Exhibit 10.1

 

EXECUTION COPY

 

October 3, 2016

 

Aralez Pharmaceuticals Inc.

7100 West Credit Avenue

Suite 101

Mississauga, Ontario L5N 0E4

 

Re:                                          Limited Consent

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain Second Amended and Restated Facility
Agreement dated as of December 7, 2015 (as amended, restated, supplemented or
otherwise modified from time to time, the “Facility Agreement”), by and among
Aralez Pharmaceuticals Inc. (“Aralez”), POZEN Inc. (“Pozen”), Tribute
Pharmaceuticals Canada Inc. (“Tribute” and collectively with Aralez and Pozen,
the “Credit Parties”) and Deerfield Private Design Fund III, L.P., Deerfield
International Master Fund, L.P. and Deerfield Partners, L.P. (collectively, the
“Lenders”).  Capitalized terms used in this letter (this “Consent”) and not
otherwise defined herein shall have the meanings ascribed thereto in the
Facility Agreement.

 

The Credit Parties have advised the Lenders that Aralez Pharmaceuticals Trading
DAC, a Guarantor (the “Buyer”), intends to acquire certain assets (such
acquisition, the “Acquisition”) pursuant to the terms of that certain Asset
Purchase Agreement (in substantially the form provided to the Lenders prior to
the date hereof, the “Purchase Agreement”), dated as of October 3, 2016, by and
among AstraZeneca AB (the “Seller”), the Buyer and Aralez.  Pursuant to the
terms of the Purchase Agreement, Aralez shall guaranty the obligations of the
Buyer and its affiliates to the Seller arising pursuant to, in respect of or in
connection with the Purchase Agreement or any Ancillary Agreement (as defined in
the Purchase Agreement) (such guaranty the “Parent Guaranty”).  In addition,
pursuant to the terms of the Purchase Agreement, after the Closing Date (as
defined in the Purchase Agreement), (i) upon the first achievement of certain
events described in the Purchase Agreement, the Buyer shall pay to the Seller
additional consideration as set forth in the Purchase Agreement (such payments
in accordance with the terms of the Purchase Agreement, the “Milestone
Payments”), and (ii) as additional consideration, the Buyer shall make royalty
payments to the Seller as set forth in the Purchase Agreement (such payments, in
accordance with the terms of the Purchase Agreement the “Royalty Payments”).

 

The Credit Parties have requested that the Lenders consent to the Acquisition
and the related transactions contemplated by the Purchase Agreement, including
the Parent Guaranty and any Ancillary Agreements (as defined in the Purchase
Agreement), the Milestone Payments and the Royalty Payments.

 

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Notwithstanding the terms and provisions of the Facility Agreement or any other
Loan Document to the contrary, subject to the terms and conditions set forth
below, the Lenders party hereto, constituting the Required Lenders, hereby
consent to the Acquisition and the related transactions expressly contemplated
by the Purchase Agreement, including the Parent Guaranty, the Milestone Payments
and the Royalty Payments.  The parties hereto agree that, notwithstanding the
terms and provisions of the Facility Agreement or any other Loan Document to the
contrary, the Acquisition shall be deemed a Permitted Acquisition, and that the
Parent Guaranty and the obligations of the Buyer to make the Milestone Payments
and the Royalty Payments shall each be deemed Permitted Indebtedness.

 

The parties hereto further agree that, on and after the date that is three
(3) Business Days’ following the Borrower’s delivery to the Lenders of an
Acquisition Loan Request, but in no event earlier than October 25, 2016 or later
than December 31, 2016, and subject to satisfaction of the conditions set forth
in Sections 4.2(b) and 4.2(c) of the Facility Agreement, the Borrower is
permitted to borrow Acquisition Loans on the Closing Date (as defined in the
Purchase Agreement), in an aggregate amount of $175,000,000, which amount is
equal to, and shall be used solely to fund, the Purchase Price (as defined in
the Purchase Agreement, but, for the avoidance of doubt, not including any
amounts constituting the Milestone Payments or the Royalty Payments) paid or
payable on the Closing Date (such Acquisition Loans, the “AZ Acquisition
Loans”).

 

In the event that the Borrower elects to borrow the AZ Acquisition Loans,
notwithstanding anything contained in the Prior Limited Consent (defined below)
to the contrary, the Borrower shall, subject to the conditions set forth in
Sections 4.2(b) and 4.2(c) of the Facility Agreement, be entitled to borrow
Acquisition Loans in the amount of $25,000,000 to fund the purchase price of the
Prior Acquisition (defined below) (such Acquisition Loans, the “Merck
Acquisition Loans” and, together with the AZ Acquisition Loans, the “Permitted
Acquisition Loans”); provided that the Merck Acquisition Loans must be borrowed
substantially concurrent with the borrowing of the AZ Acquisition Loans.  If the
Borrower does not elect to borrow the Merck Acquisition Loans, and the Lenders
fund the AZ Acquisition Loans, the Borrower shall not be permitted to borrow,
and the Lenders shall have no further obligation to fund, any other Acquisition
Loans, including without limitation, the Merck Acquisition Loans or any other
Acquisition Loans with respect to such Prior Acquisition.

 

The consents set forth above are conditioned upon the Credit Parties’
(i) providing the Lenders upon the closing of the Acquisition, with copies of
the Purchase Agreement and the Ancillary Agreements, each in substantially the
form provided to the Lenders prior to the date hereof without any change in the
Purchase Price, any change in the Milestone Payments or the Royalty Payments,
any change in the products being acquired or any modification or waiver thereto
that is materially adverse to the interest of the Lenders (as determined in good
faith by the Required Lenders), without the consent of the Required Lenders, and
duly executed by each of the parties thereto, (ii) taking all steps required to
perfect the Lenders’ (or their agents’) Liens in any Intellectual Property or
other assets acquired by the Buyer pursuant to the Purchase Agreement

 

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(other than “Excluded Property” as defined in the Loan Documents) within sixty
(60) days of the consummation of the Acquisition (or such later date as Required
Lenders may reasonably agree), (iii) certification (which certification is
deemed a representation and warranty of each of the Credit Parties under the
Facility Agreement) as of the date hereof (and by their execution of this
Consent, each Credit Party hereby certifies as of the date hereof) that (a) all
of the representations and warranties set forth in Section 3.1 of the Facility
Agreement are true and correct in all material respects (or, in the case of any
representation or warranty qualified by materiality, true and correct in all
respects), and (b) no Default or Event of Default has occurred or would be
created by the consummation of the Acquisition and (iv) certification (which
certification shall be deemed a representation and warranty of each of the
Credit Parties under the Facility Agreement) as of the Closing Date that (x) the
“Specified Representations” are true and correct in all material respects (or,
in the case of any representation or warranty qualified by materiality, true and
correct in all respects), and (y) no Event of Default has occurred under
Section 5.4(a) and (d) of the Facility Agreement.  For purposes hereof,
“Specified Representations” means the representations and warrants set forth in
Sections 3.1(a), (c), (e), (g), (i) (but solely the first three sentences
thereof and clauses (B) and (C) of the fourth sentence thereof), (k) and (y) of
the Facility Agreement.

 

The Lenders and/or other funds affiliated therewith will have available
sufficient capital to make additional loans to the Borrower in an aggregate
amount of up to $250,000,000 for the payment of the purchase price of any
Permitted Acquisitions (for this purpose excluding clause (vii) of the
definition of “Permitted Acquisition set forth in the Facility Agreement) with
respect to target businesses mutually approved by, and as otherwise mutually
agreed upon, by the Borrower and the Lenders, subject to Section 5.1(m) of the
Facility Agreement.  Any such loans (if and to the extent made available by the
Lenders and/or affiliated funds) shall be borrowed in one or more advances at
any time prior to April 3, 2018, upon at least fifteen (15) Business Days’ prior
written notice to the Lenders.  Further, any such loans shall be in addition to
the Permitted Acquisition Loans and shall be evidenced by notes substantially in
the form of the Acquisition Notes and on terms, and subject to conditions,
including, but not limited to, interest and amortization terms, substantially
similar to the Acquisition Loans under the Facility Agreement or such other
terms as may be mutually agreed to by the Borrower and the Lenders.

 

It is understood and agreed that this Consent shall become effective when, and
the Credit Parties shall have no rights under this Consent until, the Lenders
shall have received executed counterparts to this Consent from all of the Credit
Parties.

 

Except as expressly set forth herein or contemplated hereby, (i) the Facility
Agreement and the other Loan Documents remain unchanged and in full force and
effect (including, without limitation, the Limited Consent dated as of
September 6, 2016 (the “Prior Limited Consent”) for the acquisition consented to
by the Lenders therein (“Prior Acquisition”)),  (ii) this Consent shall not be
deemed to be a waiver, amendment or modification of, or consent to or departure
from, any provision of the Facility Agreement or other Loan Documents or to be a
waiver of any Event of Default under the Facility Agreement or the other Loan
Documents whether arising before or

 

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after the date hereof or as a result of the transactions contemplated hereby
(except for the specific waivers referenced above), and (iii) this Consent shall
not preclude the future exercise of any right, remedy, power or privilege
available to the Lenders whether under the Facility Agreement, other Loan
Documents or otherwise, and shall not be construed or deemed to be a
satisfaction, novation, cure, modification, amendment or release of the
Obligations, Facility Agreement or other Loan Documents.

 

This Consent (i) is a Loan Document and constitutes the entire understanding of
the parties with respect to the subject matter hereof, and any other prior or
contemporaneous agreements, whether written or oral, with respect hereto or
thereto are expressly superseded hereby, and (ii) shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto.

 

All questions concerning the construction, validity, enforcement and
interpretation of this Consent shall be governed by and construed and enforced
in accordance with the laws of the State of Delaware applicable to contracts
made and to be performed in such State.

 

This Consent may be executed in any number of counterparts (which taken together
shall constitute one and the same instrument) and by facsimile or other
electronic transmission, which facsimile (or other electronically delivered)
signatures shall be considered original executed counterparts.

 

[Signature pages follow.]

 

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Very truly yours,

 

DEERFIELD PRIVATE DESIGN FUND III, L.P.

 

By: Deerfield Mgmt III, L.P., its General Partner

 

By: J.E. Flynn Capital III, LLC, its General Partner

 

 

 

By:

/s/ Jonathan Isler

 

Name:

Jonathan Isler

 

Title:

Authorized Signatory

 

 

 

DEERFIELD PARTNERS, L.P.

 

By: Deerfield Mgmt, L.P., its General Partner

 

By: J.E. Flynn Capital, LLC, its General Partner

 

 

 

By:

/s/ Jonathan Isler

 

Name:

Jonathan Isler

 

Title:

Authorized Signatory

 

 

 

DEERFIELD INTERNATIONAL MASTER FUND, L.P.

 

By: Deerfield Mgmt, L.P., its General Partner

 

By: J.E. Flynn Capital, LLC, its General Partner

 

 

 

By:

/s/ Jonathan Isler

 

Name:

Jonathan Isler

 

Title:

Authorized Signatory

 

 

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Acknowledged and Agreed to

 

as of the date set forth above:

 

ARALEZ PHARMACEUTICALS INC.

 

 

 

By:

/s/ Adrian Adams

 

Name:

Adrian Adams

 

Title:

Chief Executive Officer

 

 

 

TRIBUTE PHARMACEUTICALS CANADA INC.

 

 

 

By:

/s/ James L. Hall

 

Name:

James L. Hall

 

Title:

General Manager

 

 

 

POZEN INC.

 

 

 

By:

/s/ Scott J. Charles

 

Name:

Scott J. Charles

 

Title:

Treasurer

 

 

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