Document:

Exhibit 10.1

 

EXECUTION COPY

 

SALE AND CONTRIBUTION AGREEMENT

 

dated as of November 30, 2018

 

among

 

THERAVANCE BIOPHARMA R&D, INC., as the Transferor,

 

TRIPLE ROYALTY SUB LLC, as the Transferee,

 

and

 

solely with respect to Articles V and IX and Sections 6.7, 8.2, 8.3 and 8.4,

 

THERAVANCE BIOPHARMA, INC.

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
ARTICLE I
    
	
DEFINED TERMS   AND RULES OF CONSTRUCTION
    
	
 
    	
 
    	
 
    
	
Section 1.1
    	
Defined Terms and   Rules of Construction
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
SALE AND   CONTRIBUTION OF THE TRANSFERRED ASSETS
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
Sale and Contribution   of the Transferred Assets
    	
2
    
	
Section 2.2
    	
Purchase Price
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
REPRESENTATIONS   AND WARRANTIES OF THE TRANSFEROR
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Organization
    	
4
    
	
Section 3.2
    	
No Conflicts
    	
5
    
	
Section 3.3
    	
Authorization
    	
5
    
	
Section 3.4
    	
Ownership
    	
5
    
	
Section 3.5
    	
Governmental and Third   Party Authorizations
    	
6
    
	
Section 3.6
    	
Investment Company   Status
    	
6
    
	
Section 3.7
    	
No Litigation
    	
6
    
	
Section 3.8
    	
Solvency
    	
6
    
	
Section 3.9
    	
Tax Matters
    	
6
    
	
Section 3.10
    	
No Brokers’ Fees
    	
7
    
	
Section 3.11
    	
TRC LLC Agreement
    	
7
    
	
Section 3.12
    	
UCC Matters
    	
7
    
	
Section 3.13
    	
Margin Stock
    	
7
    
	
Section 3.14
    	
Foreign Corrupt   Practices
    	
7
    
	
Section 3.15
    	
Money Laundering Laws
    	
8
    
	
Section 3.16
    	
Sanctions
    	
8
    
	
Section 3.17
    	
No Implied   Representations by the Transferee
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
REPRESENTATIONS   AND WARRANTIES OF THE TRANSFEREE
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
Organization
    	
9
    
	
Section 4.2
    	
No Conflicts
    	
10
    
	
Section 4.3
    	
Authorization
    	
10
    
	
Section 4.4
    	
Governmental and Third   Party Authorizations
    	
10
    
	
Section 4.5
    	
No Litigation
    	
11
    
	
Section 4.6
    	
Not a Restricted Party
    	
11
    
	
Section 4.7
    	
No Implied   Representations by the Transferor or Theravance Biopharma
    	
11
    

 

i

 

	
ARTICLE V
    
	
REPRESENTATIONS   AND WARRANTIES OF THERAVANCE BIOPHARMA
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Organization
    	
12
    
	
Section 5.2
    	
No Conflicts
    	
12
    
	
Section 5.3
    	
Authorization
    	
13
    
	
Section 5.4
    	
Governmental and Third   Party Authorizations
    	
13
    
	
Section 5.5
    	
No Litigation
    	
13
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    
	
COVENANTS
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
Notices
    	
14
    
	
Section 6.2
    	
Confidentiality
    	
14
    
	
Section 6.3
    	
Further Assurances
    	
15
    
	
Section 6.4
    	
Payments on Account of   the Transferred Assets
    	
16
    
	
Section 6.5
    	
Existence
    	
16
    
	
Section 6.6
    	
Payment of Expenses;   Commingling of Assets
    	
16
    
	
Section 6.7
    	
The Master Agreement   and the Extension Agreement With Respect to Theravance Biopharma
    	
17
    
	
Section 6.8
    	
The Master Agreement   and the TRC LLC Agreement With Respect to the Transferor
    	
18
    
	
Section 6.9
    	
Risk Retention   Requirement
    	
19
    
	
Section 6.10
    	
Treatment of Notes as   Debt
    	
19
    
	
Section 6.11
    	
Tax Matters
    	
19
    
	
Section 6.12
    	
Foreign Corrupt   Practices
    	
19
    
	
Section 6.13
    	
Money Laundering Laws
    	
19
    
	
Section 6.14
    	
Sanctions
    	
19
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
THE CLOSING
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Closing
    	
19
    
	
Section 7.2
    	
Closing Deliverables of   the Transferor
    	
20
    
	
Section 7.3
    	
Closing Deliverables of   the Transferee
    	
20
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
INDEMNIFICATION
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Indemnification by the   Transferor
    	
20
    
	
Section 8.2
    	
Indemnification by   Theravance Biopharma
    	
21
    
	
Section 8.3
    	
Procedures
    	
21
    
	
Section 8.4
    	
Exclusive Remedy
    	
22
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    
	
Section 9.1
    	
Survival
    	
22
    

 

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Section 9.2
    	
Specific Performance
    	
23
    
	
Section 9.3
    	
Notices
    	
23
    
	
Section 9.4
    	
Successors and Assigns
    	
25
    
	
Section 9.5
    	
Independent Nature of   Relationship
    	
26
    
	
Section 9.6
    	
Entire Agreement
    	
26
    
	
Section 9.7
    	
Governing Law;   Submission to Jurisdiction; Service of Process
    	
26
    
	
Section 9.8
    	
Waiver of Jury Trial
    	
27
    
	
Section 9.9
    	
Severability
    	
27
    
	
Section 9.10
    	
Counterparts
    	
27
    
	
Section 9.11
    	
Amendments; No Waivers
    	
27
    
	
Section 9.12
    	
Limited Recourse
    	
28
    
	
Section 9.13
    	
Cumulative Remedies for   the Transferor
    	
28
    
	
Section 9.14
    	
Table of Contents and   Headings
    	
28
    
	
Section 9.15
    	
Acknowledgment and   Agreement
    	
29
    
	
Section 9.16
    	
Currency Exchange
    	
29
    
	
Section 9.17
    	
Judgment Currency
    	
29
    
	
Section 9.18
    	
Waiver of Immunity
    	
29
    
	
Exhibit A
    	
Form of Innoviva   Instruction
    	
 
    
	
Annex A
    	
Rules of   Construction and Defined Terms
    	
 
    

 

iii

 

SALE AND CONTRIBUTION AGREEMENT

 

This SALE AND CONTRIBUTION AGREEMENT, dated as of November 30, 2018 (this “Sale and Contribution Agreement”), is entered into among Theravance Biopharma R&D, Inc., a Cayman Islands exempted company (the “Transferor”), Triple Royalty Sub LLC, a Delaware limited liability company (the “Transferee”), and solely with respect to Articles V and IX and Sections 6.7, 8.2, 8.3 and 8.4, Theravance Biopharma, Inc., a Cayman Islands exempted company (“Theravance Biopharma”).

 

W I T N E S S E T H

 

WHEREAS, the Transferor is a direct, wholly owned subsidiary of Theravance Biopharma;

 

WHEREAS, prior to the Spin-Off in May 2014 from Innoviva, Innoviva assigned to TRC LLC the Strategic Alliance Agreement and all of its rights and obligations under the Collaboration Agreement with GSK, other than with respect to RELVAR® ELLIPTA®/BREO® ELLIPTA®, ANORO® ELLIPTA® and VI Monotherapy (the Strategic Alliance Agreement and the portion of the Collaboration Agreement assigned to TRC LLC, the “GSK Agreements”);

 

WHEREAS, on May 31, 2014, Theravance Biopharma and Innoviva entered into the TRC LLC Agreement, pursuant to which TRC LLC issued to Theravance Biopharma 2,125 Class B Units and 6,375 Class C Units, entitling Theravance Biopharma to an 85% economic interest in future payments relating to the Products that may be made by GSK pursuant to the GSK Agreements (net of the cash, if any, expected to be used in TRC LLC pursuant to the TRC LLC Agreement over the next four fiscal quarters);

 

WHEREAS, pursuant to the Assignment and Assumption Agreement, dated as of June 1, 2014, by and among Theravance Biopharma, as the assignor, the Transferor, as the assignee, and Innoviva, as the manager of TRC LLC and as a member of TRC LLC, Theravance Biopharma assigned all of its equity interest in TRC LLC (as represented by 2,125 Class B Units and 6,375 Class C Units) to the Transferor; and

 

WHEREAS, the Transferor desires to sell, contribute, assign, transfer, convey and grant to the Transferee, and the Transferee desires to purchase, acquire and accept from the Transferor, the Transferred Assets described herein, upon and subject to the terms and conditions set forth in this Sale and Contribution Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements, representations and warranties set forth herein and of other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto covenant and agree as follows:

 

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ARTICLE I
 DEFINED TERMS AND RULES OF CONSTRUCTION

 

Section 1.1            Defined Terms and Rules of Construction.  Capitalized terms used but not otherwise defined in this Sale and Contribution Agreement shall have the respective meanings given to such terms in Annex A attached hereto, which is hereby incorporated by reference herein.  The rules of construction set forth in Annex A attached hereto shall apply to this Sale and Contribution Agreement and are hereby incorporated by reference herein.  Not all terms defined in Annex A are used in this Sale and Contribution Agreement.

 

The following terms as used herein shall have the respective meanings referenced below:

 

“Cash Purchase Price” has the meaning set forth in Section 2.2.

 

“Closing” shall have the meaning set forth in Section 7.1.

 

“Purchase Price” shall have the meaning set forth in Section 2.2.

 

“Recharacterization Event” shall have the meaning set forth in Section 2.1(d).

 

“Retained Notes” shall have the meaning set forth in Section 2.2.

 

“Risk Retention Period” has the meaning set forth in Section 6.9.

 

“Transferee Indemnified Party” shall have the meaning set forth in Section 8.1.

 

“Transferor Account” shall have the meaning set forth in Section 6.4(c).

 

“Transferor Secured Amount” shall have the meaning set forth in Section 2.1(d).

 

“Transferred Assets” shall have the meaning set forth in Section 2.1(a).

 

“U.S. Credit Risk Retention Rules” means the final rules that mandate risk retention for securitizations as approved by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Federal Housing Finance Agency and the Department of Housing and Urban Development.

 

ARTICLE II
 SALE AND CONTRIBUTION OF THE TRANSFERRED ASSETS

 

Section 2.1            Sale and Contribution of the Transferred Assets.

 

(a)           Subject to the terms and conditions of this Sale and Contribution Agreement, on the Closing Date, the Transferor hereby sells, contributes, assigns, transfers, conveys and grants to the Transferee, and the Transferee hereby purchases, acquires and accepts from the Transferor, all of the Transferor’s right, title and interest as a holder of the Issuer Class C Units, including the Issuer Class C Units and any and all of the economic rights and governance, voting and other consensual rights that may arise as holder of the Issuer Class C

 

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Units under the TRC LLC Agreement, free and clear of any and all Liens, other than those Liens created in favor of the Transferee by the Transaction Documents; provided, however, that the distribution of net cash payments to the Transferee from TRC LLC will commence with the payment related to the payment of royalties by GSK to TRC LLC in the first fiscal quarter of 2019 (collectively, the “Transferred Assets”).  For avoidance of doubt, the Transferee shall have no right, title or interest in any payment related to the payment of royalties by GSK to TRC LLC prior to the first fiscal quarter of 2019.

 

(b)           The Transferor and the Transferee intend and agree that the sale, contribution, assignment, transfer, conveyance and granting of the Transferred Assets under this Sale and Contribution Agreement shall be, and are, a true, complete, absolute and irrevocable contribution and sale by the Transferor to the Transferee of the Transferred Assets and that such contribution and sale shall provide the Transferee with the full benefits of ownership of the Transferred Assets.   The Transferor hereby relinquishes all title and control over the Transferred Assets upon the transfer of the Transferred Assets hereunder.  Neither the Transferor nor the Transferee intends the transactions contemplated hereby to be, or for any purpose characterized as, a loan from the Transferee to the Transferor or a pledge or assignment or a security agreement.  The Transferor waives any right to contest or otherwise assert that this Sale and Contribution Agreement does not constitute a true, complete, absolute and irrevocable sale and contribution by the Transferor to the Transferee of the Transferred Assets under Applicable Law, which waiver shall be enforceable against the Transferor in any Bankruptcy Event in respect of the Transferor.  The sale, contribution, assignment, transfer, conveyance and granting of the Transferred Assets shall be reflected on the Transferor’s financial statements and other records as a sale and contribution of assets to the Transferee (except to the extent GAAP or the rules of the SEC require otherwise with respect to the Transferor’s consolidated financial statements).

 

(c)           The Transferor hereby authorizes the Transferee or its designee to execute, record and file, and consents to the Transferee or its designee executing, recording and filing, at the Transferee’s sole cost and expense, financing statements in the appropriate filing offices under the UCC (and continuation statements with respect to such financing statements when applicable), and amendments thereto or assignments thereof, in such manner and in such jurisdictions as are necessary or appropriate to evidence or perfect the sale, contribution, assignment, transfer, conveyance and grant by the Transferor to the Transferee, and the purchase, acquisition and acceptance by the Transferee from the Transferor, of the Transferred Assets and to perfect the security interest in the Transferred Assets granted by the Transferor to the Transferee pursuant to Section 2.1(d), in each case, subject to the confidentiality provisions under the GSK Agreements.

 

(d)           If, notwithstanding Section 2.1(a) and Section 2.1(b), the transfer of the Transferred Assets pursuant to this Sale and Contribution Agreement is characterized as a collateral transfer for security or as a financing transaction (a “Recharacterization Event”), the Transferor intends that the Transferee have a perfected security interest in, and Lien on, the Transferred Assets to secure an obligation of the Transferor to pay to the Transferee an amount equal to the value of the Transferred Assets (the “Transferor Secured Amount”).  Accordingly, if a Recharacterization Event occurs, the Transferor does hereby grant to the Transferee a security interest in, to and under the Transferred Assets and all proceeds thereof, whether now owned or

 

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existing or hereafter acquired, in each case to secure the obligation of the Transferor set forth in Section 2.1(e).

 

(e)           If a Recharacterization Event has occurred, the Transferor agrees to pay or cause to be paid to the Transferee all amounts that would have been required to be paid to the Transferee in respect of the Transferred Assets if the Recharacterization Event had not occurred; such payments to be made when, as and if received by the Transferor.  The maximum amount payable by the Transferor to the Transferee pursuant to this Section 2.1(e) shall be the Transferor Secured Amount.  If the Transferor fails to pay to the Transferee any such amounts, (i) the Transferee may exercise all rights and remedies of a secured party under the relevant UCC (including the rights of a secured party obtaining a Lien under Section 9-608 of the relevant UCC) and (ii) the Transferor may exercise all of the rights of a debtor granting a Lien under the relevant UCC (including the rights of a debtor granting a Lien under Section 9-623 of the relevant UCC).

 

Section 2.2            Purchase Price.  In full consideration for the sale, contribution, assignment, transfer, conveyance and granting of the Transferred Assets, and subject to the terms and conditions set forth herein, on the Closing Date, the fair market value of the Transferred Assets, as agreed at arm’s length by the Transferor and the Transferee, shall be paid as follows:

 

(i)            the Transferee shall pay (or cause to be paid) to the Transferor, or the Transferor’s designee, the sum of $229,884,049.72, in immediately available funds, by wire transfer to the Transferor Account (the “Cash Purchase Price”); and

 

(ii)           the Transferee shall issue to the Transferor the Retained Notes in the aggregate principal amount of $12,500,000 (together with the Cash Purchase Price, the “Purchase Price”);

 

it being understood that any excess portion of the consideration for the Transferred Assets, where the total consideration for the Transferred Assets is equal to the fair market value of the Transferred Assets as agreed at arm’s length by the Transferor and the Transferee, shall be a capital contribution by the Transferor to the Transferee in an amount equal to such excess portion.  The Transferee shall mark its books and records to reflect the amount of such contribution.

 

ARTICLE III
 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR

 

The Transferor hereby represents and warrants to the Transferee as of the date hereof as follows:

 

Section 3.1            Organization.  The Transferor has been duly incorporated with limited liability and is validly existing under the laws of the Cayman Islands and has all power and authority, and all licenses, permits, franchises, authorizations, consents and approvals of all Governmental Authorities, required to own its property and conduct its business as now conducted and to exercise its rights and to perform its obligations under this Sale and Contribution Agreement and the TRC LLC Agreement.  The Transferor is duly qualified to transact business and is in good standing in every jurisdiction in which such qualification or

 

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good standing is required by Applicable Law (except where the failure to be so qualified or in good standing would not have a Material Adverse Effect).

 

Section 3.2            No Conflicts.

 

(a)           None of the execution and delivery by the Transferor of any of the Transaction Documents to which the Transferor is party, the performance by the Transferor of the obligations contemplated hereby or thereby or the consummation of the transactions contemplated hereby or thereby will: (i) contravene, conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy or obtain any additional rights under, or accelerate the maturity or performance of or payment under, in any respect, (A) any Applicable Law or any judgment, order, writ, decree, permit or license of any Governmental Authority to or by which the Transferor or any of its assets or properties may be subject or bound, except where such violation would not have a Material Adverse Effect, (B) any contract, agreement, indenture, lease, license, deed, binding obligation or instrument to which the Transferor is a party or by which the Transferor or any of its assets or properties is bound (including the TRC LLC Agreement), except where such violation would not have a Material Adverse Effect or (C) the memorandum and articles of association of the Transferor or (ii) give rise to any additional right of termination, cancellation or acceleration of any right or obligation of the Transferor, except where such additional right of termination, cancellation or acceleration would not have a Material Adverse Effect.

 

(b)           Except as permitted under the Indenture, the Transferor has not granted any Lien on the Transaction Documents.

 

Section 3.3            Authorization.  The Transferor has all power and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which it is party and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of each of the Transaction Documents to which the Transferor is party and the performance by the Transferor of its obligations hereunder and thereunder have been duly authorized by the Transferor.  Each of the Transaction Documents to which the Transferor is party has been duly executed and delivered by the Transferor.  Each of the Transaction Documents to which the Transferor is party constitutes the legal, valid and binding obligation of the Transferor, enforceable against the Transferor in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.

 

Section 3.4            Ownership.  The Transferor is the exclusive owner of the entire right, title (legal and equitable) and interest in, to and under the Transferred Assets and has good and valid title thereto, free and clear of all Liens.  None of the patents covering the Products under the Collaboration Agreement are owned by or assigned to the Transferor.  The Transferred Assets sold, contributed, assigned, transferred, conveyed and granted to the Transferee on the Closing Date have not been pledged, sold, contributed, assigned, transferred, conveyed or granted by the Transferor to any other Person.  The Transferor has full right to sell, contribute, assign, transfer, convey and grant the Transferred Assets to the Transferee.  Upon the sale, contribution, assignment, transfer, conveyance and granting by the Transferor of the Transferred Assets to the

 

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Transferee, the Transferee shall acquire full legal and equitable title to the Transferred Assets free and clear of all Liens, other than Liens in favor of the Trustee and Liens permitted under the Indenture, and shall be the exclusive owner of the Transferred Assets.  The Transferee shall have the same rights as the Transferor would have with respect to the Transferred Assets (if the Transferor were still the owner of such Transferred Assets) against any other Person.

 

Section 3.5            Governmental and Third Party Authorizations.  The execution and delivery by the Transferor of the Transaction Documents to which the Transferor is party, the performance by the Transferor of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder (including the sale, contribution, assignment, transfer, conveyance and granting of the Transferred Assets to the Transferee) do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Authority or any other Person, except for the filing of a Current Report on Form 8-K with the SEC, the filing of UCC financing statements, the notice to Innoviva, as manager of TRC LLC, in the form of Exhibit A attached hereto, and the amendment of Exhibit A to the TRC LLC Agreement to reflect the transfer of the Issuer Class C Units contemplated by the Transaction Documents and those previously obtained.

 

Section 3.6            Investment Company Status.  Assuming the accuracy of the representations and warranties of the initial purchasers of the Original Notes in the Note Purchase Agreements and compliance by the initial purchasers of the Original Notes and any subsequent purchaser of the Original Notes with the requirements set forth in the Indenture, the Transferor is not, and, after giving effect to the use of proceeds of the offering as contemplated by the Transaction Documents, would not be, required to register as an investment company under the Investment Company Act.

 

Section 3.7            No Litigation.  There is no action, suit, arbitration proceeding, claim, demand, citation, summons, subpoena, other proceeding or, to the knowledge of the Transferor, investigation  pending or, to the knowledge of the Transferor, threatened against the Transferor that would be a Material Adverse Change or that challenges or seeks to prevent or delay the consummation of the transactions contemplated by the Transaction Documents to which the Transferor is party.

 

Section 3.8            Solvency.  The Transferor is, and after giving effect to the sale and contribution of the Transferred Assets to the Transferee pursuant to this Sale and Contribution Agreement will be, solvent and able to pay its debts as they come due, and has and will have adequate capital to carry out its business as now conducted or proposed to be conducted.

 

Section 3.9            Tax Matters.  No deduction or withholding for or on account of any Tax has been made from any payment to the Transferor in respect of the Issuer Class C Units and, following the Closing Date, if any such deduction or withholding is required, then, under the Collaboration Agreement, GSK would be required to gross-up and indemnify TRC LLC for any withholding taxes in excess of 5%.  The Transferor has filed (or caused to be filed) all material tax returns and reports required by Applicable Law to have been filed by it and has paid all material taxes required to be paid by it, except any such taxes that are being diligently contested

 

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in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP from time to time have been set aside on its books.

 

Section 3.10          No Brokers’ Fees.  The Transferor has not taken any action that would entitle any Person other than Morgan Stanley & Co. LLC to any commission or broker’s fee in connection with the transactions contemplated by this Sale and Contribution Agreement.

 

Section 3.11          TRC LLC Agreement.

 

(a)           Other than the Transaction Documents, the Master Agreement, the GSK Agreements and the TRC LLC Agreement, there is no written contract to which the Transferor is a party or by which any of its assets or properties is bound or committed that relates to the Transferred Assets for which breach, nonperformance, cancellation or failure to renew would have a Material Adverse Effect.  For the avoidance of doubt, the Transferor is not a party to the Master Agreement or the GSK Agreements.

 

(b)           The TRC LLC Agreement is in full force and effect and is the legal, valid and binding obligation of the Transferor and, to the knowledge of the Transferor, Innoviva, enforceable against the Transferor and, to the knowledge of the Transferor, Innoviva in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.  The Transferor is not in breach or violation of or in default under the TRC LLC Agreement.

 

Section 3.12          UCC Matters.  The Transferor’s exact legal name is, and since its formation has been, “Theravance Biopharma R&D, Inc.”  The Transferor’s jurisdiction of organization is, and since its formation has been, the Cayman Islands.  The Transferor’s registered office is, and since its formation has been, located at PO Box 309, Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands KY1-1104.  Since its formation, the Transferor has not been the subject of any merger or other corporate or other reorganization in which its identity or status was materially changed, except in each case when it was the surviving or resulting Person.

 

Section 3.13          Margin Stock.  The Transferor is not engaged in the business of extending credit for the purpose of buying or carrying margin stock, and no portion of the Purchase Price shall be used by the Transferor for a purpose that violates Regulation T, U or X promulgated by the Board of Governors of the Federal Reserve System from time to time.

 

Section 3.14          Foreign Corrupt Practices.  Since December 1, 2013, except as would not be expected to have a Material Adverse Effect, none of the Transferor, any of its Subsidiaries or, to the knowledge of the Transferor, any director, officer, agent, employee, Affiliate or other Person acting on behalf and for the benefit of the Transferor or any of its Subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such Persons, with respect to the business of the Transferor or any of its Subsidiaries, of either (a) the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder, including making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money

 

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or other property, gift, promise to give or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder) or any foreign political party or official thereof or any candidate for foreign political office in contravention of the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder or (b) the U.K. Bribery Act 2010, and the Transferor, its Subsidiaries and, to the knowledge of the Transferor, its other Affiliates have conducted their businesses in compliance with the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder and the U.K. Bribery Act 2010 and have instituted and maintain policies and procedures reasonably designed to ensure, and that are reasonably expected to continue to ensure, continued compliance therewith.

 

Section 3.15          Money Laundering Laws.  The operations of the Transferor and its Subsidiaries are and have been conducted at all times in compliance in all material respects with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the applicable money laundering statutes of all relevant jurisdictions and the applicable rules and regulations thereunder.  No action, suit or proceeding by or before any Governmental Authority involving the Transferor or any of its Subsidiaries with respect to the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all relevant jurisdictions, the rules and regulations thereunder is pending or, to the knowledge of the Transferor, threatened.

 

Section 3.16          Sanctions.  None of the Transferor, any of its Subsidiaries or, to the knowledge of the Transferor, any director, officer, agent or employee is (a) a Person currently the target of any sanctions administered or enforced by (i) the United States government, including the U.S. Department of the Treasury’s Office of Foreign Assets Control, (ii) the United Nations Security Council, (iii) the European Union, or (iv) Her Majesty’s Treasury or (b) located, organized or resident in a country or territory that is the target of any comprehensive sanctions of the type described in clause (a) above.

 

Section 3.17          No Implied Representations by the Transferee.  The Transferor acknowledges and agrees that: (i) other than the representations and warranties of the Transferee specifically contained in Article IV, there are no representations or warranties of the Transferee for the benefit of the Transferor, and the Transferee hereby disclaims all other representations and warranties for the benefit of the Transferor, whether express, statutory or implied, in connection with this Sale and Contribution Agreement or the other Transaction Documents, and (ii) the Transferor does not rely on, and the Transferee shall have no liability in respect of, any representation or warranty not specifically set forth in Article IV.  Without limiting the foregoing, the Transferor acknowledges and agrees that, except as expressly set forth in any representation or warranty in Article IV, the Transferee shall have no liability to the Transferor for losses or damages pursuant to this Sale and Contribution Agreement (or otherwise) with respect to any information, documents or materials furnished or made available to the Transferor in any presentation, interview or in any other form or manner relating to this Sale and Contribution Agreement or the other Transaction Documents.

 

Notwithstanding anything in this Sale and Contribution Agreement to the contrary, (i) other than the representations and warranties of the Transferor specifically contained in this

 

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Article III, there are no representations or warranties of the Transferor for the benefit of the Transferee, and the Transferor hereby disclaims all other representations and warranties for the benefit of the Transferee, whether express, statutory or implied, in connection with this Sale and Contribution Agreement or the other Transaction Documents, including with respect to the royalty payments made by GSK pursuant to the GSK Agreements, the Transferred Assets, the GSK Agreements, the Products and data relating to the Products including patents and patent applications and other intellectual property associated with the Products, and (ii) the Transferee does not rely on, and the Transferor shall have no liability in respect of, any representation or warranty not specifically set forth in this Article III.  Without limiting the foregoing, the Transferee acknowledges and agrees that (a)(i) the GSK Agreements, the TRC LLC Agreement and the Master Agreement generally impose confidentiality obligations on information relating to or generated in connection with those agreements and performance thereunder, and, accordingly, the Transferee has made its own investigation and assessment of the royalty payments made by GSK pursuant to the GSK Agreements, the Transferred Assets, the Products and data relating to the Products including patents and patent applications and other intellectual property associated with the Products, and (ii) except as expressly set forth in any representation or warranty in this Article III, the Transferee is not relying on, and shall have no remedies in respect of, any implied warranties whatsoever, including as to the future payment or potential payment that may be made by GSK to TRC LLC pursuant to the GSK Agreements, the future distributions or potential distributions that may be made by TRC LLC to the Transferee pursuant to the TRC LLC Agreement, the creditworthiness of GSK or TRC LLC or any of their respective Affiliates or any other matter, and (b) except as expressly set forth in any representation or warranty in Article III, the Transferor shall have no liability to the Transferee for losses or damages pursuant to this Sale and Contribution Agreement (or otherwise) with respect to any information, documents or materials furnished or made available to the Transferee or any of its Affiliates in any presentation, interview or in any other form or manner relating to this Sale and Contribution Agreement, the other Transaction Documents or the TRC LLC Agreement.

 

ARTICLE IV
 REPRESENTATIONS AND WARRANTIES OF THE TRANSFEREE

 

The Transferee hereby represents and warrants to the Transferor as of the date hereof as follows:

 

Section 4.1            Organization.  The Transferee is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all power and authority, and all licenses, permits, franchises, authorizations, consents and approvals of all Governmental Authorities, required to own its property and conduct its business as now conducted and to exercise its rights and to perform its obligations under this Sale and Contribution Agreement and the TRC LLC Agreement.  The Transferee is duly qualified to transact business and is in good standing in every jurisdiction in which such qualification or good standing is required by Applicable Law (except where the failure to be so qualified or in good standing would not have a Material Adverse Effect).

 

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Section 4.2            No Conflicts.

 

(a)           None of the execution and delivery by the Transferee of any of the Transaction Documents to which the Transferee is party, the performance by the Transferee of the obligations contemplated hereby or thereby or the consummation of the transactions contemplated hereby or thereby will (i) contravene, conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy or obtain any additional rights under, or accelerate the maturity or performance of or payment under, in any respect, (A) any Applicable Law or any judgment, order, writ, decree, permit or license of any Governmental Authority to or by which the Transferee or any of its assets or properties may be subject or bound, except where such violation would not have a Material Adverse Effect, (B) any contract, agreement, indenture, lease, license, deed, binding obligation or instrument to which the Transferee is a party or by which the Transferee or any of its assets or properties is bound, except where such violation would not have a Material Adverse Effect or (C) any of the organizational documents of the Transferee; or (ii) give rise to any additional right of termination, cancellation or acceleration of any right or obligation of the Transferee, except where such additional right of termination, cancellation or acceleration would not have a Material Adverse Effect.

 

(b)           The Transferee has not granted any Lien on the Transaction Documents except as provided herein or in any other Transaction Document.

 

Section 4.3            Authorization. The Transferee has all power and authority to execute and deliver, and perform its obligations under, the Transaction Documents to which the Transferee is party and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of each of the Transaction Documents to which the Transferee is party and the performance by the Transferee of its obligations hereunder and thereunder have been duly authorized by the Transferee.  Each of the Transaction Documents to which the Transferee is party has been duly executed and delivered by the Transferee.  Each of the Transaction Documents to which the Transferee is party constitutes the legal, valid and binding obligation of the Transferee, enforceable against the Transferee in accordance with its respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.

 

Section 4.4            Governmental and Third Party Authorizations.  The execution and delivery by the Transferee of the Transaction Documents to which the Transferee is party, the performance by the Transferee of its obligations hereunder and thereunder and the consummation of any of the transactions contemplated hereunder and thereunder do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Authority or any other Person, except for the filing of a Current Report on Form 8-K with the SEC, the filing of UCC financing statements, the notice to Innoviva, as manager of TRC LLC, in the form of Exhibit A attached hereto, and the amendment of Exhibit A to the TRC LLC Agreement to reflect the transfer of the Issuer Class C Units contemplated by the Transaction Documents and those previously obtained.

 

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Section 4.5            No Litigation.  There is no action, suit, arbitration proceeding, claim, demand, citation, summons, subpoena, other proceeding or, to the knowledge of the Transferee, investigation pending or, to the knowledge of the Transferee, threatened against the Transferee that challenges or seeks to prevent or delay the consummation of the transactions contemplated by the Transaction Documents to which the Transferee is party.

 

Section 4.6            Not a Restricted Party.  The Transferee is not a Restricted Party.

 

Section 4.7            No Implied Representations by the Transferor or Theravance Biopharma.

 

(a)           The Transferee acknowledges and agrees that: (i) other than the representations and warranties of the Transferor specifically contained in Article III, there are no representations or warranties of the Transferor for the benefit of the Transferee, and the Transferor hereby disclaims all other representations and warranties for the benefit of the Transferee, whether express, statutory or implied, in connection with this Sale and Contribution Agreement or the other Transaction Documents, including with respect to the royalty payments made by GSK pursuant to the GSK Agreements, the Transferred Assets, the GSK Agreements, the Products and data relating to the Products including patents and patent applications and other intellectual property associated with the Products, and (ii) the Transferee does not rely on, and the Transferor shall have no liability in respect of, any representation or warranty not specifically set forth in Article III.

 

(b)           The Transferee acknowledges and agrees that: (i) other than the representations and warranties of Theravance Biopharma specifically contained in Article V, there are no representations or warranties of Theravance Biopharma for the benefit of the Transferee, and Theravance Biopharma hereby disclaims all other representations and warranties for the benefit of the Transferee, whether express, statutory or implied, in connection with this Sale and Contribution Agreement or the other Transaction Documents, including with respect to the royalty payments made by GSK pursuant to the GSK Agreements, the Transferred Assets, the GSK Agreements, the Products and data relating to the Products including patents and patent applications and other intellectual property associated with the Products and (ii) the Transferee does not rely on, and Theravance Biopharma shall have no liability in respect of, any representation or warranty not specifically set forth in Article V.

 

(c)           Without limiting the foregoing, the Transferee acknowledges and agrees that (a)(i) the GSK Agreements, the TRC LLC Agreement and the Master Agreement generally impose confidentiality obligations on information relating to or generated in connection with those agreements and performance thereunder, and, accordingly, the Transferee has made its own investigation and assessment of the royalty payments made by GSK pursuant to the GSK Agreements, the Transferred Assets, the Products and data relating to the Products including patents and patent applications and other intellectual property associated with the Products, and (ii)  except as expressly set forth in any representation or warranty in Article III, the Transferee is not relying on, and shall have no remedies in respect of, any implied warranties whatsoever, including as to the future payment or potential payment that may be made by GSK to TRC LLC pursuant to the GSK Agreements, the future distributions or potential distributions that may be made by TRC LLC to the Transferee pursuant to the TRC LLC Agreement, the creditworthiness of GSK or TRC LLC or any of their respective Affiliates or any other matter, and (b) except as

 

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expressly set forth in any representation or warranty in Article III (with respect to the Transferor) and in Article V (with respect to Theravance Biopharma), neither the Transferor nor Theravance Biopharma shall have any liability to the Transferee for losses or damages pursuant to this Sale and Contribution Agreement (or otherwise) with respect to any information, documents or materials furnished or made available to the Transferee or any of its Affiliates in any presentation, interview or in any other form or manner relating to this Sale and Contribution Agreement, the other Transaction Documents or the TRC LLC Agreement.

 

Notwithstanding anything in this Sale and Contribution Agreement to the contrary, (i) other than the representations and warranties of the Transferee specifically contained in this Article IV, there are no representations or warranties of the Transferee for the benefit of the Transferor, and the Transferee hereby disclaims all other representations and warranties for the benefit of the Transferor, whether express, statutory or implied, in connection with this Sale and Contribution Agreement or the other Transaction Documents, and the Transferor does not rely on, and (ii) the Transferee shall have no liability in respect of, any representation or warranty not specifically set forth in Article IV.  Without limiting the foregoing, the Transferor acknowledges and agrees that, except as expressly set forth in any representation or warranty in this Article IV, the Transferee shall have no liability to the Transferor for losses or damages pursuant to this Sale and Contribution Agreement (or otherwise) with respect to any information, documents or materials furnished or made available to the Transferor in any presentation, interview or in any other form or manner relating to this Sale and Contribution Agreement or the other Transaction Documents.

 

ARTICLE V
 REPRESENTATIONS AND WARRANTIES OF THERAVANCE BIOPHARMA

 

Theravance Biopharma hereby represents and warrants to the Transferee as of the date hereof as follows:

 

Section 5.1            Organization.  Theravance Biopharma has been duly incorporated with limited liability and is validly existing under the laws of the Cayman Islands and has all power and authority, and all licenses, permits, franchises, authorizations, consents and approvals of all Governmental Authorities, required to own its property and conduct its business as now conducted and to exercise its rights and to perform its obligations under this Sale and Contribution Agreement.  Theravance Biopharma is duly qualified to transact business and is in good standing in every jurisdiction in which such qualification or good standing is required by Applicable Law (except where the failure to be so qualified or in good standing would not have a Material Adverse Effect).

 

Section 5.2            No Conflicts.

 

(a)           None of the execution and delivery by Theravance Biopharma of this Sale and Contribution Agreement, the performance by Theravance Biopharma of its obligations contemplated hereby or the consummation of the transactions by Theravance Biopharma contemplated hereby will (i) contravene, conflict with, result in a breach, violation, cancellation or termination of, constitute a default (with or without notice or lapse of time, or both) under, require prepayment under, give any Person the right to exercise any remedy or obtain any

 

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additional rights under, or accelerate the maturity or performance of or payment under, in any respect, (A) any Applicable Law or any judgment, order, writ, decree, permit or license of any Governmental Authority to or by which Theravance Biopharma or any of its assets or properties may be subject or bound, except where such violation would not have a Material Adverse Effect, (B) any contract, agreement, indenture, lease, license, deed, binding obligation or instrument to which Theravance Biopharma is a party or by which Theravance Biopharma or any of its assets or properties is bound, except where such violation would not have a Material Adverse Effect or (C) any of the organizational documents of Theravance Biopharma; or (ii) give rise to any additional right of termination, cancellation or acceleration of any right or obligation of Theravance Biopharma, except where such additional right of termination, cancellation or acceleration would not have a Material Adverse Effect.

 

(b)           Theravance Biopharma has not granted any Lien on this Sale and Contribution Agreement and the other Transaction Documents.

 

Section 5.3            Authorization. Theravance Biopharma has all power and authority to execute and deliver, and perform its obligations under, this Sale and Contribution Agreement, and to consummate the transactions contemplated hereby.  The execution and delivery of this Sale and Contribution Agreement and the performance by Theravance Biopharma of its obligations hereunder have been duly authorized by Theravance Biopharma.  This Sale and Contribution Agreement has been duly executed and delivered by Theravance Biopharma.  This Sale and Contribution Agreement constitutes the legal, valid and binding obligation of Theravance Biopharma, enforceable against Theravance Biopharma in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or similar Applicable Laws affecting creditors’ rights generally, general equitable principles and principles of public policy.

 

Section 5.4            Governmental and Third Party Authorizations.  The execution and delivery by Theravance Biopharma of this Sale and Contribution Agreement, the performance by Theravance Biopharma of its obligations hereunder and the consummation of any of the transactions by Theravance Biopharma contemplated hereunder do not require any consent, approval, license, order, authorization or declaration from, notice to, action or registration by or filing with any Governmental Authority or any other Person, except for the filing of a Current Report on Form 8-K with the SEC, the filing of UCC financing statements, the notice to Innoviva, as manager of TRC LLC, in the form of Exhibit A attached hereto, and the amendment of Exhibit A to the TRC LLC Agreement to reflect the transfer of the Issuer Class C Units contemplated by the Transaction Documents and those previously obtained.

 

Section 5.5            No Litigation.  There is no action, suit, arbitration proceeding, claim, demand, citation, summons, subpoena, other proceeding or, to the knowledge of Theravance Biopharma, investigation pending or, to the knowledge of Theravance Biopharma, threatened against Theravance Biopharma that would be a Material Adverse Change or that challenges or seeks to prevent or delay the consummation of the transactions contemplated by this Sale and Contribution Agreement.

 

Notwithstanding anything in this Sale and Contribution Agreement to the contrary, (i) other than the representations and warranties of Theravance Biopharma specifically contained in

 

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this Article V, there are no representations or warranties of Theravance Biopharma for the benefit of the Transferee, and Theravance Biopharma hereby disclaims all other representations and warranties for the benefit of the Transferee, whether express, statutory or implied, in connection with this Sale and Contribution Agreement or the other Transaction Documents and (ii) the Transferee does not rely on, and Theravance Biopharma shall have no liability in respect of, any representation or warranty not specifically set forth in this Article V.

 

ARTICLE VI
 COVENANTS

 

Until the Notes have been repaid, redeemed, repurchased or defeased and the Indenture has been satisfied or discharged:

 

Section 6.1            Notices.

 

(a)           Subject to applicable confidentiality restrictions and Applicable Laws relating to securities matters or other confidential matters, the Transferor shall provide the Transferee with written notice as promptly as practicable (and in any event within five Business Days) after becoming aware of any of the following: (i) any breach or default by the Transferor of or under any covenant, agreement or other provision of any Transaction Document to which it is party; (ii) any representation or warranty made by the Transferor in any of the Transaction Documents or in any certificate delivered to the Transferee pursuant to this Sale and Contribution Agreement shall prove to be untrue or inaccurate in any material respect on the date as of which made; (iii) any change, effect, event, occurrence, state of facts, development or condition that would have a Material Adverse Effect; or (iv) any Bankruptcy Event in respect of the Transferor.

 

(b)           The Transferor shall notify the Transferee in writing not less than 30 days prior to any change in, or amendment or alteration of, the Transferor’s (i) legal name, (ii) form or type of organizational structure or (iii) jurisdiction of organization.

 

(c)           Subject to applicable confidentiality restrictions and Applicable Laws relating to securities matters or other confidential matters, the Transferor shall make available such other information as the Transferee may, from time to time, reasonably request with respect to the Transferred Assets.

 

Section 6.2            Confidentiality.

 

Except as otherwise required by Applicable Law, by the rules and regulations of any securities exchange or trading system or by the FDA or any other Governmental Authority with similar regulatory authority and except as otherwise set forth in this Section 6.2, all Confidential Information furnished by the Transferor to the Transferee, as well as the terms, conditions and provisions of this Sale and Contribution Agreement and any other Transaction Document, shall be kept confidential by the Transferee and shall be used by the Transferee only in connection with this Sale and Contribution Agreement and any other Transaction Document and the transactions contemplated hereby and thereby.  Notwithstanding the foregoing, the Transferee may disclose such information to its actual and potential partners, directors, employees, managers, officers, agents, investors (including any holder of debt securities of the

 

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Transferee and such holder’s advisors, agents and representatives), co-investors, insurers and insurance brokers, underwriters, financing parties, equityholders, brokers, advisors, lawyers, bankers, trustees and representatives subject in each case to the confidentiality requirements set forth in the GSK Agreements, the TRC LLC Agreement and the Master Agreement; provided, that such Persons (i) shall be informed of the confidential nature of such information and shall be obligated to keep such information confidential pursuant to obligations of confidentiality no less onerous than those set out herein or (ii) shall have executed and delivered a Confidentiality Agreement.

 

Section 6.3            Further Assurances.

 

(a)           Subject to the terms and conditions of this Sale and Contribution Agreement, the GSK Agreements, the Master Agreement, the TRC LLC Agreement and applicable confidentiality obligations, each of the Transferor and the Transferee will use its commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under Applicable Laws to consummate the transactions contemplated by the Transaction Documents to which the Transferor or the Transferee, as applicable, is party, including to (i) perfect the sale and contribution of the Transferred Assets to the Transferee pursuant to this Sale and Contribution Agreement, (ii) execute and deliver such other documents, certificates, instruments, agreements and other writings and to take such other actions as may be necessary or desirable, or reasonably requested by the Transferor or the Transferee, as applicable in order to consummate or implement expeditiously the transactions contemplated by any Transaction Document to which the Transferor or the Transferee, as applicable, is party, (iii) perfect, protect, more fully evidence, vest and maintain in the Transferee, good, valid and marketable rights and interests in and to the Transferred Assets free and clear of all Liens (other than those permitted by the Transaction Documents), (iv) create, evidence and perfect the Transferee’s back-up security interest granted pursuant to Section 2.1(d), and (v) enable the Transferee to exercise or enforce any of the Transferee’s rights under any Transaction Document to which the Transferor or the Transferee, as applicable, is party, including following the Closing Date.

 

(b)           Subject to the terms and conditions of this Sale and Contribution Agreement, the GSK Agreements, the Master Agreement, the TRC LLC Agreement and applicable confidentiality obligations, the Transferor and the Transferee shall cooperate and provide assistance as reasonably requested by the Transferor or the Transferee, as applicable, at the expense of the Transferor or the Transferee, as applicable (except as otherwise set forth herein), in connection with any litigation, arbitration, investigation or other proceeding (whether threatened, existing, initiated or contemplated prior to, on or after the date hereof) to which the Transferor or the Transferee, as applicable, any of its Affiliates (other than the other party hereto) or controlling persons or any of their respective officers, directors, equityholders, controlling persons, managers, agents or employees is or may become a party or is or may become otherwise directly or indirectly affected or as to which any such Persons have a direct or indirect interest, in each case relating to any Transaction Document, the transactions described herein or therein or the Transferred Assets but in all cases excluding any litigation brought by the Transferor against the Transferee or brought by the Transferee (for itself or on behalf of any Transferee Indemnified Party) against the Transferor.

 

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(c)           Each of the Transferor and the Transferee shall comply with all Applicable Laws with respect to the Transaction Documents to which it is party, the Transferred Assets and all ancillary agreements related thereto, the violation of which would have a Material Adverse Effect.

 

(d)           The Transferor shall not enter into any contract, agreement or other legally binding arrangement (whether written or oral), or grant any right to any other Person, in any case that would reasonably be expected to conflict with the Transaction Documents.

 

Section 6.4            Payments on Account of the Transferred Assets.

 

(a)           Notwithstanding the terms of the Innoviva Instruction, if TRC LLC, Innoviva or any other Person pays the Class C Distributions to the Transferor (or any of its Subsidiaries other than the Transferee) directly and not to the Collection Account, then (i) such payment or distribution shall be held by the Transferor (or such Subsidiary) in trust for the benefit of the Transferee, (ii) the Transferor (or such Subsidiary) shall have no right, title or interest whatsoever in such payment or distribution and shall not create or suffer to exist any Lien thereon and (iii) the Transferor (or such Subsidiary) promptly, and in any event no later than two Business Days following the receipt by the Transferor (or such Subsidiary) of such payment or distribution, shall remit such payment or distribution to the Collection Account pursuant to Section 6.4(b) in the exact form received with all necessary endorsements.

 

(b)           The Transferor shall make all payments required to be made by it to the Transferee pursuant to this Sale and Contribution Agreement by wire transfer of immediately available funds, without Set-off, to the Collection Account.

 

(c)           The Transferee shall make all payments required to be made by it to the Transferor pursuant to this Sale and Contribution Agreement by wire transfer of immediately available funds, without Set-off, to the following account (or to such other account as the Transferor shall notify the Transferee in writing from time to time) (the “Transferor Account”):

 

	
Bank Name:
    	
Bank of America, N.A.
    
	
ABA Number:
    	
026009593
    
	
Account Number:
    	
1416501926
    
	
Account Name:
    	
Theravance Biopharma   R&D, Inc.
    
	
Attention:
    	
Asif Ali
    

 

Section 6.5            Existence.  The Transferor shall preserve and maintain its existence; provided, that the foregoing shall not prohibit the Transferor from entering into any merger, consolidation or amalgamation with, or selling or otherwise transferring all or substantially all of its assets to, any other Person if the Transferor is the continuing or surviving entity or if the surviving or continuing or acquiring entity assumes (either expressly or by operation of law) all of the obligations of the Transferor under the Transaction Documents.

 

Section 6.6            Payment of Expenses; Commingling of Assets.   Until the Indenture has been satisfied and discharged in full in accordance with its terms, (a) the Transferor shall pay from its own funds and assets all obligations and indebtedness incurred by it and (b) the

 

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Transferor shall not commingle its assets with those of the Transferee except as specifically permitted in the Transaction Documents.

 

Section 6.7            The Master Agreement and the Extension Agreement With Respect to Theravance Biopharma.

 

(a)           Theravance Biopharma shall perform and comply with the Master Agreement and the Collaboration Agreement to the extent relating to the Extension Agreement and shall not take any action, or fail to take any action, that breaches, violates or could reasonably be expected to breach or violate the Master Agreement or the Collaboration Agreement to the extent relating to the Extension Agreement.

 

(b)           (i) Theravance Biopharma shall enforce the Master Agreement and the Collaboration Agreement to the extent relating to the Extension Agreement and its rights under the Master Agreement and the Collaboration Agreement to the extent relating to the Extension Agreement, in each case to the extent that the failure to do so under this clause (i) would be reasonably expected to have a direct or indirect material and adverse effect on Theravance Biopharma’s or its permitted transferees’, successors’ and permitted assigns’ (as applicable), including the Transferor’s and the Transferee’s, rights or obligations under the Master Agreement, the Collaboration Agreement to the extent relating to the Extension Agreement and the TRC LLC Agreement to the extent relating to the Issuer Class C Units, and (ii) Theravance Biopharma shall not amend, modify, supplement, waive, cancel, terminate or grant any consent under the Master Agreement and the Collaboration Agreement to the extent relating to the Extension Agreement, or take any other action or fail to take any action having the effect of the foregoing, or agree to do any of the foregoing directly or indirectly, in whole or in part, to the Master Agreement or the Collaboration Agreement to the extent relating to the Extension Agreement or any rights under the Master Agreement or the Collaboration Agreement to the extent relating to the Extension Agreement, in each case to the extent that such action or inaction referred to in this clause (ii) would be reasonably expected to have a direct or indirect material and adverse effect on the rights or obligations of Theravance Biopharma or its permitted transferees, successors and permitted assigns (as applicable), including the Transferor and the Transferee, under the Master Agreement, the Collaboration Agreement to the extent relating to the Extension Agreement or the TRC LLC Agreement to the extent relating to the Issuer Class C Units.

 

(c)           Notwithstanding anything to the contrary in the foregoing clauses (a) and (b) of this Section 6.7, Theravance Biopharma is permitted to take any action or fail to take any action with respect to any agreement or drug program (other than the Collaboration Agreement and drug programs under the Collaboration Agreement), including the Strategic Alliance Agreement and/or any drug programs (including the MABA program) that are covered under the Strategic Alliance Agreement, including a transfer, sale, mortgage, pledge, assignment or disposal of, either directly or indirectly, in whole or in part, by operation of law or otherwise, its interest in the MABA program.

 

(d)           It is understood and agreed between the Transferor and the Transferee that neither the Transferor nor the Transferee shall have any obligation or liability with respect to the allocations of resources, scope, intensity and duration of efforts or decisions and judgments made

 

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in connection with development and commercialization (including acts or omissions that result in or increase the likelihood of, greater or lesser commercial success): (i) with respect to, or as among, any Products or (ii) as among any one or more Products, on the one hand, and other products or therapeutically active components, on the other hand.

 

Section 6.8            The Master Agreement and the TRC LLC Agreement With Respect to the Transferor.

 

(a)           The Transferor shall perform and comply with the Master Agreement (if applicable) and the TRC LLC Agreement and shall not take any action, or fail to take any action, that breaches, violates or could reasonably be expected to breach or violate the Master Agreement (if applicable) or the TRC LLC Agreement.

 

(b)           (i) The Transferor shall enforce the Master Agreement (if applicable) and the TRC LLC Agreement and its rights under the Master Agreement (if applicable) and the TRC LLC Agreement, in each case to the extent that the failure to do so under this clause (i) would be reasonably expected to have a direct or indirect material and adverse effect on Theravance Biopharma’s or its permitted transferees’, successors’ and permitted assigns’ (as applicable), including the Transferor’s and the Transferee’s, rights or obligations under the Master Agreement (if applicable) and the TRC LLC Agreement, in each case to the extent relating to the Issuer Class C Units, and (ii) the Transferor shall not amend, modify, supplement, waive, cancel, terminate or grant any consent under the Master Agreement (if applicable) or the TRC LLC Agreement, or take any other action or fail to take any action having the effect of the foregoing, or agree to do any of the foregoing directly or indirectly, in whole or in part, to the Master Agreement (if applicable) or the TRC LLC Agreement or any rights under the Master Agreement (if applicable) or the TRC LLC Agreement, in each case to the extent that such action or inaction referred to in this clause (ii) would be reasonably expected to have a direct or indirect material and adverse effect on the rights or obligations of Theravance Biopharma or its permitted transferees, successors and permitted assigns (as applicable), including the Transferor and the Transferee, under the Master Agreement (if applicable) or the TRC LLC Agreement, in each case to the extent relating to the Issuer Class C Units.

 

(c)           The Transferor shall not take any action to, directly or indirectly, adversely impact, delay, forgive, release or compromise any amount owed to or becoming owing to Theravance Biopharma and its permitted transferees, successors and permitted assigns (as applicable), including the Transferor and the Transferee in respect of the Class C Distributions under the TRC LLC Agreement.

 

(d)           Notwithstanding anything to the contrary in the foregoing clauses (a), (b) and (c) of this Section 6.8, the Transferor is permitted to take any action or fail to take any action with respect to any agreement or drug program (other than the Collaboration Agreement and drug programs under the Collaboration Agreement), including the Strategic Alliance Agreement and/or any drug programs (including the MABA program) that are covered under the Strategic Alliance Agreement, including a transfer, sale, mortgage, pledge, assignment or disposal of, either directly or indirectly, in whole or in part, by operation of law or otherwise, its interest in the MABA program.

 

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Section 6.9            Risk Retention Requirement.  Other than as permitted by the U.S. Credit Risk Retention Rules, neither the Transferor nor any of its Affiliates may sell, transfer or hedge the Retained Notes until the latest of (i) two years from the Closing Date, (ii) the date the unpaid principal balance (if applicable) of the Collateral is 33% or less of the initial unpaid principal balance of the Collateral or (iii) the first date the principal amount of the Notes is 33% or less of the original principal amount of the Notes (the “Risk Retention Period”); provided that the Risk Retention Period will end with respect to the Notes immediately upon the earlier of the time at which no Notes are outstanding and such time as the “sponsor” (as defined under the U.S. Credit Risk Retention Rules) of the offer and sale of the Notes, in its capacity as sponsor of such offer and sale, is no longer required by the U.S. Credit Risk Retention Rules to retain an economic interest in the Notes.

 

Section 6.10          Treatment of Notes as Debt.  The Transferor shall treat the Notes as debt for U.S. federal income tax purposes.

 

Section 6.11          Tax Matters.  The Transferor shall use commercially reasonable efforts to avoid being treated as engaged in a U.S. trade or business. The Transferor shall not change its jurisdiction of organization or tax residence while the Notes are outstanding prior to the Transferor providing the Trustee an opinion of nationally recognized U.S. tax counsel satisfactory to the Trustee to the effect that any such change should not cause a “significant modification” of the Notes for U.S. federal income tax purposes.

 

Section 6.12          Foreign Corrupt Practices.  None of the Transferor or, to the knowledge of the Transferor, any director, officer, agent, employee, Affiliate or other Person acting on behalf and for the benefit of the Transferor or any of its Subsidiaries shall materially violate the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder or the U.K. Bribery Act 2010.

 

Section 6.13          Money Laundering Laws.  At all times throughout the term of this Sale and Contribution Agreement, the operations of the Transferor and its Subsidiaries will be conducted in compliance in all material respects with the applicable provisions of the Currency and Foreign Transactions Reporting Act of 1970, as amended and the applicable money laundering statutes of all relevant jurisdictions.

 

Section 6.14          Sanctions.  The Transferor will not, directly or knowingly indirectly, use the proceeds of the sale of the Transferred Assets, or lend, contribute or otherwise make available such proceeds to any subsidiaries, joint venture partners or other Persons, to fund any activities of or business with any Person, or in any country or territory, that, at the time of such funding, is the target of sanctions of the type described in Section 3.16(a), in each case, in violation of applicable sanctions or in any other manner that will result in a violation by any Person party hereto of sanctions of the type described in Section 3.16(a).

 

ARTICLE VII
 THE CLOSING

 

Section 7.1            Closing.  The closing of the transactions contemplated hereby (the “Closing”) shall take place on the Closing Date at the offices of Skadden, Arps, Slate, Meagher

 

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& Flom LLP located at 4 Times Square, New York, New York 10036, or at such other place as the parties hereto mutually agree.

 

Section 7.2            Closing Deliverables of the Transferor.  At the Closing, the Transferor shall deliver or cause to be delivered to the Transferee the following:

 

(a)           the Servicing Agreement, the Account Control Agreement, the Pledge and Security Agreement and the Note Purchase Agreements, each executed by the Transferor;

 

(b)           the Innoviva Instruction executed by the Transferor; and

 

(c)           such other certificates, documents and financing statements as the Transferee may reasonably request, including (i) the documents contemplated by Article VI of the Note Purchase Agreements and (ii) a financing statement reasonably satisfactory to the Transferee to evidence and perfect the sale, contribution, assignment, transfer, conveyance and grant of the Transferred Assets pursuant to Section 2.1 and the back-up security interest granted pursuant to Section 2.1(d).

 

Section 7.3            Closing Deliverables of the Transferee.  At the Closing, the Transferee shall deliver or cause to be delivered to the Transferor the following:

 

(a)           the payment of the Cash Purchase Price in accordance with Section 2.2;

 

(b)           $12,500,000 aggregate principal amount of Retained Notes in accordance with Section 2.2; and

 

(c)           such other certificates, documents and financing statements as the Transferor may reasonably request.

 

ARTICLE VIII
 INDEMNIFICATION

 

Section 8.1            Indemnification by the Transferor.  The Transferor agrees to indemnify and hold each of the Transferee and its Affiliates (other than the Transferor and Theravance Biopharma) and any and all of their respective partners, directors, managers, members, officers, employees, agents and controlling persons (each, a “Transferee Indemnified Party”) harmless from and against, and to pay to each Transferee Indemnified Party the amount of, any and all Losses awarded against or incurred or suffered by such Transferee Indemnified Party, whether or not involving a third party claim, demand, action or proceeding, arising out of (i) any breach of any representation, warranty or certification made by the Transferor in any of the Transaction Documents to which the Transferor is party or certificates given by the Transferor to the Transferee in writing pursuant to this Sale and Contribution Agreement or any other Transaction Document, (ii) any breach of or default under any covenant or agreement by the Transferor to the Transferee pursuant to any Transaction Document to which the Transferor is party and (iii) any fees, expenses, costs, liabilities or other amounts incurred or owed by the Transferor to any brokers, financial advisors or comparable other Persons retained or employed by it in connection with the transactions contemplated by this Sale and Contribution Agreement; provided, however, that the foregoing shall exclude any indemnification to any Transferee Indemnified Party (A)

 

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that has the effect of imposing on the Transferor any recourse liability for the Class C Distributions because of the insolvency or other creditworthiness problems of TRC LLC or GSK or the insufficiency of the Class C Distributions, whether as a result of the amount of cash flow arising from the failure of Innoviva to comply with the TRC LLC Agreement or the royalty payments made by GSK pursuant to the GSK Agreements or otherwise, unless resulting from the failure of the Transferor to perform its obligations under this Sale and Contribution Agreement, (B) that results from the bad faith, gross negligence or willful misconduct of such Transferee Indemnified Party or its Affiliates (other than the Transferor or Theravance Biopharma) or (C) to the extent resulting from the failure of any Person other than the Transferor to perform any of its obligations under any of the Transaction Documents.  Any amounts due to any Transferee Indemnified Party under this Section 8.1 shall be payable by the Transferor to such Transferee Indemnified Party upon demand.

 

Section 8.2            Indemnification by Theravance Biopharma.  Theravance Biopharma agrees to indemnify and hold each Transferee Indemnified Party harmless from and against, and to pay to each Transferee Indemnified Party the amount of, any and all Losses awarded against or incurred or suffered by such Transferee Indemnified Party, whether or not involving a third party claim, demand, action or proceeding, arising out of (i) any breach of any representation, warranty or certification made by Theravance Biopharma in Article V of this Sale and Contribution Agreement (ii) any breach of or default under any covenant or agreement by Theravance Biopharma to the Transferee pursuant to Section 6.7 of this Sale and Contribution Agreement and (iii) any fees, expenses, costs, liabilities or other amounts incurred or owed by Theravance Biopharma to any brokers, financial advisors or comparable other Persons retained or employed by it in connection with the transactions contemplated by this Sale and Contribution Agreement; provided, however, that the foregoing shall exclude any indemnification to any Transferee Indemnified Party (A) that results from the bad faith, gross negligence or willful misconduct of such Transferee Indemnified Party or any of its Affiliates (other than the Transferor or Theravance Biopharma) or (B) to the extent resulting from the failure of any Person other than Theravance Biopharma to perform any of its obligations under any of the Transaction Documents.  Any amounts due to any Transferee Indemnified Party under this Section 8.2 shall be payable by Theravance Biopharma to such Transferee Indemnified Party upon demand.

 

Section 8.3            Procedures.  If any claim, demand, action or proceeding (including any investigation by any Governmental Authority) shall be brought against an indemnified party in respect of which indemnity is to be sought against an indemnifying party pursuant to Sections 8.1 or 8.2, as applicable, the indemnified party shall, promptly after receipt of notice of the commencement of any such claim, demand, action or proceeding, notify the indemnifying party in writing of the commencement of such claim, demand, action or proceeding, enclosing a copy of all papers served, if any; provided, that the omission to so notify such indemnifying party will not relieve the indemnifying party from any liability that it may have to any indemnified party under Sections 8.1 or 8.2, as applicable, unless, and only to the extent that, the indemnifying party is actually prejudiced by such omission.  In the event that any such action is brought against an indemnified party and it notifies the indemnifying party of the commencement thereof in accordance with this Section 8.3, the indemnifying party will be entitled, at the indemnifying party’s sole cost and expense, to participate therein and, to the extent that it may wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party, and, after

 

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notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Article VIII for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.  In any such proceeding, an indemnified party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party unless (a) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel at the indemnifying party’s expense, (b) the indemnifying party has assumed the defense of such proceeding and has failed within a reasonable time to retain counsel reasonably satisfactory to such indemnified party or (c) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them based on the advice of counsel to the indemnifying party.  It is agreed that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm for each jurisdiction for all such indemnified parties.  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement, compromise or discharge of any claim or pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement, compromise or discharge, as the case may be, (i) includes an unconditional written release of such indemnified party, in form and substance reasonably satisfactory to the indemnified party, from all liability on claims that are the subject matter of such claim or proceeding, (ii) does not include any statement as to an admission of fault, culpability or failure to act by or on behalf of any indemnified party and (iii) does not impose any continuing material obligation or restrictions on any indemnified party.

 

Section 8.4            Exclusive Remedy.  Except in the case of fraud or intentional breach, following the Closing, the indemnification afforded by this Article VIII shall be the sole and exclusive remedy for money damages awarded against or incurred or suffered by a Transferee Indemnified Party in connection with the transactions contemplated by the Transaction Documents, including with respect to any breach of any representation, warranty or certification made by a party hereto in any of the Transaction Documents or certificates given by a party hereto in writing pursuant hereto or thereto or any breach of or default under any covenant or agreement by a party hereto pursuant to any Transaction Document.  Notwithstanding anything in this Sale and Contribution Agreement to the contrary, in the event of any breach or failure in performance of any covenant or agreement contained in any Transaction Document, the non-breaching party shall be entitled to specific performance, injunctive or other equitable relief pursuant to Section 9.2.

 

ARTICLE IX
 MISCELLANEOUS

 

Section 9.1            Survival.  All representations, warranties and covenants made herein and in any other Transaction Document shall survive the execution and delivery of this Sale and Contribution Agreement and the Closing. The rights hereunder to indemnification, payment of

 

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Losses or other remedies based on such representations, warranties and covenants shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time (whether before or after the execution and delivery of this Sale and Contribution Agreement or the Closing) in respect of the accuracy or inaccuracy of or compliance with, any such representation, warranty or covenant.  The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant, shall not affect the rights hereunder to indemnification, payment of Losses or other remedies based on such representations, warranties and covenants.

 

Section 9.2            Specific Performance.  Each of the parties hereto acknowledges that the other party hereto will have no adequate remedy at law if it fails to perform any of its obligations under any of the Transaction Documents.  In such event, each of the parties hereto agrees that the other party hereto shall have the right, in addition to any other rights it may have (whether at law or in equity), to specific performance of this Sale and Contribution Agreement.

 

Section 9.3            Notices.  All notices, consents, waivers and other communications hereunder shall be in writing and shall be effective (a) upon receipt when sent through the mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (b) upon receipt when sent by an overnight courier, (c) on the date personally delivered to an authorized officer of the party to which sent or (d) on the date transmitted by facsimile or other electronic transmission with a confirmation of receipt, in all cases, with a copy emailed to the recipient at the applicable address, addressed to the recipient as follows:

 

if to the Transferor (including as Servicer under the Servicing Agreement), to:

Theravance Biopharma R&D, Inc.

c/o Theravance Biopharma US, Inc.
 901 Gateway Boulevard
 South San Francisco, CA 94080
 Attention:  Brett A. Grimaud, Assistant Secretary, Vice President & Assistant General Counsel

Telephone: (650) 808-3785
 Facsimile: (650) 808-6095
 Email: BGrimaud@theravance.com

 

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square 
 New York, NY 10036
 Attention:  Andrew M. Faulkner

Telephone: (212) 735-2853
 Facsimile: (917) 777-2853
 E-Mail:  andrew.faulkner@skadden.com

 

Skadden, Arps, Slate, Meagher & Flom LLP
 525 University Ave

 

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Palo Alto, CA 94301
 Attention:  Amr Razzak

Telephone: (650) 470-4533
 Facsimile: (650) 798-6504
 E-Mail:  amr.razzak@skadden.com

 

if to the Transferee, to:

Triple Royalty Sub LLC
 c/o Theravance Biopharma US, Inc.
 901 Gateway Boulevard
 South San Francisco, CA 94080
 Attention:  Brett A. Grimaud, Vice President and Assistant Secretary

Telephone: (650) 808-3785
 Facsimile: (650) 808-6095
 Email: BGrimaud@theravance.com

 

With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square 
 New York, NY 10036
 Attention:  Andrew M. Faulkner

Telephone: (212) 735-2853
 Facsimile: (917) 777-2853
 E-Mail: andrew.faulkner@skadden.com

 

Skadden, Arps, Slate, Meagher & Flom LLP
 525 University Ave

Palo Alto, CA 94301
 Attention:  Amr Razzak

Telephone: (650) 470-4533
 Facsimile: (650) 798-6504
 E-Mail:  amr.razzak@skadden.com

 

if to Theravance Biopharma, to:

Theravance Biopharma, Inc.

c/o Theravance Biopharma US, Inc.
 901 Gateway Boulevard
 South San Francisco, CA 94080
 Attention:  Brett A. Grimaud, Assistant Secretary, Vice President & Assistant General Counsel
 Telephone: (650) 808-3785

Facsimile: (650) 808-6095
 Email: BGrimaud@theravance.com

 

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With a copy to:

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square 
 New York, NY 10036
 Attention:  Andrew M. Faulkner

Telephone: (212) 735-2853
 Facsimile: (917) 777-2853
 E-Mail:  andrew.faulkner@skadden.com

 

Skadden, Arps, Slate, Meagher & Flom LLP
 525 University Ave

Palo Alto, CA 94301
 Attention:  Amr Razzak

Telephone: (650) 470-4533
 Facsimile: (650) 798-6504
 E-Mail:  amr.razzak@skadden.com

 

Each party hereto may, by notice given in accordance herewith to the other party hereto, designate any further or different address to which subsequent notices, consents, waivers and other communications shall be sent.

 

Section 9.4            Successors and Assigns.

 

(a)           Neither the Transferor nor Theravance Biopharma shall assign or otherwise transfer this Sale and Contribution Agreement without the prior written consent of the Transferee, except that the Transferor or Theravance Biopharma, as applicable, may assign this Sale and Contribution Agreement, in whole or in part, without the consent of the Transferee to (i) an acquirer of the Transferor or Theravance Biopharma, as applicable, or a successor to all or substantially all of the assets of the Transferor or Theravance Biopharma, as applicable, whether by merger, sale of stock, sale of assets or other similar transaction, if the surviving or continuing or acquiring entity assumes (either expressly or by operation of law) all of the obligations of the Transferor or Theravance Biopharma, as applicable, under this Sale and Contribution Agreement or (ii) an Affiliate of the Transferor or Theravance Biopharma, as applicable, for so long as such Affiliate remains an Affiliate of the Transferor or Theravance Biopharma, as applicable, and if the Transferor or Theravance Biopharma, as applicable, guarantees the performance of this Sale and Contribution Agreement by such Affiliate.

 

(b)           Except as provided in Section 9.15, any assignment or transfer of this Sale and Contribution Agreement by the Transferee shall require the prior written consent of the Transferor and Theravance Biopharma.  The Transferor and Theravance Biopharma shall be under no obligation to reaffirm any representations, warranties or covenants made in this Sale and Contribution Agreement or any of the other Transaction Documents or take any other action in connection with any such assignment by the Transferee.

 

(c)           Subject to the terms and conditions of this Section 9.4, this Sale and Contribution Agreement shall be binding upon and inure to the benefit of the parties hereto and

 

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their permitted successors and assigns.  Any purported assignment or other transfer in violation of this Section 9.4 shall be void ab initio and of no force or effect.

 

Section 9.5            Independent Nature of Relationship.  Except for any Capital Securities of the Transferee held by the Transferor, the Retained Notes, and the Transferor’s role as Servicer under the Servicing Agreement, the relationship between the Transferor and the Transferee is solely that of transferor and transferee, and neither the Transferor nor the Transferee has any fiduciary or other special relationship with the other party hereto or any of its Affiliates.  Nothing contained herein or in any other Transaction Document shall be deemed to constitute the Transferor and the Transferee as a partnership, an association, a joint venture or any other kind of entity or legal form.

 

Section 9.6            Entire Agreement.  This Sale and Contribution Agreement and the other Transaction Documents, constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties hereto with respect to the subject matter of this Sale and Contribution Agreement.  No representation, inducement, promise, understanding, condition or warranty not set forth herein (or in the other Transaction Documents) has been made or relied upon by any party hereto.  Except as described in Section 9.11 and Section 9.15, neither this Sale and Contribution Agreement nor any provision hereof is intended to confer upon any Person other than the parties hereto and the other Persons referenced in Article VIII any rights or remedies hereunder.

 

Section 9.7            Governing Law; Submission to Jurisdiction; Service of Process.

 

(a)           THIS SALE AND CONTRIBUTION AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

 

(b)           Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Sale and Contribution Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by Applicable Law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Applicable Law.

 

(c)           Each of the parties hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or

 

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hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Sale and Contribution Agreement in any court referred to in Section 9.7(b).  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)           Each of the parties hereto irrevocably consents to service of process in the manner provided for notices in Section 9.3.  Nothing in this Sale and Contribution Agreement will affect the right of any party hereto to serve process in any other manner permitted by Applicable Law.  Each of the parties hereto waives personal service of any summons, complaint or other process, which may be made by any other means permitted by New York law.

 

Section 9.8            Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS SALE AND CONTRIBUTION AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE OTHER PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE OTHER PARTY HERETO WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS SALE AND CONTRIBUTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.8.

 

Section 9.9            Severability.  If one or more provisions of this Sale and Contribution Agreement are held to be invalid, illegal or unenforceable by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision of this Sale and Contribution Agreement, which shall remain in full force and effect, and the parties hereto shall replace such invalid, illegal or unenforceable provision with a new provision permitted by Applicable Law and having an economic effect as close as possible to the invalid, illegal or unenforceable provision.  Any provision of this Sale and Contribution Agreement held invalid, illegal or unenforceable only in part or degree by a court of competent jurisdiction shall remain in full force and effect to the extent not held invalid, illegal or unenforceable.

 

Section 9.10          Counterparts.  This Sale and Contribution Agreement may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all of such counterparts shall together constitute but one and the same instrument.  Any counterpart may be executed by facsimile or other electronic transmission, and such facsimile or other electronic transmission shall be deemed an original.

 

Section 9.11          Amendments; No Waivers.  Neither this Sale and Contribution Agreement nor any term or provision hereof may be amended, supplemented, restated, waived, changed or otherwise modified except with the written consent of the parties hereto; provided, that unless (i) the amendment or other modification is solely for purposes of correcting a technical error,

 

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inconsistency or ambiguity, adding to the covenants or agreements to be observed by the Transferee for the benefit of the Noteholders, complying with the requirements of the SEC or any other regulatory body or any Applicable Law or (ii) the amendment or other modification does not adversely affect the interests of the Noteholders in any material respect as confirmed in an Officer’s Certificate of the Transferee, the Transferee shall provide at least ten (10) Business Days’ prior written notice of the amendment or other modification to the Noteholders and the amendment or the modification shall not be effective if the Controlling Party notifies the Transferee within such ten (10) Business Day period that it would be materially adversely affected by the amendment or other modification and does not consent to the amendment or other modification.  The Noteholders shall be third party beneficiaries of this Sale and Contribution Agreement for purposes of this provision.  No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  No notice to or demand on any party hereto in any case shall entitle it to any notice or demand in similar or other circumstances.  No waiver or approval hereunder shall, except as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions.  No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.  The rights and remedies of the Noteholders provided in this Section 9.11 shall be cumulative and not exclusive of any rights or remedies of the Noteholders provided by Applicable Law.

 

Section 9.12          Limited Recourse.  The Transferor accepts that the enforceability against the Transferee of any obligations of the Transferee hereunder shall be limited to the Collateral and the Issuer Pledged Collateral.  Once all such Collateral and Issuer Pledged Collateral has been realized upon and such Collateral and Issuer Pledged Collateral has been applied in accordance with the Indenture, any outstanding obligations of the Transferee to the Transferor hereunder shall be extinguished.  The Transferor further agrees that it shall take no action against any employee, director, officer or administrator of the Transferee in relation to this Sale and Contribution Agreement; provided, that nothing herein shall limit the Transferee (or its permitted successors or assigns) from pursuing claims, if any, against any such Person; provided, further, that the foregoing shall not in any way limit, impair or otherwise affect any rights of the Transferor to proceed against any employee, director, officer or administrator of the Transferee (a) for intentional and willful fraud or intentional and willful misrepresentations on the part of or by such employee, director, officer or administrator or (b) for the receipt by any such employee, director, officer or administrator of the Transferee of any distributions or payments to which the Transferor or any successor in interest is entitled.  For the avoidance of doubt, this Section 9.12 does not affect the obligations of any holder of Capital Securities of the Transferee under the Pledge and Security Agreement or the ability of the Trustee or any Noteholder to exercise any rights or remedies it may have under the Pledge and Security Agreement.

 

Section 9.13          Cumulative Remedies for the Transferor.  The remedies herein provided for the Transferor are cumulative and not exclusive of any remedies provided by Applicable Law.

 

Section 9.14          Table of Contents and Headings.  The Table of Contents and headings of the Articles and Sections of this Sale and Contribution Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

 

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Section 9.15          Acknowledgment and Agreement.  Each of the Transferor and Theravance Biopharma expressly acknowledges and agrees that all of the Transferee’s right, title and interest in, to and under this Sale and Contribution Agreement shall be pledged and assigned to the Trustee as collateral by the Transferee pursuant to the Indenture, and each of the Transferor and Theravance Biopharma consents to such pledge and assignment.  Each of the parties hereto acknowledges and agrees that the Trustee, acting on behalf of the Noteholders, is a third party beneficiary of the rights of the Transferee arising hereunder that have been assigned and pledged to the Trustee under the Indenture, which rights may be enforced by the Trustee only so long as an Event of Default has occurred and is continuing and the Trustee is exercising remedies under the Indenture, in each case (if required thereunder) at the Direction of the Controlling Party.  In all other cases, the Transferee shall have the right to give and withhold consents and exercise or refrain from exercising rights and remedies hereunder.  The Trustee shall also be a third party beneficiary of this Sale and Contribution Agreement in order to permit the Trustee to exercise such other rights as are granted to the Trustee hereunder.

 

Section 9.16          Currency Exchange.  If, for the purpose of obtaining a judgment or order in any court, it is necessary to convert a sum due hereunder from Dollars into another currency, the Transferor has agreed, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, the Transferee could purchase Dollars with such other currency in the Borough of Manhattan, The City of New York on the Business Day preceding the day on which final judgment is given.

 

Section 9.17          Judgment Currency.  The obligation of the Transferor in respect of any sum payable by it to the Transferee hereunder shall, notwithstanding any judgment or order in a currency other than Dollars, be discharged only to the extent that, on the Business Day following receipt by the Transferee of any sum adjudged to be so due in the Judgment Currency, the Transferee may in accordance with normal banking procedures purchase Dollars with the Judgment Currency. If the amount of Dollars so purchased is less than the sum originally due to the Transferee in the Judgment Currency (determined in the manner set forth in Section 9.16), the Transferor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Transferee against such loss, and, if the amount of the Dollars so purchased exceeds the sum originally due to the Transferee, the Transferee shall remit to the Transferor such excess, provided that the Transferee shall have no obligation to remit any such excess as long as the Transferor shall have failed to pay the Transferee any obligations due and payable to the Transferee hereunder, in which case such excess may be applied to such obligations of the Transferor in accordance with the terms hereof. The foregoing indemnity shall constitute a separate and independent obligation of the Transferor and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.

 

Section 9.18          Waiver of Immunity.  To the extent that the Transferor or Theravance Biopharma may in any jurisdiction claim for itself or its assets immunity (to the extent such immunity may now or hereafter exist, whether on the grounds of sovereign immunity or otherwise) from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process (whether through service or notice or otherwise), and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Transferor or Theravance Biopharma, as the case may be, irrevocably agrees with respect to any matter arising under this Sale and Contribution Agreement

 

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for the benefit of the Transferee not to claim, and irrevocably waives, such immunity to the full extent permitted by the Applicable Laws of such jurisdiction.

 

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Sale and Contribution Agreement as of the day and year first written above.

 

 

	
 
    	
 
    	
THERAVANCE BIOPHARMA   R&D, INC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Brett A. Grimaud
    
	
 
    	
 
    	
 
    	
Name:
    	
Brett A. Grimaud
    
	
 
    	
 
    	
 
    	
Title:
    	
Assistant Secretary, Vice   President
    
	
 
    	
 
    	
 
    	
 
    	
and Assistant General   Counsel
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
TRIPLE ROYALTY SUB LLC
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/ Brett A. Grimaud
    
	
 
    	
 
    	
 
    	
Name:
    	
Brett A. Grimaud
    
	
 
    	
 
    	
 
    	
Title:
    	
Vice President and Assistant
    
	
 
    	
 
    	
 
    	
 
    	
Secretary
    

 

TRIPLE ROYALTY SUB LLC

Sale and Contribution Agreement

 

 

The following party shall be a party to this Agreement solely with respect to Articles V and IX and Sections 6.7, 8.2, 8.3 and 8.4:

 

 

THERAVANCE BIOPHARMA, INC.

 

 

	
By:
    	
/s/ Bradford J. Shafer
    	
 
    	
 
    
	
 
    	
Name: 
    	
Bradford J. Shafer
    	
 
    	
 
    
	
 
    	
Title:
    	
Executive Vice President and Secretary
    	
 
    	
 
    

 

 

TRIPLE ROYALTY SUB LLC

Sale and Contribution Agreement

 

 

EXHIBIT A

 

FORM OF INNOVIVA INSTRUCTION

 

November 30, 2018

 

VIA FACSIMILE

 

Innoviva, Inc.

2000 Sierra Point Parkway, Suite 500

Brisbane, California 94005

Attention:   Eric d’Esparbes, Senior Vice President & Chief Financial Officer

E-mail:  eric.desparbes@inva.com

Facsimile: (650) 872-5083

 

Ladies and Gentlemen:

 

Reference is hereby made to that certain limited liability company agreement (as amended from time to time, the “TRC LLC Agreement”) of Theravance Respiratory Company, LLC, a Delaware limited liability company (“TRC LLC”), dated as of May 31, 2014, between Innoviva, Inc., a Delaware corporation (formerly known as Theravance, Inc.) (“Innoviva”), and Theravance Biopharma R&D, Inc. (“Theravance Biopharma R&D”), as assignee of Theravance Biopharma, Inc. (“Theravance Biopharma”), pursuant to the Assignment and Assumption Agreement, dated as of June 1, 2014, by and among Theravance Biopharma, as the assignor, Theravance Biopharma R&D, as the assignee, and Innoviva, Inc., as the manager of TRC LLC and as a member of TRC LLC.

 

Pursuant to the Sale and Contribution Agreement, dated as of November 30, 2018, by and among Theravance Biopharma R&D, as the transferor, Triple Royalty Sub LLC, as the transferee (the “Transferee”), and Theravance Biopharma, Inc., Theravance Biopharma R&D transferred to the Transferee its right, title and interest as a holder of 6,375 Class C Units in TRC LLC.  Following such transfer, the Transferee, a wholly-owned subsidiary of Theravance Biopharma R&D, will become a member of TRC LLC.

 

As of January 1, 2019, you, as the manager of TRC LLC, are hereby irrevocably and unconditionally directed to cause TRC LLC to make all payments and distributions due to the Transferee, as a member of TRC LLC, by wire transfer in United States dollars to the following account:

 

Bank Name:  U.S. Bank National Association
 ABA Number: 091000022
 Account Number: 275915000
 Reference: Triple Royalty Notes Collection Acct

 

In addition, as of November 30, 2018, you, as the manager of TRC LLC, are hereby irrevocably and unconditionally directed to amend Exhibit A to the TRC LLC Agreement to reflect the

 

 

admission of the Transferee as a new member of TRC LLC and the holder of 6,375 Class C Units in TRC LLC.

 

Further, you are hereby irrevocably and unconditionally instructed to send all reports or other notices sent or required to be sent to the Transferee pursuant to the TRC LLC Agreement, to the following parties at the following addresses, beginning immediately:

 

Triple Royalty Sub LLC

 

c/o Theravance Biopharma US, Inc.
 901 Gateway Boulevard

South San Francisco, CA 94080
 Attention:  Brett A. Grimaud, Vice President and Assistant Secretary

Facsimile: (650) 808-6095
 Email: BGrimaud@theravance.com

 

With a copy to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square 
 New York, NY 10036
 Attention:  Andrew M. Faulkner
 Facsimile: (917) 777-2853
 E-Mail:  andrew.faulkner@skadden.com

 

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Ave

Palo Alto, CA 94301

Attention:  Amr Razzak

Telephone: (650) 470-4533

Facsimile: (650) 798-6504

E-Mail:  amr.razzak@skadden.com

 

Theravance Biopharma R&D, Inc., as Servicer

c/o Theravance Biopharma US, Inc.
 901 Gateway Boulevard
 South San Francisco, CA 94080
 Attention:  Brett A. Grimaud, Assistant Secretary, Vice President & Assistant General Counsel
 Facsimile: (650) 808-6095
 Email: BGrimaud@theravance.com

 

With a copy to:

 

Skadden, Arps, Slate, Meagher & Flom LLP
 4 Times Square 
 New York, NY 10036

 

Exhibit A-2

 

Attention:  Andrew M. Faulkner
 Facsimile: (917) 777-2853
 E-Mail:  andrew.faulkner@skadden.com

 

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Ave

Palo Alto, CA 94301

Attention:  Amr Razzak

Telephone: (650) 470-4533

Facsimile: (650) 798-6504

E-Mail:  amr.razzak@skadden.com

 

Exhibit A-3

 

Thank you for your cooperation regarding this matter.

 

Very truly yours,

 

THERAVANCE BIOPHARMA R&D, INC.

 

 

	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Name: 
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    	
 
    

 

Exhibit A-4

 

Annex A

 

Rules of Construction and Defined TermsExhibit 10.2

 

EXECUTION COPY

 

PLEDGE AND SECURITY AGREEMENT

 

MADE BY

 

THERAVANCE BIOPHARMA R&D, INC., AS EQUITYHOLDER,

 

IN FAVOR OF

 

U.S. BANK NATIONAL ASSOCIATION,
 A NATIONAL BANKING ASSOCIATION,
 AS TRUSTEE

 

Dated as of November 30, 2018

 

 

Table of Contents

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
Article I   RULES OF CONSTRUCTION AND DEFINED TERMS
    	
2
    
	
Section 1.1
    	
Rules of   Construction and Defined Terms
    	
2
    
	
 
    	
 
    	
 
    
	
Article II   PLEDGE
    	
2
    
	
Section 2.1
    	
Pledge
    	
2
    
	
 
    	
 
    	
 
    
	
Article III   DELIVERY OF ISSUER PLEDGED COLLATERAL
    	
3
    
	
Section 3.1
    	
Delivery of Issuer   Pledged Collateral
    	
3
    
	
Section 3.2
    	
Capital Securities
    	
3
    
	
 
    	
 
    	
 
    
	
Article IV   REPRESENTATIONS AND WARRANTIES
    	
4
    
	
Section 4.1
    	
Representations and   Warranties
    	
4
    
	
 
    	
 
    	
 
    
	
Article V   SUPPLEMENTS; FURTHER ASSURANCES
    	
6
    
	
Section 5.1
    	
Supplements
    	
6
    
	
Section 5.2
    	
Further Assurances
    	
6
    
	
 
    	
 
    	
 
    
	
Article VI   COVENANTS
    	
6
    
	
Section 6.1
    	
No Sale and No Liens
    	
6
    
	
Section 6.2
    	
Notices
    	
7
    
	
Section 6.3
    	
Voting Rights
    	
7
    
	
Section 6.4
    	
Distributions
    	
7
    
	
Section 6.5
    	
Capital Securities
    	
8
    
	
Section 6.6
    	
Legal Existence
    	
8
    
	
Section 6.7
    	
Compliance with Laws
    	
8
    
	
Section 6.8
    	
Modifications
    	
8
    
	
Section 6.9
    	
No Liquidation or   Dissolution
    	
8
    
	
Section 6.10
    	
Monies Held in Trust
    	
8
    
	
Section 6.11
    	
No Claims
    	
8
    
	
Section 6.12
    	
Notice to Trustee
    	
9
    
	
Section 6.13
    	
Other Covenants
    	
9
    
	
 
    	
 
    	
 
    
	
Article VII   TRUSTEE APPOINTED ATTORNEY-IN-FACT
    	
10
    
	
Section 7.1
    	
Trustee Appointed   Attorney-In-Fact
    	
10
    
	
 
    	
 
    	
 
    
	
Article VIII   REASONABLE CARE
    	
10
    
	
Section 8.1
    	
Reasonable Care
    	
10
    
	
 
    	
 
    	
 
    
	
Article IX NO   LIABILITY
    	
10
    
	
Section 9.1
    	
No Liability
    	
10
    

 

i

 

	
Article X   REMEDIES UPON EVENT OF DEFAULT
    	
11
    
	
Section 10.1
    	
Remedies Upon Event of   Default
    	
11
    
	
 
    	
 
    	
 
    
	
Article XI   PURCHASE OF THE ISSUER PLEDGED COLLATERAL
    	
13
    
	
Section 11.1
    	
Purchase of the Issuer   Pledged Collateral
    	
13
    
	
 
    	
 
    	
 
    
	
Article XII   EXPENSES
    	
13
    
	
Section 12.1
    	
Expenses
    	
13
    
	
 
    	
 
    	
 
    
	
Article XIII   NO WAIVER; REMEDIES
    	
14
    
	
Section 13.1
    	
No Waiver; Remedies
    	
14
    
	
 
    	
 
    	
 
    
	
Article XIV   AMENDMENTS
    	
14
    
	
Section 14.1
    	
Amendments
    	
14
    
	
 
    	
 
    	
 
    
	
Article XV   RELEASE; TERMINATION
    	
14
    
	
Section 15.1
    	
Release; Termination
    	
14
    
	
 
    	
 
    	
 
    
	
Article XVI   NOTICES
    	
15
    
	
Section 16.1
    	
Notices
    	
15
    
	
 
    	
 
    	
 
    
	
Article XVII   CONTINUING SECURITY INTEREST
    	
15
    
	
Section 17.1
    	
Continuing Security   Interest
    	
15
    
	
 
    	
 
    	
 
    
	
Article XVIII   SECURITY INTEREST ABSOLUTE
    	
15
    
	
Section 18.1
    	
Security Interest   Absolute
    	
15
    
	
Section 18.2
    	
Obligations of   Equityholders Several and Not Joint
    	
16
    
	
 
    	
 
    	
 
    
	
Article XIX   INDEMNITY
    	
16
    
	
Section 19.1
    	
Indemnity
    	
16
    
	
 
    	
 
    	
 
    
	
Article XX   OBLIGATIONS SECURED BY ISSUER PLEDGED COLLATERAL
    	
17
    
	
Section 20.1
    	
Obligations Secured by   Issuer Pledged Collateral
    	
17
    
	
 
    	
 
    	
 
    
	
Article XXI   SEVERABILITY
    	
17
    
	
Section 21.1
    	
Severability
    	
17
    
	
 
    	
 
    	
 
    
	
Article XXII   COUNTERPARTS; EFFECTIVENESS
    	
17
    
	
Section 22.1
    	
Counterparts;   Effectiveness
    	
17
    
	
 
    	
 
    	
 
    
	
Article XXIII   REINSTATEMENT
    	
18
    
	
Section 23.1
    	
Reinstatement
    	
18
    
	
 
    	
 
    	
 
    
	
Article XXIV   SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; SERVICE OF PROCESS
    	
18
    

 

ii

 

	
Section 24.1
    	
SUBMISSION TO   JURISDICTION; WAIVER OF JURY TRIAL; SERVICE OF PROCESS
    	
18
    
	
 
    	
 
    	
 
    
	
Article XXV   GOVERNING LAW
    	
19
    
	
Section 25.1
    	
GOVERNING LAW
    	
19
    
	
 
    	
 
    	
 
    
	
Article XXVI   TABLE OF CONTENTS AND HEADINGS
    	
19
    
	
Section 26.1
    	
Table of Contents and   Headings
    	
19
    
	
 
    	
 
    	
 
    
	
Article XXVII   CONVERSION OF CURRENCY; WAIVER OF IMMUNITY
    	
19
    
	
Section 27.1
    	
Currency Conversion
    	
19
    
	
Section 27.2
    	
Judgment Currency
    	
19
    
	
Section 27.3
    	
Waiver of Immunity
    	
20
    
	
 
    	
 
    	
 
    
	
Annex A
    	
Rules of   Construction and Defined Terms
    	
 
    
				

 

iii

 

PLEDGE AND SECURITY AGREEMENT

 

This PLEDGE AND SECURITY AGREEMENT, dated as of November 30, 2018 (this “Pledge and Security Agreement”), is made by Theravance Biopharma R&D, Inc., a Cayman Islands exempted company (“Theravance Biopharma R&D”), as the equityholder (in such capacity, the “Equityholder”) of Triple Royalty Sub LLC, a Delaware limited liability company, as the issuer (the “Issuer”), in favor of U.S. Bank National Association, a national banking association, not in its individual capacity but solely as the trustee (the “Trustee”) under the Indenture, dated as of the date hereof, by and between the Issuer and the Trustee.

 

W  I  T  N  E  S  S  E  T  H :

 

WHEREAS, contemporaneously with the execution and delivery of this Pledge and Security Agreement, pursuant to the Sale and Contribution Agreement, dated as of the date hereof, by and among Theravance Biopharma R&D, as the transferor (in such capacity, the “Transferor”), the Issuer, as the transferee (in such capacity, the “Transferee”), and solely with respect to Articles V and IX and Sections 6.7, 8.2, 8.3 and 8.4 thereof, Theravance Biopharma, Inc., a Cayman Islands exempted company, the Transferor has sold and contributed to the Transferee all of the Transferor’s right, title and interest as a holder of the Issuer Class C Units, including the Issuer Class C Units and any and all of the economic rights and governance, voting and other consensual rights that may arise as a holder of the Issuer Class C Units under the TRC LLC Agreement; provided, however, that the distribution of net cash payments to the Issuer from Theravance Respiratory Company, LLC, a Delaware limited liability company (“TRC LLC”), will commence with the payment related to the payment of royalties by GSK to TRC LLC in the first fiscal quarter of 2019;

 

WHEREAS, contemporaneously with the execution and delivery of this Pledge and Security Agreement, pursuant to the Indenture, the Issuer has issued its Original Notes to the Noteholders;

 

WHEREAS, in order to secure the repayment of such Original Notes, any Subordinated Notes and any Refinancing Notes, the Issuer shall, except as otherwise expressly provided in the Indenture, grant a security interest in all of its property and rights to the Trustee for the benefit of the Noteholders in accordance with the terms and conditions thereof; and

 

WHEREAS, in addition to the grant of security interest by the Issuer to the Trustee as set forth in the preceding recital, in order to further secure repayment of the Original Notes, any Subordinated Notes and any Refinancing Notes, the Equityholder has agreed to pledge all of the Capital Securities of the Issuer owned by the Equityholder to the Trustee for the benefit of the Noteholders.

 

NOW, THEREFORE, in consideration of the foregoing premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in order to induce the Noteholders to purchase the Original Notes issued pursuant to the Indenture, the Equityholder agrees for the benefit of the Trustee on behalf of each Noteholder, as follows:

 

 

ARTICLE I

 

RULES OF CONSTRUCTION AND DEFINED TERMS

 

Section 1.1            Rules of Construction and Defined Terms.  Capitalized terms used but not otherwise defined in this Pledge and Security Agreement shall have the respective meanings given to such terms in Annex A attached hereto, which is hereby incorporated by reference herein.  The rules of construction set forth in Annex A attached hereto shall apply to this Pledge and Security Agreement and are hereby incorporated by reference herein.  Not all terms defined in Annex A are used in this Pledge and Security Agreement.

 

ARTICLE II

 

PLEDGE

 

Section 2.1            Pledge.  As security for the punctual payment and performance of the Secured Obligations as and when due and subject to and in accordance with the provisions of this Pledge and Security Agreement, the Equityholder hereby pledges, grants, assigns, hypothecates, transfers and delivers (subject to Section 3.1) to the Trustee, its successors and assigns, for the security and benefit of the Noteholders, a continuing security interest in all of the Equityholder’s right, title and interest in, to and under the following property, whether now owned or existing or hereafter acquired or arising (the “Issuer Pledged Collateral”):

 

(a)           all of the Equityholder’s Capital Securities in the Issuer, whether now owned or acquired in the future, and all certificates, agreements and other instruments, if any, representing such Capital Securities, including, without limitation all management, voting and member status rights with respect to the Issuer (the “Issuer Pledged Equity”);

 

(b)           the right to receive all monies and property representing a distribution in respect of the Issuer Pledged Equity (except those representing proceeds of the issuance of the Original Notes, any Subordinated Notes or any Refinancing Notes to the extent not applicable to any Redemption of the Notes), whether by way of distribution, redemption, liquidation payments, repurchase or otherwise;

 

(c)           all substitutions, replacements and additions to any of the Issuer Pledged Collateral;

 

(d)           any and all of the economic rights and governance, voting and other commercial rights that may arise as or for the benefit of a holder of any of the Issuer Pledged Collateral;

 

(e)           any rights related to the Equityholder’s capital account in the Issuer in respect of the Issuer Pledged Equity; and

 

(f)            all proceeds of and to the Issuer Pledged Equity and any of the foregoing, including all shares, securities, rights, monies or other property accruing, offered or issued at any time by way of redemption, conversion, exchange, substitution, preference, option or otherwise in respect of the Issuer Pledged Equity; provided, however, that all of the proceeds received or unbilled but to be received by the Equityholder in respect of any sale, transfer or other 

 

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disposition of such Issuer Pledged Equity shall be excluded (x) to the extent such Issuer Pledged Equity remains or concurrently therewith becomes subject to this Pledge and Security Agreement and (y) such sale, transfer or other disposition is permitted pursuant to Sections 6.1 and 17.1;

 

TO HAVE AND TO HOLD the Issuer Pledged Collateral, together with all right, title, interest, powers, privileges and preferences pertaining or incidental thereto, unto the Trustee, its successors and assigns, subject to the terms and conditions set forth herein.

 

ARTICLE III

 

DELIVERY OF ISSUER PLEDGED COLLATERAL

 

Section 3.1            Delivery of Issuer Pledged Collateral.  Contemporaneously with the execution of this Pledge and Security Agreement, the Equityholder shall deliver or cause to be delivered to the Trustee, to the extent not previously delivered, (a) any and all certificates and other instruments evidencing the Issuer Pledged Equity then held in the form of certificates or other instruments by the Equityholder, together with undated stock powers or assignments of such certificates duly executed and signed in blank, including Membership Interest Certificate No.1 of 100% of the Issuer dated the Closing Date, (b) any and all certificates or other instruments or documents representing any of the Issuer Pledged Collateral then held by the Equityholder and (c) all other property comprising part of the Issuer Pledged Collateral then held in the form of certificates or other instruments by the Equityholder with proper instruments of assignment or transfer duly executed and such other instruments or documents as may be reasonably necessary to effect the purposes contemplated hereby.

 

Section 3.2            Capital Securities.  If the Equityholder shall become entitled to receive or shall receive, in respect of the Issuer Pledged Equity, any Capital Securities, options, warrants, rights or other similar property, including any certificate representing any distribution in connection with any recapitalization, reclassification or increase or reduction of capital (whether as an addition to, in substitution of or in exchange for such Issuer Pledged Equity or otherwise), the Equityholder agrees:

 

(a)           to accept the same as the agent of the Trustee;

 

(b)           to hold the same in trust on behalf of and for the benefit of the Trustee and the Noteholders and separate and apart from its other property; and

 

(c)           to deliver any and all certificates or instruments evidencing the same to the Trustee on or before the close of business on the fifth Business Day following the receipt thereof by the Equityholder, in the exact form received, with the endorsement or assignment in blank of the Equityholder when necessary and with appropriate undated irrevocable proxies duly executed in blank (with signatures properly guaranteed), to be held by the Trustee, subject to the terms of this Pledge and Security Agreement, as additional Issuer Pledged Collateral.

 

3

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1            Representations and Warranties.  The Equityholder represents and warrants to the Trustee, as of the date the Equityholder becomes a party to this Pledge and Security Agreement, as follows:

 

(a)           The Equityholder has been duly incorporated with limited liability and is validly existing and in good standing under the laws of the Cayman Islands and has all licenses, permits, franchises and governmental authorizations necessary to carry on its business as now being conducted and shall appoint and employ agents or attorneys in each jurisdiction where it shall be necessary to take action under this Pledge and Security Agreement.   The registered office of the Equityholder is located in the Cayman Islands.  The Equityholder is duly licensed or qualified to do business in good standing in each jurisdiction in which such qualification or good standing is required by Applicable Law, except where the failure to be so qualified or in good standing would not be a Material Adverse Change.  The Equityholder has the full power and authority to own the property it purports to own and to carry on its business as presently conducted and as proposed to be conducted.

 

(b)           The Equityholder is the sole legal and beneficial owner of the Issuer Pledged Collateral, free and clear of any Lien other than the Lien created pursuant to this Pledge and Security Agreement and the Indenture or other Permitted Liens.  No security agreement, financing statement or other public notice with respect to all or any part of the Issuer Pledged Collateral is on file or of record in any public office, except such as may have been filed in favor of the Trustee pursuant to this Pledge and Security Agreement and the Indenture.

 

(c)           The consummation of the transactions contemplated hereby has been duly and validly authorized by the Equityholder.  The Equityholder has full power to execute and deliver this Pledge and Security Agreement and to perform its obligations hereunder and to pledge all the Issuer Pledged Collateral pursuant to this Pledge and Security Agreement.  This Pledge and Security Agreement has been duly authorized, executed and delivered by the Equityholder.  This Pledge and Security Agreement constitutes a legal, valid and binding obligation of the Equityholder enforceable against the Equityholder in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, moratorium or other similar Applicable Laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).  All requisite action has been taken by the Equityholder to make this Pledge and Security Agreement valid and binding upon the Equityholder.

 

(d)           All necessary governmental approvals and consents of other parties (including directors, officers, partners, members, managers or creditors of the Equityholder) have been obtained that are required (i) for the execution, delivery and performance by the Equityholder of this Pledge and Security Agreement or (ii) for the pledge by the Equityholder of the Issuer Pledged Collateral pursuant to this Pledge and Security Agreement (except as may be required (w) in connection with filings of any UCC financing statements, (x) in connection with any disposition of all or any part of the Issuer Pledged Collateral under any Applicable Laws 

 

4

 

affecting the offering and sale of securities generally, (y) under Applicable Laws and applicable interpretations thereof providing for the supervision or regulation of the banking or trust businesses generally and applicable to the Trustee and (z) with respect to the Trustee as a result of any relationship that the Trustee may have with Persons not parties to, or any activity or business the Trustee may conduct other than pursuant to, any of the Transaction Documents).

 

(e)           This Pledge and Security Agreement creates a valid security interest in the Issuer Pledged Collateral securing the Secured Obligations, and the Equityholder has done such other acts, if any, reasonably requested by the Trustee to perfect the security interest in the Issuer Pledged Collateral granted hereunder (including permitting the Trustee to file any appropriate UCC financing statement against the Equityholder).  The Equityholder has taken such other action, if any, as may be required under the laws of the Cayman Islands to ensure the validity, perfection and priority of the security interests of the Trustee in the Issuer Pledged Collateral.

 

(f)            The execution, delivery and performance by the Equityholder of this Pledge and Security Agreement and the consummation of the transactions contemplated by this Pledge and Security Agreement with respect to the Equityholder do not (i) violate the provisions of the memorandum and articles of association of the Equityholder, (ii) violate the provisions of any Applicable Law (including any Applicable Law relating to usury matters), regulation or order of any Governmental Authority applicable to the Equityholder except where such violation would not be a Material Adverse Change, (iii) result in a breach of, or constitute a default under, any material agreement relating to the management or affairs of the Equityholder, or any indenture, credit agreement or loan agreement or any other similar material agreement, lease or instrument to which the Equityholder is a party or by which the Equityholder or any of its material properties may be bound (which default or breach has not been permanently waived by the other party to such document) or (iv) result in or create any Lien (other than Permitted Liens) under, or require any consent that has not been obtained under, any indenture (including the Indenture), credit agreement or loan agreement or any other material agreement, instrument or document or the provisions of any order, writ, judgment, injunction, decree, determination or award of any Governmental Authority, binding upon the Issuer Pledged Collateral.

 

(g)           There are no proceedings and there is no action, suit or proceeding at law or in equity or by or before any Governmental Authority now pending against the Equityholder or, to the best knowledge of the Equityholder, threatened against the Equityholder that questions the validity or legality of or seeks damages in connection with this Pledge and Security Agreement or that seeks to prevent the consummation of any of the transactions contemplated by this Pledge and Security Agreement.

 

(h)           The percentage of limited liability company interests of Issuer Pledged Equity held by the Equityholder is set forth under the Equityholder’s signature hereto.

 

(i)            The Issuer Pledged Equity constitutes “certificated securities” under Article 8 of the Delaware Uniform Commercial Code.

 

5

 

ARTICLE V

 

SUPPLEMENTS; FURTHER ASSURANCES

 

Section 5.1            Supplements.  The Equityholder agrees that, at any time and from time to time, at the Equityholder’s expense, the Equityholder will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary, or may be reasonably requested by the Trustee (acting at the Direction of Noteholders holding a majority of the Outstanding Principal Balance of the Senior Class of Notes) in order to perfect the security interest of the Trustee in the Issuer Pledged Collateral and to carry out the provisions of this Pledge and Security Agreement or to enable the Trustee to exercise and enforce its rights and remedies hereunder with respect to any Issuer Pledged Collateral.  The Equityholder hereby authorizes the Trustee to file (or cause to be filed) such UCC financing statements or continuation statements, or amendments thereto, and such other instruments or notices as may be necessary to perfect and preserve the security interests and other rights granted or purported to be granted to the Trustee hereby in respect of the Issuer Pledged Collateral.  With respect to the foregoing and the grant of the security interest hereunder, the Equityholder hereby authorizes the Trustee to file or cause to be filed one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Issuer Pledged Collateral.  The authorization set forth in this Section 5.1 shall not relieve the Equityholder of the primary obligation to file any such instruments as set forth herein.

 

Section 5.2            Further Assurances.  If the Equityholder fails to perform any agreement contained herein on its part after receipt of a written request to do so from the Trustee (it being understood that no such request need be given after the occurrence and during the continuance of an Event of Default), the Trustee may (but shall not be obligated to) itself perform, or cause performance of, such agreement, in which case the expenses of the Trustee, including the reasonable fees and expenses of its counsel, incurred in connection therewith shall be payable by the Equityholder under Section 12.1 to the extent the Equityholder would have otherwise been responsible therefor under this Pledge and Security Agreement.

 

ARTICLE VI

 

COVENANTS

 

Section 6.1            No Sale and No Liens.  The Equityholder agrees that, without the consent of the Trustee pursuant to Section 9.1 or Section 9.2 of the Indenture, as applicable, it will not (a) sell or otherwise dispose of the Issuer Pledged Collateral or any interest therein or obligation thereunder or (b) except for Permitted Liens, create or permit to exist any Lien upon or with respect to any of the Issuer Pledged Collateral or any interest therein; provided, however, that, so long as no Event of Default has occurred and is continuing in respect of which the Equityholder has received written notice from the Trustee or otherwise has actual knowledge thereof, the Equityholder will be entitled to sell, contribute, assign, transfer, convey or grant the Issuer Pledged Equity (x) subject to the Lien of this Pledge and Security Agreement and (y) so long as (i) such Issuer Pledged Equity in the hands of each transferee remains subject to the pledge under this Pledge and Security Agreement, (ii) the Trustee shall have been provided with an Opinion of Counsel as to the continuing validity of such pledge and perfection of the security interest of the

 

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Trustee therein and a written acknowledgement from the transferee that it is acquiring such Issuer Pledged Equity subject to such pledge and security interest and making representations and warranties to the effect set forth in Article IV, (iii) the Trustee shall have been provided with an Opinion of Counsel from a law firm with a nationally recognized tax practice that such sale, contribution, assignment, transfer, conveyance or granting should not cause a “significant modification” of the Notes for U.S. federal income tax purposes; provided, however, that, notwithstanding the foregoing, the Trustee shall not be required to be provided with such an Opinion of Counsel if there has been a change in Applicable Law and counsel to the Equityholder determines in good faith that it is unable to render such an Opinion of Counsel (whereas it would have been able to render such an Opinion of Counsel had the change in Applicable Law not occurred), (iv) the transferee agrees in writing for the benefit of the Trustee to be bound by the provisions of this Pledge and Security Agreement and (v) the transferee is not subject to U.S. federal withholding tax in respect of the Class C Distributions.

 

Section 6.2            Notices.  The Equityholder shall promptly provide the Trustee with copies of all notices and other communications received by the Equityholder with respect to any Issuer Pledged Collateral registered in the name of the Equityholder that could adversely affect in any material respect the validity, perfection or priority of the pledge of the Issuer Pledged Collateral owned by it pursuant to this Pledge and Security Agreement.

 

Section 6.3            Voting Rights.  So long as the Equityholder is the owner of the Issuer Pledged Collateral, notwithstanding anything to the contrary in this Pledge and Security Agreement or any other Transaction Document, unless an Event of Default has occurred and is continuing in respect of which the Equityholder has received written notice from the Trustee or otherwise has actual knowledge thereof, the Equityholder may exercise any and all voting and consensual powers pertaining to the Issuer Pledged Collateral or any part thereof for any purpose not inconsistent with this Pledge and Security Agreement or the Indenture.  If an Event of Default has occurred and is continuing in respect of which the Equityholder has received written notice from the Trustee, the Equityholder shall not be entitled to exercise any of the powers described in the preceding sentence as to the Issuer Pledged Collateral, which powers shall be exercised exclusively by the Trustee.

 

Section 6.4            Distributions.  So long as no Event of Default has occurred and is continuing in respect of which the Equityholder has received written notice from the Trustee or otherwise has actual knowledge thereof, the Equityholder may receive and retain any cash distributions (including wire transfers of immediately available funds or payments by check) on the Issuer Pledged Equity.  If an Event of Default has occurred and is continuing in respect of which the Equityholder has received written notice from the Trustee or otherwise has actual knowledge thereof, the Equityholder shall not be entitled to receive any subsequent cash distributions (including wire transfers of immediately available funds or payments by check) on the Issuer Pledged Equity and, unless otherwise agreed by the Senior Trustee at the Direction of Noteholders holding a majority of the Outstanding Principal Balance of the Senior Class of Notes, all such subsequent distributions otherwise payable or distributable thereafter in respect of the Equityholder’s Issuer Pledged Collateral shall constitute Issuer Pledged Collateral.  All non-cash dividends and distributions automatically shall be part of the Issuer Pledged Collateral and shall be promptly delivered to the Trustee.

 

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Section 6.5            Capital Securities.  The Equityholder agrees that it will not accept any Capital Securities of the Issuer or any rights or options to acquire any such Capital Securities, each in addition to or in substitution for the Issuer Pledged Collateral, without prior written consent from the Trustee pursuant to Section 9.1 or Section 9.2 of the Indenture, as applicable, unless the foregoing are pledged to the Trustee pursuant hereto.

 

Section 6.6            Legal Existence.  The Equityholder shall preserve and maintain (a) its legal existence as an entity in good standing under the laws of the Cayman Islands and (b) its qualification to do business in every jurisdiction where the ownership of its properties and the nature of its business require it to be so qualified and where the failure to be so qualified would have a material adverse effect on the security interest created by this Pledge and Security Agreement in respect of the Issuer Pledged Collateral owned by it; provided, that the foregoing shall not prohibit the Equityholder from entering into any merger, consolidation or amalgamation with, or selling or otherwise transferring all or substantially all of its assets to, any other Person if the Equityholder is the continuing or surviving entity or if the surviving or continuing or acquiring entity assumes (either expressly or by operation of law) all of the obligations of the Equityholder under the Transaction Documents.

 

Section 6.7            Compliance with Laws.  The Equityholder shall comply with all Applicable Laws, and obtain, maintain and comply with all government approvals as shall now or hereafter be necessary under Applicable Law, in each case in connection with the making and performance by the Equityholder of any material provision of this Pledge and Security Agreement in respect of the Issuer Pledged Collateral owned by it.

 

Section 6.8            Modifications.  The Equityholder shall not agree to or permit any amendment, supplement, modification, cancellation or termination of, or waiver with respect to, any of the provisions of any of the organizational documents of the Issuer if any such amendment, supplement, modification, cancellation, termination or waiver would result in a material adverse change in respect of the validity, perfection or priority of the pledge of the Issuer Pledged Collateral owned by it pursuant to this Pledge and Security Agreement or the exercise of the rights by the Trustee of the rights granted to it hereunder in respect thereof.

 

Section 6.9            No Liquidation or Dissolution.  Without the prior written direction by the Trustee pursuant to Section 9.1 or Section 9.2 of the Indenture, as applicable, the Equityholder shall not  take any action to liquidate, dissolve or terminate the Issuer, or to authorize or cause any such liquidation, dissolution or termination, until all of the Secured Obligations are paid in full.

 

Section 6.10          Monies Held in Trust.  Subject to Section 6.4, the Equityholder shall hold all monies received by it that constitute Issuer Pledged Collateral (including any payment or other benefit in breach of this Section 6.10 or Section 6.11) in trust for the Trustee for the benefit of the Noteholders.

 

Section 6.11          No Claims.  Subject to Section 6.4, the Equityholder shall not claim payment, whether directly or by set-off, Lien, counterclaim or otherwise, of any amount that may be or has become due to the Equityholder from the Issuer (other than in accordance with Section 3.6(a) of the Indenture, net proceeds of the issuance of any Subordinated Notes and net proceeds 

 

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of the issuance of the Original Notes) until all of the Secured Obligations have been paid in full, other than if any amount received in respect thereof becomes Issuer Pledged Collateral or is entitled to become Issuer Pledged Collateral or to prevent a claim from becoming time-barred.

 

Section 6.12          Notice to Trustee.  Upon any sale, contribution, assignment, transfer, conveyance or granting of any Issuer Pledged Equity by the Equityholder, the Equityholder shall cause the transferee (and, if any Issuer Pledged Equity is retained by the Equityholder, the Equityholder) to provide the Trustee with executed signature pages to this Pledge and Security Agreement, which shall set forth the percentage of limited liability company interests of Issuer Pledged Equity held by the transferee and, if applicable, the Equityholder.

 

Section 6.13          Other Covenants.  The Equityholder shall:

 

(a)           file all tax returns and reports required by Applicable Law to be filed by it and pay all taxes required to be paid by it, except any such taxes that are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on its books, and it shall not file any tax return or report under any name other than its exact legal name;

 

(b)           maintain, and shall cause the Issuer to maintain, the status of the Issuer as an entity that is not classified as a corporation or publicly traded partnership taxable as a corporation for U.S. federal income tax purposes;

 

(c)           cause the Issuer to use commercially reasonable efforts to file any form (or comply with any other administrative formalities) required for an exemption from or a reduction of any withholding tax for which the Issuer is eligible;

 

(d)           treat the Notes as indebtedness for U.S. federal income tax purposes;

 

(e)           maintain in place all policies and procedures, and take and continue to take all actions, described in the assumptions as to facts relating to the separateness of the Issuer and Theravance Biopharma R&D set forth in, and forming the basis of, the true sale and non-consolidation opinion delivered pursuant to Section 6.1 of the Note Purchase Agreements;

 

(f)            not take any action to cause the Issuer (except as required by Applicable Law) to become subject to any Voluntary Bankruptcy or Involuntary Bankruptcy;

 

(g)           not institute against the Issuer, or join any Person in instituting against the Issuer, any Voluntary Bankruptcy or Involuntary Bankruptcy until one year and one day after the date on which the Notes have been paid in full;

 

(h)           not cause the Issuer to petition for a Voluntary Bankruptcy or an Involuntary Bankruptcy before one year and one day have elapsed since the Notes have been paid in full or, if longer, the applicable preference period then in effect;

 

(i)            cause the Issuer Pledged Equity to continue to constitute certificated securities under the Delaware Uniform Commercial Code; and

 

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(j)            not pass a resolution to cause the Issuer to be liquidated before one year and two days have elapsed since the Notes have been paid in full.

 

ARTICLE VII

 

TRUSTEE APPOINTED ATTORNEY-IN-FACT

 

Section 7.1            Trustee Appointed Attorney-In-Fact.  The Equityholder hereby appoints the Trustee, or any Person (including any officer or agent) whom the Trustee may designate, as the Equityholder’s true and lawful attorney-in-fact, with full irrevocable power and authority in the place and stead of the Equityholder and in the name of the Equityholder or in its own name, at the Equityholder’s cost and expense, from time to time in the Trustee’s reasonable discretion to take any action and to execute any instrument that the Trustee may reasonably deem necessary or advisable to enforce its rights under this Pledge and Security Agreement, including authority to receive, endorse and collect all instruments made payable to the Equityholder representing any distribution, interest payment or other payment in respect of the Issuer Pledged Collateral or any part thereof and to give full discharge for the same and to sign, complete and deliver all transfers, proxies and letters of resignation; provided, however, that such attorney-in-fact of the Equityholder shall not be a Restricted Party and the Trustee shall not exercise its powers under this Section 7.1 unless an Event of Default has occurred and is continuing and unless so instructed by the Noteholders pursuant to and in accordance with the Indenture; provided, further, that if there is more than one Equityholder, the Trustee will enforce its rights and exercise its remedies against all Equityholders ratably and shall not enforce its rights or exercise its remedies against one Equityholder without similarly enforcing its rights and exercising its remedies against all Equityholders in the same manner.

 

ARTICLE VIII

 

REASONABLE CARE

 

Section 8.1            Reasonable Care.  The Trustee shall be deemed to have exercised reasonable care in the custody and preservation of the Issuer Pledged Collateral in its possession if the Issuer Pledged Collateral is accorded treatment substantially equivalent to that which the Trustee accords its own property of the type of which the Issuer Pledged Collateral consists, it being understood that the Trustee shall have no responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Issuer Pledged Collateral, whether or not the Trustee has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against any parties with respect to any Issuer Pledged Collateral absent its gross negligence or willful misconduct.

 

ARTICLE IX

 

NO LIABILITY

 

Section 9.1            No Liability.  Neither the Trustee nor any of its directors, officers, employees or agents shall be deemed to have assumed any of the liabilities or obligations of the Equityholder as a result of the pledge and security interest granted under or pursuant to this 

 

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Pledge and Security Agreement.  In the absence of gross negligence or willful misconduct, the Trustee or any of its directors, officers, employees or agents shall not be liable for any failure to collect or realize upon the Secured Obligations or any collateral security or guarantee therefor, or any part thereof, or for any delay in so doing nor shall it be under any obligation to take any action whatsoever with regard thereto.

 

ARTICLE X

 

REMEDIES UPON EVENT OF DEFAULT

 

Section 10.1          Remedies Upon Event of Default.  Subject to Section 4.3 of the Indenture and to the extent permitted by Applicable Law, if an Event of Default shall have occurred and be continuing and the Trustee shall have given written notice of such Event of Default to the Equityholder:

 

(a)           The Trustee may exercise the power of attorney described in Section 7.1 with respect to any of the certificates or other instruments delivered pursuant to Section 3.1 with respect to the Issuer Pledged Collateral and may sign, complete and deliver all transfers, proxies and letters of resignation and do all acts and things that the Trustee may in its absolute discretion specify to enable or assist the Trustee to perfect or improve its security over the Capital Securities, to vest ownership of the Capital Securities in the Trustee or its nominee, to provide that the Trustee is registered as the holder of the Capital Securities, to exercise any rights or powers attaching to the Capital Securities, to sell the Capital Securities or otherwise to enforce any of the rights of the Trustee under this Pledge and Security Agreement.

 

(b)           The Trustee may exercise in respect of the Issuer Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the UCC, to the extent permitted by Applicable Law or the UCC as then in effect in any applicable jurisdiction, and the Trustee may also in its sole discretion, without notice except as specified below or except as required by mandatory provisions of the UCC and other Applicable Law, sell, subject to Section 11.1, the Issuer Pledged Collateral or any part thereof in one or more parcels at public or private sale or at any of the Trustee’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Trustee may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Issuer Pledged Collateral at any such sale.  Each purchaser at any such sale shall hold the property, sold absolutely, free from any claim or right on the part of the Equityholder, and the Equityholder hereby waives (to the extent permitted by Applicable Law) all rights of redemption, stay and/or appraisal that it now has or may at any time in the future have under any Applicable Law now existing or hereafter enacted.  The Equityholder agrees that, to the extent notice of sale shall be required by Applicable Law, at least ten days’ notice to the Equityholder of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification.  The Trustee shall not be obligated to make any sale of Issuer Pledged Collateral regardless of notice of sale having been given.  The Trustee 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.  The Trustee shall incur no liability as a 

 

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result of the sale of the Issuer Pledged Collateral, or any part thereof, at any public or private sale, absent gross negligence or willful misconduct.

 

(c)           The Equityholder recognizes that the Trustee may elect in its sole discretion to sell all or a part of the Issuer Pledged Collateral to one or more purchasers in privately negotiated transactions in which the purchasers will be obligated to agree, among other things, to acquire the Issuer Pledged Collateral for their own account, for investment and not with a view to the distribution or resale thereof.  The Equityholder acknowledges that any such private sales may be at prices and on terms less favorable than those obtainable through a public sale (including a public offering made pursuant to a registration statement under the Securities Act), and the Equityholder and the Trustee agree that such private sales shall be deemed to have been made in a commercially reasonable manner and that the Trustee has no obligation to engage in public sales or to delay sale of any Issuer Pledged Collateral to permit the Issuer to register the Issuer Pledged Collateral for a form of public sale thereof requiring registration under the Securities Act.

 

(d)           Any cash held by the Trustee as Issuer Pledged Collateral and all cash proceeds received by the Trustee in respect of any sale of, collection from or other realization upon all or any part of the Issuer Pledged Collateral shall, as soon as reasonably practicable, be applied (after payment of any amounts payable to the Trustee pursuant to Section 12.1) by the Trustee first, to the payment of the costs and expenses of such sale, collection or other realization, if any, including reasonable out-of-pocket costs and expenses of the Trustee (including the reasonable fees and out-of-pocket expenses of its counsel), and all reasonable expenses, liabilities and advances made or incurred by the Trustee in connection therewith, second, to the payment of the Secured Obligations in accordance with the terms of the Indenture (including Section 4.14 thereof) and third, to the Equityholder or its successors or assigns in respect of its respective Issuer Pledged Collateral as indicated on the signature page hereto (or pursuant to Section 6.12) and in respect to its respective portion of the proceeds from any sale of, collection from or other realization upon all or any part of the Issuer Pledged Collateral.

 

(e)           The Equityholder agrees that:

 

(i)            in any sale of any of the Issuer Pledged Collateral, whenever an Event of Default shall have occurred and be continuing, the Trustee is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to:

 

(A)          avoid any violation of Applicable Law (including compliance with such procedures as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Issuer Pledged Collateral); or

 

(B)          obtain any required approval of the sale or of the purchaser by any Governmental Authority or official; and

 

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(ii)           such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Trustee be liable or accountable to the Equityholder for any discount allowed by the reason of the fact that such Issuer Pledged Collateral is sold in compliance with any such limitation or restriction.

 

ARTICLE XI

 

PURCHASE OF THE ISSUER PLEDGED COLLATERAL

 

Section 11.1          Purchase of the Issuer Pledged Collateral.  In connection with the potential foreclosure or sale of any Issuer Pledged Collateral upon the occurrence and continuation of an Event of Default, the Equityholder shall have the right, but not the obligation, to match any offer to purchase all or any portion of such Issuer Pledged Collateral from a third party.  In the event that the Equityholder does not offer to purchase any Issuer Pledged Collateral within 10 Business Days of such offer, the Trustee may sell any remaining Issuer Pledged Collateral to third parties; provided, that such third parties shall have first executed a confidentiality agreement in the form of the Confidentiality Agreement and delivered such confidentiality agreement to the Trustee, the Issuer and the Equityholder.  Subject to the preceding sentence, the Equityholder may, but shall not be required to, bid on and be a purchaser of the Issuer Pledged Collateral or any part thereof or any right or interest therein at any sale thereof, whether pursuant to foreclosure, power of sale or otherwise.  In connection with any such sale of any Issuer Pledged Collateral by the Trustee pursuant to this Section 11.1, the Trustee shall apply the purchase price to the payment of the Secured Obligations secured hereby in accordance with Sections 10.1(d) and 12.1 of this Pledge and Security Agreement and in accordance with Section 4.14 of the Indenture.  Any purchaser of all or any part of the Issuer Pledged Collateral shall, upon any such purchase, acquire good title to the Issuer Pledged Collateral so purchased, free of the security interests created by this Pledge and Security Agreement.

 

ARTICLE XII

 

EXPENSES

 

Section 12.1          Expenses.  The Equityholder will upon demand pay to the Trustee the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel and of any experts and the Trustee, and any transfer Taxes, in each case payable upon sale of the Issuer Pledged Collateral, which the Trustee may incur solely in connection with (a) the custody or preservation of, or the sale of, collection from or other realization upon, any of the Issuer Pledged Collateral, (b) the exercise or enforcement of any of the rights of the Trustee hereunder against the Equityholder or the Issuer Pledged Collateral, (c) the failure by the Equityholder to perform or observe any of the provisions hereof or (d) the administration of this Pledge and Security Agreement in respect of the Equityholder.  Any amount payable by the Equityholder pursuant to this Section 12.1 shall constitute Secured Obligations secured hereby; provided, however, if there is more than one Equityholder, in no event shall the Issuer Pledged Collateral of one Equityholder be used to satisfy the failure by another Equityholder to make any such payment.

 

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ARTICLE XIII

 

NO WAIVER; REMEDIES

 

Section 13.1          No Waiver; Remedies.  No failure or delay on the part of the Trustee to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Trustee of any right, power or remedy preclude any additional exercise by the Trustee of such right, power or remedy.  The remedies herein provided are to the fullest extent permitted by Applicable Law cumulative and are not exclusive of any remedies provided by Applicable Law.  No notice to or demand on the Equityholder in any case shall entitle the Equityholder to any other or further notice or demand in similar or other circumstances.

 

ARTICLE XIV

 

AMENDMENTS

 

Section 14.1          Amendments.

 

(a)           No waiver, amendment, modification or termination of any provision of this Pledge and Security Agreement, or consent to any departure by the Equityholder therefrom, shall in any event be effective without the written concurrence of the Trustee pursuant to Section 9.1 or Section 9.2 of the Indenture, as applicable, and (except as otherwise provided in Section 15.1) none of the Issuer Pledged Collateral shall be released without the written consent of the Trustee pursuant to Section 9.1 or Section 9.2 of the Indenture, as applicable.  Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

(b)           As long as Theravance Biopharma R&D (and its successors) is the holder of any Capital Securities of the Issuer, no amendment, modification or termination of any provision of this Pledge and Security Agreement shall be effective without the written concurrence of Theravance Biopharma R&D (and its successors).

 

ARTICLE XV

 

RELEASE; TERMINATION

 

Section 15.1          Release; Termination.  Upon payment and performance in full of the Secured Obligations or discharge of the Indenture pursuant to Section 11.1 of the Indenture, this Pledge and Security Agreement shall terminate automatically, and the Trustee (a) upon written request by the Equityholder shall promptly deliver to the Equityholder any remaining Issuer Pledged Collateral and money received in respect thereof in its possession, and all documents, agreements or instruments representing the Issuer Pledged Collateral held by the Trustee prior to such termination, and (b) upon written request by the Equityholder, shall promptly execute and deliver to the Equityholder and, if necessary, file or record, at the Equityholder’s expense, all such documentation (including UCC termination statements) necessary to release, and evidence the release of, the Liens on the Issuer Pledged Collateral, such documentation to be prepared by 

 

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the Equityholder and delivered to the Trustee.  If the Trustee fails to promptly deliver or file or record the UCC termination statements referred to in, and in accordance with, clause (b) in the preceding sentence, then the Equityholder may file or record such UCC termination statements.

 

ARTICLE XVI

 

NOTICES

 

Section 16.1          Notices.  All Notices shall be in writing and shall be effective (a) upon receipt when sent through the mails, registered or certified mail, return receipt requested, postage prepaid, with such receipt to be effective the date of delivery indicated on the return receipt, (b) upon receipt when sent by an overnight courier, (c) on the date personally delivered to an authorized officer of the party to which sent, (d) on the date transmitted by facsimile transmission with a confirmation of receipt or (e) in the case of any report that is of a routine nature, on the date sent by first class mail or overnight courier or transmitted by facsimile transmission, in all cases, with a copy emailed to the recipient at the applicable address, addressed to the Equityholder as set forth under the Equityholder’s signature hereto and to the Trustee in accordance with Section 12.5 of the Indenture.  Each party hereto may, by notice given in accordance herewith to each other party hereto, designate any further or different address to which subsequent Notices shall be sent.

 

ARTICLE XVII

 

CONTINUING SECURITY INTEREST

 

Section 17.1          Continuing Security Interest.  Subject to the provisions of Section 6.1, this Pledge and Security Agreement shall create a continuing Lien in the Issuer Pledged Collateral and remain in full force and effect until the release thereof pursuant to Section 15.1 or the sale thereof pursuant to Section 11.1, shall be binding upon the Equityholder and its respective successors, transferees and assigns and shall inure to the benefit of and be enforceable by the Trustee and its successors, transferees and assigns; provided, however, that the Equityholder may not (unless otherwise permitted hereunder) assign any of its obligations hereunder without the prior written consent of the Noteholders or the Trustee pursuant to the Indenture.  The Trustee and the Noteholders may assign or otherwise transfer any indebtedness held by any of them secured by this Pledge and Security Agreement to any other Person in accordance with the Indenture, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Trustee herein or otherwise.

 

ARTICLE XVIII

 

SECURITY INTEREST ABSOLUTE

 

Section 18.1          Security Interest Absolute.  All rights of the Trustee and security interests hereunder, and all obligations of the Equityholder hereunder, shall be absolute and unconditional irrespective of, and the Equityholder hereby irrevocably waives vis-à-vis the Trustee any defenses it may now have or may hereafter acquire in any way relating to, any or all of the following:

 

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(a)           any lack of validity or enforceability of any of the Transaction Documents or any other agreement or instrument relating thereto (other than against the Trustee);

 

(b)           any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Transaction Documents or any other agreement or instrument relating thereto, including any increase in the Secured Obligations resulting from the extension of additional credit;

 

(c)           any taking, exchange, surrender, release or non-perfection of any Issuer Pledged Collateral or any other collateral securing the Secured Obligations, or any release or amendment or waiver of or consent to any departure from any guaranty, for all or any of the Secured Obligations;

 

(d)           any manner of application of any other collateral, or proceeds thereof, to all or any of the Secured Obligations, or any manner of sale or other disposition of any other collateral securing all or any of the Secured Obligations or any other obligations of the Issuer under or in respect of the Transaction Documents or of any other assets of the Issuer;

 

(e)           any change, restructuring or termination of the limited liability company structure or existence of the Issuer;

 

(f)            the release or reduction of liability of any guarantor or surety with respect to the Secured Obligations; or

 

(g)           any other circumstance (including any statute of limitations) or any existence of or reliance on any representation to the Trustee that might otherwise constitute a defense available to, or a discharge of, the obligations of the Equityholder.

 

Section 18.2          Obligations of Equityholders Several and Not Joint.  Notwithstanding any other provision of this Pledge and Security Agreement, if there is more than one Equityholder, references to the Equityholder herein shall apply to each Equityholder mutatis mutandis and the obligations of each Equityholder hereunder shall be several and not joint and in no event shall the Issuer Pledged Collateral of one Equityholder be used to satisfy the failure by any other Equityholder to perform any obligation hereunder.

 

ARTICLE XIX

 

INDEMNITY

 

Section 19.1          Indemnity.  The Equityholder agrees to indemnify, reimburse, defend and save and hold the Trustee and its officers, directors, employees, trustees, agents, advisors and affiliates (each, an “Indemnitee” and, collectively, the “Indemnitees”) harmless from and against, and shall pay on demand, any and all Losses of whatsoever kind and nature imposed on, asserted against or incurred by any of the Indemnitees solely (a) in connection with the custody or preservation of, or the sale of, collection from or other realization upon, any of the Issuer Pledged Collateral pursuant to the exercise or enforcement of any of the rights of the Trustee hereunder, (b) in connection with the failure by the Equityholder to perform or observe any of 

 

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the provisions hereof to be performed by it or (c) arising out of or in connection with or resulting from this Pledge and Security Agreement and the transactions contemplated hereby in respect of the Equityholder, excluding those arising out of the gross negligence or willful misconduct of any Indemnitee.  Each Indemnitee agrees to use its best efforts to promptly notify the indemnitor(s) of any assertion of any such liability, damage, injury, penalty, claim, demand, action, judgment or suit of which such Indemnitee has knowledge.

 

The obligations of the Equityholder in this Section 19.1 shall survive the termination of this Pledge and Security Agreement.

 

The Trustee shall be entitled to all of the protections, immunities, indemnities, rights and privileges of the Trustee set forth in the Indenture, whether or not expressly stated herein.

 

ARTICLE XX

 

OBLIGATIONS SECURED BY ISSUER PLEDGED COLLATERAL

 

Section 20.1          Obligations Secured by Issuer Pledged Collateral.  Any amounts paid by any Indemnitee as to which such Indemnitee has the right to indemnification, and any amounts paid by the Trustee in preservation of any of its rights or interest in the Issuer Pledged Collateral, shall constitute Secured Obligations secured by the Issuer Pledged Collateral.

 

ARTICLE XXI

 

SEVERABILITY

 

Section 21.1          Severability.  Any provision of this Pledge and Security Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without, to the extent permitted by Applicable Law, invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not, to the extent permitted by Applicable Law, invalidate or render unenforceable such provision in any other jurisdiction.  Where provisions of any Applicable Law resulting in such prohibition or unenforceability may be waived, they are hereby waived by the parties hereto to the full extent permitted by Applicable Law so that this Pledge and Security Agreement shall be deemed a valid, binding agreement in accordance with its terms, to the extent permitted by Applicable Law.

 

ARTICLE XXII

 

COUNTERPARTS; EFFECTIVENESS

 

Section 22.1          Counterparts; Effectiveness.  This Pledge and Security Agreement and any amendments, waivers, consents or supplements may be executed in counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument.  This Pledge and Security Agreement shall become effective upon the execution and delivery of a counterpart hereof by each of the original parties hereto and, with respect to any Person becoming a party hereto after the date hereof, upon the execution and delivery hereof by such Person.  Any counterpart may be executed by 

 

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facsimile or other electronic transmission, and such facsimile or other electronic transmission shall be deemed an original.

 

ARTICLE XXIII

 

REINSTATEMENT

 

Section 23.1          Reinstatement.  This Pledge and Security Agreement shall continue to be effective or be reinstated, as the case may be, with respect to the Equityholder if at any time any amount received by the Trustee hereunder or pursuant hereto is rescinded or must otherwise be restored or returned by the Trustee, as the case may be, upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Equityholder or upon the appointment of any intervenor or conservator of, or trustee or similar official for, the Equityholder or any substantial part of its assets, or upon the entry of an order by a bankruptcy court avoiding the payment of such amount, or otherwise, all as though such payments had not been made.

 

ARTICLE XXIV

 

SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; SERVICE OF PROCESS

 

Section 24.1          SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; SERVICE OF PROCESS.

 

(a)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS PLEDGE AND SECURITY AGREEMENT OR ANY DOCUMENT RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND THE EQUITYHOLDER HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS RESPECTIVE PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS.  THE EQUITYHOLDER AND THE TRUSTEE HEREBY IRREVOCABLY WAIVE TRIAL BY JURY, AND THE EQUITYHOLDER HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.

 

(b)           THE EQUITYHOLDER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE SENDING OF COPIES THEREOF BY FEDERAL EXPRESS OR OTHER OVERNIGHT COURIER COMPANY, TO THE EQUITYHOLDER AT ITS ADDRESS SPECIFIED BY SECTION 16.1, SUCH SERVICE TO BECOME EFFECTIVE UPON DELIVERY THEREOF TO THE EQUITYHOLDER.

 

(c)           NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE 

 

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LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE EQUITYHOLDER IN ANY OTHER JURISDICTION.

 

ARTICLE XXV

 

GOVERNING LAW

 

Section 25.1          GOVERNING LAW.  THIS PLEDGE AND SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE RULES THEREOF RELATING TO CONFLICTS OF LAW OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT TO THE EXTENT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR THE REMEDIES HEREUNDER, ARE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

 

ARTICLE XXVI

 

TABLE OF CONTENTS AND HEADINGS

 

Section 26.1          Table of Contents and Headings.  The Table of Contents and headings of the Articles and Sections of this Pledge and Security Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

 

ARTICLE XXVII

 

CONVERSION OF CURRENCY; WAIVER OF IMMUNITY

 

Section 27.1          Currency Conversion.  If, for the purpose of obtaining a judgment or order in any court, it is necessary to convert a sum due hereunder from Dollars into another currency, the Equityholder has agreed, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, the Trustee could purchase Dollars with such other currency in the Borough of Manhattan, The City of New York on the Business Day preceding the day on which final judgment is given.

 

Section 27.2          Judgment Currency.  The obligation of the Equityholder in respect of any sum payable by it to the Trustee hereunder shall, notwithstanding any judgment or order in a Judgment Currency, be discharged only to the extent that, on the Business Day following receipt by the Trustee of any sum adjudged to be so due in the Judgment Currency, the Trustee may in accordance with normal banking procedures purchase Dollars with the Judgment Currency.  If the amount of Dollars so purchased is less than the sum originally due to the Trustee in the Judgment Currency (determined in the manner set forth in Section 27.1), the Equityholder agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Trustee against such loss, and, if the amount of the Dollars so purchased exceeds the sum originally due to the 

 

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Trustee, the Trustee shall remit to the Equityholder such excess, provided that the Trustee shall have no obligation to remit any such excess as long as the Equityholder shall have failed to pay the Trustee any obligations due and payable to the Trustee hereunder, in which case such excess may be applied to such obligations of the Equityholder in accordance with the terms hereof.  The foregoing indemnity shall constitute a separate and independent obligation of the Equityholder and shall continue in full force and effect notwithstanding any such judgment or order as aforesaid.

 

Section 27.3          Waiver of Immunity.  To the extent that the Equityholder may in any jurisdiction claim for itself or its assets immunity (to the extent such immunity may now or hereafter exist, whether on the grounds of sovereign immunity or otherwise) from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process (whether through service or notice or otherwise), and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Equityholder irrevocably agrees with respect to any matter arising under this Pledge and Security Agreement for the benefit of the Trustee not to claim, and irrevocably waives, such immunity to the full extent permitted by the laws of such jurisdiction.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Pledge and Security Agreement as of the day and year first written above.

 

	
 
    	
U.S. BANK NATIONAL ASSOCIATION,
    
	
 
    	
not in its individual capacity but solely as 
    
	
 
    	
Trustee
    
	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Alison D.B. Nadeau
    
	
 
    	
 
    	
Name:
    	
Alison D.B. Nadeau
    
	
 
    	
 
    	
Title:
    	
Vice President
    

 

TRIPLE ROYALTY SUB LLC

Pledge and Security Agreement

 

 

	
 
    	
THERAVANCE BIOPHARMA R&D, INC.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Brett A. Grimaud
    
	
 
    	
 
    	
Name:
    	
Brett A. Grimaud
    
	
 
    	
 
    	
Title:
    	
Assistant Secretary, Vice President and
    
	
 
    	
 
    	
 
    	
Assistant General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Percentage of membership interests of Issuer Pledged Equity as of the   date hereof: 100%
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Notice Information pursuant to Section 16.1:
    
	
 
    	
 
    	
Theravance Biopharma R&D, Inc.
    
	
 
    	
 
    	
c/o Theravance Biopharma US, Inc.
    
	
 
    	
 
    	
901 Gateway Boulevard
    
	
 
    	
 
    	
South San Francisco, CA 94080
    
	
 
    	
 
    	
Attention: Brett A. Grimaud, Assistant
    
	
 
    	
 
    	
Secretary, Vice President and
    
	
 
    	
 
    	
Assistant General Counsel
    
	
 
    	
 
    	
Facsimile: (650) 808-6095
    
	
 
    	
 
    	
Email: BGrimaud@theravance.com
    

 

TRIPLE ROYALTY SUB LLC

Pledge and Security Agreement

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