EXHIBIT 99.2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of this 24th day of
December, 2002 (this "Agreement"), between AVANIR PHARMACEUTICALS, a California
corporation (the "Grantor"), with and in favor of DRUG ROYALTY USA, INC., a
Nevada corporation (together with any Affiliate, "DRC USA").
WHEREAS, the Grantor is entering into a License Purchase Agreement dated
as of even date herewith (as amended, supplemented or otherwise modified from
time to time, the "LP Agreement") with DRC USA, pursuant to which Grantor has
agreed to sell, and DRC USA has agreed to acquire from the Grantor an undivided
interest in all rights, title, and interest of Grantor in and to the SB License
Agreement with respect to the Product in the Field in the Territory, subject to
the terms and conditions set forth in the LP Agreement;
WHEREAS, terms that are capitalized herein and not otherwise defined shall
have the meanings given to them in Annex 1 hereto; and
WHEREAS, it is a condition precedent to the obligation of DRC USA to
consummate the transactions under the LP Agreement that the Grantor shall have
executed and delivered this Agreement and granted a security interest in all of
the Grantor's right, title and interest in and to all of the Collateral (as
hereinafter defined) in favor of DRC USA, as contemplated hereby.
NOW, THEREFORE, in consideration of the premises hereof and to induce DRC
USA to enter into the LP Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. SECURITY FOR OBLIGATIONS.
(a) Security Interest in Patents. To secure the full and prompt
performance of all of the Obligations (as hereinafter defined in clause (e)
below), except as set forth in clause (d) below, the Grantor hereby grants and
conveys to DRC USA a first and valid security interest in all of the right,
title and interest of the Grantor in and to (i) the Patents, (ii) all income,
royalties, damages and payments now or hereafter due and payable under or in
respect of all Patents, (iii) all rights during the term of this Agreement to
xxx, collect and retain for DRC USA's benefit damages and payments for past,
present or future infringements of the Patents and (iv) any and all other
proceeds or products of the Patents or any of the other property described in
clauses (ii) and (iii) above. All Patents (including all currently pending
patent applications) in which the Grantor has an interest are listed on Schedule
A attached hereto and made a part hereof. Nothing contained in the foregoing
definition shall be construed to afford DRC USA any recourse to the Patents or
any other Collateral (as hereinafter defined) prior to the occurrence of an
Event of Default.
(b) Security Interest in Know-How. To secure the performance of all of the
Obligations, except as set forth in clause (d) below, the Grantor hereby grants
to DRC USA a first and valid security interest in all of its right, title and
interest, in the Know-How, and to all
income, royalties, damages and payments now and hereafter due or payable
therefore or in respect thereof and any and all other proceeds or products of
any of the foregoing.
(c) Security Interest in SB License Agreement. To secure the performance
of all of the Obligations, the Grantor hereby grants to DRC USA a first and
valid security interest in all of its right, title and interest in the SB
License Agreement (i.e., the limited right, title and interest in the SB License
Agreement not conveyed to DRC USA under the LP Agreement) and all income,
royalties, damages and payments now and hereafter due or payable thereunder or
in respect thereof and any and all other proceeds or products of any of the
foregoing.
(d) Definition of Collateral. The Patents, the Know-How, the SB License
Agreement and the other property identified in Sections 1(a)-(c) above are
collectively referred to herein as the "Collateral". Notwithstanding the
foregoing, the Collateral shall not include, and DRC USA shall not have a
security interest in, any right, title or interest in any Permitted Licenses (as
defined in Section 2(b)(ii) below), including, without limitation, any right,
title and interest in any income, royalties, damages, payments, proceeds,
products, rights to xxx and collect under or in respect of a Permitted License.
The right, title and interest of the licensee and Grantor under each Permitted
License shall be free and clear of DRC USA's security interest in the
Collateral.
(e) Definition of Obligations. As used in this Security Agreement the term
"Obligations" means (A) the obligations of the Grantor under Sections 2.2, 8.11,
9.3 and 9.4 of the LP Agreement and (B) DRC USA's rights arising upon an Event
of Default under the LP Agreement.
SECTION 2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE GRANTOR.
(a) The Grantor is and will continue to be the owner of all of the
Collateral, free from any security interest, lien or encumbrance in favour of
any Person except for (i) the security interest granted hereunder to DRC USA,
and (ii) Permitted Licenses (as hereinafter defined).
(b) None of the Collateral is or shall become subject to any lien in favor
of any Person other than DRC USA, and the Grantor agrees that it shall not
license, transfer, convey or encumber any interest in or to the Collateral other
than (i) as provided in Sections 9.3 and 9.4 of the LP Agreement or (ii) any
license of the Patents to Third Parties and/or to its Affiliates that does not
grant rights with respect to the Product in the Field in the Territory (each
such license described in this clause (ii), a "Permitted License").
(c) There is no financing statement or other document or instrument now
signed or on file in any public office granting a security interest in or
otherwise encumbering any part of the Collateral, except those showing DRC USA
as secured party. So long as any Obligations remain outstanding, the Grantor
will not execute or authorize any such financing statement or other document or
instruments, except financing statements filed or to be filed in favor of DRC
USA.
(d) Grantor shall execute all documents reasonably requested by DRC USA to
perfect its security interest in each Patent relating to Product in the Field in
the Territory, including, without limitation, an instrument sufficient to
perfect or establish any lien hereunder to be recorded in the U.S. Patent and
Trademark Office with respect to all United States Patents.
(e) The Grantor agrees that during the term of this Agreement it shall
cooperate with DRC USA to execute and deliver such further instruments and
documents, and take such other further actions as may be reasonably requested by
DRC USA in order to perfect any of the security interests granted hereunder and
to enable DRC USA to exercise and enforce its rights and remedies hereunder with
respect to the Collateral, including, without limitation, (i) to execute,
acknowledge and deliver (A) any Replacement License (as such term is defined in
Section 3(a) below) and any related documents or instruments reasonably
requested by the licensee thereunder or by DRC USA in connection with such
Replacement License, and (B) such other instruments and documents as may be
necessary or reasonably requested to (I) effect the purposes and intents of this
Agreement, or (II) to create, evidence, perfect or continue the security
interests of DRC USA in the Collateral, in each case in a form reasonably
acceptable to DRC USA and (ii) to appear in and defend any action or proceeding
that may adversely affect Grantor's title to or DRC USA's security interest in
the Collateral; provided, however, that Grantor shall have no obligation to
prosecute, maintain or defend the Patents.
SECTION 3. RIGHTS AND REMEDIES UPON AN EVENT OF DEFAULT.
(a) If an Event of Default shall have occurred and be continuing under the
LP Agreement, then DRC USA may
(i) In consultation with the Grantor, license the Patents and (if
applicable) the Know-How to one or more Third Parties for use with
respect to the Product in the Field in the Territory, which, in the
case of an Event of Default resulting from a partial termination of
the SB License Agreement, shall include only that country as to
which the SB License Agreement has been terminated (any such license
being referred to herein as a "Replacement License"). Except as set
forth in clause (ii) below, the foregoing right to enter into a
Replacement License or Licenses shall be the sole remedy of DRC USA
for the disposition of the Collateral under this Agreement or under
Article 9 of the Uniform Commercial Code, and DRC USA shall not
otherwise sell, lease, license or otherwise dispose of the Patents
or the Know-How; and the Grantor waives any and all objections and
rights to object to such manner of disposition as set forth in this
Agreement.
(ii) If (A) DRC USA, through the diligent exercise of its rights
pursuant to clause (i) above, is not able, within a period of one
(1) year following the occurrence of an Event of Default, to enter
into a binding agreement for one or more Replacement Licenses
providing for royalty payments at least equivalent to the royalties
provided for under the SB License Agreement, or (B) Grantor shall at
any time following the occurrence and during the continuance of an
Event of Default, fail to comply in any material respect with its
obligations set forth in Section 2(e) hereof in connection with DRC
USA's exercise of remedies pursuant to clause (i) above, then DRC
USA, in addition to other rights and remedies provided for herein
and any rights now or hereafter existing under other applicable law,
shall have all rights and remedies of a secured party under the
Uniform Commercial Code in all relevant jurisdictions; and without
limiting the generality of the foregoing, DRC USA may:
(I) personally, or by agents or attorneys, immediately
take possession of the Collateral or any part thereof, from
the Grantor or any other Person who then has possession of any
part thereof, with or without notice or process of law; and
(II) in consultation with the Grantor, sell, assign,
lease, license or otherwise dispose of any or all of the
Collateral or any part thereof, for cash, on credit, or future
delivery, and take possession of the proceeds of any such sale
or disposition.
Notwithstanding the foregoing, in responding to any Event of Default
arising from the Grantor's failure to comply with Section 9.3 of the LP
Agreement following a partial termination of the SB License Agreement, DRC USA
may exercise its rights and remedies under this Section 3(a)(ii) only with
respect to those Patents in the country as to which the SB License Agreement has
been terminated.
(b) Any Collateral as to which DRC USA has a security interest and is
exercising rights under or pursuant to Section 3(a)(ii) may be sold, assigned,
leased, licensed or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of sale the
property to be sold, and in general in such manner, at such time or times, at
such place or places and on such terms as DRC USA may, in compliance with any
requirements of law, determine to be commercially reasonable. Any such
disposition which shall be a private sale or other private proceedings permitted
by such requirements shall be made upon not less than 10 days' written notice to
the Grantor specifying the time at which such disposition is to be made and the
intended sale price or other consideration therefor, and shall be subject, for
the 10 days after the giving of such notice, to the right of the Grantor or any
nominee of the Grantor to acquire the Collateral involved at a price or for such
other consideration at least equal to the intended sale price or other
consideration so specified. Any such disposition which shall be a public sale
permitted by such requirements shall be made upon not less than 10 days' written
notice to the Grantor specifying the time and place of such sale and, in the
absence of applicable requirements of law, shall be by public auction (which
may, at the option of DRC USA, be subject to reserve), after publication of
notice of such auction not less than 10 days prior thereto in two newspapers of
general circulation in the jurisdiction in which such auction is to be held. To
the extent permitted by any such requirements of law, DRC USA may bid for and
become the purchaser of the Collateral or any item thereof, offered for sale in
accordance with this Section without accountability to the Grantor (except to
the extent of surplus money received). If, under mandatory requirements of law,
DRC USA shall be required to make disposition of the Collateral within a period
of time which does not permit the giving of notice to the Grantor as hereinabove
specified, DRC USA need give the Grantor only such notice of disposition as
shall be reasonably practicable in view of such mandatory requirements of law.
DRC USA shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. DRC USA 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. For the avoidance of doubt, any exercise of remedies pursuant to
this Section 3 shall be subject to the rights of any licensees under Permitted
Licenses.
(c) Upon the occurrence and during the continuance of an Event of Default,
DRC USA shall have the right at any time to make any payments and do any other
acts DRC USA may deem necessary to protect its security interests in the
Collateral, including, without limitation, the rights to pay, purchase, contest
or compromise any lien which, in the reasonable judgment of DRC USA, appears to
be prior to or superior to the security interests granted hereunder, and appear
in and defend any action or proceeding purporting to affect its security
interests in, or the value of, the Collateral. Payments reasonably made and
expenses reasonably incurred by DRC USA under this Agreement following and
during the continuance of an Event of Default, including reasonable attorneys
fees and expenses incurred by DRC USA, shall constitute additional Obligations
secured under this Agreement recoverable only from the proceeds of any
disposition of Collateral.
(d) The Grantor hereby irrevocably authorizes and appoints DRC USA, or any
Person or agent DRC USA may designate, as the Grantor's attorney-in-fact, with
full authority in the place and stead of the Grantor and in the name of the
Grantor or otherwise, in DRC USA's good faith business judgment, to take any
action and to execute any instrument that DRC USA may deem necessary or
advisable to accomplish the purposes and intents of this Agreement and to
exercise all of the following powers upon and at any time that the remedies
under Section 3(a)(ii) are available to DRC USA after the occurrence and during
the continuance of an Event of Default (excepting, however, the powers set forth
in clause (vi) below, which may also be exercised at any time, either prior or
subsequent to occurrence of an Event of Default), which powers, being coupled
with an interest, shall be irrevocable until all of the Obligations shall have
been satisfied in full:
(i) ask for, demand, collect, bring suit, recover, compromise,
administer, accelerate or extend the time of performance, issue
credits, compromise, receive and give acquittance and receipts for
moneys due and to become due under or in respect of any of the
Collateral;
(ii) receive, take, endorse, negotiate, sign, assign and deliver and
collect any checks, notes, drafts or other instruments, documents
and chattel paper, in connection with clause (i) above;
(iii) give customers indebted on the Collateral notice of DRC USA's
interest therein, or to request, at any time from customers indebted
on the Collateral, verification of information concerning the
Collateral and the amounts owing thereon;
(iv) to instruct customers obligated with respect to the Collateral
in connection with the SB License Agreement or a Replacement License
to make payment directly to DRC USA for the Grantor's account;
(v) convey any item of Collateral to any purchaser thereof;
(vi) execute and record any instruments under Section 2(d) or (e)
hereof;
(vii) make any payments or take any acts under Section 3(c) hereof;
and
(viii) file any claims or take any action or institute any
proceedings that DRC USA may reasonably deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
the rights of DRC USA with respect to any of the Collateral.
DRC USA's authority under this Section 3(d) shall include, without limitation,
the authority to execute and give receipt for any certificate of ownership or
any document, transfer title to any item of Collateral, sign the Grantor's name
on all financing statements or any other documents deemed necessary or
appropriate to preserve, protect or perfect the security interest in the
Collateral and to file the same, prepare, file and sign the Grantor's name on
any notice of lien, assignment or satisfaction of lien or similar document in
connection with any Collateral and prepare, file and sign the Grantor's name on
a proof of claim in bankruptcy or similar document against any customer of the
Grantor, and to take any other actions arising from or incident to the rights,
powers and remedies granted to DRC USA in this Agreement. This power of attorney
is coupled with an interest and is irrevocable by the Grantor.
(e) Except as provided in Section 3(a)(i), each and every right, power and
remedy hereby specifically given to DRC USA shall be in addition to every other
right, power and remedy specifically given under this Agreement or now or
hereafter existing at law or in equity, or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time or simultaneously and as often and in such order as
may be deemed expedient by DRC USA. All such rights, powers and remedies shall
be cumulative and the exercise or the beginning of exercise of one shall not be
deemed a waiver of the right to exercise of any other or others. No delay or
omission of DRC USA in the exercise of any such right, power or remedy and no
renewal or extension of any of the Obligations shall impair any such right power
or remedy or shall be construed to be a waiver of any Event of Default or any
acquiescence therein.
(f) In the event that DRC USA exercises any rights and remedies under this
Agreement, any payments or amounts received by DRC USA in excess of the
Obligations shall be paid to Grantor.
(g) Upon the occurrence and during the continuance of an Event of Default,
all income, royalties, payments and damages under or in respect of the
Collateral, if any, received thereafter shall be held by the Grantor in trust
for the benefit of DRC USA, separate from the Grantor's own property or funds
and immediately turned over to DRC USA with proper assignments or endorsements.
Upon the occurrence and during the continuance of an Event of Default, DRC USA
shall have the right to notify payors of income, royalties, payments and damages
under or in respect of the Collateral to make payment directly to DRC USA.
SECTION 4. GENERAL PROVISIONS.
(a) Notices. All notices, approvals, consents or other communications
required or desired to be given hereunder shall be in writing and sent by
certified or registered mail, return receipt requested, by overnight delivery
service, with all charges prepaid, or by telecopier followed by a hard copy sent
by overnight mail:
in the case of Grantor to Avanir at:
Avanir Pharmaceuticals
00000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: President and Chief Executive Officer
Fax No.: (000) 000-0000
with a copy to Xxxxxx Xxxxxx White & XxXxxxxxx LLP at:
Xxxxxx Xxxxxx White & XxXxxxxxx LLP
0000 XxXxxxx Xxxxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
and in the case of a notice to DRC USA at:
Drug Royalty USA, Inc.
000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
P.O. Box 50401
Las Vegas, Nevada 89109 U.S.A.
Attention: Xxxxxx Xxxxxxxxxxxx
Fax No.: (000) 000-0000
with a copy to Drug Royalty Corporation at:
Drug Royalty Corporation
Royal Bank Plaza, Ste: 0000
Xxxxx Xxxxx
000 Xxx Xxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxx Xxxxxxxxxxxx
Fax No.: (000) 000-0000
and with a copy to Xxxxxx Xxxxxx Gervais LLP at:
00 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxxx
Fax No. (000) 000-0000
All such notices and correspondence shall be deemed given (i) if sent by
certified or registered mail, three Business Days after being postmarked, (ii)
if sent by overnight delivery service, when received at the above stated
addresses or when delivery is refused and (iii) if sent by telecopier
transmission, when receipt of such transmission is acknowledged.
(b) Headings. The headings in this Agreement are for purposes of reference
only and shall not affect the meaning or construction of any provision of this
Agreement.
(c) Severability. The provisions of this Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect,
in that jurisdiction only, such clause or provision, or part thereof, and shall
not in any manner affect such clause or provision in any other jurisdiction or
any other clause or provision of this Agreement in any jurisdiction.
(d) Amendments - Waivers and Consents. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by the Grantor from
any provision of this Agreement shall not be effective unless the same shall be
in writing and signed by the Grantor and DRC USA and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(e) Interpretation. Time is of the essence in each provision of this
Agreement of which time is an element. All terms not defined herein or in the LP
Agreement shall have the meaning set forth in the Uniform Commercial Code,
except where the context otherwise requires. To the extent a term or provision
of this Agreement conflicts with the LP Agreement and is not dealt with herein
with more specificity, the LP Agreement shall control with respect to the
subject matter of such term or provision. Acceptance of or acquiescence in a
course of performance rendered under this Agreement shall not be relevant in
determining the meaning of this Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
(f) Continuing Security Interest. This Agreement shall create a continuing
security interest in the Collateral and shall (i) remain in full force and
effect until the satisfaction in full of the Obligations, (ii) be binding upon
the Grantor and its successors and assigns and (iii) inure, together with the
rights and remedies of DRC USA, to DRC USA's successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), DRC USA
may, in accordance with the terms of the LP Agreement, assign or otherwise
transfer all or any portion of
its rights and obligations under the LP Agreement to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to DRC USA herein or otherwise, in each case as provided in the
LP Agreement.
(g) Reinstatement. To the extent permitted by law, this Agreement shall
continue to be effective or be reinstated if at any time any amount received by
DRC USA in respect of the Obligations is rescinded or must otherwise be restored
or returned by DRC USA because the Grantor is the subject of an Event of
Default, all as though such payments had not been made.
(h) Survival of Provisions. All representations, warranties and covenants
of the Grantor contained herein shall survive the execution and delivery of this
Agreement, and shall terminate only upon the full performance by the Grantor of
the Obligations secured hereby.
(i) DRC USA May Perform. If the Grantor fails to perform any agreement
contained herein, DRC USA may itself perform, or cause performance of, such
agreement and the expenses of DRC USA reasonably incurred in connection
therewith shall constitute additional Obligations secured by this Agreement
recoverable only from the proceeds of any disposition of Collateral.
(j) No Duty on DRC USA. The powers conferred on DRC USA hereunder are
solely to protect the interest of DRC USA in the Collateral and shall not impose
any duty upon DRC USA to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for money actually
received by it hereunder, DRC USA shall have no duty as to any Collateral, or as
to the taking of any necessary steps to preserve rights against any Person or
any other rights pertaining to any Collateral. DRC USA shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which DRC USA accords its own property. To the extent the Collateral is
held by a custodian, DRC USA shall be deemed to have exercised reasonable care
if it has selected the custodian with reasonable care.
(k) Delays; Partial Exercise of Remedies. No delay or omission of DRC USA
to exercise any right or remedy hereunder, whether before or after the happening
of any Event of Default, shall impair any such right or shall operate as a
waiver thereof or as a waiver of any such Event of Default. No single or partial
exercise by DRC USA of any right or remedy shall preclude any other or further
exercise thereof, or preclude any other right or remedy.
(l) Release; Termination of Agreement. Subject to the provisions of
subsection (g) of this Section 4, upon fulfilment of the Obligations, this
Agreement shall terminate and all rights in the Collateral shall revert to the
Grantor. At such time, DRC USA shall, upon the request of the Grantor, (A)
execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination and (B) reassign and redeliver
to the Grantor (or as otherwise required under applicable law) all of the
Collateral hereunder which has not been sold, disposed of, retained or applied
by DRC USA in accordance with the terms hereof. Such reassignment and redelivery
shall be without warranty by or recourse to DRC USA, except as to the absence of
any prior assignments by DRC USA of its interest in the Collateral.
(m) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but both of which shall
together constitute one and the same agreement.
(n) GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO CONFLICT OF LAW PRINCIPLES, EXCEPT TO THE EXTENT THAT FEDERAL LAW IS
APPLICABLE.
(o) SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN THE GRANTOR AND DRC
USA, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED
ONLY BY STATE OR FEDERAL COURTS LOCATED IN THE CITY AND COUNTY OF NEW YORK AND
THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT
DRC USA SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO
PROCEED AGAINST THE GRANTOR OR THE COLLATERAL IN ANY LOCATION REASONABLY
SELECTED BY DRC USA IN GOOD FAITH TO ENABLE DRC USA TO REALIZE ON SUCH PROPERTY,
OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF DRC USA. THE GRANTOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH DRC
USA HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO
THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
(p) JURY TRIAL. THE GRANTOR AND DRC USA EACH HEREBY WAIVES TO THE FULLEST
EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY.
(q) Purpose. The Grantor and DRC USA acknowledge and agree that the
purpose of this Security Agreement is to secure performance by the Grantor of
the Obligations. Nothing contained in this Security Agreement or in any related
document shall be construed to imply that the Grantor has incurred any
indebtedness to DRC USA, under the LP Agreement or otherwise, or that the
transaction provided for in the LP Agreement is anything other than an outright
sale.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
causing this Agreement to be signed by their respective duly authorized officers
on the day and year first above written.
AVANIR PHARMACEUTICALS
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
Accepted and Agreed as of the
date first above written:
DRUG ROYALTY USA, INC.
By: /s/ Xxxxxx Xxxxxxxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxxxxxxx
Title: President
ANNEX 1
DEFINITIONS
"Affiliate" means a Person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the Person specified.
"Business Day" means any day of the week other than a Saturday, Sunday or
statutory or civic holiday observed in the United States.
"Closing Document" means any document, instrument, undertaking or
agreement made or delivered pursuant to or in connection with the LP Agreement.
"Collateral" has the meaning assigned thereto in Section 1(d) of this
Agreement.
"Event of Default" has the meaning assigned thereto in Section 10.1 of the
LP Agreement.
"Field" means the Non-Prescription Use of Product in humans for the
prevention or treatment of herpes labialis, also known as cold sores/fever
blisters.
"including," when used herein or in any Closing Document, means "including
without limitation" and shall not be construed to limit any general statement
which it follows to the specific or similar items or matters immediately
following it.
"Know-How" means the technical information and know-how in the Field which
has already been communicated to SB under the SB License Agreement including all
biological, chemical, pharmacological, toxicological, clinical, assay, control
and manufacturing data and any other information relating to Product and useful
for the development and commercialization of Product.
"Non-Prescription Use" means that a prescription from a physician or other
health care professional is not required by the regulatory authorities in a
country in which Product is purchased to enable consumers to purchase Product.
"Patents" means all patents and patent applications in the Territory as
set forth on Schedule A to this Agreement and all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals or
extensions thereof. Also included within the definition of Patents are any
patents or patent applications in the Territory which generically or
specifically claim an improvement to a medicinal product in the Field including
docosanol as an ingredient or an improvement to a process for preparing a
medicinal product in the Field including docosanol as an ingredient, which are
developed by Grantor, or which Grantor otherwise has the right to grant
licenses, now or in the future, during the term of the SB License Agreement.
"Person" includes an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization, or any other entity.
ANNEX 1
"Product" means a medicinal product in the Field including as an
ingredient the chemical compound known as docosanol, whose more specific
chemical formula is XX0 (XX0)00 - CH20H and other aliphatic saturated straight
chain monohydric alcohols of chain length C20 - C28, its prodrugs and
metabolites, and all esters, salts, hydrates, solvates, polymorphs and isomers
thereof, and shall include compositions comprising such compound, prodrug or
metabolites, or esters, salts, hydrates, solvates, polymorphs and isomers or any
product, the manufacture, use, sale or import of which, but for the license
granted under the SB License Agreement, infringes any Patent or employs any
Know-How in the Field.
"SB License Agreement" means that certain license agreement dated March
31, 2000, between Grantor and SB.
"SB" means SB Pharmco Puerto Rico Inc., a wholly-owned subsidiary of
GlaxoSmithKline plc.
"Territory" means Canada and the United States of America, including all
of its territories and possessions (including, but without limitation, Puerto
Rico).
"Third Party" means any Person other than the Grantor or DRC USA or their
respective Affiliates.
