COLLATERAL ASSIGNMENT
EXHIBIT
99.4
COLLATERAL
ASSIGNMENT,
dated as
of September 14, 2006, made by PSIVIDA INC.
(formerly
Control Delivery Systems, Inc.), a Delaware corporation (together with its
successors and assigns, hereinafter, the “Assignor”),
in
favor of CASTLERIGG MASTER INVESTMENTS LTD., a company organized under the
laws
of the British Virgin Islands (the “Assignee”),
in
its capacity as collateral agent for the “Buyers” (as defined below) party to
the Securities Purchase Agreement, dated as of October 5, 2005 (the
“Securities
Purchase Agreement”)
, as
amended by that certain Amendment Agreement, dated as of July 28, 2006 (the
“Amendment
Agreement”).
W
I T
N E S S E T H
:
WHEREAS,
pSivida Limited, an Australian corporation (the “Parent”),
and
each party listed as a “Buyer” on the Schedule of Buyers attached thereto (each
a “Buyer”,
and
collectively, the “Buyers”)
are
parties to the Securities Purchase Agreement pursuant to which the Parent sold,
and the Buyers purchased, the “Notes” (as defined therein, and as such Notes may
be amended, restated, replaced or otherwise modified from time to time in
accordance with the terms thereof, collectively, the “Notes”);
WHEREAS,
the Parent owns 100% of the voting stock of the Assignor;
WHEREAS,
contemporaneously herewith, the Assignor has executed and delivered to the
Assignee (for the benefit of the Buyers), a guaranty (the “Guaranty”)
guaranteeing payment by Parent of amounts due under the Transaction Documents
(as defined in the Amendment Agreement); and
WHEREAS,
the Assignor is a party to an Amended and Restated License Agreement dated
December 9, 2003, as amended by that certain Amendment No. 1 thereto (as
amended, the “B&L License
Agreement”)
with
Bausch & Lomb Incorporated (the “Licensee”)
pursuant to which it has licensed certain intellectual property rights to the
Licensee for, among other things, the purposes of producing the Retisert and
Vitrasert product lines and in connection therewith receives certain royalty
payments from the Licensee as further described in the B&L License Agreement
(the “B&L Royalty
Payments”);
WHEREAS,
pursuant to the terms of the Amendment Agreement, the Assignor has agreed to
enter into this Collateral Assignment to secure the payment by the Assignor,
as
and when due and payable, of all "Guaranteed Obligations" under (and as defined
in) the Guaranty, including the punctual payment, as and when due and payable,
by stated maturity or otherwise, of all the payments by the Parent, as and
when
due and payable (by scheduled maturity, required prepayment, acceleration,
demand or otherwise), of any and all amounts from time to time owing by Parent
in respect of the Notes, including, without limitation, all interest that
accrues after the commencement of any proceeding
commenced by or against Parent or any Guarantor (as defined in the Guaranty)
under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the
United States Code) or under any other bankruptcy or insolvency law, assignments
for the
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benefit
of creditors, formal or informal moratoria, compositions, or extensions
generally with creditors, or proceedings seeking reorganization, arrangement,
or
other similar relief (an “Insolvency
Proceeding”),
whether
or not the payment of such interest is unenforceable or is not allowable due
to
the existence of such Insolvency Proceeding, and all reasonable fees,
commissions, expense reimbursements, indemnifications and all other amounts
due
or to become due under the Notes (collectively the “Secured
Obligations”).
NOW,
THEREFORE, in consideration of the premises set forth herein and for other
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Assignor hereby agrees as follows:
1. ASSIGNMENT
AS SECURITY.
The
Assignor hereby collaterally assigns and grants to the Assignee as security
for
the payment and performance in full of the Secured Obligations when due, a
security interest in all of the Assignor’s right, title and interest in and to
the Assignor’s right to receive the B&L Royalty Payments from the
Licensee.
All
capitalized terms used herein and not otherwise defined herein shall have the
meanings given to such terms in the Transaction Documents.
2. REPRESENTATIONS,
WARRANTIES AND COVENANTS.
(a) Except
as
referenced herein or as disclosed to the Assignee, the B&L License
Agreement, since its execution and delivery by the Assignor, has not been
modified or amended.
(b) The
Assignor has not delivered or received any notices of default under the B&L
License Agreement. The Assignor is not in default under any of the terms of
the
B&L License Agreement, and there are no events which, with the giving of
notice or the passage of time or both, would constitute a material default
by
the Assignor under the B&L License Agreement.
(c) To
the
best of the Assignor’s knowledge, the Licensee is not in default under any of
the terms of the B&L License Agreement, and there are no events which, with
the giving of notice or the passage of time or both, would constitute a default
by the Licensee under the B&L License Agreement.
(d) The
Assignor has delivered to the Assignee a true and complete copy of the B&L
License Agreement and any written amendments or agreements modifying, waiving
or
otherwise altering the terms thereof.
(e) The
Assignor will perform and observe all of the terms, covenants and conditions
required to be performed and observed by the Assignor, and do all things
required by the B&L License Agreement to preserve and to keep unimpaired its
rights, under the B&L License Agreement.
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(f) The
Assignor will (i) promptly notify the Assignee of its receipt of any notice
from
the Licensee of any default by the Assignor in the performance or observance
of
any of the terms, covenants or conditions on its part to be performed or
observed under the B&L License Agreement, and (ii) promptly cause a copy of
any such notice received by the Assignor from the Licensee to be delivered
to
the Assignee.
(g) The
Assignor will not, without the prior written consent of the Assignee, which
consent shall not be unreasonably withheld or delayed so long as no Event of
Default (as defined below) has occurred and is continuing, (i) modify or
supplement the B&L License Agreement in any material respect (if such
modification or supplement would materially diminish or impair any of the
collateral pledged to the Assignee for the Secured Obligations pursuant to
this
Assignment or the Assignee's security interest therein) or terminate or cancel
the B&L License Agreement, or (ii) consent or refuse to consent to any
action taken or to be taken by the Licensee or anyone else under the B&L
License Agreement, if such consent or refusal to consent would materially
diminish or impair any of the collateral pledged to the Assignee for the Secured
Obligations pursuant to this Assignment or the Assignee’s security interest
therein.
3. INTELLECTUAL
PROPERTY COVENANTS.
The
Assignor hereby agrees that:
(a) The
Assignor may not, to the extent prohibited by the B&L License Agreement or
not consented to by B&L, abandon any Licensed Patents or Licensor Improved
Patents (as such terms are defined in the B&L License Agreement) without the
prior written consent of the Assignee, and if any Licensed Patents or Licensor
Improved Patents is infringed or misappropriated or otherwise violated by a
third party, the Assignor shall take such action as the Assignee shall
reasonably deem appropriate under the circumstances to enforce such Licensed
Patents or Licensor Improved Patents.
(b) In
the
event that, upon a default by the Assignor in the performance of or compliance
with any provision of the B&L License Agreement, the Licensee notifies the
Assignor that it has elected to terminate the B&L License Agreement as a
result of such default: (A) the Assignor shall promptly notify the Assignee
in
writing of such notice, describing in reasonable detail the nature of such
default; (B) the Assignee shall have the right and opportunity, but not the
obligation, to cure such default within the period provided for in the B&L
License Agreement for cure; and (C) during such period, the Assignor shall
not
terminate the B&L License Agreement. Any payment made or act done by the
Assignee to cure such default shall not constitute an assumption by the Assignee
of the B&L License Agreement or of any obligations of the Licensee
thereunder.
(c) From
and
after the occurrence of any Event of Default and until the later of (A) the
last
day during which such Event of Default is continuing and (B) until such time
as
all Secured Obligations then due and payable have been paid in full (the
“Default
Period”):
(i) all
royalties, dividends, distributions, interest and other payments that are
received by the Assignor pursuant to the B&L License Agreement shall be
received in trust for the benefit of the Assignee, shall be segregated from
other funds of the Assignor, and shall be forthwith paid over to the Assignee
as
pledged interests in
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the
exact
form received with any necessary endorsement, to be held by the Assignee as
pledged interests and as further collateral security for the Secured
Obligations;
(ii) the
Assignor shall, pursuant to written notice to the Assignor from the Assignee:
(A) cease any use of the Licensed
Patents or Licensor Improved Patents
for any
purpose described in such notice that involves the right to make, have made,
use, sell, offer to sell, and import First Generation Exclusive Licensed
Products and Vitrasert Licensed Product in the Licensed Field (as such terms
are
defined in the B&L License Agreement) and (B) assign all of the Assignor's
right, title and interest in and to the B&L License Agreement to the
Assignee for the duration of such Default Period; and
(iii) the
Assignor shall grant to the Assignee an exclusive, irrevocable, royalty-free,
worldwide right and license, with exclusive right to sublicense, under the
Assignee's interest in the Licensed Patents and Licensor Improvement Patents,
solely to make, have made, use, sell, offer to sell, and import First Generation
Exclusive Licensed Products and Vitrasert Licensed Product in the Licensed
Field
(as such terms are defined in the B&L License Agreement); such license shall
be subject to the B&L License Agreement and terminate on the final day of
the Default Period.
4. TERMS
AND CONDITIONS.
(a) Prior
to
any failure by Parent and Assignor to make any payment due under the Note within
the applicable cure period (an “Event
of Default”),
if
the Assignor has any right, privilege or claim against the Licensee under the
B&L License Agreement and the failure by the Assignor to enforce such right,
privilege or claim would be reasonably likely to materially diminish or impair
any of the collateral pledged to the Assignee for the Secured Obligations
pursuant to this Assignment or the Assignee's security interest therein, the
Assignor will take all actions necessary, in its good faith business judgment,
to enforce such right, privilege or claim.
(b) The
Assignor hereby irrevocably authorizes and empowers the Assignee, at any time
during a Default Period, to (i) assert, either directly (to the extent of the
Secured Obligations) or on behalf of the Assignor, any claims and demands and
enforce, either directly or on behalf of the Assignor, any rights and remedies
which the Assignor may have, from time to time, during such period, against
the
Licensee under the B&L License Agreement, and (ii) to collect any B&L
Royalty Payment or other amounts due to the Assignor under the B&L License
Agreement up to an amount equal to the amount of any outstanding Secured
Obligations then due and payable and apply such amounts to such Secured
Obligations in such manner as the Assignee shall elect, until such time as
all
Secured Obligations then due and payable have been paid in full. Simultaneously
with the execution and delivery of this Assignment, the Assignor shall execute
a
notice to be addressed to the Licensee substantially in the form attached hereto
as Exhibit
A.
(the
“Payment
Direction Notice”).
The
Assignee shall be authorized to send the Payment Direction Notice to the
Licensee upon the occurrence of an Event of Default directing the Licensee
to
remit during the Default Period any and all B&L Royalty Payments to the
Assignee when payable under the B&L License Agreement up to an aggregate
amount equal to the amount of the outstanding Secured Obligations then due
and
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payable.
The Assignee is authorized to insert in such Payment Direction Notice a
description of the account into which any B&L Royalty Payments are to be
remitted (which account description may be changed by the Assignee from time
to
time by delivery of a notice to the Licensee). The Assignee shall execute a
cancellation of the Payment Direction Notice promptly following the end of
the
Default Period.
(c) The
Assignor hereby irrevocably makes, constitutes and appoints the Assignee as
the
Assignor’s true and lawful attorney-in-fact (such power being coupled with an
interest) for the purpose of enabling the Assignee or its designated agent
to
take any or all of the actions contemplated by clauses (a) and (b) above.
(d) The
Assignor
hereby acknowledges and agrees that it shall remain liable under the B&L
License Agreement to observe and perform all of the conditions and obligations
to be observed or performed by the Assignor thereunder, and neither this
Assignment, nor any action taken by the Assignee pursuant hereto, shall cause
the Assignee to be deemed to have assumed any of the obligations or liabilities
of the Assignor under the B&L License Agreement; provided, however, that,
notwithstanding anything to the contrary herein, in the event that royalties
are
owed to a third party based on the B&L Royalty Payments, the Assignee shall,
at such time as it is collecting the B&L Royalty payments with respect to
products other than products in the Collateral Product Lines (as defined in
the
Amendment Agreement), be responsible for paying any such royalties from the
B&L Royalty Payments. The Assignor further agrees to indemnify, protect,
defend and hold the Assignee harmless from and against any claims or demands
by
the Licensee under the B&L License Agreement, except to the extent such
claims or demands result solely and directly from the Assignee’s gross
negligence or willful misconduct as determined by a final judgment of a court
of
competent jurisdiction.
(e) The
Assignor hereby agrees to keep the Assignee reasonably informed of all
circumstances bearing upon the exercise of the Assignor’s rights and remedies
under the B&L License Agreement. In no event shall the Assignor waive,
amend, alter or modify any of its rights or remedies under the B&L License
Agreement, if such waiver, amendment, alteration or modification would
materially diminish or impair any of the collateral pledged to the Assignee
for
the Secured Obligations pursuant to this Assignment or the Assignee's security
interest therein, without the prior written consent of the Assignee, which
consent shall not be unreasonably withheld or delayed so long as no Event of
Default has occurred and is continuing.
(f) This
Collateral Assignment shall continue in full force and effect until all of
the
Secured Obligations have been indefeasibly paid or performed in full, at which
time the Assignee's interest in the B&L License Agreement and any other
rights assigned to the Assignee hereunder shall be automatically released.
The
Assignee shall, promptly upon request by the Assignor, execute such additional
documentation to evidence such release.
(g) No
delay
by the Assignee in the exercise of its rights hereunder shall constitute a
waiver of any such rights. A waiver by the Assignee of a particular Event of
Default shall not constitute a waiver of any subsequent Event of Default. Any
waiver by the Assignee of any right hereunder on one occasion shall not
constitute a waiver on any other occasion.
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(h) The
Assignor
hereby authorizes the Assignee to file one or more Uniform Commercial Code
financing or continuation statements, and amendments thereto, necessary to
perfect the security interest granted to the Assignee hereunder.
The
Assignee shall execute an appropriate release promptly upon the termination
of
this Assignment
5. GENERAL
CONDITIONS.
(a) This
Collateral Assignment shall be binding upon, and shall inure to the benefit
of,
the respective successors and permitted assigns of the parties hereto.
(b) This
Collateral Assignment shall be construed and enforced in accordance with the
internal laws of the State of New York.
(c) The
Assignor shall pay all reasonable attorneys’ fees and expenses which the
Assignee may hereafter incur in enforcing any of its rights
hereunder.
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In
WITNESS WHEREOF, the Assignor and the Assignee have duly executed and delivered
this Assignment as of the 14th
day of
September, 2006.
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PSIVIDA
INC.
By:
/s/
Xxxxxxx X. Xxxx
Print
Name:Xxxxxxx
X. Xxxx
Its:
Vice
President and Chief Financial Officer
|
|
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CASTLERIGG
MASTER INVESTMENTS LTD.
By:
/s/
Xxxxxxx X. Xxxxx
Print
Name: Xxxxxxx
X. Xxxxx
Its:
Senior
Managing Director
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EXHIBIT
A
FORM
OF PAYMENT DIRECTION NOTICE
Bausch
& Lomb Incorporated
0000
X.
Xxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
Attention:
Ladies
and Gentlemen:
Reference
is made to the Amended and Restated License Agreement, dated December 9, 2003,
as amended by that certain Amendment No. 1 thereto dated as of June 28, 2005
(the “B&L
License Agreement”)
between you and pSivida Inc. (formerly Control Delivery Systems, Inc.), a
Delaware corporation (the “Company”).
The
Company has assigned its interest in the B&L License Agreement to Castlerigg
Master Investments Ltd. (together
with its successors and assigns, (the “Assignee”)),
as
security for certain obligations which the Company has to the Assignee under
the
Guaranty, dated as of September 14, 2006. Notwithstanding such assignment,
you
are authorized and directed to send all notices and reports under the B&L
License Agreement to both the Assignee and the Company.
The
Company and the Assignee hereby jointly authorize and direct you to remit any
and all payments required to be made by you to the Company under the B&L
License Agreement now or hereafter due to the Company under the B&L License
Agreement to the Assignee, until such time as you shall receive a notice
canceling such authorization, in accordance with the following wiring
instructions:
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If
you
have any questions, you may contact Xxxx Xxxxxxxx at
pSivida Inc. at 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, phone (000)
000-0000, facsimile (000) 000-0000.
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Sincerely,
|
|
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PSIVIDA
INC.
By:__________________________________
Print
Name:___________________________
Its:__________________________________
|
|
|
CASTLERIGG
MASTER INVESTMENTS LTD.
By:__________________________________
Print
Name:___________________________
Its:__________________________________
|
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