Exhibit 10.54

 

 

 

NEBIDO

CONTINGENT CASH CONSIDERATION AGREEMENT

by and between

ENDO PHARMACEUTICALS HOLDINGS INC.

and

AMERICAN STOCK TRANSFER & TRUST COMPANY

as

Paying Agent

 

 

Dated as of February 23, 2009

 

 

 

 

 

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TABLE OF CONTENTS

 

          Page Section 1.    Appointment of Paying Agent    2 Section 2.    No
Certificates    2 Section 3.    Registration by the Paying Agent    2 Section 4.
   Rights of Nebido CCCP Holder    3 Section 5.    Non-transferability    3
Section 6.    Transfer of Nebido CCCPs    3 Section 7.    Payment Procedures   
4 Section 8.    Notices to the Company and Paying Agent    11 Section 9.   
Supplements and Amendments; Actions    12 Section 10.    Enforcement of Rights
of Holders    14 Section 11.    Company May Consolidate, Etc.    14 Section 12.
   Certain Rights of the Paying Agent    15 Section 13.    Designation; Removal;
Successor Paying Agent    17 Section 14.    Successors    18 Section 15.   
Termination; Effect of Termination    18 Section 16.    Governing Law    19
Section 17.    Benefits of this Agreement    19 Section 18.    Counterparts   
19 Section 19.    Headings    19 Section 20.    Additional Covenants    19
Section 21.    Negotiation; Arbitration    20

 

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INDEX OF DEFINED TERMS

 

Agreement

   1

Approval Deadline

   5

Approval Non-Compliance Certificate

   9

Approval With Label Compliance Certificate

   4, 6

Approval With Label Milestone

   5

Approval With Label Milestone Date

   5

Approval With Label Payment Amount

   5

Approval Without Label Compliance Certificate

   5

Approval Without Label Milestone

   6

Approval Without Label Milestone Date

   6

Approval Without Label Payment Amount

   6

Board Resolution

   12

Company

   1

Co-Paying Agents

   2

Determinations

   11

Effective Time

   1

Escrow Amount

   1

FDA

   5

Holder

   2

IFRS

   8

Indevus

   1

Indevus Common Stock

   1

Merger

   1

Merger Agreement

   1

Merger Sub

   1

Nebido CCCP

   1

Net Sales

   7

Net Sales Milestone

   6

Net Sales Milestone Date

   6

Net Sales Non-Compliance Certificate

   9

Net Sales Payment Amount

   7

Non-Compliance Certificate

   9

Notice of Objection

   10

Offer

   1

Offer Closing

   1

Paying Agent

   1

Payment Amounts

   11

Permitted Transfer

   3

Release Date

   4

Surviving Person

   13

Termination Date

   6

 

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This NEBIDO CONTINGENT CASH CONSIDERATION AGREEMENT (this “Agreement”), dated as
of February 23, 2009, is entered into by and between Endo Pharmaceuticals
Holdings Inc., a Delaware corporation (the “Company”), and American Stock
Transfer & Trust Company, as Paying Agent (the “Paying Agent”).

W I T N E S S E T H:

WHEREAS, the Company, BTB Purchaser Inc., a Delaware corporation and
wholly-owned subsidiary of the Company (“Merger Sub”), and Indevus
Pharmaceuticals, Inc., a Delaware corporation (“Indevus”), have entered into an
Agreement and Plan of Merger, dated as of January 5, 2009 (as may be amended and
restated from time to time, the “Merger Agreement”), pursuant to which, among
other things, Merger Sub has commenced an offer (as it may be amended from time
to time as permitted under the Merger Agreement, the “Offer”) to purchase all of
the outstanding shares of common stock, par value $0.001 per share, of Indevus
(the “Indevus Common Stock”), and, at the Effective Time (as defined in the
Merger Agreement), Merger Sub will be merged (the “Merger”) with and into
Indevus, with Indevus continuing as the surviving corporation and as a
wholly-owned subsidiary of the Company;

WHEREAS, the consideration to be paid for each share of Indevus Common Stock by
Merger Sub in the Offer and pursuant to the Merger Agreement includes contingent
consideration payments as hereinafter described (each, a “Nebido CCCP” and
collectively, the “Nebido CCCPs”);

WHEREAS, each holder of Indevus Common Stock who tenders Indevus Common Stock in
the Offer or who is entitled to receive the Merger Consideration (as defined in
the Merger Agreement) will also receive one or more Nebido CCCPs in
consideration for such holder’s shares of Indevus Common Stock in the amounts
and subject to the terms and conditions set forth herein;

WHEREAS, all things necessary have been done to make the obligations of the
Company hereunder the valid obligations of the Company, and to make this
Agreement a valid agreement of the Company, in accordance with its terms;

WHEREAS, at the Offer Closing (as defined in the Merger Agreement, the “Offer
Closing”), the Company will deposit $175,000,000 in cash (the “Escrow Amount”)
with the Paying Agent, which amount is equal to the aggregate Approval With
Label Payment Amount (as defined below) payable upon the occurrence of the
Approval With Label Milestone Date (as defined below), to be held and disposed
of by the Paying Agent in accordance with this Agreement; and

 

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WHEREAS, the Company desires the Paying Agent to act on behalf of the Company,
and the Paying Agent is willing to make payments in satisfaction of the
Company’s obligations with respect to the Nebido CCCPs as provided herein.

NOW, THEREFORE, in consideration of the premises and mutual agreements herein,
the Company and the Paying Agent hereby agree as follows:

Section 1. Appointment of Paying Agent. The Company hereby appoints American
Stock Transfer & Trust Company as the Paying Agent to act as agent for the
Company in accordance with the instructions hereinafter set forth in this
Agreement, and the Paying Agent hereby accepts such appointment. The Company may
from time to time appoint additional paying agents (“Co-Paying Agent(s)”) as it
may deem necessary or desirable. The Paying Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such Co-Paying Agents. In the event of the appointment of a Co-Paying Agent
pursuant to this Section 1, the Company shall cause such Co-Paying Agent to
become vested with the same powers, rights, duties and responsibilities as if it
had originally been named as Paying Agent.

Section 2. No Certificates. The Nebido CCCPs shall not be evidenced by a
certificate or other instrument.

Section 3. Registration by the Paying Agent.

(a) The Company and the Paying Agent may deem and treat the registered holder
(the “Holder”) of a Nebido CCCP as the absolute owner thereof for all purposes,
and neither the Company nor the Paying Agent shall be affected by any notice to
the contrary.

(b) The Company shall cause to be kept at the Paying Agent’s principal office a
register (the “Nebido CCCP Register”) in which the Paying Agent shall provide
for the registration of the Nebido CCCPs. The Nebido CCCPs shall be registered
in the names and addresses of, and in the denomination as set forth in, the
applicable letter of transmittal accompanying the shares of Indevus Common Stock
surrendered by the holder thereof in connection with the Offer or the Merger
pursuant to the Merger Agreement. A Holder may make a written request to the
Paying Agent or the Company to change such Holder’s address of record on the
Nebido CCCP Register. The written request must be duly executed by the Holder.
Upon receipt of such written request by the Paying Agent or the Company, the
Paying Agent shall promptly record the change of address on the Nebido CCCP
Register. The Paying Agent shall provide a copy of the Nebido CCCP Register to
the Company upon request.

 

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Section 4. Rights of Nebido CCCP Holder. Nothing contained in this Agreement
shall be construed as conferring upon any Holder, by virtue of being a Holder of
a Nebido CCCP, the right to vote or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the election of
directors of the Company or any other matter, or any rights of any kind or
nature whatsoever as a stockholder of the Company, either at law or in equity.
The rights of a Holder are limited to those expressed in this Agreement.

Section 5. Non-transferability. The Nebido CCCPs and any interest therein shall
not be sold, assigned, transferred, pledged, encumbered or in any other manner
transferred or disposed of, in whole or in part, other than through a Permitted
Transfer (as defined herein) and, in the case of a Permitted Transfer, only in
accordance with Section 6 hereof. A “Permitted Transfer” shall mean (a) the
transfer of any or all of the Nebido CCCPs on death, by will or intestacy;
(b) transfer by instrument to an inter vivos or testamentary trust in which the
Nebido CCCPs are to be passed to beneficiaries upon the death of the trustee;
(c) transfers made pursuant to a court order of a court of competent
jurisdiction (such as in connection with divorce, bankruptcy or liquidation);
(d) if the Holder is a partnership or limited liability company, a distribution
by the transferring partnership or limited liability company to its partners or
members, as applicable; or (e) a transfer made by operation of law (such as a
merger).

Section 6. Transfer of Nebido CCCPs.

(a) Subject to the restrictions on transferability set forth in Section 5
hereof, the Paying Agent shall, from time to time, register the transfer of any
outstanding Nebido CCCPs upon the Nebido CCCP Register, upon delivery to the
Paying Agent of a written instrument or instruments of transfer and other
requested documentation in a form satisfactory to the Company and the Paying
Agent, duly executed by the registered Holder or Holders thereof or by the duly
appointed legal representative thereof or by a duly authorized attorney, such
signature to be guaranteed by a participant in a recognized Signature Guarantee
Medallion Program. A request for a transfer of a Nebido CCCP shall be
accompanied by such documentation establishing satisfaction of the conditions
set forth in Section 5 hereof as may be reasonably requested by the Company
(including opinions of counsel, if appropriate). Upon receipt of documentation
reasonably satisfactory to the Company, the Company shall authorize the Paying
Agent to permit the transfer of a Nebido CCCP. The Paying Agent shall not permit
the transfer of a Nebido CCCP until it is so authorized by the Company. No
transfer of a Nebido CCCP shall be valid until registered on the Nebido CCCP
Register and any transfer not duly registered on the Nebido CCCP Register will
be void ab initio. All transfers of Nebido CCCPs registered on the Nebido CCCP
Register shall be the valid obligations of the Company, representing the same
rights to receive cash as the Nebido CCCPs

 

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transferred then entitled such transferee to receive, and shall entitle the
transferee to the same benefits and rights under this Agreement as those held by
the transferor. It is clarified that the Nebido CCCP Register will show one
position for Cede & Co which represents all the Shares held by DTC on behalf of
the street holders of the Shares as of the Effective Time and the Paying Agent
will have no responsibility whatsoever directly to the street holders with
respect to the transfer of Nebido CCCPs. It is also clarified that with respect
to any payments to be made under Section 7 below, the Paying Agent will
accomplish the payment to the street holders by sending one lump payment to DTC,
who will then be required to distribute the payments to brokers and shareholders
as of the Effective Time. The Paying Agent will have no responsibilities
whatsoever with regards to distribution of payments to the street holders
directly.

(b) No service charge shall be made for any registration of transfer of Nebido
CCCPs. The Paying Agent shall have no duty or obligation to take any action
under any Section of this Agreement which requires the payment by a Holder of a
Nebido CCCP of applicable taxes and charges unless and until the Paying Agent is
satisfied that all such taxes and/or charges have been paid.

Section 7. Payment Procedures.

(a) Escrow Amount.

(i) Any amounts payable to any Holder pursuant to this Agreement shall be paid
first out of the Escrow Amount to the extent of the then remaining Escrow
Amount.

(ii) If the Approval With Label Milestone Date or the Approval Without Label
Milestone Date (each as defined below) shall have occurred, on the payment date
set forth in any certificate delivered pursuant to Section 7(b)(i) or
Section 7(c)(i) hereof, as applicable, and following the payment of the Approval
With Label Payment Amount or the Approval Without Label Payment Amount (each as
defined below), as applicable, in accordance with this Section 7, the Paying
Agent shall deliver the then remaining Escrow Amount to the Company free and
clear of any interest of any Holder.

(iii) Notwithstanding any other provision in this Agreement, on December 15,
2009 (the “Release Date”), the Paying Agent shall deliver the then remaining
Escrow Amount to the Company free and clear of any interest of any Holder;
provided, however, that such delivery shall not limit or otherwise act to

 

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diminish the obligations of the Company hereunder, including, without
limitation, any obligations to pay any amounts to Holders if and when payable.

(b) Approval With Label.

(i) Within 5 business days following the occurrence of the Approval With Label
Milestone Date, the Company shall deliver to the Paying Agent (A) a certificate
(the “Approval With Label Compliance Certificate”) certifying that the Holders
are entitled to receive the Approval With Label Payment Amount and establishing
a payment date with respect to the Approval With Label Payment Amount that is
within 5 business days of the date of the issuance of such certificate and
(B) if the Release Date shall have occurred, an amount in cash equal to the
aggregate Approval With Label Payment Amount with respect to Nebido CCCPs held
by all Holders. Upon payment of such aggregate Approval With Label Payment
Amount, no further payment by the Company pursuant to this Agreement shall be
required.

(ii) “Approval With Label Milestone Date” shall mean the date on which the
Company (or any of its subsidiaries) receives an approval letter from the U.S.
Food and Drug Administration (the “FDA”) with respect to its new drug
application for Nebido (as defined in the Merger Agreement), which approval
letter grants the Company the right to market and sell Nebido immediately and
provides labeling for Nebido that does not contain a “boxed warning” (as defined
in 21 CFR 201.57(c)(1)) (the “Approval With Label Milestone”); provided,
however, that, subject to Section 7(l) hereof, if the Approval With Label
Milestone Date does not occur on or before the third anniversary of the Offer
Closing (the “Approval Deadline”), the Nebido CCCPs will terminate and all
rights thereunder and all rights in respect thereof under this Agreement shall
cease; provided, further, that in no event shall the Approval With Label
Milestone Date occur if the Approval Without Label Milestone Date shall have
already occurred.

(iii) “Approval With Label Payment Amount” means an amount equal to $2.00 per
Nebido CCCP, without interest thereon, payable in cash.

 

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(c) Approval Without Label.

(i) Within 5 business days following the occurrence of the Approval Without
Label Milestone Date, the Company shall deliver to the Paying Agent (A) a
certificate (the “Approval Without Label Compliance Certificate”) certifying
that the Holders are entitled to receive the Approval Without Label Payment
Amount and establishing a payment date with respect to the Approval Without
Label Payment Amount that is within 5 business days of the date of such
certificate and (B) if the Release Date shall have occurred, an amount in cash
equal to the aggregate Approval Without Label Payment Amount with respect to
Nebido CCCPs held by all Holders.

(ii) “Approval Without Label Milestone Date” shall mean the date on which the
Company (or any of its subsidiaries) receives an approval letter from the FDA
with respect to its new drug application for Nebido (as defined in the Merger
Agreement), which approval letter grants the Company the right to market and
sell Nebido immediately and provides labeling for Nebido that contains a “boxed
warning” (as defined in 21 CFR 201.57(c)(1)) (the “Approval Without Label
Milestone”); provided, however, that, subject to Section 7(l) hereof, if the
Approval Without Label Milestone Date does not occur on or before the Approval
Deadline, the Nebido CCCPs will be terminated and all rights thereunder and all
rights in respect thereof under this Agreement shall cease; provided, further,
that in no event shall the Approval Without Label Milestone Date occur if the
Approval With Label Milestone Date shall have already occurred.

(iii) “Approval Without Label Payment Amount” means an amount equal to $1.00 per
Nebido CCCP, without interest thereon, payable in cash.

(iv) If the Approval Without Label Milestone Date shall have occurred, within 5
business days following the occurrence of the Net Sales Milestone Date, the
Company shall, at such time, deliver to the Paying Agent (A) a certificate (the
“Net Sales Compliance Certificate”) certifying that the Holders are entitled to
receive the Net Sales Payment Amount and establishing a payment date with
respect to the Net Sales Payment Amount that is within 5 business days of the
date of such certificate and (B) an amount in cash equal to the aggregate Net
Sales Payment Amount with respect to the Nebido CCCPs held by all Holders. Upon
such payment, no further payment by the Company pursuant to this Agreement shall
be required.

 

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(v) “Net Sales Milestone Date” shall mean the date following the Approval
Without Label Milestone Date on which the Company (and its subsidiaries)
publicly report audited financial statements which reflect at least $125,000,000
in cumulative Net Sales during any four consecutive calendar quarters ending on
or prior to the fifth anniversary of the date of first commercial sale of Nebido
(the achievement of such Net Sales in such time period, the “Net Sales
Milestone” and such fifth anniversary, the “Termination Date”).

(vi) “Net Sales Payment Amount” means an amount equal to $1.00 per Nebido CCCP,
without interest thereon, payable in cash.

(vii) “Net Sales” means, with respect to Nebido, the gross amount invoiced by or
on behalf of the Company or its affiliates, licensees or sublicensees for Nebido
sold to third parties other than licensees or sublicensees in bona fide,
arm’s-length transactions, less the following deductions, determined in
accordance with the Company’s standard accounting methods as generally and
consistently applied by the Company, to the extent included in the gross
invoiced sales price of the product or otherwise directly paid or incurred by
the Company, its affiliates, licensees or sublicensees acting on its behalf with
respect to the sale of such product:

(1) normal and customary trade and quantity discounts actually allowed and
properly taken directly with respect to sales of the product;

(2) amounts repaid or credited by reasons of defects, recalls, returns, rebates
and allowances of goods or because of retroactive price reductions specifically
identifiable to the product;

(3) chargebacks, rebates (or the equivalent thereof) and other amounts paid on
sale or dispensing of the product;

(4) rebates (or the equivalent thereof) and administrative fees paid to medical
healthcare organizations, to

 

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group purchasing organizations or to trade customers in line with approved
contract terms or other normal and customary understandings and arrangements;

(5) amounts payable resulting from governmental (or agency thereof) mandated
rebate programs or chargeback programs;

(6) tariffs, duties, excise, sales, value-added and other taxes (other than
taxes based on income) and charges of Governmental Authorities;

(7) cash discounts for timely payment;

(8) rebates paid to wholesalers for inventory management programs;

(9) amounts repaid or credited or provisions made for uncollectible amounts on
previously sold products; and

(10) required distribution commissions and fees (such as fees related to
services provided pursuant to distribution service agreements with major
wholesalers) payable to any third party providing distribution services to the
Company so long as such commissions and fees are consistent with the
distribution commissions and fees payable in respect to other branded
prescription products commercialized by the Company;

all as determined in accordance with the Company’s usual and customary
accounting methods, which shall be in accordance with U.S. Generally Accepted
Accounting Principles; or in accordance with International Financial Reporting
Standards (“IFRS”), should the Company be required to, or elect to maintain
records and books of accounts in accordance with IFRS. Sales from the Company to
its affiliates, licensees or sublicensees shall be disregarded for purposes of
calculating Net Sales. Any of the items set forth above that would otherwise be
deducted from the invoice price in the calculation of Net Sales but which are
charged to third parties shall not be deducted from the invoice price in the
calculation of Net Sales. Further:

(1) In the case of any sale or other disposal of a product between or among the
Company and its affiliates, licensees and sublicensees, for resale, Net Sales
shall be calculated as above only on the value charged or invoiced on the first
arm’s-length sale thereafter to a third party;

 

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(2) In the case of any sale which is not invoiced or is delivered before
invoice, Net Sales shall be calculated at the time of shipment or when the
product is paid for, if paid for before shipment or invoice; and

(3) In the case of any sale or other disposal for value, such as barter or
counter-trade, of any product, or part thereof, other than in an arm’s-length
transaction exclusively for money and excluding any patient assistance programs,
Net Sales shall be calculated as above on the value of the non-cash
consideration received or the fair market price (if higher) of the product in
the country of sale or disposal.

(d) If (A) prior to the delivery of an Approval With Label Compliance
Certificate or an Approval Without Label Compliance Certificate, events or
circumstances occur that cause the Company reasonably to believe that either or
both of the Approval With Label Milestone Date or the Approval Without Label
will not and cannot occur prior to the Approval Deadline or, (B) an approval of
Nebido is obtained but the Company determines that it does not meet the
definition of an Approval With Label Milestone or Approval Without Label
Milestone, then within 30 days of the occurrence of such events or circumstances
or determination, the Company shall deliver to the Paying Agent a certificate
(the “Approval Non-Compliance Certificate”) setting forth in reasonable detail
the events and circumstances underlying its belief that delivery of such
Non-Compliance Certificate is required.

(e) If, after the delivery of an Approval Without Label Compliance Certificate,
on the Termination Date the Net Sales Milestone has not occurred, the Company
shall, promptly after such time, deliver to the Paying Agent a certificate (the
“Net Sales Non-Compliance Certificate”) setting forth such fact. Each of the
Approval Non-Compliance Certificate and the Net Sales Non-Compliance Certificate
is referred to herein as a “Non-Compliance Certificate”.

(f) On the applicable payment date, the Paying Agent shall pay the applicable
amount to each of the Holders (the amount to which each Holder is entitled to
receive will be based on the number of Nebido CCCPs held by such Holder as
reflected on the Nebido CCCP Register) by (i) check mailed to the address of
each Holder as reflected on the Nebido CCCP Register as of the close of business
on the last business day prior to such payment date or (ii) with respect to
Holders that are due amounts in excess of $1,000,000 in the aggregate who have
provided the

 

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Company with wire transfer instructions in writing, the Paying Agent will make
payments by wire transfer of immediately available funds to the account
specified in the written instructions of the Company. In addition to the notices
required by Section 11 hereof, the Company shall cause the Paying Agent, on
behalf of and at the expense of the Company, to mail with (or, in the case of
payments made to Holders who have provided the Company with wire instructions,
at the same time as) each payment made a copy of each Compliance Certificate
(whether the Approval With Label Compliance Certificate, Approval Without Label
Compliance Certificate or a Net Sales Compliance Certificate) to which such
payment relates. In addition, the Company shall post a copy of such Compliance
Certificate on its Internet website and issue a press release announcing the
occurrence of the applicable milestone date.

(g) The Company shall cause the Paying Agent to promptly (and in no event later
than five business days after receipt by the Paying Agent) send each Holder a
copy of each Non-Compliance Certificate at such Holder’s registered address.

(h) The Company shall be entitled to deduct and withhold, or cause to be
deducted or withheld, from any amounts otherwise payable pursuant to this
Agreement, such amounts as it is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld or
paid over to or deposited with the relevant governmental entity, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the Holder in respect of which such deduction and withholding was made.

(i) The Paying Agent shall invest any cash held by it for payment to the
Holders, including the Escrow Amount, in a JP Morgan Custodial Account or as
reasonably directed by the Company in writing. Any interest and other income
resulting from such investment shall promptly be paid to the Company.

(j) Any cash that remains undistributed to the Holders of Nebido CCCPs six
months after the payment date set forth in any Approval With Label Compliance
Certificate, Approval Without Label Compliance Certificate or Net Sales
Compliance Certificate, as applicable, shall be delivered to the Company, upon
demand, and any Holders of Nebido CCCPs who have not theretofore received cash
in exchange for such Nebido CCCPs shall thereafter look only to the Company for
payment of their claim therefor. Notwithstanding any other provisions of this
Agreement, any portion of the cash provided by the Company to the Paying Agent
that remains unclaimed after termination of this Agreement in accordance with
Section 15 hereof (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to, or become property of, any governmental
entity) shall, to the extent permitted by law, become the property of the
Company free and clear of any claims or interest of any person previously
entitled thereto.

 

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(k) The Paying Agent shall keep copies of this Agreement available for
inspection by the Holders during normal business hours at its office. The
Company shall supply the Paying Agent from time to time with such numbers of
copies of this Agreement as the Paying Agent may request.

(l) Any Holder or Holders of at least 20% in the aggregate of the outstanding
Nebido CCCPs may, within 45 days of (A) receipt of any Non-Compliance
Certificate or (B) the payment of the Approval Without Label Payment Amount,
deliver a written notice to the Paying Agent and the Company stating that such
Holder or Holders object to (a “Notice of Objection”) such Non-Compliance
Certificate or nonpayment of the Approval With Label Amount (as applicable) and
setting forth in reasonable detail each of the objections to the events or
circumstances described in the applicable Non-Compliance Certificate or the
failure to pay the Approval With Label Payment Amount (as applicable)
(collectively, the “Determinations”). If the Company does not agree with the
objections to the applicable Non-Compliance Certificate in the Objection
Certificate, the Determinations that are in dispute shall be resolved by the
procedure set forth in Section 21, which decision shall be binding on the
parties hereto and the Holders. If no Notice of Objection is delivered to the
Paying Agent within such 45 day period, the applicable Approval With Label
Payment Amount, Approval Without Label Payment Amount, or Net Sales Payment
Amount (collectively, “Payment Amounts”) to which the Non-Compliance Certificate
relates, or, in the case of the payment of the Approval Without Label Payment
Amount, the Approval With Label Payment Amount, shall not be due and payable to
the Holders, and the Company and the Paying Agent shall have no further
obligations with respect to such Payment Amount (but may have obligations with
respect to the other Payment Amounts in accordance with the terms of this
Agreement).

Section 8. Notices to the Company and Paying Agent. Any notice or demand
authorized by this Agreement to be given or made by the Paying Agent or by any
Holder to or on the Company shall be sufficiently given or made when received at
the office of the Company expressly designated by the Company as its office for
purposes of this Agreement (until the Paying Agent is otherwise notified in
accordance with this Section 8 by the Company), as follows:

Endo Pharmaceuticals Holdings Inc.

100 Endo Boulevard

Chadds Ford, PA 19317

Fax No.: (610) 558-9864

Attention: Caroline B. Manogue, Esq.

 

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and with a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036-6522

Fax No.: (212) 735-2000

Attention: Eileen T. Nugent, Esq.

Any notice pursuant to this Agreement to be given by the Company or by any
Holder(s) to the Paying Agent shall be sufficiently given when received by the
Paying Agent at the address appearing below (until the Company is otherwise
notified in accordance with this Section 8 by the Paying Agent).

American Stock Transfer & Trust Company LLC

Operations Center

6201 15th Avenue

Brooklyn, NY 11219

Telephone: (800) 937-5449

Attention: Reorganization Department

Section 9. Supplements and Amendments; Actions.

(a) Without the consent of any Holders, the Company, at any time and from time
to time, may enter into one or more amendments hereto, for any of the following
purposes:

(i) to evidence the succession of another person to the Company and the
assumption by any such successor of the covenants of the Company herein;
provided that such succession and assumption is in accordance with the terms of
this Agreement;

(ii) to evidence the succession of another person as a successor Paying Agent
and the assumption by any successor of the covenants and obligations of such
Paying Agent herein; provided that such succession and assumption is in
accordance with the terms of this Agreement;

(iii) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as the Company shall consider to be for
the protection of Holders; provided that in each case, such provisions shall not
adversely affect the rights of the Holders; or

 

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(iv) to cure any ambiguity, to correct or supplement any provision herein that
may be defective or inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Agreement; provided that in each case, such provisions shall not adversely
affect the rights of Holders.

(b) Subject to Section 9(c) hereof, with the written consent of the Holders of
not less than a majority of the then outstanding and unpaid Nebido CCCPs
delivered to the Company, the Company (when authorized by a Board Resolution (as
defined below)) may enter into one or more amendments hereto for the purpose of
adding, eliminating or changing any provision of this Agreement, if such
addition, elimination or change is in any way adverse to the rights of Holders.
It shall not be necessary for any written consent of Holders under this
Section 9(b) to approve the particular form of any proposed amendment, but it
shall be sufficient if such written consent shall approve the substance thereof.
“Board Resolution” means a resolution, certified by the secretary or an
assistant secretary of the Company to have been duly adopted by the Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Paying Agent.

(c) The unanimous consent of each and every Holder affected shall be required
for any amendment pursuant to which the amount of cash payable in consideration
for the Nebido CCCPs would be decreased.

(d) Promptly after the execution by the Company of any amendment pursuant to the
provisions of this Section 9, the Company shall mail by first class mail,
postage prepaid, a notice thereof to the Holders at their addresses as they
shall appear on the Nebido CCCP Register, setting forth in general terms the
substance of such amendment.

(e) Upon the execution of any amendment in accordance with this Section 9, this
Agreement shall be modified in accordance therewith, such amendment shall form a
part of this Agreement for all purposes and every Holder shall be bound thereby.

(f) The Paying Agent shall be entitled to receive and shall be fully protected
in relying upon an officers’ certificate and opinion of counsel as conclusive
evidence that any such amendment or supplement is authorized or permitted
hereunder, that it is not inconsistent herewith, and that it will be valid and
binding upon the Company in accordance with its terms.

 

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Section 10. Enforcement of Rights of Holders. Any actions seeking enforcement of
the rights of Holders hereunder may be brought either by the Paying Agent or the
Holders of a majority of outstanding and unpaid Nebido CCCPs.

Section 11. Company May Consolidate, Etc.

(a) The Company shall not consolidate with or merge into any other Person (as
defined in the Merger Agreement) or convey, transfer or lease its properties and
assets substantially as an entirety to any Person, unless:

(i) The board of directors of the Company shall have determined that, following
such transaction, such Person would reasonably be expected to be able to carry
out the obligations of the Company hereunder;

(ii) the Person formed by such consolidation or into which the Company is merged
or the Person that acquires by conveyance or transfer, or that leases, the
properties and assets of the Company substantially as an entirety (the
“Surviving Person”) shall, by a supplemental contingent consideration payment
agreement or other acknowledgment executed and delivered to the Paying Agent,
expressly assume payment of amounts on all the Nebido CCCPs and the performance
of every duty, obligation liability and covenant of this Agreement, subject to
the conditions herein, on the part of the Company to be performed or observed in
the manner prescribed herein; and

(iii) the Company has delivered to the Paying Agent a Certificate executed by
the Chief Executive Officer of the Company, stating that such consolidation,
merger, conveyance, transfer or lease complies with this Section 11 and that all
conditions precedent herein provided for relating to such transaction have been
complied with.

(b) Upon any consolidation of or merger by the Company with or into any other
Person, or any conveyance, transfer or lease of the properties and assets
substantially as an entirety to any Person in accordance with Section 11(a)
hereof, the Surviving Person shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement with the
same effect as if the Surviving Person had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor Person shall be
relieved of all obligations and covenants under this Agreement and the Nebido
CCCPs.

 

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(c) In the event that (i) the Company shall enter into any definitive agreement
with respect to a consolidation or merger (whether by proxy, tender offer or
otherwise) involving the Company and for which approval of stockholders of the
Company is required, or of the conveyance or transfer of the properties and
assets of the Company substantially as an entirety, or a tender offer or
exchange offer for shares of its common stock; or (ii) the Company shall file
(or have filed against it) for the voluntary or involuntary dissolution,
liquidation or winding up of the Company, then the Company shall give prompt
written notice to the Paying Agent and shall cause the Paying Agent, on behalf
of and at the expense of the Company to give to each Holder of a Nebido CCCP at
his, her or its address appearing on the Nebido CCCP Register, at least 10 days
prior to the applicable record date for such transaction, or the date of the
event in the case of events for which there is no record date, by first-class
mail, postage prepaid, a written notice stating (i) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or winding
up is reasonably expected to become effective or consummated or (ii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
the Company’s common stock. The failure by the Company or the Paying Agent to
give such notice or any defect therein shall not affect the legality or validity
of any consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up, or the vote upon any such action.

(d) The provisions of this Section 11 shall apply to successive transactions.

Section 12. Certain Rights of the Paying Agent. The Paying Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders, by their acceptance of
the Nebido CCCPs, shall be bound:

(a) The statements contained herein and in any notice delivered by the Company
shall be taken as statements of the Company, and the Paying Agent assumes no
responsibility for the correctness of any of the same except such as describe
the Paying Agent or any action taken by it. The Paying Agent assumes no
responsibility with respect to the distribution of the Nebido CCCPs except as
herein otherwise provided.

(b) The Paying Agent shall not be responsible for any failure of the Company to
comply with the covenants contained in this Agreement to be complied with by the
Company. The Paying Agent shall not be responsible for the failure of the
Company to issue any certificate required under this Agreement or to determine
whether such certificate is required or for the contents of any certificate
issued by the Company.

 

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(c) The Paying Agent may execute and exercise any of the rights or powers hereby
vested in it or perform any duty hereunder either by itself (through its
employees) or by or through its attorneys or agents (which shall not include its
employees) and shall not be responsible for the misconduct of any agent
appointed with due care.

(d) The Paying Agent may consult at any time with legal counsel satisfactory to
it (who may be counsel for the Company), and the Paying Agent shall incur no
liability or responsibility to the Company or to any Holder in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or the advice of such counsel.

(e) Whenever in the performance of its duties under this Agreement the Paying
Agent shall deem it necessary or desirable that any fact or matter be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless such evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Financial Officer, one of the Vice Presidents,
the Treasurer or the Secretary of the Company and delivered to the Paying Agent;
and such certificate shall be full authorization to the Paying Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

(f) The Company agrees to pay the Paying Agent reasonable compensation for all
services rendered by the Paying Agent in the performance of its duties under
this Agreement, to reimburse the Paying Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Paying Agent (including reasonable fees and expenses of the Paying Agent’s
counsel and agents) in the performance of its duties under this Agreement, and
to indemnify the Paying Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything done or
omitted by the Paying Agent in the performance of its duties under this
Agreement, except as a result of the Paying Agent’s gross negligence or bad
faith.

(g) The Paying Agent shall be under no obligation to institute any action, suit
or legal proceeding or to take any other action likely to involve expense unless
the Company or one or more Holders shall furnish the Paying Agent with
reasonable security and indemnity satisfactory to the Paying Agent for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Paying Agent to take such action as the Paying Agent may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement may be enforced by the Paying Agent, and any such
action, suit or proceeding instituted by the Paying Agent shall be brought in
its name as Paying Agent, and any recovery of judgment shall be for the ratable
benefit of the Holders, as their respective rights or interests may appear.

 

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(h) The Paying Agent and any stockholder, director, officer or employee of the
Paying Agent may buy, sell or deal in any other securities of the Company or
become pecuniarily interested in any transactions in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though it were not Paying Agent under this Agreement or such
director, officer or employee. Nothing herein shall preclude the Paying Agent
from acting in any other capacity for the Company or for any other legal entity
including, without limitation, acting as transfer agent or as a lender to the
Company or an affiliate thereof.

(i) The Paying Agent shall act hereunder solely as agent, and its duties shall
be determined solely by the provisions hereof. The Paying Agent shall not be
liable for anything which it may do or refrain from doing in connection with
this Agreement except for its own gross negligence or bad faith.

(j) The Paying Agent will not incur any liability or responsibility to the
Company or to any Holder for any action taken in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by it to be genuine and to have been signed, sent
or presented by the proper party or parties.

(k) The Paying Agent shall not be under any responsibility in respect of the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Paying Agent) or in respect of the validity of any
Nebido CCCP.

(l) The Paying Agent is hereby authorized and directed to accept instructions
with respect to the performance of its duties hereunder from the Chairman of the
Board, the Chief Executive Officer President, the Chief Financial Officer, any
Vice President or the Secretary of the Company, and to apply to such officers
for advice or instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in good faith and
without negligence in accordance with the instructions of any such officer or
officers.

Section 13. Designation; Removal; Successor Paying Agent. The Paying Agent may
resign at any time and be discharged from its duties under this Agreement by
giving to the Company 30 days’ notice in writing. The Company may remove the
Paying Agent or any successor Paying Agent by giving to the Paying Agent or
successor Paying Agent 30 days’ notice in writing. If the Paying Agent shall
resign or be removed or shall otherwise become incapable of acting, the

 

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Company shall appoint a successor to the Paying Agent. If the Company shall fail
to make such appointment within a period of 30 days after such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Paying Agent or by any Holder (whose name shall
appear on the Nebido CCCP Register), then any Holder may apply to any court of
competent jurisdiction for the appointment of a successor to the Paying Agent.
Pending appointment of a successor Paying Agent, either by the Company or by
such court, the duties of the Paying Agent shall be carried out by the Company.
Any successor Paying Agent, whether appointed by the Company or such a court,
shall be a bank or trust company in good standing, incorporated under the laws
of the United States of America or any State thereof or the District of Columbia
and having at the time of its appointment as Paying Agent a combined capital and
surplus of at least $10,000,000. After appointment, the successor Paying Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Paying Agent without further act or deed; but
the former Paying Agent shall deliver and transfer to the successor Paying Agent
any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for such purpose. In the
event of such resignation or removal, the Company or the successor Paying Agent
shall mail by first class mail, postage prepaid, to each Holder, written notice
of such removal or resignation and the name and address of such successor Paying
Agent. Failure to file any notice provided for in this Section 13, however, or
any defect therein, shall not affect the legality or validity of the resignation
or removal of the Paying Agent or the appointment of the successor Paying Agent,
as the case may be.

Section 14. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company, the Paying Agent or any Holder shall bind and
inure to the benefit of their respective successors, assigns, heirs and personal
representatives.

Section 15. Termination; Effect of Termination.

(a) Subject to the resolution of any disputes in accordance with Sections 7(l)
and 21 hereof, in the event that the Approval With Label Milestone Date or the
Approval Without Label Date shall not have occurred on or prior to the Approval
Deadline, this Agreement shall terminate at 5:00 p.m., New York City time, on
the Approval Deadline.

(b) In the event that the Approval With Label Milestone Date shall have occurred
prior to the Approval Deadline, this Agreement will terminate at 5:00 p.m., New
York City time, on the date that all payments are sent by the Paying Agent in
respect of the payment date set forth in any certificate delivered pursuant to
Section 7(b)(i) hereof.

 

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(c) Subject to the resolution of any disputes in accordance with Sections 7(l)
and 21 hereof, in the event that the Approval Without Label Milestone Date shall
have occurred prior to the Approval Deadline, this Agreement will terminate at
5:00 p.m., New York City time, on the earlier of (i) the date that all payments
are sent by the Paying Agent in respect of the payment date set forth in any
certificate delivered pursuant to Section 7(c)(iv) hereof and (ii) the
Termination Date.

(d) Notwithstanding anything to the contrary contained herein, the
indemnification contained in Section 12(f) hereof shall survive termination of
this Agreement.

(e) Upon termination of this Agreement, each Nebido CCCP shall become void, and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease.

Section 16. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws thereof.

Section 17. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Paying Agent and the Holders any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive benefit
of the Company, the Paying Agent and the Holders.

Section 18. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.

Section 19. Headings. The headings and table of contents contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

Section 20. Additional Covenants

(a) List of Holders. The Company shall furnish or cause to be furnished to the
Paying Agent (a) in such form as the Company receives from its transfer agent
(or other agent performing similar services for the Company), the names and
addresses of the Holders within five business days of the Effective Time, and
(b) at such times as the Paying Agent may request in writing, within five
business days after receipt by the Company of any such request, a list, in such
form as the Company receives from its transfer agent (or other agent performing
similar services for the Company), of the names and the addresses of the Holders
as of a date not more than 15 days prior to the time such list is furnished.

 

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(b) Ability To Make Prompt Payment. Neither the Company nor any of its
subsidiaries shall enter into any agreement that would restrict the Company’s
right to be able to promptly make or cause to be made payments to the Holders
under this Agreement or otherwise restrict the Company’s ability to fund or
cause to be funded such payments.

Section 21. Negotiation; Arbitration.

(a) Prior to any arbitration pursuant to Section 21(b) hereof, the Company, the
Paying Agent and any Holder or Holders of at least 20% in the aggregate of the
outstanding Nebido CCCPs shall negotiate in good faith for a period of 30 days
to resolve any controversy or claim arising out of or relating to this
Agreement, or the alleged breach thereof.

(b) After expiration of the 30-day period contemplated by Section 21(a) hereof,
such controversy or claim, including any claims for breach of this Agreement,
shall be settled by arbitration administered by the American Arbitration
Association under its Commercial Arbitration Rules, and judgment on the award
rendered by the arbitrators may be entered in any court having jurisdiction
thereof. The Company, the Paying Agent and any Holder or Holders of at least 20%
in the aggregate of the outstanding Nebido CCCPs may initiate an arbitration for
any matter relating to this Agreement. The number of arbitrators shall be three.
Within 15 days after the commencement of arbitration, each party shall select
one person to act as arbitrator, and the two selected shall select a third
arbitrator within 15 days of their appointment. If the arbitrators selected by
the parties are unable or fail to agree upon the third arbitrator, the third
arbitrator shall be selected by the American Arbitration Association. The place
of the arbitration shall be New York, New York, and the arbitration shall be
conducted in such a manner so that the written opinion of the arbitrators is
given within 180 days after the arbitrators are selected. The arbitrators shall
be lawyers or retired judges with experience in the life sciences industry and
with mergers and acquisitions. Except as may be required by law, neither a party
nor an arbitrator may disclose the existence, content or results of any
arbitration hereunder without the prior written consent of both parties. All
fees and expenses incurred in connection with any arbitration, including the
costs and expenses billed by the arbitrators in connection with the performance
of their duties described herein shall be paid by the party or parties against
whom the arbitrators rule.

 

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Any award payable in favor of the Holder or Paying Agent as a result of
arbitration shall be distributed to the Holders on a pro rata basis, based on
the number of Nebido CCCPs held by each Holder.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.

 

ENDO PHARMACEUTICALS HOLDINGS INC. By:  

/s/ David P. Holveck

Name:   David P. Holveck Title:   CEO AMERICAN STOCK TRANSFER & TRUST COMPANY as
Paying Agent By:  

/s/ Isaac Freilich

Name:   Isaac Freilich Title:   VP

 

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