EXHIBIT 4.5(e)
DATED JULY 14, 2004
US$50,000,000
LOAN AGREEMENT
BETWEEN
VERNALIS PLC
AS PARENT
VERNALIS DEVELOPMENT LIMITED
AS BORROWER
AND
ENDO PHARMACEUTICALS INC.
AS LENDER
SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS AGREEMENT (this "AGREEMENT") is made the 14th day of July, 2004.
BETWEEN:
(1) VERNALIS PLC a limited liability company incorporated in England and Wales
with its registered office at Oakdene Court, 613 Reading Road, Winnersh,
Wokingham, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "PARENT");
(2) VERNALIS DEVELOPMENT LIMITED a limited liability company incorporated in
England and Wales with its registered office at Oakdene Court, 613 Reading
Road, Winnersh, Wokingham, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("VDL"); and
(3) ENDO PHARMACEUTICALS INC. whose principal place of business is at ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ ("ENDO").
WHEREAS Endo has agreed to make available to VDL a loan (the "LOAN") in
accordance with the terms hereof. VDL agrees, inter alia, to ▇▇▇▇▇ ▇▇▇▇ security
over the Secured Assets in accordance with the terms of the Security Agreement
as a condition precedent to Endo agreeing to advance the Loan.
IT IS AGREED AS FOLLOWS:
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
In this Agreement:
"ACT" means the Companies ▇▇▇ ▇▇▇▇, a United Kingdom statute.
"ADVANCE" means the single drawing under this Agreement or (as the context
requires) the aggregate of (i) the principal amount outstanding under this
Agreement; and (ii) the aggregate of all Deemed Advances made available
under this Agreement and then outstanding.
"AVAILABILITY PERIOD" means the period from the date hereof, and ending on
the earlier of (i) 30 days after the Closing Date (as that expression is
defined in the License Agreement) and (ii) the date on which the License
Agreement is terminated pursuant to clause 2.2 of the License Agreement.
"BUSINESS DAY" means a day (other than a Saturday, Sunday or public
holiday) on which banks are customarily open for business in London and
New York.
"CAPITAL STOCK" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock,
including, without limitation, partnership interests.
"CERTIFIED COPY" means a copy, certified to be a true, complete and
up-to-date copy by or on behalf of the Parent and/or VDL (as the case may
be) and the term "CERTIFIED COPIES" shall be construed accordingly.
"CHANGE OF CONTROL" means a situation where any person or group of persons
acting in concert obtains control of the Parent where:
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(a) "acting in concert" has the meaning given to it in the City Code on
Takeovers and Mergers; and
(b) "control" has the meaning given to it in section 416 of the Income
and Corporations Taxes Act of 1988, a United Kingdom statute.
"DEFAULT" means an Event of Default or a Potential Event of Default.
"DEEMED ADVANCE" means, on any Interest Payment Date (as defined in Clause
5.1.1) an amount equal to the interest accrued on the Advance but unpaid
on that Interest Payment Date.
"DRAWDOWN DATE" has the meaning given to that term in Clause 4(a).
"DRAWDOWN NOTICE" means a drawdown notice in the form set out in
Schedule 1.
"ELAN OUTSTANDING LIABILITY" means the aggregate of all amounts owing
(whether or not then due) to Elan Pharma International Limited by either
or both of the Parent and VDL at the Drawdown Date.
"ENDO" has the meaning given to that term in the preamble.
"ENDO GROUP" means Endo, any person that holds 20% or more of the equity
share capital of Endo and any direct or any indirect subsidiary of Endo
(as such terms are defined in the Act).
"EVENT OF DEFAULT" means any of the events specified in Clause 10.1.
"EXISTING FLOATING CHARGE" means the floating charge dated 18 May 2004 and
entered into between Elan Pharma International Limited and VDL.
"FACILITY AMOUNT" has the meaning given to it in Clause 3.1.
"FINAL REPAYMENT DATE" means the fifth anniversary of the date hereof;
provided, that if prior to the fifth anniversary of the date hereof the
License Agreement is terminated either (i) by VDL, exercising its rights
as a Terminating Party under (and as that expression is defined in) Clause
17.2 of the License Agreement or (ii) by Endo on expiry of twelve (12)
months' notice given under Clause 17.3 of the License Agreement, the Final
Repayment Date shall mean the fifth anniversary of the date hereof or, if
later, the earlier of (x) the date falling five (5) years and six (6)
months after the date hereof and (y) the date falling twelve (12) months
after the date on which the License Agreement is terminated.
"FINANCE DOCUMENTS" means each of this Agreement, the Security Agreement,
a Drawdown Notice, any document executed by VDL pursuant to Clause 7(r),
any notice or other document given under the Security Agreement and any
other document designated as a "Finance Document" by Endo and VDL.
"GROUP" means the Parent, VDL and each of its other subsidiaries from time
to time.
"INSOLVENCY EVENT" means in relation to any person, each of the following:
(a) Such person is unable or admits inability to pay its debts as they
fall due or is deemed to or declared to be unable to pay its debts
under applicable law, suspends or threatens to suspend making
payments on any of its debts or, by reason of actual or
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anticipated financial difficulties, commences negotiations with one
or more of its creditors with a view to rescheduling any of its
indebtedness.
(b) The value of the assets of that person is less than its liabilities
(taking into account contingent and prospective liabilities).
(c) A moratorium is declared in respect of any indebtedness of that
person. If a moratorium occurs, the ending of the moratorium will
not remedy any Event of Default caused by that moratorium.
(d) Any corporate action, legal proceedings or other procedure or step
is taken in relation to:
(i) the suspension of payments, a moratorium of any indebtedness,
winding-up, dissolution, administration or reorganisation (by
way of voluntary arrangement, scheme of arrangement or
otherwise) of that person other than a solvent liquidation or
reorganisation of any person which is not an Obligor;
(ii) a composition, compromise, assignment or arrangement with any
creditor of that person;
(iii) the appointment of a liquidator (other than in respect of a
solvent liquidation of a person which is not an Obligor),
receiver, administrative receiver, administrator, compulsory
manager or other similar officer in respect of that person or
any of its assets; or
(iv) enforcement of any security over any assets of that person,
or any analogous procedure or step is taken in any jurisdiction.
(e) Paragraph (d) shall not apply to any winding-up petition which is
frivolous or vexatious and is discharged, stayed or dismissed within
14 days of commencement or, if earlier, the date on which it is
advertised; or
(f) Any expropriation, attachment, sequestration, distress or execution
or any analogous process in any jurisdiction affects any asset or
assets of that person having an aggregate value of $500,000 and is
not discharged within 7 days.
"INTEREST RATE" means five percent (5%) per annum.
"LICENSE AGREEMENT" means the License Agreement entered into between VDL
and Endo on the date hereof in the agreed form.
"LISTING RULES" means the listing rules of the UK Listing Authority.
"MAM APPROVAL DATE" means the date of receipt of the Marketing
Authorization in the USA of the Product for MAM (each term as defined in
the License Agreement).
"MAM APPROVAL DATE PREPAYMENT AMOUNT" has the meaning given to that term
in Clause 3.3(b).
"MATERIAL ADVERSE EFFECT" means, subject to the provisions of Clause 3.6,
a material adverse effect on:
(a) the business, operations, property or financial condition of the
Obligors taken as a whole (after taking into account the status of
the Obligors as biotechnology
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companies having regard to their earnings since the first date of
the period covered by the most recently published audited annual
accounts of an Obligor and the ability to access capital markets
they have at the time this definition is applied); or
(b) the ability of an Obligor to perform its obligations under the
Finance Documents; or
(c) the validity or enforceability of, or the effectiveness or ranking
of any security granted or purporting to be granted pursuant to any
of the Finance Documents or the rights or remedies of Endo under any
of the Finance Documents.
"MILESTONE PAYMENTS" means the payment pursuant to Section 11.5.1 of the
License Agreement.
"NET DISPOSAL PROCEEDS" has the meaning given to that term in Clause
3.3(c).
"OBLIGATIONS" means all present and future obligations (whether actual or
contingent) of VDL to Endo under the Finance Documents.
"OBLIGORS" means the Parent and/or VDL, and "OBLIGOR" shall be construed
accordingly.
"PAYMENT DATE" has the meaning given to that term in Clause 3.3(a).
"PERMITTED LIEN" means:
(a) liens for Taxes provided such Taxes are not overdue;
(b) liens arising by operation of law in the ordinary course of trading
or day to day business in whatever jurisdiction and statutory liens
of landlords and liens of carriers, warehousemen, mechanics,
materialmen and other similar liens, in each case, incurred in the
ordinary course of business, provided such liens are not securing
any amount more than 30 days overdue;
(c) any security arising under the Security Agreement;
(d) any right of a bank to set-off deposits against debts owed to such
bank existing as a matter of law or arising pursuant to any
agreement customarily entered into by such bank and its depositors
in connection with a cash management scheme;
(e) any title transfer or retention of title arrangement entered into by
VDL in the normal course of its trading activities on the
counterparty's standard or usual terms;
(f) any security created or subsisting with the prior consent of Endo;
(g) up to and including the Drawdown Date, the Existing Floating Charge;
and
(h) the mortgage on VDL's property at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ (the "MORTGAGED REAL ESTATE") in favour of Canada Life
Assurance Company, provided that the amount secured thereby does not
exceed (pound)2 million at any time, recourse in respect of such
debt is just to the Mortgaged Real Estate and such mortgage is
discharged and released and the debt which it secures is repaid in
full out of (i) the proceeds of the disposal of the Oxford Property
plus (ii) not more than (pound)500,000 from other resources.
"POTENTIAL EVENT OF DEFAULT" means any event or circumstance which, with
the giving of notice, lapse of time or making of any determination, would
become an Event of Default.
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"QUALIFYING LENDER" means a company which at the time the payment is made
is beneficially entitled to the interest payable to it under the Finance
Documents and is entitled under a double taxation agreement in force at
that date (subject only to the completion of any necessary formalities or
administrative procedures, (including, without limitation, the matters
referred to in Clause 12.3(c)) to receive any payments of interest under
the Finance Documents without a Tax Deduction.
"RELEVANT ASSETS" means the Vernalis IP (as defined in the License
Agreement) and the payments to be made by Endo to VDL pursuant to Clause
11 of the License Agreement.
"ROYALTY PAYMENT" has the meaning given to that term in Clause 3.3(a).
"SATISFACTORY PURCHASER" has the meaning given to that term in Clause
3.3(e).
"SECURITY AGREEMENT" means the security deed to be entered into between
VDL and Endo in the form set out in Schedule 2 as a condition precedent to
Endo making the Advance.
"SECURED ASSETS" means the assets subject to the security constituted by
the Security Agreement.
"TAX" means any tax, levy, impost, duty, or other fee, charge or
withholding of a similar nature (including any penalty or interest payable
in connection with any failure to pay or any delay in paying the same),
and "Taxes" and "Taxing" shall be construed accordingly.
"TAX DEDUCTION" means a withholding or deduction for or on account of Tax.
"TERM" means the period beginning on the date hereof and ending on the
date on which all amounts outstanding under the Finance Documents are
repaid.
"TRANSACTION DOCUMENTS" means each of the Finance Documents and the
License Agreement.
"UK LISTING AUTHORITY" means the Financial Services Authority acting in
its capacity as the competent authority for the purposes of Part VI of the
Financial Services and Markets ▇▇▇ ▇▇▇▇, a United Kingdom statute.
"VDL" has the meaning given to that term in the preamble.
1.2 HEADINGS
In this Agreement, the headings shall not affect its interpretation and
are for ease of reference only.
1.3 INTERPRETATION
In this Agreement (unless otherwise provided):
(a) words importing the singular shall include the plural and vice
versa;
(b) words importing one gender shall include all genders;
(c) references to Clauses and Schedules are to be construed as
references to the Clauses of, and Schedules to, this Agreement
unless otherwise specifically provided;
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(d) references to this Agreement or any other document shall be
construed as references to this Agreement or that other document, as
amended, varied, novated or supplemented from time to time;
(e) references to any statute or statutory provision include any statute
or statutory provision which amends, extends, consolidates or
replaces the same, or which has been amended, extended, consolidated
or replaced by the same, and shall include any orders, regulations,
instruments or other subordinate legislation made under the relevant
statute;
(f) the words "INCLUDING" and "IN PARTICULAR" shall be construed as
being by way of illustration or emphasis only and shall not be
construed as, nor shall they take effect as, limiting the generality
of any preceding words;
(g) the words "OTHER" and "OTHERWISE" shall not be construed ejusdem
generis with any foregoing words where a wider construction is
possible;
(h) references to a person shall be construed so as to include that
person's assigns, transferees or successors in title and shall be
construed as including references to an individual, firm,
partnership, joint venture, company, corporation, body corporate,
unincorporated body of persons or any state or any agency of a
state;
(i) references to a "DRAWING" are to the drawing of the Advance under
this Agreement;
(j) references to a document in "AGREED FORM" are to the form of the
relevant document which has been initialled for the purposes of
identification by or on behalf of Endo and VDL on or prior to the
date of this Agreement;
(k) the terms "SUBSIDIARY" and "HOLDING COMPANY" have the meaning
ascribed thereto in the Act;
(l) "INDEBTEDNESS" means any indebtedness for or in respect of:
(i) moneys borrowed;
(ii) any amount raised by acceptance under any acceptance credit
facility;
(iii) any amount raised pursuant to any note purchase facility or
the issue of bonds, notes, debentures, loan stock, preferred
stock, redeemable stock or any similar instrument;
(iv) the amount of any liability in respect of any lease or hire
purchase contract which would, in accordance with generally
accepted accounting principles in England, be treated as a
finance or capital lease;
(v) receivables sold or discounted (other than any receivables to
the extent they are sold on a non-recourse basis);
(vi) any amount raised under any other transaction (including any
forward sale or purchase agreement) having the commercial
effect of a borrowing;
(vii) for the purposes of Clause 10.1(g) only, any derivative
transaction entered into in connection with protection against
or benefit from fluctuation in any rate or price (and, when
calculating the value of any derivative transaction, only the
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marked to market value shall be taken into account);
(viii) any counter-indemnity obligation in respect of a guarantee,
indemnity, bond, standby or documentary letter of credit or
any other instrument issued by a bank or financial
institution; and
(ix) the amount of any liability in respect of any guarantee or
indemnity for any of the items referred to in paragraphs (i)
to (viii) inclusive above.
(m) "LIEN" shall have the meaning given to that expression by English
law.
(n) "SECURITY" means mortgage, charge, pledge, lien or other security
interest securing any obligation of any person or any other
agreement or arrangement having a similar effect;
(o) "ASSETS" includes present and future properties, revenues and rights
of every description; and
(p) "US$" and "DOLLARS" shall mean the lawful currency of the United
States of America ("USA").
2. CONDITIONS PRECEDENT
2.1 CONDITIONS PRECEDENT - GENERAL
The obligations of Endo with respect to the making of the Advance
hereunder are subject to the conditions precedent that Endo shall have
received the following in form and substance reasonably satisfactory to
it:
(a) an original copy of this Agreement duly signed by VDL and the
Parent;
(b) Certified Copies of each of the Parent's and VDL's certificate of
incorporation, certificate of incorporation on change of name (if
any) and Memorandum and Articles of Association;
(c) Certified Copies of the resolutions of each of the Parent's and
VDL's board of directors authorising the execution and delivery of
the Transaction Documents to which it is a party and the performance
of the transactions contemplated thereby;
(d) written confirmation from Elan Pharma International Limited dated no
earlier than the Drawdown Date of the amount of the Elan Outstanding
Liability (being an amount less than the Facility Amount), of the
account details to which such payment should be made, and that upon
payment of such amount the Existing Floating Charge shall be
immediately discharged and released;
(e) a deed of discharge and release in respect of the Existing Floating
Charge executed by Elan Pharma International Limited held to its
order on terms that are reasonably satisfactory to Endo but which in
any event are irrevocable and provide for the automatic and
immediate release and delivery of the deed of discharge to VDL upon
payment of the amount referred to in paragraph 2.1(d);
(f) two originals of the Security Agreement, duly executed and delivered
by VDL, and the security constituted by the Security Agreement being
in full force and effect and perfected in accordance with its terms;
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(g) two originals of the License Agreement, duly executed by VDL;
(h) a certificate from an officer of VDL confirming that the Closing
Date under and as defined in the License Agreement has occurred;
(i) evidence that, VDL will discharge all Elan Outstanding Liability out
of the Advance (which evidence may take the form of an appropriately
completed Drawdown Notice);
(j) a Certified Copy of the most recently prepared consolidated monthly
management accounts of, the Parent (comprising at least a balance
sheet, income statement and cash flow statement for such month and
the year to date);
(k) legal opinions from ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ MNP and ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP, (respectively) counsel to VDL and the Parent, in respect of the
Finance Documents; and
(l) an ordinary resolution of the shareholders of VDL authorizing the
Advance.
2.2 FURTHER CONDITIONS PRECEDENT TO THE ADVANCE
The obligations of Endo with respect to the making of the Advance under
this Agreement are subject to the further conditions precedent that:
(a) Endo shall have received a duly completed Drawdown Notice; and
(b) both at the date of the relevant Drawdown Notice and the Drawdown
Date:
(i) the matters represented and warranted by each Obligor in
Clause 6 are true and correct at that time as if made at that
time and will be true and correct immediately after the
drawing has been made;
(ii) no Default has occurred and is continuing; and
(iii) the principal amount of the proposed drawing, does not exceed
the Facility Amount.
3. AMOUNT, REPAYMENT, CANCELLATION AND PURPOSE
3.1 FACILITY AMOUNT
The aggregate principal amount available to be drawn under this Agreement
is US$50,000,000 (fifty million Dollars) (the "FACILITY AMOUNT"). In
addition to the Facility Amount, Endo shall also make the Deemed Advances
available to VDL but only on the basis set out in Clause 5.
3.2 REPAYMENT
The Advance shall be repaid in full on or before the Final Repayment Date.
Voluntary repayments are permitted in whole or in part without premium,
make-whole or penalty.
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3.3 MANDATORY PREPAYMENT AND SET-OFF
(a) Endo may, by written notice to VDL at least five (5) Business Days
prior to any payment pursuant to clause 11.9 of the License
Agreement (a "ROYALTY PAYMENT") require VDL to make a mandatory
prepayment of all or any part of the Advance on the date such
Royalty Payment is due under the License Agreement (each a "PAYMENT
DATE"), in an amount (the "MANDATORY PREPAYMENT AMOUNT") not greater
than fifty percent (50%) (or, following the occurrence of a Material
Adverse Effect, not greater than seventy five percent (75%)) of the
Royalty Payment then due on that date. VDL and Endo agree that any
Mandatory Prepayment Amount then due on such Payment Date from VDL
shall be set-off against and reduce the Royalty Payment then due by
Endo to VDL, the balance of which Royalty Payment shall be paid to
VDL or otherwise dealt with in accordance with the terms of the
License Agreement or as those parties shall have otherwise agreed.
(b) On the MAM Approval Date, if Endo so requires by giving not less
than five (5) Business Days written notice to VDL, VDL shall be
required to make a mandatory prepayment of an amount not greater
than fifty percent (50%) (or, following the occurrence of a Material
Adverse Effect, not greater than seventy five percent (75%)) of the
Milestone Payment due on such date pursuant to Clause 11.5 of the
License Agreement (the "MAM APPROVAL DATE PREPAYMENT AMOUNT"). VDL
and Endo agree that the MAM Approval Date Prepayment Amount then due
to Endo from VDL shall be set-off against and reduce the amounts
then due by Endo to VDL as the Milestone Payment due on the MAM
Approval Date and the balance of any such moneys then due and
payable by Endo to VDL shall be paid to VDL or otherwise dealt with
in accordance with the terms of the License Agreement or as those
parties shall have otherwise agreed.
(c) Without prejudice to any other provisions of the Finance Documents,
VDL and the Parent shall apply fifty percent (50%) of all Net
Disposal Proceeds in mandatory prepayment of the Advance and all
other sums outstanding under the Finance Documents immediately upon
receipt of the same by any member of the Group. For these purposes:
"NET DISPOSAL PROCEEDS" means all cash and other consideration (and
in respect of non-cash consideration, the market value thereof shall
be taken into account) including the assumption or repayment of debt
paid to or to the order of any member of the Group in connection
with an MP Disposal by it less any costs, expenses and taxes
incurred to persons other than members of the Group in connection
with such MP Disposal which are documented and reasonably and
properly incurred and which are customary in nature and amount for
such type of disposal; and
"MP DISPOSAL" means any voluntary or involuntary sale, lease,
transfer or other disposal of any asset of any member of the Group
save for (i) the granting of intellectual property licenses in the
ordinary course of business, (ii) a disposal of the type permitted
by Clause 7(l), (iii) the disposal of VDL's property at ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, (iv) MP Disposals not referred to in
paragraphs (i)-(iii) where the aggregate Net Disposal Proceeds of
all such MP Disposals in any financial year does not exceed $1
million provided that, for the avoidance of doubt, only such excess
shall be taken into account for the purposes of this Clause 3.3(c),
and (v) any disposition where the provisions of Clause 3.3(e) apply.
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(d) If VDL defaults in the payment of any amount of principal or
interest or otherwise on the due date for such payment, Endo may,
without prejudice to any other remedy which may be available to it,
reduce any amounts owing or due to be made by Endo under the License
Agreement by an amount equal to the amount in default, and, so long
as no Event of Default is outstanding, Endo agrees to notify VDL in
writing promptly upon so doing.
(e) Immediately upon the occurrence of the sale of the whole or
substantially the whole of the Group's or VDL's business and assets
other than to a single Satisfactory Purchaser (in which event the
terms of Clause 3.3(c) shall not apply and no payment otherwise
required thereby shall be due), Endo's commitment hereunder shall be
cancelled in full and VDL shall repay the Advance in full together
with interest thereon and all other amounts accrued and owing by the
Obligors under the Finance Documents.
A "SATISFACTORY PURCHASER" shall mean a company which:
(i) having regard to all the circumstances, including its assets
and liabilities (actual and contingent), has, and provides,
Endo with evidence that such company has a credit worthiness
such that its ability to meet the payment obligations under
the Finance Documents is at least equal to that of VDL and the
Parent, and
(ii) (x) acquires all rights and obligations in respect of the
Relevant Assets and acquires all VDL's rights and obligations
under the License Agreement, this Agreement and the other
Finance Documents, (y) expressly confirms (and executes such
documents as Endo reasonably requires to evidence) (1) the
continuation or novation of all the terms of such Transaction
Documents (including any principles of set-off), and (2) that
the security over the Secured Assets survives and remains
unaffected by the acquisition or is replaced with
substantially equivalent security over the Secured Assets with
the Satisfactory Purchaser as grantor of such replacement
security (or with such variations as Endo reasonably agrees)
(and with Endo being satisfied that any such new security will
not be subject to any "hardening" or "suspect" periods (as
those expressions are generally understood by United Kingdom
insolvency practitioners)), and (z) provides Endo with such
opinion of outside counsel as Endo reasonably requires (in
form and content reasonably satisfactory to Endo) confirming
the corporate status of such acquiring company, the legality,
validity, binding effect and enforceability of the Transaction
Documents (or replacements thereof) on the acquiring company,
and that the continuation of the security remains unaffected
by the acquisition or (in the case of the replacement of such
security) that the new security provides substantially
equivalent security over the Secured Assets; and Endo has
received satisfactory legal advice that its rights to set-off
are not adversely affected by such acquisition;
provided that if there is any dispute as to whether a person meets
the test in paragraph (i) of the definition of a "Satisfactory
Purchaser", such matter shall be referred to a "Panel" (as defined
in Clause 3.6 below) and a person shall only be regarded as
satisfying the test in paragraph (i) above once the Panel has so
determined and for
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these purposes, the procedures specified in Clause 3.6 for
determining a Material Adverse Effect shall apply mutatis mutandis
(with the procedure being capable of being started by either VDL or
Endo) save that under all circumstances the fees and expenses shall
be paid by VDL;
(f) No Advance prepaid may be re-drawn. Notice of prepayment is
irrevocable.
3.4 CANCELLATION
For the avoidance of doubt, VDL shall not be permitted to draw down any
undrawn portion of the Facility Amount following the expiry of the
Availability Period, and thereafter, Endo shall have no obligation to make
any further advances hereunder.
3.5 PURPOSE
VDL shall use the proceeds of the Advance first to discharge all Elan
Outstanding Liability and thereby effect a release and discharge of the
Existing Floating Charge and, thereafter, the balance for general
corporate purposes.
3.6 PANEL
As used herein, the term "EXPERT" means the London branch or office of an
independent investment bank regulated in both the United States and the
United Kingdom with specific expertise in both the United States and
United Kingdom capital markets for biotechnology and pharmaceutical
companies.
If Endo believes that events constituting a Material Adverse Effect have
occurred and are continuing, or if there is a dispute as to whether a
person is a "Satisfactory Purchaser", Endo shall promptly notify VDL
making express reference to this Clause 3.6, and provide a written
explanation in reasonable detail of the basis therefor to VDL. Unless VDL
acknowledges that it agrees with Endo, both VDL and Endo shall arrange for
an in-person meeting or a telephone conference call between their
respective presidents or chief executive officers or officers of similar
status within five (5) Business Days after VDL's receipt of such notice.
If following such meeting or call, the parties continue to disagree, each
of Endo and VDL shall, within five (5) Business Days after such meeting,
by giving written notice to the other party, propose a party as an
"Expert". The Endo Expert and the VDL Expert shall together choose a third
Expert and all decisions shall be made by a majority of the three Experts
so chosen (the three Experts, are hereinafter referred to as the "PANEL").
The Panel shall be provided with such information as it shall reasonably
request, subject to applicable confidentiality restrictions. The Panel
shall be instructed to make a decision as to whether a Material Adverse
Effect shall have occurred as soon as reasonably practicable after
receiving all relevant data and information, but in any event not more
than fourteen (14) days after its engagement. The Panel shall be
instructed to give a full written explanation of its decision. All
communications between the parties hereto and the Panel shall be made in
writing and a copy thereof provided simultaneously to the other parties
hereto. No meeting between the Panel and the parties hereto shall take
place unless all the parties have a reasonable opportunity to attend such
meeting. Except as set forth in Clause 3.3(e), all fees and expenses of
the Panel shall be paid by Endo, provided that if the Panel determines
that a Material Adverse Effect has occurred, all such fees and expenses
shall be paid by VDL.
4. DRAWING
Subject to Clause 2:
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(a) VDL may make a drawing under this Agreement on one Business Day
during the Availability Period, provided that VDL shall inform Endo
of such proposed date of drawing (the "DRAWDOWN DATE"), by delivery
to Endo of a Drawdown Notice by no later than 11.00 a.m. on the
fifth Business Day prior to the Drawdown Date. Once notice has been
given it may not be revoked and shall oblige VDL to borrow the
stated amount on the Drawdown Date specified in the Drawdown Notice;
(b) the drawing shall be in a single amount not exceeding US$50,000,000
(fifty million Dollars); and
(c) only one drawing may be made.
5. INTEREST AND COMMITMENT FEES
5.1 INTEREST RATE
5.1.1 Interest shall accrue at the Interest Rate on the principal amount
drawn down plus the aggregate amount of Deemed Advances made
available under Clause 5.1.2 below. Interest will be paid
semi-annually in arrear on each 31 July and 31 January throughout
the Term (each an "INTEREST PAYMENT DATE"), provided that accrued
interest on the Advance shall be paid on the Final Repayment Date or
the date on which the Advance is prepaid in full, if earlier, in
respect of the period from the most recent Interest Payment Date to
the date of such repayment or prepayment. Interest shall accrue from
day to day and shall be calculated on the basis of a year of 365
days and for the actual number of days elapsed.
5.1.2 Subject as provided elsewhere in this Agreement, provided VDL has
given Endo written notice (the "DEEMED ADVANCE NOTICE") of its
intention to exercise its option under this Clause 5.1.2 at least
five (5) Business Days before the relevant Interest Payment Date,
Endo shall (subject always to the provisions of Clauses 5.1.3 and
5.1.4) make to VDL on the relevant Interest Payment Date a Deemed
Advance in an amount equal to the amount of interest accrued under
Clause 5.1.1 above but unpaid on that Interest Payment Date (such
interest being "ACCRUED INTEREST").
5.1.3 Each Deemed Advance is made available on its relevant Interest
Payment Date subject to satisfaction of each of the following
conditions:
(a) the Deemed Advance shall be applied only by way of set-off
against the Accrued Interest due on that Interest Payment Date
(which application is irrevocably authorized by VDL); and
(b) notwithstanding anything else contained in the Finance
Documents, Endo shall not be required to make any part of any
Deemed Advance available by the disbursement of money or
otherwise than by set-off as referred to in 5.1.3(a); and
(c) no Event of Default has occurred and is outstanding on the
relevant Interest Payment Date.
5.1.4 If any of the conditions in Clause 5.1.3 are not met in respect of a
Deemed Advance on an Interest Payment Date (including, for the
avoidance of doubt, if for any reason the set-off arrangements
described therein are not effective), the provisions of Clause 5.1.2
shall not apply and the Deemed Advance shall not be made available.
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5.2 DEFAULT INTEREST
5.2.1 If VDL fails to pay any amount payable by it under this Agreement,
VDL shall pay default interest on an Advance to Endo from the due
date to the date of actual payment (but exclusive of such dates) in
full before, as well as after, judgment at the rate per annum of the
Interest Rate plus one percent (1%).
5.2.2 So long as the default set out in Clause 5.2.1 continues, unpaid
interest then payable but unpaid under this Clause shall be
compounded quarterly but shall remain payable on demand.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES
Each Obligor represents and warrants on the date of this Agreement and
(other than in respect of 6.1(h), which representation shall be repeated
in respect of those accounts delivered pursuant to Clauses 2.1(k) and 7
only on the date of delivery of such accounts) on each Interest Payment
Date throughout the period of the Term in relation to which a Deemed
Advance Notice has been given that:
(a) it is and will remain a company duly incorporated under the laws of
England and Wales, validly existing and having full corporate
capacity to carry on its business as conducted at any time, to own
its assets, to enter into and perform its obligations under each of
the Transaction Documents to which it is a party which constitute
and will constitute its legal, valid and binding obligations, and to
incur the indebtedness contemplated by this Agreement;
(b) it has obtained and shall maintain in effect all necessary
corporate, shareholder and other authorisations and all other
necessary consents, licenses, exemptions and authorisations in
connection with the Transaction Documents to which it is a party;
(c) execution of this Agreement, execution and delivery of the Security
Agreement and the utilisation of the Facility Amount and the
performance of its obligations under the Transaction Documents to
which it is a party does not and shall not constitute a default
(howsoever described) or a breach of any law or regulation or of its
memorandum and articles of association or of any limitation on the
powers of its directors or of the terms of any charge, agreement,
undertaking or restriction to which it is a party or which is
binding on it;
(d) no Default has occurred and is continuing;
(e) it is not in default under any agreement to which it is a party or
which is binding upon it or any of its assets which is reasonably
likely to have a material and adverse effect on its business,
financial condition, assets or its ability to perform its
obligations under this Agreement;
(f) no litigation, arbitration or proceeding is taking place, pending,
or to the best of the its knowledge and belief, threatened in
writing against it or any of its assets which is reasonably likely
to be adversely determined against it and which if adversely
determined would have a material and adverse effect on its ability
to perform its obligations under the Transaction Documents or its
assets, financial condition or prospects; provided, that when
repeated, this representation and warranty shall be repeated as if
the words "or prospects" were deleted;
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(g) it has taken no action, and no steps have been taken or legal
proceedings started or (to the actual knowledge of any of its
directors) threatened against it, for an administration or
winding-up order to be made against it or for its dissolution or
reorganisation or for the appointment of a receiver, administrative
receiver, administrator, liquidator, supervisor, trustee or similar
officer over, or for the taking into possession or enforcement of
security by any person, mortgagee or chargee in respect of, all or
any part of its assets, undertaking or revenues nor has any
analogous event occurred in any jurisdiction nor (to the actual
knowledge of any of its directors) are there any circumstances which
would entitle any person or the court to take any such action nor
has any event occurred causing or which may cause any floating
charge created by it to crystallise over any of its assets or any
charge created by it to become enforceable over any of its assets
nor has any such crystallisation occurred nor is any such
enforcement in process;
(h) the annual accounts most recently published prior to the date of
this Agreement and the accounts delivered to Endo pursuant to
Clauses 2.1(k) and 7 present a true and fair view of (in the case of
audited accounts) or disclose with reasonable accuracy (in other
cases) its financial condition during the period for which such
accounts were prepared and have been prepared in accordance with
accounting practices and principles generally accepted in the United
Kingdom and consistently applied;
(i) for the purposes of The Council of the European Union Regulation No.
1346/2000 on Insolvency Proceedings (the "REGULATION"), its centre
of main interest (as that term is used in Article 3(1) of the
Regulation) is and will remain situated in England and Wales; and
(j) the amount of the Elan Outstanding Liability is less than the
Facility Amount and upon payment of such amount to Elan Pharma
International Limited, neither Obligor shall have any outstanding
actual liability to Elan Pharma International Limited.
7. UNDERTAKINGS AND COVENANTS
Each Obligor agrees, throughout the duration of the Term:
(a) to give Endo notice in writing immediately upon becoming aware of
the occurrence of any event or circumstance, which constitutes or
which, with the giving of notice, lapse of time or making of any
determination, is reasonably likely to lead to the occurrence of an
Event of Default together with reasonable details of what steps it
is taking to avoid or cure such event or circumstance;
(b) as soon as they become available but in any event within 180 days
after the end of each financial year to provide Endo with a copy of
its published annual audited accounts and (in the case of the Parent
or a Satisfactory Purchaser only) as soon as they become available
but in any event within 120 days of the end of the first six months
of each financial year to provide Endo with a copy of its half
yearly accounts for the half year then ended as presented to its
board of directors,
(c) as soon as they become available but in any event within 30 days of
the end of each month the Parent and any Satisfactory Purchaser
shall provide Endo with a copy of its monthly management accounts
for the month then ended;
(d) (i) (in the case of the Parent and any Satisfactory Purchaser only)
to procure that each set of its annual audited accounts provided
pursuant to Clause 7(a) and each set of its half yearly accounts
provided pursuant to Clause 7(b) are consolidated and comply in
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form, substance and content with the requirements of (A) in the case
of a Satisfactory Purchaser which is a UK listed and incorporated
corporate entity, the Act and the Listing Rules or (B) in the case
of any other Satisfactory Purchaser, the laws and generally accepted
accounting principles in its jurisdiction of incorporation
consistently applied; and that each set of its monthly management
accounts provided pursuant to Clause 7(c) are consolidated and
contain a balance sheet, income statement and cashflow statement and
related notes to such financial statements and are otherwise in the
same form and have the same content as is provided to its board of
directors and; (ii) to procure that each set of the annual audited
accounts of VDL comply in form, substance and content with the
requirements of the Act;
(e) prior to the beginning of each financial year, to deliver to Endo a
copy of its annual budget;
(f) to provide Endo promptly with such other financial information
relating to it as Endo may from time to time require to comply (i)
with any regulatory requests or requirements or (ii) with any
reasonable requests or requirements from financial institutions
making financial facilities available to Endo provided that (A)
those institutions have agreed with Endo to keep such information
confidential (save for customary exceptions such as requirement of
law or regulatory requirements) and (B) such Obligor would not
thereby be in breach of any restrictions contained in (i) any
confidentiality obligation binding on it at the date of this
Agreement or (ii) any law or governmental or quasi-governmental
regulation then binding on it or (iii) the Listing Rules to the
extent then applicable to it but provided further that, at Endo's
request, such Obligor shall use reasonable endeavors to seek a
waiver of such restrictions;
(g) prior to the MAM Approval Date, it will not and will ensure that
each of its subsidiaries will not incur or permit to remain
outstanding any indebtedness whatsoever save for:
(i) indebtedness owing by a subsidiary acquired after the date of
this Agreement provided that (a) such indebtedness was not
created in contemplation of that acquisition, (b) such
indebtedness is not increased after the date of that
acquisition and (c) neither the Parent nor VDL nor any of the
Parent's other subsidiaries assumes any obligation or
liability (whether by guarantee or otherwise) for such
indebtedness;
(ii) indebtedness incurred pursuant to the Transaction Documents;
(iii) trade indebtedness incurred in the ordinary course of its
business; and
(iv) indebtedness not otherwise excluded by paragraphs (i)-(iii)
above incurred or outstanding to the Parent, VDL and each of
the Parent's other subsidiaries which in aggregate does not
exceed $10 million at any time;
(h) save with respect to Permitted Liens, it will not, without the prior
written consent of Endo, create, or permit to subsist any security
over:
(i) prior to the MAM Approval Date, any of its assets or any of
the assets of its subsidiaries;
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(ii) on and after the MAM Approval Date, (A) any of the Secured
Assets or other Relevant Assets; or (B) any book and other
debts and monetary claims relating to the Secured Assets or
other Relevant Assets and any proceeds of such debts and
claims (including without limitation, any claims or sums of
money deriving from or in relation to the Secured Assets or
other Relevant Assets, any court order or judgment, any
contract or agreement to which VDL is party and any other
assets, property rights or undertaking of the Company in each
case in or relating to the Secured Assets or other Relevant
Assets);
(i) prior to the MAM Approval Date, it will not pay dividends or make
any distributions on its Capital Stock (other than distributions in
the nature of the allotment of new Capital Stock) and will not
purchase, redeem or otherwise acquire for value any of its Capital
Stock;
(j) (in respect of the Parent only) it will at all times throughout the
Term own directly or indirectly one hundred percent (100%) of the
issued share capital in VDL and at least 51% of the Capital Stock of
each other company which has been a subsidiary at any time since the
date of this Agreement;
(k) it will not, and will not permit any subsidiary to, make any
payments, distributions or disposals or incur any liabilities or
grant any security, loans, collateral, guarantee or indemnity to or
for the benefit of any related party other than the other Obligor
and save for (i) payments and liabilities to related parties who are
individuals acting on their own account and not representing any
third party (and who do not account for such payments or liabilities
to any third party) on arm's length contracts of employment or
consultancy agreements and (ii) dividends and distributions on its
Capital Stock permitted by this Agreement and for the purposes of
this Clause 7(k), "related party" shall have the meaning given in
Chapter 11 of the Listing Rules but as if the percentage referred to
in the definition of "substantial shareholder" therein was (i) prior
to any Change of Control, 5 percent and (ii) following a Change of
Control, to any shareholding;
(l) save in the circumstances described in Clause 3.3(e), it will not
enter into any single transaction or series of transactions (whether
related or not) and whether voluntary or involuntary to sell, lease,
transfer or otherwise dispose of any interest in the Secured Assets
or other Relevant Assets save as part of the sale of the whole or
substantially the whole of the Group's or VDL's business and assets
to be a single Satisfactory Purchaser;
(m) (in respect of VDL only) immediately on discharge of the Secured
Obligations (under and as defined in the Existing Floating Charge)
it will procure that the Existing Floating Charge is released and
will file a form 403a in respect of that release of the Companies
Registry no later than the Business Day following such release;
(n) (in respect of VDL only) it will use the proceeds of an Advance in
accordance with the terms of this Agreement only;
(o) not to substantially change the general nature of its business;
(p) obtain, comply with and do all that is necessary to maintain in full
force and effect any authorisation required under any law or
regulation of its jurisdiction of incorporation to enable it to
perform its obligations under the Finance Documents and
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to ensure the legality, validity, enforceability or admissibility in
evidence in its jurisdiction of incorporation of any Finance
Document;
(q) shall comply in all respects with all laws to which it may be
subject, if failure to so comply would impair its ability to perform
its obligations under the Finance Documents;
(r) (in respect of VDL only):
(i) promptly do all such acts or execute all such documents
(including assignments, transfers, mortgages, charges, notices
and instructions) as Endo may reasonably specify (and in such
form as Endo may reasonably specify) to perfect the security
created or intended to be created under or evidenced by the
Security Agreement (which may include the execution of a
mortgage, charge, assignment or other security over all or any
of the assets which are, or are intended to be, the subject of
the Security Agreement) or for the exercise of any rights,
powers and remedies of Endo provided by or pursuant to the
Finance Documents or by law;
(ii) subject to the terms hereof and of the Security Agreement, and
following an Event of Default and during the continuance
thereof to facilitate the realisation of the assets which are,
or are intended to be, the subject of the Security Agreement;
(iii) take all such action as is available to it (including making
all filings and registrations) as may be necessary for the
purpose of the creation, perfection, protection or maintenance
of any security conferred or intended to be conferred on Endo
by or pursuant to the Finance Documents;
(s) shall ensure that at all times any unsecured and unsubordinated
claims of Endo against it under the Finance Documents rank at least
pari passu with the claims of all its other unsecured and
unsubordinated creditors except those creditors whose claims are
mandatorily preferred by laws of general application to companies;
(t) it will not default under any agreement to which it is a party or
which is binding on it or any of its assets where the nature and
consequences of such default are reasonably likely to have a
material adverse effect on its business, financial condition, assets
or its ability to perform its obligations under the Finance
Documents;
(u) promptly upon becoming aware of the same, it shall notify Endo of
all litigation, arbitration or proceedings taking place, pending or
threatened in writing against it or any of its assets which is
reasonably likely to be adversely determined against it and which if
so adversely determined would have a material adverse effect on its
ability to perform its obligations under the Transaction Documents
or its assets, financial condition or prospects;
(v) it will not dispose of any asset or make any acquisition on terms
which are not arm's length or better for it except with respect to
one or more such transactions which taken as a whole are not
material in the context of the Parent or VDL (as applicable);
(w) it will not enter into any derivative transaction except for the
purposes of hedging interest rate and currency rate exposures
incurred under the Finance Documents or its
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ordinary course of trading and in any event will not enter into any
derivative transaction for speculative purposes.
8. GUARANTEE
(a) The Parent irrevocably and unconditionally:
(i) guarantees as primary obligor and not as surety, to Endo
performance by VDL of all of the Obligations;
(ii) undertakes with Endo, that whenever VDL does not pay any
amount when due under or in connection with any Finance
Document, VDL shall immediately on demand pay that amount as
if it was the principal obligor; and
(iii) indemnifies Endo immediately on demand against any cost, loss
or liability suffered by it if any obligation guaranteed by it
hereunder is or becomes unenforceable, invalid or illegal. The
amount of the cost, loss or liability shall be equal to the
amount which Endo would otherwise have been entitled to
recover.
(b) The guarantee contained in this Clause 8 is a continuing guarantee
and will extend to the ultimate balance of sums payable by any
Obligor under the Finance Documents, regardless of any intermediate
payment or discharge in whole or in part.
(c) If any payment by an Obligor or any discharge given by Endo (whether
in respect of the obligations of any Obligor or any security for
those obligations or otherwise) is avoided or reduced as a result of
insolvency or any similar event:
(i) the liability of each Obligor shall continue as if the
payment, discharge, avoidance or reduction had not occurred;
and
(ii) Endo shall be entitled to recover the value or amount of that
security or payment from each Obligor, as if the payment,
discharge, avoidance or reduction had not occurred.
(d) The obligations of the Parent under this Clause 8 will not be
affected by an act, omission, matter or thing which, but for this
Clause, would reduce, release or prejudice any of its obligations
under this Clause 8 (without limitation and whether or not known to
it) including:
(i) any time, waiver or consent granted to, or composition with,
any Obligor or other person;
(ii) the release of any other Obligor or any other person under the
terms of any composition or arrangement with any creditor of
any Obligor;
(iii) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any
Obligor or other person or any non-presentation or
non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full
value of any security;
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(iv) any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or
status of an Obligor or any other person;
(v) any amendment (however fundamental) or replacement of a
Finance Document or any other document or security;
(vi) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document or any
other document or security; or
(vii) any insolvency or similar proceedings.
(e) The Parent waives any right it may have of first requiring Endo to
proceed against or enforce any other rights or security or claim
payment from any person prior to Endo claiming from the Parent under
this Clause 8. This waiver applies irrespective of any law or any
provision of a Finance Document to the contrary.
(f) Until all amounts which may be or become payable by the Obligors
under or in connection with the Finance Documents have been
irrevocably paid in full, Endo may:
(i) refrain from applying or enforcing any other moneys, security
or rights held or received by it (or any trustee or agent on
its behalf) in respect of those amounts, or apply and enforce
the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and the Parent shall not
be entitled to the benefit of the same; and
(ii) hold in an interest-bearing suspense account any moneys
received from the Parent or on account of the Parent's
liability under this Clause 8.
(g) Until all amounts which may be or become payable by the Obligors
under or in connection with the Finance Documents have been
irrevocably paid in full and unless Endo otherwise directs, the
Parent will not exercise any rights which it may have by reason of
performance by it of its obligations under the Finance Documents:
(i) to be indemnified by VDL; and/or
(ii) to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of Endo under the
Finance Documents or of any other guarantee or security taken
pursuant to, or in connection with, the Finance Documents by
Endo.
(h) The guarantee in this Clause 8 is in addition to and is not in any
way prejudiced by any other guarantee or security now or
subsequently held by Endo.
9. STANDSTILL
9.1 Without prejudice to any obligation Endo may have under applicable law and
regulation, under other provisions of this Agreement, pursuant to the
requirements of any government, governmental agency or regulatory or other
authority or body, under The City Code on Takeovers and Mergers (the
"CODE") or otherwise, Endo undertakes that so long as the
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Obligors are in compliance with Clauses 7(b)-(e) inclusive it shall not,
and shall (so far as it is legally able) procure that no member of the
Endo Group shall, directly or indirectly, or in concert (as the same would
be construed for the purposes of and in accordance with the Code) with or
in conjunction with any third party, before the earliest to occur of (i)
the expiry of the Term, (ii) the Final Repayment Date, and (iii) the
exercise of any remedy under Clause 10.2 (Acceleration) without the prior
written approval of the board of the Parent:
(a) acquire, or procure or induce any other person to acquire, any
interest in the shares comprised in the relevant share capital of
the Parent (within the meaning of sections 198 to 210 of the Act) or
enter into any agreement or arrangement (whether legally binding or
not) having a similar affect; or
(b) make, or procure or induce any other person to make, any offer for
all or any of the shares of the Parent or enter into any agreement
or arrangement (whether legally binding or not) having a similar
affect; or
(c) announce, or procure or induce any other person to announce, any
offer for all or any of the shares of the Parent or enter into any
agreement or arrangement (whether legally binding or not) having a
similar affect,
unless, the acquisition, offer or the announcement, as the case may be, is
recommended by a majority of the directors of the Parent at the time when
the acquisition, offer or announcement is made.
9.2 In Clauses 9.1 and 9.3 "OFFER" means any general, partial, tender or other
type of offer including, without limitation, any takeover or merger
transaction (however effected), reverse takeover, scheme of arrangement or
other court scheme, offer by a parent company for shares in its
subsidiary, share exchange or similar transaction.
9.3 Notwithstanding Clauses 9.1 and 9.2, nothing shall restrict Endo or any
member of its group or any other person from discussing (on a confidential
basis, without any intent to require the public disclosure thereof) with
members of the Parent's board the possibility of any such persons
acquiring any interest in any shares in the Parent and the basis upon
which the directors of the Parent would recommend such offer or
announcement or acquisition.
10. EVENTS OF DEFAULT
10.1 DEFAULTS
There shall be an Event of Default if any of the following occurs:
(a) an Obligor does not pay on the due date any amount payable by it
under the Finance Documents unless:
(i) its failure to pay is caused by administrative or technical
error by a third party which is not a member of the Group; and
(ii) payment is made within 3 Business Days of its due date;
(b) an Obligor is in breach of any of its other obligations under any of
the Finance Documents unless:
(i) such breach is not a breach of an Immediate Default Clause;
and
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(ii) such breach is capable of remedy; and
(iii) such breach is remedied within 14 days of Endo giving notice
to an Obligor or an Obligor becoming actually aware of the
failure to comply,
For these purposes an "IMMEDIATE DEFAULT CLAUSE" is each of Clauses
3.3 (Mandatory Prepayment and Set-off), 7(g) (indebtedness), 7(h)
(negative pledge), 7(i) (dividends) to 7(m) (release of Existing
Floating Charge) inclusive and 8 (Guarantee);
(c) an Insolvency Event occurs with respect to an Obligor, a
Satisfactory Purchaser or a parent undertaking of any such person as
defined in the Act;
(d) it is or becomes unlawful for an Obligor to perform any of its
obligations under the Transaction Documents or any security created
or expressed to be created or evidenced by the Security Agreement
cease to be effective, or any obligation of any Obligor under any
Transaction Document is not or ceases to be legal, valid, binding or
enforceable.
(e) VDL is the Defaulting Party as defined in and for the purposes of
Clause 17.2 of the License Agreement;
(f) an Obligor suspends or ceases or threatens to suspend or cease to
carry on its business or all or any substantial part of its assets
are seized or appropriated by or on behalf of any governmental or
other authority or are compulsorily acquired (provided that any such
action is not discharged, stayed or withdrawn within 10 days of its
occurrence);
(g) any indebtedness (whether in respect of capital or interest) of an
Obligor in excess of US$1,000,000 in aggregate is not paid when due
or is declared to be or otherwise becomes due and payable prior to
its specified maturity;
(h) any consent or exemption required which is material to enabling an
Obligor to perform its obligations under the Finance Documents to
which it is a party is withdrawn or modified or for any reason it
becomes unlawful for VDL to perform any of its obligations under the
Finance Documents; or
(i) any representation or warranty made to Endo by an Obligor in any of
the Finance Documents proves to have been incorrect in any respect
when made, deemed made or repeated.
10.2 ACCELERATION
Without prejudice to the provisions of Clause 3.3(d), at any time when any
Event of Default remains unremedied Endo may by notice to VDL:
(a) require VDL immediately to repay the Advance and all other sums
payable under the Finance Documents, whereupon the same shall become
immediately due and payable;
(b) place the Advance on demand, whereupon the Advance and all other
sums payable under the Finance Documents shall become repayable on
demand;
(c) declare that some or all of the commitment hereunder shall be
cancelled forthwith, whereupon the same shall be so cancelled;
and/or
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(d) exercise any of its rights as a secured creditor under the Security
Agreement provided that prior to the occurrence of any Insolvency
Event (as defined in the License Agreement) or any analogous event
in any jurisdiction, Endo may not sell or assign or otherwise
dispose of (reserving at all times Endo's right to receive and apply
to the Obligations the proceeds thereof) the Secured Assets (except
in connection with any assignment or transfer of its rights under
and as permitted by this Agreement) unless an Event of Default has
occurred under either Clause 10.1(d) or Clause 10.1(f).
Upon the service of any such notice Endo's obligations under this
Agreement shall be terminated.
11. SECURITY AND CONFIDENTIALITY
(a) Any security or guarantee granted to Endo pursuant to any of the
Finance Documents shall be in addition to and without prejudice to
any other security or guarantee which Endo now holds or may in the
future hold as security for the Facility Amount.
(b) The provisions of Clause 29 and 16 of the License Agreement shall
apply mutatis mutandis to this Agreement, save that disclosure may
also be made by Endo to any person to whom it is permitted to assign
or transfer its rights under this Agreement.
12. PAYMENTS
12.1 PLACE
All payments to be made by an Obligor pursuant to this Agreement shall be
made in Dollars in immediately available funds to Endo into a bank
account, details of which shall be notified to an Obligor by Endo not less
than five (5) Business Days before payment is due.
12.2 NO WITHHOLDINGS
All payments by an Obligor under the Finance Documents are to be made (a)
free and clear of and without any Tax Deduction unless the Tax Deduction
is required by law; and (b) without any set-off or counter-claim
whatsoever.
12.3 GROSSING-UP
(a) Subject to Clause 12.3(b) below, if a Tax Deduction is required by
law in respect of any sum payable by an Obligor to Endo under the
Finance Documents, that Obligor shall increase such sum so that the
amount received by Endo after the Tax Deduction shall be equal to
the amount which Endo would have been entitled to receive in the
absence of any requirement to make that Tax Deduction.
(b) An Obligor is not required to make an increased payment to Endo
under Clause 12.3(a) above for a Tax Deduction if on the date on
which the payment is made:
(i) the payment could have been made to Endo without a Tax
Deduction but for the sole fact that, on that date, Endo is
not or has ceased to be a Qualifying Lender other than as a
result of any change after the date of this Agreement in (or
in the published interpretation, administration or application
of) any law, directive, treaty or regulation or any published
practice or concession of any relevant Taxing authority; or
-22-
(ii) the relevant Obligor could have made the payment to Endo
without a Tax Deduction had Endo complied with its obligations
under Clause 12.3(c) below, provided that, pending receipt of
the authorisation referred to in Clause 12.3(c) below, this
Clause 12.3(b)(ii) shall not apply (and the relevant Obligor
shall be required to make an increased payment to Endo under
Clause 12.3(a) above for a Tax Deduction) if Endo has
reasonably promptly taken all such steps as are reasonably
practicable to comply with its obligations under Clause
12.3(c) following the date of this Agreement or the relevant
request from the Obligor (as applicable).
(c) Endo and the Obligors shall co-operate in completing, as soon as
reasonably practicable after the date of this Agreement, any
procedural formalities necessary for the Obligors to obtain
authorisation to make a payment under this Agreement without a Tax
Deduction (including, for the avoidance of doubt, the completion and
submission to the Taxing authority in Endo's country of
incorporation (or, if different, its country of residence for the
purposes of the relevant double taxation agreement) of appropriate
forms and documents that are provided to it by the Obligors).
(d) If an Obligor makes a payment to Endo without a Tax Deduction in
circumstances where Endo has not notified that Obligor that it has
ceased to be a Qualifying Lender (other than as a result of any
change after the date of this Agreement in, or in the published
interpretation, administration or application of, any law or treaty,
or any published practice or concession of any relevant Taxing
authority):
(i) where any liability in respect of an amount which should have
been deducted or withheld is imposed, levied or assessed
against an Obligor, Endo shall, within three (3) Business Days
of demand by the relevant Obligor, indemnify that Obligor
against such liability or payment together with any interest,
penalties and expenses payable or incurred in connection with
the same; and
(ii) Endo authorises the Obligors to withhold amounts equivalent to
the Tax Deduction which should have been made from subsequent
payments to Endo under this Agreement and to pay such amounts
to the relevant Taxing authority
provided that any amounts withheld in accordance with Clause
12.3(d)(ii) shall not also be recoverable under Clause 12.3(d)(i)
above.
(e) If an Obligor makes a payment under Clause 12.3(a) above (a "TAX
PAYMENT") and Endo determines in its sole discretion that:
(i) a Tax Credit is attributable to that Tax Payment; and
(ii) Endo has obtained, utilised and retained that Tax Credit,
Endo shall, to the extent that it can do so without prejudice to the
retention of the Tax Credit, pay such amount to the relevant Obligor
as Endo determines in its absolute discretion to be attributable to
the Tax Payment and will leave it (after that payment to the
Obligor) in the same after-Tax position as it would have been in had
the Tax Payment not been required to be made by that Obligor.
Nothing herein contained shall interfere with the right of Endo to
arrange its Tax affairs in whatever manner it
-23-
thinks fit nor oblige it to disclose any information relating to its
Tax affairs or any computations in respect thereof.
(f) If an Obligor makes any Tax Deduction, it shall pay the full amount
of that Tax Deduction to the relevant Tax authority within the time
allowed for such payment under applicable law and shall deliver to
Endo, as soon as reasonably practicable after such payment falls due
to the applicable authority, any original receipt (or a certified
copy thereof) issued by such authority evidencing such payment.
12.4 NON-BUSINESS DAYS
Any payments which, but for this Clause 12.4, would fall due under this
Agreement on a day other than a Business Day shall be made on the next
succeeding Business Day.
12.5 SET-OFF
Endo may set off any matured obligation due from an Obligor under the
Finance Documents against any matured obligation owed by Endo to that
Obligor, regardless of the place of payment or currency of either
obligation. If the obligations are in different currencies, Endo may
convert either obligation at a market rate of exchange for the purpose of
the set-off.
13. LAW AND JURISDICTION
13.1 APPLICABLE LAW.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK INCLUDING GENERAL OBLIGATION LAW
5-1401.
13.2 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
(a) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY OBLIGOR ARISING OUT OF
OR RELATING HERETO OR ANY OTHER FINANCE DOCUMENT, OR ANY OF THE
OBLIGATIONS, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇. BY
EXECUTING AND DELIVERING THIS AGREEMENT, EACH OBLIGOR, FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (i) ACCEPTS
GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND
VENUE OF SUCH COURTS; (ii) WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS; (iii) AGREES THAT, NOTWITHSTANDING CLAUSE 13.2 (b),
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY
BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
TO THE APPLICABLE OBLIGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
CLAUSE 18; (iv) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (iii) IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE
OBLIGOR IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (v)
AGREES ENDO RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY OBLIGOR IN THE
COURTS OR ANY OTHER JURISDICTION; and
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(b) EACH OBLIGOR HEREBY IRREVOCABLY AND UNCONDITIONALLY APPOINTS CT
CORPORATION, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ (FAX: ▇▇▇-▇▇▇-▇▇▇-▇▇▇▇) ("THE PROCESS AGENT"), AS ITS AGENT TO
RECEIVE ON BEHALF OF SUCH OBLIGOR AND ITS PROPERTY SERVICE OF COPIES
OF THE SUMMONS AND COMPLAINTS AND ANY OTHER PROCESS WHICH MAY BE
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY COURT
SPECIFIED IN CLAUSE 13.2(a), SUCH SERVICE MAY BE MADE BY MAILING OR
DELIVERING A COPY OF SUCH PROCESS TO AN OBLIGOR IN CARE OF THE
PROCESS AGENT AT THE ADDRESS SPECIFIED ABOVE FOR THE PROCESS AGENT,
AND EACH OBLIGOR HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE
PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. EACH OBLIGOR
FURTHER CONSENTS TO MAILING COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH OBLIGOR AT ITS ADDRESSES
FOR NOTICE HEREUNDER, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
MAILING. FAILURE OF THE PROCESS AGENT TO GIVE NOTICE TO ANY OBLIGOR
OR FAILURE OF AN OBLIGOR TO RECEIVE NOTICE OF SUCH SERVICES OF
PROCESS SHALL NOT AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE ON
THE PROCESS AGENT OR SUCH OBLIGOR. EACH OBLIGOR COVENANTS AND AGREES
THAT IT SHALL TAKE ANY AND ALL REASONABLE ACTION, INCLUDING THE
EXECUTION AND FILING OF ANY AND ALL DOCUMENTS, THAT MAY BE NECESSARY
FOR THE PROCESS AGENT TO ACT AS SUCH. IN THE EVENT THAT AT ANY TIME
SUCH PROCESS AGENT SHALL FOR ANY REASON CEASE TO MAINTAIN AN OFFICE
IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY, OR CEASE TO ACT AS
PROCESS AGENT, THEN SUCH OBLIGOR IRREVOCABLY CONSENTS TO THE SERVICE
OF ANY AND ALL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ACCORDANCE WITH THE TERMS CLAUSE (iii) OF CLAUSE 13.2(a). EACH
OBLIGOR ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS CLAUSE 13.2(b)
SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO ▇▇▇ IN ANY OTHER
JURISDICTION.
13.3 WAIVER OF JURY TRIAL
EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
HEREUNDER OR UNDER ANY OF THE OTHER FINANCE DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN
ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS
WAIVER IN ITS RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS
AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL
-25-
AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER
THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS CLAUSE 13.3
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
HERETO OR ANY OF THE OTHER FINANCE DOCUMENTS OF TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE ADVANCE MADE HEREUNDER. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY
THE COURT.
14. SEVERANCE
If at any time any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect under any law of any jurisdiction,
the validity, legality and enforceability of the remaining provisions of
this Agreement and the validity, legality and enforceability of those
provisions under the law of other jurisdictions shall not in any way be
affected or impaired thereby.
15. FEES, COSTS AND INDEMNITY
15.1 COSTS AND EXPENSES
Each party shall be liable for its own costs, charges and expenses arising
at any time in connection with the preparation, negotiation and execution
of the Finance Documents and the transactions contemplated thereby.
15.2 INDEMNITY
Each Obligor shall indemnify Endo on an after tax basis from and against
all losses, costs, expenses, claims, proceedings and damages suffered or
incurred by Endo in consequence of any Event of Default (other than to the
extent the same arise solely under the License Agreement) and/or any
failure to borrow in accordance with any notice given under Clause 4.
16. NON-WAIVER
No failure by Endo to exercise and no delay by Endo in exercising any
right, power or privilege under this Agreement shall operate as a waiver
thereof nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided
in this Agreement are cumulative and not exclusive of any rights or
remedies provided by law.
17. SUCCESSORS
The agreement evidenced by this Agreement shall enure to the benefit of
Endo and its successors and assigns from time to time. No Obligor may
assign or transfer any of its rights, benefits or obligations under this
Agreement. Endo may assign or transfer its rights and obligations under
this Agreement to any of its subsidiaries, to any holding company of Endo,
to any subsidiary of any such holding company or to any holders of Endo
secured senior debt. Endo or its successor or assignee or transferee shall
pay any stamp duty, transfer registration or similar Taxes payable on such
assignment.
-26-
18. NOTICE
18.1 METHOD
Each notice or other communication to be given under this Agreement shall
be given in writing and, unless otherwise provided, shall be made by fax
or letter.
18.2 DELIVERY
Any notice or other communication to be given by Endo or an Obligor to the
other under this Agreement shall (unless one party has by fifteen (15)
days' notice to the other party specified another address) be given to
that other party at the respective addresses given in Clause 18.3.
18.3 ADDRESSES
The address and fax number of each Obligor and Endo are:
(A) Endo:
Endo Pharmaceuticals Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Legal Officer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
(B) the Parent:
Vernalis PLC
Oakdene Court
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: 011-44-118-989-9300
-27-
(C) VDL:
Vernalis Development Limited
Oakdene Court
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: 011-44-118-989-9300
18.4 DEEMED RECEIPT
Any notice or other communication given by an Obligor or Endo shall be
deemed to have been received:
(a) if sent by fax, with a confirmed receipt of transmission from the
receiving machine, on the day on which transmitted;
(b) in the case of a written notice given by hand, on the day of actual
delivery; and
(c) if posted, on the second Business Day following the day on which it
was despatched by first class mail postage prepaid
provided that a notice given in accordance with the above but received on
a day which is not a Business Day or after normal business hours in the
place of receipt shall only be deemed to have been received on the next
Business Day.
19. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this has
the same effect as if the signatures on the counterparts were on a single
copy of this Agreement.
20. THIRD PARTY BENEFICIARIES
20.1 The terms and provisions of this Agreement are for the purpose of defining
the relative rights and obligations of each party hereto with respect to
the transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement.
-28-
IN WITNESS WHEREOF the parties have executed this agreement as of the day and
year first above written.
VERNALIS PLC
By: /s/ ▇ ▇ ▇▇▇▇
Name: ▇▇ ▇▇▇▇, CFO
VERNALIS DEVELOPMENT LIMITED
By: /s/ ▇▇ ▇▇▇▇
Name: ▇▇ ▇▇▇▇, Director
ENDO PHARMACEUTICALS INC
By: /s/ ▇▇▇▇▇ ▇ ▇▇▇▇▇
Name: ▇▇▇▇▇ ▇ ▇▇▇▇▇
-29-
SCHEDULE 1
DRAWDOWN NOTICE
To: [ ]
From: Vernalis Development Limited
Dear Sirs,
LOAN AGREEMENT DATED [ ] (THE "AGREEMENT")
Terms defined in the Agreement have the same meaning in this notice.
We request a drawing under the Agreement as follows:
1. Amount of Advance: US$50,000,000
2. Drawdown Date: [ ]
3. Payment Details:
The Advance should be disbursed on the Drawdown Date to the following persons
and accounts:
3.1 Amount: [sufficient to discharge the Elan Outstanding Liability]
Payee: Elan Pharma International Limited
Payee Account
Details: [ ]
3.2 Amount: [The balance of $50M]
Payee: Vernalis Development Limited
Payee Account
Details: [ ]
We confirm that today and on the Drawdown Date:
(a) the representations and warranties in Clause 6.1 of the Agreement are and
will be correct;
(b) no Event of Default or Potential Event of Default has occurred and is
continuing or will occur on the making of the drawing.
SIGNED
For and on behalf of
VERNALIS DEVELOPMENT LIMITED
-30-
SCHEDULE 2
SECURITY DEED
[See Attached]
-1-
SECURITY DEED
DATED AS OF JULY __, 2004
BETWEEN
VERNALIS DEVELOPMENT LIMITED,
AS THE GRANTOR
AND
ENDO PHARMACEUTICALS INC.,
AS THE SECURED PARTY
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS; GRANT OF SECURITY................................... 1
1.1 GENERAL DEFINITIONS.................................................... 1
1.2 DEFINITIONS; INTERPRETATION............................................ 3
1.3 THIRD PARTY RIGHTS..................................................... 4
SECTION 2. GRANT OF SECURITY................................................ 4
2.1 GRANT OF SECURITY...................................................... 4
2.2 CERTAIN LIMITED EXCLUSIONS............................................. 4
SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE................. 4
3.1 SECURITY FOR OBLIGATIONS............................................... 4
3.2 CONTINUING LIABILITY UNDER COLLATERAL.................................. 5
3.3 IMMEDIATE RECOURSE..................................................... 6
3.4 ADDITIONAL SECURITY.................................................... 6
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS..................... 6
4.1 GENERALLY.............................................................. 6
4.2 RECEIVABLES............................................................ 8
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES............... 9
5.1 ACCESS; RIGHT OF INSPECTION............................................ 9
5.2 FURTHER ASSURANCES..................................................... 9
SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT......................... 10
6.1 POWER OF ATTORNEY...................................................... 10
6.2 NO DUTY ON THE PART OF SECURED PARTY................................... 10
SECTION 7. REMEDIES, GENERALLY.............................................. 10
7.1 GENERALLY.............................................................. 10
7.2 APPLICATION OF PROCEEDS................................................ 12
7.3 SALES ON CREDIT........................................................ 12
7.4 CASH PROCEEDS.......................................................... 12
SECTION 8. REMEDIES, UK. ................................................... 13
8.1 UK ENFORCEMENT OF SECURITY, GENERALLY.................................. 13
8.2 RECEIVER............................................................... 13
SECTION 9. SECURED PARTY.................................................... 14
SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER OF THE ADVANCE........... 14
SECTION 11. STANDARD OF CARE; SECURED PARTY MAY PERFORM..................... 15
SECTION 12. MISCELLANEOUS................................................... 15
i
EXHIBITS:
Exhibit A - Form of Pledge Supplement
Exhibit B - Form of Notice
Exhibit C - Powers of Receiver
SCHEDULES:
Schedule 4.1(a)(ii) - Organizational Information
Schedule 4.1(a)(iii) - Other Names of Grantor
Schedule 4.1(a)(iv) - Changes in Organizational Information and Structure
Schedule 4.1(a)(v) - Filing Offices
ii
This SECURITY DEED, dated as of July __, 2004 (this "SECURITY
DEED"), between VERNALIS DEVELOPMENT LIMITED, a limited liability company
incorporated under the laws of England and Wales with company number 2600483 and
with a registered address at Oakdene Court, 613 Reading Road, Winnersh,
Workingham, Berkshire, RG41 5UA, as the grantor (the "GRANTOR"), and ENDO
PHARMACEUTICALS INC., a Delaware corporation, as the secured party (the "SECURED
PARTY").
RECITALS:
WHEREAS, reference is made to that certain Loan Agreement, dated as
of the date hereof (as it may be amended, restated, supplemented or otherwise
modified from time to time, the "LOAN AGREEMENT"), by and among Vernalis
Development Limited, as borrower, Vernalis PLC, as parent, and Endo
Pharmaceuticals Inc. ("ENDO");
WHEREAS, in consideration of the extensions of credit and other
accommodations of Endo as set forth in the Loan Agreement, the Grantor has
agreed to secure its obligations under the Finance Documents as set forth
herein; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Grantor and the Secured Party
agree as follows:
SECTION 1.DEFINITIONS; GRANT OF SECURITY.
1.1 GENERAL DEFINITIONS. In this Security Deed, the following terms
shall have the meanings provided below:
"ACCOUNT DEBTOR" shall mean each Person who is obligated on a
Receivable or any Supporting Obligation related thereto.
"ACCOUNTS" shall mean all "accounts" as defined in Article 9 of the
UCC.
"ACT" shall have the meaning assigned in Section 8.1.
"BANKRUPTCY CODE" shall mean Title 11 of the United States Code
entitled "Bankruptcy", as now and hereafter in effect, or any successor statute.
"CASH PROCEEDS" shall have the meaning assigned in Section 7.4.
"CHATTEL PAPER" shall mean all "chattel paper" as defined in Article
9 of the UCC, including, without limitation, "electronic chattel paper" or
"tangible chattel paper", as each term is defined in Article 9 of the UCC.
"CLOSING DATE" means July __, 2004.
"COLLATERAL" shall have the meaning assigned in Section 2.1.
"COLLATERAL ACCOUNT" shall mean any account established by the
Secured Party and details of which have been noticed to the Grantor.
"COLLATERAL SUPPORT" shall mean all property (real or personal)
collaterally assigned, hypothecated or otherwise securing any Account included
in the Collateral (including
the royalty stream payable to the Grantor under the License Agreement) and shall
include any security agreement or other agreement granting a lien or security
interest in such real or personal property.
"ENDO" shall have the meaning assigned in the recitals.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, authority,
instrumentality, regulatory body, court, administrative tribunal, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.
"GRANTOR" shall have the meaning assigned in the preamble.
"INSTRUMENTS" shall mean all "instruments" as defined in Article 9
of the UCC.
"LICENSE AGREEMENT" shall have the meaning assigned in Section 2.1.
"LIEN" shall mean any lien, mortgage, pledge, collateral assignment,
security interest, charge or encumbrance of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, and any lease in the nature thereof) and any other agreement, option,
trust or other arrangement having the practical effect of any of the foregoing.
"LOAN AGREEMENT" shall have the meaning assigned in the recitals.
"OBLIGATIONS" shall mean all obligations of every nature of the
Grantor from time to time owed to the Secured Party under any Finance Document,
whether for principal, interest (including interest which, but for the filing of
a petition in bankruptcy with respect to the Grantor, would have accrued on any
obligation, whether or not a claim is allowed against the Grantor for such
interest in the related bankruptcy proceeding), fees, expenses, indemnification
or otherwise.
"PERMITTED SALES" shall mean those sales, assignments or other
dispositions permitted by the Loan Agreement.
"PERSON" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and Governmental Authorities.
"PLEDGE SUPPLEMENT" shall mean any supplement to this Security Deed
in substantially the form of Exhibit A attached hereto, together with all
supplements and schedules thereto.
"PROCEEDS" shall mean: (i) all "proceeds" as defined in Article 9 of
the UCC, and (ii) whatever is receivable or received when Collateral or proceeds
are sold, exchanged, collected or otherwise disposed of, whether such
disposition is voluntary or involuntary.
2
"RECEIVABLES" shall mean all Accounts, including all rights to
payment, whether or not earned by performance, for property licensed or
otherwise disposed of and all Collateral Support and Supporting Obligations
related thereto and all Receivables Records.
"RECEIVABLES RECORDS" shall mean (i) all original copies of all
documents, instruments or other writings or electronic records or other Records
evidencing the Receivables, (ii) all books, correspondence or other files,
Records, ledger sheets or cards, invoices, and other papers relating to
Receivables, including, without limitation, all tapes, cards, computer tapes,
computer discs, computer runs, record keeping systems and other papers and
documents relating to the Receivables, whether in the possession or under the
control of Grantor or any computer bureau or agent from time to time acting for
Grantor or otherwise, and (iii) any other written or nonwritten forms of
information related in any way to the foregoing or any Receivable.
"RECEIVER" shall have the meaning assigned in Section 8.2(a)(i).
"RECORD" shall have the meaning specified in Article 9 of the UCC.
"RELEVANT ASSETS" means the Vernalis IP (as defined in the License
Agreement) and the Collateral.
"SECURITY DEED" shall have the meaning assigned in the preamble.
"SECURED OBLIGATIONS" shall have the meaning assigned in Section
3.1.
"SUPPORTING OBLIGATION" shall mean all "supporting obligations" as
defined in Article 9 of the UCC.
"SECURED PARTY" shall have the meaning assigned in the preamble.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the State of New York or, when the context implies, the Uniform
Commercial Code as in effect from time to time in any other applicable
jurisdiction.
"UK" shall mean the United Kingdom.
"UNITED STATES" shall mean the United States of America.
1.2 DEFINITIONS; INTERPRETATION. All capitalized terms used herein
(including the preamble and recitals hereto) and not otherwise defined herein
shall have the meanings ascribed thereto in the Loan Agreement or, if not
defined therein, in the UCC. References to "Sections," "Exhibits" and
"Schedules" shall be to Sections, Exhibits and Schedules, as the case may be, of
this Security Deed unless otherwise specifically provided. Section headings in
this Security Deed are included herein for convenience of reference only and
shall not constitute a part of this Security Deed for any other purpose or be
given any substantive effect. Any of the terms defined herein may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
nonlimiting language (such as "without limitation" or "but not limited to" or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that fall within the broadest
possible scope of such general statement,
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term or matter. If any conflict or inconsistency exists between this Security
Deed and the Loan Agreement, the Loan Agreement shall govern. All references
herein to provisions of the UCC shall include all successor provisions under any
subsequent version or amendment to any Article of the UCC.
1.3 THIRD PARTY RIGHTS.
(a) Any security granted to the Secured Party pursuant to this
Security Deed shall be in addition to and without prejudice to any other
security which the Secured Party now holds or may in the future hold as security
for the Secured Obligations.
(b) The terms and provisions of this Security Deed are for the
purpose of defining the relative rights and obligations of each party hereto
with respect to the transactions contemplated hereby and no Person shall be a
third party beneficiary of any of the terms and provisions of this Security
Deed.
SECTION 2.GRANT OF SECURITY.
2.1 GRANT OF SECURITY. To secure the Secured Obligations, the Grantor
hereby grants to the Secured Party a security interest in and continuing lien on
all of the Grantor's right, title and interest in, to and under those portions
of the License Agreement, dated as of a date on or about the date hereof,
between Vernalis Development Limited and Endo Pharmaceuticals Inc. (as may be
amended, supplemented or modified from time to time, the "LICENSE AGREEMENT")
related to the payments due to the Grantor thereunder, including, without
limitation, the royalty stream payable to the Grantor pursuant to, and any
Receivables and Accounts related to, the License Agreement, and all Proceeds,
products, accessions, rents and profits of or in respect of the License
Agreement (all of which being hereinafter collectively referred to as the
"COLLATERAL").
2.2 CERTAIN LIMITED EXCLUSIONS. Notwithstanding anything herein to the
contrary, in no event shall the security interest granted under Section 2.1
hereof attach to any lease, license, contract, property rights or agreement to
which the Grantor is a party or any of its rights or interests thereunder if and
for so long as the grant of such security interest shall constitute or result in
(a) the abandonment, invalidation or unenforceability of any right, title or
interest of the Grantor therein or (b) in a breach or termination pursuant to
the terms of, or a default under, any such lease, license, contract property
rights or agreement (other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the
UCC (or any successor provision or provisions) of any relevant jurisdiction or
any other applicable law (including the Bankruptcy Code) or principles of
equity), provided, however, that such security interest shall attach immediately
at such time as the condition causing such abandonment, invalidation or
unenforceability shall be remedied and to the extent severable, shall attach
immediately to any portion of such Lease, license, contract, property rights or
agreement that does not result in any of the consequences specified in (a) or
(b) above.
SECTION ▇.▇▇▇▇▇▇▇▇ FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.
3.1 SECURITY FOR OBLIGATIONS (a) Generally. This Security Deed secures,
and the Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic
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stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a) (and
any successor provision thereof), of all Obligations (the "SECURED
OBLIGATIONS").
(b) Creation of Floating Charge. The Grantor, with full title
guarantee and as further continuing security for the payment and discharge of
the Secured Obligations, charges the Collateral in favor of the Secured Party by
way of first floating charge.
(c) Conversion of Floating Charge
(i) The Secured Party may, by notice to the Grantor, convert
the floating charge created by this Security Deed, with immediate effect,
into a fixed charge over all or any of the Grantor's assets specified in
the notice if:
(1) an Event of Default has occurred and is continuing; or
(2) the Secured Party reasonably considers those assets to be in danger
of being seized or sold under any form of distress, attachment,
execution or other legal process or to be otherwise in jeopardy.
(ii) Upon notice being given by the Secured Party under
paragraph 3.1(c)(i) above, the Grantor will not exercise any rights it has
over the Collateral, other than as provided in this Security Deed.
(iii) The giving by the Secured Party of a notice pursuant to
paragraph (i) above in relation to the Collateral shall not be construed
as a waiver or abandonment of the Secured Party's rights to give other
similar notices in respect of the Collateral.
(d) Miscellaneous. Upon the occurrence and during continuation of
an Event of Default, if the charge of Collateral referred to in Clause 3.1(c)
(Creation of Floating Charge) is found to be ineffective or any sums payable in
respect of such Collateral are received by the Grantor, the Grantor shall hold
the benefit of such Collateral and any such sums received by it in trust for the
Secured Party and shall account to the Secured Party for or otherwise apply all
such sums as the Secured Party may direct and shall otherwise, at its own cost,
take such action and execute such documents as the Secured Party may, in its
sole discretion, require.
3.2 CONTINUING LIABILITY UNDER COLLATERAL. Notwithstanding anything
herein to the contrary, (a) the Grantor shall remain liable for all obligations
under the Collateral and nothing contained herein is intended or shall be a
delegation of duties to the Secured Party, (b) the Grantor shall remain liable
under each of the agreements now or hereafter included in the Collateral to
perform all of the obligations undertaken by it thereunder all in accordance
with and pursuant to the terms and provisions thereof and the Secured Party
shall not have any obligation or liability under any of such agreements by
reason of or arising out of this Security Deed or any other document related
thereto nor shall the Secured Party have any obligation to make any inquiry as
to the nature or sufficiency of any payment received by it or have any
obligation to take any action to collect or enforce any rights under any
agreement now or hereafter included in the Collateral and (c) the exercise by
the Secured Party of any of its rights hereunder shall not release the Grantor
from any of its duties or obligations under the contracts and agreements now or
hereafter included in the Collateral.
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3.3 IMMEDIATE RECOURSE. The Grantor waives any right it may have of
first requiring the Secured Party to proceed against or enforce any other rights
or security before enforcing the security constituted hereby.
3.4 ADDITIONAL SECURITY. The security constituted by this Security Deed
is in addition to, and not in any way prejudiced by, any other security now or
hereafter held by the Secured Party.
SECTION 4. REPRESENTATIONS AND WARRANTIES AND COVENANTS.
4.1 GENERALLY
(a) Representations and Warranties of the Grantor. The Grantor
hereby represents and warrants, on the Closing Date and on each Interest Payment
Date throughout the period of the Term in relation to which a Deemed Advance
Notice has been given is made available, that:
(i) it is the sole and exclusive owner of the entire right,
title, and interest in the Collateral, as to all Collateral whether now
existing or hereafter acquired, will continue to have such rights in the
Collateral (except with respect to Proceeds), in each case free and clear
of any and all Liens, rights or claims of all other Persons to the extent
not otherwise included above, including, without limitation, liens arising
as a result of the Grantor becoming bound (as a result of merger of
otherwise) as a debtor under a security agreement entered into by another
Person, other than Permitted Liens;
(ii) as indicated on Schedule 4.1(a)(ii), it is a limited
liability company incorporated solely under the laws of England and Wales
and remains duly existing as such. The Grantor has not filed any
certificates of domestication, transfer or continuance in any other
jurisdiction. The Grantor has also indicated on Schedule 4.1(a)(ii) (as
such schedule may be amended or supplemented from time to time): (w) the
full legal name of the Grantor, (x) its organizational identification
number (as applicable), (y) the jurisdiction where the chief executive
office is located, and for the one-year period preceding the date hereof
has been located, and (z) its notice address.
(iii) it has not done in the last five (5) years, and does not
do, business under any other name (including any trade-name or fictitious
business name) except for those names set forth on Schedule 4.1(a)(iii)
(as such schedule may be amended or supplemented from time to time);
(iv) except as provided on Schedule 4.1(a)(iv) (as such
schedule may be amended or supplemented from time to time), it has not
changed its name, jurisdiction of organization, or chief executive office
within the past five (5) years;
(v) upon the filing of (x) all UCC financing statements
naming the Grantor as "debtor" and the Secured Party as "secured party",
and (y) all relevant filings in the UK, describing the Collateral in the
filing office set forth on Schedule 4.1(a)(v) hereof (as such schedule may
be amended or supplemented from time to time), the security interest
granted to the Secured Party hereunder constitutes a valid, legal,
enforceable and perfected first priority Lien (subject in the case of
priority only to Permitted Liens);
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(vi) all actions and consents, including all filings,
notices, registrations and recordings necessary or desirable for the
exercise by the Secured Party of the rights provided for in this Security
Deed or the exercise of remedies in respect of the Collateral have been
made or obtained;
(vii) other than the financing statements filed in favor of
the Secured Party, no effective UCC financing statement or other
instrument similar in effect under any applicable law covering all or any
part of the Collateral is on file in any filing or recording office except
for (y) financing statements for which proper termination statements have
been delivered to the Secured Party for filing and (z) financing
statements filed in connection with Permitted Liens;
(viii) no authorization, approval or other action by, and no
notice to or filing with, any Governmental Authority or regulatory body is
required for either (y) the grant by the Grantor of the Lien purported to
be created in favor of the Secured Party hereunder or (z) the exercise by
the Secured Party of any rights or remedies in respect of the Collateral
(whether specifically granted or created hereunder or created or provided
for by applicable law), except for the filings contemplated by clause (v)
above;
(ix) as of the Closing Date, it has delivered notice,
substantially in the form of Exhibit C attached hereto, of the Lien
created by this Security Deed to Endo.
(b) Covenants and Agreements of the Grantor. The Grantor hereby
covenants and agrees that:
(i) save with respect to Permitted Liens, it will not,
without the prior written consent of Secured Party, create, or permit to
subsist any security over:
(1) prior to the MAM Approval Date, any of its assets or
any of the assets of its subsidiaries; and
(2) on and after the MAM Approval Date: (A) any of the
Collateral or other Relevant Assets; or (B) any book and other debts and
monetary claims relating to the Collateral or other Relevant Assets and
any proceeds of such debts and claims (including without limitation, any
claims or sums of money deriving from or in relation to the Collateral or
other Relevant Assets, any court order or judgment, any contract or
agreement to which the Grantor is party and any other assets, property
rights or undertaking of the Grantor in each case in or relating to the
Collateral or other Relevant Assets);
(ii) except with the prior consent of the Secured Party or as
permitted under the Loan Agreement the Grantor shall not execute, and
there will not be on file in any public office, any financing statement or
other documents or instruments, except financing statements or other
documents or instruments filed or to be filed in favor of the Secured
Party and the Grantor shall not (except as permitted by the Loan
Agreement) sell, assign, transfer, license, grant any option, or create or
suffer to exist any Lien upon or with respect to, or otherwise dispose of
(by operation of law or otherwise) the Collateral, except Permitted Liens
and the Lien created by and under this Security Deed and other Finance
Documents, and the Grantor shall defend the Collateral against all Persons
at any time claiming any interest therein;
7
(iii) it shall not change the Grantor's name, chief executive
office, type of organization or jurisdiction of organization unless it
shall have (y) notified the Secured Party in writing, by executing and
delivering to the Secured Party a completed Pledge Supplement, at least
thirty (30) days prior to any such change or establishment, identifying
such new proposed name, chief executive office or jurisdiction of
organization and providing such other information in connection therewith
as the Secured Party may reasonably request and (z) taken all actions
necessary or advisable in the reasonable opinion of the Secured Party to
maintain the continuous validity, perfection and the same or better
priority of the Secured Party's security interest in the Collateral
intended to be granted and agreed to hereby;
(iv) it shall pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and
all claims against, the Collateral, except to the extent the validity
thereof is being contested in good faith; provided, the Grantor shall in
any event pay such taxes, assessments, charges, levies or claims not later
than five (5) days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment entered or filed against the
Grantor or any of the Collateral as a result of the failure to make such
payment;
(v) upon the Grantor obtaining actual knowledge thereof, it
shall promptly notify the Secured Party in writing of any event that is
reasonably likely to have a material and adverse effect on the ability of
the Grantor or the Secured Party to dispose of the Collateral or any
portion thereof following an Event of Default, including, without
limitation, the levy of any legal process against the Collateral or any
portion thereof; and
(vi) it shall not take or permit any action which is
reasonably likely to impair the Secured Party's rights in the Collateral.
4.2 RECEIVABLES.
(a) Representations and Warranties. The Grantor represents and
warrants, on the Closing Date and on each Interest Payment Date throughout the
period of the Term in relation to which a Deemed Advance Notice has been given
is made available, that no Receivable requires the consent of the Account Debtor
in respect thereof in connection with the pledge hereunder, except any consent
which has been obtained.
(b) Covenants and Agreements. The Grantor hereby covenants and
agrees that:
(i) it shall keep and maintain at its own cost and expense
satisfactory and complete records of the Receivables, including, but not
limited to, the originals of all documentation with respect to all
Receivables and records of all payments received and all credits granted
on the Receivables;
(ii) it shall not evidence Receivables as Chattel Paper or
Instruments except with the prior consent of the Secured Party, and it
shall ▇▇▇▇ conspicuously, in form and manner reasonably satisfactory to
the Secured Party, all Chattel Paper and Instruments hereafter created
with an appropriate reference to the fact that the Secured Party has a
security interest therein;
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(iii) except as otherwise provided in this subsection, the
Grantor shall continue to collect all amounts due or to become due to the
Grantor under the Receivables and any Supporting Obligation.
Notwithstanding anything in the foregoing, at any time following the
occurrence and during the continuation of an Event of Default, the Secured
Party may: (y) direct the Account Debtors under any Receivables to make
payment of all amounts due or to become due to the Grantor thereunder
directly to the Secured Party; and (z) notify, or require the Grantor to
notify, each Person (if any) maintaining a lockbox or similar arrangement
to which Account Debtors under any Receivables have been directed to make
payment to remit all amounts representing collections on checks and other
payment items from time to time sent to or deposited in such lockbox or
other arrangement directly to the Secured Party. If following the
occurrence and continuance of an Event of Default the Secured Party
notifies the Grantor that it has elected to collect the Receivables in
accordance with the preceding sentence, any payments of Receivables
received by the Grantor shall be forthwith (and in any event within two
(2) Business Days) deposited by the Grantor thereafter in the exact form
received, duly indorsed by the Grantor to the Secured Party if required,
in the Collateral Account maintained under the sole dominion and control
of the Secured Party, and until so turned over, all amounts and proceeds
(including checks and other instruments) received by the Grantor in
respect of the Receivables, any Supporting Obligation or Collateral
Support shall be received in trust for the benefit of the Secured Party
hereunder and shall be segregated from other funds of the Grantor and the
Grantor shall not adjust, settle or compromise the amount or payment of
any Receivable, or release wholly or partly any Account Debtor or obligor
thereof, or allow any credit or discount thereon.
(c) Delivery and Control of Receivables. With respect to any
Receivables that are evidenced by, or constitute, Chattel Paper or Instruments,
the Grantor shall cause each originally executed copy thereof to be delivered to
the Secured Party (or its agent or designee) appropriately indorsed to the
Secured Party or indorsed in blank within ten (10) days of the Grantor acquiring
rights therein. With respect to any Receivables which at anytime hereafter would
constitute "electronic chattel paper" under Article 9 of the UCC, the Grantor
shall take all steps necessary to give the Secured Party control over such
Receivables (within the meaning of Section 9-105 of the UCC) within ten (10)
days of the Grantor acquiring rights therein.
SECTION 5. ACCESS; RIGHT OF INSPECTION AND FURTHER ASSURANCES.
5.1 ACCESS; RIGHT OF INSPECTION. The Secured Party and its
representatives shall at all times following the occurrence and during the
continuation of an Event of Default, have full and free access during normal
business hours to all the books, correspondence and records of the Grantor that
are related to the Collateral, and the Secured Party and its representatives may
examine the same, take extracts therefrom and make photocopies thereof, and the
Grantor agrees to render to the Secured Party, at the Grantor's cost and
expense, such clerical and other assistance as may be reasonably requested with
regard thereto.
5.2 FURTHER ASSURANCES (a) The Grantor agrees that from time to time, at
its expense, that it shall promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or that the
Secured Party may reasonably request, in order to create and/or maintain the
validity, perfection or priority of and protect any security interest granted
hereby or, upon the occurrence and during the continuance of an Event of
Default, to enable the Secured Party to exercise and enforce its rights and
remedies hereunder with respect to the Collateral. Without limiting the
generality of the foregoing, the Grantor shall:
9
(i) file (x) such financing or continuation statements (or
similar documents) or (y) such other agreements, instruments,
endorsements, powers of attorney or notices as may be necessary under UK
law, or as the Secured Party may reasonably request, in order to perfect
and preserve the security interests granted or purported to be granted
hereby;
(ii) at the Secured Party's request, appear in and defend any
action or proceeding that is reasonably likely to affect such Grantor's
title to or the Secured Party's security interest in all or any part of
the Collateral.
(b) The Grantor hereby authorizes the Secured Party to file a
Record, including, without limitation, financing or continuation statements, and
amendments thereto, in any jurisdictions and with any filing offices as the
Secured Party may determine, in its reasonable discretion, are necessary or
advisable to perfect the security interest granted to the Secured Party herein.
Such financing statements may describe the Collateral in the same manner as
described herein or may contain an indication or description of collateral that
describes such property in any other manner as the Secured Party may determine,
in its reasonable discretion, is necessary, advisable or prudent to ensure the
perfection of the security interest in the Collateral granted to the Secured
Party herein. The Grantor shall furnish to the Secured Party from time to time
statements and schedules further identifying and describing the Collateral as
the Secured Party may reasonably request, all in reasonable detail.
SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
6.1 POWER OF ATTORNEY. The Grantor, by way of security, irrevocably
appoints the Secured Party and any of its delegates and sub-delegates to be its
attorney to take, at any time after the security constituted by this Security
Deed has become enforceable, any action which the Grantor is obliged to take
under this Security Deed. The Grantor ratifies and confirms whatever any
attorney does or purports to do pursuant to its appointment under this Clause.
6.2 NO DUTY ON THE PART OF SECURED PARTY. The powers conferred on the
Secured Party hereunder are solely to protect its interests in the Collateral
and shall not impose any duty upon the Secured Party to exercise any such
powers. The Secured Party shall be accountable only for amounts that it actually
receive as a result of the exercise of such powers, and neither the Secured
Party nor any of its officers, directors, employees or agents shall be
responsible to the Grantor for any act or failure to act hereunder, except for
the own gross negligence or willful misconduct.
SECTION 7. REMEDIES, GENERALLY.
7.1 GENERALLY.
(a) If any Event of Default shall have occurred and be continuing,
the Secured Party may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it at
law or in equity, all the rights and remedies of the Secured Party on default
under the UCC (whether or not the UCC applies to the affected Collateral) to
collect, enforce or satisfy any Secured Obligations then owing, whether by
acceleration or otherwise, and also may pursue any of the following separately,
successively or simultaneously:
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(i) require the Grantor to, and the Grantor hereby agrees
that it shall at its expense and promptly upon request of the Secured
Party forthwith, assemble all or part of the Collateral as directed by the
Secured Party and make it available to the Secured Party at a place to be
designated by the Secured Party that is reasonably convenient to both
parties;
(ii) take possession of the Collateral with or without
judicial process;
(iii) prior to the disposition of the Collateral, prepare the
Collateral for disposition in any manner to the extent the Secured Party
deems appropriate; and
(iv) subject to the terms of Section 10.2 of the Loan
Agreement, without notice except as specified below or under the UCC,
sell, assign, lease, license (on an exclusive or nonexclusive basis) or
otherwise dispose of the Collateral or any part thereof in one or more
parcels at public or private sale, at any of the Secured Party's offices
or elsewhere, for cash, on credit or for future delivery, at such time or
times and at such price or prices and upon such other terms as the Secured
Party may deem commercially reasonable.
(b) The Secured Party may be the purchaser of any or all of the
Collateral at any public or private (to the extent to the portion of the
Collateral being privately sold is of a kind that is customarily sold on a
recognized market or the subject of widely distributed standard price
quotations) sale in accordance with the UCC and the Secured Party shall be
entitled, for the purpose of bidding and making settlement or payment of the
purchase price for all or any portion of the Collateral sold at any such sale
made in accordance with the UCC, to use and apply any of the Secured Obligations
as a credit on account of the purchase price for any Collateral payable by the
Secured Party at such sale. Each purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of the
Grantor, and the Grantor hereby waives (to the extent permitted by applicable
law) all rights of redemption, stay and/or appraisal which it now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. The Grantor agrees that, to the extent notice of sale shall
be required by law, at least ten (10) days notice to the Grantor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Grantor hereby waives any claims against the Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if the Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, the Grantor shall be liable for the deficiency
and the fees of any attorneys employed by the Secured Party to collect such
deficiency. The Grantor further agrees that a breach of any of the covenants
contained in this Section will cause irreparable injury to the Secured Party,
that the Secured Party has no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this Section
shall be specifically enforceable against the Grantor, and the Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default has occurred
giving rise to the Secured
11
Obligations becoming due and payable prior to their stated maturities. Nothing
in this Section shall in any way alter the rights of the Secured Party
hereunder.
(c) The Secured Party may sell the Collateral without giving any
warranties as to the Collateral. The Secured Party may specifically disclaim or
modify any warranties of title or the like. This procedure will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.
(d) The Secured Party shall have no obligation to marshal any of
the Collateral.
7.2 APPLICATION OF PROCEEDS. Except as expressly provided elsewhere in
this Security Deed, all proceeds received by the Secured Party in respect of any
sale, any collection from, or other realization upon all or any part of the
Collateral shall be applied in full or in part by the Secured Party against, the
Secured Obligations in the following order of priority:
(a) first, to the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to the
Secured Party's agents and counsel, and all other expenses, liabilities and
advances made or incurred by the Secured Party in connection therewith, and all
amounts for which the Secured Party is entitled to indemnification hereunder and
all advances made by the Secured Party hereunder for the account of the Grantor;
(b) second, to the payment of all other costs and expenses paid or
incurred by the Secured Party in connection with the exercise of any right or
remedy hereunder or under the Loan Agreement, all in accordance with the terms
hereof or thereof;
(c) third, to the extent of any excess of such proceeds, to the
payment of all other Secured Obligations; and
(d) fourth, to the extent of any excess of such proceeds, to the
payment to or upon the order of the Grantor or to whosoever may be lawfully
entitled to receive the same or as a court of competent jurisdiction may direct.
7.3 SALES ON CREDIT. If Secured Party sells any of the Collateral upon
credit, the Grantor will be credited only with payments actually made by
purchaser and received by Secured Party and applied to indebtedness of the
purchaser. In the event the purchaser fails to pay for the Collateral, the
Secured Party may resell the Collateral and the Grantor shall be credited with
proceeds of the sale.
7.4 CASH PROCEEDS.
In addition to the rights of the Secured Party specified in Section
4.2 with respect to payments of Receivables, all proceeds of any Collateral
received by the Grantor after the occurrence and during the continuation of an
Event of Default consisting of cash, checks and other non-cash items
(collectively, "CASH PROCEEDS") shall be held by the Grantor in trust for the
Secured Party, segregated from other funds of the Grantor, and shall, forthwith
upon receipt by the Grantor, be turned over to the Secured Party in the exact
form received by the Grantor (duly indorsed by the Grantor to the Secured Party,
if required) and held by the Secured Party. Any Cash Proceeds received by the
Secured Party (whether from the Grantor or otherwise), if an Event of Default
shall have occurred and be continuing, may, in the sole discretion of the
Secured Party, (a) be held by the Secured Party for the benefit as collateral
security for the Secured
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Obligations (whether matured or unmatured) or (b) then or at any time thereafter
may be applied by the Secured Party against the Secured Obligations then due and
owing.
For the avoidance of doubt, so long as no Event of Default has
occurred and is continuing, nothing contained herein shall limit the rights of
the Grantor to use and apply Cash Proceeds as it sees fit.
SECTION 8. REMEDIES, UK.
8.1 UK ENFORCEMENT OF SECURITY, GENERALLY
Without limiting anything contained in this Security Deed, for the
purposes of all powers implied by UK statute, the Secured Obligations are deemed
to have become due and payable on the date of this Security Deed and Section 103
of the Law of Property Act (Eng.) (the "ACT") (restricting the power of sale)
and Section 93 of the Act (restricting the right of consolidation) do not apply
to the security constituted by this Security Deed. The statutory powers of
leasing conferred on the Secured Party are extended so as to authorize the
Secured Party to lease, make agreements for leases, accept surrenders of leases
and grant options as the Secured Party may think fit and without the need to
comply with any provision of Sections 99 or 100 of the Act; and further
(a) Contingencies. If the Secured Party enforces the security
constituted by this Security Deed at a time when no amounts are due under any
Finance Document but at a time when amounts may or will become so due, the
Secured Party (or the Receiver) may pay the proceeds of any recoveries effected
by it into any account established for such purpose upon documentary terms and
conditions satisfactory to the Secured Party;
(b) No Liability as Mortgagee in Possession. Neither the Secured
Party nor any Receiver will be liable, by reason of entering into possession of
all or any of the Collateral, to account as mortgagee in possession or for any
loss on realization or for any default or omission for which a mortgagee in
possession might be liable;
(c) Agent of the Grantor. Each Receiver is deemed to be the agent
of the Grantor for all purposes and accordingly is deemed to be in the same
position as a Receiver duly appointed by a mortgagee under the Act. The Grantor
alone shall be responsible for his contracts, engagements, acts, omissions,
defaults and losses and for liabilities incurred by him and the Secured Party
shall not incur any liability (either to the Grantor or to any other Person) by
reason of the Secured Party making his appointment as a Receiver or for any
other reason; and
(d) Privileges. Each Receiver and the Secured Party is entitled to
all the rights, powers, privileges and immunities conferred by the Act on
mortgagees and receivers when such receivers have been duly appointed under the
Act, except that Section 103 of the Act does not apply.
8.2 RECEIVER
(a) Appointment of Receiver.
(i) Subject to paragraph (iii) below at any time after the
occurrence and during the continuation of an Event of Default and after
the security constituted by this Security Deed becomes enforceable or the
Secured Party may without
13
further notice appoint by deed, under seal or in writing, under its hand
any one or more persons to be a receiver (a "RECEIVER") of all or any part
of the Collateral in like manner in every respect as if the Secured Party
had become entitled under the Act to exercise the power of sale conferred
under the Act (subject to Clause 10.2 of the Loan Agreement);
(ii) Section 109(1) of the Act shall not apply to this
Security Deed; and
(iii) the Secured Party shall be entitled to appoint a
Receiver save to the extent prohibited by Section 72A of the Insolvency
▇▇▇ ▇▇▇▇ (Eng.); and
(iv) any duly appointed Receiver has, until removed, the
powers set forth on Exhibit D attached hereto.
(b) Removal. The Secured Party may by notice remove from time to
time any Receiver appointed by it (subject to the provisions of Section 45 of
the Insolvency ▇▇▇ ▇▇▇▇ (Eng.) in the case of any administrative receivership if
applicable) and, whenever it may deem appropriate, appoint a new Receiver in the
place of any Receiver whose appointment has terminated for whatever reason;
(c) Remuneration. The Secured Party may fix the remuneration of
any Receiver appointed by it and the maximum rate specified in Section 109(6) of
the Act shall not apply; and
(d) Relationship with the Secured Party. To the fullest extent
permitted by law, any right, power or discretion conferred by this Security Deed
(either expressly or impliedly) upon a Receiver of the Collateral may after the
continuation and during the continuation of an Event of Default and after the
security created by this Security Deed becomes enforceable, be exercised by the
Secured Party in relation to any of the Collateral without first appointing a
Receiver or notwithstanding the appointment of a Receiver.
SECTION 9. SECURED PARTY.
The Secured Party has the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking any action (including, without limitation, the release or
substitution of Collateral), solely in accordance with the Finance Documents and
any statutory provisions related therewith.
SECTION 10. CONTINUING SECURITY INTEREST; TRANSFER OF THE ADVANCE.
This Security Deed shall create a continuing security interest in
the Collateral and shall remain in full force and effect until the payment in
full of all Secured Obligations and the cancellation or termination of the Loan
Agreement, be binding upon the Grantor, its successors and assigns, and inure,
together with the rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party and its successors, transferees and assigns (to the
extent permitted by the Loan Agreement). Without limiting the generality of the
foregoing, but subject to the terms of the Loan Agreement, the Secured Party may
assign or otherwise transfer the Advance held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Secured Party herein or otherwise. Upon the payment in
full of all Secured Obligations and the cancellation or termination of the Loan
Agreement, the
14
security interest granted hereby shall terminate hereunder and of record and all
rights to the Collateral shall revert to the Grantor. Upon any such termination
the Secured Party shall, at the Grantor's expense, execute and deliver to the
Grantor such documents as it shall reasonably request to evidence such
termination.
SECTION 11. STANDARD OF CARE; SECURED PARTY MAY PERFORM.
The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Secured Party shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
Secured Party shall be deemed to have exercised reasonable care in the custody
and preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which the Secured Party accords its own
property. Neither the Secured Party nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of the Grantor or otherwise. If the Grantor fails to perform any
agreement contained herein, the Secured Party may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Secured Party
incurred in connection therewith shall be immediately due and payable by the
Grantor.
SECTION 12. MISCELLANEOUS.
Any notice required or permitted to be given under this Security
Deed shall be given in accordance with Section 18 of the Loan Agreement. No
failure or delay on the part of the Secured Party in the exercise of any power,
right or privilege hereunder or under any other Finance Document shall impair
such power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other power, right or privilege. All rights and remedies existing under this
Security Deed and the other Finance Documents are cumulative to, and not
exclusive of, any rights or remedies otherwise available. In case any provision
in or obligation under this Security Deed shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of a
Potential Event of Default or an Event of Default if such action is taken or
condition exists. This Security Deed shall be binding upon and inure to the
benefit of the Secured Party and the Grantor and their respective successors and
assigns. The Grantor shall not, without the prior written consent of the Secured
Party given in accordance with the Loan Agreement, assign any right, duty or
obligation hereunder, except as contemplated by the Loan Agreement. This
Security Deed and the other Finance Documents embody the entire agreement and
understanding between the Grantor and the Secured Party and supersede all prior
agreements and understandings between such parties relating to the subject
matter hereof and thereof. Accordingly, the Finance Documents may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements
of the parties. There are no unwritten oral agreements between the parties. This
Security Deed may be executed in one or more counterparts and by different
parties hereto in separate counterparts, each of which when so
15
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
THIS SECURITY DEED AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE
NEW YORK GENERAL OBLIGATION LAWS).
16
IN WITNESS WHEREOF, the Grantor and the Secured Party have caused this
Security Deed to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
Executed as a Deed, by:
VERNALIS DEVELOPMENT LIMITED,
as the Grantor
By: ___________________________________
Name:
Title: Director
By: ___________________________________
Name:
Title: Director/Secretary
ENDO PHARMACEUTICALS INC.,
as the Secured Party
By: ___________________________________
Name:
Title:
17
EXHIBITS TO SECURITY DEED
EXHIBIT A
FORM OF PLEDGE SUPPLEMENT
This PLEDGE SUPPLEMENT, dated [MM/DD/YY], is delivered by VERNALIS
DEVELOPMENT LIMITED a limited liability company incorporated in England and
Wales (the "GRANTOR") pursuant to the Security Deed, dated as of July __, 2004
(as it may be from time to time amended, restated, modified or supplemented, the
"SECURITY DEED"), among the Grantor, and ENDO PHARMACEUTICALS INC., as the
Secured Party. Capitalized terms used herein not otherwise defined herein shall
have the meanings ascribed thereto in the Security Deed.
Grantor hereby confirms the grant to the Secured Party of, and does
hereby grant to the Secured Party, a security interest in all of Grantor's
right, title and interest in and to all Collateral to secure the Secured
Obligations, in each case whether now or hereafter existing or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located.
Grantor represents and warrants that the attached supplements to schedules
accurately and completely set forth all additional information required pursuant
to the Security Deed and hereby agrees that such supplements to schedules shall
constitute part of the schedules to the Security Deed.
IN WITNESS WHEREOF, Grantor has caused this Pledge Supplement to be
duly executed and delivered by its duly authorized officer as of the date first
written above.
VERNALIS DEVELOPMENT LIMITED
By:____________________________________
Name:
Title:
EXHIBITS TO SECURITY DEED
EXHIBIT B
FORM OF NOTICE
NOTICE OF CHARGE
To: Endo Pharmaceuticals Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
(as licensee under the License Agreement (as defined below))
Dear Sir or Madam,
We hereby give you notice that pursuant to a security deed dated as of July __,
2004 (the "SECURITY DEED") we have charged to Endo Pharmaceuticals Inc. (as
secured party under the Security Deed) (the "SECURED PARTY") all our right,
title and interest in, to and in respect of all payments made by the licensee
under the license agreement (the "LICENSE AGREEMENT"), dated as of July __,
2004, between Vernalis Development Limited and Endo Pharmaceuticals Inc.
With effect from your receipt of this notice we hereby give you notice that we
have agreed that upon the occurrence and during the continuation of an Event of
Default, the Secured Party shall have certain rights and remedies under the
Security Deed, including, without limitation:
(a) all payments to be made to us under or arising from the License
Agreement should be made to the Secured Party or to its order as it
may specify from time to time;
(b) all remedies provided for in the License Agreement or available at
law or in equity shall be exercisable by the Secured Party;
(c) all rights to compel performance of the License Agreement shall be
exercisable by the Secured Party (although we shall remain liable to
perform all the obligations assumed by us under the License
Agreement); and
(d) all rights, interests and benefits whatsoever accruing to or for the
benefit of ourselves arising from the License Agreement belong to
the Secured Party and no changes may be made to the terms of the
License Agreement, nor may the License Agreement be terminated,
without the Secured Party's prior written consent.
You are hereby authorized and instructed, without requiring further approval
from us, to provide the Secured Party with such information related to the
License Agreement as it may from time to time request and to send it copies of
all notices issued by you under the License Agreement to the Secured Party, as
well as to us.
These instructions may not be revoked, nor may the terms of the License
Agreement be amended, varied or waived without the prior written consent of the
Secured Party.
Yours faithfully,
For and on behalf of
VERNALIS DEVELOPMENT LIMITED
EXHIBITS TO SECURITY DEED
EXHIBIT C
POWERS OF RECEIVER
1.1 GENERAL.
(a) Each Receiver has, and is entitled to exercise, all of the rights,
powers and discretions set out below in this Exhibit D in addition
to those conferred by the Act on any receiver appointed under the
Act;
(b) If there is more than one Receiver holding office at the same time,
each Receiver may (unless the document appointing him states
otherwise) exercise all of the powers conferred on a Receiver under
this Security Deed individually and to the exclusion of any other
Receivers;
(c) Each Receiver has all the rights, powers and discretions set out in
schedule 1 to the Insolvency ▇▇▇ ▇▇▇▇ (Eng.); and
(d) A Receiver who is an administrative receiver of the Grantor has all
the rights, powers and discretions of an administrative receiver
under the Insolvency ▇▇▇ ▇▇▇▇ (Eng.).
1.2 POSSESSION. Receiver may take immediate possession of, get in and collect
any of the Collateral.
1.3 PROTECTION OF ASSETS. A Receiver may do all acts which the Grantor might
do in the ordinary conduct of its business as well for the protection as
for the improvement of the Collateral, in each case as he may think fit.
1.4 EMPLOYEES. A Receiver may appoint and discharge managers, the officers,
the Secured Party, accountants, servants, workmen and others for the
purposes of this Security Deed upon such terms as to remuneration or
otherwise as he may think proper and discharge any such persons appointed
by the Grantor.
1.5 BORROW MONEY. A Receiver may raise and borrow money either unsecured or on
the securing of any of the Collateral either in priority to the security
constituted by this Security Deed or otherwise and generally on any terms
and for whatever purpose he thinks fit. No person lending that money shall
be concerned to enquire as to the propriety or purpose of the exercise of
that power or to check the application of any money so raised or borrowed.
1.6 SALE OF ASSETS. Subject to the provisions of Clause 10.2 of the Loan
Agreement, a Receiver may sell, exchange, convert into money and realise
any of the Collateral by public auction or private contract and generally
in any manner and on any terms that he thinks proper. The consideration
for any such transaction may consist of cash, debentures or other
obligations, shares, stock or other valuable consideration and any such
consideration may be payable in a lump sum or by instalments spread over
such period as he thinks fit.
1.7 COMPROMISE. A Receiver may settle, adjust, refer to arbitration,
compromise and arrange any claims, accounts, disputes, questions and
demands with or by any person who is or claims to be a creditor of the
Grantor or relating in any way to any of the Collateral.
1.8 LEGAL ACTIONS. A Receiver may bring, prosecute, enforce, defend and
abandon all actions, suits and proceedings in relation to any of the
Collateral that may seem to him to be expedient.
1.9 RECEIPTS. A Receiver may give valid receipts for all moneys and execute
all assurances and things that may be proper or desirable for realising
any of the Collateral.
1.10 OTHER POWERS
Any Receiver may:
(a) do all other acts and things which he may consider desirable or
necessary for realising any of the Collateral or incidental or
conducive to any of the rights, powers or discretions conferred on a
Receiver under or by virtue of this Security Deed;
(b) exercise in relation to any of the Collateral all the powers,
authorities and things which he would be capable of exercising if he
were the absolute beneficial owner of the same, and
(c) and may use the name of the Grantor for any of the above purposes.
SCHEDULES TO SECURITY DEED
SCHEDULE 4.1(a)(ii)
ORGANIZATIONAL INFORMATION
CHIEF
ORGANIZATION EXECUTIVE OFFICE
GRANTOR'S TYPE OF JURISDICTION OF IDENTIFICATION AND
FULL LEGAL NAME ORGANIZATION ORGANIZATION NUMBER NOTICE ADDRESS
------------------- ------------ ----------------- -------------- -------------------------------
VERNALIS DEVELOPMENT Limited England and Wales 2600483 CHIEF EXECUTIVE OFFICE:
LIMITED Liability
Company
NOTICE ADDRESS:
Vernalis Development Limited
Oakdene Court
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attention: Head of Legal
Affairs/Chief Financial Officer
Telecopy: ▇▇▇▇-▇▇▇-▇▇▇▇▇
SCHEDULES TO SECURITY DEED
SCHEDULE 4.1(a)(iii)
OTHER NAMES OF GRANTOR
SCHEDULES TO SECURITY DEED
SCHEDULE 4.1(a)(iv)
CHANGES IN ORGANIZATIONAL INFORMATION AND STRUCTURE
CHANGES IN NAME:
DATE OF CHANGE DESCRIPTION OF CHANGE
-------------- ---------------------
------------------- ----------------------------
------------------- ----------------------------
CHANGES IN JURISDICTION OF ORGANIZATION:
DATE OF CHANGE DESCRIPTION OF CHANGE
-------------- ---------------------
------------------- ----------------------------
------------------- ----------------------------
CHANGES IN CHIEF EXECUTIVE OFFICE:
DATE OF CHANGE DESCRIPTION OF CHANGE
-------------- ---------------------
------------------- ----------------------------
------------------- ----------------------------
SCHEDULES TO SECURITY DEED
SCHEDULE 4.1(a)(v)
FILING OFFICES
Recorder of Deeds, District of Columbia
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇