EXHIBIT 10.38
LOAN AND SECURITY AGREEMENT
Dated as of
May 7, 2003
Between
WACHOVIA BANK, NATIONAL ASSOCIATION
as the Lender
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and
GUILFORD PHARMACEUTICALS INC.
as the Borrower
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TABLE OF CONTENTS
ARTICLE I INTERPRETATION OF THIS AGREEMENT. 1
Section 1.1 Definitions. 1
Section 1.2 Accounting Terms. 6
Section 1.3 Interpretive Provisions. 6
ARTICLE II LOAN 7
Section 2.1 Term Loan. 7
Section 2.2 Bank Products. 8
ARTICLE III INTEREST AND FEES 8
Section 3.1 Interest. 8
Section 3.2 Origination Fee. 8
ARTICLE IV PAYMENTS AND PREPAYMENTS. 8
Section 4.1 Repayment of Term Loan. 8
Section 4.2 Voluntary Prepayments of Term Loan. 9
Section 4.3 Place and Form of Payments; Extension of Time; Automatic Debit. 9
Section 4.4 Application and Reversal of Payments. 9
Section 4.5 INDEMNITY FOR RETURNED PAYMENTS. 9
Section 4.6 Lender's Books And Records; Monthly Statements. 10
ARTICLE V TAXES, YIELD PROTECTION AND ILLEGALITY 10
Section 5.1 Taxes. 10
Section 5.2 Increased Costs and Reduction of Return. 11
Section 5.3 Funding Losses. 11
Section 5.4 Inability to Determine Rates. 12
Section 5.5 Survival. 12
ARTICLE VI COLLATERAL. 12
Section 6.1 Grant of Security Interest. 12
Section 6.2 Perfection and Protection of Security Interest. 12
Section 6.3 Title to, Liens on, and Sale and Use of Collateral. 12
Section 6.4 Power of Attorney. 13
Section 6.5 Lender's Rights, Duties, and Liabilities. 13
ARTICLE VII BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES. 13
Section 7.1 Books and Records. 13
Section 7.2 Financial Information. 14
Section 7.3 Notices to Lender. 15
ARTICLE VIII GENERAL WARRANTIES AND REPRESENTATIONS. 15
Section 8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents. 16
Section 8.2 Validity and Priority of Security Interest. 16
Section 8.3 Organization and Qualification. 16
Section 8.4 Corporate Name; Prior Transactions. 16
Section 8.5 Subsidiaries and Affiliates. 17
Section 8.6 Financial Statements and Projections. 17
Section 8.7 Solvency. 17
Section 8.8 Debt. 17
Section 8.9 Adequate Assets. 17
Section 8.10 Litigation. 17
Section 8.11 Restrictive Agreements. 18
Section 8.12 Labor Disputes. 18
Section 8.13 No Violation of Law. 18
Section 8.14 No Default. 18
Section 8.15 Taxes. 18
Section 8.16 Use of Proceeds. 18
Section 8.17 Private Offerings. 19
Section 8.18 Broker's Fees. 19
Section 8.19 No Material Adverse Change. 19
ARTICLE IX AFFIRMATIVE AND NEGATIVE COVENANTS. 19
Section 9.1 Taxes and Other Obligations. 19
Section 9.2 Corporate Existence and Good Standing. 19
Section 9.3 Compliance with Law and Agreements. 20
Section 9.4 Mergers, Consolidations, Acquisitions, or Sales. 20
Section 9.5 Transactions Affecting Collateral or Obligations. 20
Section 9.6 Debt. 20
Section 9.7 Liens. 21
Section 9.8 Further Assurances. 21
Section 9.9 Swap Agreement. 21
ARTICLE X CONDITIONS TO CLOSING. 21
Section 10.1 Conditions Precedent to Making of Term Loan on the Closing Date. 21
ARTICLE XI DEFAULT. 22
Section 11.1 Events of Default. 22
Section 11.2 Remedies. 23
ARTICLE XII MISCELLANEOUS. 25
Section 12.1 Cumulative Remedies. 25
Section 12.2 No Implied Waivers. 25
Section 12.3 Severability. 25
Section 12.4 Governing Law. 25
Section 12.5 Waiver of Jury Trial. 25
Section 12.6 Survival of Representations and Warranties. 25
Section 12.7 Other Security and Guaranties. 26
Section 12.8 Fees and Expenses. 26
Section 12.9 Notices. 26
Section 12.10 Waiver of Notices. 27
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Section 12.11 Binding Effect; Assignment. 27
Section 12.12 Modification. 27
Section 12.13 Counterparts. 28
Section 12.14 Captions. 28
Section 12.15 Right of Set-Off. 28
Section 12.16 Participating Lender's Security Interests. 28
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is dated as of May
7, 2003, by and between WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association ("Lender") and GUILFORD PHARMACEUTICALS INC., a corporation
organized and existing under the laws of the State of Delaware ("Borrower").
WITNESSETH:
WHEREAS, the Borrower has requested the Lender to make a term loan the
Borrower in the principal amount of $18,800,000, which term loan the Borrower
will use to refinance certain existing obligations and for its working capital
needs and general business purposes; and
WHEREAS, the Lender has agreed to make the term loan to the Borrower
upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lender and the Borrower hereby
agree as follows.
ARTICLE I
INTERPRETATION OF THIS AGREEMENT.
Section 1.1 Definitions.
As used herein:
"ACH Transactions" means any cash management or related services
including the automatic clearing house transfer of funds by the Lender for the
account of the Borrower pursuant to agreement or overdrafts.
"Affiliate" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, fifty percent (50%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this Loan and Security Agreement.
"Attorney Costs" means and includes all fees, expenses and
disbursements of any law firm or other counsel engaged by the Lender, the
allocated costs of internal legal services of the Lender and the reasonable
expenses of internal counsel to the Lender.
"Bank Products" means any one or more of the following types of
services or facilities extended to the Borrower by the Lender or any Affiliate
of the Lender in reliance on the
Lender's agreement to indemnify such Affiliate: (a) credit cards; (b) ACH
Transactions; and (c) Swap Agreements.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.).
"Business Day" means (a) any day that is not a Saturday, Sunday, or a
day on which banks in the State of Maryland are required or permitted to be
closed and (b) during any period in which the Interest Rate is based on the
LIBOR Rate, any which commercial banks are open for international business,
including dealings in U.S. Dollar deposits, in London, England.
"Capital Adequacy Regulation" means any guideline, request or directive
of any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Change in Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Borrower to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a plan
relating to the liquidation or dissolution of the Borrower, or (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above)
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule
13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the
voting stock of the Borrower. For purposes of this definition, any transfer of
an equity interest of an entity that was formed for the purpose of acquiring
voting stock of the Borrower will be deemed to be a transfer of such portion of
such voting stock as corresponds to the portion of the equity of such entity
that has been so transferred.
"Closing Date" means the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute, and regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1 (Grant of
Security Interest).
"Debt" means, without duplication, all liabilities, obligations and
indebtedness of the Borrower to any Person, of any kind or nature, now or
hereafter owing, arising, due or payable, howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, and including, without in any way limiting the generality of
the foregoing: (a) liabilities and obligations to trade creditors; (b) all
Obligations; (c) all obligations and liabilities of any Person secured by any
Lien on the Borrower's property, even though the Borrower shall not have assumed
or become liable for the payment thereof; provided, however, that all such
obligations and liabilities which are limited in recourse to such property shall
be included in Debt only to the extent of the book value of such property as
would be shown on a balance sheet of the Borrower prepared in accordance with
GAAP; (d) all obligations or liabilities created or arising under any capital
lease or conditional sale or other title retention agreement with respect to
property used or acquired by the Borrower, even if the rights and remedies of
the lessor, seller or lender thereunder are limited to repossession of such
property;
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provided, however, that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of the Borrower
prepared in accordance with GAAP; and (e) all obligations and liabilities under
Guaranties.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Default Rate" means the otherwise applicable Interest Rate plus (b)
two percent (2%). The Default Rate shall be adjusted simultaneously with any
change in the Interest Rate.
"Deposit" means (i) that certain certificate of deposit having account
number 140811290120072 and (ii) that certain certificate of deposit having
account number 140811290120073, (together with all renewals and extensions of,
substitutions for, and additions to either or both certificates of deposit,
however titled or styled, the "Deposit") in the original aggregate amount of
$18,800,000 issued and/or opened by the Lender and styled in the name of the
Borrower.
"Dollar" and "$" means dollars in the lawful currency of the United
States.
"Event of Default" has the meaning specified in Section 11.1 (Events of
Default).
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"Financial Statements" means, according to the context in which it is
used, the financial statements referred to in Section 7.2 or any other financial
statements required to be given to the Lender pursuant to this Agreement.
"Fiscal Year" means the Borrower's fiscal year for financial accounting
purposes. The current Fiscal Year of the Borrower will end on December 31, 2003.
"GAAP" means generally accepted accounting principles and practices set
forth from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of the
Closing Date.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
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"Interest Rate" means each or any of the interest rates, including the
Default Rate, set forth in Section 3.1 (Interest).
"IRS" means the Internal Revenue Service and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Laws" means Requirement of Law.
"Lender" means Wachovia Bank, National Association, a national banking
association, or any successor entity thereto.
"LIBOR Rate" means, with respect to each calendar month (each an
"Interest Period"), the rate for U.S. dollar deposits with a 1-month maturity as
reported on Telerate page 3750 as of 11:00 a.m., London time, on the second
London Business Day before such Interest Period (or if not so reported, then as
determined by the Lender) from another recognized source or interbank quotation.
"Telerate Page 3750" means the British Bankers Association Libor Rates
(determined as of 11:00 a.m. London time) that are published by Bridge
Information Systems, Inc.
"Loan Documents" means this Agreement, the Note, and all other
agreements, instruments, and documents heretofore, now or hereafter evidencing,
securing, guaranteeing or otherwise relating to the Loan Obligations, the
Collateral, or any other aspect of the transactions contemplated by this
Agreement, excluding any and all Swap Agreements and other agreements,
instruments and documents which relate solely to any and all Swap Agreements.
"Loan Obligations" means all liabilities, obligations, covenants,
duties, and Debt owing by the Borrower to the Lender under and in connection
with the Term Loan, this Agreement, the Term Note, and the other Loan Documents,
whether or not evidenced by any note, or other instrument or document, whether
arising from an extension of credit, opening of a letter of credit, acceptance,
loan, guaranty, indemnification or otherwise, whether direct or indirect
(including, without limitation, those acquired by assignment from others, and
any participation by the Lender in the Borrower's debts owing to others)
absolute or contingent, due or to become due, primary or secondary, as principal
or guarantor, and including, without limitation, all interest, charges,
expenses, fees, attorneys' fees, filing fees and any other sums chargeable to
the Borrower hereunder, under another Loan Document. "Loan Obligations" shall
not include any of the Borrower's existing and future obligations under or in
connection with any and all ACH Transactions or any and all Swap Agreements.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Borrower; (b) a material impairment
of the ability of the Borrower to perform under any Loan Document to which it is
a party and to avoid any Event of Default; or (c) a material adverse effect upon
the legality, validity, binding effect or enforceability against the Borrower of
any Loan Document to which it is a party.
"Maturity Date" means May 1, 2008.
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"Other Taxes" means any present or future stamp or documentary taxes or
any other excise or property taxes, charges or similar levies which arise from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Documents.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, limited liability company
association, corporation, Public Authority, or any other entity.
"Proceeds" means all products and proceeds of any Collateral, and all
proceeds of such proceeds and products.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Public Authority" means the government of any country or sovereign
state, or of any state, province, municipality, or other political subdivision
thereof, or any department, agency, public corporation or other instrumentality
of any of the foregoing.
"Requirement of Law" means any law (statutory or common), treaty, rule
or regulation or determination of an arbitrator or of a Public Authority.
"Secured Obligations" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and Debt owing by the Borrower to
the Lender, whether or not arising under this Agreement, whether or not
evidenced by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment from others, and any participation by
the Lender in the Borrower's debts owing to others) absolute or contingent, due
or to become due, primary or secondary, as principal or guarantor, and
including, without limitation, all interest, charges, expenses, fees, attorneys'
fees, filing fees and any other sums chargeable to the Borrower hereunder, under
another Loan Document, or under any other agreement or instrument with the
Lender. "Secured Obligations" includes, without limitation, any and all of the
Borrower's existing and future obligations under or in connection with any and
all ACH Transactions and any and all Swap Agreements and also includes the Loan
Obligations.
"Security Interest" means collectively the Liens granted to the Lender
in the Collateral pursuant to this Agreement, the other Loan Documents, or any
other agreement or instrument.
"Solvent" means when used with respect to any Person that at the time
of determination:
(a) the assets of such Person, at a fair valuation, are
in excess of the total amount of its debts (including, without
limitation, contingent liabilities); and
(b) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as such debts
become absolute and matured; and
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(c) it is then able and expects to be able to pay its
debts (including, without limitation, contingent debts and other
commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of
any contingent liability shall be computed as the amount that, in light of all
the facts and circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured liability.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Borrower.
"Swap Agreement" has the meaning given such term in 11 U.S.C. Section
101, as amended, or any successor statute and includes (a) an agreement
(including terms and conditions incorporated by reference therein) which is a
rate swap agreement, basis swap, forward rate agreement, commodity swap,
interest rate option, forward foreign exchange agreement, rate cap agreement,
rate floor agreement, rate collar agreement, currency swap agreement,
cross-currency rate swap agreement, currency option, any other similar agreement
(including any option to enter into any of the foregoing); (b) any combination
of the foregoing; or (c) a master agreement for any of the foregoing, together
with all supplements.
"Taxes" means any and all present or future taxes, assessments, levies,
imposts, impositions, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding, in the case of the Lender, such taxes
(including income taxes or franchise taxes) as are imposed on the Lender.
"UCC" means the Uniform Commercial Code (or any successor statute), as
in effect from time to time, of the State of Maryland or of any other state the
laws of which are required as a result thereof to be applied in connection with
the issue of perfection of security interests.
Section 1.2 Accounting Terms.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given in accordance with
GAAP.
Section 1.3 Interpretive Provisions.
(a) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
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(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and
means "including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to but excluding" and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Lender,
the Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lender merely because of
the Lender's involvement in their preparation.
ARTICLE II
LOAN
Section 2.1 Term Loan.
(a) Amount of Term Loan. The Lender agrees to make a term loan
("Term Loan") to the Borrower on the Closing Date, upon the satisfaction of the
conditions precedent set forth in ARTICLE X (Conditions of Closing), in an
amount equal to Eighteen Million Eight Hundred Thousand Dollars ($18,800,000).
(b) Term Note. The Borrower shall execute and deliver to the
Lender on the Closing Date a promissory note substantially in the form of
Exhibit A attached hereto and made a part hereof ("Term Note") to evidence the
Term Loan.
(c) Deposit Balance. The Borrower covenants and agrees to at all
times maintain a collected funds Deposit balance equal to the then unpaid
principal balance of the Term Loan.
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Section 2.2 Bank Products.
The Borrower may request and the Lender may, in its sole and absolute
discretion, arrange for the Borrower to obtain from the Lender or the Lender's
Affiliates Bank Products although the Borrower is not required to do so. The
Borrower acknowledges and agrees that the obtaining of Bank Products from the
Lender or the Lender's Affiliates (a) is in the sole and absolute discretion of
the Lender or the Lender's Affiliates, and (b) is subject to all rules and
regulations of the Lender or the Lender's Affiliates.
ARTICLE III
INTEREST AND FEES
Section 3.1 Interest.
(a) Applicable Interest Rate Prior to Event of Default. All Loan
Obligations shall bear interest on the unpaid principal amount thereof from the
date made until paid in full in cash at a rate equal to the LIBOR Rate, plus
fifty (50) basis points. Each change in the LIBOR Rate shall be reflected in the
Interest Rate as of the effective date of such change. All interest charges
shall be computed on the basis of a year of three hundred sixty (360) days and
actual days elapsed.
(b) Interest Subsequent to an Event of Default. If any Event of
Default occurs, then, from the date such Event of Default occurs until it is
cured, or if not cured until all Loan Obligations are paid and performed in
full, the applicable Interest Rate shall be increased by two percent (2%) per
annum.
Section 3.2 Origination Fee.
(a) The Borrower shall pay to the Lender on or before the Closing
Date a loan origination fee in an amount equal to one-half of one percent (.5%)
of the Term Loan amount, which origination fee has been fully earned and is
non-refundable.
ARTICLE IV
PAYMENTS AND PREPAYMENTS.
Section 4.1 Repayment of Term Loan.
The unpaid principal balance of the Term Loan shall accrue interest at
the Interest Rate. Accrued interest shall be payable on the unpaid principal
balance of the Term Note monthly on the first day of each calendar month
commencing with the first such date after the Closing Date and continuing on the
first day of each calendar month thereafter. As set forth in the Term Note, the
unpaid principal balance of the Term Note shall be payable in monthly
installments on the first day of each calendar month commencing with the first
such date after the Closing Date and continuing on the first day of each
calendar month thereafter. Each principal installment shall be in the amount set
forth in the Term Note and shall be calculated so as to fully amortize the
unpaid principal balance of the Term Loan over a period of two hundred forty
(240) months. Unless sooner paid, the unpaid principal balance of the Term Loan,
together with any and all unpaid and accrued interest thereon, shall be due and
payable in full on the Maturity Date.
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Section 4.2 Voluntary Prepayments of Term Loan.
The Borrower may prepay the principal of the Term Loan in whole or in
part at any time and from time to time upon at least five (5) Business Days
prior written notice to the Lender. All voluntary prepayments of the principal
of the Term Loan shall be accompanied by the payment of all accrued but unpaid
interest on the Term Loan to the date of prepayment. Amounts prepaid in respect
of the Term Loan pursuant to this Section 4.2 (Voluntary Prepayments of Term
Loan) may not be reborrowed. Any voluntary prepayment under this Section of less
than all of the outstanding principal of the Term Loan shall be applied to the
principal amount due on the Maturity Date and then to the principal installments
in the inverse order of their maturities. Notwithstanding the foregoing, no
prepayment shall affect the Borrower's obligation to continue making payments
under any applicable SWAP Agreement which will remain in full force and effect
notwithstanding such prepayment.
Section 4.3 Place and Form of Payments; Extension of Time; Automatic
Debit.
All payments of principal, interest, premium, and other sums due to the
Lender shall be made at the Lender's address set forth in Section 12.9
(Notices). All such payments shall be made in immediately available funds. If
any payment of principal, interest, premium, or other sum to be made hereunder
becomes due and payable on a day other than a Business Day, the due date of such
payment shall be extended to the next succeeding Business Day and interest
thereon shall be payable at the applicable interest rate during such extension,
except that if such next succeeding Business Day would be in the succeeding
calendar month, the due date of such payment shall be the then preceding
Business Day.
Section 4.4 Application and Reversal of Payments.
The Lender shall determine in its sole discretion the order and manner
in which payments that the Lender receives are applied to the Term Loan,
interest thereon, and the other Loan Obligations, and the Borrower hereby
irrevocably waives the right to direct the application of any payment. The
Lender shall have the continuing and exclusive right to apply and reverse and
reapply any and all such payments to any portion of the Loan Obligations.
Section 4.5 INDEMNITY FOR RETURNED PAYMENTS.
IF AFTER RECEIPT OF ANY PAYMENT WHICH IS APPLIED TO THE PAYMENT OF ALL
OR ANY PART OF THE LOAN OBLIGATIONS, THE LENDER IS FOR ANY REASON COMPELLED TO
SURRENDER SUCH PAYMENT TO ANY PERSON BECAUSE SUCH PAYMENT IS INVALIDATED,
DECLARED FRAUDULENT, SET ASIDE, DETERMINED TO BE VOID OR VOIDABLE AS A
PREFERENCE, IMPERMISSIBLE SETOFF, OR A DIVERSION OF TRUST FUNDS, OR FOR ANY
OTHER REASON, THEN: THE LOAN OBLIGATIONS OR PART THEREOF INTENDED TO BE
SATISFIED SHALL BE REVIVED AND CONTINUE AND THIS AGREEMENT SHALL CONTINUE IN
FULL FORCE AS IF SUCH PAYMENT HAD NOT BEEN RECEIVED BY THE LENDER AND THE
BORROWER SHALL BE LIABLE TO PAY TO THE LENDER AND HEREBY DOES INDEMNIFY THE
LENDER AND HOLD THE LENDER HARMLESS FOR THE AMOUNT OF SUCH PAYMENT SURRENDERED.
The provisions of this Section 4.5 (Indemnity for Returned Payments) shall be
and remain effective notwithstanding any contrary action which may have been
taken by the Lender in reliance upon such payment, and any such contrary action
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so taken shall be without prejudice to the Lender's rights under this Agreement
and shall be deemed to have been conditioned upon such payment having become
final and irrevocable. The provisions of this Section 4.5 (Indemnity for
Returned Payments) shall survive the termination of this Agreement.
Section 4.6 Lender's Books And Records; Monthly Statements.
The Borrower agrees that the Lender's books and records showing the
Loan Obligations and the transactions pursuant to this Agreement and the other
Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute prima facie proof thereof, irrespective of
whether any Loan Obligation is also evidenced by a promissory note or other
instrument. The Lender will provide to the Borrower a monthly statement of
payments and other transactions pursuant to this Agreement. Such statement shall
be deemed correct, accurate, and binding on the Borrower and as an account
stated (except for reversals and reapplications of payments made as provided in
Section 4.4 (Application and Reversal of Payments) and corrections of errors
discovered by the Lender), unless the Borrower notifies the Lender in writing to
the contrary within sixty (60) days after such statement is rendered. In the
event a timely written notice of objections is given by the Borrower, only the
items to which exception is expressly made will be considered to be disputed by
the Borrower.
ARTICLE V
TAXES, YIELD PROTECTION AND ILLEGALITY
Section 5.1 Taxes.
(a) Any and all payments by the Borrower to the Lender under this
Agreement and any other Loan Document shall be made free and clear of, and
without deduction or withholding for any Taxes. In addition, the Borrower shall
pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless the Lender
for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section) paid by the
Lender and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within thirty (30) days after the date the Lender
makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to
Lender, then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section) the Lender receives an amount equal to the sum it would
have received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
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(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to the Lender at the time
interest is paid, all additional amounts which the Lender specifies as
necessary to preserve the after-tax yield the Lender would have
received if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the Lender the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Lender.
Section 5.2 Increased Costs and Reduction of Return.
(a) If the Lender determines that, due to either (i) the
introduction of or any change in the interpretation of any law or regulation or
(ii) the compliance by the Lender with any guideline or request from any central
bank or other Public Authority (whether or not having the force of law), there
shall be any increase in the cost to the Lender of agreeing to make or making,
funding or maintaining the Term Loan with interest being charged based on the
LIBOR Rate, then the Borrower shall be liable for, and shall from time to time,
upon demand, pay to the Lender, additional amounts as are sufficient to
compensate the Lender for such increased costs.
(b) If the Lender shall have determined that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Public Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Lender or any corporation controlling the Lender with any Capital Adequacy
Regulation, affects or would affect the amount of capital, reserves, or special
deposits required or expected to be maintained by the Lender or any corporation
controlling the Lender and (taking into consideration such Lender's or such
corporation's policies with respect to capital adequacy and such Lender's
desired return on capital) determines that the amount of such capital, reserves,
or special deposits is increased as a consequence of its loans, credits or
obligations under this Agreement, then, upon demand of the Lender to the
Borrower, the Borrower shall pay to the Lender, from time to time as specified
by the Lender, additional amounts sufficient to compensate the Lender for such
increase.
Section 5.3 Funding Losses.
The Borrower shall reimburse the Lender and hold the Lender harmless
from any out-of-pocket loss or expense that the Lender may incur due to:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of the Term Loan if the applicable Interest Rate is based
on the LIBOR Rate;
(b) the prepayment or other payment (including after acceleration
thereof) of the Term Loan if the applicable Interest Rate is based on the LIBOR
Rate on a day that is not the Maturity Date; including any such loss or expense
arising from the liquidation or reemployment of funds obtained by it to maintain
the Term Loan at an Interest Rate based on the LIBOR Rate or from fees payable
to terminate the deposits from which such funds were obtained.
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Section 5.4 Inability to Determine Rates.
If the Lender determines that for any reason adequate and reasonable
means do not exist for determining the LIBOR Rate, the Lender will promptly so
notify the Borrower and the Lender shall select a reasonably comparable base or
index for the Interest Rate.
Section 5.5 Survival.
The agreements and obligations of the Borrower in this ARTICLE V
(Taxes, Yield Protection) shall survive the payment of all other Loan
Obligations.
ARTICLE VI
COLLATERAL.
Section 6.1 Grant of Security Interest.
As security for the Secured Obligations (including the Loan
Obligations), the Borrower hereby grants to the Lender a continuing security
interest in, lien on, and assignment of all of the Borrower's rights, title and
interest in, to and under (i) the Deposit, including any and all principal,
interest and other income earned thereon or amounts payable with respect
thereto, together with any and all Proceeds and products thereof and (ii) all
books, records and other property relating to or referring to any of the
foregoing, including, without limitation, all books, records, ledger cards, data
processing records, computer software and other property and general intangibles
at any time evidencing or relating to the foregoing (all of the foregoing, and
all other property in which the Lender may at any time be granted a Lien, being
herein collectively referred to as the "Collateral"). The Lender shall have all
of the rights of a secured party with respect to the Collateral under the UCC
and other applicable laws.
Section 6.2 Perfection and Protection of Security Interest.
The Borrower shall, at its expense, perform all steps requested by the
Lender at any time to perfect, maintain, protect, and enforce the Security
Interest including, without limitation: (a) authorizing, executing and filing
financing or continuation statements, and amendments thereof, in form and
substance satisfactory to the Lender; (b) delivering to the Lender the originals
of all instruments, documents, and chattel paper, and all other Collateral of
which the Lender determines it should have physical possession in order to
perfect and protect the Security Interest therein, duly endorsed or assigned to
the Lender without restriction; and (c) taking such other steps as are deemed
necessary by the Lender to maintain the Security Interest. The Lender is hereby
authorized to file, without the Borrower's signature or further consent or
authorization, one or more financing statements disclosing the Security
Interest. From time to time, the Borrower shall, upon Lender's request, execute
and deliver confirmatory written instruments pledging to the Lender the
Collateral, but the Borrower's failure to do so shall not affect or limit the
Security Interest or the Lender's other rights in and to the Collateral. So long
as this Agreement is in effect and until all Secured Obligations have been fully
satisfied, the Security Interest shall continue in full force and effect in all
Collateral.
Section 6.3 Title to, Liens on, and Sale and Use of Collateral.
The Borrower represents and warrants to the Lender that (a) all
Collateral is and will continue to be owned by the Borrower free and clear of
all Liens whatsoever, except for the
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Security Interest; (b) the Security Interest will not be subject to any prior
Lien; (c) the Borrower will ensure that the aggregate principal balance of the
Deposit shall at all times be at least equal to the unpaid principal balance of
the Term Loan, and (d) the Borrower will not, without the Lender's prior written
approval, sell, assign or dispose of or permit the sale, assignment or
disposition of the Collateral or any portion thereof or interest therein. The
inclusion of Proceeds in the Collateral shall not be deemed the Lender's consent
to any sale, assignment or other disposition of the Collateral.
Section 6.4 Power of Attorney.
The Borrower hereby appoints the Lender and the Lender's designees as
the Borrower's attorney, with power to file any such financing statements by
electronic means with or without a signature as authorized or required by
applicable law or filing procedure and to do all things necessary to carry out
this Agreement. The Borrower ratifies and approves all acts of such attorney.
Neither the Lender nor the attorney will be liable for any acts or omissions or
for any error of judgment or mistake of fact or law. This power, being coupled
with an interest, is irrevocable until this Agreement has been terminated and
the Secured Obligations have been fully satisfied.
Section 6.5 Lender's Rights, Duties, and Liabilities.
The Secured Obligations shall not be affected by any failure of the
Lender to take any steps to perfect the Security Interest or to collect or
realize upon the Collateral, nor shall loss of or damage to the Collateral
release the Borrower from any of the Secured Obligations. Following the
occurrence of and continuation of an Event of Default, the Lender may (but shall
not be required to), without notice to or consent from the Borrower, ▇▇▇ upon or
otherwise collect, modify or amend the terms of, compromise or settle for cash,
credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action
with respect to the Collateral, any security therefor, any agreement relating
thereto, any Person liable directly or indirectly in connection with any of the
foregoing, without discharging or otherwise affecting the liability of the
Borrower for the Secured Obligations or under this Agreement or any other
agreement now or hereafter existing between the Lender and the Borrower.
ARTICLE VII
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES.
Section 7.1 Books and Records.
The Borrower shall maintain, at all times, correct and complete books,
records and accounts in which complete, correct and timely entries are made of
its transactions in accordance with GAAP consistent with those applied in the
preparation of the Financial Statements. The Borrower shall, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of Property and bad debts, all in accordance with
GAAP. The Borrower shall maintain at all times books and records pertaining to
the Collateral in such detail, form, and scope as the Lender shall reasonably
require.
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Section 7.2 Financial Information.
The Borrower shall promptly furnish to the Lender or its agents all
such financial information as the Lender shall reasonably request, and notify
its auditors and accountants that the Lender is authorized to obtain such
information directly from them. Without limiting the foregoing, the Borrower and
its Subsidiaries will furnish to the Lender, in such detail as the Lender shall
request, the following:
(a) Annual Statements. As soon as available, but in any event not
later than one hundred twenty (120) days after the close of each Fiscal Year,
consolidated audited balance sheets, and statements of income and expense,
retained earnings, and changes in financial position and stockholders equity for
the Borrower and its consolidated Subsidiaries for such Fiscal Year, and the
accompanying notes thereto, setting forth in each case in comparative form
figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of the Borrower
and its consolidated Subsidiaries as at the date thereof and for the Fiscal Year
then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards and
accompanied by a report thereon unqualified as to scope by independent certified
public accountants selected by the Borrower and reasonably satisfactory to the
Lender.
(b) Quarterly Statements. As soon as available, but in any event
not later than forty five (45) days after the close of each fiscal quarter other
than the fourth quarter of a Fiscal Year, consolidated unaudited balance sheets
of the Borrower and its consolidated Subsidiaries as at the end of such quarter,
and consolidated and consolidating unaudited statements of income and expense
and changes in financial position for the Borrower and its consolidated
Subsidiaries for such quarter and for the period from the beginning of the
Fiscal Year to the end of such quarter, together with the accompanying notes
thereto, all in reasonable detail, fairly presenting the financial position and
results of operation of the Borrower and its consolidated Subsidiaries as at the
date thereof and for such periods, prepared in accordance with GAAP consistent
with the audited Financial Statements required pursuant to Section 7.2(a)
(Annual Statements). Such statements shall be certified to be fairly stated in
all material respects by the chief financial or accounting officer of the
Borrower, subject to normal year-end adjustments.
(c) Accountant's Certificate. With each of the audited Financial
Statements delivered pursuant to Section 7.2(a) (Annual Statements), a
certificate of the independent certified public accountants that examined such
statements to the effect that they have reviewed and are familiar with the Loan
Documents and that, in examining such Financial Statements, they did not become
aware of any fact or condition which then constituted an Event or Event of
Default, except for those, if any, described in reasonable detail in such
certificate.
(d) Proxy Statements and Other Information. Promptly after their
release, copies of any and all proxy statements, financial statements, and
reports that the Borrower makes available to its stockholders.
(e) Annual Filings and Reports. Promptly after filing with the
SEC, a copy of each annual and/or quarterly report (including 10K and 10Q
reports) or other filing or notice filed with respect to the Borrower.
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(f) Other Information. Such additional information as the Lender
may from time to time reasonably request regarding the financial and business
affairs of the Borrower or any Subsidiary, including, without limitation,
projections of future operations on both a consolidated and consolidating basis.
Section 7.3 Notices to Lender.
The Borrower shall notify the Lender in writing of the following
matters at the following times:
(a) Immediately after becoming aware of the existence of any
Default or Event of Default.
(b) Immediately after becoming aware of any material adverse
change in the Borrower's Property, business, operations, or condition (financial
or otherwise).
(c) Immediately after becoming aware of any pending action, suit,
proceeding, or counterclaim by any Person, or any pending or threatened
investigation by a Public Authority, which may materially and adversely affect
the Collateral, the repayment of the Loan Obligations, the Lender's rights under
the Loan Documents, or the Borrower's Property, business, operations, or
condition (financial or otherwise).
(d) Immediately after becoming aware of any pending strike, work
stoppage, material unfair labor practice claim, or other material labor dispute
affecting the Borrower or any of its Subsidiaries.
(e) Immediately after becoming aware of any violation of any law,
statute, regulation, or ordinance of a Public Authority applicable to Borrower,
any Subsidiary, or their respective Properties which may materially and
adversely affect the Collateral, the repayment of the Loan Obligations, the
Lender's rights under the Loan Documents, or the Borrower's Property, business,
operations, or condition (financial or otherwise).
(f) Thirty (30) days prior to the Borrower changing its name or
the address of its chief executive office.
Each notice given under this Section 7.3 (Notices to Lender) shall
describe the subject matter thereof in reasonable detail and shall set forth the
action that the Borrower has taken or proposes to take with respect thereto.
ARTICLE VIII
GENERAL WARRANTIES AND REPRESENTATIONS.
The Borrower continuously warrants and represents to the Lender, at all
times during the term of this Agreement and until all Loan Obligations have been
satisfied, that, except as hereafter disclosed to and accepted by the Lender in
writing:
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Section 8.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents.
The Borrower has the corporate power and authority to execute, deliver
and perform this Agreement and the other Loan Documents, to incur the Loan
Obligations and any other Secured Obligations existing or contemplated as of the
date of this Agreement, and to grant the Security Interest. The Borrower has
taken all necessary corporate action to authorize its execution, delivery, and
performance of this Agreement and the other Loan Documents. No consent,
approval, or authorization of, or declaration or filing with, any Public
Authority, and no consent of any other Person, is required in connection with
the Borrower's execution, delivery, and performance of this Agreement and the
other Loan Documents, except for those already duly obtained. This Agreement and
the other Loan Documents have been duly executed and delivered by the Borrower
and constitute the legal, valid and binding obligations of the Borrower,
enforceable against it in accordance with their respective terms without
defense, setoff, or counterclaim. The Borrower's execution, delivery, and
performance of this Agreement and the other Loan Documents do not and will not
conflict with, or constitute a violation or breach of, or constitute a default
under, or result in the creation or imposition of any Lien upon the Property of
the Borrower or any of its Subsidiaries (except as contemplated by this
Agreement and the other Loan Documents) by reason of the terms of (a) any
mortgage, lease, agreement, or instrument to which the Borrower or any of its
Subsidiaries is a party or which is binding upon it, (b) any judgment, law,
statute, rule or governmental regulation applicable to the Borrower or any of
its Subsidiaries, or (c) the certificate or articles of incorporation or bylaws
of the Borrower or any of its Subsidiaries.
Section 8.2 Validity and Priority of Security Interest.
The provisions of this Agreement and the other Loan Documents create
legal and valid Liens on all the Collateral in the Lender's favor, and when all
proper filings, recordings, and other actions necessary to perfect such Liens
have been made or taken, such Liens will constitute perfected and continuing
Liens on all the Collateral, having priority over all other Liens on the
Collateral and enforceable against the Borrower and all third parties.
Section 8.3 Organization and Qualification.
The Borrower: (a) is duly incorporated and organized and validly
existing in good standing under the laws of the State of Delaware; (b) is
qualified to do business as a foreign corporation and is in good standing in
each other State where the qualification is necessary in order for it to own or
lease its Property and conduct its business; and (c) has all requisite power and
authority to conduct its business and to own its Property.
Section 8.4 Corporate Name; Prior Transactions.
The Borrower has not, during the past five years, been known by or used
any other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any Person,
or acquired any of its Property out of the ordinary course of business.
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Section 8.5 Subsidiaries and Affiliates.
The exhibits and schedules attached to the Borrower's most recent 10-K
statement furnished to the Lender set forth a correct and complete list of the
name and relationship to the Borrower of each and all of the Borrower's
Subsidiaries and other Affiliates. Each Subsidiary is (a) duly incorporated and
organized and validly existing in good standing under the laws of its state of
incorporation set forth on Schedule 8.5, and (b) qualified to do business as a
foreign corporation and in good standing in the states set forth opposite its
name on Schedule 8.5, which are the only states in which such qualification is
necessary in order for it to own or lease its Property and conduct its business.
Section 8.6 Financial Statements and Projections.
The Borrower has delivered to the Lender the audited balance sheet and
related statements of income, retained earnings, cash flows, and changes in
stockholders equity for the Borrower as of December 31, 2002 and for the Fiscal
Year then ended, accompanied by the report thereon of the Borrower's independent
certified public accountants. The Borrower has also delivered to the Lender the
unaudited balance sheet and related statements of income and cash flows for the
Borrower, as of March 31, 2003 and for the three (3) months then ended. All such
financial statements have been prepared in accordance with GAAP and present
accurately and fairly the Borrower's financial position as at the dates thereof
and its results of operations for the periods then ended.
Section 8.7 Solvency.
The Borrower is Solvent prior to and after giving effect to, the making
of the Term Loan.
Section 8.8 Debt.
The Borrower has no Debt, except (a) the Secured Obligations, (b) Debt
set forth in the most recent Financial Statements delivered to the Lender, or
the notes thereto, (c) trade payables and other contractual obligations arising
in the ordinary course of business since the date of such Financial Statements,
and (d) Debt incurred since the date of such Financial Statements to finance
capital expenditures permitted hereby.
Section 8.9 Adequate Assets.
The Borrower possesses adequate assets for the conduct of its business.
Section 8.10 Litigation.
Except as set forth on Schedule 8.10, there is no pending or, to the
best of the Borrower's knowledge, threatened action, suit, proceeding, or
counterclaim by any Person, or investigation by any Public Authority, or any
basis for any of the foregoing, which may materially and adversely affect the
Collateral, the repayment of the Loan Obligations, the Lender's rights under the
Loan Documents, or the Borrower's Property, business, operations, or condition
(financial or otherwise).
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Section 8.11 Restrictive Agreements.
The Borrower is not a party to any contract or agreement, and is not
subject to any charter or other corporate restriction, which affects its ability
to execute, deliver, and perform the Loan Documents and repay the Loan
Obligations or which materially and adversely affects the Borrower's Property,
business, operations, or condition (financial or otherwise).
Section 8.12 Labor Disputes.
(a) there is no collective bargaining agreement or other labor contract
covering employees of the Borrower or any of its Subsidiaries; (b) no such
collective bargaining agreement or other labor contract is scheduled to expire
during the term of this Agreement; (c) no union of other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of
employees of the Borrower or any of its Subsidiaries or for any similar purpose;
and (d) there is no pending or, to the best of the Borrower's knowledge,
threatened strike, work stoppage, material unfair labor practice claim, or other
material labor dispute against or affecting the Borrower, or any of its
Subsidiaries or their respective employees.
Section 8.13 No Violation of Law.
The Borrower is not in violation of any law, statute, regulation,
ordinance, judgment, order, or decree applicable to it which violation would in
any respect materially and adversely affect the Collateral, the repayment of the
Loan Obligations, the Lender's rights under the Loan Documents, or the
Borrower's Property, business, operations, or condition (financial or
otherwise).
Section 8.14 No Default.
The Borrower is not in default with respect to any note, indenture,
loan agreement, mortgage, lease, deed, or other agreement to which the Borrower
is a party or bound, which default could reasonably be expected to materially
and adversely affect the Collateral, the repayment of the Loan Obligations, the
Lender's rights under the Loan Documents, or the Borrower's Property, business,
operations, or condition (financial or otherwise).
Section 8.15 Taxes.
The Borrower and its Subsidiaries have filed all tax returns and other
reports required to be filed and have paid all Taxes, assessments, fees and
other governmental charges levied or imposed upon them or their properties,
income or assets that are otherwise due and payable.
Section 8.16 Use of Proceeds.
None of the transactions contemplated in this Agreement (including,
without limitation, the use of proceeds from the Term Loan) will violate or
result in the violation of Section 7 of the Securities Exchange Act of 1934, as
amended, or any regulations issued pursuant thereto, including without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System ("Federal Reserve Board"), 12 CFR, Chapter II. Borrower does not
own or intend to carry or purchase any "margin stock" within the meaning of said
Regulation U. None of the proceed of the loans will be used, directly or
indirectly, to purchase or carry (or refinance any borrowing, the proceeds of
which were used to purchase or carry) any "security" within the meaning of the
Securities Exchange Act of 1934, as amended.
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Section 8.17 Private Offerings.
Borrower has not, directly or indirectly, offered the Term Loan for
sale to, or solicited offers to buy part thereof from, or otherwise approached
or negotiated with respect thereto with any prospective purchaser other than
Lender. Borrower hereby agrees that neither it nor anyone acting on its behalf
has offered or will offer the Term Loan or any part thereof or any similar
securities for issue or sale to or solicit any offer to acquire any of the same
from anyone so as to bring the issuance thereof within the provisions of Section
5 of the Securities Act of 1933, as amended.
Section 8.18 Broker's Fees.
No Person is entitled to any brokerage or finder's fee with respect to
the transactions described in this Agreement.
Section 8.19 No Material Adverse Change.
No material adverse change has occurred in the Borrower's Property,
business, operations, or conditions (financial or otherwise) since the date of
the Financial Statements delivered to the Lender.
ARTICLE IX
AFFIRMATIVE AND NEGATIVE COVENANTS.
The Borrower covenants that, so long as any of the Loan Obligations
remain outstanding or this Agreement is in effect:
Section 9.1 Taxes and Other Obligations.
The Borrower and each of its Subsidiaries shall: (a) file when due all
tax returns and other reports which it is required to file, pay, or provide for
the payment, when due, of all Taxes, fees, assessments and other governmental
charges against it or upon its Property, income, and franchises, make all
required withholding and other tax deposits, and establish adequate reserves for
the payment of all such items, and shall provide to the Lender, upon request,
satisfactory evidence of its timely compliance with the foregoing; and (b) pay
when due all Debt owed by it and perform and discharge in a timely manner all
other obligations undertaken by it; provided, however that the Borrower and its
Subsidiaries need not pay any tax, fee, assessment, governmental charge, or
Debt, or perform or discharge any other obligation, that it is contesting in
good faith by appropriate proceedings diligently pursued.
Section 9.2 Corporate Existence and Good Standing.
The Borrower and each of its Subsidiaries shall maintain its corporate
existence and its qualification and good standing in all states necessary to
conduct its business and own its Property, and shall obtain and maintain all
licenses, permits, franchises and governmental authorizations necessary to
conduct its business and own its Property.
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Section 9.3 Compliance with Law and Agreements.
The Borrower and each of its Subsidiaries shall comply in all material
respects with the terms and provisions of each judgment, law, statute, rule, and
governmental regulation applicable to it and each contract, mortgage, lien,
lease, indenture, order, instrument, agreement, or document to which it is a
party or by which it is bound where the failure to so comply would have a
materially and adverse affect on the Collateral or the Borrower's ability to
perform its obligations under the Loan Documents.
Section 9.4 Mergers, Consolidations, Acquisitions, or Sales.
The Borrower shall not enter into any transaction of merger,
reorganization, or consolidation, or transfer, sell, assign, lease, or otherwise
dispose of all or substantially all of its Property, or wind up, liquidate or
dissolve, or agree to do any of the foregoing.
Section 9.5 Transactions Affecting Collateral or Obligations.
Neither the Borrower nor any of its Subsidiaries shall enter into any
transaction that materially and adversely affects the Collateral or the
Borrower's ability to repay the Loan Obligations.
Section 9.6 Debt.
The Borrower will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any Debt, or permit any Subsidiary so to do,
except:
(a) the Obligations;
(b) current accounts payable arising in the ordinary
course;
(c) Debt which is incurred on account of purchase money
or finance lease arrangements of assets (other than real property)
acquired by the Borrower, after the Closing Date; provided that (i)
each such purchase money or finance lease arrangement does not exceed
the cost of the assets acquired or leased, (ii) any Lien securing such
purchase money or finance lease arrangement does not extend to any
assets or property other than that purchased or leased and other
property similarly financed from the same financing source, and (iii)
the aggregate amount of Debt under and in connection with all such
purchase money and/or finance lease arrangements shall not exceed, in
the aggregate, the sum of One Million Five Hundred Thousand Dollars
($1,500,000) during any fiscal year and the cost of any single asset
acquired or leased shall not exceed Five Hundred Thousand Dollars
($500,000);
(d) unsecured Debt of the Borrower incurred at any time
and from time to time after the Closing Date which is fully convertible
to equity; and
(e) unsecured Debt of the Borrower existing on the date
hereof and reflected on the financial statements most recently
furnished to the Lender on or before the Closing Date.
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Section 9.7 Liens.
Neither the Borrower nor any of its Subsidiaries shall create, incur,
assume, or permit to exist any Lien on the Collateral.
Section 9.8 Further Assurances.
The Borrower shall execute and deliver, or cause to be executed and
delivered, to the Lender such documents and agreements, and shall take or cause
to be taken such actions, as the Lender may, from time to time, request to carry
out the terms and conditions of this Agreement and the other Loan Documents.
Section 9.9 Swap Agreement.
The Borrower may, in its discretion, hedge the floating interest
expense of the Term Loan for the full term of the Term Loan by maintaining one
or more Swap Agreements with the Lender (or with another financial institution
approved by the Lender in writing) in an aggregate notional amount equal to the
outstanding principal balance of the Term Loan with the Borrower making fixed
rate payments and receiving floating rate payments to offset changes in the
variable interest expense of the Term Loan, all upon terms and subject to such
conditions as shall be acceptable to the Lender (or if such transaction is with
another financial institution, all upon terms and subject to such conditions as
shall be approved by the Lender in writing).
ARTICLE X
CONDITIONS TO CLOSING.
The Lender will not be obligated to make the Term Loan on the Closing
Date, unless the following conditions precedent have been satisfied in a manner
satisfactory to Lender:
Section 10.1 Conditions Precedent to Making of Term Loan on the
Closing Date.
(a) Representations and Warranties; Covenants. The Borrower's
representations and warranties contained in this Agreement and the other Loan
Documents shall be correct and complete; the Borrower shall have performed and
complied with all covenants, agreements, and conditions contained herein and in
the other Loan Documents which are required to have been performed or complied
with.
(b) Delivery of Documents. The Borrower shall have delivered, or
caused to be delivered, to the Lender such documents, instruments and agreements
as the Lender shall request in connection herewith, duly executed by all parties
thereto other than the Lender, and in form and substance satisfactory to the
Lender and its counsel.
(c) Payment of Fees and Expenses. The Borrower shall have paid all
fees and expenses of the Lender's outside counsel and all other fees and
expenses of the Lender, if any, incurred in connection with any of the Loan
Documents and the transactions contemplated thereby and reflected in the closing
statement approved by the Borrower and the Lender on or before the Closing Date.
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(d) Required Approvals. The Lender shall have received certified
copies of all consents or approvals of any Public Authority or other Person that
the Lender determines is required in connection with the transactions
contemplated by this Agreement.
(e) No Material Adverse Change. There shall have occurred no
material adverse change in the Borrower's business or financial condition since
December 31, 2002.
(f) Proceedings. All proceedings to be taken in connection with
the transactions contemplated by this Agreement, and all documents, contemplated
in connection herewith, shall be satisfactory in form and substance to the
Lender and its counsel.
(g) Deposit. The Deposit in an aggregate amount at least equal to
the principal amount of the Term Loan.
ARTICLE XI
DEFAULT.
Section 11.1 Events of Default.
It shall constitute an event of default ("Event of Default") if any one
or more of the following shall occur for any reason:
(a) failure to make payment of principal, interest, fees or
premium on any of the Loan Obligations when due, which failure to make payments
shall continue uncured for a period of ten (10) days after written notice
thereof to the Borrower or failure to make payment of any of the other Secured
Obligations when due, subject to any applicable notice and cure period;
(b) any representation or warranty made or deemed made by the
Borrower in this Agreement, any of the other Loan Documents, any Financial
Statement, or any certificate furnished by the Borrower or any Subsidiary at any
time to the Lender shall prove to be untrue in any material respect as of the
date when made, deemed made, or furnished;
(c) default shall occur in the observance or performance by the
Borrower of any of the covenants and agreements contained Section 9.1, 9.2, 9.3,
9.8 and 9.9 in this Agreement and such default shall continue for a period of
thirty (30) days after written notice thereof is given by the Lender to the
Borrower
(d) except as provided in subpart (a), (b) or (c) above, default
shall occur in the observance or performance by the Borrower of any of the
covenants and agreements contained in this Agreement or, subject to any
applicable notice and cure periods, any of the other Loan Documents, or any
other agreement entered into at any time to which the Borrower and the Lender
(or any Affiliate of the Lender) are party, including, without limitation, any
Swap Agreement;
(e) the Borrower or any Subsidiary shall: (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer or otherwise
commence any action or proceeding seeking reorganization, arrangement or
readjustment of its debts or for any other relief under the Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
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federal, now or hereafter existing, or consent to, approve of, or acquiesce in,
any such petition, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, assignee, liquidator, sequestrator, custodian,
trustee or similar officer for it or for all or any part of its Property; (iii)
make an assignment for the benefit of creditors; or (iv) be unable generally to
pay its debts as they become due;
(f) an involuntary petition shall be filed or an action or
proceeding otherwise commenced seeking reorganization, arrangement or
readjustment of the Borrower's or any Subsidiary's debts or for any other relief
under the Federal Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter existing which shall
not have been dismissed within sixty (60) days after the date of filing;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
trustee or similar officer for the Borrower or any Subsidiary or for all or any
part of their Property shall be appointed involuntarily; or a warrant of
attachment, execution or similar process shall be issued against any part of the
Property of the Borrower or any Subsidiary which if involuntary shall not have
been dismissed within sixty (60) days after the date of appointment or filing;
(h) the Borrower shall file a certificate of dissolution under
applicable state law or shall be liquidated, dissolved or wound-up or shall
commence or have commenced against it any action or proceeding for dissolution,
winding-up or liquidation, or shall take any corporate action in furtherance
thereof;
(i) all or any material part of the Property of the Borrower shall
be nationalized, expropriated or condemned, seized or otherwise appropriated, or
custody or control of such Property or of the Borrower shall be assumed by any
Public Authority or any court of competent jurisdiction at the instance of any
Public Authority, except where contested in good faith by proper proceedings
diligently pursued where a stay of enforcement is in effect;
(j) one or more final judgments for the payment of money
aggregating in excess of $250,000 (whether or not covered by insurance) shall be
rendered against the Borrower and the Borrower shall fail to discharge the same
within thirty (30) days from the date of notice of entry thereof or to appeal
therefrom;
(k) there occurs a Change in Control;
(l) if at any time the aggregate principal amount of the Deposit
is less than the then unpaid principal balance of the Term Loan;
(m) if a default shall occur under or with respect to any other
Debt; and
(n) if a default shall occur under any other agreement to which
the Borrower is a party which is considered material by the Lender in its sole
and absolute.
Section 11.2 Remedies.
(a) If an Event of Default has occurred and is continuing, the
Lender may, without notice to or demand on the Borrower, do one or more of the
following at any time or times and in
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any order: (i) declare any or all Loan Obligations to be immediately due and
payable (provided however that upon the occurrence of any Event of Default
described in Section 11.1(e), Section 11.1(f), Section 11.1(g) or Section
11.1(h), all Loan Obligations shall automatically become immediately due and
payable); and (ii) pursue its other rights and remedies under the Loan Documents
and applicable law.
(b) If an Event of Default has occurred and is continuing: (i) the
Lender shall have, in addition to all other rights, the rights and remedies of a
secured party under the UCC; (ii) the Lender may, at any time, terminate and
unwind the Deposit (without regard to any early termination or withdrawal fees,
penalties or premiums) and apply the proceeds thereof to the Secured Obligations
in such order and manner as the Lender shall determine in its sole and absolute
discretion; and (iii) the Lender may sell and deliver any Collateral at public
or private sales, for cash, upon credit or otherwise, at such prices and upon
such terms as the Lender deems advisable, in its sole discretion, and may, if
the Lender deems it reasonable, postpone or adjourn any sale of the Collateral
by an announcement at the time and place of sale or of such postponed or
adjourned sale without giving a new notice of sale. Without in any way requiring
notice to be given in the following manner, the Borrower agrees that any notice
by the Lender of sale, disposition or other intended action hereunder or in
connection herewith, whether required by the UCC or otherwise, shall constitute
reasonable notice to the Borrower if such notice is mailed by registered or
certified mail, return receipt requested, postage prepaid, or is delivered
personally against receipt, at least five (5) days prior to such action to the
Borrower's address specified in or pursuant to Section 12.9 (Notices). If any
Collateral is sold on terms other than payment in full at the time of sale, no
credit shall be given against the Secured Obligations until the Lender receives
payment, and if the buyer defaults in payment, the Lender may resell the
Collateral without further notice to the Borrower. In the event the Lender seeks
to take possession of all or any portion of the Collateral by judicial process,
the Borrower irrevocably waives: (a) the posting of any bond, surety or security
with respect thereto which might otherwise be required; (b) any demand for
possession prior to the commencement of any suit or action to recover the
Collateral; and (c) any requirement that the Lender retain possession and not
dispose of any Collateral until after trial or final judgment. The Borrower
agrees that the Lender has no obligation to preserve rights to the Collateral or
marshal any Collateral for the benefit of any Person. The proceeds of sale shall
be applied first to all expenses of sale, including attorney's fees, and second,
in whatever order the Lender elects, to all Secured Obligations. The Lender will
return any excess to the Borrower or such other Person as shall be legally
entitled thereto and the Borrower shall remain liable for any deficiency.
(c) If an Event of Default occurs, the Borrower hereby waives all
rights to notice and hearing prior to the exercise by the Lender of the Lender's
rights to repossess the Collateral without judicial process or to replevy,
attach or levy upon the Collateral without notice or hearing.
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ARTICLE XII
MISCELLANEOUS.
Section 12.1 Cumulative Remedies.
The enumeration herein of the Lender's rights and remedies is not
intended to be exclusive, and such rights and remedies are in addition to and
not by way of limitation of any other rights or remedies that the Lender may
have under the UCC or other applicable law. The Lender shall have the right, in
its sole discretion, to determine which rights and remedies are to be exercised
and in which order. The exercise of one right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative. The Lender may,
without limitation, proceed directly against the Borrower to collect the Secured
Obligations without any prior recourse to the Collateral.
Section 12.2 No Implied Waivers.
No act, failure or delay by the Lender shall constitute a waiver of any
of its rights and remedies. No single or partial waiver by the Lender of any
provision of this Agreement or any other Loan Document, or of breach or default
hereunder or thereunder, or of any right or remedy which the Lender may have,
shall operate as a waiver of any other provision, breach, default, right or
remedy or of the same provision, breach, default, right or remedy on a future
occasion. No waiver by the Lender shall affect its rights to require strict
performance of this Agreement.
Section 12.3 Severability.
If any provision of this Agreement shall be prohibited or invalid,
under applicable law, it shall be ineffective only to such extent, without
invalidating the remainder of this Agreement.
Section 12.4 Governing Law.
This Agreement shall be deemed to have been made in the State of
Maryland and shall be governed by and interpreted in accordance with the laws of
such state, except that no doctrine of choice of law shall be used to apply the
laws of any other state or jurisdiction.
Section 12.5 Waiver of Jury Trial.
THE BORROWER AND THE LENDER EACH HEREBY WAIVES TRIAL BY JURY, RIGHTS OF
SETOFF, AND THE RIGHT TO IMPOSE COUNTERCLAIMS IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, THE SECURED OBLIGATIONS OR THE COLLATERAL, OR ANY INSTRUMENT OR
DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY OTHER CLAIM OR DISPUTE
HOWSOEVER ARISING, BETWEEN THE BORROWER AND THE LENDER. THE BORROWER CONFIRMS
THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.
Section 12.6 Survival of Representations and Warranties.
All of the Borrower's representations and warranties contained in this
Agreement shall survive the execution, delivery, and acceptance thereof by the
parties, notwithstanding any investigation by the Lender or its agents.
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Section 12.7 Other Security and Guaranties.
The Lender may, without notice or demand and without affecting the
Borrower's obligations hereunder, from time to time: (a) take from any Person
and hold collateral (other than the Collateral) for the payment of all or any
part of the Secured Obligations and exchange, enforce or release such collateral
or any part thereof; and (b) accept and hold any endorsement or guaranty of
payment of all or any part of the Secured Obligations and release or substitute
any such endorser or guarantor, or any Person who has given any Lien in any
other collateral as security for the payment of all or any part of the Secured
Obligations, or any other Person in any way obligated to pay all or any part of
the Secured Obligations.
Section 12.8 Fees and Expenses.
The Borrower shall pay to the Lender on demand all costs and expenses
that the Lender pays or incurs in connection with the negotiation, preparation,
enforcement, and termination of this Agreement and the other Loan Documents,
including, without limitation: (a) attorneys' and paralegals' fees and
disbursements of counsel to the Lender (including, without limitation, a
reasonable estimate of the allocable cost of in-house counsel and staff); (b)
costs and expenses including attorneys' and paralegals' fees and disbursements
(including, without limitation, a reasonable estimate of the allocable cost of
in-house counsel and staff) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Loan Documents and the transactions
contemplated thereby; (c) Taxes, fees and other charges for filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Security Interest; (d) sums paid or incurred to pay any amount or
take any action required of the Borrower under the Loan Documents that the
Borrower fails to pay or take; (e) costs and expenses of preserving and
protecting the Collateral; and (f) costs and expenses including attorneys' and
paralegals' fees and disbursements (including, without limitation, a reasonable
estimate of the allocable cost of in-house counsel and staff) paid or incurred
to obtain payment of the Secured Obligations, enforce the Security Interest,
sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of the Loan Documents, or to defend any claims made or threatened
against the Lender arising out of the transactions contemplated hereby
(including without limitation, preparations for and consultations concerning any
such matters). The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by the
Borrower.
Section 12.9 Notices.
Except as otherwise provided herein, all notices, demands, and requests
that either party is required or elects to give to the other shall be in
writing, shall be delivered personally against receipt, or sent by recognized
overnight courier services, or mailed by registered or certified mail, return
receipt requested, postage prepaid, and shall be addressed to the party to be
notified as follows:
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If to the Lender: Wachovia Bank, National Association
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to the Borrower: Guilford Pharmaceuticals Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
with a copy to: Guilford Pharmaceuticals Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
or to such other address as each party may designate for itself by like notice.
Any such notice, demand, or request shall be deemed given when received if
personally delivered or sent by overnight courier, or when deposited in the
United States mails, postage paid, if sent by registered or certified mail.
Section 12.10 Waiver of Notices.
Unless otherwise expressly provided herein, the Borrower waives
presentment, protest and notice of demand or dishonor and protest as to any
instrument, as well as any and all other notices to which it might otherwise be
entitled. No notice to or demand on the Borrower that the Lender may elect to
give shall entitle the Borrower to any or further notice or demand in the same,
similar or other circumstances.
Section 12.11 Binding Effect; Assignment.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective representatives, successors and assigns of the parties
hereto; provided, however, that no interest herein may be assigned by the
Borrower without the prior written consent of the Lender. The rights and
benefits of the Lender hereunder shall, if the Lender so agrees, inure to any
assignee of the Loan Obligations or any part thereof.
Section 12.12 Modification.
This Agreement is intended by the Borrower and the Lender to be the
final, complete, and exclusive expression of the agreement between them. This
Agreement supersedes any and all prior oral or written agreements relating to
the subject matter hereof and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements of the parties. There are no oral
agreements between the parties. No modification, rescission, waiver, release,
27
or amendment of any provision of this Agreement shall be made, except by a
written agreement signed by the Borrower and a duly authorized officer of the
Lender.
Section 12.13 Counterparts.
This Agreement may be executed in any number of counterparts, and by
the Lender and the Borrower in separate counterparts, each of which shall be an
original, but all of which shall together constitute one and the same agreement.
Section 12.14 Captions.
The captions contained in this Agreement are for convenience only, are
without substantive meaning and should not be construed to modify, enlarge, or
restrict any provision.
Section 12.15 Right of Set-Off.
Whenever an Event of Default exists, the Lender is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Lender or any affiliate of the Lender to or for the credit or the account
of the Borrower against any and all of the Secured Obligations, whether or not
then due and payable. The Lender agrees promptly to notify the Borrower after
any such set-off and application made by the Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.
Section 12.16 Participating Lender's Security Interests.
The Lender may, without notice to or consent by the Borrower, grant one
or more participations in the Term Loan to participating lenders. If a
participating lender shall at any time with the Borrower's knowledge participate
with the Lender in the Term Loan, the Borrower hereby grants to such
participating lender, and the Lender and such participating lender shall have
and are hereby given, a continuing lien on and security interest in any money,
securities and other property of the Borrower in the custody or possession of
the participating lender, including the right of setoff, to the extent of the
participating lender's participation in the Loan Obligations, and such
participating lender shall be deemed to have the same right of setoff to the
extent of Participating Lender's participation in the Loan Obligations under
this Agreement as it would have it were a direct lender.
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IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
GUILFORD PHARMACEUTICALS INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (SEAL)
---------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President, Finance
and Administration, Chief
Financial Officer and Treasurer
WACHOVIA BANK, NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇ (SEAL)
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
29