RIGHTS HEREUNDER, DO NOT AND WILL NOT
CONFLICT WITH OR RESULT IN A BREACH OF ANY OF THE TERMS AND PROVISIONS OF OR
CONSTITUTE A DEFAULT OR CREATE A TERMINATION RIGHT UNDER, WITH OR WITHOUT THE
PASSAGE OF TIME AND THE GIVING OF NOTICE, ANY MATERIAL CONTRACT OR OTHER
INSTRUMENT OR OBLIGATION BINDING OR AFFECTING THE DEBTOR, THE ROYALTY PRODUCTS
OR THE COLLATERAL INCLUDING, WITHOUT LIMITATION, THAT CERTAIN AGREEMENT DATED
DECEMBER 28, 2000 BETWEEN TANABE SEIYAKU CO., LTD. AND THE DEBTOR (THE "TANABE
AGREEMENT"), EXCEPT AS SET FORTH IN THAT CERTAIN DISCLOSURE LETTER OF EVEN DATE
HEREWITH DELIVERED BY THE DEBTOR TO THE SECURED PARTY PURSUANT TO SECTION 7 OF
THE ROYALTY AGREEMENT.
3.5
NO RESTRICTIONS.
THERE ARE NO STATUTORY OR
REGULATORY RESTRICTIONS, PROHIBITIONS OR LIMITATIONS ON THE DEBTOR'S ABILITY TO
GRANT TO THE SECURED PARTY A LIEN UPON AND SECURITY INTEREST IN THE COLLATERAL
PURSUANT TO THIS AGREEMENT OR (EXCEPT FOR THE PROVISIONS OF THE FEDERAL
ANTI-ASSIGNMENT ACT (41 U.S.C. 15), AS AMENDED AND THE ANTI-CLAIMS ACT (31
U.S.C. 3727), AS AMENDED) ON THE EXERCISE BY THE SECURED PARTY OF ITS RIGHTS AND
REMEDIES HEREUNDER (INCLUDING ANY FORECLOSURE UPON OR COLLECTION OF THE
COLLATERAL), AND THERE ARE NO CONTRACTUAL RESTRICTIONS ON THE DEBTOR'S ABILITY
TO GRANT SUCH LIEN AND SECURITY INTEREST.
3.6
ACCOUNTS.
EACH COLLATERAL ACCOUNT IS, OR AT
THE TIME IT ARISES WILL BE, (I) A BONA FIDE, VALID AND LEGALLY ENFORCEABLE
INDEBTEDNESS OF THE ACCOUNT DEBTOR ACCORDING TO ITS TERMS, ARISING OUT OF OR IN
CONNECTION WITH THE SALE, LEASE OR PERFORMANCE OF GOODS OR SERVICES BY THE
DEBTOR OR ANY OF THEM, (II) SUBJECT TO NO OFFSETS, DISCOUNTS, COUNTERCLAIMS,
CONTRA ACCOUNTS OR ANY OTHER DEFENSE OF ANY KIND AND CHARACTER, OTHER THAN
WARRANTIES AND DISCOUNTS CUSTOMARILY GIVEN BY THE DEBTOR IN THE ORDINARY COURSE
OF BUSINESS AND WARRANTIES PROVIDED BY APPLICABLE LAW, (III) TO THE EXTENT
LISTED ON ANY SCHEDULE OF COLLATERAL ACCOUNTS AT ANY TIME FURNISHED TO THE
SECURED PARTY, A TRUE AND CORRECT STATEMENT OF THE AMOUNT ACTUALLY AND
UNCONDITIONALLY OWING THEREUNDER, MATURING AS STATED IN SUCH SCHEDULE AND IN THE
INVOICE COVERING THE TRANSACTION CREATING SUCH COLLATERAL ACCOUNT, AND (IV) NOT
EVIDENCED BY ANY OTHER INSTRUMENT; OR IF SO, SUCH OTHER INSTRUMENT (OTHER THAN
INVOICES AND RELATED CORRESPONDENCE AND SUPPORTING DOCUMENTATION) SHALL PROMPTLY
BE DULY ENDORSED TO THE ORDER OF THE SECURED PARTY AND DELIVERED TO THE SECURED
PARTY TO BE HELD AS COLLATERAL HEREUNDER.
TO THE KNOWLEDGE OF THE DEBTOR, THERE
ARE NO FACTS, EVENTS OR OCCURRENCES THAT WOULD IN ANY WAY IMPAIR THE VALIDITY OR
ENFORCEMENT OF ANY COLLATERAL ACCOUNTS EXCEPT AS SET FORTH ABOVE.
6
ARTICLE 4
COVENANTS
The Debtor agrees that so long as any Obligation remains unpaid:
4.1
USE AND DISPOSITION OF COLLATERAL.
SO LONG
AS NO EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, THE DEBTOR MAY, IN
ANY LAWFUL MANNER NOT INCONSISTENT WITH THE PROVISIONS OF THIS AGREEMENT, USE,
CONTROL AND MANAGE THE COLLATERAL IN THE OPERATION OF ITS BUSINESS, AND RECEIVE
AND USE