EXHIBIT 2.04
REVENUE INTEREST ASSIGNMENT AGREEMENT
Dated as of October 28, 2003
among
ARTERY, LLC,
as Assignor,
GUILFORD PHARMACEUTICALS INC.,
GPI HOLDINGS, INC.
and
▇▇▇▇ ROYALTY FUND, L.P.,
and
▇▇▇▇ ROYALTY FUND HOLDINGS II
as Assignees
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
Table of Contents
(continued)
Page
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ARTICLE I DEFINITIONS............................................................................................1
Section 1.01 Definitions................................................................................1
ARTICLE II PURCHASE AND SALE OF ASSIGNED INTERESTS..............................................................23
Section 2.01 Purchase and Sale.........................................................................23
Section 2.02 Payments in Respect of the Assigned Interests.............................................24
Section 2.03 Purchase Price............................................................................28
Section 2.04 No Assumed Obligations....................................................................28
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND GUILFORD.............................................28
Section 3.01 Organization..............................................................................29
Section 3.02 Corporate Authorization...................................................................29
Section 3.03 Governmental Authorization................................................................29
Section 3.04 Ownership.................................................................................30
Section 3.05 Financial Statements......................................................................30
Section 3.06 No Undisclosed Liabilities................................................................30
Section 3.07 Solvency..................................................................................30
Section 3.08 Litigation................................................................................30
Section 3.09 Compliance with Laws......................................................................31
Section 3.10 Conflicts.................................................................................31
Section 3.11 Material Contracts........................................................................32
Section 3.12 Intellectual Property.....................................................................32
Section 3.13 Regulatory Approval.......................................................................33
Section 3.14 Subordination.............................................................................33
Section 3.15 Place of Business.........................................................................34
Section 3.16 Broker's Fees.............................................................................34
Section 3.17 Other Information.........................................................................34
Section 3.18 Distribution Agreements and License Agreements............................................34
Section 3.19 Insurance.................................................................................37
Section 3.20 Accuracy of Reports.......................................................................37
Section 3.21 * Representations; Closing................................................................37
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ASSIGNEES..........................................................37
Section 4.01 Organization..............................................................................37
Section 4.02 Authorization.............................................................................38
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*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
Page
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Section 4.03 Broker's Fees.............................................................................38
Section 4.04 Conflicts.................................................................................38
Section 4.05 Consents..................................................................................38
Section 4.06 Tax Representation........................................................................39
ARTICLE V COVENANTS.............................................................................................39
Section 5.01 Consents and Waivers......................................................................39
Section 5.02 Access; Books and Records.................................................................39
Section 5.03 Material Contracts........................................................................40
Section 5.04 Confidentiality; Public Announcement......................................................40
Section 5.05 Quarterly Reports.........................................................................41
Section 5.06 Right of First Refusal....................................................................42
Section 5.07 Purchase Options..........................................................................43
Section 5.08 Security Agreements.......................................................................47
Section 5.09 Best Efforts; Further Assurance...........................................................48
Section 5.10 Remittance to Lockbox Account.............................................................49
Section 5.11 Additional Covenants of Assignor, GPI Holdings and Guilford...............................51
Section 5.12 Future Agreements.........................................................................56
Section 5.13 Guarantee.................................................................................57
Section 5.14 Financial Statements......................................................................58
ARTICLE VI THE CLOSING; CONDITIONS TO CLOSING AND FUNDING.......................................................58
Section 6.01 Closing...................................................................................58
Section 6.02 Conditions Applicable to Assignees........................................................59
Section 6.03 Conditions Applicable to Assignor.........................................................62
ARTICLE VII TERMINATION.........................................................................................63
Section 7.01 Termination Date..........................................................................63
Section 7.02 Effect of Termination.....................................................................63
ARTICLE VIII MISCELLANEOUS......................................................................................63
Section 8.01 Survival..................................................................................63
Section 8.02 Specific Performance......................................................................64
Section 8.03 Notices...................................................................................64
Section 8.04 Successors and Assigns....................................................................66
Section 8.05 Indemnification...........................................................................66
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Section 8.06 Expenses..................................................................................68
Section 8.07 Independent Nature of Relationship........................................................68
Section 8.08 Federal Tax...............................................................................68
Section 8.09 Entire Agreement..........................................................................69
Section 8.10 Amendments; No Waivers....................................................................69
Section 8.11 Interpretation............................................................................69
Section 8.12 Headings and Captions.....................................................................70
Section 8.13 Counterparts; Effectiveness...............................................................70
Section 8.14 Severability..............................................................................70
Section 8.15 Governing Law; Jurisdiction...............................................................70
Section 8.16 Waiver of Jury Trial......................................................................71
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EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A - * Sales
Exhibit B - Financial Statements
Exhibit C - ▇▇▇▇ of Sale
Exhibit D - Assignor-Assignee Security Agreement
Exhibit D-1 - Guilford-Assignor Security Agreement
Exhibit D-2 - Guilford-Assignee Security Agreement
Exhibit E(i) - Legal Opinion ▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P.
Exhibit E(ii) - Legal Opinion of Patent Counsel
Exhibit F - LLC Agreement
Exhibit G - Certificate of Formation
Exhibit H - Management Agreement
Exhibit I - Warrant
Exhibit J - Aggrastat Net Sales Projection and Budget
Exhibit K - Pledge Agreement
Exhibits L -N-Conversion Documents
Exhibit O - Acceptable Investments
SCHEDULES
Schedule 1.01 - Applicable Percentage
Schedule 3.02 - Corporate Authorization
Schedule 3.04 - Liens
Schedule 3.06 - Liabilities
Schedule 3.08 - Litigation
Schedule 3.09 - Compliance with Laws
Schedule 3.10 - Conflicts
Schedule 3.12(a) - Registered Intellectual Property
Schedule 3.12(b) - Intellectual Property Agreements
Schedule 3.12(c) - Issues Associated with Intellectual Property Agreements
Schedule 3.12(d) - Third Party Intellectual Property Rights
Schedule 3.12(f) - Restrictions On Granting Powers Under Distribution Agreements
and Licensing Agreements
Schedule 3.12(i) - Payments On Primary Products and Intellectual Property
Schedule 3.12(k) - Disputes
Schedule 3.15 - Place of Business
Schedule 3.17 - Other Information
Schedule 3.18(a) - Distribution Agreements and License Agreements
Schedule 3.18(a)(iii) - Notices of Intention to Terminate Distribution
Agreements and License Agreements
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
iv
Schedule 3.18(a)(iv) - Right to Receive Payments Under Distribution Agreements
and License Agreements
Schedule 3.18(a)(v) - Required Payments Under Distribution Agreements and
License Agreements
Schedule 3.18(b) - Correspondence and Written Communications Regarding
Distribution Agreements and License Agreements
Schedule 3.19 - Insurance
Schedule 5.07(a) - Assignees Option Repurchase Price
Schedule 5.07(b)(i) - Assignor Option Repurchase Price
Schedule 5.07(b)(ii)(A) - Call Price
Schedule 5.07(b)(ii)(B) - Secured Financing Event Price
Schedule 5.07(c) - Payment Factors
Schedule 6.02(g) - UCC Filing Jurisdictions
Schedule 8.08 - Federal Tax-Projected Payment Schedule
#The Company has omitted certain schedules in accordance with Regulation S-K
601(b)(2). The Company will furnish the omitted schedules to the Commission
upon request.
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REVENUE INTEREST ASSIGNMENT AGREEMENT
REVENUE INTEREST ASSIGNMENT AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "Agreement") is made
and entered into as of October 28, 2003 by and among GUILFORD PHARMACEUTICALS
INC., a Delaware corporation ("Guilford"), GPI HOLDINGS, INC., a Delaware
corporation and wholly-owned subsidiary of Guilford ("GPI Holdings"), ARTERY,
LLC, a Delaware limited liability company and wholly-owned subsidiary of GPI
Holdings ("Assignor"), and ▇▇▇▇ ROYALTY FUND, L.P., a Delaware limited
partnership ("Fund") and ▇▇▇▇ ROYALTY FUND HOLDINGS II, a California general
partnership ("Holdings"), (each an "Assignee" and together, the "Assignees").
WHEREAS, Assignor is the owner of the Intellectual Property
(as hereinafter defined) and the Regulatory Approvals (as hereinafter defined)
with respect to the Primary Products and the other rights, assets, and
properties acquired by Assignor under the Merck Purchase Agreement and the
Assignment Documents; and
WHEREAS, Assignor has the right to payments under the
Management Agreement (as hereinafter defined); and
WHEREAS, Assignor wishes to sell, assign, convey and transfer
to Assignees, and Assignees wish to purchase from Assignor, the Assigned
Interests (as hereinafter defined), upon and subject to the terms and conditions
hereinafter set forth; and
NOW, THEREFORE, in consideration of the mutual covenants,
agreements representations and warranties set forth herein, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS.
The following terms, as used herein, shall have the following
meanings:
"Acceptable Investments" shall mean the types of investments,
and subject to the applicable concentration limits, described in the GPI
Holdings, Inc. - Short Term Investment Policy attached as Exhibit O.
"Affiliate" shall mean, with respect to any Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person.
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
"After Acquired Products" shall mean any products acquired or
in-licensed by Guilford or any Subsidiary of Guilford after the Closing, whether
individually or as part of an acquisition, merger or other transaction, and any
product that is developed internally by Guilford or a Subsidiary of Guilford
that is competitive with either of the Primary Products.
"After Acquired Products Net Sales" shall mean, for any period
of determination, the aggregate gross revenues of Guilford and its Affiliates,
calculated in accordance with GAAP, with respect to the After Acquired Products,
arising from direct sales, royalties or otherwise, earned by Guilford and its
Affiliates during such period, less, in the case of direct sales only, (i)
customary cash trade discounts and rebates actually granted or paid solely in
connection with After Acquired Products sold after the Closing, (ii) allowances
and adjustments actually credited to customers for After Acquired Products that
are spoiled, damaged, outdated, obsolete, returned or otherwise recalled and are
solely in connection with After Acquired Products sold after the Closing, (iii)
allowances and adjustments actually credited to customers for a recall by a
Government Authority of any After Acquired Product sold after the Closing, (iv)
charges included as part of the aggregate sales for freight, postage, shipping
and insurance charges, to the extent invoiced, and (v) taxes, duties or other
governmental charges when included in the invoice, plus any proceeds (including
payments of whatever type and whenever received) received by Guilford and its
Affiliates from the Transfer of an After Acquired Product or the Intellectual
Property, Regulatory Approvals or related assets with respect to an After
Acquired Product. In calculating After Acquired Product Net Sales, any Transfer
from Guilford to an Affiliate shall be disregarded and the calculation shall
instead be based on the first Transfer to an unrelated third party.
"Aggrastat" shall mean
(a) the product currently known and marketed as AGGRASTAT(R),
(b) the active pharmaceutical ingredient tirofiban
hydrochloride,
(c) the formulated solutions for intravenous injection or
infusion containing tirofiban hyrdrochloride marketed under the trademark
AGGRASTAT(R),
(d) any formulation of or product containing or comprised of
tirofiban hyrdrochloride, or any derivative thereof (including but not limited
to any stereoisomers, either separated or combined, any hydrates, any salts, any
solvates and any crystal forms), and
(e) any reformulation or line extension of such product, any
product containing or comprised of the same active pharmaceutical ingredient as
such product, regardless of dosage or method of administration, and any
improvement, enhancement, refinement or modification of such product.
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"Aggrastat Regulatory Approvals" shall mean with respect to
Aggrastat, collectively, all INDs, NDAs and other regulatory approvals,
registrations and associated materials (including the product dossier),
including IND No. 38,899, NDA No. 20-912 (vial concentrate) and NDA No. 20-913
(pre-mixed bag) acquired from Merck, and all reports, correspondence and other
submissions related thereto and the regulatory and clinical files and data
pertaining thereto, and all information, data, know-how, formulations, assays,
goodwill or intellectual property contained in such IND and the NDAs, relating
to Aggrastat in the United States and its territories and possessions, together
with all amendments, supplements and updates thereto, and all comparable
regulatory approvals, registrations and associated materials throughout the
world.
"Agreement" shall have the meaning set forth in the first
paragraph hereof.
"Applicable Percentage" shall mean, as of any date of
determination:
(a) for the period from the Closing Date through and including
December 31, 2006:
(i) with respect to annual Primary Products Net Sales
earned during a calendar year after the Closing Date
(including 2003) of up to and including $75 million, 10% of
such Primary Products Net Sales for such calendar year, and in
addition, to the extent that Primary Products Net Sales for
such calendar year are less than the * Sales for such calendar
year, 10% of the lesser of (A) the After Acquired Products Net
Sales for such calendar year and (B) (x) the * Sales for such
calendar year less (y) the Primary Products Net Sales for such
calendar year, and
(ii) with respect to annual Primary Products Net
Sales earned during a calendar year after the Closing Date
(including 2003) in excess of $75 million, 2.5% of such excess
Primary Products Net Sales for such calendar year and in
addition, to the extent that Primary Products Net Sales for
such calendar year are less than the * Sales for such calendar
year, 2.5% of the lesser of (A) the After Acquired Products
Net Sales for such calendar year and (B) (x) the * Sales for
such calendar year less (y) the Primary Products Net Sales for
such calendar year, and
(b) for the period from January 1, 2007 through and including
December 31, 2012:
(i) with respect to annual Primary Products Net Sales
earned during a calendar year up to and including $75 million,
17.5% of such Primary Products Net Sales for such calendar
year and in addition, to the extent that Primary Products Net
Sales for such calendar year are less than the * Sales for
such calendar year, 17.5% of the lesser of (A) After
Acquired Products Net Sales for such calendar year and (B) (x)
the * Sales for such calendar year less (y) the Primary
Products Net Sales for such calendar year, and
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
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(ii) with respect to annual Primary Products Net
Sales earned during a calendar year in excess of $75 million,
3.5% of such excess Primary Products Net Sales for such
calendar year and in addition, to the extent that Primary
Products Net Sales for such calendar year are less than the
* Sales for such calendar year, 3.5% of the lesser of (A) the
After Acquired Products Net Sales for such calendar year and
(B) (x) the * Sales for such calendar year less (y) the
Primary Products Net Sales for such calendar year.
Notwithstanding the foregoing:
(x) if, for any of calendar years 2004, 2005 or 2006, the
Primary Products Net Sales and the After Acquired Products Net Sales
collectively are less than 75% of the * Sales for such year, then the Applicable
Percentage set forth in clause (a)(i) above shall be 12.5% rather than 10% for
such calendar year, *;
(y) if, for any calendar year after December 31, 2006, the
Primary Products Net Sales and After Acquired Products Net Sales collectively
are less than $75 million, the Applicable Percentage set forth in clause (b)(i)
above shall be 22.5% rather than 17.5% for such calendar year, provided,
however, that if the 22.5% rate is applicable in a particular year, then
Assignees will not receive any payments pursuant to clause (b)(ii) above for
that year;
(z) if, for any calendar year during the Term, Primary
Products Net Sales plus After Acquired Products Net Sales for such calendar year
are less than the * Sales for Primary Products for such calendar year, then the
Applicable Percentage shall additionally include an amount equal to 2.5% of the
lesser of (i) Secondary Products Net Sales for such calendar year and (ii) (A)
* Sales for such calendar year less (B) the sum of Primary Products Net Sales
for such calendar year and After Acquired Products Net Sales for such calendar
year; and
The foregoing definition of the Applicable Percentage is to be
interpreted in accordance with the illustrative examples set forth on Schedule
1.01 hereto.
"Assigned Interests" shall mean an undivided interest in the
right to receive amounts payable to Assignor by Guilford under the Management
Agreement, without any offset or reduction for any amounts payable by Assignor
to Guilford under the Management Agreement, equal to the Applicable Percentage
of Total Net Sales and all other amounts payable in accordance with Section
2.02.
"Assignees" shall have the meaning set forth in the first
paragraph hereof.
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
4
"Assignees Concentration Account" shall mean a segregated
account established for the benefit of Assignees and maintained at the Lockbox
Bank pursuant to the terms of the Lockbox Agreement and this Agreement.
Assignees Concentration Account shall be the account into which the funds held
in the Joint Concentration Account which are payable to Assignees pursuant to
this Agreement are swept by the Lockbox Bank in accordance with the terms of
this Agreement and the Lockbox Agreement.
"Assignees Indemnified Party" shall have the meaning set forth
in Section 8.05(a).
"Assignees Option Repurchase" shall have the meaning set forth
in Section 5.07(a).
"Assignees' Account" shall mean an account maintained by
Assignees at any financial institution and designated in writing by Assignees to
Assignor, as Assignees may so designate from time to time.
"Assignees' Consultants" shall mean, collectively, Assignees'
employees, officers, directors, legal and accounting advisors, agents or other
authorized representatives.
"Assignor" shall have the meaning set forth in the first
paragraph hereof.
"Assignor-Assignees Security Agreement" shall mean the
Security Agreement dated as of October 28, 2003 by and between Assignor and
Assignees providing for, among other things, the grant by Assignor in favor of
Assignees of a valid continuing, perfected lien on and security interest in, the
collateral described therein. "Assignor Concentration Account" shall mean a
segregated account established and maintained at the Lockbox Bank pursuant to
the terms of the Lockbox Agreement and this Agreement. Assignor Concentration
Account shall be the account into which the funds remaining in the Joint
Concentration Account after payment therefrom of the amounts payable to
Assignees pursuant to this Agreement are swept in accordance with the terms of
this Agreement.
"Assignor Indemnified Party" shall have the meaning set forth
in Section 8.05(b).
"Assignor Option Event" shall mean any one of the following
events:
(i) a Change of Control; or
(ii) the acquisition by Guilford of a product for
more than $100 million in cash at closing;
or
(iii) the refinancing of all indebtedness for
borrowed money in a single transaction or a
series of related transactions, as such
indebtedness may
5
exist from time to time, of Guilford and its
Subsidiaries, other than leasehold debt,
equipment financing and working capital
revolving lines of credit.
"Assignor Option Repurchase" shall have the meaning set forth
in Section 5.07(b).
"Assignor Option Repurchase Price" shall have the meaning set
forth in Section 5.07(b).
"Assignor's Account" shall have the meaning set forth in
Section 2.03(b).
"Audit Costs" shall mean, with respect to any audit of the
books and records of Assignor with respect to amounts payable or paid under this
Agreement or any License Party Audit, the cost of such audit, including, without
limitation, all fees, costs and expenses incurred in connection therewith.
"Audit Reports" shall mean, with respect to a License Party
Audit, any and all reports, findings and other written information related to
such License Party Audit.
"Bankruptcy Event" shall mean:
(i) Guilford, GPI Holdings or Assignor shall
commence any case, proceeding or other
action (A) under any existing or future law
of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency,
reorganization, relief of debtors or the
like, seeking to have an order for relief
entered with respect to it, or seeking to
adjudicate it bankrupt or insolvent, or
seeking reorganization, arrangement,
adjustment, winding-up, liquidation,
dissolution, composition or other relief
with respect to it or its respective debts,
or (B) seeking appointment of a receiver,
trustee, custodian or other similar official
for it or for all or any portion of its
assets, or Assignor, GPI Holdings or
Guilford shall make a general assignment for
the benefit of its respective creditors; or
(ii) there shall be commenced against Assignor,
GPI Holdings or Guilford any case,
proceeding or other action of a nature
referred to in clause (i) above which
remains undismissed, undischarged or
unbonded for a period of ninety (90) days;
or
(iii) there shall be commenced against Assignor,
GPI Holdings or Guilford any case,
proceeding or other action seeking issuance
of a warrant of attachment, execution,
distraint or similar process against (A) all
or any
6
major portion of its assets and/or (B)
either of the Primary Products, or any
significant portion of the Intellectual
Property related to either of the Primary
Products, which results in the entry of an
order for any such relief which shall not
have been vacated, discharged, stayed,
satisfied or bonded pending appeal within
forty-five (45) days from the entry thereof;
or
(iv) Assignor, GPI Holdings or Guilford shall
take any action in furtherance of, or
indicating its consent to, approval of, or
acquiescence in, any of the acts set forth
in clause (i), (ii) or (iii) above of this
definition of "Bankruptcy Event";
(v) Assignor, GPI Holdings or Guilford shall
generally not, or shall be unable to, or
shall admit in writing its inability to, pay
its respective debts as they become due; or
(vi) Assignor, GPI Holdings or Guilford shall be
Insolvent.
"▇▇▇▇ of Sale" shall mean the ▇▇▇▇ of Sale pursuant to which
Assignor shall assign to Assignees all of its rights and interests in and to the
Assigned Interests purchased hereunder, which ▇▇▇▇ of Sale shall be
substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a Saturday, a
Sunday, any day which is a legal holiday under the laws of the State of New
York, or any day on which banking institutions located in the State of New York
are required by law or other governmental action to close.
"Call" shall have the meaning as set forth in Section 5.07(b).
"Call Price" shall have the meaning as set forth in Section
5.07(b).
"Certificate of Formation" shall mean the certificate of
formation of Assignor, dated as of October 27, 2003, a copy of which is attached
hereto as Exhibit G.
"Change of Control" shall mean:
(i) the acquisition by any Person or group
(within the meaning of Sections 13(d)(3) or
14(d)(2) of the Securities Exchange Act of
1934) (other than any trustee or other
fiduciary holding securities under an
employee benefit plan of Guilford or any
entity controlled by Guilford) of beneficial
ownership of any capital stock of Guilford,
if after such acquisition, such Person or
group would be the "beneficial owner" (as
defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or
indirectly, of
7
securities of Guilford representing more
than 50% of the combined voting power of
Guilford's then outstanding securities
entitled to vote generally in the election
of directors; or
(ii) Guilford's stockholders approve a merger or
consolidation of Guilford, with any other
Person, other than a merger or consolidation
which would result in Guilford's voting
securities outstanding immediately prior
thereto continuing to represent (either by
remaining outstanding or by being converted
into voting securities of the surviving
entity) more than 50% of the combined voting
power of Guilford's voting securities or
such surviving entity's voting securities
outstanding immediately after such merger or
consolidation; or
(iii) during any period of two consecutive years,
individuals who at the beginning of such
period constitute the Board of Directors of
Guilford (together with any new directors
(other than a director designated by a
Person who has entered into an agreement
with Guilford to effect a transaction
described in clause (i) or (ii) of this
definition of "Change of Control"), whose
election by such Board of Directors or
nomination for election by Guilford's
stockholders, as applicable, was approved by
a vote of a majority of the directors then
still in office who either were directors at
the beginning of such period or whose
election or nomination for election was
previously so approved) cease for any reason
to constitute at least a majority of the
Board of Directors of Guilford then in
office; or
(iv) GPI Holdings ceases to be the sole owner of
100% of the membership interests in the
Assignor;
(v) Guilford ceases to be the direct or indirect
sole owner of 100% of the capital stock of
GPI Holdings; or
(vi) Assignor merges or is consolidated with any
other Person.
"Closing" shall have the meaning set forth in Section 6.01.
"Closing Date" shall mean October 28, 2003.
"Collateral" shall mean the property included in the
definition of "Collateral" in any of the Security Agreements.
8
"Confidential Information" shall mean, as it relates to
Assignor, Guilford, Guilford's Affiliates and the Products, the Intellectual
Property, know-how, trade secrets, confidential business information, financial
data and other like information (including ideas, research and development,
know-how, formulas, schematics, compositions, technical data, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), inventory, ideas, algorithms, processes,
computer software programs or applications (in both source code and object code
form), client lists and tangible or intangible proprietary information or
material. Notwithstanding the foregoing definition, Confidential Information
shall not include information that is (i) already in the public domain at the
time the information is disclosed, (ii) thereafter becomes lawfully obtainable
from other sources, (iii) is required to be disclosed in any document to be
filed with any Government Authority or (iv) is required to be disclosed under
securities laws, rules and regulations applicable to Assignor or Guilford, as
the case may be, or pursuant to the rules and regulations of the Nasdaq National
Market or any other stock exchange or stock market on which securities of
Guilford may be listed for trading.
"Consolidated EBITDA" shall mean for any period, the sum
(without duplication) of (i) Consolidated Net Income and (ii) to the extent
Consolidated Net Income has been reduced thereby, (A) all income taxes of the
Surviving Party and its Subsidiaries paid or accrued in accordance with GAAP for
such period (other than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses or taxes attributable to sales or dispositions
outside of the ordinary course of business), (B) Total Debt Service and (C) the
aggregate depreciation, amortization and other noncash expenses of the Surviving
Party and its Subsidiaries reducing Consolidated Net Income of the Surviving
Party for such period, determined on a consolidated basis in accordance with
GAAP (excluding any such charges constituting an extraordinary item or loss or
any charge which requires an accrual of or a reserve for cash charges for any
future period) less any noncash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for the Surviving Party
and its Subsidiaries in accordance with GAAP.
"Consolidated Net Income" shall mean the aggregate net income
(or loss) of the Surviving Party and its Subsidiaries for such period on a
consolidated basis, determined in accordance with GAAP; provided that there
shall be excluded therefrom (a) after-tax gains or losses from the sale of
assets outside of the ordinary course of business, including sale and leaseback
transactions and sale of any stock of the Surviving Party to any Person
(excluding the disposal and replacement of obsolete equipment in the ordinary
course of business) or abandonments or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains or losses, (c) the net
income (but not loss) of any Subsidiary to the extent that the declaration of
dividends or similar distributions by that Subsidiary of that income is
restricted by contract, operation of law or otherwise, (d) income or loss
attributable to discontinued operations (including, without limitation,
operations disposed of during such period whether or not such operations were
classified as discontinued), and (e) any noncash losses attributable to
9
the use of a fair value methodology for recognition and measurement of
impairment of goodwill not identified with impaired assets in accordance with
Financial Accounting Standards Board Statement No. 142.
"Contract Party" shall mean any party to a Distribution
Agreement or License Agreement.
"Conversion Documents" shall mean the Certificate of
Conversion, dated October 27, 2003, relating to the conversion by GPI Polymer
Holdings, Inc., from a Delaware corporation to the Delaware limited liability
company that adopted the LLC Agreement.
"Daily Amount" shall have the meaning set forth in Section
2.02(a).
"Deposit Accounts" shall mean, collectively, the Lockbox
Account, the Joint Concentration Account, Assignor Concentration Account and
Assignees Concentration Account, each established and maintained pursuant to the
Lockbox Agreement.
"Discrepancy Notice" shall have the meaning set forth in
Section 2.02(h).
"Distribution Agreement" shall mean any existing or future
agreement (whether or not in writing) pursuant to which Guilford, or any
Affiliate or agent of Guilford, or any other Person markets or sells the
Products, whether to end-users, for redistribution by the purchaser thereof, or
otherwise, or to license distribution of the Products or the use of the
Intellectual Property.
"Dollars" or "US$" shall mean the freely transferable lawful
money of the United States.
"EBITDA to Total Debt Service Ratio" shall mean the ratio of
(a) Consolidated EBITDA for the period of four consecutive fiscal quarters (the
"Measurement Period") ending on such date, to (b) the Total Debt Service for
such Measurement Period.
"Excluded Liabilities and Obligations" shall have the meaning
set forth in Section 2.04.
"Excluded Transfer" shall mean (i) a Transfer to a Person that
is not an Affiliate of Guilford pursuant to a Distribution Agreement or License
Agreement and that (a) is entered into in the ordinary course of Guilford's or
Assignor's business, (b) does not have the effect of a complete or outright
transfer of any of the Products or substantial portion of the economic value of
any of the Products, and (c) does not entitle Guilford or any of its Affiliates
or Assignor to one or more lump sum payments in an aggregate amount in excess of
$1,000,000 in consideration of the Transfer or any related series of Transfers
or (ii) the Transfer by Guilford of all or any part of
10
any After Acquired Product or any Secondary Product or the Intellectual Property
or Regulatory Approvals related thereto if, at the time of such Transfer, the
quotient, expressed as a percentage, of (A) the fair market value of the assets
proposed to be sold divided by (B) the product of the number of shares of
Guilford common stock then issued and outstanding and the average daily closing
price for such stock as quoted on the primary exchange on which such shares are
quoted (and if not so quoted or listed at any time, the average daily bid and
ask price as quoted in the pink sheets) for the ten (10) trading days prior to
the date of the Transfer is less than 50% and (iii) a Gliadel Foreign
Transaction.
"FDA" shall mean the United States Food and Drug
Administration.
"Financial Statements" shall mean the consolidated balance
sheets of Guilford and its Subsidiaries at December 31, 2001, December 31, 2002
and June 30, 2003 and the related consolidated statements of operations, cash
flows and changes in stockholders' equity of Guilford and its Subsidiaries
audited for the years ended December 31, 2001 and December 31, 2002 and
unaudited for the six months ended June 30, 2003, and the accompanying footnotes
thereto, copies of which are attached hereto as Exhibit B.
"Future Agreement" shall mean any distribution, licensing or
similar agreement entered into by Guilford or any Affiliate of Guilford with any
other Person after the date hereof relating to the marketing and/or sale of any
of the Products, as the same may be amended, supplemented or otherwise modified
from time to time.
"GAAP" shall mean generally accepted accounting principles in
the United States in effect from time to time.
"Gliadel" shall mean:
(a) the product currently known and marketed under the
trademark GLIADEL(R),
(b) the pharmaceutical composition comprising the
biodegradable polymer prolifeprosan 20 and the active pharmaceutical ingredient
carmustine (BCNU),
(c) the formulation marketed under the trademark
GLIADEL(R)Wafer,
(d) any formulation or product comprising or containing
prolifeprosan 20 and carmustine (BCNU), or any derivative thereof (including but
not limited to any stereoisomers, either separated or combined, any hydrates,
any salts, any solvates and any crystal forms), and
(e) any reformulation or line extension of such product, any
product containing or comprised of the same biodegradable polymer and the same
active pharmaceutical ingredient as
11
such product, regardless of dosage or method of administration, and any
improvement, enhancement, refinement or modification of such product.
"Gliadel Foreign Transaction" shall mean the Transfer in whole
or in part of Gliadel, or the Intellectual Property and Regulatory Approvals
with respect to Gliadel, to a Person that is not an Affiliate of Guilford,
solely for manufacture, sale, distribution or license outside North America.
"Gliadel Regulatory Approvals" shall mean, collectively, all
INDs, NDAs and other regulatory approvals, registrations and associated
materials (including the product dossier) relating to Gliadel, issued by the FDA
as to Gliadel and all reports, correspondence and other submissions related
thereto and the regulatory and clinical files and data pertaining thereto, and
all information, data, know-how, formulations, assays, goodwill or intellectual
property contained in such INDs and the NDAs, relating to Gliadel together with
all amendments, supplements and updates thereto, and all comparable regulatory
approvals, registrations and associated materials throughout the world.
"Governmental Authority" means any government, court,
regulatory or administrative agency or commission, or other governmental
authority, agency or instrumentality, whether foreign, federal, state or local
(domestic or foreign), including, without limitation, the U.S. Patent and
Trademark Office, the FDA, the U.S. National Institute of Health or any other
government authority in any country.
"GPI" shall mean GPI Polymer Holdings, Inc., a Delaware
corporation.
"GPI Holdings" shall have the meaning set forth in the first
paragraph hereof.
"Guaranteed Obligations" shall have the meaning set forth in
Section 5.13(a).
"Guilford" shall have the meaning set forth in the first
paragraph hereof.
"Guilford-Assignees Security Agreement" shall mean the
Security Agreement dated as of October 28, 2003 by and between Assignees and
Guilford providing for, among other things, the grant by Guilford in favor of
Assignees of a valid continuing, perfected lien on and security interest in, the
Collateral described therein.
"Guilford-Assignor Security Agreement" shall mean the Security
Agreement dated as of October 28, 2003 by and between Assignor and Guilford
providing for, among other things, the grant by Guilford in favor of Assignor of
a valid continuing, perfected lien on and security interest in, the collateral
described therein.
12
"Guilford 5% Convertible Subordinated Notes" shall mean the
notes issued by Guilford under the Subordinated Indenture.
"Included Products Payments" shall mean the sum of all Primary
Products Net Sales, After Acquired Products Net Sales and Secondary Products Net
Sales.
"IND" shall mean an investigational new drug application as
defined in 21 C.F.R. Section 312 et seq. filed with the FDA in the United States
or an equivalent application filed with a Regulatory Agency in any country
outside of the United States.
"Indebtedness" means with respect to any Person, (a) any
liability of such Person (1) for borrowed money, or under any reimbursement
obligation relating to a letter of credit, or (2) evidenced by a bond, note,
debenture, or similar instrument (including a purchase money obligation) given
in connection with the acquisition of any businesses, properties or assets of
any kind (other than a trade payable or a current liability arising in the
ordinary course of business), or (3) for the payment of money relating to any
obligations under any capital lease of real or personal property which has been
recorded as a capitalized lease obligation; (b) all redeemable stock issued by
such Person that is mandatorily redeemable or redeemable or required to be
repurchased at the election of the holder thereof (the amount of Indebtedness
represented by any involuntary liquidation preference plus accrued and unpaid
dividends); (c) any liability of others described in the preceding clause (a)
that the Person has guaranteed or that is otherwise its legal liability; and (d)
(without duplication) any amendment, supplement, modification, deferral,
renewal, extension or refunding of any liability of the types referred to in
clauses (a), (b) and (c) above.
"Independent Accountants" shall have the meaning set forth in
Section 2.02(h).
"Insolvent" shall mean, with respect to a Person, a financial
condition such that the sum of such Person's debts is greater than the fair
market value of such Person's property, when taken together on a consolidated
basis. When used with respect to Assignor or Guilford, the debts of such
entities shall include the obligations of Guilford under this Agreement and the
obligation of Assignor to make payments in respect of the Assigned Interests
pursuant to this Agreement, including any payments pursuant to Section 5.07.
"Intellectual Property" shall mean all trade secrets;
Know-How; Confidential Information; inventions (whether patentable or
unpatentable and whether or not reduced to practice) and all improvements
thereto; all patents, patent rights, patent applications and invention
disclosures, together with all reissuance, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof; all registered or
unregistered trademarks, trade names, service marks, including all goodwill
associated therewith; all domain names and websites; and all registered and
unregistered copyrights and all applications, in each case that are
13
owned, controlled by, issued to, licensed to, licensed by or hereafter acquired
by or licensed by Assignor, Guilford or any Subsidiary of Guilford, in each case
relating to or involving the Products.
"Joint Concentration Account" shall mean a segregated account,
subject to a control agreement in favor of the Assignees, established for the
benefit of Assignor and Assignees and maintained at the Lockbox Bank pursuant to
the terms of the Lockbox Agreement and this Agreement. The Joint Concentration
Account shall be the account into which the Lockbox Bank sweeps the funds held
in the Lockbox Account.
"Know-How" means relating solely to the Products, all trade
secrets, materials, discoveries, data, processes, methods of manufacture,
devices, techniques, algorithms, flow charts, computer software programs or
applications (in both source code and object code form), schematics,
compositions, formulations, formula, specifications, uses, patterns,
compilations and other information, including, but not limited to (i) medical,
chemical, pharmacological and other scientific or clinical data or materials and
(ii) methodology and information used in the manufacture, packaging, labeling,
development, testing or analysis of the Products, that, in each case, derives
actual or potential independent economic value from not generally being known
to, and not being readily ascertainable by proper means by, other Persons who
can obtain economic value from its disclosure or use, and that is now owned,
controlled or licensed by Assignor, Guilford or any Subsidiary of Guilford, or
that is hereafter acquired or licensed by Assignor, Guilford of any Subsidiary
of Guilford during the term of this Agreement.
"Knowledge" shall mean, with respect to Assignor and/or
Guilford, as applicable, the knowledge of an officer of such Person relating to
a particular matter.
"Letter of Intent" shall mean the letter dated September 25,
2003 between ▇▇▇▇ Capital Partners and Guilford as the same may be amended to
the date hereof.
"License Agreement" shall mean any existing or future
distribution, co-promotion, manufacturing, marketing or partnering agreements
entered into by Guilford relating to the Products and/or the Intellectual
Property pursuant to which Guilford or any Affiliate of Guilford grants a
license under intellectual property rights that relate to the Products or the
Intellectual Property.
"License Party Audit" shall have the meaning set forth in
Section 5.12(d).
"Licensed Intellectual Property" shall mean any intellectual
property licensed to Assignor or Guilford by a third party.
"Liquidity Account" shall have the meaning set forth in
Section 5.07(h).
14
"LLC Agreement" shall mean the limited liability company
agreement of Assignor dated as of October 27, 2003, a true and correct copy of
which is attached as Exhibit F.
"Liens" shall mean all liens, encumbrances, security
interests, mortgages, rights to preferential payments or charges of any kind.
"Lockbox Account" shall mean collectively, any lockbox and
segregated lockbox account established and maintained at the Lockbox Bank
pursuant to a Lockbox Agreement and this Agreement. The Lockbox Account shall be
the account into which all payments made in respect of the sale of the Primary
Products are to be remitted.
"Lockbox Agreement" shall mean any agreement entered into by a
Lockbox Bank, Guilford, Assignor and Assignees, in form and substance reasonably
satisfactory to the parties thereto, pursuant to which, among other things, the
Lockbox Account, the Joint Concentration Account, Assignees Concentration
Account and Assignor Concentration Account shall be established and maintained.
"Lockbox Bank" shall mean ▇▇ ▇▇▇▇▇▇ Chase Bank or such other
bank or financial institution approved by each of Assignees and Assignor.
"Losses" shall mean collectively, any and all claims, damages,
losses, judgments, liabilities, costs and expenses (including, without
limitation, reasonable expenses of investigation and reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding).
"Management Agreement" shall mean the Management and Licensing
Agreement dated as of October 28, 2003 by and between Guilford and Assignor
providing for, among other things, a license in the Intellectual Property to
Guilford by Assignor to manufacture, use, sell, market, license and distribute
the Primary Products and the rights relating to Guilford's ability to enter into
manufacturing, licensing and distribution agreements with third parties to sell,
market, license and distribute the Primary Products, a true and correct copy of
which is attached as Exhibit H.
"Material Adverse Change" shall mean, with respect to Assignor
and/or Guilford, as applicable, a material adverse change in the business,
operations, assets, prospects or financial condition of the Assignor and/or
Guilford and its Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean (i) the effect of a
Material Adverse Change, (ii) a material adverse effect on the validity or
enforceability of any of the Transaction Documents, (iii) a material adverse
effect on the ability of the Assignor or Guilford to perform any of its
obligations under any of the Transaction Documents, (iv) a material adverse
effect on the rights or remedies of Assignees under any of the Transaction
Documents, (v) an adverse
15
effect on the right of Guilford or Assignor to receive any material payments
payable under any Distribution Agreement or License Agreement or any other
material rights and remedies of Guilford or Assignor under any Distribution
Agreement or License Agreement, (vi) a material adverse effect on the right of
Assignees to receive Assigned Interests or the Applicable Percentage of Total
Net Sales or any payment due to Assignees hereunder or (vii) a material adverse
effect on the Assigned Interests, including, without limitation, any material
adverse effect on the Primary Products or the After Acquired Products or the
ability of the Guilford to manufacture, distribute, market and/or sell the
Primary Products or the After Acquired Products or on the level of anticipated
Total Net Sales.
"Material Contracts" shall mean any contract, agreement or
other arrangement to which either Assignor, Guilford or a Subsidiary of Guilford
is a party or any of Assignor's, Guilford's or a Subsidiary of Guilford's
respective assets or properties are bound or committed (other than the
Transaction Documents) for which breach, nonperformance, cancellation or failure
to renew could reasonably be expected to have a Material Adverse Effect.
"Merck" shall mean Merck & Co., Inc., a New Jersey
corporation.
"Merck Purchase Agreement" shall mean the Asset Transfer and
License Agreement, dated as of October 28, 2003 between Merck & Co., Inc.,
Guilford.
"NDA" shall mean a New Drug Application, and all amendments
and supplements thereto, for regulatory approval by the FDA as defined in 21 CFR
ss. 314.50 et seq., as such act or regulations may be amended, supplemented or
replaced from time to time.
"Necessary Intellectual Property" shall have the meaning set
forth in Section 3.12(a).
"Notice Event" means either (a) Guilford's or Assignor's
intent to cause or to take any action to cause a Bankruptcy Event, (b) Guilford
or Assignor being advised or otherwise becoming aware that a Bankruptcy Event
(including an involuntary Bankruptcy Event) has occurred or will occur shortly
or (c) the presentation to Guilford's Board of Directors or to Assignor's
manager or other governing body or to any one of Guilford's directors or
managers by an officer, member of senior management, director or manager of
either Guilford or Assignor of a proposal to commence a bankruptcy proceeding or
otherwise cause a Bankruptcy Event.
"Notice of Election" shall have the meaning set forth in
Section 5.06(b).
"Obligations" shall mean any and all obligations of Assignor
or Guilford or GPI Holdings under this Agreement and the other Transaction
Documents.
"Offered Interests" shall have the meaning set forth in
Section 5.06(a).
16
"Other Interests" shall have the meaning set forth in Section
5.06(a).
"Owned Intellectual Property" shall have the meaning set forth
in Section 3.12(d).
"Patent Office" shall mean the respective patent office
(foreign or domestic) for any Patent.
"Patents" shall mean all current and future patents, patent
applications and patent disclosures, together with all reissuances, divisions,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof relating to the Products and/or the Intellectual Property, composition
of matter, formulation, or methods of manufacture or use thereof that are issued
or filed, including, without limitation, those identified on Schedule 3.12(a),
that, in each case, are owned, controlled by, issued to, licensed to, licensed
by or hereafter acquired by or licensed by Assignor, Guilford or any Subsidiary
of Guilford.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, but not including a
government or political subdivision or any agency or instrumentality of such
government or political subdivision.
"Pledge Agreement" shall mean the Pledge Agreement dated as of
the date hereof by and between GPI Holdings and Assignees providing for, among
other things, the grant of a security interest by GPI Holdings in favor of
Assignees of its membership interest in Assignor as security for GPI Holdings'
guarantee of Assignor's Obligations hereunder and GPI Holdings' Obligations
hereunder.
"Primary Products" shall mean Gliadel and Aggrastat.
"Primary Products Net Sales" shall mean, for any period of
determination, the aggregate gross end-user sales revenues of the Primary
Products in finished form earned during such period, as invoiced by Guilford,
its Affiliates, Contract Parties or others to end-users of the Primary Products
(provided, however, that Primary Product Net Sales with respect to sales of
Gliadel for each Territory outside North America shall instead be the aggregate
gross revenues of Guilford and its Affiliates, calculated in accordance with
GAAP, for such period with respect to Gliadel sales in such Territory for so
long as Guilford sells Gliadel in such Territory solely through third party
licensees and distributors) less (i) customary cash trade discounts and rebates
actually granted or paid solely in connection with sales after the Closing, (ii)
allowances and adjustments actually credited to customers for Primary Products
that are spoiled, damaged, outdated, obsolete, returned or otherwise recalled
and are solely in connection with Primary Products sold after the Closing, (iii)
allowances and adjustments actually credited to customers for a significant
recall by a Government Authority of any Primary Product sold after the Closing,
(iv) charges included as part of the aggregate sales for freight, postage,
shipping and insurance
17
charges, to the extent invoiced, and (v) taxes, duties or other governmental
charges when included in the invoice (provided that the total of all amounts in
clauses (i) through (iv) for sales of Gliadel for any period shall not exceed
*% of the aggregate gross end-user sales revenues of Gliadel for such period
and the total of all amounts in clauses (i) through (iv) for sales of Aggrastat
for any period shall not exceed *% of the aggregate gross end-user sales
revenue of Aggrastat for such period). Primary Products Net Sales shall not
include the proceeds of any Transfer by Assignor or Guilford made in compliance
with Section 2.02(g). For the avoidance of doubt, the shipment of Primary
Products to Contract Parties or other end-users of Primary Products in
replacement for damaged or expired Primary Products for which no additional
payments are due from any Contract Party or end-user shall, together with the
initial sale of the damaged or expired Primary Products, be considered a single
sale of Primary Products.
"Products" shall mean the Primary Products, the After Acquired
Products and the Secondary Products, collectively.
"* Sales" shall mean, with respect to any calendar year during
the Term, the Primary Products Net Sales * by Assignor for such calendar
year, as set forth in Exhibit A hereto.
"Proposed Transfer" shall have the meaning set forth in
Section 5.06(a).
"Purchase Option Exercise Period" shall have the meaning set
forth in Section 5.07(a).
"Purchase Option Event" shall mean any of the following
events:
(i) any Change of Control;
(ii) any Bankruptcy Event;
(iii) Guilford shall have at the end of any
calendar month less than $20 million of
Working Capital;
(iv) the Transfer (other than an Excluded
Transfer) by either Assignor or Guilford of
(A) all or any major part of its respective
interests in the Products, the Intellectual
Property and the Regulatory Approvals, taken
as a whole, and/or (B) all or any part of
either of the Primary Products, any products
or proceeds of either of the Primary
Products, the Regulatory Approvals as to
either Primary Product, any Intellectual
Property with respect to either of the
Primary Products, or any other property
transferred to Assignor or Guilford pursuant
to the Merck Purchase Agreement;
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
18
(v) the Transfer by Guilford or its Subsidiaries
of a majority, calculated by reference to
fair market value, of the consolidated
assets of Guilford and its Subsidiaries;
(vi) Assignor fails to pay when due any of the
amounts set forth in Section 2.02(b)(ii);
(vii) (A) any representation, warranty or
certification made by either Assignor or
Guilford in any of the Transaction Documents
or in any certificate at any time given by
either Assignor or Guilford in writing
pursuant hereto or thereto or in connection
herewith or therewith shall be inaccurate on
the date as of which it was made or deemed
made, and such inaccuracy would,
individually or in the aggregate with other
inaccuracies on the part of Assignor or
Guilford, as the case may be, reasonably be
expected to have a Material Adverse Effect
or (B) there has occurred a breach of or
default under any term, covenant, or
agreement under any Transaction Document by
either Assignor or Guilford, which would,
individually or in the aggregate with other
breaches on the part of Assignor or
Guilford, as the case may be, reasonably be
expected to have a Material Adverse Effect,
and
(viii) a Notice Event.
Notwithstanding * to the contrary, * a Transfer described in Section 2.02(g)
shall not constitute a Purchase Option Event if the Assignor has complied with
all of the provisions of Section 2.02(g).
"Purchase Price" shall have the meaning set forth in Section 2.03.
"Quarterly Report" shall mean, with respect to the relevant
calendar quarter of Assignor, (i) a report showing all payments made by Assignor
to Assignees under this Agreement during such quarter and showing in detail the
basis for the calculation of such payments, (ii) a reconciliation of such report
referred to in clause (i) above to all information and data deliverable to
Guilford or its Affiliates by the parties to any License Agreements or
Distribution Agreements, together with relevant supporting documentation, (iii)
a report showing, by type of Product, the amount of gross end-user sales of
Products and all deductions supporting Assignor's calculation of Primary
Products Net Sales, After Acquired Products Net Sales and Secondary Products Net
Sales, as applicable and (iv) such additional information as Assignees may
reasonably request.
"Regulatory Agency" shall mean a Governmental Authority with
responsibility for the approval of the marketing and sale of drugs in any
country.
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
19
"Regulatory Approvals" shall mean, collectively, the Gliadel
Regulatory Approvals and the Aggrastat Regulatory Approvals and all INDs, NDAs
and other regulatory approvals, registrations and associated materials
(including the product dossier) issued by the FDA as to the Secondary Products
or any After Acquired Product and all reports, correspondence and other
submissions related thereto and the regulatory and clinical files and data
pertaining thereto, and all information, data, know-how, formulations, assays,
goodwill or intellectual property contained in such INDs and the NDAs, relating
to such Products together with all amendments, supplements and updates thereto
and all comparable regulatory approvals, registrations and associated materials
throughout the world.
"Repurchase Event" shall have the meaning set forth in Section
5.07(d).
"Repurchase Price" shall have the meaning set forth in Section
5.07(c).
"Review Materials" shall have the meaning set forth in Section
5.06(a).
"Secondary Products" shall mean (i) the propofol prodrug known
as AQUAVAN(TM) Injection and (ii) the neuroimmunophilin ligand capable of
regenerating nerves without being immunosuppressive currently known as GPI 1485
or NIL-A, any reformulation or line extension of either of such products, any
product containing or comprised of the same active pharmaceutical ingredient as
either of such products, regardless of the dosage or method of administration
and any improvement, enhancement, refinement or modification of either of such
products.
"Secondary Products Net Sales" shall mean, for any period of
determination, the aggregate gross revenues of Guilford and its Affiliates,
calculated in accordance with GAAP, with respect to the Secondary Products,
arising from direct sales, royalties or otherwise, earned by Guilford and its
Affiliates during such period, less in the case of direct sales only (i)
customary cash trade discounts and rebates actually granted or paid solely in
connection with sales after the Closing, (ii) allowances and adjustments
actually credited to customers for Secondary Products that are spoiled, damaged,
outdated, obsolete, returned or otherwise recalled and are solely in connection
with Secondary Products sold after the Closing, (iii) allowances and adjustments
actually credited to customers for a recall by a Government Authority of any
Secondary Product sold after the Closing, (iv) charges included as part of the
aggregate sales for freight, postage, shipping and insurance charges, to the
extent invoiced, and (v) taxes, duties or other governmental charges when
included in the invoice, plus any proceeds (including payments of whatever type
and whenever received) received by Guilford and its Affiliates from the Transfer
of a Secondary Product or the Intellectual Property, Regulatory Approvals or
related assets with respect to a Secondary Product. In calculating Secondary
Products Net Sales, any Transfer from Guilford to an Affiliate shall be
disregarded and the calculation shall instead be based on the first Transfer to
an unrelated third party.
20
"Secured Financing Event Price" shall have the meaning as set
forth in Section 5.07(b).
"Secured Financing Event Purchase" shall have the meaning as
set forth in Section 5.07(b).
"Security Agreements" shall mean the Guilford-Assignees
Security Agreement, the Guilford-Assignor Security Agreement and the
Assignor-Assignees Security Agreement collectively.
"Subordinated Indenture" shall mean the Indenture, dated as of
June 17, 2003, between Guilford Pharmaceuticals Inc. and Wachovia Bank, National
Association, with respect to the issue of Guilford's 5% Convertible Subordinated
Notes due 2008.
"Supply Agreement" shall mean that certain Supply Agreement by
and between Guilford and Merck Sharp & Dohme (Ireland) Limited dated as of
October 28, 2003.
"Subsidiary" shall mean with respect to any Person (a) any
corporation of which the outstanding capital stock having at least a majority of
votes entitled to be cast in the election of directors under ordinary
circumstances shall at the time owned, directly or indirectly, by such Person or
(b) any other Person of which at least a majority voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Surviving Party" shall have the meaning set forth in Section
5.07(f).
"Technical Agreement" shall mean the Technical Agreement,
dated as of October 28, 2003, between Merck and Guilford.
"Term" shall mean the term of this Agreement, which shall
commence on the date hereof and terminate on the earlier of (i) December 31,
2012 and (ii) the consummation of a Repurchase Event (other than a Secured
Financing Event Purchase).
"Territories" shall mean, with respect to any of the Products,
any location where Guilford or its Affiliates or any Contract Party has the
right to sell such Product.
"Total Debt" shall mean the aggregate (without duplication) of
(i) all outstanding Indebtedness of the Surviving Party and its Subsidiaries
relating to or in respect of (A) the borrowing of money or the obtaining of
credit, including the issuance of notes or bonds and standby letters of credit
outstanding but excluding documentary letters of credit, (B) the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business), (C) any lease of goods or other property, whether real or
personal, which is treated as an operating lease under GAAP and as a loan or
financing for U.S. income tax purposes or any
21
lease under which the Surviving Party or any of its Subsidiaries is the lessee
or obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP, and (D) the Obligations to the Assignees under this
Agreement, plus (ii) all indebtedness of the type referred to in clause (i) of
another Person guaranteed by the Surviving Party or any of its Subsidiaries.
"Total Debt Service" shall mean the aggregate (without
duplication) of (i) Total Interest Expense plus (ii) any and all scheduled
repayments of principal during such period in respect of Total Debt of the
Surviving Party and its Subsidiaries plus (iii) all amounts payable to Assignees
during such period pursuant to Section 2.02(b)(ii).
"Total Debt to Total Capitalization" shall mean, on any date,
the ratio of (a) Total Debt as at such date to (b) the sum of (i) Total Debt as
at such date plus (ii) the sum of (A) the capital accounts including common
stock and preferred stock, but excluding treasury stock of the Surviving Party
plus (B) the earned surplus and capital surplus of the Surviving Party
(excluding adjustments to translate foreign assets and liabilities for changes
in foreign exchange rates made in accordance with Financial Accounting Standards
Board Statement No. 52), as determined in accordance with GAAP as of such date.
"Total Interest Expense" shall mean the aggregate amount of
interest required to be paid or accrued for any period by the Surviving Party
and its Subsidiaries during such period on all Indebtedness of the Surviving
Party and its Subsidiaries outstanding during all or any part of such period,
whether such interest was or is required to be reflected as an item of expense
or capitalized, including payments consisting of interest in respect of any
lease of goods or other property, whether real or personal, which is treated as
an operating lease under GAAP and as a loan or financing for U.S. income tax
purposes or any lease under which the Surviving Party or any of its Subsidiaries
is the lessee or obligor, the discounted future rental payment obligations under
which are required to be capitalized on the balance sheet of the lessee or
obligor in accordance with GAAP and including facility fees, commitment fees,
usage fees, agency fees, balance deficiency fees, and similar fees or expenses
or in connection with borrowing of money, as determined in accordance with GAAP.
"Total Net Sales" shall mean, collectively, the Primary
Products Net Sales, the After Acquired Products Net Sales and the Secondary
Products Net Sales.
"Transaction Documents" shall mean, collectively, this
Agreement, the ▇▇▇▇ of Sale, the Conversion Documents, the Security Agreements,
the Pledge Agreement, the Management Agreement, the LLC Agreement, the Warrant
and any Lockbox Agreement.
"Transfer" or "Transferred" shall mean any sale, conveyance,
assignment, disposition, license, sublicense, co-promotion agreement, or other
form of transfer.
22
"Transfer Notice" shall have the meaning set forth in Section
5.06(a).
"Transition Services Agreement" shall mean the Transition
Services Agreement, dated as of October 28, 2003 between Merck and Guilford.
"True-Up Amount" shall have the meaning set forth in Section
2.02(e).
"True-Up Date" for any calendar quarter shall mean the 45th
day following the end of each such quarter, unless such date is not a Business
Day in which case the applicable date will be the immediately succeeding
Business Day.
"United States" shall mean the United States of America.
"UCC" shall mean the Uniform Commercial Code (or any similar
or equivalent legislation) as in effect in any applicable jurisdiction.
"Warrants" shall mean those two Warrants issued by Guilford to
Assignees in substantially the form attached hereto as Exhibit I, pursuant to
which Assignees shall have the right to purchase, in aggregate, 300,000 shares
of Guilford's common stock.
"Working Capital" shall mean, as to Guilford and its
Subsidiaries, on a consolidated basis, as of any date of determination, the
amount equal to (i) the total, without duplication, of such parties'
unrestricted cash, unrestricted marketable securities and other unrestricted
cash equivalents, amounts on deposit in the Liquidity Account, and accounts
receivable (less allowance for doubtful accounts as required by GAAP) minus (ii)
the total, without duplication, of (A) all Total Debt Service payable during the
next four calendar quarters and (B) all other liabilities and obligations of
such parties due on demand or within one year (whether by the terms of such
obligations or because of the occurrence of one or more events).
ARTICLE II
PURCHASE AND SALE OF ASSIGNED INTERESTS
SECTION 2.01 PURCHASE AND SALE.
Upon the terms and subject to the conditions set forth in this
Agreement, Assignor agrees to sell, assign, transfer and convey to Assignees,
and Assignees agree to purchase from Assignor, free and clear of all Liens
(except those Liens created in favor of Assignees pursuant to the Security
Agreements and any other Transaction Document), all of Assignor's right, title
and interest in and to the Assigned Interests.
23
SECTION 2.02 PAYMENTS IN RESPECT OF THE ASSIGNED INTERESTS.
Assignor shall make the following payments to Assignees in
respect of the Assigned Interests:
(a) Subject to the minimum payment requirements of Section
2.02(b), Assignor shall pay Assignees an amount equal to the Applicable
Percentage of Total Net Sales made during the Term. In the event that as of June
30, 2005 or June 30, 2006, Primary Products Net Sales for the first two quarters
of such year are less than fifty percent (50%) of * Sales for the same two
quarters (calculated by dividing the * Sales for the applicable calendar year by
two (2)), the Assignor shall, on or before July 20 of such year, pay to the
Assignees the additional amount that would have been paid during the first two
quarters of such year had the rate specified in clause (x) of Applicable
Percentage been applied during such quarters and the Applicable Percentage shall
be thereafter calculated at the rate specified in clause (x) of the definition
of Applicable Percentage for the remainder of that year, subject to final
adjustment in accordance with Section 2.02(e) and (i) below. In the event that
as of June 30 in any calendar year after December 31, 2006, Primary Products Net
Sales for the first two quarters of such year are less than $37.5 million, the
Assignor shall, on or before July 20 of such year, pay to the Assignees the
additional amount that would have been paid during the first two quarters of
such year had the rate specified in clause (y) of Applicable Percentage been
applied during such quarters and the Applicable Percentage shall be thereafter
calculated at the rate specified in clause (y) of the definition of Applicable
Percentage for the remainder of that year, subject to final adjustment in
accordance with Section 2.02(e) and (i) below.
(b) For each calendar year during the Term, Assignor shall be
required to pay Assignees the greater of: (i) the aggregate amounts payable in
accordance with Sections 2.02(a) above and (ii) the first $5 million of Included
Products Payments in 2004, the first $6.25 million of Included Products Payments
in 2005, the first $7.5 million of Included Products Payments in 2006, the first
$10 million of Included Products Payments in each of the years 2007 through 2009
and the first $12.5 million of Included Products Payments in each of the years
2010 through 2012 and if the Included Product Payments during any period are
insufficient to meet the minimum first payments required by this subsection
(b)(ii), Assignor shall pay such amounts from any other available source. For
purposes of subsection (b)(ii) above, Assignor shall be required to pay to
Assignees one quarter of each applicable annual amount during each calendar
quarter before Assignor shall be entitled to receive any portion of the Included
Products Payments during such Calendar quarter. By way of example, during the
first quarter of 2004 Assignees shall receive 100% of the first $1.25 million of
Included Products Payments, whether pursuant to the terms of Section 2.02(a) or
otherwise. Thereafter, the Assignees shall receive the Applicable Percentage of
Total Net Sales pursuant to Section 2.02(a) above from and after the date during
each calendar quarter on which the Applicable Percentage of Total Net Sales for
such quarter exceeds the minimum amount payable during such quarter under
subsection (b)(ii).
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
24
Assignees' right to payments under this Section 2.02(b) shall not be conditioned
on the Assignor receiving or retaining any amounts under this Section 2.02. As
to any quarter in which Assignees have not received the full quarterly portion
of the applicable minimum amount set forth in subsection (b)(ii) above, the
unpaid balance of such minimum amounts shall be added to the minimum amount
otherwise owing for the following quarter (whereupon such increased minimum
amount shall be the then applicable minimum amount).
(c) If Assignor, Guilford, or any Affiliate thereof receives
any amount of money as a damages award (or pursuant to a settlement agreement)
in connection with a patent infringement claim or other cause of action
involving any of the Primary Products Intellectual Property or any of the
Primary Products, (a) if for each year of the Term, Primary Products Net Sales
have equaled or exceeded * Sales, 100% of the proceeds (net of litigation costs)
shall be included in Primary Products Net Sales for each of the calendar years
in which the proceeds are received, and (b) if for any year of the Term, Primary
Products Net Sales have not equaled or exceeded * Sales, Assignor shall pay
Assignees an amount equal to 50% of the proceeds (net of litigation costs)
within thirty (30) days of each receipt of such proceeds by Assignor, Guilford
or any Affiliate thereof.
(d) Prior to the date on which the Lockbox Agreement is
executed by all parties thereto, the Assignor and Guilford shall cause any
payments due to Assignees under this Section 2.02 to be paid directly to
Assignees, by wire transfer, on Wednesday of every other week for the period
ending on the Friday of the immediately prior two weeks. From and after the
execution of the Lockbox Agreement pursuant to Section 5.10 and subject to the
other provisions of this Agreement, amounts payable to Assignees pursuant to
Section 2.02(a) and (b) shall be paid to Assignees first from the proceeds from
the sale of the Primary Products which are received from time to time in the
Lockbox Account, which shall be swept from the Joint Concentration Account into
Assignees Concentration Account on a daily basis (the "Daily Amount") pursuant
to Section 5.10.
(e) In the event that the aggregate of the Daily Amounts and
other payments on account of Total Net Sales received by Assignees during any
quarter is less or more than the amount due pursuant to Section 2.02(a), (b) and
(c), then on the applicable True-Up Date, Assignor shall pay to Assignees or
Assignees shall pay to Assignor an amount equal to such difference (the "True-Up
Amount"). All amounts payable by the Assignor to the Assignees pursuant to
clause (z) of the definition of Applicable Percentage shall be paid to Assignees
in immediately available funds within forty (40) days after the end of the
applicable calendar year.
(f) In the event that Assignor, Guilford or any Affiliate of
Guilford closes a Gliadel Foreign Transaction, Assignor shall pay to Assignees a
percentage of any and all proceeds (including payments of whatever type and
whenever received, but excluding future royalties payable to Assignor or
Guilford in the ordinary course of business (which shall continue to be
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
25
included in Primary Products Net Sales)) received by Assignor, Guilford or any
Affiliate from or with respect to such Gliadel Foreign Transaction calculated as
follows:
(i) Assignor shall pay 10% of any and all
proceeds received during the period from the
Closing Date through and including December
31, 2006, plus an additional 2.5% of any and
all proceeds received in a calendar year
during such period for which the Primary
Products Net Sales and the After Acquired
Products Net Sales for such year are less
than 75% of * Sales for such year; and
(ii) Assignor shall pay 17.5% of any and all
proceeds received during the period from
January 1, 2007 through and including
December 31, 2012, plus an additional 5% of
any and all proceeds received in a calendar
year during such period for which Primary
Products Net Sales and After Acquired
Products Net Sales are less than $75
million.
The base amounts payable under clauses (i) and (ii) above (10% and 17.5%,
respectively) shall be paid to Assignees upon the closing of the Gliadel Foreign
Transaction or, if later, immediately upon the receipt of proceeds by Assignor,
Guilford or an Affiliate of Guilford. Any other amounts payable under clauses
(i) and (ii) above shall be payable to Assignees no later than 30 days after the
close of the calendar year during which the proceeds were received by Assignor,
Guilford or an Affiliate of Guilford.
(g) In the event of the Transfer (other than an Excluded
Transfer) by Assignor or Guilford of one but not both of the Primary Products,
and/or the Regulatory Approvals and Intellectual Property related thereto, the
Assignor shall pay to the Assignees an amount equal to a percentage of the
Assignees Option Repurchase Price, calculated as of the date of payment, as
specified below:
(i) if a Transfer of Aggrastat, Assignor shall pay
Assignee an amount equal to sixty-five percent (65%)
of the applicable Assignees Option Repurchase Price;
and
(ii) if a Transfer of Gliadel, Assignor shall pay
Assignees an amount equal to thirty-five percent
(35%) of the applicable Assignees Option Repurchase
Price.
The amounts payable under clauses (i) and (ii) above shall be paid to Assignees
simultaneously with the closing of the Transfer. A payment under this Section
2.02(g) shall not constitute a repurchase of any portion of the Assigned
Interests, but shall be included in the calculation of Repurchase Price as set
forth in Section 5.07(c)(i).
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
26
(h) Amounts payable pursuant to clauses (a), (b), (c), (d),
(e), (f) or (g) of this Section 2.02 shall be in addition to any amounts
otherwise payable under this Agreement.
(i) Any payments, other than from funds paid to Assignees from
the Assignees Concentration Account, to be made by Assignor to Assignees
hereunder or under any other Transaction Document shall be made by wire transfer
of immediately available funds to Assignees' Account.
(j) Within three (3) years following delivery to Assignees by
Assignor of the Quarterly Report for the fourth fiscal quarter of each calendar
year during the Term, to the extent that either Assignees or Assignor has
determined that there is a discrepancy as to the amounts paid to Assignees
hereunder for such calendar year, then the Person who has made such
determination may notify the other in writing of such discrepancy indicating in
reasonable detail its reasons for such determination (the "Discrepancy Notice").
In the event that either Assignees or Assignor delivers to the other party a
Discrepancy Notice, Assignees and Assignor shall meet within ten (10) Business
Days (or such other time as mutually agreed by the parties) after the receiving
party has received a Discrepancy Notice to resolve in good faith such
discrepancy. If the discrepancy has been resolved and, as a result thereof, it
is determined that a payment is owing by Assignees to Assignor or by Assignor to
Assignees, then the party owing such payment shall promptly pay such payment to
the other party. If, within forty-five (45) days after receipt of the
Discrepancy Notice, Assignor and Assignees cannot resolve any such
discrepancies, then Assignees and Assignor shall promptly instruct their
respective firms of independent certified public accountants to select, within
five (5) Business Days thereafter, a third nationally recognized accounting firm
(the "Independent Accountants"). After offering Assignor and its representatives
and Assignees and their representatives the opportunity to present their
positions as to the disputed items, which opportunity shall not extend for more
than ten (10) calendar days after the Independent Accountants have been
selected, the Independent Accountants shall review the disputed matters and the
materials submitted by Assignor and Assignees and, as promptly as practicable,
deliver to Assignor and Assignees a statement in writing setting forth its
determination of the proper treatment of the discrepancies as to which there was
disagreement, and that determination will be final and binding upon the parties
hereto without any further right of appeal. If Assignor has delivered the
Discrepancy Notice that has resulted in the selection of the Independent
Accountants, Assignor will bear all the charges of the Independent Accountants.
If Assignees have delivered the Discrepancy Notice that has resulted in the
selection of the Independent Accountants, Assignees will bear all the charges of
the Independent Accountants unless the Independent Accountants determine that
the amounts paid to Assignees for the applicable calendar year underpaid the
Assignees by an amount equal or in excess of 7.5% of the amounts determined to
be due to Assignees for such calendar year, in which event Assignor shall bear
all of the charges of the Independent Accountants.
27
(k) If a portion of the Assigned Interests has been
repurchased by Assignor pursuant to the provisions of Section 5.07(b)(ii)(B),
the amounts payable to Assignees under this Section 2.02, from and after the
date of payment in full of the Secured Financing Event Price shall be ratably
reduced to reflect the portion of Assigned Interests then held by the Assignees.
(l) Without in any manner limiting its obligations under
Section 5.13, Guilford agrees that to the extent that the Assignor does not pay
any amount due to the Assignees under this Section 2.02, Guilford will promptly
pay or cause Assignor to pay such amounts directly to the Assignees.
SECTION 2.03 PURCHASE PRICE.
(a) In full consideration for the sale of the Assigned
Interests, and subject to the terms and conditions set forth herein, Fund shall
pay to Assignor, or its designee, $31.5 million and Holdings shall pay to
Assignor, or its designee, $10.5 million (together, the "Purchase Price").
(b) The Purchase Price shall be paid by wire transfer of
immediately available funds to the account designated by Assignor (the
"Assignor's Account") upon, and subject to the occurrence of, the Closing.
SECTION 2.04 NO ASSUMED OBLIGATIONS.
Notwithstanding any provision in this Agreement or any other
writing to the contrary, Assignees are acquiring only the Assigned Interests and
are not assuming any liability or obligation of Assignor or Guilford of whatever
nature, whether presently in existence or arising or asserted hereafter, whether
under any Distribution Agreement, License Agreement or any other Transaction
Document or otherwise. All such liabilities and obligations shall be retained by
and remain obligations and liabilities of Assignor or Guilford (the "Excluded
Liabilities and Obligations").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ASSIGNOR AND GUILFORD
Assignor, GPI Holdings and Guilford hereby jointly and
severally represent and warrant to Assignees the following (in each case, after
giving effect to the concurrent closing of the transactions contemplated by the
Merck Purchase Agreement):
28
SECTION 3.01 ORGANIZATION.
Guilford is a corporation duly incorporated, validly existing
and in good standing under the laws of Delaware, and has all corporate powers
and all licenses, authorizations, consents and approvals required to carry on
its business as now conducted and as proposed to be conducted in connection with
the transactions contemplated hereby and by the other Transaction Documents.
Assignor is a limited liability company duly organized, validly existing and in
good standing under the laws of Delaware, and has all powers and all licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and as proposed to be conducted in connection with the transactions
contemplated hereby and by the other Transaction Documents. GPI Holdings is a
corporation duly incorporated, validly existing and in good standing under the
laws of Delaware, and has all corporate powers and all licenses, authorizations,
consents and approvals required to carry on its business as now conducted and as
proposed to be conducted in connection with the transactions contemplated hereby
and by the other Transaction Documents.
SECTION 3.02 CORPORATE AUTHORIZATION.
Except as set forth on Schedule 3.02, each of Assignor, GPI
Holdings and Guilford has all necessary power and authority to enter into,
execute and deliver this Agreement and the other Transaction Documents to which
it is a party and to perform all of the obligations to be performed by it
hereunder and thereunder and to consummate the transactions contemplated
hereunder and thereunder. This Agreement and the other Transaction Documents
have been duly authorized, executed and delivered by each of Assignor, GPI
Holdings and Guilford (to the extent a party thereto) and each of this Agreement
and each other Transaction Document to which either Assignor, GPI Holdings or
Guilford is a party constitutes the valid and binding obligation of Assignor,
GPI Holdings and Guilford, as applicable enforceable against Assignor, GPI
Holdings or Guilford in accordance with their respective terms subject, as to
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally or general equitable
principles.
SECTION 3.03 GOVERNMENTAL AUTHORIZATION.
The execution and delivery by each of Assignor, GPI Holdings
and Guilford of this Agreement and the other Transaction Documents to which it
is a party, and the performance by Assignor, GPI Holdings and Guilford of its
respective obligations hereunder and thereunder, does not require any notice to,
action or consent by, or in respect of, or filing with, any Government
Authority, except for the filing of financing statements under the UCC and
filings with the United States Patent and Trademark Office.
29
SECTION 3.04 OWNERSHIP.
(a) Assignor owns, or holds a valid license under all of the
Intellectual Property and the Regulatory Approvals with respect to the Primary
Products and all other rights, properties and assets, acquired by Assignor
pursuant to the Merck Purchase Agreement or the Conversion Documents.
(b) *
(c) GPI Holdings is the sole member of the Assignor.
SECTION 3.05 FINANCIAL STATEMENTS.
The Financial Statements are complete and accurate in all
material respects, were prepared in conformity with GAAP and present fairly in
all material respects the consolidated financial position and the consolidated
financial results of the operations of Guilford and its Subsidiaries as of the
dates and for the periods covered thereby. There has been no Material Adverse
Change since June 30, 2003.
SECTION 3.06 NO UNDISCLOSED LIABILITIES.
Except for those liabilities (a) identified in the Financial
Statements, (b) publicly disclosed and identified on Schedule 3.06, (c) incurred
by Guilford or its Subsidiaries in the ordinary course of business since June
30, 2003 or (d) described on Schedule 3.06, there are no material liabilities of
Guilford or any of its Subsidiaries taken as a whole, or Assignor separately, of
any kind whatsoever, whether accrued, contingent, absolute, determined or
determinable. Other than the Obligations under this Agreement, Assignor has no
outstanding obligations or liabilities and conducts no business other than to
own the Primary Products, and the Intellectual Property and Regulatory Approvals
related to the Primary Products, and to perform its obligations to Guilford
under the Management Agreement.
SECTION 3.07 SOLVENCY.
*
SECTION 3.08 LITIGATION.
Except as set forth on Schedule 3.08, there is no (a) action,
suit, arbitration proceeding, claim, investigation or other proceeding pending
or, to the Knowledge of either Assignor or Guilford, threatened against either
Assignor or Guilford or (b) any governmental inquiry pending or, to the
Knowledge of either Assignor or Guilford, threatened against either Assignor or
Guilford, in each case with respect to clauses (a) and (b) above, which, if
adversely
30
determined, would question the validity of, or could adversely affect the
transactions contemplated by this Agreement or any of the other Transaction
Documents or could reasonably be expected to have a Material Adverse Effect.
Other than as set forth on Schedule 3.08, there is no action, suit, claim,
proceeding or investigation pending or, to the Knowledge of either Assignor or
Guilford, threatened against Assignor, Guilford or any other Person relating to
the Products, the Intellectual Property, the Regulatory Approvals or the
Assigned Interests.
SECTION 3.09 COMPLIANCE WITH LAWS.
Except as set forth on Schedule 3.09, neither Assignor nor
Guilford (a) is in violation of, has violated, or to the Knowledge of either
Assignor or Guilford, is under investigation with respect to, and, (b) has been
threatened to be charged with or been given notice of any violation of, with
respect to clauses (a) and (b) above, any law, rule, ordinance or regulation of,
or any judgment, order, writ decree, permit or license entered by any Government
Authority applicable to either Assignor, Guilford or the Assigned Interests
which could reasonably be expected to have a Material Adverse Effect.
SECTION 3.10 CONFLICTS.
(a) Except as set forth in Schedule 3.10, neither the
execution and delivery of this Agreement or any other Transaction Document nor
the performance or consummation of the transactions contemplated hereby or
thereby will: (i) contravene, conflict with, result in a breach or violation of,
constitute a default under, or accelerate the performance provided by, in any
material respects any provisions of: (A) any law, rule, ordinance or regulation
of any Government Authority, the breach or violation of which would be
reasonably expected to result in a Material Adverse Effect, or any judgment,
order, writ, decree, material permit or license of any Government Authority, to
which Assignor or Guilford or its Subsidiaries or any of their respective assets
or properties may be subject or bound; or (B) any contract, agreement,
commitment or instrument to which either Assignor or Guilford or its
Subsidiaries is a party or by which Assignor or Guilford or its Subsidiaries or
any of their respective assets or properties is bound or committed; (ii)
contravene, conflict with, result in a breach or violation of, constitute a
default under, or accelerate the performance provided by, in any respects any
provisions of the certificate of incorporation or by-laws (or other
organizational or constitutional documents) of Assignor or Guilford or its
Subsidiaries; (iii) except for the filing of the UCC-1 financing statements
required hereunder and filings with the United States Patent and Trademark
Office, require any notification to, filing with, or consent of, any Person or
Government Authority; (iv) give rise to any right of termination, cancellation
or acceleration of any right or obligation of Assignor, Guilford or its
Subsidiaries or any other Person or to a loss of any benefit relating to the
Assigned Interests; or (v) result in the creation or imposition of any Lien on
(A) the assets or properties of Assignor or Guilford or its Subsidiaries or (B)
the Assigned Interests or any other
31
Collateral, other than, with respect to clauses (A) and (B) above, pursuant to
the Guilford-Assignees Security Agreement and the Guilford-Assignor Security
Agreement.
(b) Neither Assignor nor Guilford has granted, nor does there
exist, any Lien on any Distribution Agreement, License Agreement, the Assigned
Interests or any other Collateral other than pursuant to the Security
Agreements.
(c) The obligations of Guilford to Assignees under the
Transaction Documents will constitute Senior Debt (as defined in the
Subordinated Indenture).
SECTION 3.11 MATERIAL CONTRACTS.
Neither Assignor nor Guilford or its Subsidiaries is in breach
of or in default under any Material Contract, including, without limitation, the
Supply Agreement, the Merck Purchase Agreement, the Technical Agreement, the
Transition Services Agreement or any Distribution Agreement or any License
Agreement to which Assignor, Guilford or its Subsidiaries is a party which
default, individually or in the aggregate, would be reasonably expected to
result in a Material Adverse Effect. To the knowledge of either Assignor or
Guilford, nothing has occurred and no condition exists that would permit any
other party thereto to terminate any Material Contract to which either Assignor
or Guilford or its Subsidiaries is a party. Neither Assignor nor Guilford nor
any of its Subsidiaries has received any notice or, to the Knowledge of either
Assignor or Guilford, any threat of termination of any such Material Contract.
To the Knowledge of either Assignor or Guilford, no other party to a Material
Contract to which either Assignor or Guilford or its Subsidiaries is a party is
in breach of or in default under such Material Contract. All Material Contracts
to which either Assignor or Guilford or its Subsidiaries is a party are valid
and binding on Assignor and Guilford and, to the Knowledge of either Assignor or
Guilford, on each other party thereto, and are in full force and effect.
SECTION 3.12 INTELLECTUAL PROPERTY.
(a) Schedule 3.12(a) sets forth an accurate and complete list
of all (1) Patents and Patent applications and (2) trade names, common law
trademarks, common law service marks, registered trademarks, registered service
marks, and applications for trademark registrations and service ▇▇▇▇
registrations, and (3) registered and unregistered copyrights and (4) domain
name registrations and websites in each case with respect to clauses (1), (2),
(3) and (4) above in this subsection (a)*
(b) * -
(c) *
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
32
(d) *
(e) *
(f) *
(g) *
(h) *
(i) *
(j) *
(k) *
(l) *
(m) *
SECTION 3.13 REGULATORY APPROVAL.
(a) *
(i) *.
(ii) *
(iii) *
(b) *
(c) *
(d) *
SECTION 3.14 SUBORDINATION.
(a) *
(b) During the Term, Assignor's obligations to pay Guilford
the Management Fee (as defined in the Management Agreement) shall be in all
respects subordinate to, and shall be paid to Guilford only after the
satisfaction in full of, Assignor's past or current payment Obligations
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
33
to Assignee, including Assignor's payment to Assignee of the Applicable
Percentage of Total Net Sales and all other Obligations set forth in this
Agreement.
SECTION 3.15 PLACE OF BUSINESS.
Assignor's principal place of business and chief executive
office are set forth on Schedule 3.15. Guilford's principal place of business
and chief executive office are set forth on Schedule 3.15.
SECTION 3.16 BROKER'S FEES.
Except for the fees to be paid to UBS Securities LLC solely by
Guilford, neither Assignor, GPI Holdings nor Guilford has taken any action which
would entitle any Person to any commission or broker's fee in connection with
the transactions contemplated by this Agreement.
SECTION 3.17 OTHER INFORMATION.
Except as set forth on Schedule 3.17, no written statement,
information, report or materials prepared by or on behalf of either Assignor or
Guilford and furnished to Assignees by or on behalf of either Assignor or
Guilford in connection with this Agreement or any Transaction Document or any
transaction contemplated hereby or thereby, no written representation, warranty
or statement made by either Assignor or Guilford in any Transaction Document,
and no schedule or exhibit hereto, in each case taken in the aggregate, contains
any untrue statement of a material fact or omits any statement of material fact
necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.
SECTION 3.18 DISTRIBUTION AGREEMENTS AND LICENSE AGREEMENTS.
Except as set forth on Schedule 3.18(a), the existing
Distribution Agreements and existing License Agreements are in full force and
effect and, except for such correspondence and written communication as are
identified on Schedule 3.18(b), there has been no correspondence or other
written communication sent by or on behalf of Assignor or Guilford to, or
received by or on behalf of Assignor or Guilford from, any Contract Party, the
subject matter of which would reasonably be expected to have a Material Adverse
Effect.
(a) With respect to existing Distribution Agreements and
existing License Agreements:
(i) Except for that which, individually or in
the aggregate, would not reasonably be
expected to have a Material Adverse Effect,
each such Distribution Agreement and License
Agreement is in full force and effect and
has not been impaired, waived, altered or
modified in any
34
respect, whether by way of any sublicense or
consent or otherwise. To the Knowledge of
either Assignor or Guilford, no licensee has
granted a sublicense under any Distribution
Agreement or any License Agreement.
(ii) Except for that which, individually or in
the aggregate, would not reasonably be
expected to have a Material Adverse Effect,
the Contract Party under each such
Distribution Agreement or License Agreement
has not been released, in whole or in part,
from any of its obligations under such
Distribution Agreement or License Agreement.
(iii) Neither Guilford nor Assignor has received
(A) any notice of any Contract Party's
intention to terminate such Distribution
Agreement or License Agreement in whole or
in part or (B) except as set forth on
Schedule 3.18(a)(iii), any notice requesting
any amendment, alteration or modification of
such Distribution Agreement, License
Agreement or any sublicense or assignment
thereunder which would be reasonably
expected to have a Material Adverse Effect.
(iv) To the Knowledge of either Assignor or
Guilford, nothing has occurred and no
condition exists that would adversely impact
the right of either Guilford or Assignor to
receive any payments payable under such
Distribution Agreement or License Agreement.
Other than as set forth on Schedule
3.18(a)(iv), none of Assignor, Guilford, or
to the Knowledge of either Assignor or
Guilford, any Contract Party has taken any
action or omitted to take any action, that
would adversely impact the right of
Assignees to receive the Assigned Interests
or the Applicable Percentage of the Total
Net Sales.
(v) Other than as set forth on Schedule
3.18(a)(v), all payments required to be made
under the terms of each existing
Distribution Agreement and existing License
Agreement have been made. To the Knowledge
of either Assignor or Guilford, no payment
required to be made under the terms of any
existing Distribution Agreement or existing
License Agreement has been subject to any
claim pursuant to any right of rescission,
set-off, counterclaim or defense. Except for
that which, individually or in the aggregate
would not reasonably be expected to have a
Material Adverse Effect, the operation of
any of the terms of any existing
Distribution Agreement or existing License
Agreement, or the exercise of any rights
thereunder, will not render such
35
Distribution Agreement or License Agreement
unenforceable, in whole or in part.
(vi) Except for that which, individually or in
the aggregate, would not reasonably be
expected to have a Material Adverse Effect,
such Distribution Agreement or License
Agreement has not been satisfied in full,
discharged, canceled, terminated,
subordinated or rescinded, in whole or in
part. Such Distribution Agreement or License
Agreement is the entire agreement between
Guilford and the Contract Party thereto
relating to the subject matter thereof.
(vii) Except for that which, individually or in
the aggregate, would not reasonably be
expected to have a Material Adverse Effect,
such Distribution Agreement or License
Agreement is the legal, valid and binding
obligation of each of Guilford and the
Contract Party thereto, enforceable against
Guilford and such Contract Party in
accordance with its terms, subject, as to
enforcement of remedies, to bankruptcy,
insolvency, reorganization, moratorium or
similar laws affecting creditors' rights
generally and general equitable principles.
The execution, delivery and performance of
such Distribution Agreement or License
Agreement was and is within the corporate
powers of Guilford and, to the Knowledge of
either Assignor or Guilford, the Contract
Party thereto. Such Distribution Agreement
or License Agreement was duly authorized by
all necessary action on the part of, and
validly executed and delivered by, Guilford
and, to the Knowledge of either Assignor or
Guilford, the Contract Party thereto. Except
for that which, individually or in the
aggregate would not reasonably be expected
to have a Material Adverse Effect, there is
no breach or default, or event which upon
notice or the passage of time, or both,
could give rise to any breach or default, in
the performance of such Distribution
Agreement or License Agreement by Guilford
or, to the Knowledge of either Assignor or
Guilford, the Contract Party thereto.
(viii) Except for that which, individually or in
the aggregate, would not reasonably be
expected to have a Material Adverse Effect,
the representations and warranties made in
each existing Distribution Agreement or
existing License Agreement by Guilford were
as of the date made true and correct in all
material respects.
36
SECTION 3.19 INSURANCE.
Except as set forth in Schedule 3.19, there is in full force
and effect insurance policies maintained by Guilford with an insurance company
rated not less than A- by A.M. Best Company, Inc., with coverages and in amounts
sufficient to comply with the Supply Agreement and otherwise customary for
companies of comparable size and condition similarly situated in the same
industry as Guilford, including without limitation product liability insurance,
directors and officers insurance and insurance against litigation liability,
subject only to such exclusions and deductible items as are usual and customary
in insurance policies of such type. Guilford has named Assignor as an additional
insured party on all of its general liability and product liability insurance
policies. A schedule of Guilford's insurance policy or insurance policies is
attached hereto as Schedule 3.19.
SECTION 3.20 ACCURACY OF REPORTS.
All reports required to be filed by Guilford on or after
January 1, 2002 under the Securities Exchange Act of 1934, as amended, have been
duly filed, were in substantial compliance with the requirements of their
respective forms, were complete and correct in all material respects as of the
dates at which the information was furnished, and contained (as of such dates)
no untrue statement of a material fact nor omitted to state a material fact
necessary in order to make the statements made therein in light of the
circumstances under which they were made not misleading.
SECTION 3.21 * REPRESENTATIONS; CLOSING.
To the Knowledge of Guilford and Assignor,*
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ASSIGNEES
Assignees represent and warrant to each of Assignor and
Guilford the following:
SECTION 4.01 ORGANIZATION.
Fund is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware. Holdings is a
general partnership duly formed and validly existing under the laws of the State
of California. Each of Fund and Holdings has all partnership powers and all
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
37
SECTION 4.02 AUTHORIZATION.
Each of the Assignees has all necessary power and authority to
enter into, execute and deliver this Agreement and to perform all of the
obligations to be performed by it hereunder. This Agreement has been duly
authorized, executed and delivered by each of the Assignees and constitutes the
valid and binding obligation of each of the Assignees, enforceable against each
of the Assignees in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally and general equitable principles.
SECTION 4.03 BROKER'S FEES.
Neither of the Assignees has taken any action which would
entitle any Person to any commission or broker's fee in connection with the
transactions contemplated by this Agreement.
SECTION 4.04 CONFLICTS.
Neither the execution and delivery of this Agreement or the
other Transaction Documents nor the performance or consummation of the
transactions contemplated hereby or thereby will: (i) contravene, conflict with,
result in a breach or violation of, constitute a default under, or accelerate
the performance provided by, in any material respects any provisions of: (A) any
law, rule or regulation of any Government Authority, or any judgment, order,
writ, decree, permit or license of any Government Authority, to which either of
the Assignees or any of their assets or properties may be subject or bound; or
(B) any material contract, agreement, commitment or instrument to which either
of the Assignees are a party or by which either of the Assignees or any of their
assets or properties is bound or committed; (ii) contravene, conflict with,
result in a breach or violation of, constitute a default under, or accelerate
the performance provided by, in any respects any provisions of organizational or
constitutional documents of either of the Assignees; or (iii) require any
notification to, filing with, or consent of, any Person or Government Authority.
SECTION 4.05 CONSENTS.
The execution and delivery by each of the Assignees of this
Agreement and the other Transaction Documents to which it is a party, and the
performance by each of the Assignees of its obligations hereunder and
thereunder, does not require any notice to, action or consent by, or in respect
of, or filing with, any Governmental Authority or Person.
38
SECTION 4.06 TAX REPRESENTATION.
Each Assignee is and will continue to be a "United States
Person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code
of 1986, as amended. Each Assignee will deliver to Guilford or Assignor, upon
reasonable demand by Guilford or Assignor, any form or document, including
without limitation, Internal Revenue Service Form W-9, that may be required or
reasonably requested in order to allow Guilford or Assignor to make payment
under this Agreement without any deduction or withholding for or on account of
any tax.
ARTICLE V
COVENANTS
During the Term, the following covenants shall apply:
SECTION 5.01 CONSENTS AND WAIVERS.
Each of Assignor and Guilford shall use commercially
reasonable efforts to obtain any required consents, acknowledgements,
certificates or waivers so that the transactions contemplated by this Agreement
or any other Transaction Document may be consummated and shall not result in any
default or breach or termination of any of the Distribution Agreements, the
License Agreements or any other Material Contracts; including, without
limitation, the agreements listed on Schedules 3.10 and 3.12(f).
SECTION 5.02 ACCESS; BOOKS AND RECORDS.
(a) Promptly after receipt by either Assignor or Guilford of
notice of any action, claim, investigation or proceeding (commenced or
threatened) relating to the transactions contemplated by this Agreement, any
other Transaction Document, any Distribution Agreement or any License Agreement,
Assignor and/or Guilford shall inform Assignees of the receipt of such notice
and the substance of such action, claim, investigation or proceeding and, if in
writing shall furnish Assignees with a copy of such notice and any related
materials with respect to such action, claim, investigation or proceeding.
(b) Guilford and Assignor shall keep and maintain, or cause to
be kept and maintained, at all times full and accurate books of account and
records adequate to correctly reflect all payments paid and/or payable with
respect to Assigned Interests and all deposits made into the applicable Deposit
Accounts.
(c) Assignees and any of Assignees' Consultants shall have the
right, from time to time, to visit Guilford's and/or Assignor's offices and
properties where Guilford and/or Assignor
39
keeps and maintains its books and records relating or pertaining to the Assigned
Interests and the other Collateral for purposes of conducting an audit of such
books and records, and to inspect, copy and audit such books and records, during
normal business hours, and, upon five (5) Business Days written notice given by
Assignees to Guilford and/or Assignor, Guilford and/or Assignor will provide
Assignees and any of Assignees' Consultants reasonable access to such books and
records, and shall permit Assignees and any of Assignees' Consultants to discuss
the business, operations, properties and financial and other condition of
Guilford and/or Assignor or any of their Affiliates relating or pertaining to
the Assigned Interests and the other Collateral with officers of such parties,
and with their independent certified public accountants (to the extent such
independent certified accountants agree to discuss such matters with Assignees).
Assignees' visits to Guilford's or Assignor's offices pursuant to this
subsection (c) shall occur not more than two times for each company per calendar
year; provided, however, that Assignees may so visit more frequently to the
extent that there has occurred an event, a reasonably foreseeable consequence of
which is a Material Adverse Effect, and Assignees' visit or visits to Guilford's
or Assignor's offices in connection therewith are for purposes related to such
event.
(d) In the event any audit of the books and records of
Guilford or Assignor relating to the Total Net Sales, the Assigned Interests or
the other Collateral by Assignees and/or any of Assignees' Consultants reveals
that the amounts paid to Assignees hereunder for the period of such audit have
been understated by more than the greater of $20,000 or 7.5% of the amounts
determined to be due for the period subject to such audit, then the Audit Costs
in respect of such audit shall be borne by Guilford or Assignor; and in all
other cases, such Audit Costs shall be borne by Assignees.
SECTION 5.03 MATERIAL CONTRACTS.
Each of Assignor and Guilford shall comply with all material
terms and conditions of and fulfill all of its obligations under all the
Material Contracts including, without limitation, any Distribution Agreement or
License Agreement to which Guilford is a party.
SECTION 5.04 CONFIDENTIALITY; PUBLIC ANNOUNCEMENT.
(a) Except as set forth in Section 5.04(b), all information
furnished by Assignees to either Assignor or Guilford or by either Assignor or
Guilford to Assignees, including the Confidential Information, in connection
with this Agreement and any other Transaction Document and the transactions
contemplated hereby and thereby, as well as the terms, conditions and provisions
of this Agreement and any other Transaction Document, shall be kept confidential
by the recipient thereof, and shall be used by the recipient thereof only in
connection with this Agreement and any other Transaction Document and the
transactions contemplated hereby and thereby, except to the extent that such
information (i) is already known by the party to whom the information is
disclosed or is already in the public domain at the time the information is
40
disclosed, (ii) thereafter becomes lawfully obtainable from other sources, (iii)
is required to be disclosed in any document to be filed with any Government
Authority, or (iv) is required to be disclosed under securities laws, rules and
regulations applicable to Assignor, Guilford or Assignees, as the case may be,
or pursuant to the rules and regulations of the Nasdaq Stock Market or any other
stock exchange or stock market on which securities of Guilford may be listed for
trading. Notwithstanding the foregoing, Assignor, Guilford and Assignees may
disclose such information to their partners, directors, employees, managers,
officers, investors, bankers, advisors, trustees and representatives on a
need-to-know basis, provided that such Persons shall be informed of the
confidential nature of such information and shall be obligated to keep such
information confidential pursuant to the terms of this Section 5.04(a).
(b) Except as required by law or the rules and regulations of
any securities exchange or trading system or the FDA or any Government Authority
with similar regulatory authority, or except with the prior written consent of
the other party (which consent shall not be unreasonably withheld), neither
party shall issue any press release or make any other public disclosure with
respect to the transactions contemplated by this Agreement or any other
Transaction Document. Except as otherwise required by law or the rules and
regulations of any securities exchange or trading system or the FDA or any
Government Authority with similar regulatory authority, (i) Assignor, Guilford
and the Assignees, on or prior to the Closing, shall agree upon the form and
content of the initial press release by Guilford with respect to the
Transaction, (ii) Assignor, Guilford and the Assignees, shall agree upon the
form of the initial SEC filings by Guilford with respect to the Transaction,
(iii) any subsequent disclosures by Guilford or Assignor with respect to the
Transaction shall, except as otherwise agreed by Assignees in writing, be
substantially consistent with the disclosures described in clauses (i) and (ii)
above, and (iv) Guilford and Assignor shall consider the good faith comments
made by Assignees in Guilford's confidential treatment request to the SEC
regarding the Transaction Documents.
(c) Notwithstanding anything herein to the contrary, any party
to this Agreement (and each employee, representative, or other agent of such
party) may disclose to any and all persons, without limitation of any kinds, the
tax treatment and tax structure of the transactions contemplated by this
Agreement or any other Transaction Document and all materials of any kind
(including opinions and other tax analyses) that are provided to the party
relating to such tax treatment and tax structure.
SECTION 5.05 QUARTERLY REPORTS.
(a) Assignor shall, promptly after the end of each fiscal
quarter of Assignor (but in no event later than thirty (30) days following the
end of such quarter), produce and deliver to Assignees a Quarterly Report for
such quarter, together with a certificate of a senior officer of Assignor and,
pursuant to the Management Agreement, a certificate of a senior officer of
Guilford, certifying that to the knowledge of each such officer (i) such
Quarterly Report is a true
41
and complete copy and (ii) any statements and any data and information therein
prepared by Guilford and/or Assignor are true, correct and accurate in all
material respects. Guilford shall furnish to Assignor promptly all information
that Assignor may require in connection with such Quarterly Reports.
SECTION 5.06 RIGHT OF FIRST REFUSAL.
Neither Guilford, nor the Assignor, nor any Affiliates of
Guilford or the Assignor shall Transfer any rights to payment, including any
revenue or royalty interests with respect to any products (including, without
limitation, the Products) without complying with the following procedure:
(a) If Guilford or any Affiliates of Guilford or the Assignor
(the "Transferor") at any time during the Term desires to Transfer (each, a
"Proposed Transfer") any rights to payment, including any revenue or royalty
interests, with respect to any products, then Transferor shall give written
notice (the "Transfer Notice") to Assignees setting forth (i) the interests that
are proposed to be Transferred pursuant to such Proposed Transfer (the "Offered
Interests"), (ii) the proposed date of the closing of such Proposed Transfer,
and (iii) all of the material terms of such Proposed Transfer (the "Proposed
Terms"). Guilford and Assignor shall promptly provide to Assignee any additional
documentation, information and other diligence materials reasonably requested by
Assignees (the "Review Materials").
(b) Upon the receipt of any Transfer Notice, Assignees will
have the option, but not the obligation, to purchase all, but not less than all,
of all the Offered Interests, on the terms as are specified in the Transfer
Notice. Within sixty (60) days after the later of (a) Assignees' receipt of the
Transfer Notice and (b) Assignees' receipt of all Review Materials requested
under Section 5.06(a), Assignees will give a written notice (a "Notice of
Election") to Transferor stating whether Assignees elect to exercise such
option. During such sixty (60) day period, the Assignees shall also have the
exclusive right to propose and negotiate alternative terms for the Proposed
Transfer.
(c) If Assignees elect to purchase pursuant to the Notice of
Election, the closing of the purchase and sale of the Offered Interests to
Assignees will take place as soon as is reasonably practicable on such date and
at such time and place, in each case as Assignees may reasonably determine but
not later than thirty (30) days following Transferor's receipt of the Notice of
Election. If Assignees do not elect to purchase all of the Offered Interests
hereunder, Transferor will thereafter be free for a period of one hundred twenty
(120) days after expiration of the sixty (60) day period referred to subsection
(b) of this Section 5.06 to Transfer the Offered Interests to a transferee on
terms no more favorable to that transferee than the Proposed Terms offered to
the Assignees. If no Transfer of the Offered Interests is consummated within
such one hundred and twenty (120) day period, or if Transferor seeks to transfer
the Offered Interests to a
42
transferee on terms more favorable to the proposed transferee than the Proposed
Terms offered to the Assignees, the Transferor shall again be required to comply
with all of the provisions of this Section 5.06. Failure by Assignees to give a
Notice of Election within such time period specified in subsection (b) of this
Section 5.06 will be deemed an election by Assignees not to exercise Assignees'
option to purchase all the Offered Interests.
SECTION 5.07 PURCHASE OPTIONS.
(a) In the event that a Purchase Option Event shall occur,
Assignees shall have the right, but not the obligation (the "Assignees Option
Repurchase"), exercisable from the date of the Purchase Option Event (whether or
not Assignor gives notice thereof) through the date one hundred and eighty (180)
days after its receipt of written notice from Assignor or Guilford of the
Purchase Option Event (the "Purchase Option Exercise Period"), to require
Assignor to repurchase from Assignees the Assigned Interests for a repurchase
price equal to, if the Purchase Option Event occurs and such payment is made
prior to the first anniversary of this Closing Date, $54.6 million, and if it
occurs on or after the first anniversary of the Closing Date, the amount
determined by reference to the date of payment by Assignor to Assignees in
accordance with Schedule 5.07(a) (the "Assignees Option Repurchase Price"). In
the event that Assignees elect to exercise their rights to require an Assignees
Option Repurchase, then Assignor shall, within ten (10) days following
Assignor's receipt of Assignees' repurchase election notice if the Assignees
Option Repurchase is based on a Purchase Option Event described in clauses
(iii), (iv), (v), (vi) or (vii) thereof and otherwise within fifteen (15) days
following Assignor's receipt of Assignees' repurchase election notice (the
"Assignees Option Repurchase Period"), repurchase from Assignees the Assigned
Interests at the Assignees Option Repurchase Price, the payment of which shall
be made by wire transfer, in immediately available funds, to Assignees' Account
designated by Assignees in such election notice. Notwithstanding anything to the
contrary contained herein, immediately upon the occurrence of a Bankruptcy Event
or a Notice Event, the Assignees shall be deemed to have automatically and
simultaneously elected to have the Assignor repurchase from the Assignees the
Assigned Interests for the Assignees Option Repurchase Price and the Assignees
Option Repurchase Price shall be immediately due and payable without any further
action or notice by any party.
(b) (i)In the event that an Assignor Option Event shall occur,
Assignor shall have the option ("Assignor Option Repurchase"), exercisable
within one hundred and eighty (180) days after the Assignor Option Event, to
repurchase the Assigned Interests for a repurchase price ("Assignor Option
Repurchase Price") equal to, if the Assignor Option Event occurs and such
payment is made prior to the first anniversary of the Closing Date, $84 million,
and if it occurs on or after the first anniversary of the Closing Date, the
amount determined by reference to the date of payment by Assignor to Assignees
in accordance with Schedule 5.07(b)(i).
43
(ii) In addition, the Assignor may, at its election and
regardless of whether there has occurred an Assignor Option Event, (A) on or
after the third anniversary of the Closing Date, repurchase the Assigned
Interests (a "Call") for a repurchase price ("Call Price") equal to the amount
determined by reference to the date of payment by Assignor to Assignees in
accordance with Schedule 5.07(b)(ii)(A); and (B) at any time, if a potential
secured financing requires a security interest in any of the Intellectual
Property ("Secured Financing Event Purchase"), repurchase up to * of the
Assigned Interests for a repurchase price ("Secured Financing Event Price")
equal to, if the Secured Financing Event Purchase occurs and such payment is
made prior to the first anniversary of the Closing Date, $105 million, and if it
occurs on or after the first anniversary of the Closing Date, the amount
determined by reference to the date of payment by Assignor to Assignees in
accordance with Schedule 5.07(b)(ii)(B) (initially calculated with respect to
100% of the Assigned Interests, which shall be reduced on a pro rata basis to
reflect the percentage of the Assigned Interests actually repurchased by the
Assignor). *
(c) The Assignees Option Repurchase Price, the Assignor Option
Repurchase Price, the Call Price and the Secured Financing Event Price (as
calculated in accordance with Schedule 5.07(b)(ii)(B) and prior to any ratable
reduction in accordance with Section 5.07(b)(ii)(B)) (collectively, the
"Repurchase Price") shall, in each case, be reduced by the sum of (i) the total
payments received and retained by the Assignees under Section 2.02(a), (b), (c),
(f) and (g) multiplied by the applicable factor specified in Schedule 5.07(c)
for each Repurchase Price and to reflect the calendar year in which each of the
applicable Section 2.02 payments was made and the calendar year in which the
Repurchase Price is paid, and (ii) the net cash gain (after deduction for the
actual exercise price and any brokerage or similar costs and expenses) from the
sale proceeds received by Assignees upon the sale of any common stock received
by Assignees upon exercise of the Warrants plus, if Assignees have not exercised
the Warrants in full or sold all of the common stock received upon the exercise
of the Warrants, an amount equal to 90% of (x) the product of (A) the number of
shares of common stock (or, if the Warrants have not been exercised in full, the
common stock issuable upon full exercise of such Warrants held by the Assignees)
on the date the Assignees elect to exercise an Assignees Option Repurchase or
the date on which the Assignor elects to exercise an Assignor Option Repurchase,
a Call or a Secured Financing Event Purchase and (B) the closing price for such
common stock on such date as quoted on the primary exchange on which such shares
are quoted (and if not so quoted or listed at any time, the average daily bid
and ask price as quoted in the pink sheets) minus (y) the exercise price paid or
payable for such common stock under the Warrants. In the event that a Secured
Financing Event Purchase is followed by another Repurchase Event, amounts
previously credited under clause (c)(i) or (ii) shall not be applied to reduce
the Repurchase Price for the subsequent Repurchase Event. Notwithstanding
anything herein or in any Schedules to the contrary, the sum of (a) any
Repurchase Price (after giving effect to the reductions set forth in the first
sentence of this Section 5.07(c)), plus (b) the amounts actually paid to
Assignees under Sections 2.02(a), (b), (c), (f) and (g), shall not exceed $147
million.
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
44
(d) In connection with the consummation of an Assignees Option
Repurchase, an Assignor Option Repurchase, a Call or a Secured Financing Event
Purchase pursuant to subparagraphs (a) and (b) above (each, a "Repurchase
Event"), Assignees agree that they will (i) promptly execute and deliver to
Assignor such UCC termination statements and other documents as may be necessary
to release, or evidence the relative ranking of, Assignees' Lien on the
collateral and otherwise give effect to such Repurchase Event and (ii) take such
other action or provide such other assistance as may be necessary to give effect
to the Repurchase Event.
(e) Assignees' failure to exercise the Assignees Option
Repurchase under Section 5.07(a) upon the occurrence of a Purchase Option Event
shall not preclude Assignees from exercising the Assignees Option Repurchase
under Section 5.07(a) upon the occurrence of a subsequent Purchase Option Event.
(f) Notwithstanding anything to the contrary contained in
Section 5.07(a), Assignees shall not be entitled to exercise an Assignees Option
Repurchase based upon the occurrence of an event described in clauses (i), (ii)
or (iii) of the definition of Change of Control if:
(i) Simultaneously with (or, as applicable in clauses
(i)(2) through (i)(5) below, thereafter) the occurrence of the Change of Control
(or, in the case of an event described in clause (ii) of the definition of
Change of Control, upon the closing of the transaction that results from the
Change of Control), the surviving entity in the Change of Control transaction,
whether Guilford or another Person (the "Surviving Party"), (1) assumes (or if
the Surviving Party is Guilford, as to its own existing obligations hereunder,
affirms and as to its additional obligations agrees to) all of the obligations
of Guilford and Assignor to Assignees hereunder and the additional undertakings
described in clauses (2) through (7) below pursuant to documentation in form and
substance reasonably acceptable to Assignees; (2) maintains (as applicable with
respect to the following specified periods) a fully-dedicated Aggrastat
salesforce of at least 25 people (on a full time equivalent basis) from and
after June 30, 2004; 45 people from and after June 30, 2005; and 75 people at
all times from and after June 30, 2006; (3) maintains sales and marketing
expenditures for Aggrastat that are not less than the amounts indicated in the
Net Sales Projections and Budget provided to Assignees by Guilford on June 25,
2003, a copy of which is attached hereto as Exhibit J; (4) maintains an EBITDA
to Total Debt Service Ratio of 1.25:1.00 and a Total Debt to Total
Capitalization Ratio of 0.5:1.0, on a pro forma basis as of the date of the
Change of Control (after giving effect to the transaction, if any, that results
from the Change of Control) and thereafter measured quarterly on the last day of
each calendar quarter on a consolidated basis; (5) achieves Primary Product Net
Sales of at least 85% of the * Sales * as projected for each year
during the Term; (6) with respect to such Surviving Party, Guilford and
Assignor, no Bankruptcy Event or Notice Event occurs at any time and such Person
does not become Insolvent at any time; and (7) such Surviving Party's ultimate
parent
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
45
unconditionally guarantees in a form comparable to Section 5.13 of this
Agreement all of the Obligations assumed or affirmed by such Surviving Party;
and
(ii) none of the Guilford 5% Convertible Subordinated
Notes due 2008 are accelerated, none of the holders of such notes have elected
to have such notes repurchased pursuant to a Designated Event Offer (as defined
in the Subordinated Indenture) and no other holder of Indebtedness of Guilford
or Assignor has accelerated such Indebtedness or elected to have such
Indebtedness repurchased.
If, at any time or from time to time, any of the provisions in
clauses (i) and (ii) of this subsection (f) are not fulfilled, then the Change
of Control shall be deemed to be a Purchase Option Event from the first date on
which any provision was not fulfilled, Assignees shall have the rights they
would otherwise have had under Section 5.07(a) of this Agreement beginning on
such date and, if the Assignees exercise an Assignees Option Repurchase, the
Assignees Option Repurchase Price shall be immediately due and payable as of the
date of such exercise.
(g) In the event the Assignees elect to exercise an Assignees
Option Repurchase based upon the occurrence of an event described in clauses
(i), (ii) or (iii) of the definition of Change of Control and (A) there has not
occurred any Notice Event or Bankruptcy Event and (B) none of the Guilford 5%
Convertible Subordinated Notes due 2008 are accelerated, none of the holders of
such notes have elected to have such notes repurchased pursuant to a Designated
Event Offer (as defined in the Subordinated Indenture) and no other holder of
Indebtedness of Guilford or Assignor has accelerated such Indebtedness or
elected to have such Indebtedness repurchased, the Assignor may elect by written
notice given within the Assignees Option Repurchase Period to pay the Assignees
Option Repurchase Price either (i) by the payment of one hundred percent (100%)
of the Assignees Option Repurchase Price in cash or (ii) by the payment of
seventy-five percent (75%) of the Assignees Option Repurchase Price in cash and
the remainder, as elected by Assignees in their sole discretion, either by the
issuance of (x) common stock of Guilford, covered by an effective resale
registration statement which Guilford shall covenant to maintain effective for a
period of two (2) years after the date of the issuance of such common stock to
Assignees, at a 10% discount to the current market price (determined by the
average closing market prices for the ten (10) trading days before the date of
the Assignees' election to take such stock), or (y) a secured promissory note of
Guilford and Assignor (secured at the least by the Collateral that secures the
Obligations upon the occurrence of the Closing provided for in this Agreement
and guaranteed by Guilford's ultimate parent in a form comparable to Section
5.13 of this Agreement) senior to all other debt and equity of any kind or type
of both Guilford and Assignor, payable in 12 equal quarterly installments of
principal with interest at a rate of 20% per annum (or, if lower, the highest
legal rate) payable as to principal installments and interest quarterly, each on
the last day of each calendar quarter with any unpaid interest to be compounded
monthly.
46
(h) Notwithstanding anything to the contrary contained in
Section 5.07(a), Assignees shall not exercise an Assignees Option Repurchase
based solely upon the occurrence and continuance of an event described in clause
(iii) of the definition of Purchase Option Event if (i) on the Closing Date,
Assignor pledges to Assignees, and grants to Assignees a first priority security
interest in, a collateral account containing unrestricted cash, cash equivalents
or other Acceptable Investments in an amount equal to $11,250,000, pursuant to
security documents and control agreements acceptable to Assignees (the
"Liquidity Account"), securing the Obligations, and (ii) on the first Business
Day of each calendar quarter during the Term, Assignor makes an additional
deposit into the Liquidity Account such that the total amount on deposit equals
the first amounts payable to Assignees by Assignor from Included Product
Payments pursuant to Section 2.02(b)(ii) for each of the next eight (8) calendar
quarters, including the quarter in which such Business Day occurs. Assignees
shall be entitled to exercise all rights as secured parties with respect to the
Liquidity Account upon any default in the payment or performance of the
Obligations, including the application of amounts in the Liquidity Account to
due but unpaid Obligations. The application by Assignees of amounts in the
Liquidity Account to the payment of any due but unpaid Obligations, including
without limitation, the payment of any amounts due to Assignees from Assignor
from Included Product Payments pursuant to Section 2.02(b), shall not cure any
failure by Assignor or Guilford to make directly such payments. Upon thirty (30)
days prior written notice, Assignor may request that Assignees release their
security interest in the Liquidity Account. Upon such request, the Assignees
shall release their security interest in the Liquidity Account upon their
determination, in their reasonable discretion, that as of the date of release,
no Purchase Option Event or Notice Event has occurred and no Purchase Option
Event is reasonably expected to occur as a result of such release, including,
without limitation, an event described in clause (iii) of the definition of
Purchase Option Event. Upon the Assignees' release of their interest in the
Liquidity Account, this Section 5.07(h) shall be of no further effect. During
any period of the Term prior to the release of the Liquidity Account by
Assignees, it shall be an immediate Purchase Option Event if during any calendar
quarter, Assignor fails to pay to Assignees the minimum amounts specified in
Section 2.02(b)(ii).
(i) Without in any manner limiting its obligations under
Section 5.13, Guilford agrees that to the extent that Assignor does not pay any
amount due to Assignees under this Section 5.07, Guilford will promptly pay or
cause Assignor to pay such amounts.
SECTION 5.08 SECURITY AGREEMENTS.
(a) Assignor Security Agreement.
(i) Except as otherwise provided in Section
5.07(b)(ii)(B), Assignor shall at all times
until the Obligations of Assignor are paid
and performed in full grant in favor of
Assignees a valid, continuing, first
perfected lien on and security interest in
the Assigned Interests, the Intellectual
47
Property with respect to the Primary
Products and the other Collateral described
in the Assignor-Assignees Security
Agreement.
(ii) Except as provided in Section
5.07(b)(ii)(B), Assignor shall not grant a
security interest in any of its property to
any party other than the Assignees.
(b) Guilford Security Agreements. Guilford shall at all times
until the Obligations of Guilford and the Assignor under this Agreement and the
other Transaction Documents are paid and performed in full: (i) grant and
maintain in favor of Assignor a valid, continuing, first perfected lien on and
security interest in the Collateral described in the Guilford-Assignor Security
Agreement and (ii) grant and maintain in favor of Assignees a valid, continuing,
first perfected lien on and security interest in the collateral described in the
Guilford-Assignees Security Agreement. Notwithstanding the foregoing, if at any
time during the Term, Guilford receives a bona fide financing proposal from a
third-party institutional lender that is conditioned upon such lender obtaining
a first priority security interest in the Intellectual Property relating to the
After Acquired Products, or the receivables, payment intangibles or Distribution
Agreements or License Agreements relating to the Secondary Products or the After
Acquired Products, Assignees shall, at the closing of such new financing,
subordinate their security interest under the Guilford-Assignees Security
Agreement in such of the assets as the third party lender has required a first
priority security interest, pursuant to the terms of a written subordination
reasonably satisfactory to the Assignees and such third party lender. The
Assignees confirm and agree that Assignor may similarly subordinate its security
interest in the same assets under the Guilford-Assignor Security Agreement.
Nothing in this Section 5.08(b) or in any subordination agreement entered into
in connection therewith shall affect or reduce any of the obligations of
Assignor or Guilford to the Assignees under this Agreement or the obligations of
Guilford to Assignor under the Management Agreement.
SECTION 5.09 BEST EFFORTS; FURTHER ASSURANCE.
(a) Subject to the terms and conditions of this Agreement,
each party hereto will use its commercially reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary under applicable laws and regulations to consummate the transactions
contemplated by this Agreement and any other Transaction Document. Assignees,
Assignor and Guilford agree to execute and deliver such other documents,
certificates, agreements and other writings (including any financing statement
filings requested by Assignees) and to take such other actions as may be
reasonably necessary in order to consummate or implement expeditiously the
transactions contemplated by this Agreement and any other Transaction Document
and to vest in Assignees good, valid and marketable rights and interests in and
to the Assigned Interests free and clear of all Liens, except those Liens
created in favor of Assignees pursuant to the Security Agreements and any other
Transaction Document.
48
(b) Each of the parties hereto shall execute and deliver such
additional documents, certificates and instruments, and perform such additional
acts, as may be reasonably requested and necessary or appropriate to carry out
and effectuate all of the provisions of this Agreement and any other Transaction
Document and to consummate all of the transactions contemplated by this
Agreement and any other Transaction Document.
(c) Guilford, GPI Holdings, Assignor and Assignees shall
cooperate and provide assistance as reasonably requested by the other parties in
connection with any litigation, arbitration or other proceeding (whether
threatened, existing, initiated, or contemplated prior to, on or after the date
hereof) to which any party hereto or any of its officers, directors,
shareholders, 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 interests, in each case relating to this Agreement, any other
Transaction Document, the Assigned Interests or any other Collateral, or the
transactions described herein or therein but in all cases excluding any
litigation brought by Guilford, GPI Holdings or Assignor against Assignees or
brought by Assignees against Guilford, GPI Holdings or Assignor.
SECTION 5.10 REMITTANCE TO LOCKBOX ACCOUNT.
(a) Within sixty (60) days after the date of this Agreement,
the parties hereto shall enter into a Lockbox Agreement in form and substance
reasonably satisfactory to the parties hereto and the Lockbox Bank, which
Lockbox Agreement will provide for, among other things, the establishment and
maintenance of a Lockbox Account, a Joint Concentration Account, an Assignor
Concentration Account and an Assignees Concentration Account in accordance with
the terms herein and therein. Any Assignees Concentration Account shall be held
solely for the benefit of Assignees, but shall be subject to the terms and
conditions of this Agreement, the Security Agreements, the Management Agreement
and the other Transaction Documents. Funds deposited into the Lockbox Account
shall be swept by the Lockbox Bank on a daily basis into the Joint Concentration
Account and immediately subsequent thereto, the Daily Amount and any other
amounts payable to the Assignees under Section 2.02 shall be swept into the
Assignees Concentration Account. Assignees shall have immediate and full access
to any funds held in the Assignees Concentration Account and such funds shall
not be subject to any conditions or restrictions whatsoever. After the Daily
Amount and any other amounts payable to the Assignees under Section 2.02 are
swept into the Assignees Concentration Account the amounts remaining in the
Joint Concentration Account shall then be swept, at the direction of Assignor,
into the Assignor Concentration Account. Assignor shall have immediate and full
access to any funds held in the Assignor Concentration Account and such funds
shall not be subject to any conditions or restrictions whatsoever other than
those of the Lockbox Bank, provided, however, that nothing herein shall (i)
affect or reduce Assignor's obligations to pay in full all amounts due to
Assignees under this Agreement, or (ii) in any manner limit the recourse of
Assignees to the assets of Assignor to satisfy the Assignor's obligations.
49
(b) Upon execution of the Lockbox Agreement, Assignees shall
receive an opinion of counsel of Assignor as to the perfection of Assignees'
security interest in the Pledged Deposit Accounts (as defined in the
Assignor-Assignees Security Agreement).
(c) Assignor shall pay for all fees, expenses and charges of
the Lockbox Bank by debiting the Assignor Concentration Account.
(d) Each Distribution Agreement and License Agreement entered
into by Guilford shall contain a provision providing for all payments in respect
of sales of the Primary Products and in respect of royalties received from
Contract Parties to be remitted directly by the applicable party into the
Lockbox Account and Assignor and Guilford shall cause such payments to be
remitted directly by the applicable party into the Lockbox Account. Without in
any way limiting the foregoing, commencing on the later of the Closing Date and
the date on which the Lockbox Agreement is executed and at any time thereafter,
any and all payments in respect of Primary Products Net Sales received by
Assignor or Guilford shall be deposited into the Lockbox Account within five (5)
Business Days of Assignor's or Guilford's receipt thereof.
(e) With respect to any Distribution Agreement, License
Agreement or other sale agreement or invoice entered into or issued by Guilford
from and after the date hereof Guilford shall (i) at the time of the execution
and delivery of such Distribution Agreement, License Agreement or other sale
agreement or the issuance of any invoice, instruct any party thereto or
recipient thereof to remit to the Lockbox Account when due all applicable
payments in respect of sales of the Products and in respect of royalties that
are due and payable to Assignor or Guilford in respect of or derived from such
Distribution Agreement, License Agreement or other sale agreement or invoice
during the Term and (ii) in the case of any Distribution Agreement, License
Agreement or other sale agreement, deliver to Assignees evidence of such
instruction and of such applicable party's agreement thereto.
(f) Neither Assignor nor Guilford shall have any right to
terminate the Lockbox Bank without Assignees' prior written consent. Any such
consent, which Assignees may grant or withhold in their discretion, shall be
subject to the satisfaction of each of the following conditions to the
satisfaction of Assignees:
(i) the successor Lockbox Bank shall be
reasonably acceptable to Assignees;
(ii) Assignees, Assignor, Guilford and the
successor Lockbox Bank shall have entered
into a lockbox agreement substantially in
the form of the Lockbox Agreement initially
entered into;
50
(iii) all funds and items in the accounts subject
to the Lockbox Agreement to be terminated
shall be transferred to the new accounts
held at the successor Lockbox Bank prior to
the termination of the then existing Lockbox
Bank; and
(iv) Assignees shall have received evidence that
all of the applicable parties making
payments in respect of sales of the Products
have been instructed to remit all future
payments in respect of sales of the Products
to the new accounts held at the successor
Lockbox Bank.
SECTION 5.11 ADDITIONAL COVENANTS OF ASSIGNOR, GPI HOLDINGS
AND GUILFORD
(a) In the event that either Assignor or Guilford becomes
aware that the making, using or selling of any Products licensed by Guilford to
a Contract Party under any of the Distribution Agreements or License Agreements
infringes or violates any third party Intellectual Property, Guilford shall
promptly use its reasonable best efforts to attempt to secure the right to use
such Intellectual Property on behalf of itself and the affected Contract Party
and shall pay all costs and amounts associated with obtaining any such license,
without any charge to the Contract Party or any reduction in the Assigned
Interests.
(b) Guilford shall duly perform and observe all of Guilford's
covenants and obligations under each Distribution Agreement and License
Agreement in all material respects. Upon the occurrence of a material breach of
any of the Distribution Agreements or License Agreements by any other party
thereto, which is not cured as provided therein, Guilford shall use its
commercially reasonable best efforts to seek to enforce all of its rights and
remedies thereunder. Guilford and Assignor shall duly comply with all material
terms of the Management Agreement and not suffer to exist any default
thereunder.
(c) Neither Assignor nor Guilford shall, without the prior
written consent of Assignees, which consent shall not be unreasonably withheld:
(i) Forgive, release or compromise any amount
owed to Assignor and relating to the
Assigned Interests in a manner which could
reasonably be expected to materially
adversely affect the Assigned Interests;
(ii) Waive, amend, cancel or terminate, exercise
or fail to exercise, any of its material
rights constituting or relating to the right
to receive payment on Total Net Sales;
(iii) Amend, modify, restate, cancel, supplement,
terminate or waive any provision of any
Distribution Agreement or License Agreement,
or
51
grant any consent thereunder, or agree to do
any of the foregoing, including, without
limitation, entering into any agreement with
the Contract Party under the provisions of
such Distribution Agreement or License
Agreement in each case which could
reasonably be expected to have a Material,
Adverse Effect; or
(iv) Create, incur, assume or suffer to exist any
Lien, or exercise any right of rescission,
offset, counterclaim or defense, upon or
with respect to the Assigned Interests or
the other Collateral, or agree to do or
suffer to exist any of the foregoing, except
for (A) any Lien or agreements in favor of
Assignees granted under or pursuant to this
Agreement and the other Transaction
Documents, (B) the Liens set forth on
Schedule 3.04, and (C) the Liens described
in, and subject to the conditions set forth
in, Section 5.07(b)(ii)(B) and Section
5.08(b).
(d) Assignor shall promptly provide to Assignees copies of any
material reports or other information prepared by any Contract Party it has
received pursuant to the Management Agreement that has not been previously
provided to Assignees by either Assignor, Guilford or any other Person.
(e) Each of Assignor, GPI Holdings and Guilford shall provide
Assignees with written notice as promptly as practicable (and in any event
within five (5) Business Days) after becoming aware of any of the following:
(i) the occurrence of a Bankruptcy Event;
(ii) any material breach or default by either
Assignor, GPI Holdings or Guilford of any
covenant, agreement or other provision of
this Agreement or any other Transaction
Document;
(iii) any representation or warranty made or
deemed made by either Assignor, GPI Holdings
or Guilford in any of the Transaction
Documents to which it is a party or in any
certificate delivered to Assignees pursuant
hereto shall prove to be untrue, inaccurate
or incomplete in any material respect on the
date as of which made or deemed made;
(iv) the occurrence of a Purchase Option Event;
(v) the occurrence of an Assignor Option Event;
52
(vi) any sublicense by a Contract Party of any
rights licensed pursuant to any Distribution
Agreement or License Agreement; or
(vii) the resignation, death or removal of any
Class A Manager or Class B Manager (as such
terms are defined in the LLC Agreement) of
Assignor.
(f) Promptly (but in no event later than five (5) Business
Days) after (i) receiving written or oral notice from a Contract Party, (A)
terminating the related Distribution Agreement or License Agreement, (B)
alleging any material breach of or default under such Distribution Agreement or
License Agreement by Guilford or (C) asserting the existence of any facts,
circumstances or events which alone or together with other facts, circumstances
or events could reasonably be expected (with or without the giving of notice or
passage of time or both) to give rise to a material breach of or default under
or right to terminate such Distribution Agreement or License Agreement or (ii)
either Assignor or Guilford otherwise having Knowledge of any fact, circumstance
or event which alone or together with other facts, circumstances or events could
reasonably be expected (with or without the giving of notice or passage of time
or both) to give rise to a material breach of or default under such Distribution
Agreement or License Agreement by Guilford or a right to terminate such
Distribution Agreement or License Agreement by such Contract Party, in each
case, either Assignor or Guilford shall give a written notice to Assignees
describing in reasonable detail the relevant breach, default or termination
event, including a copy of any written notice received from such Contract Party
and, in the case of any breach or default or alleged breach or default by
Guilford, describing any corrective action Guilford proposes to take.
(g) Guilford shall, at Guilford's sole expense, either
directly or by causing the Contract Party to do so, take any and all actions and
prepare, execute, deliver and file any and all agreements, documents or
instruments which are necessary or desirable to (A) diligently maintain the
applicable licensed Intellectual Property and the Patents and (B) diligently
defend such licensed Intellectual Property and such Patents against infringement
or interference by any other Persons, and against any claims of invalidity or
unenforceability, in any jurisdiction (including, without limitation, by
bringing any legal action for infringement or defending any counterclaim of
invalidity or action of a third party for declaratory judgment of
non-infringement or non-interference). Guilford shall not, and shall use
commercially reasonable efforts to cause the applicable Contract Party not to,
disclaim or abandon, or fail to take any action necessary or desirable to
prevent the disclaimer or abandonment of, the applicable Patents or other
Intellectual Property.
(h) Guilford shall use its reasonable best efforts to secure
and maintain, or, where a Contract Party is required to do so under any
Distribution Agreement or License Agreement, assist such Contract Party in
securing and maintaining, all regulatory and other governmental
53
approvals, clearances, registrations and permits which may be required to
manufacture, market and/or sell any and all of the Products in accordance with
Guilford's business plans that are reasonably designed to maximize the
commercial potential of the Products.
(i) Neither Guilford nor Assignor shall provide samples of
Products, sell Products at reduced prices or grant credits against the purchase
prices of the Products to any person for purposes of inducing or otherwise
related to the sale of other products.
(j) Guilford and Assignor shall comply with all manufacturing
guidelines and processes required by the FDA.
(k) Guilford shall (i) maintain insurance policies with
insurance companies rated not less than "A-" by A.M. Best Company, Inc. with
coverages and in amounts sufficient to comply with the Supply Agreement and
otherwise what is customary for companies of comparable size and condition
similarly situated in the same industry as Guilford including without
limitation, product liability insurance and directors and officers insurance and
(ii) maintain each of Assignor and Assignees as an additional insured party with
respect to its general liability and product liability insurance policies.
(l) Neither Assignor nor Guilford nor any Affiliate of
Guilford will Transfer (other than an Excluded Transfer) (i) all or any major
part of its interests in the Products or (ii) all or any part of its interests
in either of the Primary Products to a third party purchaser or licensee, as
applicable, unless such third party purchaser or licensee, as applicable,
assumes in writing all of the obligations of Assignor or Guilford, as
applicable, hereunder, including the obligation to make all payments in respect
of the Assigned Interests to Assignees pursuant to a written assumption, in a
form reasonably satisfactory to Assignees. In the event of any such Transfer,
Assignor and Guilford shall hold any proceeds of such transfer in trust for ten
(10) business days after the consummation of such Transfer to permit the
Assignees to exercise an Assignees Option Repurchase and to be paid directly
from such proceeds. Assignor and Guilford shall give Assignees thirty (30) days
prior written notice of any such proposed Transfer.
(m) Neither Guilford, GPI Holdings nor Assignor will amend,
modify or terminate, or permit to be amended, modified or terminated, nor shall
Guilford, GPI Holdings or Assignor waive any rights under (i) the Certificate of
Formation (ii) the LLC Agreement, (iii) the Management Agreement, (iv) the
Guilford-Assignees Security Agreement or (v) the Guilford-Assignor Security
Agreement without the prior written consent of Assignees, which consent shall be
granted or withheld in Assignees' sole discretion. Without limiting the
foregoing, Assignor will diligently pursue all of its rights and remedies with
respect to Guilford under the Management Agreement and the Guilford-Assignor
Security Agreement.
54
(n) Except as provided in, and subject to the conditions set
forth in, Section 5.07(b)(ii)(B), Assignor will not pledge or otherwise assign
or transfer any of its assets without the prior written consent of Assignees,
which consent shall be granted or withheld in Assignees' sole discretion.
(o) Assignor will comply with the procedures and records as
set forth in Article V of the LLC Agreement, a copy of which is attached hereto
as Exhibit F.
(p) Guilford shall cause each Contract Party under any
Distribution Agreement or License Agreement, as applicable, to provide, promptly
following the end of each calendar quarter, all information with respect to net
end-user sales (including all components of information required to calculate
Total Net Sales) under each such agreement for inclusion in the Quarterly Report
for such quarter, and Guilford shall cause such obligation to be included in
every Distribution Agreement and License Agreement it enters into following the
Closing Date.
(q) Assignor shall not make any dividends or distributions to
Guilford or GPI Holdings (including payment of the Management Fee (as defined in
the Management Agreement) or any distributions under the LLC Agreement) unless
and until all amounts at that time owing to Assignees under this Agreement, the
Management Agreement or any obligation under any other Transaction Document are
paid in full.
(r) Guilford, GPI Holdings and Assignor shall ensure that the
claims and rights of Assignees created by this Agreement and any other
Transaction Document in and to the Assigned Interests and, subject to the
provisions of Section 5.07(b)(ii)(B) and 5.08(b), any other Collateral are and
shall remain senior to any creditor of Assignor, GPI Holdings, Guilford or any
other Person.
(s) Assignor's obligations to pay Guilford the Management Fee
(as defined in the Management Agreement) shall be in all respects subordinate
to, and shall be paid to Guilford only after the satisfaction in full of,
Assignor's payment Obligations to Assignees, including Assignor's payment to
Assignees of the Applicable Percentage of Total Net Sales and all other
Obligations set forth in this Agreement.
(t) Guilford shall not incur any Indebtedness (other than
equipment financing, secured financing for an After Acquired Product, senior
bank financing (or financing provided by a financial institution on
substantially the same terms as senior bank financing) and industrial bond
financing) that is not expressly subordinated to Guilford's Obligations to
Assignees under this Agreement on terms no less favorable to Assignees than the
subordination provisions benefiting Senior Debt, as defined in the Subordinated
Indenture.
55
(u) Guilford shall assign, and agrees to cause all of its
Affiliates to assign, to Assignor all improvements of or to the Primary Products
and the Intellectual Property related to the Primary Products that arise on or
after the Closing Date and agrees to execute and deliver, and agrees to cause
its Affiliates to execute and deliver, all instruments, documents and agreements
as are reasonably required to effectuate such assignment.
SECTION 5.12 FUTURE AGREEMENTS.
(a) Guilford shall provide Assignees, promptly after the
execution of a Distribution Agreement or License Agreement by Guilford and any
Contract Party, a copy of the executed Distribution Agreement or License
Agreement for review by Assignees.
(b) If Guilford, at any time and from time to time during the
term of this Agreement, proposes to materially change the form of Distribution
Agreement or License Agreement it utilizes, or proposes in connection with any
transaction or transactions with a Contract Party to materially vary the terms
of the related Distribution Agreement or License Agreement from those contained
in the prevailing form of Distribution Agreement or License Agreement, then
Guilford shall promptly provide to Assignees such revised form of Distribution
Agreement or License Agreement or, at least three (3) Business Days prior to the
execution and delivery of any Distribution Agreement or License Agreement that
includes a material deviation from the terms of the prevailing form of
Distribution Agreement or License Agreement, give written notice to Assignees
indicating that Guilford proposes to enter into such Distribution Agreement or
License Agreement and the anticipated date of execution of such proposed
Distribution Agreement or License Agreement.
(c) In the event that any payments under any Distribution
Agreement or License Agreement relating to a Product are calculated upon a basis
that is materially different than the basis used under the Distribution
Agreements or License Agreements in existence at such time, Guilford and
Assignor shall, in good faith, discuss with Assignees and mutually agree on the
basis of the appropriate payments to be made to Assignees in respect of any such
Distribution Agreement or License Agreement and the manner of calculating such
payments, which payments and manner of calculating payments will not be less
advantageous to Assignees than are provided under the Distribution Agreements or
License Agreements in existence at such time.
(d) To the extent Guilford has the right to perform or cause
to be performed inspections or audits under any of the License Agreements or
Distribution Agreements regarding payments payable and/or paid to Guilford
thereunder (each, a "License Party Audit"), Guilford shall, at the reasonable
request of Assignees, cause such License Party Audit to be promptly performed
(it being understood that it shall not be a reasonable request if, in the good
faith belief of Guilford, the requested License Party Audit would impair
Guilford's commercial relationship with the applicable Contract Party). In
conducting a License Party Audit, Guilford may engage
56
its then retained internationally recognized independent public accounting firm,
or, if Guilford elects otherwise, such other internationally recognized
independent public accounting firm reasonably acceptable to Assignees. Promptly
after completion of any License Party Audit (whether or not requested by
Assignees), Guilford shall promptly deliver to Assignees an Audit Report in
respect of such License Party Audit. With respect to any License Agreement or
Distribution Agreement under which Guilford has a right to perform or cause to
be performed a License Party Audit, in the event Assignees requests Guilford to
perform a License Party Audit and such License Party Audit is in fact performed
by or on behalf of Guilford, then if the results thereof reveal that the amounts
paid to Guilford in respect of sales of any licensed Product under such License
Agreement or Distribution Agreement for the period of such License Party Audit
have been understated by more than the greater of $20,000 or 7.5% of the amounts
payable to Guilford with respect to sales of any licensed Product and determined
to be due for the applicable period of such License Party Audit, then the Audit
Costs incurred by Guilford in respect of such License Party Audit shall be borne
by Guilford. In all other cases the Audit Costs incurred by Guilford in respect
of a License Party Audit shall be borne by Assignees.
SECTION 5.13 GUARANTEE.
(a) The Guarantee. Guilford and GPI Holdings, jointly and
severally (collectively, the "Guarantor") hereby unconditionally and irrevocably
guarantees the full and prompt payment of all amounts when due which may be
owing by Assignor under this Agreement and the other Transaction Documents and
the full and prompt performance of all of the Obligations of Assignor under this
Agreement and the other Transaction Documents (collectively, the "Guaranteed
Obligations"). *
(b) * -
(i) *
(ii) *
(iii) *; or
(iv) *
*
(c) *. -
(d) *
(e) * -
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
57
(f) * -
(g) * -
(h) Senior Debt. Guilford confirms and agrees that its
Obligations under this Section 5.13 and its other Obligations to Assignees under
this Agreement and the other Transaction Documents constitute Senior Debt and
Designated Senior Debt as defined in and for the purposes of the Subordinated
Indenture.
SECTION 5.14 FINANCIAL STATEMENTS.
Guilford shall maintain, and cause Assignor to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Guilford shall deliver to Assignees the following financial
statements:
(a) Within sixty (60) days after the end of each calendar
quarter, copies of (i) the unaudited consolidated financial statements of
Guilford and its Subsidiaries for the prior fiscal quarter and (ii) the
unaudited financial statements of Assignor for the prior fiscal quarter; and
(b) Within ninety (90) days after the end of each calendar
year, copies of (i) the audited consolidated financial statements of Guilford
and its Subsidiaries for the prior calendar year and (ii) the audited financial
statements of Assignor for the prior calendar year.
(c) Within ten (10) days after the end of each calendar
quarter, a certificate of the chief financial officer of Guilford in a form
satisfactory to Assignees pursuant to which such officer certifies the amount of
Working Capital of Guilford as at the end of the such quarters and certifies
that Guilford maintained Working Capital of no less than $20 million at the end
of each calendar month during such quarter.
ARTICLE VI
THE CLOSING; CONDITIONS TO CLOSING AND FUNDING
SECTION 6.01 CLOSING.
Subject to the closing conditions set forth in Sections 6.02
and 6.03, the closing of the purchase and sale of the Assigned Interests (the
"Closing") shall take place at the offices of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., Baltimore,
MD, on the Closing Date.
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
58
SECTION 6.02 CONDITIONS APPLICABLE TO ASSIGNEES.
The obligations of Assignees to effect the Closing and the
payment of the Purchase Price shall be subject to the satisfaction of each of
the following conditions, any of which may be waived by Assignees in their sole
discretion:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Assignor and Guilford set forth in this
Agreement and the other Transaction Documents shall be true, correct and
complete in all material respects as of the Closing Date.
(b) No Adverse Circumstances. There shall not have occurred or
be continuing any event or circumstance (including any development with respect
to the efficacy of the Primary Products or the licensed Intellectual Property or
the use or expected future use of the same as opposed to competing products)
that could reasonably be expected to have a Material Adverse Effect.
(c) Litigation. No action, suit, litigation, proceeding or
investigation shall have been instituted, be pending or threatened (i)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in connection with
the transactions contemplated by this Agreement, or (ii) seeking to restrain or
prohibit Assignees' acquisition or future receipt of the Assigned Interests.
(d) Officer's Certificates.
(i) Assignees shall have received at the Closing
a certificate of an executive officer of Assignor pursuant to which such officer
certifies that the conditions set forth in Sections 6.02(a), (b), (c), (m) and
(o) have been satisfied in all respects as of the Closing Date.
(ii) Assignees shall have received at the Closing
a certificate of the executive officer of Guilford pursuant to which such
officer certifies that the conditions set forth in Sections 6.02(a), (b), (c),
(l) and (o) have been satisfied in all respects as of the Closing Date.
(iii) Assignees shall have received at the Closing
a certificate of the executive officer of GPI Holdings pursuant to which such
officer certifies that the conditions set forth in Sections 6.02(a), (b), (c),
(n) and (o) have been satisfied in all respects as of the Closing Date.
(e) Legal Opinions.
(i) Assignees shall have received an opinion of
▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P., counsel to Assignor
dated the Closing Date, in form and
substance
59
satisfactory to Assignees and their counsel,
to the effect set forth in Exhibit E(i).
(ii) Assignees shall have received an opinion of
patent counsel to Assignor, dated the
Closing Date, in form and substance
satisfactory to Assignees and their counsel,
to the effect set forth in Exhibit E(ii).
(f) ▇▇▇▇ of Sale. A ▇▇▇▇ of Sale shall have been executed and
delivered by Assignor to Assignees and Assignees shall have received the same.
(g) Assignor-Assignees Security Agreement. The
Assignor-Assignees Security Agreement shall have been duly executed and
delivered by all the parties thereto and shall be in form of Exhibit D hereto,
together with proper financing statements (including Form UCC-1s) for filing
under the UCC and/or any other applicable law, rule, statute or regulation
relating to the perfection of a security interest in filing offices in the
jurisdictions listed on Schedule 6.02(g).
(h) Guilford Security Agreements. Each of the
Guilford-Assignor Security Agreement and the Guilford-Assignees Security
Agreement shall have been duly executed and delivered by all the parties thereto
and shall be in forms of Exhibits D-1 and D-2 hereto, together with proper
financing statements (including Form UCC-1s) for filing under the UCC and/or any
other applicable law, rule, statute or regulation relating to the perfection of
a security interest in filing offices in the jurisdictions listed on Schedule
6.02(g).
(i) Pledge Agreement. The Pledge Agreement shall have been
duly executed and delivered by all the parties thereto and shall be in form of
Exhibit K hereto, together with proper financing statements (including Form
UCC-1s) fully executed for filing under the UCC and/or any other applicable law,
rule, statute or regulation relating to the perfection of a security interest in
filing offices in the jurisdictions listed on Schedule 6.02(g).
(j) Management Agreement. The Management Agreement shall have
been duly executed and delivered by all the parties thereto and shall be in form
of Exhibit H hereto.
(k) Conversion Documents. Each Conversion Document shall have
been duly executed and delivered by all the parties thereto and filed with the
Secretary of State of the State of Delaware and shall be in forms of Exhibits
L-N hereto.
(l) Corporate Documents of Guilford. Assignees shall have
received on the Closing Date, a certificate, dated the Closing Date, of a senior
officer of Guilford (the statements made in which shall be true and correct on
and as of the Closing Date): (i) attaching copies, certified by such officer as
true and complete, of Guilford's certificate of incorporation and by-laws or
other
60
organizational documents (together with any and all amendments thereto)
certified by the appropriate Government Authority as being true, correct and
complete copies; (ii) attaching copies, certified by such officer as true and
complete, of resolutions of the board of directors of Guilford authorizing and
approving the execution, delivery and performance by Guilford of this Agreement,
the other Transaction Documents and the transactions contemplated herein and
therein; (iii) setting forth the incumbency of the officer or officers of
Guilford who have executed and delivered this Agreement and the other
Transaction Documents including therein a signature specimen of each such
officer or officers; and (iv) attaching copies, certified by such officer as
true and complete, of certificates of the appropriate Government Authority of
the jurisdiction of formation, stating that Guilford is in good standing under
the laws of such jurisdiction.
(m) Corporate Documents of Assignor. Assignees shall have
received on the Closing Date, a certificate, dated the Closing Date, of a senior
officer of Assignor (the statements made in which shall be true and correct on
and as of the Closing Date): (i) attaching copies, certified by such officer as
true and complete, of Assignor's certificate of formation or other
organizational documents (together with any and all amendments thereto)
certified by the appropriate Government Authority as being true, correct and
complete copies; (ii) attaching copies, certified by such officer as true and
complete, of resolutions of the management committee of Assignor authorizing and
approving the execution, delivery and performance by Assignor of this Agreement,
the other Transaction Documents and the transactions contemplated herein and
therein; (iii) setting forth the incumbency of the officer or officers of
Assignor who have executed and delivered this Agreement and the other
Transaction Documents including therein a signature specimen of each such
officer or officers; and (iv) attaching copies, certified by such officer as
true and complete, of certificates of the appropriate Government Authority of
the jurisdiction of formation, stating that Assignor is in good standing under
the laws of such jurisdiction.
(n) Corporate Documents of GPI Holdings. Assignees shall have
received on the Closing Date, a certificate, dated the Closing Date, of a senior
officer of GPI Holdings (the statements made in which shall be true and correct
on and as of the Closing Date): (i) attaching copies, certified by such officer
as true and complete, of GPI Holdings' certificate of incorporation and by-laws
or other organizational documents (together with any and all amendments thereto)
certified by the appropriate Government Authority as being true, correct and
complete copies; (ii) attaching copies, certified by such officer as true and
complete, of resolutions of the board of directors of GPI Holdings authorizing
and approving the execution, delivery and performance by GPI Holdings of this
Agreement, the other Transaction Documents and the transactions contemplated
herein and therein; (iii) setting forth the incumbency of the officer or
officers of GPI Holdings who have executed and delivered this Agreement and the
other Transaction Documents including therein a signature specimen of each such
officer or officers; and (iv) attaching copies, certified by such officer as
true and complete, of certificates
61
of the appropriate Government Authority of the jurisdiction of formation,
stating that GPI Holdings is in good standing under the laws of such
jurisdiction.
(o) Lack of Purchase Option Event. There shall not have
occurred a Purchase Option Event.
(p) Covenants. Each of Assignor, GPI Holdings and Guilford
shall have complied in all material respects with the covenants set forth in
this Agreement and each other Transaction Document.
(q) Warrants. The Warrants shall have been duly executed and
issued to Assignees.
(r) Merck Transaction. The asset transfer transaction
contemplated by the Merck Purchase Agreement shall simultaneously close.
(s) Liquidity Account. The Liquidity Account shall have been
established on terms and conditions acceptable to the Assignees.
SECTION 6.03 CONDITIONS APPLICABLE TO ASSIGNOR.
The obligations of each of Assignor and Guilford to effect the
Closing shall be subject to the satisfaction of each of the following
conditions, any of which may be waived by Assignor and Guilford in their sole
discretion:
(a) Accuracy of Representations and Warranties. The
representations and warranties of Assignees set forth in this Agreement shall
have been true, correct and complete as of the Closing Date.
(b) Litigation. No action, suit, litigation, proceeding or
investigation shall have been formally instituted, be pending or threatened (i)
challenging or seeking to make illegal, to delay or otherwise directly or
indirectly to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in connection with
the transactions contemplated by this Agreement, or (ii) seeking to restrain or
prohibit Assignees' acquisition or future receipt of the Assigned Interests.
(c) Officer's Certificate. Assignor shall have received at the
Closing a certificate of an officer or member of the general partner of
Assignees certifying that the conditions set forth in Sections 6.03(a) and (b)
have been satisfied, in all respects as of the Closing Date.
(d) Full Payment. The Purchase Price shall have been tendered
by Assignees to Assignor by wire transfer of immediately available funds to
Assignor's Account identified to Assignees on or prior to the Closing.
62
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION DATE.
This Agreement shall terminate on December 31, 2012; provided,
however, that if any Obligations under this Agreement remain unpaid or any
payments are required to be made by one of the parties hereunder after that
date, this Agreement shall remain in full force and effect until any and all
such payments have been made in full, and solely for that purpose. In addition,
this Agreement shall sooner terminate if Assignees or Assignor shall have
exercised their right under Sections 5.07(a), (b)(i) or (b)(ii)(A),
respectively, with the termination date in that event being the date on which
Assignor completes the repurchase in full of the Assigned Interests and pays in
full in cash the Assignees Option Repurchase Price, the Call Price, the Assignor
Option Repurchase Price or other applicable amount, as the case may be.
SECTION 7.02 EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to
Section 7.01, this Agreement shall forthwith become void and have no effect
without any liability on the part of any party hereto or its Affiliates,
directors, officers or stockholders other than the provisions of this Section
7.02 and Sections 5.04, 5.13, 8,01, 8.04 and 8.05 hereof, which shall survive
any termination as set forth in Section 8.01. Nothing contained in this Section
7.02 shall relieve any party from liability for any breach of this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 SURVIVAL.
(a) All representations and warranties made herein and in any
other Transaction Document, any certificates or in any other writing delivered
pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the Closing and shall continue to survive
indefinitely. Notwithstanding anything in this Agreement or implied by law to
the contrary, all the agreements contained in Sections 5.04, 5.13, 8.01, 8.04
and 8.05 shall survive indefinitely following the execution and delivery of this
Agreement and the Closing and the termination of this Agreement.
(b) Any investigation or other examination that may have been
made or may be made at any time by or on behalf of the party to whom
representations and warranties are made shall
63
not limit, diminish or in any way affect the representations and warranties in
this Agreement and the other Transaction Documents, and the parties may rely on
the representations and warranties in this Agreement and the other Transaction
Documents irrespective of any information obtained by them by any investigation,
examination or otherwise.
SECTION 8.02 SPECIFIC PERFORMANCE.
Each of the parties hereto acknowledges that the other party
will have no adequate remedy at law if it fails to perform any of its
obligations under this Agreement or any of the other Transaction Documents. In
such event, each of the parties agrees that the other party shall have the
right, in addition to any other rights it may have (whether at law or in
equity), to specific performance of this Agreement.
SECTION 8.03 NOTICES.
All notices, consents, waivers and communications hereunder
given by any party to the other shall be in writing (including facsimile
transmission) and delivered personally, by telegraph, telecopy, telex or
facsimile, by a recognized overnight courier, or by dispatching the same by
certified or registered mail, return receipt requested, with postage prepaid, in
each case addressed:
If to Assignees to:
c/o ▇▇▇▇ Capital Management, L.L.C.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D.
▇▇▇▇ Capital Partners
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Assignor to:
Artery, LLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.:
-------------------
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Silver, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Guilford to:
Guilford Pharmaceuticals Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Silver, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to GPI Holdings to:
GPI Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
65
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.:
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. Silver, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
if or to such other address or addresses as Assignees, Assignor or Guilford may
from time to time designate by notice as provided herein, except that notices of
changes of address shall be effective only upon receipt. All such notices
consents, waivers and communications shall: (a) when posted by certified or
registered mail, postage prepaid, return receipt requested, be effective three
(3) Business Days after dispatch, unless such communication is sent
trans-Atlantic, in which case shall be deemed effective five (5) Business Days
after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be
effective upon receipt by the transmitting party of confirmation of complete
transmission, (c) when delivered by a recognized overnight courier or in person,
be effective upon receipt when hand delivered.
SECTION 8.04 SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither Assignor nor Guilford shall be entitled to assign any of its
obligations and rights hereunder or any other Transaction Documents without the
prior written consent of Assignees. *
SECTION 8.05 INDEMNIFICATION.
(a) Each of Assignor and Guilford hereby jointly and severally
indemnifies and holds Assignees and their Affiliates and any of their respective
partners, directors, managers, officers, employees and agents (each an
"Assignees Indemnified Party") harmless from and against any and all Losses
(including all Losses in connection with any product liability claims or claims
of infringement or misappropriation of any intellectual property rights of any
third parties) incurred or suffered by any Assignees Indemnified Party arising
out of any breach of any representation, warranty or certification made by
either Assignor or Guilford in any of the Transaction Documents or certificates
given by Assignor in writing pursuant hereto or thereto or any breach of or
default under any covenant or agreement by either Assignor or Guilford pursuant
to this Agreement or any Transaction Document, including any failure by either
Assignor or Guilford to satisfy any of the Excluded Liabilities and Obligations.
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
66
(b) Assignees hereby indemnify and hold Assignor, Guilford,
their Affiliates and any of their partners, directors, managers, officers,
employees and agents (each an "Assignor Indemnified Party") harmless from and
against any and all Losses incurred or suffered by an Assignor Indemnified Party
arising out of any breach of any representation, warranty or certification made
by Assignees in any of the Transaction Documents or certificates given by
Assignees in writing pursuant hereto or thereto or any breach of or default
under any covenant or agreement by Assignees pursuant to this Agreement or any
Transaction Document.
(c) If any claim, demand, action or proceeding (including any
investigation by any Government Authority) shall be brought or alleged against
an indemnified party in respect of which indemnity is to be sought against an
indemnifying party pursuant to the preceding paragraphs, 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 the foregoing provisions of this
Section 8.05 unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. In case
any such action is brought against an indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after 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
Section 8.05 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 (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) 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 (iii) 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 such counsel. 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 (in addition to local counsel where
necessary) for all such indemnified parties. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such
67
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any 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 includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
SECTION 8.06 EXPENSES.
Each party hereto will pay all of its own fees and expenses in
connection with entering into and consummating the transactions contemplated by
this Agreement, except Guilford agrees to, within the later of 30 days after the
Closing and the presentation by Assignees of invoices or other records,
reimburse Assignees for the lesser of $375,000 and their documented out of
pocket due diligence and legal expenses.
SECTION 8.07 INDEPENDENT NATURE OF RELATIONSHIP.
(a) The relationship between Assignor and Assignees is solely
that of seller and purchaser, and neither Assignees nor Assignor has any
fiduciary or other special relationship with the other or any of their
respective Affiliates. Nothing contained herein or in any other Transaction
Document shall be deemed to constitute Assignor and Assignees as a partnership,
an association, a joint venture or other kind of entity or legal form.
(b) No officer or employee of Assignees will be located at the
premises of Assignor, Guilford or any of their Affiliates, except in connection
with an audit performed pursuant to Section 5.02. No officer or employee of
Assignees shall engage in any commercial activity with Assignor, Guilford or any
of their Affiliates other than as contemplated herein and in the other
Transaction Documents.
(c) Assignor, Guilford and/or any of its Affiliates shall not
at any time obligate Assignees, or impose on Assignees any obligation, in any
manner or respect to any Person not a party hereto.
(d) Neither Assignor nor Guilford is transferring to Assignees
any ownership interest in any patents, other patents or other intellectual
property of either Assignor or Guilford.
SECTION 8.08 FEDERAL TAX.
Notwithstanding the accounting treatment thereof, for United
States federal, state and local tax purposes, Guilford, Assignor and Assignees
shall treat the transactions contemplated by
68
this Agreement and the other Transaction Documents as (i) purchases of the
Warrants by Assignees from Guilford for $* and (ii) loans from Assignees to
Assignor in the amount of the balance of the Purchase Price, such Warrant
purchases and loans to be made by Assignees in proportion to the respective
amounts of the Purchase Price payable by them pursuant to Section 2.03 hereof. *
SECTION 8.09 ENTIRE AGREEMENT.
This Agreement, together with the Exhibits and Schedules
hereto (which are incorporated herein by reference), and the other Transaction
Documents constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements (including the
Letter of Intent), understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein (or in the Exhibits, Schedules or other Transaction Documents)
has been made or relied upon by either party hereto. None of this Agreement, nor
any provision hereof, is intended to confer upon any Person other than the
parties hereto any rights or remedies hereunder.
SECTION 8.10 AMENDMENTS; NO WAIVERS.
(a) This Agreement or any term or provision hereof may not be
amended, changed or modified except with the written consent of the parties
hereto. No waiver of any right hereunder shall be effective unless such waiver
is signed in writing by the party against whom such waiver is sought to be
enforced.
(b) No failure or delay by either party 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. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.11 INTERPRETATION.
When a reference is made in this Agreement to Articles,
Sections, Schedules or Exhibits, such reference shall be to an Article, Section,
Schedule or Exhibit to this Agreement unless otherwise indicated. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be followed by the words "without limitation." Neither party hereto
shall be or be deemed to be the drafter of this Agreement for the purposes of
construing this Agreement against one party or the other.
* The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
69
SECTION 8.12 HEADINGS AND CAPTIONS.
The headings and captions in this Agreement are for
convenience and reference purposes only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement.
SECTION 8.13 COUNTERPARTS; EFFECTIVENESS.
This Agreement may be executed in two or more counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument. This Agreement shall become effective when each
party hereto shall have received a counterpart hereof signed by the other
parties hereto.
SECTION 8.14 SEVERABILITY.
If any provision of this Agreement is held to be invalid or
unenforceable, the remaining provisions shall nevertheless be given full force
and effect.
SECTION 8.15 GOVERNING LAW; JURISDICTION.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED,
INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇. BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY
IRREVOCABLY CONSENTS TO AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS.
EACH PARTY HERETO HEREBY FURTHER 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 ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN
70
SUBSECTION (b) ABOVE OF THIS SECTION 8.15 IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO IT AT ITS ADDRESS SET FORTH IN THIS AGREEMENT. EACH PARTY HERETO
HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUIT, ACTION OR
PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT THAT
SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER
MANNER PERMITTED BY LAW.
SECTION 8.16 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT.
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the date first
above written.
ASSIGNOR: ARTERY, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------
Title: Vice President and Secretary
-----------------------------
GUILFORD: GUILFORD PHARMACEUTICALS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
------------------------
Title: Chairman, President and
------------------------
Chief Executive Officer
------------------------
ASSIGNEES: ▇▇▇▇ ROYALTY FUND, L.P.
By: ▇▇▇▇ Capital Management, LLC,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D.
Title: Managing Member
▇▇▇▇ ROYALTY FUND HOLDINGS II
By: ▇▇▇▇ Royalty Fund II, L.P.
its Managing Partner
By: ▇▇▇▇ Capital Royalty Management, LLC,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, M.D.
Title: Managing Member
GPI HOLDINGS GPI HOLDINGS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Title: Vice President and Secretary
------------------------------
[SIGNATURE PAGE TO ASSIGNMENT AGREEMENT]
73
EXHIBIT A - * SALES
*
*The asterisk denotes that confidential portions of this exhibit have been
omitted in reliance on Rule 24b-2 of the Securities Exchange Act of 1934. The
confidential portions have been submitted separately to the Securities and
Exchange Commission.
SCHEDULE 5.07(A) - ASSIGNEES OPTION REPURCHASE PRICE
The Assignees Option Repurchase Price shall be the exact respective amount
specified below if payment is received by the Assignees on one of the dates
specified below (the "Calculation Dates") and if received by the Assignees on
any other date during the Term shall be an amount equal to the sum of (i) the
amount specified for the immediately prior Calculation Date and (ii) the product
of (A) the amount specified for the immediately following Calculation Date less
the amount specified for the immediately prior Calculation Date and (B) the
quotient of the number of days that payment is received after the immediately
prior Calculation Date over 365.
October 28, October 28, October 28 October 28, October 28, October 28, October 28, October 28, October 28,
2004 2005 2006 2007 2008 2009 2010 2011 2012
----------- ----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
$63,000,000 $70,980,000 $92,274,000 $110,991,579 $141,514,263 $160,217,285+ 200,271,606+ 250,339,508+ $312,924,385+
+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).
SCHEDULE 5.07(B)(I) - ASSIGNOR OPTION REPURCHASE PRICE
The Assignor Option Repurchase Price shall be the exact respective amount
specified below if payment is received by the Assignees on one of the dates
specified below (the "Calculation Dates") and if received by the Assignees on
any other date during the Term shall be an amount equal to the sum of (i) the
amount specified for the immediately prior Calculation Date and (ii) the product
of (A) the amount specified for the immediately following Calculation Date less
the amount specified for the immediately prior Calculation Date and (B) the
quotient of the number of days that payment is received after the immediately
prior Calculation Date over 365.
October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28,
2004 2005 2006 2007 2008 2009 2010 2011 2012
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$84,000,000 $84,000,000 $103,335,750 $119,956,200 $155,943,060+ $202,725,978+ $263,543,771+ $342,606,903+ $445,388,974+
+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).
SCHEDULE 5.07(B)(II)(A) - CALL PRICE
The Call Price shall be the exact respective amount specified below if payment
is received by the Assignees on one of the dates specified below (the
"Calculation Dates") and if received by the Assignees on or after any other date
on or after October 28, 2006 during the Term shall be an amount equal to the sum
of (i) the amount specified for the immediately prior Calculation Date and (ii)
the product of (A) the amount specified for the immediately following
Calculation Date less the amount specified for the immediately prior Calculation
Date and (B) the quotient of the number of days that payment is received after
the immediately prior Calculation Date over 365.
October 28, October 28, October 28, October 28, October 28, October 28, October 28,
2006 2007 2008 2009 2010 2011 2012
----------- ----------- ----------- ----------- ----------- ----------- -----------
$109,183,594 $150,127,441+ $206,425,232+ $283,834,694+ $390,272,704+ $536,624,968+ $737,859,331+
+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).
SCHEDULE 5.07(B)(II)(B) - SECURED FINANCING EVENT PRICE
The Secured Financing Event Price shall be the exact respective amount specified
below if payment is received by the Assignees on one of the dates specified
below (the "Calculation Dates") and if received by the Assignees on any other
date during the Term shall be an amount equal to the sum of (i) the amount
specified for the immediately prior Calculation Date and (ii) the product of (A)
the amount specified for the immediately following Calculation Date less the
amount specified for the immediately prior Calculation Date and (B) the quotient
of the number of days that payment is received after the immediately prior
Calculation Date over 365.
October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28, October 28,
2004 2005 2006 2007 2008 2009 2010 2011 2012
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$105,000,000 $105,000,000 $109,183,594 $150,127,441+ $206,425,232+ $283,834,694+ $390,272,704+ $536,624,968+ $737,859,331+
+Subject to the overall limit as set forth in the last sentence of Section
5.07(c).
SCHEDULE 5.07(C) - PAYMENT FACTORS
Payments made under Sections 2.02(a), (b), (f) and (g) shall be multiplied by
the factors specified below for each applicable Repurchase Price calculation,
and to reflect the calendar years in which the applicable payments were made and
the Repurchase Price is paid.
Assignees Option Repurchase Price:
Year of Payment Under Section 2.02
----------------------------------
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
2003 1.00
2004 1.30 1.00
2005 1.69 1.30 1.00
Year of Payment 2006 2.20 1.69 1.30 1.00
of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 2.64 2.07 1.63 1.28 1.00
Price 2008 3.37 2.64 2.07 1.63 1.28 1.00
2009 3.81 3.05 2.44 1.95 1.56 1.25 1.00
2010 4.77 3.81 3.05 2.44 1.95 1.56 1.25 1.00
2011 5.96 4.77 3.81 3.05 2.44 1.95 1.56 1.25 1.00
2012 7.45 5.96 4.77 3.81 3.05 2.44 1.95 1.56 1.25 1.00
Assignor Option Repurchase Price:
Year of Payment Under Section 2.02
----------------------------------
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
2003 1.00
2004 1.35 1.00
2005 1.82 1.35 1.00
2006 2.46 1.82 1.35 1.00
2007 2.86 2.20 1.69 1.30 1.00
Year of Payment 2008 3.71 2.86 2.20 1.69 1.30 1.00
of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 4.83 3.71 2.86 2.20 1.69 1.30 1.00
Price 2010 6.27 4.83 3.71 2.86 2.20 1.69 1.30 1.00
2011 8.16 6.27 4.83 3.71 2.86 2.20 1.69 1.30 1.00
2012 10.60 8.16 6.27 4.83 3.71 2.86 2.20 1.69 1.30 1.00
Call Price and Secured Financing Event Price:
Year of Payment Under Section 2.02
----------------------------------
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
2003 1.00+
2004 1.38+ 1.00+
2005 1.89+ 1.38+ 1.00+
2006 2.60 1.89 1.38 1.00
2007 3.57 2.60 1.89 1.38 1.00
Year of Payment 2008 4.91 3.57 2.60 1.89 1.38 1.00
of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 6.76 4.91 3.57 2.60 1.89 1.38 1.00
Price 2010 9.29 6.76 4.91 3.57 2.60 1.89 1.38 1.00
2011 12.78 9.29 6.76 4.91 3.57 2.60 1.89 1.38 1.00
2012 17.57 12.78 9.29 6.76 4.91 3.57 2.60 1.89 1.38 1.00
+ Only Applicable to a Secured Financing Event Repurchase pursuant to Section
5.07(b)(ii)(B)