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SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. 20549
---------------
SCHEDULE TO
(Rule 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AMGEN INC.
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(Name of Subject Company (Issuer))
MERIDIAN VENTURE GROUP, LLC
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Name of Filer and Offeror
CONTRACTUAL CONTINGENT PAYMENT RIGHTS
ARISING FROM THE PURCHASE OF
CLASS A INTERESTS OF AMGEN CLINICAL PARTNERS, L.P.
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(Title of Class of Securities)
NONE
------------------------------------------
(CUSIP Number of Class of Securities)
David B. Schmickel
Meridian Venture Group, LLC
767 Fifth Avenue
New York, New York 10153
(212) 688-2015
with a copy to:
Steven J. Pierce, Esq.
Pryor Cashman Sherman & Flynn LLP
410 Park Avenue, 10th Floor
New York, New York 10022
(212) 326-0139
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Filer)
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
Transaction value* I Amount of Filing Fee
I
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$26,500,000 $5,300
* Estimated for the purpose of calculating amount of filing fee only. The
amount assumes the purchase of 100 Contractual Contingent Payment Rights arising
from the purchase of Class A interests of
Amgen Clinical Partners, L.P. (each a "CCPR" and collectively the "CCPRs") of
the subject company at $265,000 per CCPR in cash.
|_| Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
|_| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transaction to which
the statement relates:
|X| third-party tender offer subject to Rule 14d-1.
|_| issuer tender offer subject to Rule 13e-4.
|_| going private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: |_|
Item 1. Summary Term Sheet.
The information set forth under "Summary Term Sheet" of the Offer to
Purchase is incorporated herein by reference.
Item 2. Subject Company Information.
(a) The name of the subject company is Amgen Inc. The address and
telephone number of its principal executive offices is One Amgen Center Drive,
Thousand Oaks, CA 91320-1789; (805) 447-1000.
(b) The information set forth under the section entitled
"Introduction" of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase
entitled "Price Range of the CCPRs" is incorporated herein by reference.
Item 3. Identity And Background Of The Filing Person.
(a) The information set forth in the Introduction, Section 9 and
Schedule I of the Offer to Purchase is incorporated herein by reference.
(b) The information set forth in the Introduction, Section 9 and
Schedule I of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in the Introduction, Section 9 and
Schedule I of the Offer to Purchase is incorporated herein by reference.
Item 4. Terms Of The Transaction.
The information set forth in under the sections entitled "Summary
Term Sheet" and "Introduction", and Sections 1, 2, 3, 4, 5 and 14 of the Offer
to Purchase are incorporated herein by reference.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
(a) Transactions. None.
(b) Significant Corporate Events. The information set forth under
"Introduction" and in Sections 9, 11 and 12 of the Offer to Purchase is
incorporated herein by reference.
Item 6. Purposes of the Transaction and Plans or Proposals.
The information set forth in Section 12 of the Offer to Purchase is
incorporated herein by reference.
Item 7. Source And Amount Of Funds Or Other Consideration
(a) The information set forth in Section 10 of the Offer to Purchase
is incorporated herein by reference.
(b) The information set forth in Section 10 of the Offer to Purchase
is incorporated herein by reference.
(d) The information set forth in Section 10 of the Offer to Purchase
is incorporated herein by reference.
Item 8. Interest In Securities of the Subject Company.
The information set forth under "Introduction" and in Sections 6, 9,
11 and 12 of the Offer to Purchase is incorporated herein by reference.
Item 9. Persons/Assets, Retained, Employed, Compensated or Used.
The information set forth under "Introduction" and in Section 16 of
the Offer to Purchase is incorporated herein by reference.
Item 10. Financial Statements.
Not material.
Item 11. Additional Information.
(a)-(b) The information set forth in Sections 7, 9, and 15 of the
Offer to Purchase is incorporated herein by reference.
Item 12. Exhibits.
(a)(1)(a) Offer to Purchase;
(a)(1)(b) Assignment and Letter of Transmittal;
(b) Loan Agreement dated as of June 21, 2000; and
(c) Summary Advertisement published in Investors Business
Daily on September 11, 2000.
Item 13. Information Required By Schedule 13e-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
MERIDIAN VENTURE GROUP, LLC
By: /s/ David B. Schmickel
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David B. Schmickel
September 10, 2000
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(Date)
Instructions to Signature: The statement must be signed by the
filing person or that person's authorized representative. If the statement is
signed on behalf of a person by an authorized representative (other than an
executive officer of a corporation or general partner or partnership), evidence
of the representative's authority to sign on behalf of the person must be filed
with the statement. The name and any title of each person who signs the
statement must be typed or printed beneath the signature. See Exchange Act Rules
12b-11 and 14d-1(f) with respect to the signature requirements.
Exhibit (a)(1)(a)
OFFER TO PURCHASE FOR CASH
UP TO 100 OUTSTANDING CONTRACTUAL CONTINGENT PAYMENT RIGHTS
(THE "CCPRs")
ARISING FROM THE PURCHASE OF CLASS A INTERESTS OF
AMGEN CLINICAL PARTNERS, L.P.
AT
$265,000 NET PER CCPR
BY
MERIDIAN VENTURE GROUP, LLC
-----------------------------------
Meridian Venture Group, LLC, a Delaware limited liability company (the
"Purchaser"), hereby offers to purchase up to 100 outstanding contractual
contingent payment rights arising from the purchase of Class A Interests of
Amgen Clinical Partners, L.P. (the "CCPRs") for cash consideration per CCPR of
$265,000 (the "Purchase Price") upon the terms and subject to the conditions set
forth in this Offer to Purchase and the related Letter of Transmittal (which,
together with any amendments or supplements hereto or thereto, collectively
constitute the "Offer"). The Purchase Price will be automatically reduced by the
aggregate amount of the value of any distributions made or declared by Amgen
Inc. ("Amgen" or the "Company") on or after September 11, 2000, and prior to the
date on which the Purchaser pays the Purchase Price for the tendered CCPRs. This
Offer is made to all current holders of CCPRs (each a "Holder").
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THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME ON OCTOBER 20, 2000 UNLESS THE OFFER IS EXTENDED.
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ACCORDING TO THE QUARTERLY LETTER FROM AMGEN DATED MAY 30, 2000,
THERE ARE 838 CCPRs ISSUED AND OUTSTANDING. THE OFFER IS SUBJECT TO
PRORATION. SEE SECTION 2 OF THE OFFER.
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THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE AGREEMENT OF AMGEN
INC. TO TRANSFER CCPRs TO THE PURCHASER, A CONDITION WHICH IN THE REASONABLE
DISCRETION OF PURCHASER MUST BE SATISFIED OR WAIVED PRIOR TO THE EXPIRATION
DATE.
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THE OFFER IS NOT CONDITIONED UPON ANY NUMBER OF CCPRs BEING TENDERED. THE
OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, PURCHASER BEING SATISFIED
PRIOR TO THE EXPIRATION DATE, IN ITS REASONABLE DISCRETION, THAT UPON
PURCHASE OF THE CCPRs PURSUANT TO THE OFFER IT AND/OR ITS NOMINEE WILL HAVE
FULL RIGHTS TO OWNERSHIP AS TO ALL SUCH CCPRs AND THAT IT AND/OR ITS NOMINEE
WILL BECOME THE REGISTERED HOLDER OF THE PURCHASED CCPRs. THE OFFER IS ALSO
SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE
SECTIONS 1, 2 AND 14 OF THIS OFFER TO PURCHASE.
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EACH HOLDER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE, THE
LETTER OF TRANSMITTAL AND RELATED DOCUMENTS.
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IMPORTANT
Any Holder wishing to tender all or a portion of his or her CCPRs should
complete and sign the Letter of Transmittal (or a manually signed facsimile
thereof) in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary at its address
set forth on the back cover of this Offer to Purchase and tender such CCPRs
pursuant to the procedures for transfer set forth in Section 3 hereof and in the
Instructions attached to the Letter of Transmittal.
The Purchaser is unaware of any established trading market for the CCPRs.
The Purchase Price has been established by Purchaser, in its sole discretion. No
independent opinion, report or appraisal related to the valuation of the CCPRs
has been obtained by the Purchaser.
Questions and requests for assistance may be directed to the Information
Agent or the Purchaser at their respective addresses and telephone numbers set
forth in the Instructions attached to the Letter of Transmittal and on the back
cover of this Offer to Purchase. Requests for additional copies of this Offer to
Purchase, the Letter of Transmittal and other related materials may be directed
to the Information Agent or the Purchaser.
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TABLE OF CONTENTS
PAGE
----
SUMMARY TERM SHEET ........................................................ iii
INTRODUCTION .............................................................. 1
RISK FACTORS .............................................................. 1
VALUATION ................................................................. 3
1. Terms of the Offer .................................................... 3
2. Proration; Acceptance For Payment and Payment ......................... 4
3. Procedure for Tendering CCPRs ......................................... 5
4. Withdrawal Rights ..................................................... 6
5. Certain Federal Income Tax Consequences of the Offer .................. 7
6. Price Range of the CCPRs .............................................. 11
7. Effect of the Offer on Exchange Act Registration ...................... 12
8. Certain Information Concerning Contractual Contingent Payment Rights .. 12
9. Certain Information Concerning the Purchaser .......................... 13
10. Source and Amount of Funds ............................................ 14
11. Background of the Offer ............................................... 14
12. Purpose of the Offer .................................................. 15
13. Distributions to Holders .............................................. 15
14. Certain Conditions of the Offer ....................................... 16
15. Certain Legal Matters ................................................. 17
16. Fees and Expenses ..................................................... 18
17. Miscellaneous ......................................................... 18
Schedule I ................................................................ I-1
ii
To the Holders of Contractual Contingent Payment Rights arising from the
purchase of Class A Interests of Amgen Clinical Partners, L.P. ("CCPRs"):
SUMMARY TERM SHEET
* WHAT SECURITIES ARE SOUGHT IN THE OFFER? The securities that are sought in
this Offer are Contractual Contingent Payment Rights arising from the
purchase of Class A Interests of Amgen Clinical Partners, L.P.
* WHO IS OFFERING TO BUY MY CCPRs? Meridian Venture Group, LLC, a Delaware
limited liability company ("we") are offering to purchase your CCPRs which
are securities which entitle you, according to their terms, to contingent
payments based on the sale of the drug Neupogen from the drug maker Amgen,
Inc. Meridian Venture Capital, LLC, a Delaware limited liability company,
and our manager and sole member, formed us to buy and hold CCPRs of
pharmaceutical companies. Meridian Venture Capital, LLC delegated its
rights, powers and duties as our manager with respect to our Offer and the
purchase, sale, holding, and exercise of all rights with respect to CCPRs
on our behalf to Meridian Venture Group Management Ltd., a New York
corporation, which is affiliated with us and Meridian Venture Capital,
LLC. See Section 9 - "Certain Information Concerning the Purchaser" and
Schedule 1.
* WHAT ARE THE TERMS OF THE OFFER? We are offering to purchase up to 100
CCPRs from you and the other beneficial owners at $265,000 per CCPR in
cash, adjusted for distributions. We have the cash to consummate this
transaction. If you are the record owner of your CCPR(s) on September 11,
2000 and you complete and send to us a letter of transmittal that we have
provided to you in connection with this Offer, where you agree to sell or
"tender" your CCPRs to us, you will be able to participate. If you tender
your CCPRs, you will receive the cash price we are offering for your
CCPRs, unless more than 100 units are tendered to us. If that happens, we
will still purchase a total of 100 CCPRs but we may elect to purchase from
you only a fraction of the CCPRs you tender, but still at the rate of
$265,000 per CCPR. The Purchase Price will be automatically reduced by the
aggregate amount of the value of any distributions made or declared by
Amgen Inc. ("Amgen") on or after September 11, 2000, and prior to the date
on which the Purchaser pays the Purchase Price for the tendered CCPRs. You
also will not have to pay any brokerage fees or any similar expenses if
you tender the CCPRs directly to the third party depositary that we hired
to complete this transaction. If you own your CCPRs through a broker or
other nominee, you might want to check whether they will charge any fee to
tender your CCPRs for you. See the "Introduction" to this Offer to
Purchase and Section 1 - "Terms of the Offer".
* DOES THE PURCHASER HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT? Yes.
Pursuant to commitments from investors and a credit facility with a
certain commercial lender, we will have the funds available to acquire the
shares in the Offer. See Section 10 - "Source and Amount of Funds".
* IS THE PURCHASER'S FINANCIAL CONDITION RELEVANT TO MY DECISION ON WHETHER
TO TENDER IN THE OFFER? No. Since we are paying cash for your CCPRs and
the Offer is not subject to a financing condition, we do not believe that
the financial condition of the Purchaser is important to your decision to
tender in the Offer. See Section 10 - "Source and Amount of Funds".
* HOW LONG DO YOU HAVE TO DECIDE TO TENDER? You will have until midnight,
New York City Time on October 20, 2000, to tender your CCPR(s) unless we
extend the time period of our Offer, which extends the time period that
you can tender. See Section 1--"Terms of the Offer" and Section 3 -
"Procedure for tendering CCPRs".
iii
* CAN WE EXTEND THE TIME PERIOD OF OUR OFFER? We may but are not obligated
to extend the time period of our tender offer. If we do extend, we will
not only notify the third party depositary we hired about the extension,
but we will also make a public announcement for your benefit on our intent
to extend. This announcement will be made no later than 9:00 a.m., New
York City Time on the business day after what would have been the original
expiration date. See Section 1 - "Terms of the Offer".
* HOW DO I TENDER MY CCPRs? Tendering your CCPRs is easy. All you have to do
is complete and sign the transmittal letter which was provided which
indicates you want to sell your CCPRs to us. Then send it to the
depositary we hired to help us complete this Offer prior to the expiration
of the Offer. See Section 3 - "Procedure for Tendering CCPRs".
* IF I TENDER MY CCPRs, CAN I CHANGE MY MIND? You can withdraw your tender
any time if your notice electing withdrawal is received by the depositary
prior to the expiration of the Offer. In order to withdraw, send written
notice of your intent to withdraw. Be sure to specify the name of the
registered holder which is probably you, the name of the person who
tendered the CCPR(s), and the number of CCPR(s) that are being withdrawn.
See Section 4 - "Withdrawal Rights".
* WHAT DOES AMGEN INC.'S BOARD OF DIRECTORS THINK OF THE OFFER? As of the
time of the commencement of our Offer, Amgen's Board of Directors has not
expressed any opinion on our Offer. Amgen must file a response with the
Securities and Exchange Commission within 10 business days after the date
of our Offer. See Section 11 - "Background of Offer".
* IF I DO NOT TENDER ALL OF MY CCPRs, WHAT HAPPENS TO THE VALUE OF THE CCPRs
I KEEP? We believe that the current value of any CCPR(s) that you do not
tender will not be affected. However, there can be no assurance that there
will be an available market at the time you decide to sell your CCPRs in
the future. Assuming there is an available future market, it is unknown
whether the sales price that you would receive for your CCPRs at a future
time would be more or less than the price we are offering as part of this
Offer.
* WHAT IS THE MARKET VALUE OF MY CCPRs AS OF A RECENT DATE? There is no
established market for the CCPRs. From time to time, we and others have
made offers to purchase CCPRs or fractional units of CCPRs. No independent
person has been retained by us to evaluate or render any opinion with
respect to the purchase price we are offering, and we make no
representations as to the fairness of our Offer. We did not attempt to
attain current independent valuations or appraisals of the CCPRs. See
Section 6 --"Price Range of the CCPRs."
* IF I OBJECT TO THE PRICE BEING OFFERED, WILL I HAVE APPRAISAL RIGHTS? No.
Appraisal rights are not available in the Offer. You may choose to retain
your CCPRs by not tendering in the Offer and any CCPR(s) retained by you
will be unaffected by this Offer. See Section 12--"Purpose of the Offer"
and Section 15--"Certain Legal Matters".
* WHAT ARE THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING MY
CCPRs? Your sale of a CCPR pursuant this Offer is a taxable event for United
States federal income tax purposes and in all likelihood for state,
local and perhaps foreign income tax purposes also. For original Holders
and possibly secondary Holders, a portion of the proceeds that you receive
from the sale of the CCPR may constitute ordinary interest income. In
addition, if you are an original Holder of a CCPR, a portion of the
proceeds that you receive from such sale may give rise to additional
ordinary income attributable to your share of certain inventory items and
"unrealized receivables" of ACPLP. The remaining proceeds that you receive
from your sale of a CCPR pursuant to this Offer, to the extent exceeding
or less than your basis in the sold CCPR, should result in, respectively,
capital gain or loss. Currently, for individuals, trusts and estates, a
capital gain attributable to property held for more than 12 months is
generally taxed at a maximum 20%
iv
tax rate. It is recommended that you consult your tax advisor concerning
the taxable impact of tendering your CCPRs. See Section 5 - "Certain
United States Federal Income Tax Consequences of the Offer".
WHAT ARE THE CONDITIONS TO THE TENDER OFFER? The consummation of this tender
offer is conditioned upon us being satisfied that, upon purchase of the
CCPRs pursuant to the Offer, we will have full ownership rights and will
become the registered holder all of the purchased CCPRs. These conditions
include the consent of Amgen to transfer the CCPRs to us and to make
payments with respect to the CCPRs directly into a collection account
controlled by a collateral agent to which we have pledged a security
interest in the CCPRs on behalf of the parties that are providing us with
the financing for their purchase. The consummation is also conditioned
upon all material regulatory and related approvals having been obtained or
made on terms reasonably satisfactory to us; the absence of litigation
challenging this tender offer or any law enacted preventing this tender
offer; and the absence of a competing tender offer; or the absence of any
change effecting the contingent payments relevant to each CCPR. See
Section 14--"Certain Conditions of the Offer."
* WHO CAN I TALK TO IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call either of the following:
Purchaser
David B. Schmickel
Meridian Venture Group, LLC
767 Fifth Avenue
New York, New York 10153
(212) 688-2015
Information Agent
MMS Escrow and Transfer Agency
PO Box 7090
Troy, Michigan 48007-7090
Attention: Matthew Fisher
(877) 346-8317
v
INTRODUCTION
Meridian Venture Group, LLC, a Delaware limited liability company (the
"Purchaser"), hereby offers to purchase up to 100 outstanding Class A
contractual contingent payment rights (the "CCPRs") arising from the purchase of
Class A Interests of Amgen Clinical Partners, L.P. ("ACPLP" or the
"Partnership"), for cash consideration per CCPR of $265,000, net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in this Offer to Purchase and the related Letter of Transmittal
(which, together with any amendments or supplements hereto or thereto,
collectively constitute the "Offer"). The Purchase Price will be automatically
reduced by the aggregate amount of the value of any distributions made or
declared by Amgen Inc. ("Amgen"), on or after September 11, 2000, and prior to
the date on which the Purchaser pays the Purchase Price for the tendered CCPRs.
This Offer is made to all current holders of the CCPRs (collectively "Holders"
and individually a "Holder").
In March 1993, Amgen purchased all of the Class A Interests in ACPLP for a
payment of $25,000 (the "Advance Payment") per interest in cash. In addition to
the Advance Payment, Amgen issued to each former Class A Limited Partner a CCPR,
whereby Amgen pays to each Holder an amount equal to a percentage of revenue
from the sale of the Partnership's products through the year 2005. According to
the quarterly letter from Amgen dated May 30, 2000, there are 838 CCPRs issued
and outstanding.
The Purchaser is acquiring the CCPRs solely for investment purposes.
Purchaser believes that the ownership of CCPRs (either by Purchaser or a Holder
who retains his or her CCPRs) remains a speculative investment. The Offer is not
conditioned upon any number of CCPRs being tendered. The Offer is conditioned
upon, among other things, Purchaser being satisfied prior to the Expiration
Date, in its reasonable discretion, that upon purchase of the CCPRs pursuant to
the Offer, Purchaser or its nominee will have full rights to ownership as to all
such CCPRs and that it and/or its nominee will become the registered holder of
the purchased CCPRs. The Offer is also subject to certain other conditions
contained in this Offer to Purchase. See Sections 1, 2 and 14.
Tendering Holders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 to the Letter of
Transmittal, transfer taxes on the purchase of CCPRs pursuant to the Offer.
Purchaser will pay all charges and expenses of MMS Escrow and Transfer Agency,
as the depositary (the "Depositary") and the information agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16--"Fees and
Expenses".
RISK FACTORS
Before tendering, Holders are urged to consider the following risk factors
in addition to the information previously provided:
Although Purchaser cannot predict the future value of the CCPRs, the
Purchase Price could differ significantly from the proceeds that would be
realized by holding the CCPRs for the entire life of the expected payment
stream.
Purchaser is making the Offer with a view toward making a profit.
Accordingly, there may be a conflict between the desire of Purchaser to
acquire the CCPRs at the Purchase Price and the ultimate value of the
CCPRs at the end of the applicable payment stream. There can be no
assurance that the Purchase Price will exceed or fall below such ultimate
value.
The actual value that a Holder may realize by retaining the CCPRs and not
tendering in the Offer may exceed the Purchase Price. The Purchase Price
may not fully reflect the present value of the future sale of Neupogen.
Purchaser's determination of the Purchase Price is in part based upon
assumptions that may or may not prove to be true.
No independent person has been retained by Purchaser or any affiliate to
value or make any appraisal of the CCPRs or to render any opinion with
respect to the fairness of the Purchase Price and no representation is
made with respect to the fairness of the Purchase Price.
Purchaser believes that there is a limited market for resale of the CCPRs.
While the Offer represents an opportunity for any holder of CCPRs to
obtain liquidity, there can be no assurance that in the future a market
will not develop or that another party will not make an offer for the
CCPRs. Purchaser has no reason to believe that any such market will
develop. Purchaser has no current plans to make another tender offer for
the CCPRs.
A Holder may wish to tender CCPRs for a number of reasons:
OPPORTUNITY FOR LIQUIDITY. The Offer provides a Holder an
opportunity to liquidate his or her investment without transaction costs
or commissions. Although there are some limited resale mechanisms
available to a Holder, there is no formal trading market for the CCPRs and
there can be no assurance that one will develop.
CURRENT REALIZATION OF VALUE OF CCPRs. Quarterly payments on the
CCPRs will cease after the payment related to Neupogen sales in the fourth
quarter of 2005, after which Holders of CCPRs will no longer be entitled
to receive payments. The Offer provides an opportunity for Holders
currently to realize their investment in CCPRs. In the alternative, a
Holder may need to wait an additional 5.50 years to realize the full value
of the CCPR.
ESTATE PLANNING PURPOSES. The sale of a CCPR in connection with this
Offer provides current cash proceeds. Should the CCPRs become part of an
estate and need to be monetized at a future time, there can be no
assurance that at such time a market will exist or a current offer price
will be available.
ANTICIPATED SLOWER GROWTH IN NEUPOGEN SALES. Sales of Neupogen grew
rapidly following the product's launch in 1991, reaching $1.26 billion in
1999. As a mature product, Neupogen's sales growth has slowed and is
expected to remain slow as evidenced by Amgen's June 30, 1999 Form 10-Q,
"... cost containment pressures in the U.S. healthcare marketplace have
limited growth of domestic Neupogen sales. These pressures are expected to
continue to influence growth for the foreseeable future. The growth of the
colony stimulating factor ("CSF") market in the European Union ("EU") in
which Neupogen competes has remained essentially flat, principally due to
EU government pressures on physicians prescribing practices in response to
ongoing governmental initiatives to reduce healthcare expenditures.
Additionally, the Company faces competition from another granulocyte CSF
product. Amgen's CSF market share has remained relatively constant over
the least few years, however, the Company expects that the competitive
intensity may increase in the near future." Further, in Amgen's July 26,
2000 earnings press release, Amgen stated that "...[Amgen] now expects
Neupogen sales for the year [2000] to be approximately the same as last
year."
VALUE OF THE CCPRs DEPENDENT ON ONE PRODUCT. The value of the CCPRs
depends exclusively on the right to receive cash payments based on the
future sales of Neupogen. Accordingly, any factor which adversely affects
sales of Neupogen could adversely affect the amount of the cash payments
on CCPRs.
POSSIBLE TAX BENEFIT. A substantial portion of the Purchase Price
may be treated as a capital gain in the event that the Purchase Price
exceeds such Holder's basis. For individuals, trusts and estates, a
capital gain on the sale or exchange of property held for more than 12
months is generally subject to a maximum 20% tax rate. PURCHASER IS NOT
EXPRESSING AN OPINION AS TO THE TAX CONSEQUENCES OF TENDERING CCPRs.
INVESTORS ARE STRONGLY ADVISED TO CONSULT THEIR TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES OF ACCEPTING THE OFFER.
2
VALUATION
The CCPRs represent the right to receive cash payments based on the
revenue of Neupogen, a product developed and marketed by Amgen as an adjunct to
chemotherapy. In determining the Purchase Price, Purchaser considered a number
of factors including its own estimates, on the basis of publicly available
information, of the potential future cash payments that may be produced by the
CCPRs throughout the remaining 5.5 year life of the payments, the risks inherent
in the future cash flows, the nature of the CCPRs, the CCPRs exclusive
dependence on the sales of a single product and the absence of any market for
the CCPRs. Purchaser is assuming the risk that its estimate of the potential
future cash payments will been realized. No third party was retained to value
the CCPRs or to render any fairness opinion with respect to the Purchase Price.
No other representation is made as to the fairness of the Purchase Price. No
other valuation analysis was performed or used, including any liquidation value
or net asset value analysis. In determining the Purchase Price, Purchaser
considered the absence of a secondary market for the CCPRs. Purchaser/affiliates
of Purchaser have previously purchased CCPRs (See Section 6 of the Offer to
Purchase) from time to time at prices per CCPR equivalent to or less than
(adjusting for distributions payable) the Purchase Price; however, in
determining the Purchase Price, Purchaser did not consider the prices paid for
such other purchases of CCPRs or the price paid for CCPRs by any third party.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment (and thereby purchase) up to
100 CCPRs that are validly tendered and not withdrawn in accordance with Section
4 prior to the Expiration Date. Holders are permitted to tender all or any
portion of the CCPRs owned by such Holder in quarters of CCPRs or any multiple
thereof. As used in the Offer, the term "Expiration Date" means 12:00 midnight,
New York City time, on October 20, 2000, unless Purchaser, in accordance with
the terms of the Offer, shall have extended the period of time during which the
Offer is open, in which event the term "Expiration Date" means the latest time
and date at which the Offer, as so extended, expires. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1(g) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Offer is not conditioned upon any minimum number of CCPRs being
tendered. The Offer is subject to certain other conditions set forth in Sections
2 and 14. The Purchaser expressly reserves the right (but will not be obligated)
to waive any or all of the conditions of the Offer. If, by the Expiration Date,
any or all of the conditions of the Offer are not satisfied or waived, Purchaser
reserves the right (but shall not be obligated) to (i) extend the period during
which the Offer is open and, subject to the rights of tendering Holders to
withdraw their CCPRs, retain all tendered CCPRs until the Expiration Date, (ii)
waive any or all of the conditions of the Offer and, subject to complying with
applicable rules and regulations of the Securities and Exchange Commission (the
"Commission"), accept for payment or purchase all validly tendered CCPRs and not
extend the Offer, or (iii) terminate the Offer and not accept for payment any
CCPRs and return promptly all tendered CCPRs to tendering Holders. Any
extension, delay in payment, termination or amendment may be made by giving oral
or written notice to the Depositary and will be followed as promptly as
practicable by public announcement, the announcement in the case of an extension
to be issued no later than 9:00 a.m., New York City time, on the next business
day after what would have been, absent extension, the Expiration Date. Without
limiting the manner in which the Purchaser may choose to make such public
announcement, except as provided by applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act), the Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service or other national news
service.
Following the expiration of the Offer or, in the event that the Offer is
not consummated, Purchaser may seek to acquire CCPRs through privately
negotiated transactions or otherwise, upon such terms and conditions and at such
prices as it shall determine, which may be more or less than the Purchase Price
and could be for cash, other consideration or any combination thereof.
3
The Commission has announced that, under its interpretation of Rules
14d-4(c) and 14d-6(d) under the Exchange Act, material changes in the terms of a
tender offer or information concerning a tender offer may require that the
tender offer be extended so that it remains open a sufficient period of time to
allow Holders to consider such material changes or information in deciding
whether or not to tender or withdraw their securities. The minimum period during
which the Offer must remain open following material changes in the terms of the
Offer or information concerning the Offer, other than a change in price or a
change in percentage of securities sought, will depend upon the facts and
circumstances, including the relative materiality of the terms or information.
If Purchaser decides to increase or decrease the consideration in the Offer or
to make a change in the percentage of CCPRs sought and if, at the time that
notice of any such change is first published, sent or given to Holders, the
Offer is scheduled to expire at any time earlier than the tenth business day
after (and including) the date of that notice, the Offer will be extended at
least until the expiration of that period of ten business days.
2. PRORATION; ACCEPTANCE FOR PAYMENT AND PAYMENT
If the number of CCPRs validly tendered (and not properly withdrawn) on or
before the Expiration Date is greater than 100 CCPRs, the Purchaser will accept
for payment (and thereby purchase) only 100 CCPRs. The Purchaser will acquire
the CCPRs pro rata to the number of CCPRs validly tendered (and not properly
withdrawn) on or before the Expiration Date, with appropriate adjustments to
avoid purchases in multiples of other than quarter CCPRs. If the number of CCPRs
validly tendered (and not properly withdrawn) on or before the Expiration Date
is not greater than 100 CCPRs, Purchaser will purchase all CCPRs validly
tendered (and not properly withdrawn) on or before the Expiration Date, upon the
terms and subject to the conditions of the Offer.
In the event that proration is required, Purchaser may not be able to
announce the final results of such proration until at least ten business days
after the Expiration Date. Subject to the Purchaser's obligation under Rule
14e-1(c) under the Exchange Act to pay Holders the Purchase Price in respect of
CCPRs tendered or return those CCPRs promptly after the termination or
withdrawal of the Offer, the Purchaser does not intend to pay for any CCPRs
accepted for payment pursuant to the Offer until the final proration results are
known.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment) and, subject to the foregoing paragraphs, Purchaser will accept
for payment (and thereby purchase) and pay for all CCPRs which are validly
tendered prior to the Expiration Date (and not properly withdrawn), promptly
after the later to occur of (i) the Expiration Date or (ii) the date of
satisfaction or waiver of all the conditions to the Offer set forth in this
Offer to Purchase. Subject to the applicable rules of the Commission, Purchaser
expressly reserves the right to delay acceptance for payment of or payment for
CCPRs pending receipt of any regulatory approval specified in Section 15 or in
order to comply, in whole or in part, with any other applicable law or
government regulation. See Sections 14 and 15.
In all cases, payment for CCPRs purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed with
notarized signatures, (ii) any other required documents, and (iii) written
notice from Amgen confirming transfer of tendered CCPRs.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment and thereby purchased CCPRs validly tendered and not properly withdrawn
if and when Purchaser gives oral or written notice to the Depositary of
Purchaser's acceptance of such CCPRs for payment. Payment for CCPRs accepted
pursuant to the Offer will be made by deposit of the Purchase Price with the
Depositary, which will act as agent for tendering Holders for the purpose of
receiving payment from Purchaser and transmitting payment to tendering Holders.
Upon the deposit of funds with the Depositary for the purpose of making payments
to tendering Holders, Purchaser's obligation to make such payment shall be
satisfied and tendering Holders must thereafter look solely to the Depositary
for payment of amounts owed to them by reason of the acceptance for payment of
CCPRs pursuant to the Offer. Purchaser will pay any transfer taxes incident to
the transfer to it of validly tendered CCPRs, as well as any charges and
expenses of the
4
Depositary and the Information Agent. Under no circumstances will interest
accrue on the consideration to be paid for the CCPRs by Purchaser, regardless of
any delay in making such payment.
If, prior to the Expiration Date, Purchaser increases the consideration to
be paid per CCPR pursuant to the Offer, Purchaser will pay the increased
consideration for all the CCPRs purchased pursuant to the Offer, whether or not
the CCPRs were tendered prior to the increase in consideration. Purchaser does
not currently expect to increase the consideration to be paid per CCPR pursuant
to the Offer.
Purchaser reserves the right to transfer or assign, in whole at any time,
or in part from time to time, to one or more of its affiliates, the right to
purchase all or any portion of the CCPRs tendered pursuant to the Offer,
provided that any such transfer or assignment will not relieve Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
Holders to receive payment for CCPRs validly tendered and accepted for payment
pursuant to the Offer. The Purchaser has no current intention to effect such a
transfer or assignment.
3. PROCEDURE FOR TENDERING FOR CCPRs
Valid Tenders. In order for a Holder to tender his or her CCPRs pursuant
to the Offer, a properly completed and duly executed Letter of Transmittal with
the required notarized signatures and any other required documents must be
received by the Depositary at the Depositary's address set forth on the back
cover of this Offer to Purchase prior to the Expiration Date.
A tender of CCPRs will constitute an acceptance by the tendering Holder of
the terms and conditions of the Offer, as well as the tendering Holder's
representation and warranty that (i) such Holder owns the CCPRs being tendered,
(ii) such Holder has full power and authority to tender, sell, assign and
transfer such CCPRs, and (iii) when such CCPRs are accepted for payment by the
Purchaser, the Purchaser will acquire good, marketable and unencumbered title
thereto including the right to receive all payments with respect to the CCPRs,
free and clear of all liens, restrictions, charges and encumbrances and will not
be subject to any adverse claim. The Purchaser's acceptance for payment of CCPRs
tendered pursuant to the Offer will constitute a binding agreement between the
tendering Holder and the Purchaser upon the terms and subject to the conditions
of the Offer.
Determination Of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for payment
of any tender of CCPRs pursuant to any of the procedures described above will be
determined by Purchaser in its sole discretion, which determination shall be
final and binding on all parties. Purchaser reserves the absolute right to
reject any or all tenders of CCPRs determined not to be in proper form or the
acceptance of or payment for which may, in the opinion of counsel, be unlawful
and reserves the absolute right to waive any defect or irregularity in any
tender of CCPRs. Purchaser also reserves the absolute right to waive or amend
any or all of the conditions of the Offer. Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and its
instructions) will be final and binding on all parties. No tender of CCPRs will
be deemed to have been validly made, until all defects and irregularities have
been cured or waived. None of Purchaser, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification.
Appointment As Proxy. By executing and delivering the Letter of
Transmittal, a tendering Holder irrevocably appoints designees of Purchaser as
his or her attorneys-in-fact and proxies, with full power of substitution, in
the manner set forth in the Letter of Transmittal, to the full extent of the
Holder's rights with respect to the CCPRs (and with respect to any and all other
securities issued or issuable in respect of such CCPRs on or after the date
hereof) tendered by the Holder. Absent the withdrawal by the tendering Holder in
accordance with the terms hereof, as more particularly described in Section 4
below, all such powers of attorney and proxies will be considered coupled with
an interest in the tendered CCPRs and all prior powers of attorney and proxies
given by the Holder with respect to the CCPRs will be revoked, without further
action, and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective) by the Holder. Designees of Purchaser will
be empowered to exercise all rights of the
5
Holder with respect to such CCPRs as they in their sole discretion may deem
proper, including, without limitation, in respect of any annual or special
meeting of the Holders, or any adjournment or postponement of any such meeting,
or in connection with any action by written consent in lieu of any such meeting
or otherwise. Purchaser reserves the absolute right to require that, in order
for CCPRs to be validly tendered, immediately upon Purchaser's acceptance for
payment of the CCPRs, Purchaser must be able to exercise full rights with
respect to the CCPRs. Purchaser must obtain the consents of Amgen for the
transfer of the CCPRs to Purchaser and Amgen's consent to pay directly into a
collection account controlled by a collateral agent to which Purchaser has
pledged a security interest in the CCPRs on behalf of Lender (defined herein) in
order for Purchaser to accept the tender of the CCPRs.
A tender of CCPRs pursuant to any of the procedures described above will
constitute the tendering Holder's acceptance of the terms and conditions of the
Offer. Purchaser's acceptance for payment of CCPRs tendered pursuant to the
Offer will constitute a binding agreement between the tendering Holder and
Purchaser upon the terms and conditions of the Offer.
The Depositary has agreed to act as such for the convenience of the
Purchaser. The Depositary will act upon the instructions of the Purchaser and
will deliver all documents deposited with it as instructed by the Purchaser. The
Depositary has no obligation to any Holder who tenders CCPRs. If any controversy
arises between the Purchaser and any other person concerning the CCPRs or
concerning this Offer to Purchase, the Letter of Transmittal, or the subject
matter of any thereof, the Depositary will not be required to determine the
controversy or to take any action regarding it. The Depositary may hold all
documents and property and may wait for settlement of any such controversy by
final appropriate legal proceedings or other means as, in the Depositary's
discretion, may be required, notwithstanding any other provision of this Offer
to Purchase or the Letter of Transmittal. In such event, the Depositary will not
be liable for any interest, damages or expenses. Furthermore, the Depositary may
at its option, file an action of interpleader requiring such persons to answer
and litigate any claims and rights among themselves. The Depositary is
authorized to deposit with the clerk of the court all documents and property
held. Upon initiating such action, the Depositary shall be fully released and
discharged of and from all obligations and liabilities involving the documents
or property, except for obligations and liabilities arising by reason of the
prior gross negligence or willful misconduct on the part of the Depositary.
4. WITHDRAWAL RIGHTS
Tenders of CCPRs made pursuant to the Offer are irrevocable, except as
otherwise provided in this Section 4. CCPRs tendered pursuant to the Offer may
be withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser as provided in this Offer to Purchase, may
also be withdrawn at any time after November 9, 2000. If Purchaser extends the
Offer, is delayed in its purchase of or payment for CCPRs, or is unable to
purchase or pay for CCPRs for any reason, then, without prejudice to the rights
of Purchaser, tendered CCPRs may be retained by the Depositary on behalf of
Purchaser and may not be withdrawn, except to the extent that tendering Holders
are entitled to withdrawal rights as set forth in this Section 4.
The reservation by Purchaser of the right to delay the acceptance or
purchase of or payment for CCPRs is subject to the provisions of Rule 14e-1(c)
under the Exchange Act, which requires Purchaser to pay the consideration
offered or to return CCPRs deposited by or on behalf of Holders promptly after
the termination or withdrawal of the Offer.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be received by the Depositary prior to
the expiration of the Offer at its address set forth on the back cover of this
Offer to Purchase. Any such notice of withdrawal must specify the name of the
persons who tendered the CCPRs to be withdrawn, the number of CCPRs to be
withdrawn and the name of the registered Holder, if different from that of the
person who tendered the CCPRs. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by
Purchaser, in its sole discretion, whose determination will be final and binding
on all parties. No withdrawal of CCPRs will be deemed to have been made properly
until all defects and irregularities have been cured or waived. None of
Purchaser, the Depositary, the Information Agent or any other person will be
under any duty to
6
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failing to give such notification.
Withdrawals may not be revoked and any CCPRs properly withdrawn will be
deemed not validly tendered for purposes of the Offer, but may be tendered at
any subsequent time prior to the Expiration Date by following any of the
procedures described in Section 3 above.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
The following is a general discussion of certain United States federal
income tax consequences of a sale of the CCPRs pursuant to the Offer. This
summary is of a general nature only and does not discuss all aspects of United
States federal income taxation that may be relevant to each particular Holder in
light of such Holder's particular circumstances. In addition, the summary does
not discuss aspects of United States federal income taxation that may be
relevant to Holders subject to special treatment under the United States federal
income tax laws, such as foreign persons, dealers in securities, insurance
companies, tax-exempt organizations, banks, thrifts, regulated investment
companies or Holders that do not hold CCPRs as capital assets (within the
meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the
"Code")). This summary is based on the Code, Treasury regulations thereunder,
and the administrative and judicial interpretations thereof, as of the date
hereof, all of which are subject to change, possibly on a retroactive basis.
This summary assumes that (i) the Purchase Price received by a Holder in
connection with such sale not otherwise constituting imputed interest or
ordinary income required to be recognized under Section 751 of the Code (i.e.,
gain attributable to certain inventory items and "unrealized receivables" of
ACPLP) qualifies for capital gain treatment under the Code, and (ii) neither the
Class A Interests in ACPLP nor the CCPRs were or are traded on an established
securities market.
In general, the United States federal income tax consequences to a Holder
who sells CCPRs pursuant to this Offer will depend, in whole or in part, on the
original exchange transaction whereby Amgen issued the CCPRs to the holders of
Class A Interests in ACPLP in exchange for their Class A Interests. Among other
things, the character of gain or loss on the sale of CCPRs pursuant to the
Offer, the time or times, if any, at which a Holder must include interest in
income (and the amount of such interest income), and the application of rules
applicable to dispositions of installment obligations will be determined by the
United States federal income tax treatment applicable to dispositions of Class A
Interests in ACPLP in exchange for Advance Payments and CCPRs.
EACH HOLDER SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO SUCH HOLDER OF SELLING CCPRs PURSUANT TO THIS OFFER. THIS
SUMMARY DOES NOT DISCUSS ANY FOREIGN, STATE OR LOCAL TAX CONSEQUENCES OF SELLING
CCPRs PURSUANT TO THIS OFFER.
A. United States federal income tax consequences to original Holders who
sell CCPRs pursuant to this Offer
In exchange for their Class A Interests in ACPLP, Holders that were formerly
holders of Class A Interests in ACPLP received CCPRs from Amgen upon Amgen's
exercise of the Partnership Purchase Option (the "Amgen Purchase"). Whether or
not the CCPRs constitute debt instruments for United States federal income tax
purposes, the United States federal income tax consequences to Holders from
their sale of CCPRs and receipt of the Purchase Price pursuant to this Offer
should be as described below in this Section A. THE DISCUSSION IN THIS SECTION
A. APPLIES ONLY TO THOSE ORIGINAL HOLDERS WHO WERE FORMERLY HOLDERS OF CLASS A
INTERESTS IN ACPLP.
In general, the Code provides that payments under an installment sales
contract (whether or not such contract is a debt instrument) that does not
provide for adequate stated interest will be recharacterized, in part, as
interest. In the case of an installment sales contract which provides for one or
more contingent
7
payments (such as the CCPRs), the current Treasury regulations provide that each
contingent payment under such contract must be bifurcated with a portion of such
payment required to be treated as "principal" and the remaining portion required
to be treated as "interest". The "principal" portion of each contingent payment
is determined, in general, by discounting the payment at the "test rate" of
interest (generally, the applicable federal rate) from the date that the payment
is made to the date that the installment sales contract was issued or entered
into, with the remaining portion of such payment constituting interest. Any
interest (or amount treated as interest) is taken into account by a taxpayer
when the right to the contingent payment becomes fixed or, if the installment
sales contract is not a debt instrument, in accordance with the taxpayer's
regular method of accounting.
Upon a holder's sale of an installment sale contract, the holder of such
contract must allocate the amount received from such sale first to the
noncontingent component of such contract (and, in the case of a CCPR, there is
no remaining noncontingent component), and then to the contingent component of
such contract. The amount allocated to the contingent component is treated as a
contingent payment that is made on the date of the sale and is characterized as
unstated interest and principal under the rules described above.
The Treasury regulations on contingent payment installment sale contracts
apply to sales and exchanges that occur on or after August 13, 1996.
In accordance with the foregoing, a Holder that sells a CCPR pursuant to
this Offer will, in general, recognize gain or loss equal to the difference
between the (i) Holder's "amount realized" from such sale, and (ii) the Holder's
adjusted tax basis in the sold CCPR. In general, a Holder's "amount realized"
from the sale of a CCPR pursuant to this Offer is equal to the portion of the
Purchase Price received by the Holder for such CCPR that is treated as
"principal" under the rules described above. Thus, the "principal" portion of
the Purchase Price will equal the present value of the Purchase Price,
determined by discounting the Purchase Price by the appropriate "applicable
federal rate" from the date of the sale of the CCPR to the date of the Amgen
Purchase (i.e., March 12, 1993). The remaining portion of the Purchase Price
will be taxable as ordinary interest income (currently subject to a maximum
39.6% income tax rate for non-corporate taxpayers and a maximum 35% income tax
rate for corporate taxpayers).
Although the above-described Treasury regulations on contingent payment
installment sales contracts apply to sales or exchanges that occur on or after
August 13, 1996 -- which is after the date that the CCPRs were issued by Amgen
in exchange for the Class A Interests in ACPLP (i.e., March 12, 1993), a Holder
should nonetheless be able to rely on these regulations for purposes of
determining the "principal" and "interest" portions of the Purchase Price. The
preamble to the applicable Treasury regulations provides that for a contingent
payment debt instrument issued before August 13, 1996, a taxpayer may use any
reasonable method to account for such instrument, including a method that would
have been required under proposed Treasury regulations when the debt instrument
was issued. Accordingly, a Holder may account for a CCPR, and the sale of the
CCPR pursuant to this Offer, using any reasonable method. However, in the event
that a Holder has been using a particular method (not described in the
above-described Treasury regulations) to account for a CCPR and the payments
previously received by the Holder from Amgen in respect of such CCPR, then such
Holder may be required to continue to use such method in accounting for the
Purchase Price received from the sale of such CCPR pursuant to this Offer.
To the extent that, at the time of the Amgen Purchase, a Holder had held
its Class A Interest in ACPLP as a capital asset and for more than the long-term
capital gain holding period, the difference between the "principal" portion of
the Purchase Price that a Holder receives for a CCPR pursuant to this Offer over
the Holder's adjusted tax basis in such CCPR generally will constitute long-term
capital gain. However, long-term capital gain treatment may not be available
under Section 751 of the Code with respect to the portion (if any) of the
"principal" amount that is attributable to certain inventory items and
"unrealized receivables" of ACPLP that the Holder has not previously recognized.
A non-corporate Holder, such as an individual, trust or estate, is
currently subject to a maximum 20% tax rate on any capital gain recognized by
such a Holder on the sale of a CCPR pursuant to this Offer (assuming that the
Holder had held its Class A Interest in ACPLP as a capital asset and for more
than 12
8
months). A non-corporate Holder may deduct any capital loss recognized on such
sale only to the extent of such Holder's capital gains plus up to $3,000 of
ordinary income. Any capital loss that a non-corporate Holder is unable to use
in the current tax year generally can be carried forward to such Holder's
succeeding tax years indefinitely, but cannot be carried back to such a Holder's
prior taxable years.
A corporate Holder is subject to a maximum 35% tax rate on any capital
gain or interest income recognized by such a Holder on the sale of a CCPR
pursuant to this Offer. A corporate Holder may only offset a capital loss
recognized on such sale against the capital gains of such Holder. Any capital
loss that a corporate Holder is unable to use in the current tax year may be
carried back three taxable years and carried forward five taxable years of such
Holder.
B. United States federal income tax consequences to those Holders, other
than original Holders, who sell CCPRs pursuant to this Offer
THE DISCUSSION BELOW IN THIS SECTION B ADDRESSES THOSE HOLDERS SELLING
CCPRs PURSUANT TO THIS OFFER WHO WERE NOT ORIGINAL HOLDERS OF THE CCPRs
("SECONDARY HOLDERS") - E.G, HOLDERS WHO PURCHASED THEIR CCPRs FROM PREVIOUS
HOLDERS, AND WHO DID NOT RECEIVE ITS CCPRs FROM AMGEN.
1. Treatment of Purchase Price as part principal, part interest
in the manner described in A. above (except with respect to
interest attributable to the period prior to a Secondary
Holder's purchase of CCPR)
The likely United States federal income tax treatment of a Secondary
Holder's receipt of the Purchase Price upon its sale of a CCPR pursuant to this
Offer should generally be the same as described above with respect to original
Holders. Accordingly, a Secondary Holder would recognize capital gain or loss on
the sale of a CCPR pursuant to this Offer equal to the difference between the
(i) Secondary Holder's "amount realized" from such sale, and (ii) Secondary
Holder's adjusted basis in the CCPR sold. This discussion assumes that the CCPR
constitutes a capital asset in the hands of the Secondary Holder. As discussed
below, excepted from this treatment would be the portion of the "interest"
component of the Purchase Price that is attributable to the period prior to a
Secondary Holder's acquisition of such CCPR ("Previously Accrued Interest").
The Secondary Holder's "amount realized" from such sale would equal the
"principal" portion of the Purchase Price. The "principal" portion of the
Purchase Price would equal the present value of the Purchase Price determined by
discounting the Purchase Price at the appropriate "applicable federal rate" from
the date of such sale to the date of original issuance of the CCPR (i.e., March
12, 1993). The remaining portion of the Purchase Price would constitute
"interest". Although not entirely free from doubt, a Secondary Holder should be
able to treat the portion of such interest which constitutes Previously Accrued
Interest, as well as the portion of each payment that the Secondary Holder
previously received from Amgen in respect of the CCPR and which constitutes
Previously Accrued Interest (i) first, as a return of the Secondary Holder's
adjusted basis in the Previously Accrued Interest, and (ii) once such basis is
fully recovered, as capital gain income, (and as long-term capital gain income
if the CCPR has been held by the Secondary Holder for more than 12 months). If,
after accounting for the Purchase Price, not all of the adjusted basis in the
Previously Accrued Interest has been fully recovered, then the Secondary Holder
should be able to deduct such remaining basis as a capital loss (and as a
long-term capital loss if the CCPR was held by the Secondary Holder for more
than 12 months).
A Secondary Holder's adjusted basis in a CCPR being sold pursuant to this
Offer would equal the Secondary Holder's initial basis in such CCPR reduced by
the aggregate of the "principal" portions of each of the payments received by
the Secondary Holder from Amgen in respect of the CCPR. In determining a
Secondary Holder's initial basis in a CCPR, the Secondary Holder would allocate
such initial basis between "principal" and Previously Accrued Interest, with the
"principal" amount being determined by discounting the Secondary Holder's
initial basis at the appropriate "applicable federal rate" from the date that
the Secondary Holder acquired the CCPR to the date of issuance of the CCPR
(i.e., March 12, 1993). The Secondary Holder would treat its remaining initial
basis as Previously Accrued Interest.
9
Finally, the portion of the Purchase Price received by a Secondary Holder
pursuant to this Offer which is recharacterized as interest and which is
allocable to the period during which the Secondary Holder has held the CCPR
would constitute ordinary interest income to the Secondary Holder.
2. Treatment of Purchase Price as amount paid for separate
property right previously purchased by Secondary Holder
It is possible that a Secondary Holder's sale of a CCPR pursuant to this
Offer could be treated as a sale of a separate property right (not constituting
a debt instrument or installment obligation for United States federal income tax
purposes), whereby no portion of the Purchase Price would be allocable to
interest. In such event, the Secondary Holder would recognize gain or loss equal
to the difference between (i) the Secondary Holder's amount realized from such
sale and (ii) the Secondary Holder's adjusted basis in the CCPR sold. For this
purpose, a Secondary Holder's adjusted basis in the CCPR would equal the
Secondary Holder's original purchase price for such CCPR reduced (but not below
zero) by the aggregate amount of payments previously received by the Secondary
Holder from Amgen in respect of such CCPR.
Any gain or loss recognized by the Secondary Holder would constitute a
capital gain or loss (again, assuming that the CCPR is held by the Secondary
Holder as a capital asset), and as a long-term capital gain or loss assuming
that such CCPR was held by the Secondary Holder for more than 12 months at the
time of the sale.
SECONDARY HOLDERS SHOULD BE ADVISED THAT AMGEN, AS THE ISSUER OF AND
OBLIGOR ON THE CCPRS, HAS TREATED AND REPORTED A PORTION OF EACH PAYMENT THAT IT
HAS MADE IN RESPECT OF THE CCPRS AS INTEREST. WE HAVE BEEN ADVISED THAT AMGEN
WILL CONTINUE THIS TREATMENT AND REPORTING. THE PURCHASER ALSO INTENDS TO TREAT
THE CCPRS THE SAME WAY AND WILL THUS TREAT AND REPORT A PORTION OF THE PURCHASE
PRICE PAID FOR EACH CCPR AS INTEREST. THUS, IF A SECONDARY HOLDER TAKES THE
POSITION DISCUSSED IN THIS SECTION B.2, THE SECONDARY HOLDER WOULD BE TAKING A
POSITION THAT IS INCONSISTENT WITH THE POSITION BEING TAKEN BY AMGEN AND THE
PURCHASER.
C. Withholding Taxes (including backup withholding)
The Purchaser shall, to the extent required under applicable law, withhold
the appropriate amount of United States federal income tax from the Purchase
Price paid to a Holder (including a Secondary Holder) that the Purchaser is
required to withhold, unless the Holder (including a Secondary Holder) that
would otherwise be subject to such withholding furnishes to the Purchaser the
appropriate certifications and/or documentation to establish such Holder's
(including Secondary Holder's) exemption from such withholding (e.g., under an
applicable treaty provision) and the Holder (including a Secondary Holder)
otherwise establishes its entitlement to such exemption to the satisfaction of
the Purchaser.
In addition, Holders (including Secondary Holders), other than
corporations and certain foreign individuals, who tender CCPRs may be subject to
31% backup withholding unless a Holder (including a Secondary Holder) provides a
taxpayer identification number ("TIN") and certifies that the TIN is correct or
properly certifies that such Holder (including a Secondary Holder) is awaiting a
TIN. A Holder (including a Secondary Holder) may avoid backup withholding by
properly completing and signing the Substitute Form W-9 included as part of the
Letter of Transmittal. IF A HOLDER (INCLUDING A SECONDARY HOLDER) WHO IS SUBJECT
TO BACKUP WITHHOLDING DOES NOT PROPERLY COMPLETE AND SIGN THE SUBSTITUTE FORM
W-9, THE PURCHASER WILL WITHHOLD 31% FROM PAYMENTS TO SUCH HOLDER (INCLUDING
SECONDARY HOLDER). SEE INSTRUCTION 4 TO THE LETTER OF TRANSMITTAL.
10
D. Possible Legislative Tax Changes
There have been a number of proposals made in Congress and by the Treasury
Department and other government agencies for changes in the United States
federal income tax laws. In addition, the Internal Revenue Service has proposed
and may still be considering changes in regulations and procedures. It is likely
that further proposals will be forthcoming or that previous proposals will be
revived in some form in the future. It is impossible to predict with any degree
of certainty what past proposals may be revived or what new proposals may be
forthcoming, the likelihood of adoption of any such proposals, the likely effect
of any such proposals upon the sale of CCPRs, or the effective date of any
legislation or regulatory changes which may derive from any such past or future
proposals. Holders are strongly urged to consider ongoing developments in this
uncertain area.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS
INCLUDED FOR GENERAL INFORMATION PURPOSES ONLY. HOLDERS (INCLUDING SECONDARY
HOLDERS) SHOULD CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE UNITED STATES
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF ACCEPTING THE OFFER.
6. PRICE RANGE OF THE CCPRs
There is no established trading market for the CCPRs. The chart set forth
below details certain transactions relating to the CCPRs and fractions thereof
that have occurred from time to time from September 17, 1996 to present:
- ------------------------------------------------------------------------------------------------------------
Date(s) of Offer Purchaser Amount of Units (Per Unit) Offer Price
Purchased
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
September 17, 1996 Pharmaceutical Partners III n/a $180,405 *
L.L.C.
- ------------------------------------------------------------------------------------------------------------
August 21, 1997 PharmaInvest L.L.C. 50.125 $240,000
- ------------------------------------------------------------------------------------------------------------
September 29, 1999 PharmaInvest L.L.C. 2.125 $220,000
- ------------------------------------------------------------------------------------------------------------
March 17, 2000 Meridian Venture Capital, LLC 2.277 $257,721 **
- ------------------------------------------------------------------------------------------------------------
June 2000 Meridian Venture Capital, LLC 0.500 $285,284 ***
- ------------------------------------------------------------------------------------------------------------
June 2, 2000 Meridian Venture Capital, LLC 0.621 $242,687 ****
- ------------------------------------------------------------------------------------------------------------
July through August, 2000 Meridian Venture Group, LLC 2.500 $285,284 ***
- ------------------------------------------------------------------------------------------------------------
* The offer price was $420 per fractional unit, which is equivalent to a
unit price of $180,405 per CCPR;
** The offer price was $600 per fractional unit, which is equivalent to a
unit price of $257,721 per CCPR;
*** Includes rights to the $20,433 per CCPR August 2000 distribution f/q/e
June 30, 2000 made by Amgen; and
**** The offer price was $565 per fractional unit, which is equivalent to a
unit price of $242,687 per CCPR. This offer price was reduced from the
prior offer price made in March 2000 by approximately the distribution
declared or made during the period between both offers.
Purchaser is not aware of any public market for the CCPRs. Holders are
advised that the sales prices received by sellers of CCPRs in the secondary
market transactions may not reflect the actual value of the CCPRs in light of
the limited trading in the market and that such prices are significantly
discounted from the values of the assets underlying the CCPRs. The Purchase
Price represents the price at which the Purchaser is willing to purchase CCPRs.
No independent person has been retained to evaluate or render any opinion with
respect to the fairness of the Purchase Price and no representation is made by
the Purchaser or any affiliate of the Purchaser as to such fairness. Purchaser
did not attempt to obtain current
11
independent valuations or appraisals of the CCPRs. Purchaser made its own
determination of the Purchase Price based on publicly available information.
Other measures of the value of the CCPRs may be relevant to Holders. HOLDERS ARE
URGED TO CONSIDER CAREFULLY ALL OF THE INFORMATION CONTAINED HEREIN AND CONSULT
WITH THEIR OWN ADVISORS, TAX, FINANCIAL OR OTHERWISE, IN EVALUATING THE TERMS OF
THE OFFER BEFORE DECIDING WHETHER TO TENDER CCPRs.
7. EFFECT OF THE OFFER ON EXCHANGE ACT REGISTRATION
The CCPRs are currently registered under the Exchange Act. Such
registration may be terminated upon application of Amgen to the Commission if
the CCPRs are neither listed on a national securities exchange nor held by 300
or more holders of record. Termination of the registration of the CCPRs under
the Exchange Act would substantially reduce the information required to be
furnished by Amgen to Holders and to the Commission and would make certain of
the provisions of the Exchange Act no longer applicable to the CCPRs. Purchaser
has no current plans to seek to cause Amgen to terminate such registration.
8. CERTAIN INFORMATION CONCERNING CONTRACTUAL CONTINGENT PAYMENT RIGHTS
Amgen Clinical Partners, L.P. ("ACPLP" or the "Partnership") was formed in
1987 to finance the clinical development of granulocyte colony stimulating
factor, or G-CSF, (trade name Neupogen(R)) and certain growth factors. Neupogen
was approved by the United States Food and Drug Administration ("FDA") in 1990
for use as an adjunct to chemotherapy. Neupogen stimulates the immune system by
causing the production of white blood cells in patients whose immune system has
been impaired by chemotherapy. Neupogen was commercially introduced in 1991 and
is marketed by Amgen in North America and Australia and by AMRO (an Amgen-F.
Hoffmann-La Roche Ltd joint venture) in the European Union. None of the other
growth factors under development by the Partnership was successfully developed.
In March 1993, Amgen exercised the Partnership Purchase Option (the "PPO")
and purchased all the outstanding limited partnership interests in ACPLP
pursuant to the Partnership Purchase Agreement (the "PPA") for a cash payment
(the "Advance Payment") of $25,000 and a contingent payment right (the "CCPR").
The CCPR entitles a Holder to receive cash payments based on the sales of
Neupogen in certain territories through 2005. The terms of such payments are set
forth in more detail in the PPA, which may be obtained upon request from the
Purchaser.
Since Neupogen's introduction in 1991, sales have grown rapidly to a level
of $1,257 million in 1999. The following table illustrates the sales of Neupogen
as reported in the corresponding Amgen Form 10-K. The chart also shows yearly
growth rates for Neupogen sales from 1992 to 1999.
Historical Neupogen Sales
- --------------------------------------------------------------------------------
Period Sales (millions) Growth Rate
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1991 $ 233 N/A
- --------------------------------------------------------------------------------
1992 544 133.5 %
- --------------------------------------------------------------------------------
1993 719 32.2 %
- --------------------------------------------------------------------------------
1994 829 15.3 %
- --------------------------------------------------------------------------------
1995 936 12.9 %
- --------------------------------------------------------------------------------
1996 1,016 8.6 %
- --------------------------------------------------------------------------------
1997 1,056 3.9 %
- --------------------------------------------------------------------------------
1998 1,117 5.8 %
- --------------------------------------------------------------------------------
1999 1,257* 12.5 %
- --------------------------------------------------------------------------------
* Sales were higher than usual due to Y2K inventory stocking.
12
The quarterly distributions are primarily based on Amgen's sales in the
U.S., on AMRO (AMRO is a joint venture between Amgen and F. Hoffman La-Roche
Ltd) sales in Europe, and sales in certain eastern European countries.
Historically, approximately 90% of these quarterly distributions resulted from
U.S. sales of which Holders receive 7% versus 2% of the non-U.S. sales.
The chart illustrates that the rate of growth in Neupogen sales has
increased in each of the last three years. However, in the recently published
Annual Report on March 7, 2000 on Form 10-K, Amgen stated that "Future Neupogen
sales increases are dependent primarily upon further penetration of existing
markets, the timing and nature of additional indications for which the product
may be approved and the effects of competitive products. Although not approved
or promoted for use in Amgen's domestic or foreign markets, except for
Australia, the Company believes that approximately 10% of its worldwide Neupogen
sales are from off-label use as a supportive therapy in various AIDS-related
treatments. Changes in AIDS therapies, including therapies that may be less
myelosuppressive, are believed to have adversely affected and are expected to
continue to adversely affect such sales. Neupogen usage is expected to continue
to be affected by cost containment pressures on health care providers worldwide.
In addition, international Neupogen sales will continue to be subject to changes
in foreign currency exchange rates and government budgets." In Amgen's July 26,
2000 earnings press release, Amgen stated that " ... [Amgen] now expects
Neupogen sales for the year [2000] to be approximately the same as last year."
AVAILABLE INFORMATION. ACPLP was acquired by Amgen in March 1993 and is no
longer subject to the informational filing requirements of the Exchange Act.
Amgen is subject to the information filing requirements of the Exchange Act. In
accordance with the requirements of the Exchange Act, Amgen files periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Such reports, proxy
statements and other information may be inspected at the Commission's office at
450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for
inspection and copying at the regional offices of the Commission located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; 7 World Trade Center, 13th Floor, New York, New York 10048
and 90 Devonshire Street, Suite 700, Boston, Massachusetts 02109. Copies may be
obtained upon payment of the Commission's prescribed fees by writing to its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Such
material can also be obtained at the office of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006-1506. In
addition, the Commission maintains a Web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER
Purchaser, a Delaware limited liability company, was formed in December of
1999 to identify, acquire and hold contingent payment rights of pharmaceutical
companies. The business address and telephone number of Purchaser is Meridian
Venture Group, LLC, 767 Fifth Avenue, 4th Floor, New York, New York 10153, (212)
688-2015. Meridian Venture Capital, LLC, a Delaware limited liability company
("MVC"), was formed to acquire a membership interest in Purchaser and to
contribute any contingent payment obligations which it may acquire from
pharmaceutical companies or individuals to Purchaser. The business address and
telephone number of MVC is Meridian Venture Capital, LLC, 767 Fifth Avenue, 4th
Floor, New York, New York 10153, (212) 688-2015. Meridian Venture Capital, LLC
delegated its rights, powers and duties as manager concerning the making of a
tender offer and the purchase, sale, holding, and exercise of all rights with
respect to CCPRs on behalf of Purchaser to Meridian Venture Group Management
Ltd., a New York corporation ("MVGM"). The business address and telephone number
of MVGM is Meridian Venture Group Management Ltd., 767 Fifth Avenue, 4th Floor,
New York, New York 10153, (212) 688-2015. Schedule 1 hereto identifies the name,
present principal occupation or employment and material occupation, positions,
offices or employment for the officers and directors of MVGM.
During the last five years, neither Purchaser, MVC, MVGM, or to the best
knowledge of Purchaser, any individual listed on Schedule I hereto have (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to any judicial or administrative proceeding
that resulted in a judgment, decree or final order enjoining Purchaser, MVC or
MVGM from
13
future violations of, or prohibiting activities subject to, federal or state
securities laws, or finding any violation of federal or state security laws.
Except as described below, neither Purchaser, MVC, MVGM or, to the best
knowledge of the Purchaser, any individual listed on Schedule I hereto
beneficially owns or has a right to acquire any CCPRs and neither has effected
any transaction in the CCPRs during the past 60 days.
Purchaser and its affiliates have acquired a total of three CCPRs over the
past three months, with the most recent transaction being effected on August 8,
2000. Purchaser also owns fractional CCPRs that represent a right to receive a
portion of the quarterly distributions attributable to the CCPRs formerly held
by the former limited partners of Paine Webber R&D Partners, L.P., a limited
partnership that distributed these rights to its holders in 1994. On an
equivalent basis, the fractional CCPRs owned by Purchaser represent
approximately 2.9 CCPRs. The most recent purchase of the fractional CCPRs was
closed in August, 2000.
Except as described in this Offer to Purchase, (i) neither Purchaser, MVC,
MVGM or, to the best knowledge of the Purchaser, any individual listed on
Schedule I, has any contract, arrangement, understanding or relationship
(whether or not legally enforceable) with any other person with respect to any
CCPRs, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any CCPRs, joint
ventures, loan or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies and (ii) there
have been no contact, negotiations or transactions between Purchaser, MVC, MVGM
or, to the best knowledge of the Purchaser, any individual listed on Schedule I
on the one hand, and Amgen and/or any of its affiliates, on the other hand,
concerning: a merger, consolidation or acquisition, a tender offer or other
acquisition of securities, an election of directors, or a call or other transfer
of a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the maximum amount of funds required to
purchase CCPRs pursuant to the Offer and to pay related costs and expenses will
be approximately $26.6 million. The Purchaser presently anticipates that all
amounts required for the purchase of CCPRs and to pay related costs and expenses
will be funded from (i) existing cash balances of the Purchaser and its
affiliates; (ii) a Loan Agreement with a third-party lender; and (iii) equity
commitments from its members.
Purchaser is the borrower under a Loan Agreement dated as of June 21, 2000
(the "Loan Agreement") with a third party lender (the "Lender"), entered into in
the ordinary course of Lender's business, which provides that Purchaser may
borrow up to $30,000,000. The interest rate of the loans under the Loan
Agreement is at the rate, which may vary over time, as from time to time
specified in the Loan Agreement. At any time the relevant interest rate is
determined by the applicable reserve adjusted eurodollar rate plus a margin.
This margin increases (increasing the cost to the purchaser of the loans) if the
S&P or Moody's rating of the issuer of the surety bond referred to below is
lowered, and this margin decreases (decreasing the cost to the purchaser of the
loans) if the S&P or Moody's rating of such issuer is raised. The loans mature
on June 30, 2005 and are secured by all property of Purchaser, including the
CCPRs of the subject company, pursuant to a Security and Intercreditor Agreement
dated as of June 21, 2000 among Purchaser, the Lender and the other parties
thereto. A surety bond has been issued by an insurer in favor of the Lender, and
Purchaser has entered into an Insurance and Indemnity Agreement dated as of June
21, 2000 with the insurer. The Loan Agreement contains provisions that (i)
prohibit future indebtedness or other liens on Purchaser's property and (ii)
contain restrictions on dividends and distributions of Purchaser. Purchaser
plans to repay the loans with (a) payments received with respect to any CCPRs of
the subject company and (b) any payments received pursuant to any other payments
rights owned or acquired from any other obligor. Obtaining financing is not a
condition to the Offer.
14
11. BACKGROUND OF THE OFFER
Purchaser was formed in December of 1999 to identify, acquire and hold
contingent payment rights of pharmaceutical companies. MVC was formed to acquire
a membership interest in Purchaser and to contribute any contingent payment
obligations which it may acquire from pharmaceutical companies to Purchaser. MVC
and Purchaser have from time to time acquired CCPRs from Holders, principally
through inquiries made by or through investment executives. See Section 6--
"Price Range of the CCPRs."
On July 24, 2000, Purchaser indicated to Amgen that it was interested in
making an offer to purchase CCPRs and made an informal request of Amgen for the
list of holders of CCPRs. By reply letter dated July 24, 2000, Amgen declined
the informal request to provide the security holder list, but indicated it was
aware of and would comply with its obligations under the tender offer rules and
regulations of the Exchange Act. In accordance with such rules and regulations,
Amgen is required to file its response on Schedule 14D-9 with the Securities and
Exchange Commission within ten business days after the date of the Offer.
12. PURPOSE OF THE OFFER
The purpose of the Offer is to enable the Purchaser to acquire CCPRs for
investment purposes. The Purchaser is acquiring the CCPRs solely for investment
purposes. Purchaser believes that the ownership of CCPRs (either by the
Purchaser or Holders who retain their CCPRs) remains a speculative investment.
Following the completion of the Offer, the Purchaser and its affiliates may
acquire additional CCPRs. Any such acquisition may be made through private
purchases, through one or more future tender offers or by any other means deemed
advisable, and may be at prices higher or lower than the price to be paid for
the CCPRs purchased in the Offer. No appraisal rights are available to Holders
in connection with the Offer.
13. DISTRIBUTIONS TO HOLDERS
Recent historical distributions per each CCPRs are illustrated in the
table below.
Quarterly Cash Distributions per CCPR
- --------------------------------------------------------------------------------
Sales Period Payment Date Cash Payment (1) per CCPR
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Q1 1995 May 1995 $ 12,775.13
- --------------------------------------------------------------------------------
Q2 1995 August 1995 15,010.56
- --------------------------------------------------------------------------------
Q3 1995 November 1995 13,967.29
- --------------------------------------------------------------------------------
Q4 1995 February 1996 15,046.66
- --------------------------------------------------------------------------------
(Total 1995) $56,799.64
- --------------------------------------------------------------------------------
Q1 1996 May 1996 13,925.90
- --------------------------------------------------------------------------------
Q2 1996 August 1996 15,859.47
- --------------------------------------------------------------------------------
Q3 1996 November 1996 15,963.66
- --------------------------------------------------------------------------------
Q4 1996 February 1997 17,033.09
- --------------------------------------------------------------------------------
(Total 1996) $62,782.12
- --------------------------------------------------------------------------------
Q1 1997 May 1997 15,238.88
- --------------------------------------------------------------------------------
Q2 1997 August 1997 12,719.66
- --------------------------------------------------------------------------------
Q3 1997 November 1997 12,795.05
- --------------------------------------------------------------------------------
Q4 1997 February 1998 12,907.87
- --------------------------------------------------------------------------------
(Total 1997) $53,661.46
- --------------------------------------------------------------------------------
Q1 1998 May 1998 12,355.10
- --------------------------------------------------------------------------------
Q2 1998 August 1998 13,018.67
- --------------------------------------------------------------------------------
Q3 1998 November 1998 14,753.40
- --------------------------------------------------------------------------------
15
- --------------------------------------------------------------------------------
Q4 1998 February 1999 19,194.31
- --------------------------------------------------------------------------------
(Total 1998) $59,321.48
- --------------------------------------------------------------------------------
Q1 1999 May 1999 17,791.55
- --------------------------------------------------------------------------------
Q2 1999 August 1999 19,316.79
- --------------------------------------------------------------------------------
Q3 1999 November 1999 20,048.86
- --------------------------------------------------------------------------------
Q4 1999 February 2000 23,620.71 (2)
- --------------------------------------------------------------------------------
(Total 1999) $80,077.91
- --------------------------------------------------------------------------------
Q1 2000 May 2000 14,716.28
- --------------------------------------------------------------------------------
Q2 2000 August 2000 20,433.06
- --------------------------------------------------------------------------------
(year to date 2000) $35,149.34
- --------------------------------------------------------------------------------
(1) Quarterly distributions historically had been reduced by $439 per CCPR to
repay a milestone payment made by F. Hoffman-La Roche Ltd in 1990. This
reduction ceased with the distribution relating to Neupogen sales for the
quarter ending December 31, 1999.
(2) The payment for Q4 1999 paid in February 2000 was higher than usual due to
Y2K inventory stocking. Without the Y2K effect, we estimate that the
approximate distribution per CCPR would have been $21,325.00.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered CCPRs promptly
after expiration or termination of the Offer), to pay for any CCPRs tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any CCPRs tendered, and may amend or terminate
the Offer (whether or not any CCPRs have theretofore been purchased or paid for)
if, (i) Purchaser is not satisfied, in its sole discretion, that, (a) upon
purchase of the CCPRs pursuant to the Offer, Purchaser and its nominee will have
full rights to ownership as to all such CCPRs, and that Purchaser, or its
nominee will become the registered holder of the purchased CCPRs; and (b) Amgen
has consented to the transfer of the CCPRs to Purchaser and to the direct
payment all payments related to the CCPRs into a collection account controlled
by a collateral agent to which Purchaser has pledged a security interest in the
CCPRs on behalf of the Lender, (ii) all material regulatory and related
approvals have not been obtained or made on terms reasonably satisfactory to
Purchaser, or (iii) at any time before acceptance for payment of, or payment
for, such CCPRs any of the following events shall occur or shall be deemed by
Purchaser to have occurred:
(A) there shall have been threatened, instituted or pending any action,
proceeding, application or counterclaim by or before any court or governmental,
regulatory or administrative agency, authority or tribunal, domestic, foreign or
supranational (other than actions, proceedings, applications or counterclaims
filed or initiated by Purchaser), which (i) seeks to challenge the acquisition
by Purchaser of the CCPRs, restrain, prohibit or delay the making or
consummation of the Offer, or obtain any damages in connection with any of the
foregoing, (ii) seeks to make the purchase of or payment for, some or all of the
CCPRs pursuant to the Offer or otherwise, illegal, (iii) seeks to impose
limitations on the ability of Purchaser effectively to acquire or hold, or
requiring Purchaser to dispose of or hold separate, any portion of the assets or
the business of Purchaser or impose limitations on the ability of Purchaser to
continue to conduct, own or operate all or any portion of their businesses and
assets as heretofore conducted, owned or operated, (iv) seeks to impose or may
result in material limitations on the ability of Purchaser or any of its
affiliates to exercise full rights of ownership of the CCPRs purchased by it,
(v) is reasonably likely to result in a material diminution in the benefits
expected to be derived by Purchaser as a result of the transactions contemplated
by the Offer or (vi) seeks to impose voting, procedural, price or other
requirements in addition to those under Delaware law and federal securities laws
(each as in effect on the date of the Offer to Purchase) or any material
condition to the Offer that is unacceptable (in its reasonable judgment) on
Purchaser;
16
(B) there shall have been proposed, sought, promulgated, enacted, entered,
enforced or deemed applicable to the Offer by any domestic, foreign or
supranational government or any governmental, administrative or regulatory
authority or agency or by any court or tribunal, domestic, foreign or
supranational, any statute, rule, regulation, judgment, decree, order or
injunction that might, directly or indirectly, result in any of the consequences
referred to in clauses (i) through (vi) of paragraph (A) above;
(C) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market in the United States, (ii) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or Cayman Islands, (iii) any material adverse change (or any
existing or threatened condition, event or development involving a prospective
material adverse change) in United States or any other currency exchange rates
or a suspension of, or a limitation on, the markets therefor, (iv) the
commencement of a war, armed hostilities or other international or national
calamity, directly or indirectly involving the United States, (v) any
limitations (whether or not mandatory) imposed by any governmental authority on,
or any event which might have material adverse significance with respect to, the
nature or extension of credit or further extension of credit by banks or other
lending institutions, (vi) any significant adverse change in securities or
financial markets in the United States or abroad or (vii) in the case of any of
the foregoing, a material acceleration or worsening thereof;
(D) any change (or any development involving a prospective change) shall
have occurred or be threatened in the business, financial condition, results of
operations, or prospects of Amgen's Neupogen franchise which, in the sole
judgment of the Purchaser, is, or may be, materially adverse to the Holders, or
the Purchaser shall become aware of any fact (including without limitation any
such change or development) which, in the sole judgment of the Purchaser, has,
or may have, materially adverse significance with respect to the Holders; or
(E) a tender offer or exchange offer for some portion or all of the CCPRs
shall have been commenced or publicly proposed to be made by any other person or
entity, or it shall have been publicly disclosed or the Purchaser shall have
learned or the Purchaser shall have cause to believe that any other person or
entity shall have entered into a definitive agreement or an agreement in
principle or made a proposal with respect to a tender offer or exchange offer
for some portion or all of the CCPRs, or Amgen shall have authorized,
recommended, or proposed, or shall have announced an intention to authorize,
recommend, or propose, any other material change in its arrangement with the
Holders.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances (other than any action or
inaction by Purchaser) giving rise to any such condition or may be waived by
Purchaser, in whole or in part, from time to time in its sole discretion. The
failure by Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right and may be asserted at any time and from time to time. Any
reasonable determination by Purchaser concerning any of the events described
herein shall be final and binding.
15. CERTAIN LEGAL MATTERS
The Purchaser is not aware of any license or other regulatory permit which
appears to be material to Amgen's business and that might be adversely affected
by the Purchaser's acquisition of CCPRs pursuant to the Offer, any approval or
other action by any domestic or foreign governmental or administrative agency
that would be required prior to the acquisition of CCPRs by the Purchaser
pursuant to the Offer, or any state takeover statute that is applicable to the
Offer. Should any such approval or other action be required, or any such state
takeover statute be applicable, the Purchaser will evaluate at such time whether
such approval or action will be sought or compliance with such takeover statute
will be effected. There can be no assurance that any such approval, action, or
compliance, if needed, would be obtained or effected or, if obtained or
effected, would be obtained or effected without substantial conditions or
adverse consequences. The Purchaser's obligation to purchase and pay for the
tendering CCPRs is subject to certain conditions, including conditions relating
to the legal matters discussed herein. See Section 14 "Certain Conditions to the
Offer."
17
APPRAISAL RIGHTS. Holders will not have appraisal rights as a result of
the Offer.
MARGIN REQUIREMENTS. The CCPRs are not "margin securities" under the
regulations of the Board of Governors and the Federal Reserve System and,
accordingly, those regulations generally are not applicable to the Offer.
ANTITRUST. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated until certain information and
documentary material has been furnished for review by the Antitrust Division of
the Department of Justice (the "Antitrust Division") and the FTC and certain
waiting period requirements have been satisfied. The Purchaser does not
currently believe any filing is required under the HSR Act with respect to its
acquisition of CCPRs contemplated by the Offer.
In addition, the Antitrust Division and the FTC frequently scrutinize the
legality under the antitrust laws of acquisitions, mergers, and other commercial
transactions. At any time before or after the Purchaser's purchase of CCPRs, the
Antitrust Division of the FTC could take such action under the antitrust laws as
it either deems necessary or desirable in the public interest regarding such
purchase, including seeking to enjoin the purchase of CCPRs pursuant to the
Offer, the divestiture of CCPRs purchased by the Purchaser or the divestiture of
substantial assets of the Purchaser, the funds and their respective affiliates
or Amgen. Private parties as well as state attorneys general may also bring
legal actions under the antitrust laws under certain circumstances. There can be
no assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such challenge is made, what the result will be.
16. FEES AND EXPENSES
Purchaser has retained MMS Escrow and Transfer Agency ("MMS") to act as
the Information Agent and Depositary in connection with the Offer. MMS will
receive reasonable and customary compensation for its services, will be
reimbursed for certain reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities under the federal securities laws.
Except as set forth above, Purchaser will not pay any fees or commissions
to any broker or dealer or other person for soliciting tenders of CCPRs pursuant
to the Offer. Brokers, dealers, commercial banks and trust companies will be
reimbursed by Purchaser for customary mailing and handling expenses incurred by
them in forwarding the offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) Holders residing in any jurisdiction in which the making of the Offer
or the acceptance thereof would not be in compliance with the securities, blue
sky or other laws of the jurisdiction. However, Purchaser may, in its
discretion, take such action as it may deem necessary to make the Offer in any
jurisdiction and extend the Offer to Holders in that jurisdiction. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer will be deemed to be made on
behalf of Purchaser by one or more registered brokers or dealers that are
licensed under the laws of the jurisdiction.
Purchaser has filed with the Commission the Schedule TO pursuant to Rule
14d-1 under the Exchange Act (the "Schedule") containing certain additional
information with respect to the Offer. The Schedule and any amendments to the
Schedule, including exhibits, may be examined and copies may be obtained from
the principal office of the Commission in the manner set forth in Section 8
above (except that they will not be available at the regional offices of the
Commission).
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO
18
PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, THE INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
September 11, 2000
MERIDIAN VENTURE GROUP, LLC
19
Attached hereto is the Letter of Transmittal. Facsimile copies of the
Letter of Transmittal, properly completed and duly signed, will be accepted. The
Letter of Transmittal and any other required documents should be sent or
delivered by each Holder or his or her broker, dealer, commercial bank, trust
company or other nominee to the Depositary or the Purchaser, at one of the
addresses set forth below:
THE DEPOSITARY AND INFORMATION AGENT FOR THE OFFER IS:
MMS ESCROW and TRANSFER AGENCY
BY TELEPHONE: (877) 346-8317
BY MAIL: MMS Escrow and Transfer Agency
PO Box 7090
Troy, Michigan 48007-7090
Attention: Matthew Fisher
BY FACSIMILE: (248) 614-4536
THE PURCHASER IS:
MERIDIAN VENTURE GROUP, LLC
BY TELEPHONE: (212) 688-2015
BY MAIL: Meridian Venture Group, LLC
767 Fifth Avenue, 4th Floor
New York, New York 10153
Attention: David B. Schmickel
BY FACSIMILE: (212) 838-7280
Questions and requests for assistance may be directed to the Information
Agent or Purchaser. Additional copies of this Offer to Purchase, the Letter of
Transmittal and other tender offer materials may be obtained from the
Information Agent or Purchaser and will be furnished promptly at Purchaser's
expense. You may also contact your broker, dealer, commercial bank, trust
company or other nominee for assistance concerning the Offer.
20
SCHEDULE I
The sole member and Manager of Purchaser is MVC. Pursuant to a certain
Limited Liability Company Agreement made as of June 21, 2000 between Purchaser
and MVC, certain MVC managerial rights, powers and duties, including the making
of the Offer, were delegated to MVGM. The following sets forth the name, present
principal occupation or employment and material occupation, positions, offices
or employment for the past five years of each officer and director of MVGM. The
business address of each such person is 767 Fifth Avenue, 4th Floor, New York,
New York 10153.
STEPHEN W. ELLIS, 51 years old, is a Director of Meridian Venture Group
Management, Ltd. Mr. Ellis is a founder of U.S. Medical Network, L.L.C, a
private company, and has been its Chief Executive Officer since June 2000. Mr.
Ellis has served as a Director of Hotjobs.com Inc, since May 1999, and as
Hotjobs.com Inc.'s Chief Financial Officer from April 1999 to May 2000. From
March 1998 through December 1998, Mr. Ellis served as the Chief Financial
Officer for Biztravel.com, an Internet based travel services company. From March
1997 through February 1998, Mr. Ellis was the Chief Financial Officer for
Metromedia Fiber Network (Nasdaq: MFNX), a facilities-based fiber optic/telecom
services company. Mr. Ellis also served as an executive officer of Data
Broadcasting Corporation (Nasdaq: DBCC), a financial market data company, first
as Chief Financial Officer from 1992 to 1995, and then as Executive Vice
President, Finance, through March 1997. Mr. Ellis holds a bachelors degree from
the Massachusetts Institute of Technology and a MBA from the Stanford University
Graduate School of Business. Mr. Ellis is a Certified Public Accountant. He is
also on the board of directors of FSA Capital, Inc., a private company.
CONSTANCE HARRISON MEYER, 41 years old, is President of Meridian Venture Group
Management, Ltd., a position she has held since January 2000, and a Director.
Prior to joining Meridian Venture Group Management, Ltd., Ms. Harrison was
employed by Raebe, LLC from February 1998 to September 1999 and Pharmaceutical
Partners, LLC, from August 1996 to June 1997. Prior to that, Ms. Harrison served
as a consultant and director to certain private companies primarily in the
biotechnology and healthcare industries since 1990. Ms. Harrison received her
B.S. in political science from Barnard College in 1981.
GIL N. PERRY, 34 years old, is currently a Vice President of Meridian Venture
Group Management, Ltd., a position he has held since January 2000, and a
Director. Prior to joining Meridian Venture Group Management Ltd. (and
currently), Mr. Perry was the founder and sole principal of Perry Consulting.
Mr. Perry received a B.B.A in Finance from the University of Massachusetts in
1987.
DAVID B. SCHMICKEL, PhD., JD., 37 years old, is a Vice President of Meridian
Venture Group Management, Ltd., a position he has held since January 2000, and a
Director. Since June 1998 Dr. Schmickel has been an officer of Enhance
Pharmaceuticals, a private company, which provides legal, lobbying and
consulting services to individuals and companies. Since March 1999, Dr.
Schmickel has been an officer of Westmark Financial Services, a private company
and a provider of financial services to individuals and corporations. Prior to
joining Meridian Venture Group Management, Ltd., Dr. Schmickel was employed by
the Biotechnology Industry Organization (BIO) as patent and legal counsel from
October 1995 to July 1999. Dr. Schmickel also served from March 1998 to July
1999 as a Vice President of Tree Source, Inc., a private company. Dr. Schmickel
received his Ph.D. in Biochemistry from John Hopkins University in 1991, and his
JD from the University of Baltimore in 1996.
I-1
Exhibit (a)(1)(b)
ASSIGNMENT AND LETTER OF TRANSMITTAL
TO TENDER
CONTRACTUAL CONTINGENT PAYMENT RIGHTS
ARISING FROM THE PURCHASE OF CLASS A INTERESTS OF
AMGEN CLINICAL PARTNERS, L.P.
PURSUANT TO THE OFFER TO PURCHASE DATED SEPTEMBER 11, 2000
BY
MERIDIAN VENTURE GROUP, LLC
(PLEASE INDICATE CHANGES OR CORRECTIONS TO THE ADDRESS ABOVE, IF NECESSARY.)
------------------------------------------------------------
------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY
TIME, ON OCTOBER 20, 2000 (THE "EXPIRATION DATE") UNLESS SUCH OFFER IS EXTENDED.
Capitalized terms, unless otherwise defined herein, shall have the meaning
ascribed in the Offer to Purchase.
The undersigned holder ("Holder") hereby tenders and consents to the
transfer to Meridian Venture Group, LLC, a Delaware limited liability company
(the "Purchaser") or its transferee or assignee, the number of Contractual
Contingent Payment Rights arising from the Purchase of Class A interests of
Amgen Clinical Partners, L.P. ("CCPRs"), as set forth below, pursuant to the
Purchaser's Offer to Purchase up to 100 of the outstanding CCPRs at a purchase
price of $265,000 per CCPR, net to the seller in cash, (the "Purchase Price"),
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated September 11, 2000 (the "Offer to Purchase") and
this Assignment and Letter of Transmittal ("Assignment"), which, together with
the Offer to Purchase and any supplements, modifications or amendments thereto,
and hereto, constitute the Offer, all as more fully described in the Offer to
Purchase. The Purchase Price will be automatically reduced by the aggregate
amount of the value of any distributions made or declared by Amgen Inc. ("Amgen"
or the "Company") on or after September 11, 2000, and prior to the date on which
the Purchaser pays the Purchase Price for the tendered CCPRs.
Purchase Price Per CCPR: $265,000
Number of CCPRs Owned:______________________________________
Number of CCPRs including quarterly fractions
thereof tendered hereunder:_________________________________
Directions:
(1) The Number of CCPRs Owned Must Be Entered Into The Box Above.
(2) The Number of CCPRs being tendered must be entered in the box above. If a
Holder tenders full CCPRs, or fractions thereof, as to the fractional
portion of the tender, no less than a quarter CCPR may be tendered, and if
a Holder tenders less than all of their CCPRs, no less than a quarter CCPR
may be retained.
----------
By executing and delivering this Assignment, a tendering Holder
irrevocably appoints designees of Purchaser as his or her attorneys-in-fact with
full power of substitution, to the full extent of the Holder's rights with
respect to the CCPRs tendered by the Holder. Absent the withdrawal by the
tendering Holder in accordance with the terms of the Offer, the powers of
attorney will be considered coupled with an interest in the tendered CCPRs and
all prior powers of attorney given by the Holder with respect to the CCPRs will
be revoked, without further action, and no subsequent powers of attorney may be
given (and, if given, will not be deemed effective) by the Holder. Designees of
Purchaser will be empowered to exercise all rights of the Holder with respect to
such CCPRs as they in their sole discretion may deem proper.
Pursuant to such appointment as attorneys-in-fact, the Purchaser and its
designees each will have the power, among other things, (i) to seek to transfer
ownership of such CCPRs on the books and records of Amgen and execute and
deliver any accompanying evidences of transfer and authenticity any of them may
deem necessary or appropriate in connection therewith, (ii) the right to
transfer or assign, in whole or from time to time in part, to any third party,
the right to purchase CCPRs tendered pursuant to the Offer, together with its
rights under the Assignment, but any such transfer or assignment will not
relieve the assigned party of its obligations under the Offer or prejudice the
right of tendering Holders to receive payment for CCPRs validly tendered and
accepted for payment pursuant to the Offer, and (iii) to execute and deliver a
change of address form instructing future payments or distributions to which the
Purchaser is entitled pursuant to the terms of the Offer in respect of tendered
CCPRs to the address specified in such form and to endorse any check payable to
or upon the order of such Holder representing a payment or distribution, if any,
to which the Purchaser is entitled pursuant to the terms of the Offer, in each
case on behalf of the tendering Holder. This power of attorney shall not be
affected by the subsequent mental disability of the Holder, and the Purchaser
shall not be required to post bond in any nature in connection with this power
of attorney. The Purchaser may assign such power of attorney to any person with
or without assigning the related CCPRs with respect to which such power of
attorney was granted. If legal title to the CCPRs is held through an IRA or
KEOGH or similar account, the Holder understands that this Assignment must be
signed by the custodian of such IRA or KEOGH account and the Holder hereby
authorizes and directs the custodian of such IRA or KEOGH to confirm this
Assignment.
By executing and delivering this Assignment, the Holder represents that
either (a) the Holder is not a plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"), or an entity deemed
to hold "plan assets" within the meaning of 29 C.F.R. Section 2510.3-101 of any
such plan; or (b) the tender and acceptance of CCPRs pursuant to the Offer will
not result in a non-exempt prohibited transaction under Section 406 of ERISA or
Section 4975 of the Code.
By executing and delivering this Assignment, the Holder represents that
this transfer has not been effected through an established securities market or
through a broker-dealer or matching agent which makes a market in CCPRs or which
provides a widely available, regular and on-going opportunity to the Holder of
CCPRs to sell or exchange their CCPRs through a public means of obtaining or
providing information of offers to buy, sell or exchange CCPRs.
The Holder recognizes that if proration is required pursuant to the terms
of the Offer, the Purchaser will accept for payment from among those CCPRs
validly tendered and not properly withdrawn on or prior to the Expiration Date
up to 100 CCPRs on a pro rata basis with adjustments to avoid purchases which
would violate the terms of the Offer, based upon the number of CCPRs validly
tendered and not properly withdrawn prior to the Expiration Date.
The Holder understands that a tender of CCPRs to the Purchaser will
constitute a binding agreement between the Holder and the Purchaser upon the
terms and subject to the conditions of the Offer. The Holder recognizes that
under certain circumstances set forth in Section 2 ("Proration; Acceptance for
Payment and Payment") and Section 14 ("Certain Conditions of the Offer") of the
Offer to Purchase, the Purchaser may not be required to accept for payment any
of the CCPRs tendered hereby. In such event, the Holder understands that any
Assignment for CCPRs not accepted for payment will be destroyed by the
Purchaser. Except as stated in Section 4 ("Withdrawal Rights") of the Offer to
Purchase, this tender is irrevocable, provided CCPRs tendered pursuant to the
Offer may be withdrawn at any time prior to the Expiration Date. The Holder
acknowledges that upon acceptance of, and payment for, tendered CCPRs, the
Holder shall no longer be entitled to any benefits as a Holder.
The Holder understands that pursuant to Section 14 of the Offer to
Purchase that notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered CCPRs promptly
after expiration or termination of the Offer), to pay for any CCPRs tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any CCPRs tendered, and may amend or
2
terminate the Offer (whether or not any CCPRs have theretofore been purchased or
paid for) if, certain conditions, including but not limited to the following,
occur: (i) Purchaser is not satisfied, in its sole discretion, that, (a) upon
purchase of the CCPRs pursuant to the Offer, Purchaser and its nominee will have
full rights to ownership as to all such CCPRs, and that Purchaser, or its
nominee will become the registered holder of the purchased CCPRs; and (b) Amgen
has consented to the transfer of the CCPRs to Purchaser and to the direct
payment into a collection account controlled by a collateral agent to which
Purchaser has pledged a security interest in the CCPRs on behalf of the lender
that is providing Purchaser with financing to effectuate the purchase of the
CCPRs, or (ii) all material regulatory and related approvals have not been
obtained or made on terms reasonably satisfactory to Purchaser.
By executing and delivering this Assignment, a tendering Holder confirms
that in deciding to tender the CCPRs, the Holder has not relied upon any
representation (whether oral or written) from the Purchaser, its management or
its representatives or agents. With respect to federal tax and other economic
considerations involved in the decision to tender the CCPRs, the Holder is not
relying on the Purchaser, its management or its representatives or agents. The
Holder has carefully considered and has, to the extent the Holder believes such
discussion necessary, discussed with the Holder's professional legal, tax,
accounting and financial advisors the consequences of the disposition of the
CCPRs for the Holder's particular tax and financial situation.
[balance of this page intentionally left blank]
3
--------------------------------------------
SIGNATURE BOX - PUBLIC NOTARY
--------------------------------------------
Please sign exactly as your name is printed on the front of this
Assignment. For joint Holders, each joint Holder must sign. (See Instruction 2.)
The signatory hereto hereby certifies under penalties of perjury that the
address as printed or corrected on the front of this Assignment and the Taxpayer
Identification Number (i.e., the social security number) furnished in the blank
provided in this Signature Box is correct. The Holder hereby represents and
warrants for the benefit of the Purchaser that the Holder owns the CCPRs
tendered hereby and has full power and authority to validly tender, sell,
assign, transfer, convey and deliver the CCPRs tendered hereby and that when the
same are accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto, free and clear of all liens,
restrictions, charges, encumbrances, conditional sales agreements or other
obligations relating to the sale or transfer thereof, and such CCPRs will not be
subject to any adverse claims, and that the transfer and the assignment
contemplated herein is in compliance with all applicable laws, regulations, and
with the terms of this Agreement. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of the Holder and any
obligations of the Holder shall be binding upon the heirs, personal
representatives, successors and assigns of the Holder.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
X
_____________________________________________________________
(Signature of Holder) (Date)
X
_____________________________________________________________
Taxpayer Identification Number or Social Security Number
(See Instruction 4)
X
_____________________________________________________________
(Signature of Co-Holder) (Date)
X
_____________________________________________________________
(Title)
Telephone (Day) ( ) _______________ Telephone (Eve) ( ) ___________________
Notary Public Stamp: ________________________________________
Authorized Signature: _______________________________________
--------------------------------------------
--------------------------------------------
4
TAX CERTIFICATIONS
SUBSTITUTE FORM W-9
(SEE INSTRUCTION 4)
The person signing this Assignment hereby certifies the following to the
Purchaser under penalties of perjury:
(i) The Taxpayer Identification Number ("TIN") furnished in the space
provided for that purpose in the Signature Box of this Assignment is the correct
TIN of the Holder; or if this box |_| is checked, the Holder has applied for a
TIN. If the Holder has applied for a TIN, a TIN has not been issued to the
Holder, and either: (a) the Holder has mailed or delivered an application to
receive a TIN to the appropriate Internal Revenue Service ("IRS") Center or
Social Security Administration Office, or (b) the Holder intends to mail or
deliver an application in the near future, it is hereby understood that if the
Holder does not provide a TIN to the Purchaser within sixty (60) days, 31% of
all reportable payments made to the Holder thereafter will be withheld until a
TIN is provided to the Purchaser; and
(ii) Unless this box |_| is checked, the Holder is not subject to backup
withholding either because the Holder: (a) is exempt from backup withholding,
(b) has not been notified by the IRS that the Holder is subject to backup
withholding as a result of a failure to report all interest or dividends, or (c)
has been notified by the IRS that such Holder is no longer subject to backup
withholding.
Note: Place an "X" in the box in (ii) above, ONLY if you are unable to certify
that the Holder is not subject to backup withholding.
PLEASE CAREFULLY READ THE FOLLOWING INSTRUCTIONS FOR THIS ASSIGNMENT. FOR
INFORMATION CALL THE INFORMATION AGENT, MMS ESCROW AND TRANSFER AGENCY, PO BOX
7090, TROY, MICHIGAN, 48007-7090, ATTENTION: MATTHEW FISHER, AT (877) 346-8317,
OR THE PURCHASER, MERIDIAN VENTURE GROUP, LLC, 767 FIFTH AVENUE, 4TH FLOOR, NEW
YORK, NEW YORK, 10153, ATTENTION: DAVID B. SCHMICKEL, (212) 688-2015.
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
--------------------------------------------
--------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
OCTOBER 20, 2000 (THE "EXPIRATION DATE") UNLESS SUCH OFFER IS EXTENDED.
1. DELIVERY OF ASSIGNMENT. For convenience in responding to the Offer, a
pre-addressed, postage-paid envelope has been enclosed with the Offer to
Purchase. HOWEVER, TO ENSURE RECEIPT OF THE ASSIGNMENT IT IS SUGGESTED THAT YOU
USE OVERNIGHT COURIER DELIVERY OR, IF THE ASSIGNMENT IS TO BE DELIVERED BY
UNITED STATES MAIL, THAT YOU USE CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED.
TENDER REQUIREMENTS. To be validly tendered, a duly completed and fully
executed Assignment, and any other required documents, must be RECEIVED by the
Depositary at the address set forth below before the Expiration Date, unless
extended. In order to be accepted for purchase, the applicable boxes on the
front of the Assignment should be completed.
NUMBER OF CCPRs TENDERED. The number of CCPRs owned MUST be entered into
the box marked "No. of CCPRs Owned." Enter the number being tendered in the box
marked "Number of CCPRs including quarterly fractions thereof tendered
hereunder."
BY MAIL, COURIER OR HAND DELIVERY. Forward your Completed Assignment and
Letter of Transmittal to the Depositary, MMS Escrow and Transfer Agency, PO Box
7090, Troy, Michigan 48007-7090, Attention: Matthew Fisher.
5
FOR ADDITIONAL INFORMATION CALL: (877) 346-8317
CCPRs IN BROKERAGE ACCOUNT. All CCPRs are registered in the name of the
purchasing Holder (or Custodian for the purchasing Holder, if a retirement
account). IN ORDER TO ACCEPT THE OFFER AND TENDER CCPRs, THE ASSIGNMENT SHOULD
BE COMPLETED ONLY BY THE HOLDER(S) LISTED ON THE FRONT OF THE ASSIGNMENT AND
RETURNED DIRECTLY TO THE DEPOSITARY AT THE ADDRESS LISTED ABOVE. Therefore, the
Assignment need not be submitted through a broker or brokerage firm.
THE METHOD OF DELIVERY OF THE ASSIGNMENT AND ALL OTHER REQUIRED DOCUMENTS
IS AT THE OPTION AND RISK OF THE TENDERING HOLDER AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
2. SIGNATURE REQUIREMENTS.
INDIVIDUAL AND JOINT OWNERS. After carefully reading and completing the
Assignment, in order to tender CCPRs, Holders must sign at the "X" in the
SIGNATURE BOX of the Assignment. The signature(s) must correspond exactly with
the name printed (or corrected) on the front of the Assignment, without any
change whatsoever. IF ANY CCPRs ARE REGISTERED IN THE NAMES OF TWO OR MORE JOINT
HOLDERS, ALL SUCH HOLDERS MUST SIGN THE ASSIGNMENT.
CUSTODIANS, TRUSTEES, CORPORATIONS AND FIDUCIARIES. Custodian(s) and/or
trustee(s) (if the CCPRs are held in an IRA, KEOGH, pension or similar account),
or executors, administrators, guardians, attorneys-in-fact, officers of a
corporation, authorized partner of a partnership or other persons acting in a
fiduciary or representative capacity must sign at the "X" in the SIGNATURE BOX
and must submit proper evidence satisfactory to the Purchaser of their authority
to so act. (See Instruction 3 herein).
PUBLIC NOTARY. ALL SIGNATURES ON THE LETTER OF TRANSMITTAL MUST BE
NOTARIZED BY A PUBLIC NOTARY.
3. DOCUMENTATION REQUIREMENTS. In addition to information required to be
completed on the Assignment, additional documentation as indicated below may be
required by the Purchaser under certain circumstances. Questions on
documentation should be directed to the Information Agent MMS Escrow and
Transfer Agency, PO Box 7090, Troy, Michigan 48007-7090, Attention: Matthew
Fisher, at (877) 346-8317.
DECEASED OWNER (JOINT TENANT) - Certified Copy of Death Certificate.
DECEASED OWNER (OTHERS) - Certified Copy of Death Certificate. (SEE ALSO
EXECUTOR/ADMINISTRATOR/GUARDIAN).
6
EXECUTOR/ADMINISTRATOR/GUARDIAN - Certified Copies of Court Appointment
Documents for Executor or Administrator dated
within 60 days; and (i) A copy of applicable
provisions of the Will (Title Page,
Executor(s) powers, asset distribution); OR
(ii) Certified copy of Estate distribution
documents.
ATTORNEY-IN-FACT - Current Power of Attorney.
CORPORATIONS/PARTNERSHIPS - Certified copy of Corporate Resolution(s),
(with raised corporate seal), or other
evidence of authority to act. Partnerships
should furnish copy of Partnership Agreement.
TRUST/PENSION PLANS - Copy of cover page of the Trust or Pension
Plan, along with copy of the section(s)
setting forth names and powers of Trustee(s)
and any amendments to such sections or
appointment of Successor Trustee(s).
4. TAX CERTIFICATIONS. Holders tendering CCPRs to the Purchaser pursuant to the
Offer must certify correctness of the address as printed or corrected on the
front of the Assignment and his, her or its Taxpayer Identification Number
("TIN") as inserted in the Signature Box.
SUBSTITUTE FORM W-9.
PART (i), TAXPAYER IDENTIFICATION NUMBER - The persons signing this Assignment
must provide to the Purchaser the Holder's correct TIN and certify its
correctness as inserted in the Signature Box, under penalties of perjury. If a
correct TIN is not provided, penalties may be imposed by the Internal Revenue
Service ("IRS"), in addition to the Holder's being subject to Backup
Withholding.
PART (ii), BACKUP WITHHOLDING - in order to avoid 31% federal income tax Backup
Withholding, the person signing this Assignment must certify, under penalties of
perjury, that such Holder is not subject to Backup Withholding. Certain Holders
(including, among others, all Corporations and certain exempt non-profit
organizations) are not subject to Backup Withholding. Backup Withholding is not
an additional tax. If withholding results in an overpayment of taxes, a refund
may be obtained from the IRS.
DO NOT CHECK THE BOX IN THE SUBSTITUTE FORM W-9 PART (ii), UNLESS YOU HAVE BEEN
NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING.
When Determining the TIN to Be Furnished, Please Refer to the Following NOTE as
a Guideline:
INDIVIDUAL ACCOUNTS should reflect their own TIN. JOINT ACCOUNTS should reflect
the TIN of the person whose name appears first.
TRUST ACCOUNTS should reflect the TIN assigned to the Trust. IRA CUSTODIAL
ACCOUNTS should reflect the TIN of the custodian (not necessary to obtain).
CUSTODIAL ACCOUNTS FOR THE BENEFIT OF MINORS should reflect the TIN of the
minor. CORPORATIONS OR OTHER BUSINESS ENTITIES should reflect the TIN assigned
to that entity.
7
5. VALIDITY OF ASSIGNMENT. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance of an Assignment will be determined
by the Purchaser and such determination will be final and binding. The
Assignment will not be valid until any irregularities have been cured by the
tendering Holder or waived by the Purchaser. Neither the Purchaser nor the
depositary is under any duty to give notification of defects in an Assignment
and neither will incur liability for failure to give such notification.
6. CONDITIONAL TENDERS. No alternative, conditional or contingent tenders
will be accepted.
7. ASSIGNEE STATUS. Assignees of Holders must provide documentation to the
Depositary which demonstrates, to the satisfaction of the Purchaser, such
person's status as an Assignee.
--------------------------------------------
--------------------------------------------
EACH HOLDER IS URGED TO READ CAREFULLY THE ENTIRE OFFER TO PURCHASE, THE
ASSIGNMENT AND RELATED DOCUMENTS BEFORE MAKING A DECISION TO TENDER.
--------------------------------------------
--------------------------------------------
8
Exhibit (b)
LOAN AGREEMENT
Dated as of June 21, 2000
Among
MERIDIAN VENTURE GROUP, LLC,
XXXXXXXX,
acting in its individual capacity,
AND
XXXXXXXX,
as Agent
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I THE COMMITMENT
1.01. Commitment......................................................1
1.02. Limits on Commitment to Lend....................................1
1.03. Borrowing Procedure.............................................2
1.04. Commitment Termination Date.....................................2
ARTICLE II THE NOTE; INTEREST
2.01. The Note........................................................2
2.02. Rate Tranches; Selection of Interest Periods....................3
ARTICLE III PREPAYMENTS; LOAN MATURITY
3.01. Mandatory Prepayments...........................................4
3.02. Voluntary Prepayment............................................4
3.03. Loan Maturity...................................................4
3.04. Application of Payments.........................................4
ARTICLE IV REPORTING COLLECTION PROCEDURES
4.01. Reporting by Manager............................................4
4.02. Collection Procedures...........................................4
ARTICLE V PAYMENT PROCEDURES; FEES AND YIELD PROTECTION
5.01. Payments and Computations.......................................5
5.02. Interest on Overdue Amounts.....................................5
5.03. Fees............................................................5
5.04. Yield Protection................................................5
5.05. Funding Losses..................................................7
5.06. Taxes...........................................................7
ARTICLE VI CONDITIONS PRECEDENT
6.01. Conditions Precedent to Initial Loan............................8
6.02. Conditions Precedent to All Loans..............................10
ARTICLE VII REPRESENTATIONS AND WARRANTIES
7.01. Representations and Warranties of the Borrower.................11
7.02. Representations and Warranties of the Manager..................15
ARTICLE VIII GENERAL COVENANTS OF BORROWER
8.01. Affirmative Covenants of the Borrower..........................15
8.02. Reporting Requirements of the Borrower.........................18
i
Section Page
- ------- ----
8.03. Negative Covenants of the Borrower.............................20
ARTICLE IX ADMINISTRATION AND COLLECTION
9.01. Rights of the Collateral Agent.................................22
9.02. Responsibilities of Borrower...................................22
9.03. Further Action Evidencing Security Interest....................23
9.04. Application of Obligors' Payments..............................24
ARTICLE X INTERCREDITOR PROVISIONS
10.01. Intercreditor Agreement........................................24
10.02. Remedies.......................................................24
10.03. No Petition....................................................24
ARTICLE XI EVENTS OF DEFAULT
11.01. Events of Default..............................................25
11.02. Remedies.......................................................26
ARTICLE XII THE AGENT
12.01. Authorization and Action.......................................27
12.02. Agent's Reliance, Etc..........................................27
12.03. Agent and Affiliates...........................................28
12.04. Resignation....................................................28
ARTICLE XIII ASSIGNMENTS BY BORROWER OR LENDER
13.01. Restrictions on Assignments....................................28
13.02. Documentation; Notice of Assignment............................29
13.03. Rights of Assignee.............................................29
ARTICLE XIV INDEMNIFICATION
14.01. Indemnities by the Borrower....................................29
14.02. Indemnities by the Manager.....................................31
ARTICLE XV MISCELLANEOUS
15.01. Amendments, Etc................................................32
15.02. Notices, Etc...................................................32
15.03. No Waiver; Remedies............................................32
15.04. Binding Effect; Survival.......................................32
15.05. Costs, Expenses and Taxes......................................33
15.06. Execution in Counterparts......................................33
15.07. Definitions; Other Terms.......................................33
15.08. Captions and Cross References..................................34
ii
Section Page
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15.09. Integration....................................................34
15.10. Governing Law..................................................34
15.11. Waiver Of Jury Trial...........................................34
15.12. Consent To Jurisdiction; Waiver Of Immunities..................34
iii
APPENDIX
APPENDIX A Definitions
SCHEDULES
Schedule 1.1 Pricing Schedule
Schedule 7.01(h) Description of Borrower Material Adverse Changes
Schedule 7.01(i) Description of Borrower Litigation
Schedule 7.01(m) List of Offices of Borrower Where Records Are Kept
Schedule 15.02 Addresses for Notice
EXHIBITS
Exhibit A Form of Loan Request
Exhibit B Form of Note
Exhibit C-1 Form of Quarterly Manager Report
Exhibit C-2 Form of Interim Manager Report
Exhibit D-1, D-2 Forms of Opinions of Counsel for Relevant Parties
Exhibit D-3 Form of Opinion of Counsel for Insurer
iv
LOAN AGREEMENT
LOAN AGREEMENT, dated as of June 21, 2000 among MERIDIAN VENTURE GROUP,
LLC, a Delaware limited liability company (the "Borrower"), XXXXXXXX, acting in
its individual capacity (in such capacity, the "Lender"), and XXXXXXXX, as agent
for the Lender (in such capacity, the "Agent"). Unless otherwise indicated,
capitalized terms used in this Agreement are defined in Appendix A.
Background
1. The Borrower has, and expects to have, Pool Units against which the
Borrower intends to borrow from Lender. The Borrower has requested the Lender,
and the Lender has agreed, subject to the terms and conditions contained in this
Agreement, to make loans to the Borrower from time to time.
2. The Lender has appointed XXXXXXXX as its agent to perform certain
administrative duties for the Lender, including, among other things, the
administration of the funding of such transactions and the making of certain
determinations hereunder and in connection herewith.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
THE COMMITMENT
SECTION 1.01. Commitment. On the terms and subject to the conditions set
forth in this Agreement (including Article VI), pursuant to Section 1.03, from
time to time until the Commitment Termination Date the Lender agrees to make
loans to the Borrower on a revolving basis upon request by the Borrower. The
initial loan hereunder and each subsequent loan is herein called a "Loan". The
Lender's obligation to lend hereunder is herein called the "Commitment".
SECTION 1.02. Limits on Commitment to Lend. Under no circumstances shall
the Lender make any Loans to the extent that, after giving effect to such loans
the Outstanding Balance would exceed the Commitment Amount.
SECTION 1.03. Borrowing Procedure. (a) Each Loan shall be made upon
written request from the Borrower to the Lender and the Agent and countersigned
by the Insurer,
substantially in the form of Exhibit A (a "Loan Request"), received by the Agent
not later than 11:00 a.m. (New York City time) on the third Business Day
preceding the date of such proposed Loan. Each such request shall specify the
desired amount and date of such Loan; provided, however, that the minimum
principal amount of any Loan during the first three months following the
effectiveness of this Agreement, shall not be less than $1,000,000 and
thereafter until the Scheduled Commitment Termination Date such minimum
principal amount shall not be less than $2,000,000. No more than two Loans may
be requested in a single calendar month, and no more than twelve Loans may be
requested during the term of this Agreement.
(b) The amount of each Loan shall be equal to the lesser of (x) the amount
proposed by the Borrower pursuant to Section 1.03(a) and (y) the maximum amount
permitted under Section 1.02.
(c) Funding of Loans. On the date of each Loan, the Lender shall, upon
satisfaction of the applicable conditions set forth in Article VI, make
available to the Agent in same day funds, at its office at XXXXXXXX, the amount
of the requested Loan (determined pursuant to Section 1.03(b)) and after receipt
by the Agent of such funds, the Agent will initiate a wire transfer to make such
funds immediately available to the Borrower at such account as the Borrower
shall have specified in writing to the Agent prior to or concurrently with its
submission of the related Loan Request.
SECTION 1.04. Commitment Termination Date. The "Commitment Termination
Date" shall be the earlier to occur of (i) June 21, 2001 (herein, as the same
may be extended, called the "Scheduled Commitment Termination Date"), and (ii)
the date of termination of the Commitment pursuant to Section 11.02.
ARTICLE II
THE NOTE; INTEREST
SECTION 2.01. The Note. The Loans shall be evidenced by a promissory note
of the Borrower, substantially in the form of Exhibit B (herein, together with
any promissory note given in extension, renewal, replacement, or substitution
thereof or therefor, called the "Note"), with appropriate insertions, dated the
date of the initial Loan (or such other date prior thereto as shall be
satisfactory to the Lender), payable to the order of the Lender on or before the
Termination Date in the principal amount of $30,000,000, or if less, in the
aggregate unpaid principal amount of all Loans. The date and amount of each Loan
and of each repayment of principal thereon received by the Lender shall be
recorded by the Lender in its records or, at its option, on the schedule
attached to the Note. The aggregate unpaid principal amount so recorded shall be
rebuttable presumptive evidence of the principal amount owing and unpaid on the
Note. The failure to so record any such amount or any error in so recording any
such amount shall not however limit or otherwise affect the obligation of the
Borrower hereunder or under the Note to repay the principal amount of any Loan
together with all interest accruing thereon.
2
SECTION 2.02. Rate Tranches; Selection of Interest Periods.
(a) From time to time, for purposes of determining the Interest Periods
applicable to different portions of the Loan, and of calculating the Earned
Interest with respect thereto, the Agent shall (subject to subsection (c) below)
allocate the Loans to one or more tranches (each a "Rate Tranche"), each
representing a portion of the Outstanding Balance.
(b) On each day in an Interest Period for a Rate Tranche, such Rate
Tranche will earn interest equal to the Earned Interest for such day and
tranche, and the Borrower shall pay to the Agent (for the account of the Lender)
such Earned Interest in arrears on each Payment Date; provided that if any
portion of such Rate Tranche is prepaid on any day other than the last day of
such Interest Period, then Earned Interest with respect to the principal amount
prepaid shall be payable concurrently with such prepayment.
(c) Subject to the requirements of the definition of Interest Period, the
Agent shall select the duration of the initial and each subsequent Interest
Period for each Rate Tranche in its discretion; provided that, so long as no
Event of Default shall have occurred and be continuing, the Agent shall use
reasonable efforts, taking into account market conditions, to accommodate the
Borrower's preferences.
(d) From time to time the Agent shall notify the Borrower of the number of
Rate Tranches, the portion of the Outstanding Balance allocated to each Rate
Tranche, the Interest Rate for such Rate Tranche and the duration of the current
Interest Period selected by it for each Rate Tranche.
(e) The Lender may, if it so elects, fulfill its commitment as to any Loan
by causing a foreign branch or affiliate of the Lender or a participant to make
such Loan; provided that in such event, for the purposes of this Agreement, such
Loan shall be deemed to have been made by the Lender, and the obligation of the
Borrower to repay such Loan shall nevertheless be to the Lender and shall be
deemed held by it, to the extent of such Loan, for the account of such branch or
affiliate.
(f) The Lender shall be entitled to fund, and maintain its funding, of any
part of the Loans in any manner it sees fit. It is understood, however, that for
purposes of this Agreement, all determinations shall be made as if the Lender
had actually funded and maintained each Loan during each Interest Period for
such Loan through the purchase of deposits having a maturity corresponding to
the last day of such Interest Period.
ARTICLE III
PREPAYMENTS; LOAN MATURITY
SECTION 3.01. Mandatory Prepayments. On each Payment Date, in each case
after the Scheduled Commitment Termination Date, the Borrower shall make an
installment
3
payment on the Outstanding Balance. Such installment payment shall equal to one
twentieth of the Outstanding Balance in effect on the Scheduled Commitment
Termination Date.
SECTION 3.02. Voluntary Prepayment. Subject to Section 5.05, the Borrower
may voluntarily prepay any Loan (or any portion thereof) on any Payment Date (to
the extent funds are available for such purpose pursuant to Article VIII of the
Intercreditor Agreement) upon three Business Days' prior written notice to the
Agent; provided that such prepayments shall be applied to the remaining
installments specified in Section 3.01 in inverse order of maturity.
SECTION 3.03. Loan Maturity. The Borrower agrees to repay the outstanding
principal amount of all Loans (together with all accrued and unpaid interest
thereon) on or before the Termination Date.
SECTION 3.04. Application of Payments. On each Payment Date, the Borrower
shall cause funds on deposit in the Collection Account to be distributed for the
purposes and in the order of priority set forth in Article VIII of the
Intercreditor Agreement.
ARTICLE IV
REPORTING COLLECTION PROCEDURES
SECTION 4.01. Reporting by Manager. The Borrower shall cause the Manager
to prepare and forward to the Agent and the Insurer a Manager Report at each of
the times required by the Management Agreement.
SECTION 4.02. Collection Procedures. The Borrower and the Manager shall
instruct each Obligor to make payments in respect of its Contract to the
Collection Account pursuant to the Intercreditor Agreement. Funds deposited in
the Collection Account shall be applied for the purposes and in the order of
priority set forth in Article VIII of the Intercreditor Agreement.
ARTICLE V
PAYMENT PROCEDURES; FEES AND YIELD PROTECTION
SECTION 5.01. Payments and Computations. (a) For all amounts to be paid or
deposited by the Borrower to or for the account of the Lender or the Agent,
Borrower shall make payment or deposit in accordance with the terms hereof no
later than 11:00 a.m. (New York City time) on the day when due in lawful money
of the United States of America in same day funds to such account (the "Agent's
Account") as the Agent may designate at its office at XXXXXXXX or at XXXXXX in
New York City as the Agent may
4
designate. Each such payment or deposit shall be accompanied by electronic
advice reading "Meridian Venture Group, LLC Loan Agreement."
(b) All computations of interest, funding losses, and any fees hereunder
shall be made on the basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day) elapsed.
SECTION 5.02. Interest on Overdue Amounts. The Borrower shall, to the
extent permitted by law, pay to the Agent interest on all amounts not paid or
deposited when due hereunder at 2% per annum above the Alternate Base Rate,
payable on demand, provided, however, that such interest rate shall not at any
time exceed the maximum rate permitted by applicable law.
SECTION 5.03. Fees. The Borrower shall pay to the Agent for the account of
the Lender a commitment fee for the period from and including the date hereof
through but excluding the Commitment Termination Date at a rate of XXXX% per
annum on the daily average of the unused amount of the Lender's Commitment. Such
commitment fee shall be payable in arrears on each Payment Date and on the
Commitment Termination Date for any period then ending for which such commitment
fee shall not have been paid.
SECTION 5.04. Yield Protection. (a) If (i) Regulation D or (ii) any
Regulatory Change occurring after the date hereof
(A) shall subject an Affected Party to any tax, duty or other charge
with respect to the Loan or any portion thereof, or any obligations or
right to make Loans or to provide funding therefor, or shall change the
basis of taxation of payments to the Affected Party of any of the
Outstanding Balances or Earned Interest, owed to or funded by it or any
other amounts due under this Agreement in respect of the Loan or any
portion thereof or its obligations or rights, if any, to make Loans or to
provide funding therefor (except for Excluded Taxes); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Federal Reserve Board, but
excluding any reserve included in the determination of Earned Interest),
special deposit or similar requirement against assets of any Affected
Party, deposits or obligations with or for the account of any Affected
Party or with or for the account of any affiliate (or entity deemed by the
Federal Reserve Board to be an affiliate) of any Affected Party, or credit
extended by any Affected Party; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party; or
5
(D) shall impose any other condition affecting the Loan or any
portion thereof owned or funded by any Affected Party, or its obligations
or rights, if any, to make Loans or to provide funding therefor; or
(E) shall change the rate for, or the manner in which the Federal
Deposit Insurance Corporation (or any successor thereto) assesses, deposit
insurance premiums or similar charges, or shall impose on any Affected
Party a requirement to maintain deposit insurance;
and the result of any of the foregoing is or would be
(x) to increase the cost to (or in the case of Regulation D referred
to above, to impose a cost on) the Agent or the Lender for continuing its
relationship with the Borrower.
(y) to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement or any other Transaction Document with
respect thereto, or
(z) in the sole determination of such Affected Party, to reduce the
rate of return on the capital of an Affected Party as a consequence of its
obligations hereunder or arising in connection herewith to a level below
that which such Affected Party could otherwise have achieved (taking into
consideration the policies of such Affected Party with respect to capital
adequacy) by an amount deemed by such Affected Party to be material,
then, within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis of such demand, in
reasonable detail), the Borrower shall pay directly to such Affected Party such
additional amount or amounts as will compensate such Affected Party for such
additional or increased cost or such reduction.
(b) Each Affected Party will promptly notify the Borrower and the Agent of
any event of which it has knowledge which occurs after the date hereof and will
entitle such Affected Party to compensation pursuant to this Section 5.04;
provided, however, no failure to give or delay in giving such notification shall
adversely affect the rights of any Affected Party to such compensation. Each
Affected Party shall take such reasonable actions as are within its control in
order to avoid or mitigate the imposition of additional amounts for which
recovery may be sought under Section 5.04 so long as such actions do not incur
additional costs or adverse consequences to the Affected Party (as determined by
it).
(c) In determining any amount provided for or referred to in this Section
5.04, an Affected Party may use any reasonable averaging and attribution methods
that it (in its sole discretion) shall deem applicable. Any Affected Party when
making a claim under this Section 5.04 shall submit to the Borrower a statement
as to such increased cost or reduced return
6
(including calculation thereof in reasonable detail), which statement shall, in
the absence of manifest error, be conclusive and binding upon the Borrower.
SECTION 5.05. Funding Losses. The Borrower hereby agrees that it shall
reimburse the Lender within 10 days after demand for any loss or expense which
the Lender may sustain or incur, as determined by the Agent, as a result of (a)
any payment or prepayment of any Loan on a date other than a Payment Date, or
(b) any failure of the Borrower to borrow any Loans on a date and in an amount
specified therefor in a notice of borrowing; provided that the Lender shall have
delivered to the Borrower and the Agent a certificate as to the amount of such
loss or expense, which certificate shall be conclusive in the absence of
manifest error.
SECTION 5.06. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any taxes (other than Excluded Taxes); provided that if the
Borrower shall be required to deduct any taxes from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Agent or the Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant governmental authority in accordance with
applicable law.
(b) The Borrower shall indemnify the Agent and the Lender for the full
amount of any taxes (other than Excluded Taxes) paid by the Agent or the Lender,
as the case may be, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such taxes were correctly or
legally imposed or asserted by the relevant governmental authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by the Agent or the Lender shall, in the absence of manifest error, be
conclusive and binding on the Borrower. The Agent and the Lender shall take such
reasonable actions as are within its control in order to avoid or mitigate the
imposition of taxes for which recovery may be sought under this Section 5.06 so
long as such actions do not cause it to incur additional costs or adverse
consequences (as determined by it).
(c) Without in any way affecting the obligation of the Borrower under
Section 5.06(a) to pay any increased amount on account of indemnified taxes, the
Lender (if organized under the laws of a jurisdiction outside the United
States), on or prior to the date of its execution and delivery of this Agreement
or on the date of the assignment pursuant to which it becomes the Lender, as the
case may be, and from time to time thereafter if requested in writing by the
Borrower or the Agent (but only so long as such Lender remains lawfully able to
do so), shall provide the Borrower and the Agent with Internal Revenue Service
form 1001 or 4224, as appropriate, or any successor or other form prescribed by
the Internal Revenue Service, certifying that the Lender is exempt from or
entitled to a reduced rate of United States withholding tax on payments of
interest pursuant to this Agreement.
7
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions Precedent to Initial Loan. The initial Loan
hereunder is subject to the condition precedent that the Agent shall have
received, on or before the date of such Loan, the following, each (unless
otherwise indicated) dated (or dated as of) such date and in form and substance
satisfactory to the Agent:
(a) This Agreement, duly executed by authorized officers of the
Borrower.
(b) The Note, duly executed by an authorized officer of the
Borrower.
(c) The forms of the Contract Transfer Documents, duly certified by
a duly authorized officer of the Manager, together with evidence
satisfactory to the Agent that all conditions precedent to the initial
purchase of CP Units thereunder have been satisfied and that all approvals
or consents of Amgen or Centocor required in connection therewith have
been obtained.
(d) The Surety Bond duly executed by a duly authorized officer of
the Insurer, and evidence satisfactory to the Agent that all conditions
precedent to such issuance shall have been satisfied (without giving
effect to any waiver thereof).
(e) The Insurance Agreement duly executed by a duly authorized
officer of the Borrower.
(f) The Intercreditor Agreement and the Letter Agreement, duly
executed by duly authorized officers of the parties thereto, together with
evidence that the accounts required to be established thereunder have been
established.
(g) The Management Agreement and the Contribution Agreement duly
executed by duly authorized officers of the parties thereto.
(h) Copies of the resolutions of the Board of Directors or governing
body, as applicable, of each of the Relevant Parties, in each case
approving the Transaction Documents to which it is a party and the
transactions contemplated hereby, certified by the Secretary or Assistant
Secretary of such Person.
(i) Good standing certificates for each of the Relevant Parties
issued by such jurisdictions as the Agent shall reasonably require and
dated as of a recent date acceptable to the Agent.
(j) A certificate of the Secretary or an Assistant Secretary of each
of the Relevant Parties, certifying the names and true signatures of the
officers authorized on its
8
behalf to sign the Transaction Documents to which it is a party (on which
certificate the Agent and the Lender may conclusively rely until such time
as the Agent shall receive from the Borrower a revised certificate meeting
the requirements of this subsection (j)).
(k) The Articles of Incorporation or organizational documents, as
applicable, of each of the Relevant Parties, in each case duly certified
by the Secretary of State of such Person's home jurisdiction, as of a
recent date acceptable to Agent, together with a copy of the Bylaws of
such Person, duly certified by the Secretary or an Assistant Secretary of
such Person.
(l) Acknowledgment copies of proper Financing Statements (Form
UCC-1), filed on or prior to the date of the initial Loan, naming the
Borrower or Parent (as applicable) as the debtor and the Collateral Agent
as the secured party or assignee of the Secured Party, or other, similar
instruments or documents, as may be necessary or, in the opinion of the
Agent, desirable under the UCC or any comparable law of all appropriate
jurisdictions to perfect the interests granted to the Collateral Agent
under the Intercreditor Agreement hereof.
(m) A search report or reports provided in writing to the Agent by
Lexis Document Services, as of a recent date (or dates) acceptable to the
Agent, listing all effective financing statements that name the Borrower,
the Manager, Capital or the Parent as debtor and that are filed in the
jurisdictions in which filings were made pursuant to subsection (l) above
and in such other jurisdictions that Agent shall reasonably request,
together with copies of such financing statements (none of which shall
cover any CP Units or Contracts or interests therein or Collections or
proceeds of any thereof).
(n) A favorable opinion of counsel for the Relevant Parties, in
substantially the forms of Exhibit D-1.
(o) A favorable opinion of counsel for the Borrower, in
substantially the form of Exhibit D-2 that the Borrower shall not be
consolidated with the Parent or the Manager for bankruptcy purposes.
(p) A favorable opinion of counsel for the Insurer, substantially in
the form of Exhibit D-3.
(q) Such Manager Reports and Loan Requests as are required under
Sections 6.02(d) and 6.02(e).
(r) Evidence that (i) the paid in capital of the Borrower is not
less than $4,000,000 (after giving effect to payments to be made by the
Borrower on such date) and is in a form acceptable to the Agent, (ii) the
Borrower has no liabilities other than deferred organizational costs,
payables relating to the Transaction Documents and
9
contingent obligations to purchase contracts, and (iii) Constance Harrison
Meyer and David B. Schmickel have executed and delivered employment
agreements in the form required by the Insurance Agreement.
(s) Evidence that (i) the Parent owns (directly or indirectly) 100%
of the outstanding capital of the Borrower, and (ii) that the Parent has
obtained all requisite approvals and authorizations for such an investment
in Borrower.
(t) The financial statements described in Section 7.01(h) hereof and
Section 6(h) of the Management Agreement, which financial statements shall
be satisfactory to the Agent and shall show the Borrower to be in
compliance with Sections 8.03(g), 8.03 (h) and 8.03(i).
(u) Evidence that the Borrower has obtained the insurance required
to be maintained by it pursuant to Section 8.01(i).
(v) Such other agreements, instruments, certificates, opinions and
other documents as the Agent may reasonably request.
SECTION 6.02. Conditions Precedent to All Loans. Each Loan (including the
initial Loan) hereunder shall be subject to the further conditions precedent
that on the date of such Loan the following statements shall be true (and the
Borrower by accepting the amount of such Loan shall be deemed to have certified
that):
(a) The representations and warranties contained in Sections 7.01
and 7.02 are correct on and as of such day as though made on and as of
such day and shall be deemed to have been made on such day,
(b) No event has occurred and is continuing, or would result from
any such Loan, that constitutes an Event of Default or Unmatured Event of
Default,
(c) The Commitment Termination Date shall not have occurred,
(d) The Agent shall have received the Quarterly Manager Report with
respect to the most recent Quarter End Date and, if the Agent shall so
request, an Interim Manager Report,
(e) The Agent shall have received a Loan Request with respect to
such Loan in accordance with Section 1.03, executed by the Borrower and
the Insurer,
(f) The Parent shall have contributed to the Borrower,
simultaneously to the funding of such Loan, an amount (in cash or in the
form of Eligible CP Units) such that Net Worth of the Borrower shall not
be less than the Required Equity Amount (after giving effect to such
Loan), and
10
(g) No event or circumstance shall be continuing that can reasonably
be expected to cause a Material Adverse Effect.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) Organization and Good Standing. The Borrower has been duly
organized and is validly existing as a limited liability company in good
standing under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business as such properties are
presently owned and such business is presently conducted, and had at all
relevant times, and now has, all necessary power, authority, and legal
right to acquire and own the Collateral.
(b) Due Qualification. The Borrower is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualification, licenses or approvals.
(c) Power and Authority; Due Authorization. The Borrower (i) has all
necessary power, authority and legal right to execute and deliver the
Transaction Documents to which it is a party, to carry out the terms of
the Transaction Documents to which it is a party and to borrow Loans and
grant Liens on the terms and conditions herein provided, and (ii) has duly
authorized by all necessary corporate action the execution, delivery and
performance of the Transaction Documents to which it is a party on the
terms and conditions herein provided.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to be signed by the Borrower when duly executed and
delivered will constitute, a legal, valid and binding obligation of the
Borrower enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Violation. The execution, delivery and performance by the
Borrower of the Transaction Documents to which it is a party and the
consummation of the transactions contemplated thereby will not (i)
conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default
under, the organizational documents of the Borrower, or any indenture,
loan
11
agreement, receivables purchase agreement, mortgage, deed of trust, or
other agreement or instrument to which the Borrower is a party or by which
it or any of its properties is bound, (ii) result in the creation or
imposition of any Lien upon any of the Borrower's properties pursuant to
the terms of any such indenture, loan agreement, receivables purchase
agreement, mortgage, deed of trust, or other agreement or instrument,
other than this Agreement, or (iii) violate any law or any order, rule, or
regulation applicable to the Borrower of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Borrower or any of its
properties.
(f) No Proceedings. There are no proceedings or investigations
pending, or threatened in writing, before any court, regulatory body,
administrative agency, or other tribunal or governmental instrumentality
(i) asserting the invalidity of any Transaction Document, (ii) seeking to
prevent the consummation of any of the transactions contemplated by any
Transaction Document, (iii) seeking any determination or ruling that could
reasonably be expected to have a Material Adverse Effect, or (iv)
asserting that the Borrower or any of its assets or properties are not in
compliance with any applicable requirement of law.
(g) Government Approvals. No consent, authorization or approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for the due execution, delivery
and performance by the Borrower of any Transaction Document to which it is
a party, except for the filing of the UCC Financing Statements referred to
in Article VI, all of which, at the time required in Article VI, shall
have been duly made and shall be in full force and effect.
(h) Financial Condition. (x) The pro forma balance sheet and income
statement and cash flow statements of the Borrower as of the date of the
first Loan hereunder, which have been furnished to the Agent prior to the
date of such Loan, are complete and correct and fairly present the
financial condition, business, business prospects and operations of the
Borrower as at such date in accordance with GAAP consistently applied, and
(y) since such date there has been no material adverse change in any such
condition, business, business prospects or operations except as described
in Schedule 7.01(h).
(i) Litigation. No injunction, decree or other decision has been
issued or made by any court, governmental agency or instrumentality
thereof that prevents, and no threat by any person has been made to
attempt to obtain any such decision that would prevent, the Borrower from
conducting a significant part of its business operations, except as
described in Schedule 7.01(i).
(j) Use of Funds. The use of all funds obtained by the Borrower
under this Agreement will not (i) conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve System from time to time
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or (ii) be for any purpose other than (A) acquisition of CP Units and (B)
payment of related costs and expenses and organizational costs and
expenses; provided that the amount applied pursuant to this clause (B)
shall not exceed $500,000.
(k) Collateral; Collateral Security. The Borrower has not assigned,
pledged, or otherwise conveyed or encumbered any of the Collateral to any
Person other than the Collateral Agent, and immediately prior to the
pledge of such Collateral, the Borrower was the sole owner of the
Collateral and had good and marketable title thereto, free and clear of
all Liens, in each case except for Liens that have been released or are to
be released simultaneously with the Liens granted in favor of the
Collateral Agent hereunder. The Collateral Agent holds a valid, perfected
security interest in all right, title and interest of the Borrower in, to
and under the Collateral, free and clear of all other Liens, to secure all
obligations of the Borrower to the Secured Parties under the Transaction
Documents.
(l) Accurate Reports. No Manager Report or other information,
exhibit, financial statement, document, book, record or report furnished
or to be furnished by the Borrower to the Agent or the Lender in
connection with the Transaction Documents was or will be inaccurate in any
material respect as of the date it was or will be dated or (except as
otherwise disclosed to the Agent or the Lender, as the case may be, at
such time) as of the date so furnished, or contained or will contain any
material misstatement of fact or omitted or will omit to state a material
fact or any fact necessary to make the statements contained therein not
materially misleading.
(m) Offices. The chief place of business and chief executive office
of the Borrower are located at the address of the Borrower referred to in
Section 15.02, and the offices where the Borrower keeps all its books,
records and documents evidencing or included in the Collateral are located
at the addresses specified in Schedule 7.01(m) (or at such other
locations, notified to the Collateral Agent and the Agent in accordance
with Section 8.01(f), in jurisdictions where all action required by
Section 9.05 has been taken and completed).
(n) Collection Procedures. Section 4.02 accurately describes the
manner in which payments on the Contracts are collected, and there has
been no change in such procedures (except as the Collateral Agent and the
Agent shall have otherwise agreed in accordance with Section 8.03(d)).
(o) Eligible Contracts and CP Units. Each Contract or CP Unit
included in the Pool Balance as an Eligible Contract or Eligible CP Unit
on the date of any Manager Report or any Loan shall be an Eligible
Contract or Eligible CP Unit (as applicable) on such date.
(p) Servicing Programs. Any and all programs used by the Borrower in
the servicing of the CP Unit Pool are owned by it and not leased or
licensed, except for
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programs readily available to the Collateral Agent over the counter at a
reasonable cost. No license or approval is required for the Collateral
Agent's use of any program used by the Manager in the administration of
the CP Units, other than those which have been obtained and are in full
force and effect.
(q) Borrower Solvent; Fraudulent Conveyance. As of the date hereof
and immediately after giving effect to each Loan, the fair value of the
Contracts of the Borrower is greater than the fair value of the
liabilities (including, without limitation, contingent liabilities if and
to the extent required to be recorded as a liability on the financial
statements of the Borrower in accordance with GAAP) of the Borrower and
the Borrower is and will be solvent, is and will be able to pay its debts
as they mature and does not and will not have an unreasonably small
capital to engage in the business in which it is engaged and proposes to
engage. Borrower does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature.
Borrower is not contemplating the commencement of insolvency, bankruptcy,
liquidation or consolidation proceedings or the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of
Borrower or any of its assets. Borrower is not transferring any Collateral
with any intent to hinder, delay or defraud any of its creditors.
(r) Ownership Interests Pari Passu. The ownership interests of the
Borrower in the Contracts are at least pari passu with the interests of
other holders in the Rights Agreements.
(s) Investment Company. The Borrower is not an "investment company,"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(t) Incorporated Provisions. Each of the representations and
warranties of the Borrower set forth in the Insurance Agreement or any of
the other Transaction Documents is hereby incorporated by reference, and
is and will be true and correct as of the date hereof and the date of each
Loan.
SECTION 7.02. Representations and Warranties of the Manager. As provided
for in the Management Agreement, the representations and warranties of the
Manager are required to be true and correct as of the date hereof and on the
date of each Loan.
ARTICLE VIII
GENERAL COVENANTS OF BORROWER
SECTION 8.01. Affirmative Covenants of the Borrower. From the date hereof
until the Final Pay Out Date, the Borrower will, unless the Agent shall
otherwise consent in writing:
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(a) Compliance with Laws, Etc. Comply in all material respects with
all laws, rules, regulations and orders applicable to the Borrower,
including those with respect to the Contract Transfer Documents and the
other Collateral.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction where the failure to preserve
and maintain such existence, rights, franchises, privileges and
qualification could reasonably be expected to have a Material Adverse
Effect.
(c) Audits. (i) At any time and from time to time during regular
business hours, permit the Agent and the Collateral Agent, or their
respective agents or representatives, (A) to examine and make copies of
and abstracts from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under the
control of the Borrower relating to the Collateral, including, without
limitation, the related contracts and other agreements, and (B) to visit
the offices and properties of the Borrower for the purpose of examining
such materials described in clause (i)(A) next above, and to discuss
matters relating to the Collateral or the Borrower's performance hereunder
with any of the officers or employees of the Borrower having knowledge of
such matters; and (ii) without limiting the provisions of clause (i) next
above, from time to time on request of the Agent or the Collateral Agent,
permit certified public accountants or other auditors acceptable to the
Agent or the Collateral Agent, as applicable, to conduct, at the
Borrower's expense, a review of the Borrower's books and records; provided
that if no Event of Default has occurred or is continuing then the Agent
shall conduct such a review no more than once per calendar year; and (vii)
within 30 days after the first day on which the Outstanding Balance is
equal to or greater than $10,000,000 (and each higher integral multiple
thereof), the Borrower shall cause an audit to be performed (at the
expense of the Borrower) by a third party, acceptable to the Agent and the
Insurer, that reconciles the amounts received by the Borrower under the
Contracts to the Manager Reports and reports delivered by the Obligors to
the Borrower referred to in Section 8.02(c).
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing Collateral in the event of the
destruction of the originals thereof), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Pool Units (including, without
limitation, records adequate to permit the daily identification of each
new Pool Unit and all Collections of and adjustments to each existing Pool
Unit).
(e) Performance and Compliance with CP Units and Contracts. At its
expense timely and fully perform and comply with all material provisions,
covenants and
15
other promises required to be observed by it under the Contracts and other
agreements included in the Collateral.
(f) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps its records concerning
the Collateral, at the address(es) of the Borrower referred to in Section
7.01(m) or, upon 30 days' prior written notice to the Agent and the
Collateral Agent, at such other locations in jurisdictions where all
action required by Section 9.05 shall have been taken and completed.
(g) Collections. Instruct all Obligors to cause all Collections of
Pool Units to be deposited to the Collection Account.
(h) Delivery of Documentation. Within 5 Business Days of the
Borrower's acquisition of each Contract, cause such Contract and the
Required Documents with respect thereto to be delivered to the Collateral
Agent.
(i) Insurance. Maintain such insurance as may be required by law and
such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by Persons similarly situated,
which insurance shall include fidelity bond insurance of not less than
$2,000,000.
(j) Separate Corporate Existence of the Borrower. The Borrower
hereby acknowledges that the Lender is entering into the transactions
contemplated by this Agreement in reliance upon the Borrower's identity as
a legal entity separate from the other Relevant Parties. Therefore, from
and after the date hereof, the Borrower shall take all reasonable steps to
continue the Borrower's identity as a separate legal entity and to make it
apparent to third Persons that the Borrower is an entity with assets and
liabilities distinct from those of the Parent, the Manager and any other
Person, and is not a division of the Parent, the Manager or any other
Person. Without limiting the generality of the foregoing, the Borrower
shall take such actions, as shall be required in order that:
(i) The Borrower will be a limited liability company whose
primary activities are restricted by its organizational documents to
entering into this Agreement and the other Transaction Documents,
and conducting such other activities as it deems necessary or
appropriate to carry out the activities referred to in this clause
(l).
(ii) Any employee, consultant or agent of the Borrower will be
compensated from funds of Borrower for services provided to the
Borrower. The Borrower will engage no agents other than a Manager
for the Contracts pursuant hereto, which Manager will be fully
compensated for its services to Borrower by payment of the fee
referred to in the Management Agreement.
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(iii) The Borrower will contract with the Manager to perform
all operations required on a daily basis to service its Contracts.
To the extent, if any, that the Borrower and the Parent or the
Manager (or any other Affiliate thereof) share items of expenses
such as legal, auditing and other professional services, such
expenses will be allocated to the extent practical on the basis of
actual use or the value of services rendered, and otherwise on a
basis reasonably related to the actual use or the value of services
rendered, it being understood that the Parent shall pay all expenses
relating to the preparation, negotiation, execution and delivery of
the Transaction Documents, including, without limitation, legal and
other up-front fees.
(iv) The Borrower's operating expenses will not be the
responsibility of the Parent, the Manager or any other Affiliate
thereof.
(v) The Borrower will have its own separate stationery.
(vi) The Borrower's books and records will be maintained
separately from those of the Parent, the Manager and any other
Affiliate thereof.
(vii) All audited financial statements of the Parent, the
Manager or any Affiliate thereof that are consolidated to include
the Borrower will contain, to the extent required by GAAP, detailed
notes clearly stating that (A) all of the Borrower's assets are
owned by the Borrower, and (B) the Borrower is a separate legal
entity with creditors who have received ownership and/or security
interests in the Borrower's assets.
(viii) The Borrower's assets will be maintained in a manner
that facilitates their identification and segregation from those of
the Parent, the Manager or any Affiliate thereof.
(ix) The Borrower will strictly observe corporate formalities
in its dealings with the Parent, the Manager or any Affiliate
thereof, including, without limitation, separate books and records,
separate officers and separate meetings of the Board of Directors,
and funds or other assets of the Borrower will not be commingled
with those of the Parent, the Manager or any Affiliate thereof. The
Borrower shall not maintain joint bank accounts or other depository
accounts to which the Parent, the Manager or any Affiliate thereof
has independent access (other than as provided in this Agreement and
the Management Agreement). None of the Borrower's funds will at any
time be pooled with any funds of the Parent, the Manager or any
Affiliate thereof.
(x) The Borrower shall pay to the Parent (or any Affiliate
thereof) the marginal increase in (or, in the absence of such
increase, the market amount of its portion of) the premium payable
with respect to any insurance policy that covers
17
the Borrower and the Parent (or any Affiliate thereof), but the
Borrower shall not, directly or indirectly, be named or enter into
an agreement to be named, as a direct or contingent beneficiary or
loss payee, under any such insurance policy, with respect to any
amounts payable due to occurrences or events related to the Parent
(or any Affiliate thereof).
(xi) The Borrower will maintain arm's-length relationships
with the Parent, the Manager and any Affiliate thereof. Any Person
that renders or otherwise furnishes services to the Borrower will be
compensated by the Borrower at market rates for such services it
renders or otherwise furnishes to the Borrower except as otherwise
provided in this Agreement or the Management Agreement. Except as
contemplated in the Transaction Documents, the Borrower will not be
and will not hold itself out to be responsible for the debts of the
Parent or any Affiliate thereof or the decisions or actions
respecting the daily business and affairs of the Parent or any
Affiliate thereof; and none of the Parent or any Affiliate thereof
will hold itself out to be responsible for the debts of the Borrower
or the decisions or actions respecting the daily business and
affairs of the Borrower.
SECTION 8.02. Reporting Requirements of the Borrower. From the date hereof
until the Final Pay Out Date, unless the Agent shall otherwise consent in
writing, the Borrower will furnish (or cause the Persons described below to
furnish) to the Agent:
(a) Quarterly Financial Statements. As soon as available and in any
event within 75 days after the end of each of the first three quarters of
each fiscal year of the Borrower, copies of the consolidated financial
statements of the Borrower, prepared in conformity with GAAP, duly
certified by the chief financial officer of the Borrower, together with a
certificate of such officer of the Borrower showing compliance with
Section 8.03.
(b) Annual Financial Statements. As soon as available and in any
event within 100 days after the end of each fiscal year of the Borrower,
copies of the financial statements of the Borrower prepared on a
consolidated basis, in each case in conformity with GAAP, and duly
certified by Buchbinder, Tunick & Company, LLC or other independent
certified public accountants of recognized standing selected by the
Borrower, together with a certificate of such officer of the Borrower
showing compliance with Section 8.03.
(c) Reports from Obligors. Copies of any reports the Borrower
receives from the Obligors, including, without limitation, the reports to
be delivered to the Borrower as a "Payment Recipient" pursuant to Sections
3.06(a) and 3.08 of the Centocor Partnership Purchase Agreement and
Sections 3.05(a) and 3.08 of the Amgen Partnership Purchase Agreement.
18
(d) ERISA. Promptly after the filing or receiving thereof, copies of
all reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Borrower files under ERISA with the Internal
Revenue Service, the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor or which the Borrower receives from the Pension
Benefit Guaranty Corporation;
(e) Events of Default. As soon as possible and in any event within 2
Business Days after the occurrence of each Event of Default and each
Unmatured Event of Default, a written statement of the president, chief
financial officer or chief accounting officer of the Borrower setting
forth details of such Event and the action that the Borrower proposes to
take with respect thereto;
(f) Litigation. As soon as possible and in any event within 2
Business Days of the Borrower's knowledge thereof, notice of (i) any
litigation, investigation or proceeding which may exist at any time which
could have a Material Adverse Effect, (ii) any material adverse
development in previously disclosed litigation, if such development would
cause such prior disclosure to be materially misleading in the light of
current facts, and (iii) any judgment in excess of $1,000,000 that is
entered against any Relevant Party in any litigation whether or not such
litigation has been previously disclosed to the Agent;
(g) Change in Business. As soon as possible and in any event within
30 days prior to any such change, notice of any material change in the
character of the Borrower's business;
(h) Insurance Agreement. Concurrently with the delivery thereof to
the Insurer, copies of all items required to be delivered to the Insurer
pursuant to Section 4.2 of the Insurance Agreement;
(i) Tender Offer. No less than 10 Business Days prior to the
initiation of a tender offer for CP Units, written notice thereof together
with the offering documents, opinions and other documents relating
thereto; and prior to the initiation of such tender offer, an opinion of
counsel in form and substance reasonably satisfactory to the Agent and the
Lender to the effect that such offer complies with all applicable
securities laws and addressing such other matters as the Agent shall
reasonably require (which opinion shall permit reliance thereon by the
Lender, the Agent and their successors, assigns and participants); and
(j) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Collateral, the transactions
contemplated by the Transaction Documents or the condition or operations,
financial or otherwise, of the Borrower or the Relevant Parties as the
Agent, the Collateral Agent or the Insurer may from time to time
reasonably request.
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SECTION 8.03. Negative Covenants of the Borrower. From the date hereof
until the Final Pay Out Date, the Borrower will not, without the prior written
consent of the Agent:
(a) Liens, Etc. Except as otherwise provided herein or Section 4.7
of the Intercreditor Agreement, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist any Lien
upon or with respect to, any Collateral or any of the Borrower's other
assets or any interest therein, or any account to which any Collections
are sent, or any right to receive income from or in respect of any of the
foregoing.
(b) Extension or Amendment of Collateral. Except as otherwise
permitted in the Management Agreement, extend, amend, waive or otherwise
modify the terms of any Collateral (including without limitation the
Contracts, the CP Units and the Management Agreement) or terminate any
Collateral.
(c) Change in Business. Make any change in the character of its
business without prior notice to, and the prior approval of, the Agent.
(d) Change in Payment Instructions to Obligors. Change the
collection procedures in respect of the Contracts from those described in
Section 4.02 unless the Collateral Agent and the Agent shall have
otherwise agreed.
(e) Deposits to Collection Account. Deposit or otherwise credit, or
cause or permit to be deposited or credited, to the Collection Account
cash or cash proceeds other than Collections of Pool Units.
(f) Mergers, Acquisitions, Sales, etc. Be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all
of the assets or any stock of any class of, or any partnership or joint
venture interest in, any other Person; or, sell, transfer, convey or lease
all or any substantial part of its assets, or sell or assign with or
without recourse any Contracts, CP Units or any interest therein (other
than pursuant hereto); or acquire any Subsidiary or any other ownership
interest or investment in any other Person.
(g) Minimum Net Worth. At any time after the funding of the first
Loan and prior to the Commitment Termination Date, permit the Borrower's
Net Worth to be less than the greater of (x) $4,000,000 and (y) 25% of the
Outstanding Balance.
(h) Cash Flow Coverage. Permit, for any Fiscal Quarter, (i) CPU Cash
Flow for all CP Units to be less than Q, where Q equals $2,250,000 times P
divided by $30,000,000; P being the maximum amount of Loans outstanding at
any time during such Fiscal Quarter; or (ii) CPU Cash Flow for each CP
Unit during any Fiscal Quarter to be less than $4,000 (in the case of
Centocor Class A Payment Rights), $8,000 (in the case of Centocor Class C
Payment Rights) or $14,000 (in the case of Amgen Payment Rights).
20
(i) Cash Flow Ratio. Permit the ratio of (i) CPU Cash Flow to (ii)
Cash Uses, in respect of any Fiscal Quarter, to be less than 1.05 to 1.0.
(j) Payment Rights Purchases. Purchase any Centocor Payment Right if
such purchase would cause the Average ReoPro Price Per A Unit to exceed
$250,000 or the Average ReoPro Price Per C Unit to exceed $470,000 or the
aggregate amount paid by the Borrower to purchase Centocor Payment Rights
to exceed $12,000,000; or purchase any Amgen Payment Right if such
purchase would cause the Average Neupogen Price Per A Unit to exceed
$325,000 or the Average Neupogen Price Per B Unit to exceed $6,300,000; or
permit the ratio of (x) the total amount paid by the Borrower to purchase
Centocor Payment Rights divided by (y) the total amount paid by the
Borrower to purchase CP Units to exceed 30 percent.
(k) Incurrence of Indebtedness. Incur or permit to exist any
indebtedness or liability on account of deposits or advances or for
borrowed money or for the deferred purchase price of any property or
services, except indebtedness arising under the Insurance Agreement or any
other Transaction Document.
(l) Restricted Payments. Purchase or redeem any capital of the
Borrower, declare or pay any dividends thereon (other than stock
dividends), make any distribution to members or set aside any funds for
any such purpose, or prepay, purchase or redeem any subordinated
indebtedness of the Borrower except dividends and distributions funded
with amounts received by the Borrower from the Collection Account in
accordance with Article VIII of the Intercreditor Agreement and otherwise
as expressly permitted by the other provisions of the Transaction
Documents.
(m) Guaranties, Loan or Advances. Not become a guarantor or surety
of, or otherwise become responsible in any manner with respect to, any
undertaking of any other Person or make or permit to exist any loans or
advances to any other Person, except for the endorsement, in the ordinary
course of business, of instruments payable to it or its order.
(n) Lines of Business. Engage in any other business activities other
than the acquisition of Contracts, pledging such Contracts hereunder, and
other activities relating to the foregoing to the extent permitted by the
Certificate of Incorporation and Bylaws of the Borrower, in each case, as
in effect on the date hereof, or as amended with the prior written consent
of the Agent.
(o) Prohibited Effect. Amend, waive or modify any Transaction
Document (or permit any Transaction Document to be amended, waived or
modified) if such amendment, waiver or modification would give rise to a
Prohibited Effect.
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ARTICLE IX
ADMINISTRATION AND COLLECTION
SECTION 9.01. Rights of the Collateral Agent. (a) Notice to Obligors. At
any time when an Event of Default (or an Unmatured Event of Default pursuant to
Section 11.01(e) or 11.01(g)) shall have occurred and be continuing, the
Collateral Agent may notify the Obligors of Pool Units, or any of them, of the
interests in the Collateral held by the Collateral Agent.
(b) Authorization and Power of Attorney. The Borrower hereby authorizes
the Collateral Agent and hereby appoints the Collateral Agent as its
attorney-in-fact (which appointment is coupled with an interest and is
irrevocable), from time to time, to take any and all steps in the Borrower's
name and on behalf of the Borrower and the Secured Parties which are necessary
or desirable, in the determination of the Collateral Agent or the Controlling
Party, to collect all amounts due under any and all Pool Units, including,
without limitation, endorsing the Borrower's name on checks and other
instruments representing Collections and enforcing agreements included in the
Collateral.
SECTION 9.02. Responsibilities of Borrower. Anything herein to the
contrary notwithstanding:
(a) The Borrower shall perform all of its obligations under the
Contracts included in the Collateral and under the other agreements
related to the Collateral to the same extent as if the Loan had not been
extended hereunder and the exercise by any Secured Party of its rights
hereunder shall not relieve the Borrower from such obligations.
(b) No Secured Party shall have any obligation or liability with
respect to any Collateral or any related agreements, nor shall any of them
be obligated to perform any of the obligations of the Borrower thereunder.
SECTION 9.03. Further Action Evidencing Security Interest. (a) The
Borrower agrees that from time to time, at its expense, it will promptly execute
and deliver all further instruments and documents, and take all further action
that the Collateral Agent may reasonably request in order to perfect, protect or
more fully evidence the interests of the Secured Parties under the Intercreditor
Agreement, or to enable the Secured Parties to exercise or enforce any of their
respective rights hereunder or under the other Transaction Documents. Without
limiting the generality of the foregoing, the Borrower will:
(i) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as may be necessary or appropriate; and
22
(ii) attach conspicuously to each Contract a legend, acceptable to
the Secured Parties, evidencing the interests of the Collateral Agent
under the Intercreditor Agreement.
(b) The Borrower hereby authorizes the Collateral Agent to file in the
name of the Borrower, to the extent permitted by applicable law, one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relative to all or any of the Collateral now existing or hereafter
arising. If the Borrower fails to perform any of its agreements or obligations
under the Transaction Documents, the Collateral Agent may (but shall not be
required to) itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Collateral Agent incurred in connection
therewith shall be payable by the Borrower as provided in the Intercreditor
Agreement.
(c) Without limiting the generality of subsection (a), the Borrower will,
not earlier than six (6) months and not later than three (3) months from the
fifth anniversary of the date of filing of the financing statements referred to
in Section 6.01(m) or any other financing statement filed in connection with the
Transaction Documents, unless the Final Pay Out Date shall have occurred:
(i) execute and deliver and file or cause to be filed an appropriate
continuation statement with respect to each such financing statement; and
(ii) deliver or cause to be delivered to the Collateral Agent and
the Agent an opinion of the counsel for the Borrower referred to in
Section 6.01(o) (or other counsel for the Borrower reasonably satisfactory
to the Collateral Agent and the Agent), in form and substance reasonably
satisfactory to the Collateral Agent and the Agent, confirming and
updating the opinion delivered pursuant to Section 6.01(o) and otherwise
to the effect that the Intercreditor Agreement continues to create a
valid, first priority and perfected security interest subject to no Liens
of record except as provided herein or otherwise permitted hereunder.
SECTION 9.04. Application of Obligors' Payments. Any payment by an Obligor
in respect of any indebtedness owed by it to the Borrower shall, except as
otherwise specified by such Obligor or otherwise required by Contract or law and
unless the Collateral Agent and the Agent instructs otherwise, be applied as a
Collection of a Pool Unit of such Obligor to the extent of any amounts then due
and payable thereunder before such payment is applied to any other indebtedness
of such Obligor.
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ARTICLE X
INTERCREDITOR PROVISIONS
SECTION 10.01. Intercreditor Agreement. To secure all obligations of the
Relevant Parties arising in connection with this Agreement and each other
Transaction Document, the Borrower has executed and delivered the Intercreditor
Agreement, which Intercreditor Agreement grants to the Collateral Agent, for the
benefit of the Secured Parties, a lien on and security interest in the
Collateral.
SECTION 10.02. Remedies. Upon the occurrence of an Event of Default, and
subject to the Intercreditor Agreement, the Collateral Agent for the benefit of
the Secured Parties, shall have, with respect to the Collateral, and in addition
to all other rights and remedies available to the Secured Parties under the
Transaction Documents or other applicable law, all the rights and remedies of a
secured party upon default under the UCC.
SECTION 10.03. No Petition. Unless an Insurer Default Period is in effect,
each of the Agent and the Lender agrees that it shall not initiate a proceeding
of the type described in the definition of Event of Bankruptcy against the
Borrower or the Manager prior to the date which is one year and one day after
payment in full of the Loans and the Secured Obligations owed to the Insurer.
ARTICLE XI
EVENTS OF DEFAULT
SECTION 11.01. Events of Default. If any of the following events ("Events
of Default") shall occur:
(a) The Manager or the Borrower shall fail to make any payment or
deposit to be made by it under a Transaction Document when due and such
failure shall remain unremedied for 1 Business Day; or
(b) Any representation or warranty made or deemed to be made by a
Relevant Party or its officers under or in connection with the Transaction
Documents or any Manager Report or other information or report delivered
pursuant to any Transaction Document shall prove to have been false or
incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe any covenant in
Section 8.03(a), 8.03(g), 8.03(h), 8.03(i), 8.03(j) or 8.03(l); or
24
(d) A Relevant Party shall fail to perform or observe any other
term, covenant or agreement contained in a Transaction Document on its
part to be performed or observed and any such failure shall remain
unremedied for 10 Business Days; or
(e) An Insurer Event of Default shall have occurred; or the Surety
Bond shall cease to be in full force and effect; or the Insurer shall have
contested in writing any of its material obligations thereunder in any
claim, action, suit or proceeding before any Governmental Agency; or
(f) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for the issuance
of indebtedness for borrowed money of, or guaranteed by, a Relevant Party,
which default (i) is a default in payment of such indebtedness or any
portion thereof, any interest thereon on any other amount owing under or
in connection with such instrument or agreement or (ii) if unremedied,
uncured, or unwaived would permit acceleration of the maturity of such
indebtedness and such default shall have continued unremedied, uncured or
unwaived for a period long enough to permit such acceleration; or any
default under any agreement or instrument relating to the purchase of
financial assets of any such Person, or any other event, shall occur and
shall continue, if the effect of such default is to terminate, or permit
the termination of, the commitment of any party to such agreement or
instrument; or
(g) An Event of Bankruptcy shall have occurred and remained
continuing with respect to a Relevant Party or any Subsidiary thereof; or
(h) (i) Any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings not
disclosed in writing by the Borrower to the Agent and the Lender prior to
the date of execution and delivery of this Agreement is pending against a
Relevant Party, or (ii) any material development not so disclosed has
occurred in any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings so
disclosed, which, in the case of clause (i) or (ii) could reasonably be
expected to have a Material Adverse Effect; or
(i) The Internal Revenue Service or the Pension Benefit Guaranty
Corporation shall, or shall indicate its intention to, file notice of a
lien pursuant to Section 6323 of the Internal Revenue Code or Section 4068
of the Employee Retirement Income Security Act of 1974 with regard to any
of the assets of the Borrower; or
(j) There shall have been entered against the Relevant Parties one
or more judgments, awards or decrees which have not been vacated,
discharged, stayed or bonded within 30 days from the entry thereof,
excluding (i) judgments, awards or decrees for which there is full
insurance and with respect to which the insurer has assumed responsibility
in writing and (ii) judgments, awards and decrees against the Relevant
Parties which, in the aggregate, do not exceed $1,000,000 at any time
outstanding; or
25
(k) The Collateral Agent shall cease to have a valid, perfected
first priority security interest in the Collateral for any reason; or
(l) The credit rating of any Obligor's long term unsecured
indebtedness shall be withdrawn or shall be reduced below BBB by S&P or
Baa2 by Moody's; or
(m) A Change of Control shall occur; or
(n) A "Borrower Default", as defined in the Insurance Agreement
shall occur; provided that if such event (other than a Valuation Event)
shall have been waived by the Insurer at any time (other than during an
Insurer Default Period), such event shall not constitute an Event of
Default for purposes hereof.
SECTION 11.02. Remedies. (a) Optional Termination. Upon the occurrence of
an Event of Default, the Agent may, subject to the terms of the Intercreditor
Agreement and by notice to the Borrower, declare the Commitment Termination Date
and the Termination Date to have occurred.
(b) Automatic Termination. Upon the occurrence of an Event of Default
described in subsection (g) of Section 11.01 with respect to the Borrower, the
Commitment Termination Date and the Termination Date shall be deemed to have
occurred automatically upon the occurrence of such event.
(c) Additional Remedies. Upon any termination of the Facility pursuant to
this Section 11.02, the Secured Parties shall have, subject to the Intercreditor
Agreement, in addition to all other rights and remedies under this Agreement or
otherwise, all other rights and remedies provided under the UCC of each
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. Without limiting the foregoing or the general applicability of
Article XIV hereof, (i) the occurrence of an Event of Default shall not deny to
any Secured Party any remedy in addition to termination of the Commitment to
which such Secured Party may be otherwise appropriately entitled, whether at law
or in equity, subject in all cases to the Intercreditor Agreement, and (ii)
following the occurrence of any Event of Default the Lender may, subject to
Section 13.01, elect to assign the Loans, or any portion thereof to any Person.
ARTICLE XII
THE AGENT
SECTION 12.01. Authorization and Action. The Lender hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under the Transaction Documents as are delegated to the Agent by the
terms of the Transaction Documents, together with such powers and discretion as
are reasonably incidental thereto.
26
SECTION 12.02. Agent's Reliance, Etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or the Agent under or in connection with the
Transaction Documents, except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent: (a) may
consult with legal counsel (including counsel for the Borrower, the Insurer or
the Collateral Agent), independent certified public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (b) makes no warranty or representation to the Lender or
any other holder of any interest in the Loans or the Collateral and shall not be
responsible to the Lender or any such other holder for any statements,
warranties or representations made by any Person in or in connection with the
Transaction Documents; (c) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
the Transaction Documents on the part of any Person or to inspect the property
(including the books and records) of any Person; (d) shall not be responsible to
the Lender or to any other holder of any interest in the Loans or the Collateral
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of any Transaction Document; and (e) shall incur no
liability under or in respect of the Transaction Documents by acting upon any
notice (including notice by telephone), consent, certificate or other instrument
or writing (which may be by facsimile) believed by it to be genuine and signed
or sent by the proper party or parties.
SECTION 12.03. Agent and Affiliates. XXXXXXXX and its Affiliates may
generally engage in any kind of business with the Borrower, the Manager, the
Insurer, the Parent or any Obligor, any of their respective Affiliates and any
Person who may do business with or own securities of the Borrower, the Manager,
the Insurer, the Parent or any Obligor or any of their respective Affiliates,
all as if XXXXXXXX were not the Agent and without any duty to account therefor
to the Lender or any other holder of an interest in the Loans or the Collateral.
SECTION 12.04. Resignation. The Agent may, at any time, upon five Business
Days' prior written notice to the Lender and the Borrower and the Insurer resign
and be discharged from its obligations hereunder. The Lender shall be entitled
to appoint a successor Agent or to become the Agent, by written notice to the
Borrower and the Insurer. Upon resignation by the Agent and until a successor
Agent is appointed the Lender shall be deemed to be the Agent.
ARTICLE XIII
ASSIGNMENTS BY BORROWER OR LENDER
SECTION 13.01. Restrictions on Assignments. (a) Neither the Borrower nor
the Lender may assign its rights hereunder or any interest herein without the
prior written consent of the Agent and the Insurer (which consent, in the case
of the Insurer with respect to an assignment by the Lender, shall not be
unreasonably withheld), and the Lender may not assign
27
all or any portion of the Commitment or the Loans without the prior written
consent of the Borrower and the Insurer (which consent, in any case shall not be
unreasonably withheld); provided that (x) such consent of the Borrower shall not
be required following an Event of Default and (y) such consent of the Insurer
shall not be required during an Insurer Default Period (it being understood and
agreed, however, that assignment of the Lender's rights under the Surety Bond
requires such consent even during such period). A Person shall be deemed to be
acting reasonably in withholding any such consent if such Person reasonably
determines that the assignment by another party would, or could reasonably be
expected to, (i) subject such Person or its affiliates to additional, different
or increased regulations, taxes or other costs or other adverse legal,
regulatory or tax consequences or (ii) otherwise increase the obligations of
such Person under any Transaction Document.
(b) The Borrower agrees to advise the Agent and the Insurer within five
Business Days after notice to the Borrower of any proposed assignment by the
Lenders of the Commitment or the Loans (or any portion thereof), not otherwise
permitted under subsection (a), of the Borrower's consent or non-consent to such
assignment; provided that if the Borrower shall fail to so advise the Agent and
the Insurer, the Borrower shall be deemed to have given its written consent to
such assignment.
(c) The Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any such pledge or assignment to a Federal Reserve Bank, and
this Section shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release the Lender from any of its obligations hereunder or substitute any
such assignee for the Lender as a party hereto. This Section 13.01(c) shall not
apply to any rights of the Lender under the Surety Bond, which may only be
pledged or assigned in any manner (including grants of security interests
therein) in accordance with the provisions of Section 10(a) thereof.
SECTION 13.02. Documentation; Notice of Assignment. (a) Any assignment of
the Loan, the Commitment or any portion thereof to any Person shall be evidenced
by such instruments or documents as may be satisfactory to the Lender, the Agent
and the assignee; and
(b) The Lender shall provide (i) notice to the Borrower and the Insurer of
any assignment of the Loans, the Commitment or any portion thereof by the Lender
to any assignee (other than the assignment and grant of a security interest
referred to in Section 13.01(c)) and (ii) copies to the Borrower and the Insurer
of all documents referred to in Section 13.02(a).
SECTION 13.03. Rights of Assignee. Upon the assignment by the Lender of
the Loan, the Commitment or any portion thereof in accordance with this Article
XIII, the assignee receiving such assignment shall be deemed to be a "Lender"
hereunder and have all of the rights and obligations of the Lender hereunder
with respect to the Loans, the Commitment or the portion thereof so assigned. It
shall be a condition precedent to the effectiveness of any assignment by the
Agent, Lender or Borrower that the permitted assignee agree in a writing
28
reasonably satisfactory to the parties hereto and, so long as no Insurer Default
Period is in effect, the Insurer, to be bound by the terms of the Intercreditor
Agreement and (in the case of an assignment by the Agent, the Lender or the
Borrower) this Agreement.
ARTICLE XIV
INDEMNIFICATION
SECTION 14.01. Indemnities by the Borrower. (a) General Indemnity. Without
limiting any other rights which any such Person may have hereunder or under
applicable law, the Borrower hereby agrees to indemnify each of the Agent, the
Lender, XXXXXXXX, the Collateral Agent (if other than the Borrower or its
Affiliate), each of their respective Affiliates, successors, transferees,
participants and assigns and all officers, directors, shareholders, controlling
persons, employees and agents of any of the foregoing (each an "Indemnified
Party"), forthwith on demand, from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or relating to the Transaction Documents or the ownership or
funding of the Loans (or any portion thereof) or in respect of any Collateral,
excluding, however, Excluded Taxes and Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part of such
Indemnified Party (as finally determined by a court of competent jurisdiction,
no longer subject to appeal or review). Without limiting the foregoing, the
Borrower shall indemnify each Indemnified Party for Indemnified Amounts arising
out of or relating to:
(i) the obligation to repay the Lender pursuant to this Agreement
and the grant of a security interest to the Collateral Agent pursuant to
the Intercreditor Agreement;
(ii) the breach of any representation or warranty made by a Relevant
Party (or any of its officers) under or in connection with any Transaction
Document, any Manager Report or any other information or report delivered
by such Relevant Party or its officers in connection with a Transaction
Document, which shall have been false or incorrect in any material respect
when made or deemed made;
(iii) the failure by a Relevant Party to comply with any applicable
law, rule or regulation (including, without limitation, any securities
law, rule or regulation pertaining to the acquisition of Collateral), or
the nonconformity of any Contract Transfer Document or other Collateral
with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the Collateral Agent
a first priority perfected security interest in and lien on the
Collateral, free and clear of any Lien, whether existing at the time of
any Loan or at any time thereafter;
29
(v) the failure to file, or any delay in filing any financing
statements, assignment or other similar instruments or documents under the
UCC of any applicable jurisdiction or other applicable laws with respect
to the interests of the Borrower or any Secured Party to any Contract or
other Collateral; or the failure to deliver, or any delay in delivering,
any Required Document to the Collateral Agent (as applicable); or any
dispute relating to the enforceability, priority or validity of the
interest of any Secured Party in any Collateral (including without
limitation any such dispute based on preference or similar laws);
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy) to the payment of any Contract or any CP Unit in, or
purporting to be in, the CP Unit Pool (including, without limitation, a
defense based on such CP Unit's or any related documents' not being legal,
valid and binding obligations of an Obligor or a party to a Contract
Transfer Document, enforceable against it in accordance with its terms, or
resulting from any action or failure to act of a Relevant Party;
(vii) any failure of a Relevant Party to perform its duties or
obligations under the Transaction Documents;
(viii) any tax or governmental fee or charge (other than an Excluded
Tax), all interest and penalties thereon or with respect thereto, and all
costs and expenses, including the reasonable fees and expenses of counsel
in defending against the same, which may arise by reason of the loans or
commitments hereunder or the interests of the Indemnified Parties in or
lien on the Contracts and other Collateral, any portion thereof or any
other interest in the Contracts or other Collateral;
(ix) the failure by a Relevant Party to comply with any term,
provision or covenant contained in any Contract, Required Document,
Contract Transfer Document or related agreements (including without
limitation in connection with the origination documentation and servicing
of Contracts and Related Property);
(x) the commingling of collections on or related to the Contracts
and other Collateral at any time with other funds;
(xi) any liability arising out of a claim or cause of action
asserted by any person against an Indemnified Party on account of its or
any other Indemnified Party's interests in the Contracts and other
Collateral, except to the extent that such liability arising out of such
Indemnified Party's gross negligence or wilful misconduct (as finally
determined by a court of competent jurisdiction, no longer subject to
appeal or review); or
(xii) any loss resulting from failure of a Relevant Party to
maintain insurance as required by the terms of the Transaction Documents.
30
(b) After-Tax Basis. Indemnification hereunder shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the payment of any of the aforesaid
taxes and the receipt of the indemnity provided hereunder or of any refund of
any such tax previously indemnified hereunder, including the effect of such tax
or refund on the amount of tax measured by net income or profits which is or was
payable by the Indemnified Party.
(c) Contribution. If for any reason the indemnification provided above in
this Section 14.01 is unavailable to an Indemnified Party or is insufficient to
hold an Indemnified Party harmless, then the Borrower shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect not
only the relative benefits received by such Indemnified Party on the one hand
and the Borrower on the other hand but also the relative fault of such
Indemnified Party as well as any other relevant equitable considerations.
SECTION 14.02. Indemnities by the Manager. As (and to the extent) provided
for in the Management Agreement, Manager has indemnified the Indemnified
Parties.
ARTICLE XV
MISCELLANEOUS
SECTION 15.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower therefrom shall in
any event be effective unless (i) the same shall be in writing and signed by (a)
the Borrower, the Agent and the Lender (with respect to an amendment) or (b) the
Agent and the Lender (with respect to a waiver or consent by them) or the
Borrower (with respect to a waiver or consent by it), as the case may be, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given; and (ii) the exercise by the Lender
and the Agent of their powers of amendment, waiver or consent, as the case may
be, shall be subject to Section 9.10 of the Intercreditor Agreement. It is
understood and agreed that any amendment, modification or change to the meaning
of any term defined in another Transaction Document and defined by
cross-reference in this Agreement to such other Transaction document will be
deemed for purposes of this Section 15.01 to be an amendment, modification or
change to this Agreement.
SECTION 15.02. Notices, Etc. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier, or by certified mail, postage prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth in
Schedule 15.02 hereto or at such other address or facsimile number as shall be
designated by such party in a written notice to the other parties hereto. All
such notices and communications shall be effective, and deemed to be received,
(a) if personally
31
delivered or sent by express mail or courier, when received, (b) if sent by
certified mail, five Business Days after having been deposited in the mail,
postage prepaid, and (c) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means, except that notices and
communications pursuant to Article I shall not be effective until received.
SECTION 15.03. No Waiver; Remedies. No failure on the part of the Agent,
any Affected Party, any Indemnified Party, the Lender or any assignee of the
Loans or any portion thereof to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law. Without limiting the
foregoing, XXXXXXXX is hereby authorized by the Borrower 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 XXXXXXXX to or for the
credit or the account of the Borrower, against amounts owed by the Borrower to
any Secured Party or its successors and assigns.
SECTION 15.04. Binding Effect; Survival. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Agent, the Lender and their
respective successors and assigns the provisions of Article V and Article XIV
shall inure to the benefit of the Affected Parties and the Indemnified Parties,
respectively, and their respective successors and assigns; provided, however,
nothing in the foregoing shall be deemed to authorize any assignment not
permitted by Section 13.01. The Insurer is intended to be a third party
beneficiary of Sections 13.01, 13.02, 13.03 and 15.01. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until such
time as the Final Pay Out Date shall have occurred. The rights and remedies with
respect to any breach of any representation and warranty made by the Borrower
pursuant to Article VII and the provisions of Article V, Article XIV, and
Sections 15.05, 15.11, and 15.12 shall be continuing and shall survive any
termination of this Agreement.
SECTION 15.05. Costs, Expenses and Taxes. In addition to its obligations
under Article XIV, the Borrower agrees to pay on demand:
(a) all costs and expenses incurred by the Agent, the Lender,
XXXXXXXX and their respective Affiliates in connection with the
negotiation, preparation, execution and delivery, the administration
(including periodic auditing) or the enforcement of, or any actual or
claimed breach of, the Transaction Documents, including, without
limitation (i) the reasonable fees and expenses of counsel to any of such
Persons incurred in connection with any of the foregoing or in advising
such Persons as to their respective rights and remedies under any of the
Transaction Documents, and (ii) all reasonable out-of-pocket expenses
(including reasonable fees and expenses of rating agencies and independent
accountants) incurred in connection with any review of the Borrower's
books and records either prior to the execution and delivery hereof or
pursuant to Section 8.01(c); and
32
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording
of the Transaction Documents and the agreements included in the Collateral
(and the Borrower agrees to indemnify each Indemnified Party against any
liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees).
SECTION 15.06. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
Agreement.
SECTION 15.07. Definitions; Other Terms. Unless otherwise defined herein,
all capitalized terms used in this Agreement shall have the meanings set forth
in Appendix A attached to this Agreement and by this reference made a part
hereof. All accounting terms not specifically defined herein shall be construed
in accordance with GAAP. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
SECTION 15.08. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 15.09. Integration. The Transaction Documents contain a final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter thereof and shall constitute the entire agreement among
the parties thereto with respect to the subject matter hereof, superseding all
prior oral or written understandings.
SECTION 15.10. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION (AND THE EFFECT OF PERFECTION OR NONPERFECTION) OF THE INTERESTS OF
THE COLLATERAL AGENT IN THE COLLATERAL IS GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 15.11. Waiver Of Jury Trial. THE BORROWER AND THE MANAGER HEREBY
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THE TRANSACTION DOCUMENTS OR ANY AMENDMENT,
INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY BE IN THE FUTURE BE DELIVERED
33
IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP
EXISTING IN CONNECTION WITH THE TRANSACTION DOCUMENTS AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
SECTION 15.12. Consent To Jurisdiction; Waiver Of Immunities. EACH OF THE
BORROWER, THE MANAGER, THE AGENT AND LENDER HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY
UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT
AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW YORK
CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THE TRANSACTION DOCUMENTS, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK
STATE OR FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER OR IN CONNECTION WITH THE TRANSACTION DOCUMENTS.
(c) TO THE EXTENT PERMITTED BY LAW, THE PARTIES HERETO HEREBY WAIVE
ANY REQUIREMENTS UNDER THE UNAUTHORIZED INSURANCE OR SIMILAR LAWS OF ANY
JURISDICTION OR OTHERWISE THAT THE INSURER POST FUNDS, SECURITIES OR OTHER
SECURITY AS A CONDITION TO ITS APPEARANCE OR FILING OF PLEADINGS IN ANY
PROCEEDING INVOLVING OR ARISING IN CONNECTION WITH THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT.
34
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
above written.
XXXXXXXX,
as Agent
By: /s/ XXXXX
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
By: /s/ XXXXX
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
XXXXXXXX,
as Lender
By: /s/ XXXXX
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
By: /s/ XXXXX
-------------------------------------
Name:
---------------------------------
Title:
--------------------------------
MERIDIAN VENTURE GROUP, LLC, as
Borrower
By: Meridian Venture Capital LLC
Its Managing Member
By: Meridian Venture Partners, LLC
Its Managing Member
By: /s/ Constance Harrison Meyer
-------------------------------------
Name: Constance Harrison Meyer
---------------------------------
Title:
--------------------------------
S-1
APPENDIX A
DEFINITIONS
This is Appendix A to the Loan Agreement dated as of June 21, 2000
among Meridian Venture Group, LLC, as Borrower, XXXXXXXX, as Lender, and
XXXXXXXX, as Agent (as amended, supplemented or otherwise modified from time to
time, this "Agreement"). Each reference in this Appendix A to any Section,
Appendix or Exhibit refers to such Section of or Appendix or Exhibit to this
Agreement.
As used in this Agreement, unless the context requires a different
meaning, the following terms have the meanings indicated herein below:
"Affected Party" means each of the Lender, any permitted assignee of
the Lender, any assignee of or participant in any of the Lender's obligations to
XXXXXXXX (including any branch or agency thereof) and any successor to XXXXXXXX
or XXXXXXXX, as the Agent.
"Affiliate" means when used with respect to any Person (including
the Borrower), means any other Person controlling, controlled by, or under
common control with, such Person. For purposes of this definition, "control"
(together with the correlative meanings of "controlled by" and "under common
control with") means possession, directly or indirectly, of the power (a) to
vote 10% or more of the securities (on a fully diluted basis) having ordinary
voting power for the directors or managing partners (or their equivalent) of
such Person, or (b) to direct or cause the direct of the management or policies
of such Person, whether through the ownership of voting securities, by contract,
or otherwise.
"Agent" has the meaning set forth in the preamble.
"Agent's Account" has the meaning set forth in Section 5.01.
"All-In-Rate" means, at any time the weighted average of the
Interest Rates applicable to all then outstanding Rate Tranches.
"Alternate Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
(a) the rate of interest most recently announced by XXXXXXXX
as its prime lending rate for unsecured commercial loans within the
United States; and
(b) .50% above the rate per annum at which the XXXXXXXX,
XXXXX,as a branch of a foreign bank, in its sole discretion, can
acquire federal funds in the interbank overnight federal funds
market, including through brokers of recognized standing.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest charged to borrowers in connection with extensions of credit.
"Amgen Partnership Purchase Agreement" means the Partnership
Purchase Agreement dated as of March 12, 1993 among Amgen Inc., Amgen Clinical
Partners, L.P. (the "Partnership"), Amgen Development Corporation, the general
partner of the Partnership, each of the Class A limited partners of the
Partnership and the Class B limited partner of the Partnership, as amended,
supplemented or otherwise modified from time to time.
"Amgen Payment Rights" has the meaning set forth in the Insurance
Agreement.
"Amgen Rights Agreement" has the meaning set forth in the Insurance
Agreement.
"Authorized Officer" means, with respect to any Person, such
Person's President, Chief Financial Officer, or Vice President.
"Average Neupogen Price Per A Unit" has the meaning set forth in the
Insurance Agreement.
"Average Neupogen Price Per B Unit"has the meaning set forth in the
Insurance Agreement.
"Average ReoPro Price Per A Unit" has the meaning set forth in the
Insurance Agreement.
"Average ReoPro Price Per C Unit" has the meaning set forth in the
Insurance Agreement.
"Bank Rate" for any Interest Period for any Rate Tranche means a
rate per annum equal to the sum of (a) the Eurodollar Margin per annum, plus (b)
the Eurodollar Rate (Reserve Adjusted) for such Interest Period; provided,
however, that if it shall become unlawful for the Agent to obtain funds in the
London interbank market in order to fund any Loan or to maintain any Rate
Tranche, or if such funds shall not be reasonably available to the Agent, then
the "Bank Rate" for any Interest Period for such Rate Tranche shall be equal to
a rate of (x) XXXX% per annum, plus (y) the Domestic CD Rate (Adjusted) for such
Interest Period.
"Borrower" has the meaning set forth in the preamble.
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"Business Day" means a day on which both (a) the Agent at its
principal office in New York City, New York is open for business and (b)
commercial banks in New York City or The Cayman Islands are not authorized or
required to be closed for business.
"Cash Uses" means, for each Fiscal Quarter in which the same is to
be determined, the aggregate amount required to be paid on the next succeeding
Payment Date under clauses first through ninth of Section 8.2, and clauses first
through eleventh of Section 8.3, of the Intercreditor Agreement.
"Centocor Class A Payment Rights" has the meaning set forth in the
Insurance Agreement.
"Centocor Class C Payment Rights" has the meaning set forth in the
Insurance Agreement.
"Centocor Payment Rights" means the Centocor Class A Payment Rights
and/or the Centocor Class C Payment Rights.
"Centocor Partnership Purchase Agreement" means the Partnership
Purchase Agreement among Centocor, Inc., Centocor Partners III, L.P. (the
"Partnership"), Centocor Development Corporation III, the general partner of the
Partnership, each of the Class A limited partners of the Partnership, the Class
C limited partner of the Partnership and the Class B limited partner of the
Partnership, as amended, supplement or otherwise modified from time to time.
"Centocor Rights Agreements" has the meaning set forth in the
Insurance Agreement.
"Centocor Contract Transfer Documents" has the meaning set forth in
the Insurance Agreement.
"Change of Control" has the meaning set forth in the Insurance
Agreement.
"Collateral" has the meaning assigned thereto in the Intercreditor
Agreement.
"Collateral Agent" means XXXXXXXX and its successors under the terms
of the Intercreditor Agreement.
"Collection Account" has the meaning set forth in the Intercreditor
Agreement.
"Collections" means, with respect to any CP Unit, all funds which
either are received by the Borrower or the Manager from or on behalf of the
related Obligors in payment of any amounts owed in respect of such CP Unit or
the related Contract and Required Documents, or applied to such amounts owed by
such Obligors.
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"Commitment" has the meaning set forth in Section 1.01.
"Commitment Amount" means $30,000,000.
"Commitment Termination Date" has the meaning set forth in Section
1.04.
"Contract" means a Rights Agreement between an Obligor and any
Person which has been acquired by the Borrower pursuant to the Contract Transfer
Documents.
"Contract Transfer Documents" means every agreement, document or
instrument pursuant to which (i) CP Units are purchased or accepted by and/or
sold, transferred, assigned or conveyed to the Borrower and/or (ii) the Obligor
under such CP Units has agreed to direct payments in respect thereof to the
Collection Account.
"Contribution Agreement" has the meaning set forth in the
Intercreditor Agreement.
"Controlling Party" has the meaning set forth in the Intercreditor
Agreement.
"CPU Cash Flow" shall mean, for any period for which the same is to
be determined, the cash payments made to the Borrower with respect to the CP
Units pledged as Collateral.
"CP Unit" means any right to payment, whether constituting an
account, chattel paper, instrument or general intangible, arising from
Contracts.
"CP Unit Balance" means, at any time, the aggregate unpaid principal
amount of CP Units arising under all Contracts.
"CP Unit Pool" means at any time all then outstanding CP Units,
other than CP Units released from the Collateral Agent's security interest.
"Debt" means (a) indebtedness for money borrowed, including
long-term capital lease obligations, (b) obligations to pay the deferred price
of goods or services (other than trade payables due within 90 days of
origination), and (c) obligations under direct or indirect guaranties in respect
of, and obligations (contingent or otherwise) to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (a) next above.
"Defaulted Contract" means a Contract: (a) as to which any payment,
or part thereof, remains unpaid for 30 days or more from the original due date
for such payment, (b) to which an Event of Bankruptcy has occurred and remains
continuing with respect to the Obligor thereunder, (c) as to which payments have
been extended, or the terms of payment thereof rewritten, without the Agent's
consent or (d) which, consistent with the Manager's standard of
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care in Section 4.2 of the Management Agreement, would be written off the
Borrower's books as uncollectible.
"Delinquent Contract" means a Contract that is not a Defaulted
Contract and as to which any payment, or part thereof, remains unpaid for 10
days or more from the original due date for such payment.
"Dollars" means dollars in lawful money of the United States of
America.
"Domestic CD Rate (Adjusted)" for any Interest Period for any Rate
Tranche means a rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined pursuant to the following formula:
Domestic CD Rate = Domestic CD Rate + Assessment
----------------
(Adjusted) 1-Reserve Rate
Requirement
where:
"Domestic CD Rate" means, with respect to any Interest Period
for any Rate Tranche, a rate of interest equal to the average
of the secondary market morning offering rates in the United
States for time certificates of deposit of major United States
money market banks for a period approximately equal to such
Interest Period in an amount substantially equal to such Rate
Tranche, as such offering rate is quoted to the Agent by the
Federal Reserve Bank of New York during the morning of the
first day of such Interest Period; provided, however, that if
the Agent shall not receive any such quote by the Federal
Reserve Bank of New York by 11:00 a.m., New York City time, on
the morning of the first day of any Interest Period, then
"Domestic CD Rate" shall mean, with respect to such Interest
Period, the rate of interest determined by the Agent to be the
average (rounded upwards, if necessary, to the nearest 1/100
of 1%) of the bid rates quoted to the Agent in the secondary
market at approximately 11:00 a.m., New York City time (or as
soon thereafter as practicable), on the first day of such
Interest Period by two certificate of deposit dealers in New
York of recognized standing selected by the Agent in its sole
discretion for the purchase from the Agent at face value of
certificates of deposit issued by the Agent in an amount
approximately equal or comparable to such Rate Tranche and
having a maturity equal to such Interest Period.
"Assessment Rate" for any Interest Period means the annual
assessment rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) applicable to the Agent on its
insured deposits, on the Business Day immediately preceding
the first day of such Interest Period, under the Federal
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Deposit Insurance Act, determined by annualizing the most
recent assessment levied on the Agent by the Federal Deposit
Insurance Corporation (together with any successor, the
"FDIC") with respect to such deposits after giving effect to
the most recent rebate granted to the Agent by the FDIC with
respect to deposit insurance as well as the loss to the Agent
(determined in the good faith judgment of the Agent) of the
use of such rebate prior to the date a credit is taken by the
Agent with respect to such rebate.
"Reserve Requirement" means, with respect to any Interest
Period, a percentage (expressed as a decimal) equal to the
daily average during such Interest Period of the aggregate
reserve requirement (including all basic, supplemental,
marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve
requirements during such period) specified under Regulation D,
as applicable to the class of banks of which the Agent is a
member, on deposits of the types used as a reference in
determining the Domestic CD Rate and having a maturity
approximately equal to such Interest Period.
"Earned Interest" for any Rate Tranche (for each day in an Interest
Period applicable to such Rate Tranche) means an amount equal to the product of
(i) such Rate Tranche on such day, times (ii) the Interest Rate for such Rate
Tranche on such day, times (iii) 1/360. No provision of the Agreement shall
require the payment or permit the collection of Earned Interest in excess of the
maximum permitted by applicable law. Earned Interest for any Rate Tranche shall
not be considered paid by any distribution if at any time such distribution is
rescinded or must otherwise be returned for any reason.
"Eligible Contract" means, at any time, a Contract:
(a) that is not a Defaulted Contract or a Delinquent Contract;
(b) which has been closed, funded, acquired and serviced by the
Borrower in the ordinary course of its business in accordance with the Contract
Transfer Documents, the applicable Rights Agreements and applicable law;
(c) with regard to which the warranty of the Borrower in Section
7.01(k) is true and correct;
(d) that has been duly authorized and that, together with the
related Required Documents and the CP Units arising thereunder, is in full force
and effect and constitutes the legal, valid and binding obligation of the
Obligor and the parties to the Related Documents thereunder enforceable against
such Persons in accordance with its terms (subject to the effect of bankruptcy,
insolvency, reorganization, or other similar laws) and is not subject to any
dispute, offset, counterclaim, right of rescission or defense whatsoever;
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(e) which, together with the applicable Required Documents, does not
contravene any laws, rules or regulations applicable thereto and with respect to
which no party to such Contract or documents is in violation of any such law,
rule or regulation; and
(f) which, together with the related Required Documents, has not
been sold, assigned or pledged to any other person and as to which Contract and
documents the Borrower has good and marketable title, free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest, and is
the sole owner and had full right to grant a security interest in such Contract
and documents to the Collateral Agent.
"Eligible CP Unit" means, at any time, a Pool Unit arising under an
Eligible Contract.
"ERISA" means the U.S. Employee Retirement Income Security Act of
1974, as amended from time to time.
"Eurodollar Margin" means a rate per annum determined in accordance
with the Pricing Schedule attached as Schedule 1.1 hereto.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any
Interest Period for any Rate Tranche, a rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) determined pursuant to the following
formula:
Eurodollar Rate = Eurodollar Rate
---------------
(Reserve Adjusted) 1-Eurodollar
Reserve Percentage
where:
"Eurodollar Rate" means, with respect to any Interest Period
for any Rate Tranche, the rate per annum at which Dollar
deposits in immediately available funds are offered to the
Eurodollar Office of the Agent two Eurodollar Business Days
prior to the beginning of such period by prime banks in the
interbank eurodollar market at or about 11:00 a.m., New York
City time for delivery on the first day of such Interest
Period, for the number of days comprised therein and in an
amount equal or comparable to the amount of such Rate Tranche.
"Eurodollar Business Day" means a day of the year on which
dealings are carried on in the London interbank market and
banks are open for business in London and are not required or
authorized to close in New York City.
"Eurodollar Office" shall mean the office of the Agent
designated as such on the signature page to the Agreement and,
thereafter, such other office or
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offices of the Agent (as designated from time to time by
notice from the Agent to the Borrower) or such other office or
offices through which the Agent determines the Eurodollar
Rate. A Eurodollar Office of the Agent may be, at the option
of the Agent, either a domestic or foreign office.
"Eurodollar Reserve Percentage" means, with respect to any
Interest Period, the then applicable percentage (expressed as
a decimal) prescribed by the Federal Reserve Board for
determining reserve requirements applicable to "Eurocurrency
Liabilities" pursuant to Regulation D.
"Event of Bankruptcy" shall be deemed to have occurred with respect
to a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding
up, or composition or readjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or a material part
of its assets, or any similar action with respect to such Person
under any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts, and such case or
proceeding shall continue undismissed, or unstayed and in effect,
for a period of 60 days; or an order for relief in respect of such
Person shall be entered in an involuntary case under the federal
bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar law
now or hereafter in effect, or shall consent to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee,
custodian, sequestrator (or other similar official) for, such Person
or for any material part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail to, or admit
in writing its inability to, pay its debts generally as they become
due, or, if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing.
"Event of Default" has the meaning set forth in Section 11.01.
"Excluded Taxes" means, with respect to the Agent, the Lender, or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) income or franchise taxes imposed by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, and (b) in the case of the Lender, any
withholding tax that is imposed on amounts payable to the Lender unless, such
withholding tax
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is the result of a Regulatory Change (including a change) and such Lender has
complied with the provisions of Section 5.06(c).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions thereof.
"Final Pay Out Date" means the date, after the Commitment
Termination Date, when the outstanding principal amount of all Loans, and all
interest, fees and other amounts payable under the Transaction Documents have
been paid to the Secured Parties.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"Fiscal Quarter" means a fiscal quarter of the Borrower.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"Governmental Authority" has the meaning set forth in the
Intercreditor Agreement.
"Indemnified Amounts" has the meaning set forth in Section 14.01.
"Indemnified Party" has the meaning set forth in Section 14.01.
"Insurance Agreement" means the Insurance Agreement, dated as of the
date hereof, between the Insurer and the Borrower, as the same may be amended,
waived or otherwise modified; provided that, for purposes of this Agreement, no
amendment, waiver or other modification of such agreement shall be effective
without the Agent's prior written consent if (x) it gives rise to a Prohibited
Effect or (y) it occurs during an Insurer Default Period.
"Insurer" means XXXXX and its successors and permitted assigns.
"Insurer Event of Default" means the existence and continuance of
any of the following: (a) a failure by the Insurer to make a payment required
under the Surety Bond in accordance with its terms for 3 Business Days after
notice thereof (in the form attached to the Surety Bond) has been received by
the Insurer from the Agent specifically identifying such payment failure as an
incipient Insurer Event of Default, or (b)(i) the Insurer (A) files any petition
or commences any case or proceeding under any provision or chapter of any
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (B) makes a general assignment for the benefit of
its creditors, or (C) has an order for relief entered against it under any
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or (ii) a court
of competent
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jurisdiction, the New York Department of Insurance or other competent authority
having regulatory oversight of the affairs of the Insurer enters a final and
nonappealable order, judgment or decree (A) appointing a custodian, trustee,
agent or receiver for the Insurer or for all or any material portion of its
property or (B) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Insurer (or the taking of possession of all or any
material portion of the property of the Insurer).
"Insurer Default Period" means the period (x) commencing upon the
occurrence of an Insurer Event of Default, and (y) ending on the related End
Date. If such Insurer Event of Default is of the type described in (a) the
definition thereof, and no other Insurer Event of Default has occurred at any
time, "End Date" means the date that such Insurer Event of Default is no longer
in existence. Otherwise, "End Date" means the date on which all obligations to
the Secured Parties under the Loan Agreement have been fully paid and performed.
"Intercreditor Agreement" means the Security and Intercreditor
Agreement, dated as of the date hereof, among the Borrower, the Agent, the
Lender, the Collateral Agent and the Insurer, as the same may be amended, waived
or otherwise modified; provided that, for purposes of this Agreement, no
amendment, waiver or other modification of such agreement shall be effective
without the Agent's prior written consent if (x) it gives rise to a Prohibited
Effect or (y) it occurs during an Insurer Default Period.
"Interest Period" means, with respect to any Rate Tranche, each
period
(a) commencing on, and including, the date of creation of such Rate
Tranche pursuant to Section 2.02, or the last day of the immediately
preceding Interest Period for such Rate Tranche (whichever is
later); and
(b) ending on, and excluding, the date that falls, (i) if the
Interest Rate for such Interest Period is based on the Eurodollar
Rate (Reserve Adjusted), the next succeeding Payment Date, or (ii)
if the Interest Rate for such Interest Period is based on the
Alternate Base Rate, such number of days thereafter as the Agent may
select in its sole discretion;
provided, however, that
(A) any Interest Period of one day for any Rate Tranche, (I)
if such Interest Period is the initial Interest Period for a new
Rate Tranche created in connection with a Loan, shall be the day of
the funding of such Rate Tranche, and (II) if such Interest Period
is not the initial Interest Period for such Rate Tranche, (x) if the
immediately preceding Interest Period is more than one day, shall be
the last day of such immediately preceding Interest Period, and (y)
if the immediately preceding Interest Period is one day, shall be
the next day following such immediately preceding Interest Period;
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(B) any Interest Period which commences before a Payment Date
and would otherwise end after the next preceding Payment Date shall
end on such Payment Date; and
(C) subject to clause (ii) above, each Interest Period which
commences on or after the maturity of the Loans shall be of such
duration as the Agent may select in its sole discretion.
The "related" Interest Period for any Rate Tranche at any time means the
Interest Period pursuant to which Earned Interest is then accruing for such Rate
Tranche.
"Interest Rate" for any Interest Period (and the related Interest
Period) for any Rate Tranche means a rate per annum equal for each day in such
period to the Bank Rate in effect on such day; provided, however, that on any
day when any Event of Default shall have occurred and be continuing, the
Interest Rate shall mean a rate per annum equal to the Interest Rate for such
Rate Tranche in effect on such day plus 2.0% per annum.
"Interim Manager Report" means a report substantially in the form of
Exhibit C-2.
"Lender" means the Person identified as "Lender" in the preamble to
this Agreement, in its capacity as Lender, together with its successors and
permitted assigns.
"Letter Agreement" has the meaning set forth in the Intercreditor
Agreement.
"Lien" means a lien, security interest, charge, or encumbrance, or
other right or claim of any Person other than (a) a potential claim or right
(that has not yet been asserted) of a trustee appointed for an Obligor in
connection with any Event of Bankruptcy or (b) an unfiled lien for taxes accrued
but not yet payable.
"Loan" has the meaning set forth in Section 1.01.
"Loan Request" has the meaning set forth in Section 1.03.
"Management Agreement" has the meaning set forth in the
Intercreditor Agreement.
"Manager" means Meridian Venture Group Management, Ltd., a New York
Corporation, or any successor or replacement manager of the Borrower that has
been appointed pursuant to the Management Agreement.
"Manager Report" means a Quarterly Manager Report or an Interim
Manager Report.
"Managing Member" means Meridian Venture Partners LLC, a Delaware
limited liability company and the managing member of the Parent.
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"Material Adverse Effect" means, with respect to any event,
condition or circumstance, a material adverse effect on:
(i) the ability of the Borrower, the Manager, the Insurer or the
other Relevant Parties to perform its obligations under this
Agreement or any other Transaction Document;
(ii) the validity, enforceability, collectibility or value of any
Transaction Document or any Collateral;
(iii) the status, existence, perfection, priority, enforceability or
value of the Collateral Agent's security interests in and liens on
the Collateral; or
(iv) the financial condition, operations or prospects of any
Relevant Party.
"Meridian" means Meridian Venture Group LLC, a Delaware limited
liability company.
"Net Worth" means, at any time, an amount equal to the sum of (i)
the member's capital in the Borrower (including earnings retained), minus (ii)
amounts shown on the Borrower's balance sheet as goodwill, all determined in
accordance with GAAP, and minus (iii) the value of CP Units that are not
Eligible CP Units.
"Neupogen" has the meaning set forth in the Insurance Agreement.
"Note" shall have the meaning set forth in Section 2.01.
"Obligor" means Amgen Inc. (and its successors or assigns), Centocor
Inc. (and its successors or assigns), Eli Lilly Company (and its successors and
agents) or any other Person obligated to make payments with respect to a CP
Unit. In the case of an Obligor which is an Affiliate of any other Obligor, the
aggregate Unpaid Balance of Pool Units of such Obligors shall be calculated as
if such Obligors were one Obligor.
"Offer to Purchase" has the meaning set forth in the Intercreditor
Agreement.
"Outstanding Balance" at any time means the aggregate outstanding
principal amount of the Loans; provided, however, the Outstanding Balance shall
not be considered reduced by any payment if at any time such payment is
rescinded or must otherwise be returned for any reason.
"Parent" means Meridian Venture Capital, LLC, a Delaware limited
liability company and the sole member of the Borrower.
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"Payment Date" means (x) the fifteenth day of each September,
December, March and June (or, if such day is not a Business Day, the next
succeeding Business Day (commencing September 15, 2000)), and (y) June 30, 2005
(or, if such day is not a Business Day, the next succeeding Business Day).
"Pay Out Period" means the period from and including the Commitment
Termination Date and to and including the Final Pay Out Date.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government or any agency or political subdivision thereof or any other
entity.
"Pool Balance" means, at any time, the aggregate unpaid principal
amount of Eligible CP Units.
"Pool Unit" means a CP Unit in the CP Unit Pool.
"Prohibited Effect" has the meaning set forth for the term "Lender
Prohibited Effect" in the Intercreditor Agreement.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Quarterly End Date" means the last day of each calendar quarter.
"Quarterly Manager Report" means a report substantially in the form
of Exhibit C-1.
"Rate Tranche" has the meaning set forth in Section 2.02.
"Regulation D" means Regulation D of the Federal Reserve Board, or
any other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulatory Change" means, relative to any Affected Party:
(a) any change in (or the adoption, implementation, phase-in
or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement
or request (whether or not having the force of law) applicable
to such Affected Party of
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(A) any court, government authority charged with the
interpretation or administration of any law referred to in
clause (a)(i) or of (B) any fiscal, monetary or other
authority having jurisdiction over such Affected Party; or
(iii) GAAP or regulatory accounting principles
applicable to such Affected Party and affecting the
application to such Affected Party of any law, regulation,
interpretation, directive, requirement or request referred to
in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of
any existing law, regulation, interpretation, directive,
requirement, request or accounting principles referred to in clause
(a)(i), (a)(ii) or (a)(iii) above.
"Related Property" means, with respect to any Pool Unit: (a) all of
the Borrower's right, title and interest in and to all Contracts, Required
Documents or other agreements or documents that evidence, secure or otherwise
relate to such Pool Unit; (b) all collateral, guarantees and other agreements or
arrangements of whatever character (if any) from time to time supporting or
securing payment of such Pool Unit whether pursuant to the Contract or Required
Documents related to such Pool Unit or otherwise; (c) all books and records
evidencing or otherwise relating to any Pool Units or any of the foregoing; and
(d) all Collections with respect to, and other proceeds of, such Pool Units and
any of the property described above.
"Relevant Parties" means the Borrower, the Parent, the Manager,
Meridian and the Managing Member.
"Remaining Term", means, at any time, for any Contract, the number
of months remaining from the date of determination to the final maturity of such
Contract.
"ReoPro" has the meaning set forth in the Insurance Agreement.
"Required Documents" means, with respect to a Contract, the
documents and agreements required to be delivered in connection with the
purchase of such Contract, but in any event each of the following: (i) the
original executed copy of such Contract and (ii) the related Contract Transfer
Documents.
"Required Equity Amount" means, with respect to any proposed funding
of a Loan:
(x) $4,000,000, if (after giving effect to such Loan) the
Outstanding Balance does not exceed $1,000,000; or
(y) the sum of $4,000,000 plus 25% of the excess of the
Outstanding Balance (after giving effect to any Loan to be funded on
such date) over $1,000,000, if (after giving effect to such Loan),
the Outstanding Balance is greater than
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$1,000,000; provided that in no event shall the Required Equity
Amount exceed $10,000,000.
"Rights Agreements" means each contract between an Obligor and any
Person with respect to certain contractual rights to receive cash payments based
upon the sales of the biotechnology drugs (i) Neupogen manufactured by Amgen,
Inc. and its successors or Affiliates, and marketed by Amgen, Inc., Roche Inc.
and their Affiliates or (ii) ReoPro manufactured by Centocor, Inc. and its
successors and Affiliates, and marketed by Centocor, Inc., Eli Lilly and Company
and their successors and Affiliates, including the Amgen Rights Agreements and
the Centocor Rights Agreements.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Scheduled Commitment Termination Date" has the meaning set forth in
Section 1.04.
"Secured Obligations" has the meaning set forth in the Intercreditor
Agreement.
"Secured Parties" means the Agent, the Lender, the Insurer, the
Indemnified Parties, the Affected Parties, the Collateral Agent, the Controlling
Party and their respective successors and assigns.
"Subsidiary" means a corporation of which the Borrower, and/or its
other Subsidiaries own, directly or indirectly, such number of outstanding
shares as have more than 50% of the ordinary voting power for the election of
directors.
"Surety Bond" means the Surety Bond, dated as of the date hereof,
between the Insurer and the Lender, as the same may at any time be amended or
modified and in effect.
"Termination Date" means June 30, 2005 (or if such day is not a
Business Day, the next succeeding Business Day).
"Transaction Documents" means this Agreement, the Note, the
Intercreditor Agreement, the Management Agreement, the Surety Bond, the
Insurance Agreement, the Offer to Purchase, the Contract Transfer Documents, the
Contribution Agreement, the Letter Agreement, and the other documents to be
executed and delivered in connection herewith.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction or jurisdictions.
"Unmatured Event of Default" means any event which, with the giving
of notice or lapse of time or both, would, unless cured or waived, become an
Event of Default.
A-15
"Valuation Event" means a "Borrower Default" described in clause
(i), (j), (o), (u), (v), (w) or (x) of Section 6.1 of the Insurance Agreement,
as in effect on the date hereof.
A-16
SCHEDULE 1.1
PRICING SCHEDULE
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Level S&P Rating Moody's Rating Eurodollar Margin
- --------------------------------------------------------------------------------
I AAA Aaa XXXX%
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II AA/AA- Aa2/Aa3 XXXX%
- --------------------------------------------------------------------------------
III A+/A A1/A2 XXXX%
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IV A- A3 XXXX%
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V BBB+/BBB Baa1/Baa2 XXXX%
- --------------------------------------------------------------------------------
VI Below BBB Below Baa2 XXXX%
- --------------------------------------------------------------------------------
The applicable Level is based on the financial strength rating of
the Insurer. Initially, Level II shall apply until a change in the S&P Rating or
Moody's Rating. If the Insurer is split- rated and the ratings differential is
one level, the higher rating will apply. If the Insurer is split- rated and the
ratings differential is two levels or more, the intermediate rating at the
midpoint will apply. If there is no midpoint, the higher of the intermediate
ratings will apply.
If at any time the Insurer has a Moody's Rating but no S&P Rating,
the Moody's Rating will apply. If at any time the Insurer has an S&P Rating but
no Moody's Rating, the S&P Rating will apply. If at any time the Insurer has no
Moody's Rating and no S&P Rating, the applicable Level will be based on the
financial strength rating of XXXXX. If at any time XXXXX has a Moody's Rating
but no S&P Rating, the Moody's Rating will apply. If at any time XXXXX has an
S&P Rating but no Moody's Rating, the S&P Rating will apply. If at any time
XXXXX has no Moody's Rating and no S&P Rating, Level VI shall exist. If the
Surety Bond is assigned pursuant to the Transaction Documents, then the
applicable Level is based on the Ratings of the assignee.
A-17
Schedule 7.01(h)
Description of Borrower Material Adverse Changes
None
Schedule 7.01(i)
Description of Borrower Litigation
None
Schedule 7.01(m)
List of Offices of Borrower Where Records Are Kept
767 Fifth Avenue
Fourth Floor
New York, New York 10153
Schedule 15.02
Addresses of Notice
MERIDIAN VENTURE GROUP, LLC
Address: 767 Fifth Avenue
Fourth Floor
New York, NY 10153
Attention: Constance Harrison Meyer
Phone: 212-688-2015
Facsimile: 212-644-4245
XXXXXXXX, as Agent
XXXXXXXX
XXXXXXXX
Credit Contact:
Attention: XXXXXXXX
Phone: XXXXXXXX
Facsimile: XXXXXXXX
Operations Contact:
Attention: _______________
Phone:
Facsimile:
XXXXX
XXXXX
XXXXX
Attention: XXXXX
Telephone: XXXXX
Facsimile: XXXXX
Reference: Meridian Venture Group, LLC
with a copy delivered by facsimile to:
XXXXX
XXXXX
XXXXX
Telephone: XXXXX
Facsimile: XXXXX
Attention: XXXXX
Reference: Meridian Venture Group, LLC
Phone: 212-898-5448
Facsimile: 212-898-5444
Exhibit A
FORM OF LOAN REQUEST
XXXXXXXX,
XXXXXXXX
XXXXXXXX
Attention: ______________
Ladies and Gentlemen:
Please refer to the Loan Agreement dated as of June 21, 2000 (the
"Loan Agreement") among Meridian Venture Group, LLC (the "Borrower"), XXXXXXXX
(the "Lender") and XXXXXXXX, as Agent (in such capacity, the "Agent").
Capitalized terms used but not otherwise defined herein have the meanings
assigned thereto in the Loan Agreement.
Pursuant to Section 1.03 of the Loan Agreement, the Borrower hereby
requests the Lender to make a Loan to the Borrower on _______________, 200_ (the
"Funding Date") in the principal amount of $_____________. We hereby certify as
follows:
1. The conditions precedent to the making of a Loan on the Funding
Date in Article VI of the Loan Agreement are satisfied and will be satisfied on
the Funding Date.
2. After giving effect to the requested Loan, the Outstanding
Balance does not exceed the Commitment Amount.
3. Attached hereto is a true and complete Manager Report prepared as
of [the most recent Month End Date] [________, 200_].
IN WITNESS WHEREOF, we have caused this Loan Request to be executed
and delivered by our duly authorized officer on the date first above written.
MERIDIAN VENTURE GROUP, LLC
By: Meridian Venture Capital LLC
Its Managing Member
By: Meridian Venture Partners, LLC
Its Managing Member
By:______________________________________
Name:___________________________________
Title:__________________________________
THIS LOAN REQUEST IS NOT VALID UNLESS SIGNED BY XXXXX
Accepted and Agreed as of
the date first written above:
XXXXX
By:______________________________________
Name:___________________________________
Title:__________________________________
Exhibit B
FORM OF NOTE
$30,000,000 June 21, 2000
New York, New York
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
XXXXXXXX, (the "Lender") at the principal office of XXXXXXXX, as Agent (the
"Agent"), in XXXXX, on the date set forth in the Loan Agreement referred to
below, THIRTY MILLION DOLLARS ($30,000,000) or, if less, the aggregate unpaid
principal amount of all Loans made by the payee to the undersigned pursuant to
the Loan Agreement (as shown in the records of the payee or, at the payee's
option, on the schedule attached hereto and any continuation thereof).
The undersigned further promises to pay interest on the unpaid principal
amount of each Loan evidenced hereby from the date of such Loan until such Loan
is paid in full, payable at the rate(s) and at the time(s) set forth in the Loan
Agreement. Payments of both principal and interest are to be made in lawful
money of the United States of America.
This Note evidences indebtedness incurred under, and is subject to the
terms and provisions of, the Loan Agreement, dated as of June 21, 2000 (herein,
as amended or otherwise modified from time to time, called the "Loan Agreement";
terms not otherwise defined herein are used herein as defined in the Loan
Agreement), among the undersigned, the Lender and the Agent, to which Loan
Agreement reference is hereby made for a statement of the terms and provisions
under which this Note may or must be paid prior to its due date or may have its
due date accelerated.
In addition to and not in limitation of the foregoing and the provisions
of the Loan Agreement, the undersigned further agrees, subject only to any
limitation imposed by applicable law, to pay all reasonable expenses, including
reasonable attorneys' fees and legal expenses, incurred by the holder of this
Note in endeavoring to collect any amounts payable hereunder which are not paid
when due, whether by acceleration or otherwise. The undersigned hereof waives
demand, presentment, protest, diligence, notice of dishonor and any other
formality in connection with this Note.
This Note is made under and governed by the internal laws of the State of
New York.
MERIDIAN VENTURE GROUP, LLC
By: Meridian Venture Capital LLC
Its Managing Member
By: Meridian Venture Partners, LLC
Its Managing Member
By:______________________________________
Name:___________________________________
Title:__________________________________
-2-
Schedule Attached to Note dated June 21, 2000, of MERIDIAN VENTURE GROUP, LLC
payable to the order of XXXXXXXX,
Date and Date and Unpaid
Amount of Amount of Principal Notation
Loan Repayment Rate Tranche Interest Period Balance Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Exhibit (c)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell contractual contingent payment rights arising from the purchase of Class
A Interests of Amgen Clinical Partners, L.P. ("CCPRs"). The Offer (as defined
below) is made only by the Offer to Purchase, dated September 11, 2000 and the
related Letter of Transmittal, and any amendments or supplements thereto, and is
being made to all holders of CCPRs. The Offer, however, is not being made to
(nor will tenders be accepted from or on behalf of) holders of CCPRs residing in
any jurisdiction in which the making of the Offer or the acceptance thereof
would not be in compliance with the securities, blue sky or other laws of such
jurisdiction. However, the Purchaser (as defined below) may, in its discretion,
take such action as it may deem necessary to make the Offer in any jurisdiction
and extend the Offer to holders of CCPRs in such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
BY MERIDIAN VENTURE GROUP, LLC,
UP TO 100 CONTRACTUAL CONTINGENT
PAYMENT RIGHTS ARISING FROM THE PURCHASE OF CLASS A
INTERESTS OF AMGEN CLINICAL PARTNERS, L.P. ("CCPRs")
SUBJECT TO THE TERMS AND CONDITIONS OF
THIS OFFER AT
$265,000 PER CCPR
Meridian Venture Group, LLC, a Delaware limited liability company ("Purchaser"),
was formed in December of 1999 to identify, acquire and hold contingent payment
rights of pharmaceutical companies. The business address and telephone number of
Purchaser is 767 Fifth Avenue, 4th Floor, New York, New York 10153, (212)
688-2015. Meridian Venture Capital, LLC, a Delaware limited liability company
("MVC"), was formed to acquire a membership interest in Purchaser and to
contribute any contingent payment obligations which it may acquire from
pharmaceutical companies to Purchaser. The business address and telephone number
of MVC is 767 Fifth Avenue, 4th Floor, New York, New York 10153, (212) 688-2015.
Purchaser is offering to purchase up to 100 CCPRs for cash consideration per
CCPR of $265,000 (the "Purchase Price") upon the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (with together with any supplements thereto, collectively constitute
the "Offer".) The Purchase Price will be automatically reduced by the aggregate
amount of the value of any distributions made or declared by Amgen Inc.
("Amgen") on or after September 11, 2000, and prior to the date on which the
Purchaser pays the Purchase Price for the tendered CCPRs.
Any tendering CCPR holder ("Holder") who has CCPRs registered in their name and
who tenders directly to MMS Escrow and Transfer Agency (the "Depositary" and
"Information Agent") will not be charged brokerage fees or commissions in
tendering their CCPRs pursuant to the Offer. Holders who hold their CCPRs
through a broker or a bank should consult such institution as to whether it
charges any service fees. Purchaser will pay all charges and expenses of the
Depositary and the Information Agent incurred in connection with the Offer.
-------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
OCTOBER 20, 2000, UNLESS THE OFFER IS EXTENDED
(THE "EXPIRATION DATE").
-------------------------------------------------------
Purchaser was formed to identify, acquire and own contingent payment rights of
pharmaceutical companies. The purpose of the Offer is to fulfill that purpose.
The Offer is conditioned upon, among other things, Purchaser being satisfied
that, upon purchase of the CCPRs pursuant to the Offer, Purchaser will have full
ownership rights and will become the registered holder of all of the purchased
CCPRs; that all material regulatory and related approvals have been obtained or
made on terms reasonably satisfactory to Purchaser; that litigation challenging
this Offer is absent; that no law or regulation exists preventing this Offer;
that there is no competing tender offer; or that there has not been any change
effecting the contingent payments relevant to each CCPR. The Offer is further
subject to certain other conditions set forth in the Offer to Purchase. See the
Summary, the Introduction and Sections 1, 14 and 15 of the Offer to Purchase.
The Offer is not conditioned upon Purchaser obtaining financing.
On the date hereof, Purchaser's manager and sole member is MVC. Pursuant to the
express terms of Purchaser's Limited Liability Operating Agreement, and a
certain Management Agreement dated June 21, 2000, between Purchaser, MVC, and
Meridian Venture Group Management Ltd., a New York corporation ("MVM"), MVM
became vested with full power and authority to make this tender offer on behalf
of Purchaser for the purchase of the CCPRs. The Purchaser is acquiring the CCPRs
solely for investment purposes.
For the purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, CCPRs validly tendered and not properly
withdrawn, if and when the Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such CCPRs for payment pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
CCPRs so accepted will be made by deposit of the Net Purchase Price (herein
defined as the Purchase Price reduced by the aggregate amount of the value of
any distributions made or declared by Amgen on or after September 6, 2000, and
prior to the date on which the Purchaser pays the Purchase Price for the
tendered CCPRs for all CCPRs purchased) with the Depositary. The Depositary will
act as agent for tendering Holders for the purpose of receiving payment from the
Purchaser of the Net Purchase Price and transmitting such payment to validly
tendering Holders.
The Purchaser's Offer is for 100 CCPRs. In the event prior to the Expiration
Date more than 100 CCPRs have been tendered, the Purchaser will accept for
payment and thereby purchase only 100 CCPRs. Under such circumstance, the
Purchaser will acquire the CCPRs pro rata to the number of CCPRs validly
tendered and not properly withdrawn on or before the Expiration Date, with
appropriate adjustments to avoid purchases in multiples of other than quarter
CCPRs.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR THE CCPRs BE
PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
In all cases, payment for CCPRs tendered and accepted for payment pursuant to
the Offer will be made only after the Expiration Date by the Depositary upon the
satisfaction of all conditions of the Offer including its possession of (i)
relevant Letters of Transmittal (or facsimiles thereof), properly completed and
duly executed, with any required
2
signature guarantees and (ii) any other documents required under the Letter of
Transmittal.
No appraisal rights are available to Holders in connection with the Offer.
Holders may choose to retain all or part of their CCPRs by not so tendering in
the Offer.
NEITHER THE PURCHASER, MVC, OR MVM MAKE ANY RECOMMENDATION TO ANY HOLDER AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING CCPRs. EACH HOLDER MUST MAKE THEIR
OWN DECISION WHETHER TO TENDER CCPRs, AND IF SO, HOW MANY CCPRs TO TENDER.
Purchaser expressly reserves the right to extend the period of time during which
the Offer is open by giving oral or written notice of such extension to the
Depositary which will be followed as promptly as practicable by a public
announcement of such extension. The announcement of any extension shall be
issued no later than 9:00 a.m. New York City time on the next business day after
what would have been, without the extension, the Expiration Date.
Except as otherwise provided in the Offer, tenders of CCPRs pursuant to the
Offer are irrevocable. CCPRs tendered pursuant to the Offer may be withdrawn
prior to the Expiration Date, and unless theretofore accepted for Payment by
Purchaser as provided in the Offer, may also be withdrawn at any time after
November 9, 2000. If Purchaser extends the Offer, is delayed in its purchase or
payment of CCPRs, or is unable to purchase or pay for CCPRs for any reason, then
tendered CCPRs may be retained by the Depositary on behalf of the Purchaser,
without prejudice to the rights of the Purchaser, and may not be withdrawn
pursuant the requirements of the Offer. For withdrawal to be effective, a
written, telegraphic or facsimile transmission notice of withdrawal must be
received by the Depositary prior to the Expiration Date at its address set forth
on the back cover page of the Offer to Purchase. Any such notice of withdrawal
must specify the name of the person who tendered the CCPRs to be withdrawn, the
number of CCPRs to be withdrawn and the name of the registered holder of such
CCPRs, if different from that of the person who tendered such CCPRs. All
questions as to the form and validity (including the time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding.
Pursuant to Rule 14d-5 of the Securities and Exchange Act of 1934, as amended,
Purchaser has made a request to Amgen on the date hereof to obtain a list of
Holders of the CCPRs for the purpose of disseminating the Offer to Purchase and
related Letter of Transmittal to the Holders of CCPRs. In response to that
request, Amgen has the option of either providing that list to Purchaser, to
permit Purchaser to mail the Offer to Purchase and related letter of Transmittal
to the Holders of CCPRs, or to mail the Offer to Purchase and related Letter of
Transmittal to the Holders of CCPRs at Purchaser's expense. The Offer to
Purchase and the related Letter of Transmittal will be mailed to record holders
of CCPRs whose names appear on the list of Holders completed by Amgen (the
"Holders List") and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the Holders list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of CCPRs.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH
3
SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
THE INFORMATION REQUIRED TO BE DISCLOSED BY REGULATION 14D AND REGULATION M-A
PROMULGATED UNDER THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED, IS
CONTAINED IN THE OFFER TO PURCHASE AND IS INCORPORATED HEREIN BY REFERENCE.
Please contact the Depositary for copies of the Offer to Purchase, the related
Letter of Transmittal and all other tender offer materials. The Depositary will
furnish copies promptly at Purchaser's expense. The Purchaser will not pay any
fees or commissions to any broker or dealer or any other person for soliciting
tenders of CCPRs pursuant to the Offer.
The Depositary: MMS Escrow and Transfer Agency
PO Box 7090
Troy Michigan 48007-7090
Attention: Matthew Fisher
Telephone: (877) 346-8317
For information concerning the Offer please contact the following representative
of the Purchaser:
The Purchaser: Meridian Venture Group, LLC
767 Fifth Avenue, 4th Floor
New York, New York 10153
Attention: David B. Schmickel
Telephone: (212) 688-2015
September 11, 2000
4