entered into any agreements or incurred any obligation to issue or granted any rights to convert any obligations into ownership interests in BioMarin/Genzyme LLC; the BioMarin/Genzyme LLC operating agreement pursuant to which the Company holds its membership interest in BioMarin/Genzyme LLC constitutes the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with the terms thereof, except as enforcement thereof may be limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles and, to the Company’s knowledge, is in full force and effect; there has been no material breach of or default under, and no event which with notice or lapse of time would constitute a material breach of or default under, such operating agreement by the Company or, to the Company’s knowledge, any other party to such agreement;

(h) neither the Company nor any of the Subsidiaries is in breach or violation of, or in default under (nor has any event occurred which with notice, lapse of time, or both would result in any breach or violation of, or constitute a default under) (each such breach, violation, default or event, a “Default Event”), (i) its charter, by-laws or other organizational documents, (ii) any obligation, agreement, covenant or condition contained in any license, permit, indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or any of their properties is bound or affected, (iii) any federal, state, local or foreign law, regulation or rule or (iv) any decree, judgment or order applicable to the Company, any of the Subsidiaries or any of their respective properties, other

than, in the case of clauses (ii) and (iii), such Default Events as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; and the execution, delivery and performance of this Agreement, the Registration Rights Agreement, the Indenture and the Notes, including the issuance and sale of the Notes, the Exempt Resales and the issuance of the Shares upon conversion of the Notes and the consummation of the other transactions contemplated hereby, does not constitute and will not result in a Default Event under (w) any provisions of the charter, by-laws or other organizational documents of the Company or any of the Subsidiaries, (x) under any provision of any license, permit, indenture, mortgage, deed of trust, bank loan or credit agreement or other evidence of indebtedness, or any lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries or by which any of them or their respective properties may be bound or affected, (y) under any federal, state, local or foreign law, regulation or rule or (z) under any decree, judgment or order applicable to the Company, any of the Subsidiaries or any of their respective properties, except, in the case of clause (x) for such Default Events as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(i) this Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding agreement of the Company;

(j) the Indenture has been duly authorized by the Company and when executed and delivered by the Company and the other parties thereto will be a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws affecting creditors’ rights generally and general principles of equity;

(k) the Registration Rights Agreement has been duly authorized by the Company and when executed and delivered by the Company and the other parties thereto will be a legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer, moratorium or similar laws affecting creditors’ rights generally and general principles of equity and except to the extent that rights to indemnity may be limited by applicable law;

(l) the Notes have been duly authorized by the Company and when executed and delivered by the Company and duly authenticated in accordance with the terms of the Indenture and delivered to and paid for by the Initial Purchasers in accordance with the terms hereof will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent

transfer, moratorium or similar laws affecting creditors’ rights generally and general principles of equity, and will be entitled to the benefits of the Indenture and the Registration Rights Agreement; the Shares issuable upon conversion of the Notes have been duly authorized and validly reserved for issuance upon conversion of the Notes, and upon conversion of the Notes in accordance with their terms and the terms of the Indenture will be issued free of statutory and contractual preemptive rights granted by the Company and are sufficient in number to meet the current conversion requirements as provided in the Indenture, and such Shares, when so issued upon such conversion in accordance with the terms of the Indenture, will be validly issued and fully paid and nonassessable;

(m) the terms of the Notes, the Registration Rights Agreement, the Indenture and the capital stock of the Company, including the Shares, conform in all material respects to the description thereof contained in the Final Memorandum;

(n) no approval, authorization, consent or order of or filing with any national, state, local or other governmental or regulatory commission, board, body, authority or agency is required to be obtained or made by the Company or any of the Subsidiaries in connection with the issuance and sale of the Notes, the Exempt Resales or the issuance of Shares upon conversion of the Notes or the consummation by the Company of the other transactions contemplated hereby and by the Indenture, the Registration Rights Agreement and the Notes other than registration of the resale of the Notes and Shares under the Act as provided in the Registration Rights Agreement, any necessary qualification under the securities or blue sky laws of the various jurisdictions in which the Shares are being offered by the Initial Purchasers, any necessary registration or filings under the Exchange Act and the approvals required to be obtained after the date hereof, if any, with respect to the listing of the Shares on the Swiss SWX New Market (“SWX”) and on the Nasdaq National Market (“Nasdaq”), each of which shall be obtained on a timely basis;

(o) except as set forth in the Final Memorandum, (i) no person has the right, contractual or otherwise, to cause the Company to issue or sell to it any shares of Common Stock or shares of any other capital stock or other securities of the Company, (ii) no person has any preemptive rights, resale rights, rights of first refusal or other rights to purchase any shares of Common Stock or shares of any other capital stock or other equity interests of the Company, and (iii) no person has the right to act as an initial purchaser, or as a financial advisor to the Company, in connection with the offer and sale of the Notes, in the case of each of the foregoing clauses (i), (ii) and (iii), whether as a result of the sale of the Notes as contemplated hereby or otherwise, or, in the case of each of the foregoing clauses (i) and (ii), except for right s that will be complied with as the parties have agreed; no person has the right, contractual or otherwise, to cause the Company to register under the Act any shares of Common Stock or shares of any other capital stock or other securities of the Company, or to include any such shares or securities in the registration statement to be filed with the Commission


	pursuant to the Registration Rights Agreement as a result of the sale of the Notes as contemplated hereby or otherwise, except for such rights as have been or will be complied with or have been waived;

(p) KPMG LLP, whose report on the consolidated financial statements of the Company and the Subsidiaries is filed with the Commission and incorporated by reference in the Final Memorandum, are independent public accountants as required by the Act and the Exchange Act. Arthur Andersen LLP previously served as the Company’s auditors and as the auditors of IBEX Technologies Inc./Technologies IBEX Inc. – Therapeutics Enzymes Division and Glyko Biomedical Ltd., and during such service, were independent public accountants as required by the Exchange Act. During the Company’s last two fiscal years, (i) the Company has not had any disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K) with either KPMG LLP or Arthur Andersen LLP and (ii) neither KPMG LLP or Arthur Andersen LLP advised the Company of any reportable event (as described in Item 304(a)(1)(v) of Regulation S-K);

(q) except as disclosed in the Final Memorandum, and except for the approvals required to be obtained after the date hereof, if any, with respect to the listing of the Shares on the SWX, the Company and each of the Subsidiaries has all necessary licenses, permits, authorizations, consents and approvals and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule (collectively, “Permits”), and has obtained all necessary authorizations, consents and approvals from other persons (collectively, “Approvals”), in order to conduct its business as currently conducted as described in the Final Memorandum, other than such Permits and Approvals the failure of which to obtain could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; neither the Company nor any of the Subsidiaries is in violation of, or in default under, any such Permit or Approval or any federal, state, local or foreign law, regulation or rule or any decree, order or judgment applicable to the Company or any of the Subsidiaries the effect of which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(r) all legal or governmental proceedings, contracts, leases or documents of a character required to be described in any Incorporated Document or to be filed as an exhibit to any Incorporated Document have been so described or filed as required;

(s) except as disclosed in the Final Memorandum, there are no actions, suits, claims, investigations or proceedings pending or, to the Company’s knowledge, threatened to which the Company or any of the Subsidiaries, or to the Company’s knowledge any of their respective directors or officers, is a party or of which any of their respective properties is subject at law or in equity, or before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency which, if adversely decided, could reasonably be expected to result in a judgment, decree or order having a Material Adverse Effect


	or prevent consummation of the transactions contemplated hereby and by the Indenture, the Registration Rights Agreement and the Notes;

(t) the financial statements, together with the related schedules and notes, included in the Final Memorandum present fairly the consolidated financial position of the Company and the Subsidiaries as of the dates indicated and the consolidated results of operations and cash flows of the Company and the Subsidiaries for the periods specified and have been prepared in compliance with the requirements of the Act and in conformity with generally accepted accounting principles applied on a consistent basis during the periods involved; any pro forma financial statements or data included in the Final Memorandum comply as to form in all material respects with the applicable accounting requirements of Regulation S-X of the Act, and the pro forma adjustments have been properly applied to the historical amounts in the compilation of those statements; the other financial and statistical data set forth in the Final Memorandum are accurately presented and prepared on a basis consistent with such financial statements and books and records of the Company; and there are no financial statements (historical or pro forma) that are required to be included in the Final Memorandum that are not included as required;

(u) subsequent to the respective dates as of which information is given in the Final Memorandum, there has not been (i) any material adverse change, or any development that could reasonably be expected to have a prospective material adverse change, in the business, operations, properties, condition (financial or otherwise) or results of operations of the Company and the Subsidiaries taken as a whole, (ii) any transaction which is material to the Company or any of the Subsidiaries taken as a whole, (iii) any obligation, direct or contingent, which is material to the Company and the Subsidiaries taken as a whole, incurred by the Company or any of the Subsidiaries, (iv) any change in the capital stock or outstanding indebtedness of the Company or any of the Subsidiaries (other than pursuant to the exercise of stock options or warrants described in the Final Memorandum as outstanding or the grant of stock options under stock option plans and restricted stock granted pursuant to compensatory grants to consultants, each as described in the Final Memorandum) that is material to the Company and its Subsidiaries, taken as a whole or (v) any dividend or distribution of any kind declared, paid or made on the capital stock of the Company; neither the Company nor any of the Subsidiaries has any material contingent obligation which is not disclosed in the Final Memorandum;

(v) the Company has obtained for the benefit of the Initial Purchasers the agreement (a “Lock-Up Agreement”), in the form set forth as Exhibit B hereto, of each of its officers and directors; the Company will not release or purport to release any of its officers or directors from any Lock-Up Agreement without the prior written consent of UBS Securities LLC;

(w) the Company is not and, immediately after giving effect to the offering and sale of the Notes, will not be an “investment company” or an


	entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”);

(x) any statistical and market-related data included in the Final Memorandum are based on or derived from sources that the Company believes to be reliable and accurate, and the Company has obtained the written consent to the use of such data from such sources to the extent required;

(y) neither the Company nor any of the Subsidiaries nor any of their respective officers, directors and controlled affiliates or, to the Company’s knowledge, other affiliates has taken, directly or indirectly, any action designed to or which has constituted or which might reasonably be expected to cause or result, under the Exchange Act or otherwise, in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Notes or Shares issuable upon conversion of the Notes;

(z) the Incorporated Documents, when they were filed with the Commission, conformed in all material respects to the requirements of the Exchange Act, and none of such documents, when they were filed with the Commission, contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Final Memorandum, when such documents are filed with the Commission, will conform in all material respects to the requirements of the Exchange Act, as applicable, and will not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(aa) the Company and each of the Subsidiaries maintain insurance of the types and in amounts reasonable in light of their respective businesses and the cost and availability of such insurance, including, but not limited to, insurance covering real and personal property owned or leased by the Company and each of the Subsidiaries against theft, damage, destruction, acts of vandalism and other risks customarily insured against, all of which insurance is in full force and effect;

(bb) neither the Company nor any of the Subsidiaries has sustained since the date of the latest financial statements included in the Final Memorandum any losses or interferences with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Final Memorandum or other than any losses or interferences which could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(cc) the Company and each of the Subsidiaries have good title to all personal property owned by them as described in the Final Memorandum,

free and clear of all liens, encumbrances and defects except such as are described in the Final Memorandum or such as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect; except as described in the Final Memorandum, any property and buildings held under lease by the Company or any of the Subsidiaries are held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company or any of the Subsidiaries, as the case may be;

(dd) neither the Company nor any of the Subsidiaries has violated any foreign, federal, state or local law or regulation relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants, nor any federal or state law relating to discrimination in the hiring, promotion or pay of employees nor any applicable federal or state wages and hours laws, nor any provisions of the Employee Retirement Income Security Act or the rules and regulations promulgated thereunder, which could, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;

(ee) the Company and each of the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; the chief executive officer and principal financial officer of the Company have made all certifications required by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and any related rules and regulations promulgated by the Commission, and the statements contained in any such certification are complete and correct; the Company maintains “disclosure controls and procedures” (as defined in Rule 13a-14(c) under the Exchange Act); the Company is otherwise in compliance in all material respects with all applicable effective provisions of the Sarbanes-Oxley Act;

(ff) all tax returns required to be filed by the Company and each of the Subsidiaries have been filed, other than those filings being contested in good faith, and all taxes, including withholding taxes, penalties and interest, assessments, fees and other charges due pursuant to such returns or pursuant to any assessment received by the Company or any of the Subsidiaries have been paid, other than those being contested in good faith and for which adequate reserves have been provided;

(gg) other than as set forth in the Final Memorandum, or as would not individually or in the aggregate have a Material Adverse Effect, the

Company and the Subsidiaries own, possess, license or have other rights to use, all patents, copyrights, trade secrets, information, proprietary rights and processes (“Intellectual Property”) necessary for the conduct of their business as presently conducted as described in the Final Memorandum; except as described in the Final Memorandum, the Company has no knowledge of any options, licenses or agreements of any kind relating to the Intellectual Property of the Company or the Subsidiaries that are outstanding and which are required to be described in the Incorporated Documents, and, except as described in the Final Memorandum, neither the Company nor any of the Subsidiaries is a party to or bound by any options, licenses or agreements with respect to the Intellectual Property of any other person or entity which are required to be described in the Incorporated Documents; none of the technology employed by the Company and the Subsidiaries has been obtained or is used or proposed to be used by the Company or the Subsidiaries in violation of any contractual obligation binding on the Company or the Subsidiaries or, to the Company’s knowledge, any of their respective directors, executive officers or employees or otherwise in violation of the rights of any persons, other than any violation which would not individually or in the aggregate have a Material Adverse Effect; except as described in the Final Memorandum, to the Company’s knowledge neither the Company nor any of the Subsidiaries has violated, infringed or conflicted with, or, by conducting its business as described in the Final Memorandum and commercializing the products under development described therein, would violate, infringe or conflict with any of the Intellectual Property of any other person or entity other than any such violation, infringement or conflict which would not individually or in the aggregate have a Material Adverse Effect; and

(hh) the clinical, pre-clinical and other studies and tests conducted by or on behalf of or sponsored by the Company or any Subsidiary or in which the Company, any Subsidiary or its products or product candidates have participated that are described in the Final Memorandum or the results of which are referred to in the Final Memorandum were and, if still pending, are being conducted in accordance with accepted medical and scientific research procedures; the descriptions in the Final Memorandum of the results of such studies and tests are accurate in all material respects and fairly present the data derived from such studies and tests (in the case of each study and test performed by outside third parties, with reference to the information regarding such studies and tests provided to the Company by such third parties), and the Company and each Subsidiary has no knowledge of any other studies or tests the results of which are inconsistent with or otherwise call into question the results described or referred to in the Final Memorandum; except to the extent disclosed in the Final Memorandum, the Company and each Subsidiary has operated and currently is in compliance in all material respects with all applicable rules, regulations and policies of the U.S. Food and Drug Administration and comparable drug regulatory agencies outside of the United States applicable to the Company (collectively, the “Regulatory Authorities”); and except to the extent disclosed in the Final Memorandum, the Company has not received any notices or other correspondence from the Regulatory Authorities or any other governmental

agency requiring the termination, suspension or modification of any pending clinical or pre-clinical studies or tests that are described in the Final Memorandum or the results of which are referred to in the Final Memorandum.

(ii) When the Notes are issued pursuant to this Agreement, the Notes will not be of the same class (within the meaning of Rule 144A) as securities that are listed on a national securities exchange registered pursuant to Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system;

(jj) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under the Act, an “Affiliate”) of the Company 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 Act) which is or will be integrated with the sale of the Notes or the Exempt Resales in a manner that would require the registration under the Act of the offer or sale of the Notes or (ii) offered, solicited offers to buy or sold the Notes by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Act;

(kk) Based on the representations of the Initial Purchasers under Section 4, it is not necessary in connection with the offer, sale and delivery of the Notes to the Initial Purchasers pursuant to this Agreement, or in connection with the Exempt Resales, to register the offer or sale of the Notes or the Shares under the Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended;

(ll) The Company satisfies all conditions for the use of a registration statement on Form S-3 to register the Notes, and the Shares issuable upon conversion of the Notes, for resale.

4. Representations and Warranties of the Initial Purchasers. The Initial Purchasers propose to offer the Notes for sale upon the terms and conditions set forth in this Agreement and the Final Memorandum, and each Initial Purchaser hereby represents and warrants to and agrees with the Company that:

(a) It will offer and sell the Notes only to persons whom it reasonably believes are “qualified institutional buyers” (“QIBs”) within the meaning of Rule 144A in transactions meeting the requirements of Rule 144A and that, in purchasing such Notes, are deemed to have represented and agreed as provided in the Final Memorandum under the caption “Notice to Investors”;

(b) It is a QIB within the meaning of Rule 144A;

(c) It has not and will not, directly or indirectly, solicit offers for, or offer or sell, the Notes by any form of general solicitation, general

advertising (as such terms are used in Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Act; and

(d) With respect to offers and sales outside the United States:

(i) It understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Notes, or possession or distribution of either Memorandum or any other offering or publicity material relating to the Notes, in any country or jurisdiction where action for that purpose is required; and

(ii) The offer and sale of the Notes have not been registered under the Act and may not be offered or sold except in accordance with Rule 144A.

(iii) It has:


	(1)	not offered or sold and, prior to the date six months after the date of issue of the Notes, will not offer or sell any Notes to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995;


	(2)	only communicated or caused to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act of 2000) (the “FSMA”) received by it in connection with the issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuer; and


	(3)	complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Notes and the Shares issuable upon conversions of the Notes in, from or otherwise involving the United Kingdom.

5. Certain Covenants of the Company: The Company hereby agrees that:

(a) The Company will prepare the Final Memorandum in a form approved by the Initial Purchasers and will make no amendment or supplement to the Final Memorandum which shall reasonably be disapproved by the Initial Purchasers promptly after reasonable notice thereof;

(b) Promptly from time to time, the Company will take such action as the Initial Purchasers may reasonably request to qualify the Notes and the Shares for offering and sale under the securities laws of such jurisdictions as the Initial Purchasers may request and will comply with such laws so as to permit the continuance of sales and dealing therein in such jurisdictions for as long as may be necessary to complete the distribution of the Notes; provided, that in connection therewith the Company shall not be required to qualify as a foreign corporation, to file a general consent to service of process or subject itself to any tax in any such jurisdiction where it is not now so qualified or subject;

(c) The Company will furnish the Initial Purchasers with as many copies of the Final Memorandum, any documents incorporated by reference therein and any amendment or supplement thereto as the Initial Purchasers may from time to time reasonably request, and if, at any time prior to the completion of the resale of the Notes by the Initial Purchasers, any event shall have occurred as a result of which the Final Memorandum as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Final Memorandum is delivered, not misleading, or, if for any other reason it shall be necessary or desirable during such same period to amend or supplement the Final Memorandum, the Company will notify the Initial Purchasers and upon the request of the Initial Purchasers will prepare and furnish without charge to the Initial Purchasers and to any dealer in securities as many copies as the Initial Purchasers may from time to time reasonably request of an amended Final Memorandum or a supplement to the Final Memorandum which will correct such statement or omission or effect such compliance;

(d) During the period beginning from the date hereof and continuing until the date that is ninety (90) days after the date of the Final Memorandum, the Company will not sell, offer or agree to sell, contract to sell, hypothecate, pledge, grant any option to sell or otherwise dispose of, directly or indirectly, any Notes or Shares of Common Stock, any securities substantially similar to the Notes or the Common Stock, any securities that are convertible into or exchangeable for shares of Common Stock, any debt securities or any securities that are convertible into or exchangeable for the Notes or such other debt securities without the prior written consent of UBS Securities LLC, except for (i) the issuance of the Notes (or the Shares issued upon conversion thereof), (ii) issuances of Common Stock upon the exercise of options or warrants disclosed as outstanding in the Final Memorandum, (iii) the issuance of employee stock options not exercisable during the Lock-up Period pursuant to stock option

plans described in the Final Memorandum and (iv) compensatory grants of restricted stock or stock options, not exceeding 10,000 shares, to our consultants;

(e) At any time when the Company is not subject to Section 13 or 15(d) of the Exchange Act and so long as any of the Notes (or Shares issued upon conversion thereof) are “restricted securities” within the meaning of Rule 144(a)(3) under the Act, for the benefit of holders from time to time of the Notes, the Company will furnish at its expense, upon request, to holders and beneficial owners of Notes and prospective purchasers of Notes information satisfying the requirements of subsection (d)(4)(i) of Rule 144A;

(f) The Company will use its reasonable best efforts to cause the Notes to be eligible for trading in PORTAL;

(g) For so long as the Notes remain outstanding, the Company will furnish to the Initial Purchasers (i) copies of any reports or other communications which the Company shall send to its stockholders, (ii) copies of all annual, quarterly and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms, as may be designated by the Commission, and (iii) copies of documents or reports filed with any national securities exchange on which any class of securities of the Company is listed;

(h) The Company will use the net proceeds received by it from the sale of the Notes pursuant to this Agreement in the manner specified in the Final Memorandum under the caption “Use of Proceeds”;

(i) The Company will reserve and keep available at all times free of preemptive rights, Shares for the purpose of enabling the Company to satisfy any obligations to issue Shares upon conversion of the Notes;

(j) The Company will use its reasonable best efforts to list, as promptly as practicable but in no event later than the time that the registration statement is declared effective in accordance with the Registration Rights Agreement, and subject to notice of issuance, the Shares on the Nasdaq National Market;

(k) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including, without limitation, (i) the fees, disbursements and expenses of the Company’s counsel and the Company’s accountants in connection with the issuance and sale of the Notes and the Exempt Resales and all other fees and expenses in connection with the preparation of each Memorandum and all amendments and supplements thereto, including all printing costs associated therewith, and the furnishing of copies thereof to the Initial Purchasers and to dealers (including costs of mailing and shipment), (ii) all costs related to the preparation, issuance, execution, authentication and delivery of the Notes and

the Shares, (iii) all costs related to the transfer and delivery of the Notes to the Initial Purchasers, including any transfer or other taxes payable thereon, (iv) all expenses in connection with the qualification of the Notes and the Shares for offering and sale under state laws and the cost of printing and furnishing of copies of any blue sky or legal investment memorandum to the Initial Purchasers and to dealers (including filing fees and the fees and disbursements of counsel for the Initial Purchasers in connection with such qualification and in connection with such blue sky or legal investment memorandum), (v) the costs and charges of the Trustee and any transfer agent, registrar or depositary, (vi) the fees and expenses, if any, incurred in connection with the admission of the Notes for trading in PORTAL or any appropriate market system, (vii) the costs and expenses of the Company relating to presentations or meetings undertaken in connection with the marketing of the offering of the Notes to prospective investors and the Initial Purchasers’ sales forces, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel, lodging and other expenses incurred by the officers of the Company and any such consultants, and the cost of aircraft chartered, if any, in connection with the road show, and (viii) all other cost and expenses incident to the performance of the Company’s obligations hereunder for which provision is not otherwise made in this Section 5(k);

(l) Neither the Company nor any Affiliate of the Company will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Act) which could be integrated with the sale of the Notes in a manner which would require their registration under the Act of the Notes;

(m) The Company will not solicit any offer to buy or make any offer or sell the Notes or the Shares by means of any form of general solicitation or general advertising (as those terms are used in Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Act;

(n) During the period of two years after the time of purchase or the additional time of purchase, if later, the Company will not, and will not permit any of its affiliates (as defined in Rule 144 under the Act (“Rule 144”)) to resell any of the Notes or the Shares which constitute “restricted securities” under Rule 144 that have been reacquired by any of them except pursuant to an effective registration statement under the Act; and

(o) The Company will not take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the Notes contemplated hereby.

6. Reimbursement of Initial Purchasers’ Expenses: If the Firm Notes are not delivered for any reason other than the default by one or more of the Initial Purchasers in their obligations hereunder, the Company shall, in addition to paying the

amounts described in Section 5(k) hereof, reimburse the Initial Purchasers for all of their out-of-pocket expenses, including the reasonable fees and disbursements of their counsel.

7. Conditions of Initial Purchasers’ Obligations: The several obligations of the Initial Purchasers hereunder are subject to the accuracy of the representations and warranties on the part of the Company on the date hereof and at the time of purchase. The several obligations of the Initial Purchasers at the additional time of purchase are subject to the accuracy of the representations and warranties on the part of the Company on the date hereof, at the time of purchase (unless previously waived) and at the additional time of purchase, as the case may be. Additionally, the several obligations of the Initial Purchasers hereunder are subject to performance by the Company of its obligations hereunder and to the following conditions precedent:

(a) You shall have received, at the time of purchase and at the additional time of purchase, as the case may be, an opinion of Paul, Hastings, Janofsky & Walker LLP, counsel for the Company, addressed to the Initial Purchasers, and dated the time of purchase or the additional time of purchase, as the case may be, with reproduced copies for each of the other Initial Purchasers and in form reasonably satisfactory to Dewey Ballantine LLP, counsel for the Initial Purchasers, stating that:

(i) the Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware. The Company has full corporate power and authority to own, lease and operate its properties and conduct its business as described in the Final Memorandum, to execute and deliver this Agreement and to issue, sell and deliver the Notes as herein contemplated;

(ii) (a) each of the corporate Subsidiaries, other than BioMarin Pharmaceutical Nova Scotia Company, BioMarin Pharmaceutical Delivery Nova Scotia Company, BioMarin Holdings (Nova Scotia) Company, BioMarin Acquisitions (Nova Scotia) Company, BioMarin Pharmaceutical (Canada) Inc. BioMarin Delivery Canada Inc. and Glyko BioMedical Ltd. (collectively, the “Canadian Subsidiaries”), as to which such counsel need express no opinion) has been duly incorporated and is validly existing as a corporation is in good standing under the laws of its jurisdiction of incorporation with the corporate power and authority to own, lease and operate its properties and conduct its business as described in the Final Memorandum; (b) BioMarin/Genzyme LLC has been duly formed and is validly existing as a limited liability company in good standing under the laws of Delaware with the limited liability company power and authority to own, lease and operate its properties and conduct its business as described in the Final Memorandum;

(iii) each of the Company and each Subsidiary (other than the Canadian Subsidiaries, BioMarin Genetics, Inc., BioMarin


	Acquisition (Del.) Inc., BioMarin Holdings (Del.) Inc., and Glyko, Inc., a California corporation) is duly qualified to transact business as a foreign corporation or limited liability company, as the case may be, in the State of California and is in good standing in such jurisdiction;

(iv) this Agreement has been duly authorized, executed and delivered by the Company;

(v) the Registration Rights Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except (A) as such enforcement may be limited by bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, fraudulent transfer and other similar laws affecting creditors’ rights generally, and by general equitable principles, whether applied in a proceeding at law or in equity, and (B) the rights to indemnity and contribution may be limited by applicable law;

(vi) the Indenture has been duly authorized, executed and delivered by the Company and constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms except as such enforcement may be limited by bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, fraudulent transfer and other similar laws affecting creditors’ rights generally and by general equitable principles, whether applied in a proceeding at law or in equity;

(vii) the Notes have been duly authorized, executed and delivered by the Company and when duly authenticated by the Trustee in accordance with the terms of the Indenture and delivered to and paid for by the Initial Purchasers in accordance with the terms of the Purchase Agreement and the Indenture will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except as such enforcement may be limited by bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance, fraudulent transfer and other similar laws affecting the creditors’ rights generally, and by general equitable principles, whether applied in a proceeding at law or in equity, and will be entitled to the benefits of the Indenture;

(viii) the Shares initially issuable upon conversion of the Notes have been duly authorized and reserved for issuance upon conversion of the Notes, and when issued upon conversion of the Notes in accordance with their terms and the terms of the Indenture will be issued free of preemptive rights under the Delaware General Corporation Laws (the “DGCL”) or any contract, commitment or instrument to which the Company or any of the Subsidiaries is a party and which is described in the Final Memorandum or filed as an exhibit to any Incorporated

Document or identified by the Company to such counsel as material to the Company and the Subsidiaries, and such Shares, when so issued in accordance with the terms of the Indenture, will be validly issued and fully paid and nonassessable; as of March 31, 2003, the Company had authorized and outstanding shares of capital stock as set forth under the heading “Actual” in the section of the Final Memorandum titled “Capitalization”; the outstanding shares of capital stock of the Company (A) have been duly authorized and validly issued and are fully paid and non-assessable and (B) are free of preemptive rights under the DGCL or the charter of the Company; and the certificates for the Shares comply in all material respects with the requirements of the DGCL and NASDAQ;

(ix) all of the outstanding shares of capital stock of the corporate Subsidiaries (other than the Canadian Subsidiaries, as to which such counsel need express no opinion), have been duly authorized and validly issued, are fully paid and non-assessable, are owned of record by the Company (except as disclosed in the Final Memorandum), are not, to such counsel’s knowledge, subject to any perfected security interest or, to such counsel’s knowledge, any other encumbrance or adverse claim; to such counsel’s knowledge, no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligation into shares of capital stock or ownership interests in any of the Subsidiaries (other than the Canadian Subsidiaries, as to which such counsel need express no opinion) are outstanding;

(x) the statements in the Final Memorandum under the captions “Description of notes” and “Description of capital stock,” insofar as they purport to constitute a summary of legal matters, are correct summaries in all material respects.

(xi) no approval, authorization, consent or order of or filing with any federal or California governmental or regulatory commission, board, body, authority or agency with jurisdiction over the Company or the Subsidiaries is required in connection with the issuance and sale by the Company of the Notes pursuant to this Agreement, or the issuance of Shares upon conversion of the Notes pursuant to the Indenture, assuming all of such Shares are issued upon conversion of such Notes as of the date of such opinion, or the consummation of the transactions as contemplated hereby and by the Indenture, the Registration Rights Agreement and the Notes; provided, however, that such counsel need express no opinion with respect to the Act, the Exchange Act or the Trust Indenture Act of 1939 (except, in each instance, as expressly set forth herein), the state securities or blue sky laws of the various jurisdictions in which the Notes are being offered by the Initial Purchasers, Nasdaq or any approval of the SWX;

(xii) the execution, delivery and performance of this Agreement, the Registration Rights Agreement, the Indenture and the Notes by the Company, including the consummation of the transactions contemplated hereby and thereby, do not constitute, whether with the giving of notice or the passage of time or both, a Default Event pursuant to (A) any provision of the charter or bylaws or other organizational documents of the Company or any of the Subsidiaries (other than the Canadian Subsidiaries, as to which such counsel need express no opinion), (B) any license, permit, franchise, authorization issued to the Company or any of the Subsidiaries (other than the Canadian Subsidiaries, as to which such counsel need express no opinion), or any indenture, mortgage, deed of trust, note, bank loan or credit agreement or other evidence of indebtedness, or any lease, contract or other agreement or instrument to which the Company or any of the Subsidiaries (other than the Canadian Subsidiaries, as to which such counsel need express no opinion) is a party filed as an exhibit to any Incorporated Document or identified by the Company to such counsel as material to the Company or any of the Subsidiaries, as the case may be, (C) any federal or California or New York law, regulation or rule or (D) any federal or California decree, judgment or order that is applicable to the Company or any of the Subsidiaries and that is identified to such counsel by the Company as material to the Company and the Subsidiaries, other than, in the case of clause (B) such Default Events as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

(xiii) assuming (a) the respective representations and warranties of the Company and the Initial Purchasers contained in this Agreement are true and correct, (b) compliance by the Company and the Initial Purchasers with their respective covenants set forth herein and (c) each person who purchases Notes from the Initial Purchasers upon the initial resale of the Notes is a QIB, it is not necessary in connection with (i) the offer, sale and delivery of the Notes by the Company to the Initial Purchasers pursuant to this Agreement or (ii) the initial resales of the Notes by the Initial Purchasers in the manner contemplated in this Agreement to register the Notes or the Shares under the Act or to qualify the Indenture in respect thereof under the Trust Indenture Act of 1939, as amended, it being understood that no opinion is expressed as to any subsequent resale of any Note or Share;

(xiv) to such counsel’s knowledge, there are no contracts, licenses, agreements, leases or documents of a character which are required to be filed as exhibits to the Incorporated Documents or to be summarized or described in the Incorporated Documents which have not been so filed, summarized or described;

(xv) to such counsel’s knowledge, there are no actions, suits, claims, investigations or proceedings pending or threatened to which

the Company or any of the Subsidiaries is subject or of which any of their respective properties is subject, whether at law, in equity or before or by any federal or California governmental or regulatory commission, board, body, authority or agency, which are required to be described in the Final Memorandum but are not so described;

(xvi) the Incorporated Documents (except as to the financial statements, notes and schedules and other information of a financial, statistical or accounting nature contained therein or incorporated by reference, as to which such counsel need express no opinion) appear on their face to have complied as to form in all material respects, at the time such documents were filed with the Commission, with the then applicable requirements of the Exchange Act;

(xvii) the Company is not and, immediately after giving effect to the offer and sale of the Notes, will not be an “investment company” or an entity “controlled” by an “investment company,” as such terms are defined in the Investment Company Act;

(xviii) those statements (A) in the Final Memorandum under the captions “Risk factors — If our joint venture with Genzyme were terminated, we could be barred from commercializing Aldurazyme or our ability to successfully commercialize Aldurazyme would be delayed or diminished,” “Risk factors — Anti-takeover provisions in our charter documents, our stockholders’ rights plan and under Delaware law may make an acquisition of us, which may be beneficial to our stockholders, more difficult” and “Certain United States federal income tax considerations,” (B) in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002 (the “10-K”) under the captions “Item 1. Description of Business — Factors that may affect future results — If our joint venture with Genzyme were terminated, we could be barred from commercializing Aldurazyme or our ability to commercialize Aldurazyme would be delayed or diminished” and “Item 1. Description of Business —Factors that may affect future results — Anti-takeover provisions in our charter documents, our stockholders’ rights plan and under Delaware law may make an acquisition of us, which may be beneficial to our stockholders, more difficult,” (C) in the Company’s Quarterly Report on Form 10-Q for the period ending March 31, 2003 under the captions “Part I. Financial Information — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — If our joint venture with Genzyme were terminated, we could be barred from commercializing Aldurazyme or our ability to commercialize Aldurazyme would be delayed or diminished” and “Part I. Financial Information — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — Anti-takeover provisions in our charter documents, our stockholders’ rights

plan and under Delaware law may make an acquisition of us, which may be beneficial to the stockholders, more difficult,” and (D) in the Company’s Form 8-A filed with the Commission on July 15, 1999 pursuant to Section 12(g) of the Exchange Act under the captions “Description of Capital Stock – Common Stock,” “Description of Capital Stock – Preferred Stock” and “Description of Capital Stock – Charter and Bylaw Provisions,” to the extent such statements include descriptions of contracts, agreements or refer to statements of law or legal conclusions, are accurate in all material respects, except to the extent that such statements have been modified or amended pursuant to statements subsequently filed with the Commission in reports listed herein;

(xix) no person, other than the parties to the Registration Rights Agreement, has the right as a result of the transactions contemplated by the Registration Rights Agreement pursuant to the terms of any contract, agreement or other instrument described in the Final Memorandum or filed as an exhibit to Incorporated Document or, to such counsel’s knowledge, any other contract, agreement or instrument to which the Company is a party to have any securities issued by the Company and owned by them registered pursuant to the Act and included in the registration statement to be filed pursuant to the Registration Rights Agreement, except for such rights as have been complied with or waived;

In rendering any such opinion, such counsel may rely, as to matters of fact, on certificates of officers of the Company and public officials. Such opinion may be limited solely to the application of the laws of the United States of America, the laws of the states of California and New York and the Delaware General Corporation Law. All matters relating to intellectual property and food and drug regulatory matters may be excluded from such opinion. Such opinion may be subject to such other assumptions, qualifications, limitations and definitions as are usual and customary in the rendering of such opinions in the aforementioned jurisdictions.

In addition, such counsel shall state that such counsel has participated in conferences with officers and other representatives of the Company, representatives of the independent public accountants of the Company and representatives of the Initial Purchasers at which the contents of the Final Memorandum were discussed and, although such counsel has not independently verified and is not passing upon and does not assume responsibility for the accuracy, completeness or fairness of the statements contained in the Final Memorandum (except as to the extent stated, but only to the extent expressly stated, in such opinion), on the basis of the foregoing, relying as to materiality to a large extent on the representations of officers and other representatives of the Company, no fact has come to the attention of such counsel which leads them to believe that the Final Memorandum or any amendment thereto, as of the date of the Final Memorandum or the date of such amendment, and as of the date of such opinion, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (it being understood that such counsel need express no

view with respect to the financial statements, notes and schedules thereto and other information of a financial, statistical or accounting nature included or incorporated by reference in the Final Memorandum).

(b) You shall have received, at the time of purchase and at the additional time of purchase, as the case may be, in the case of clause (i), (ii) and (iv) below, an opinion of Stewart McKelvey Stirling Scales, Nova Scotia counsel for the Company, with respect to the Subsidiaries incorporated in Nova Scotia, Cassels Brock & Blackwell LLP, Canadian counsel for the Company, with respect to the Subsidiaries incorporated pursuant to the Canada Business Corporations Act and McCullough, O’Connor Irwin, British Columbia counsel for the Company, with respect to the Subsidiary incorporated in British Columbia; in the case of clause (iii) below, an opinion of Desjardins Ducharme Stein Monast, Quebec counsel to the Company; and in the case of clause (v) below, an opinion of Cassels Brock & Blackwell LLP, with respect to the Canadian Subsidiaries, Canadian counsel for the Company, in each case, addressed to the Initial Purchasers, and dated the time of purchase or the additional time of purchase, as the case may be, and in form reasonably satisfactory to Dewey Ballantine LLP, counsel for the Initial Purchasers, stating that:

(i) each of the Canadian Subsidiaries has been duly incorporated and is validly existing as, in the case of the Subsidiaries incorporated in Nova Scotia, an unlimited company, and in the case of all other Canadian Subsidiaries, a corporation, under the laws of its jurisdiction of incorporation with the corporate power and authority to own, lease and operate its properties and conduct its business as described in the Final Memorandum;

(ii) all of the outstanding shares of capital stock of the Canadian Subsidiaries have been duly authorized and validly issued, are fully paid and non-assessable, are owned of record by the Company (except as disclosed in the Final Memorandum), are not, to such counsel’s knowledge, subject to any perfected security interest or, to such counsel’s knowledge, any other encumbrance or adverse claim; to such counsel’s knowledge, no options, warrants or other rights to purchase, agreements or other obligations to issue or other rights to convert any obligation into shares of capital stock or ownership interests in any of the Canadian Subsidiaries are outstanding;

(iii) BioMarin Pharmaceutical Nova Scotia Company is duly qualified to do business in the Province of Quebec;

(iv) the execution, delivery and performance of this Agreement by the Company, including the consummation of the transactions contemplated hereby and by the Final Memorandum, do not constitute, whether with the giving of notice or the passage of time or both, a Default Event pursuant to (A) any provision of the charter or


	bylaws or other organizational documents of the Canadian Subsidiaries; or (B) any Canadian federal or provincial law, regulation or rule; and

(v) the execution, delivery and performance of this Agreement, the Registration Rights Agreement, the Indenture and the Notes by the Company, including the consummation of the transactions contemplated hereby and thereby and by the Final Memorandum, do not constitute, whether with the giving of notice or the passage of time or both, a Default Event pursuant to (A) any provision of any license, permit, franchise, authorization, indenture, mortgage, deed of trust, note, bank loan or credit agreement or other evidence of indebtedness, or any lease, contract or other agreement or instrument filed as an exhibit to the Incorporated Documents and issued by any of the Canadian Subsidiaries or to which or any of the Canadian Subsidiaries is a party, or (B) any decree, judgment or order identified to such counsel by the Company as material to the Canadian Subsidiaries, other than, in the case of clause (A) such Default Events as could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(c) You shall have received at the time of purchase and at the additional time of purchase, as the case may be, the opinion of Howrey Simon Arnold & White, LLP, such counsel to the Company, dated the time of purchase or the additional time of purchase, as the case may be, and in form reasonably satisfactory to Dewey Ballantine LLP, counsel for the Initial Purchasers, stating that:

(i) such counsel (A) represents the Company in certain matters relating to intellectual property, including patents, (B) is generally familiar with the technology for which patents have been sought by or licensed to the Company for use in its business and the manner of such use, and (C) has read (I) the portions of the Final Memorandum, as they relate to patents, discussed under the captions “Risk factors — If we are unable to protect our proprietary technology, we may not be able to compete as effectively” and “Risk factors — The United States Patent and Trademark Office has issued three patents that relate to (alpha)-L-iduronidase. If we are not able to successfully challenge these patents, we may be prevented from producing Aldurazyme in the United States unless and until we obtain a license” and (II) the portions of the 10-K, as they relate to patents, discussed under the captions “Description of Business — Patents and Proprietary Rights,” (I) and (II) being hereinafter referred to as the “Patent Portions;”

(ii) based upon such counsel’s investigation, the statements in the Final Memorandum and 10-K under the Patent Portions (a) were true, correct and complete statements or summaries as of the date of the Final Memorandum and (b) are true, correct and complete


	statements or summaries at the time of purchase, or the additional time of purchase, as the case may be;

(iii) such counsel has reviewed the patents and patent applications filed in the U.S., and foreign counterparts thereto, that are owned by the Company, and patents and patent applications filed in the U.S., and foreign counterparts thereto, that are licensed exclusively to the Company (the “Patents”); in such counsel’s opinion, the Patents owned by the Company have been properly prepared and filed on behalf of the Company and are being diligently prosecuted by the Company; insofar as such counsel is aware, based upon its investigation, the Patents licensed to the Company have been properly prepared and filed and have been or are being diligently prosecuted by the licensor; based upon such counsel’s investigation, except as disclosed in the Final Memorandum, no other entity or individual has any right or claim to any of the Patents or inventions disclosed therein; in such counsel’s opinion, each of the Patents discloses patentable subject matter under 35 U.S.C. § 101; such counsel is unaware of any facts from which it has concluded that the Patents fail to disclose patentable subject matter under the other provisions of Title 35;

(iv) such counsel is not aware of pending or threatened legal, governmental or administrative agency proceedings relating to Patents, except as described in the Final Memorandum;

(v) according to the records of such counsel, the Company is the licensee of, or is listed in the records of the appropriate Patent Office(s) as the owner of record of, the Patents listed on the attachment to the such counsel’s opinion; for inventions that are the subject of Patents owned by the Company, the Company has obtained an assignment of all right, title and interest from all inventors that have been identified to such counsel and is the owner of all right, title and interest in such Patents;

(vi) except as set forth in the Final Memorandum under the caption “Risk factors,” such counsel has not become aware, after investigation, that the Company is infringing or otherwise violating any patents of others, nor has such counsel become aware, after investigation, of any patent rights of third parties that could reasonably be expected to affect materially the ability of the Company to conduct its business as described in the Final Memorandum and 10-K (including commercialization of products under development of which such counsel is aware);

(vii) to the knowledge of such counsel, after investigation, the Company owns or possesses the right to use its issued patents and the issued patents licensed exclusively to the Company to exclude others from conducting the business now being proposed to be


	conducted by the Company, as described in the Final Memorandum and 10-K and as encompassed by the claims of the such issued patents; such counsel expresses no business opinion as to the ability of the Company to commercialize products; and

(viii) such counsel has no reason to believe that the information in the Patent Portions, as of the date of the Final Memorandum, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or that, at the time of purchase, or the additional time of purchase, as the case may be, the information in the Patent Portions contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(d) You shall have received at the time of purchase and at the additional time of purchase, as the case may be, the opinion of Hyman, Phelps & McNamara, P.C., regulatory counsel for the Company, dated the time of purchase or the additional time of purchase, as the case may be, in form reasonably satisfactory to the Initial Purchasers, stating that:

(i) The statements of federal law or regulation, contained in (A) the 10-K, under the captions “Description of Business — Overview,” “Description of Business — Recent Developments — FDA issues complete response letter,” “Description of Business — Unanimous FDA advisory committee recommendations, “Description of Business — Aldurazyme,” “Description of Business — Neutralase,” “Description of Business — Aryplase,” “Description of Business — Other Product Development Programs,” “Description of Business — Manufacturing,” “Description of Business — Government Regulation,” “Description of Business — Factors that may affect future results — — If we fail to obtain regulatory approval to commercially manufacture or sell any of our future drug products, or if approval is delayed, we will be unable to generate revenue from the sale of our products, our potential for generating positive cash flow will be diminished and the capital necessary to fund our operations will be increased,” “Description of Business — Factors that may affect future results — To obtain regulatory approval to market our products, preclinical studies and costly and lengthy clinical trials will be required and the results of the studies and trials are highly uncertain,” “Description of Business — Factors that may affect future results — The fast track designation for our product candidates may not actually lead to a faster review process and a delay in the review process or approval of our products will delay revenue from the sale of the products and will increase the capital necessary to fund these programs,” “Description of Business — Factors that may affect future results — We will not be able to sell our products if we fail to comply with manufacturing regulations,”

“Description of Business — Factors that may affect future results — If we fail to obtain orphan drug exclusivity for some of our products, our competitors may sell products to treat the same conditions and our revenue will be reduced,” “Description of Business — Factors that may affect future results — If we fail to obtain an adequate level of reimbursement for our drug products by third-party payers, the sale of our drugs would be adversely affected or there may be no commercially viable markets for our products;” (B) the Company’s Quarterly Report on Form 10-Q for the period ending March 31, 2003, under the captions “Part I. Financial Information — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview,” “Part I. Financial Information —Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — If we fail to obtain regulatory approval to commercially manufacture or sell any of our future drug products, or if approval is delayed, we will be unable to generate revenue from the sale of our products, our potential for generating positive cash flow will be diminished and the capital necessary to fund our operations will be increased,” “Part I. Financial Information — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — To obtain regulatory approval to market our products, preclinical studies and costly and lengthy clinical trials will be required and the results of the studies and trials are highly uncertain,” “Part I. Financial Information —Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — The fast track designation for our product candidates may not actually lead to a faster review process and a delay in the review process or approval of our products will delay revenue from the sale of the products and will increase the capital necessary to fund these programs,” “Part I. Financial Information — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — We will not be able to sell our products if we fail to comply with manufacturing regulations,” “Part I. Financial Information — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — If we fail to obtain orphan drug exclusivity for some of our products, our competitors may sell products to treat the same conditions and our revenue will be reduced,” and “Part I. Financial Information — Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors that may affect future results — If we fail to obtain an adequate level of reimbursement for our drug products by third-party payers, the sales of our drugs would be adversely affected or there may be no commercially viable markets for our products;” (C) the Final Memorandum, under the captions “Offering memorandum summary — Business Overview,” “Offering memorandum summary — Recent Developments,” “Offering memorandum summary —

Aldurazyme,” “Offering memorandum summary — Neutralase,” “Offering memorandum summary — Aryplase,” “Offering memorandum summary — Other product development programs,” “Offering memorandum summary — Our Strategy,” “Risk factors—If we fail to obtain or maintain regulatory approval to commercially manufacture or sell our drug products, or if approval is delayed, we will be unable to generate revenue from the sale of our products, our potential for generating positive cash flow will be diminished and the capital necessary to fund our operations will be increased,” “Risk factors—To obtain regulatory approval to market our products, preclinical studies and costly and lengthy clinical trials will be required and the results of the studies and trials are highly uncertain,” “Risk factors—The fast track designation for our product candidates may not actually lead to a faster review process and a delay in the review process or approval of our products will delay revenue from the sale of the products and will increase the capital necessary to fund these programs,” “Risk factors—We will not be able to sell our products if we fail to comply with manufacturing regulations,” “Risk factors—If we fail to obtain or maintain orphan drug exclusivity for some of our products, our competitors may sell products to treat the same conditions and our revenue will be reduced,” “Risk factors—If we fail to obtain an adequate level of reimbursement for our drug products by third-party payers, the sales of our drugs would be adversely affected or there may be no commercially viable markets for our products;” (D) the Company’s Current Reports on Form 8-K incorporated by reference in the Final Memorandum; and (E) other references in the Final Memorandum, the Form 10-Q for the period ending March 31, 2003, the Company’s Current Reports on Form 8-K incorporated by reference in the Final Memorandum and the 10-K to U.S. Food and Drug Administration regulation of pharmaceutical products, (A), (B), (C), (D) and (E) being collectively referred to herein as the “Regulatory Portion,” are, in all material respects, correct and accurate statements or summaries of applicable federal law and regulation, subject to the qualifications set forth therein,

(ii) nothing has come to such counsel’s attention which has caused such counsel to believe that the information included or incorporated by reference in the Regulatory Portion of the Final Memorandum, as of its date and at the time of purchase, or the additional time of purchase, as the case may be, or the 10-K, as of the date it was filed, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and

(iii) to the best of such counsel’s knowledge, the Company’s business, as currently conducted and solely as described in the Final Memorandum and 10-K does not violate the Federal Food, Drug and Cosmetic Act, the Public Health Service Act or any FDA rule or


	regulation, and, to the best of such counsel’s knowledge, there are no FDA judicial or administrative proceedings pending or threatened against the Company.

(e) You shall have received at the time of purchase and at the additional time of purchase, as the case may be, the opinion of Dewey Ballantine LLP, counsel for the Initial Purchasers, dated the time of purchase or the additional time of purchase, as the case may be, with respect to the issuance and sale of the Notes by the Company, the Final Memorandum (together with any supplement thereto) and other related matters as the Initial Purchasers may require.

(f) You shall have received from KPMG letters dated, respectively, the date of this Agreement and the time of purchase and additional time of purchase, as the case may be, and addressed to the Initial Purchasers in the forms heretofore approved Dewey Ballantine LLP, counsel for the Initial Purchasers.

(g) No amendment or supplement to either the Preliminary Memorandum or the Final Memorandum, or any document which upon filing with the Commission would be incorporated by reference in either Memorandum, shall at any time have been made or filed to which you have objected in writing;

(h) At the time of purchase or the additional time of purchase, as the case may be, the Final Memorandum shall not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

(i) Between the time of execution of this Agreement and the time of purchase or the additional time of purchase, as the case may be, (i) no material adverse change or any development reasonably likely to result in a prospective material adverse change in the business, properties, financial condition or results of operations of the Company and the Subsidiaries taken as a whole shall occur or become known and (ii) no transaction which is material and adverse to the Company shall have been entered into by the Company or any of the Subsidiaries;

(j) The Company will, at the time of purchase and, if applicable, at the additional time of purchase, deliver to you a certificate signed by two of the Company’s executive officers to the effect that the representations and warranties of the Company set forth in this Agreement are true and correct as of each such date, that the Company has performed such of its obligations under this Agreement as are to be performed at or before the time of purchase and at or before the additional time of purchase, as the case may be, and the conditions set forth in paragraphs (h) and (i) of this Section 7 have been met;

(k) You shall have received a certificate of the Chief Financial Officer and Principal Financial and Accounting Officer of the Company, dated the date of the time of purchase or the additional time of purchase, as applicable, in the form attached as Exhibit C hereto, respecting the Company’s compliance, both prior to and after giving effect to the transactions contemplated hereby, with certain agreements and instruments respecting outstanding indebtedness of the Company and the Subsidiaries;

(l) You shall have received copies, duly executed by the Company and the other parties thereto (other than the Initial Purchasers, if applicable), of the Registration Rights Agreement and the Indenture;

(m) Each executive officer and director of the Company shall have entered into Lock-Up Agreements in the form attached as Exhibit B hereto on or prior to the date hereof, and each such Lock-Up Agreement shall have been delivered to you and shall be in full force and effect at the time of purchase and the additional time of purchase, as the case may be;

(n) The Company shall have furnished to you such other documents and certificates as to the accuracy and completeness of any statement in the Final Memorandum as of the time of purchase and the additional time of purchase, as the case may be, as you may reasonably request;

(o) The Notes shall have been designated for trading on PORTAL, subject only to notice of issuance at or prior to the time of purchase; and

(p) Between the time of execution of this Agreement and the time of purchase or additional time of purchase, as the case may be, there shall not have occurred any downgrading, nor shall any notice have been given of (i) any intended or potential downgrading or (ii) any watch, review or possible change that does not indicate an affirmation or improvement in the rating accorded any securities of or guaranteed by the Company or any Subsidiary by any “nationally recognized statistical rating organization,” as that term is defined in Rule 436(g)(2) under the Act.

8. Termination: The obligations of the several Initial Purchasers hereunder shall be subject to termination in the absolute discretion of you or any group of Initial Purchasers which has agreed to purchase in the aggregate at least 50% of the Firm Notes, (i) if, since the time of execution of this Agreement or the respective dates as of which information is given in the Final Memorandum, there has been any material adverse change, financial or otherwise (other than as specifically described in the Final Memorandum), in the operations, business, condition or prospects of the Company and the Subsidiaries taken as a whole, which would, in your judgment or in the judgment of such group of Initial Purchasers, make it impracticable to market the Notes or (ii) if, at any time prior to the time of purchase or, with respect to the purchase of any Additional Notes, the additional time of purchase, as the case may be, trading in securities on the New York Stock Exchange, the American Stock Exchange or NASDAQ shall

have been suspended or limitations or minimum prices shall have been established on the New York Stock Exchange, the American Stock Exchange or NASDAQ, or if a banking moratorium shall have been declared either by the United States or New York State authorities, or if the United States shall have declared war in accordance with its constitutional processes or there shall have occurred any material outbreak or escalation of hostilities or other national or international calamity or crisis of such magnitude in its effect on the financial markets of the United States as, in your judgment or in the judgment of such group of Initial Purchasers, to make it impracticable to market the Notes.

If you or any group of Initial Purchasers elects to terminate this Agreement as provided in this Section 8, the Company and each other Initial Purchaser shall be notified promptly by letter or telegram from such terminating Initial Purchaser.

If the sale to the Initial Purchasers of the Notes, as contemplated by this Agreement, is not carried out by the Initial Purchasers for any reason permitted under this Agreement or if such sale is not carried out because the Company shall be unable to comply with any of the terms of this Agreement, the Company shall not be under any obligation or liability under this Agreement (except to the extent provided in Sections 5(k), 6 and 9 hereof), and the Initial Purchasers shall be under no obligation or liability to the Company under this Agreement (except to the extent provided in Section 9 hereof) or to one another hereunder.

9. Indemnity by the Company and the Initial Purchasers:

(a) The Company agrees to indemnify, defend and hold harmless each Initial Purchaser, its directors and officers, and any person who controls any Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act (each, an “Initial Purchaser Indemnified Party”), from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which such Initial Purchaser Indemnified Party may incur under the Act, the Exchange Act or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in any Memorandum, as amended or supplemented, if applicable, or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, except insofar as any such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission of a material fact contained in or omitted from and in conformity with information furnished in writing by or on behalf of any Initial Purchaser to the Company expressly for use therein; provided however, that this indemnity agreement with respect to any Preliminary Memorandum or amended Preliminary Memorandum shall not inure to the benefit of any Initial Purchaser from whom the person asserting any such loss, damage, expense, liability or claim purchased the Notes which is the subject thereof if the Final Memorandum corrected any such alleged untrue statement or omission and if such Initial Purchaser failed to send or give a copy of the Final Memorandum to such person at or prior to the written confirmation of the sale of such Shares to such person, unless the failure is the result of noncompliance by the Company with Section 5(c) hereof.

(b) Each Initial Purchaser severally agrees to indemnify, defend and hold harmless the Company, its directors and officers and any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act (each, a “Company Indemnified Party”) from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which such Company Indemnified Party may incur under the Act, the Exchange Act or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any untrue statement or alleged untrue statement of a material fact contained in information furnished in writing by or on behalf of such Initial Purchaser to the Company expressly for use in any Memorandum or arises out of or is based upon any omission or alleged omission to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in connection with such information.

(c) If any action, suit or proceeding (each, a “Proceeding”) is brought against any person in respect of which indemnity may be sought pursuant to either subsection (a) or (b) of this Section 9, such person (the “Indemnified Party”) shall promptly notify the person against whom such indemnity may be sought (the “Indemnifying Party”) in writing of the institution of such Proceeding and such Indemnifying Party shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such Indemnified Party and payment of all fees and expenses; provided, however, that the omission to so notify such Indemnifying Party shall not relieve such Indemnifying Party from any liability which it may have to such Indemnified Party or otherwise, except to the extent materially prejudiced by such omission. Such Indemnified Party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless the employment of such counsel shall have been authorized in writing by such Indemnifying Party in connection with the defense of such Proceeding or such Indemnifying Party shall not have employed counsel to have charge of the defense of such Proceeding within 30 days of the receipt of notice thereof or such Indemnified Party shall have reasonably concluded upon written advice of counsel that there may be defenses available to it that are different from, additional to, or in conflict with those available to such Indemnifying Party (in which case such Indemnifying Party shall not have the right to direct that portion of the defense of such Proceeding on behalf of such Indemnified Party, but such Indemnifying Party may employ counsel and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Indemnifying Party), in any of which events such reasonable fees and expenses shall be borne by such Indemnifying Party and paid as incurred (it being understood, however, that such Indemnifying Party shall not be liable for the expenses of more than one separate counsel in any one Proceeding or series of related Proceedings together with reasonably necessary local counsel representing the Indemnified Parties who are parties to such Proceeding). An Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, but if settled with the written consent of such Indemnifying Party, such Indemnifying Party agrees to indemnify and hold harmless an Indemnified Party from and against any loss or liability by reason of such settlement. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested an Indemnifying Party to reimburse such

Indemnified Party for fees and expenses of counsel as contemplated by the second sentence of this paragraph, then such Indemnifying Party agrees that it shall be liable for any settlement of any Proceeding effected without its written consent if (i) such settlement is entered into more than 60 business days after receipt by such Indemnifying Party of the aforesaid request, (ii) such Indemnifying Party shall not have reimbursed such Indemnified Party in accordance with such request prior to the date of such settlement and (iii) such Indemnified Party shall have given such Indemnifying Party at least 30 days’ prior notice of its intention to settle. An Indemnifying Party shall not, without the prior written consent of any Indemnified Party, effect any settlement of any pending or threatened Proceeding in respect of which such Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such Indemnified Party.

(d) If the indemnification provided for in this Section 9 is unavailable to an Indemnified Party under subsections (a) and (b) of this Section 9 in respect of any losses, damages, expenses, liabilities or claims referred to therein, then each applicable Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, damages, expenses, liabilities or claims (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Initial Purchasers on the other hand from the offering of the Notes or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Initial Purchasers on the other in connection with the statements or omissions which resulted in such losses, damages, expenses, liabilities or claims, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Initial Purchasers on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of Initial Purchasers’ discounts and commissions but before deducting expenses) received by the Company bear to the discounts and commissions received by the Initial Purchasers. The relative fault of the Company on the one hand and of the Initial Purchasers on the other shall be determined by reference to, among other things, whether the untrue statement or alleged untrue statement of a material fact or omission or alleged omission relates to information supplied by the Company or by the Initial Purchasers and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, damages, expenses, liabilities and claims referred to above shall be deemed to include any reasonable legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any Proceeding.

(e) The Company and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to this Section 9 were determined by pro rata allocation or by any other method of allocation which does not take account of the

equitable considerations referred to in subsection (d) above. Notwithstanding the provisions of this Section 9, no Initial Purchaser shall be required to contribute any amount in excess of the amount by which the total price at which the Notes resold by it in the initial placement of such Notes were offered to investors exceeds the amount of any damages which such Initial Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial Purchasers’ respective obligations to contribute pursuant to this Section 9 are several in proportion to the respective principal amount of Notes they have purchased hereunder, and not joint. The remedies provided for in this Section 9 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

(f) The indemnity and contribution agreements contained in this Section 9 and the covenants, warranties and representations of the Company and the Initial Purchasers contained in this Agreement shall remain in full force and effect (regardless, with respect to representations and warranties of the Company, of any investigation made by on behalf of any Initial Purchaser, its directors or officers or any person who controls any Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on behalf of the Company, its directors and officers or any person who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act) and shall survive any termination of this Agreement or the issuance and delivery of the Notes. The Company and the Initial Purchasers agree promptly to notify the other of the commencement of any litigation or proceeding against it and, in the case of the Company, against any of the Company’s officers and directors, in connection with the issuance and sale of the Notes, or in connection with any Memorandum.

10. Effectiveness; Increase in Initial Purchasers’ Commitments: This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

Subject to Sections 7 and 7(p), if, at the time of purchase, or the additional time of purchase, as the case may be, any Initial Purchaser shall default in its obligation to take up and pay for the Notes to be purchased by it at such time hereunder (otherwise than for a reason sufficient to justify the termination of this Agreement under the provisions of Section 7(p) hereof) and if the aggregate principal amount of Notes which all Initial Purchasers so defaulting shall have agreed but failed to take up and pay for at such time does not exceed ten percent (10%) of the total aggregate principal amount of Notes to be purchased at such time, the non-defaulting Initial Purchasers shall take up and pay for (in addition to the aggregate number of Notes they are obligated to purchase at such time pursuant to Section 1 hereof) the aggregate principal amount of Notes agreed to be purchased by all such defaulting Initial Purchasers at such time, as hereinafter provided. Such Notes shall be taken up and paid for by such non-defaulting Initial Purchaser or Initial Purchasers in such amount or amounts as you may designate with the consent of each Initial Purchaser so designated or, in the event no such designation is

made, such Notes shall be taken up and paid for by all non-defaulting Initial Purchasers pro rata in proportion to the aggregate principal amount of Firm Notes set opposite the names of such non-defaulting Initial Purchasers in Schedule A.

Without relieving any defaulting Initial Purchaser from its obligations here-under, the Company agrees with the non-defaulting Initial Purchasers that it will not sell any Firm Notes hereunder unless all of the Firm Notes are purchased by the Initial Purchasers (or by substituted Initial Purchasers selected by you with the approval of the Company or selected by the Company with your approval).

If a new Initial Purchaser or Initial Purchasers are substituted by the Initial Purchasers or by the Company for a defaulting Initial Purchaser or Initial Purchasers in accordance with the foregoing provision, the Company or you shall have the right to postpone the time of purchase for a period not exceeding five (5) business days in order that any necessary changes in the Final Memorandum and other documents may be effected.

The term “Initial Purchasers” as used in this Agreement shall refer to and include any Initial Purchaser substituted under this Section 10 with like effect as if such substituted Initial Purchaser had originally been named in Schedule A.

If, at the time of purchase, the aggregate principal amount of Firm Notes which the defaulting Initial Purchaser or Initial Purchasers agreed to purchase exceeds ten percent (10%) of the total principal amount of Firm Notes which all Initial Purchasers agreed to purchase hereunder, and if neither the non-defaulting Initial Purchasers nor the Company shall make arrangements within the five (5) business day period stated above for the purchase of all the Firm Notes which the defaulting Initial Purchaser or Initial Purchasers agreed to purchase hereunder, this Agreement shall be terminated without further act or deed and without any liability on the part of the Company to any non-defaulting Initial Purchaser and without any liability on the part of any non-defaulting Initial Purchaser to the Company. If, at the additional time of purchase, the aggregate principal amount of Additional Notes which the defaulting Initial Purchaser or Initial Purchasers agreed to purchase exceeds ten (10%) of the total principal amount of Additional Notes which all Initial Purchasers agreed to purchase hereunder, the non-defaulting Initial Purchasers shall have the option to (a) terminate their obligation hereunder to purchase the Additional Notes or (b) purchase not less than the principal amount of Additional Notes that such non-defaulting Initial Purchasers would have been obligated to purchase in the absence of such default. Nothing in this paragraph, and no action taken hereunder, shall relieve any defaulting Initial Purchaser from liability in respect of any default of such Initial Purchaser under this Agreement.

11. Information Furnished by the Initial Purchasers. The statements set forth in the penultimate paragraph of the text under the caption “Plan of Distribution” in the Final Memorandum, insofar as such statements relate to stabilization, constitute the only information furnished by or on behalf of the Initial Purchasers as such information is referred to in Sections 3 and 9 hereof.

12. Tax Disclosure. Notwithstanding any other provision of this Agreement, from the commencement of discussions with respect to the transactions contemplated hereby, the Company (and each employee, representative or other agent of the Company) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure (as such terms are used in Sections 6011, 6111 and 6112 of the U.S. Code and the Treasury Regulations promulgated thereunder) of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided relating to such tax treatment and tax structure.

13. Notices: Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing or by facsimile and, if to the Initial Purchasers, shall be sufficient in all respects if delivered or sent to c/o UBS Securities LLC, 299 Park Avenue, New York, New York 10171, Attention: Syndicate Department, facsimile no. (713) [____], with a copy to (for informational purposes only): Attention: Legal Department, facsimile no. (212) 821-4042 and 677 Washington Boulevard, Stamford, Connecticut 06901, Attention: Syndicate Department, facsimile no. (203) [____], with a copy to (for informational purposes only): Attention: Legal Department, facsimile no. (203) 719-0683, and, if to the Company, shall be sufficient in all respects if delivered or sent to the Company at the offices of the Company at 371 Bel Marin Keys Boulevard, Suite 210, Novato, California, 94949, Attention: Louis Drapeau, Chief Financial Officer.

14. Governing Law and Construction: THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. THE SECTION HEADINGS IN THIS AGREEMENT HAVE BEEN INSERTED AS A MATTER OF CONVENIENCE OF REFERENCE AND ARE NOT A PART OF THIS AGREEMENT.

15. Parties at Interest: The Agreement herein set forth has been and is made solely for the benefit of the Initial Purchasers and the Company and the controlling persons, directors and officers referred to in Section 9 hereof, and their respective successors, assigns, executors and administrators. No other person, partnership, association or corporation (including a purchaser, as such purchaser, from the Initial Purchasers) shall acquire or have any right under or by virtue of this Agreement.

16. Counterparts: This Agreement may be signed by the parties in counterparts which together shall constitute one and the same agreement among the parties. Delivery of an executed counterpart by facsimile shall be effective as delivery of a manually executed counterpart thereof.

17. Successors and Assigns: This Agreement shall be binding upon the Initial Purchasers and the Company and their successors and assigns and any successor or assign of any substantial portion of the Company’s and any of the Initial Purchasers’ respective businesses and/or assets.

18. Submission to Jurisdiction: Except as set forth below, no Proceeding may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Company hereby consents to the jurisdiction of such courts and personal service with respect thereto. The Company hereby consents to personal jurisdiction, service and venue in any court in which any Proceeding arising out of or in any way relating to this Agreement is brought by any third party against the Initial Purchasers. THE COMPANY HEREBY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATING TO THIS AGREEMENT. The Company agrees that a final judgment in any such Proceeding brought in any such court shall be conclusive and binding upon the Company and may be enforced in any other courts in the jurisdiction of which the Company is or may be subject, by suit upon such judgment.

[The remainder of this page intentionally left blank; signature page follows]

If the foregoing correctly sets forth the understanding between the Company and the Initial Purchasers, please so indicate in the space provided below for the purpose, whereupon this letter and your acceptance shall constitute a binding agreement between the Company and the Initial Purchasers.


		Very truly yours,

		BIOMARIN PHARMACEUTICAL INC.


		By:	FREDRIC D. PRICE

			Name: Fredric D. Price
			Title: Chairman and Chief Executive Officer

Accepted and agreed to as of the date first above written on behalf of itself and the other Initial Purchasers named in Schedule A hereto:

UBS SECURITIES LLC


By:	/s/ SAGE KELLY

	Name: Sage Kelly
	Title: Executive Director

By:	/s/ ROSS DEDEYN

	Name: Ross DeDeyn
	Title: Associate Director

SCHEDULE A

Initial Purchasers	Principal Amount of Firm Notes
UBS SECURITIES LLC	$	100,000,000
CIBC WORLD MARKETS CORP		25,000,000

Total	$	125,000,000

EXHIBIT A

Name		Jurisdiction of Incorporation

Glyko, Inc.		Delaware
Glyko, Inc.		California
Glyko Biomedical Ltd.		British Columbia
BioMarin Pharmaceutical (Canada) Inc.		Canada
BioMarin Acquisition (Del.) Inc.		Delaware
BioMarin Acquisition (Nova Scotia) Company		Nova Scotia, Canada
BioMarin Delivery Canada Inc.		Canada
BioMarin Enzymes Inc.		Delaware
BioMarin Genetics, Inc.		Delaware
BioMarin/Genzyme LLC		Delaware
BioMarin Holdings (Del.) Inc.		Delaware
BioMarin Holdings (Nova Scotia) Company		Nova Scotia, Canada
BioMarin Pharmaceutical Nova Scotia Company		Nova Scotia, Canada
BioMarin Pharmaceutical Delivery Nova Scotia Company		Nova Scotia, Canada

EXHIBIT B

BIOMARIN PHARMACEUTICAL INC.

June __, 2003

UBS Securities LLC
299 Park Avenue
New York, New York 10171

Ladies and Gentlemen:

This Lock-Up Letter Agreement is being delivered to you in connection with the proposed Purchase Agreement (the “Purchase Agreement”) to be entered into by and among BioMarin Pharmaceutical Inc. (the “Company”) and you, as initial purchaser, with respect to the offering without registration under the Securities Act of 1933, as amended, in reliance on Rule 144A thereto (the “Offering”), of Convertible Subordinated Notes due 2008 (the “Notes”).

In order to induce you to enter into the Purchase Agreement, the undersigned agrees that for a period of 90 days after the date of the final offering memorandum relating to the Offering, the undersigned will not, without the prior written consent of UBS Securities LLC, (i) sell, offer to sell, contract to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder with respect to, any Common Stock of the Company (the “Common Stock”) or any securities convertible into or exercisable or exchangeable for Common Stock, except for the exercise of any stock option by the undersigned, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, whether any such transaction is to be settled by delivery of Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce an intention to effect any transaction specified in clause (i) or (ii). The foregoing sentence shall not apply to (a) the sale of the Notes and Common Stock issuable upon conversion of the Notes pursuant to the Purchase Agreement, (b) bona fide gifts, provided the recipient or recipients thereof agree in writing to be bound by the terms of this Lock-Up Letter Agreement, (c) dispositions to any trust for the direct or indirect benefit of the undersigned and/or the immediate family of the undersigned, provided that such trust agrees in writing to be bound by the terms of this Lock-Up Letter Agreement, or (d) sales of Common Stock pursuant to the terms of planned sale arrangements

implemented pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, provided that undersigned entered into such plan prior to June 10, 2003. For purposes of this paragraph, “immediate family” shall mean the undersigned and the spouse, lineal descendant, father, mother, brother or sister of the undersigned.

In addition, the undersigned hereby waives any rights the undersigned may have to require registration of Common Stock in connection with the filing of a registration statement relating to the Offering. The undersigned further agrees that, for a period of 90 days after the date of the final offering memorandum relating to the Offering, the undersigned will not, without the prior written consent of UBS Securities LLC, make any demand for, or exercise any right with respect to, the registration of Common Stock of the Company or any securities convertible into or exercisable or exchangeable for Common Stock.

This Lock-Up Letter Agreement shall be terminated and the undersigned shall be released from its obligations hereunder (i) upon the date the Company notifies you in writing that it does not intend to proceed with the Offering, (ii) upon the date the Purchase Agreement is terminated, for any reason, prior to the time of purchase (as defined in the Purchase Agreement) or (iii) on July 31, 2003 if the Purchase Agreement is not signed before that date.

	Yours very truly,


	Name:

B-2

EXHIBIT C

CHIEF FINANCIAL OFFICERS’ CERTIFICATE

I, Louis Drapeau, Vice President, Finance, Chief Financial Officer and Principal Financial and Accounting Officer of BioMarin Pharmaceutical Inc., a Delaware corporation (the “Company”), hereby certify that:

(i) I am familiar with the terms of (a) the Master Security Agreement dated December 15, 2001, between General Electric Capital Corporation and the Company, as amended December 15, 2001 and December 31, 2001 and the promissory notes entered into pursuant to such Master Security Agreement and (b) any and all other agreements relating to the indebtedness of the Company and the Subsidiaries outstanding on the date hereof (with regard to clauses (a) and (b) above, each as may be amended as of the date hereof, collectively, the “Debt Agreements”). For the purpose of this certificate, I have reviewed in particular the covenants contained in the Debt Agreements and the events of default provided for by the Debt Agreements.

(ii) On the date hereof, there exists no event of default or event which, with notice or lapse of time or both, would constitute an event of default under the Debt Agreements.

(iii) Neither the issuance by the Company of up to $150,000,000 aggregate principal amount of the Notes pursuant to the Purchase Agreement (assuming exercise in full of the Initial Purchasers’ option to purchase additional Notes), nor the issuance by the Company of Common Stock upon conversion of the Notes will result in an event of default or an event which, with notice or lapse of time or both, would constitute an event of default under the Debt Agreements.

Capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Purchase Agreement.

C-1

EX-31.1 9 dex311.htm CERTIFICATION OF CEO AND CFO Certification of CEO and CFO

Exhibit 31.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of BioMarin Pharmaceutical Inc. (the “Company”) for the quarterly period ended June 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Fredric D. Price, as Chief Executive Officer of the Company, and Louis Drapeau, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ FREDRIC D. PRICE
Fredric D. Price Chairman and Chief Executive Officer August 11, 2003


/s/ LOUIS DRAPEAU
Louis Drapeau Chief Financial Officer August 11, 2003

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1 10 dex321.htm CERTIFICATION OF CEO PURSUANT TO 18 U.S.C. Certification of CEO pursuant to 18 U.S.C.

Exhibit 32.1

CERTIFICATION


	I, Fredric D. Price, Chief Executive Officer, certify that:



1.	I have reviewed this quarterly report on Form 10-Q of BioMarin Pharmaceutical Inc.;



2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:



	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



	c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):



	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and



	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 11, 2003


/s/ FREDRIC D. PRICE

Fredric D. Price
Chairman and Chief Executive Officer

EX-32.2 11 dex322.htm CERTIFICATION OF CFO PURSUANT TO 18 U.S.C. SECTION 1350 Certification of CFO pursuant to 18 U.S.C. Section 1350

Exhibit 32.2

CERTIFICATION


	I, Louis Drapeau, Chief Financial Officer, certify that:



1.	I have reviewed this quarterly report on Form 10-Q of BioMarin Pharmaceutical Inc.;



2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.	The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:



	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



	b)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



	c)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and



5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):



	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: August 11, 2003


/s/ LOUIS DRAPEAU

Louis Drapeau
Chief Financial Officer

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