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Ex 10.5
GUARANTY
This Guaranty (this "GUARANTY") is entered into as of January 12,
2001 by and between Biovail Corporation, a Canadian company having its principal
place of business at 2488 Dunwin Drive, Mississauga, Ontario L5L 1J9
("GUARANTOR"), in favor of and for the benefit of DOV Pharmaceutical, Inc., a
Delaware corporation having an address at 433 Hackensack Avenue, Hackensack, New
Jersey, U.S.A. 07601 ("GUARANTEED PARTY"). In the event of any conflict or
inconsistency between the terms of this Guaranty and the terms of the License
Agreement (as defined below), the latter shall prevail. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to those terms
in the License Agreement.
RECITALS
WHEREAS, Guaranteed Party and Biovail Laboratories Incorporated, a
Barbados corporation whose head office is located at Chelston Park, Building 2,
Collymore Rock, St. Michael BH1, Barbados, West Indies ("OBLIGOR"), have entered
into that certain Research, License and Development Agreement dated as of the
date hereof (as the same may hereafter be amended from time to time, the
"LICENSE AGREEMENT").
WHEREAS, Obligor is a subsidiary of Guarantor, and thus the grant of
the exclusive license by the Guaranteed Party to Obligor as contemplated by the
License Agreement will inure to the benefit of Guarantor (which benefits are
hereby acknowledged by Guarantor).
WHEREAS, Guaranteed Party has advised Guarantor that it is not
willing to enter into the License Agreement without Guarantor being a party
thereto and responsible for the obligations therein of Obligor unless all
Obligor's obligations thereunder are guaranteed on a fully recourse basis by
Guarantor. Guarantor is willing, irrevocably and unconditionally, to guaranty
such obligations of Obligor on a fully recourse basis.
NOW THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce Guaranteed Party to enter into the License Agreement and to
grant the license contemplated thereunder, Guarantor hereby agrees as follows:
ARTICLE I - THE GUARANTY
SECTION 1.1. GUARANTY OF THE GUARANTEED OBLIGATIONS.
(a) Guarantor hereby irrevocably and unconditionally
guaranties the full and punctual performance (including, when used herein,
the full and punctual payment of all amounts owing under the License
Agreement) to Guaranteed Party of all obligations of Obligor in or arising
out of or relating to the License Agreement, in addition to those expenses
set forth in Section 1.7 hereof, whether direct or indirect,
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absolute or contingent, due or to become due, now existing or hereafter
arising or acquired, and whether consisting of obligations to pay money or
to perform in respect of the obligations and not merely as a surety (the
"GUARANTEED OBLIGATIONS").
(b) This Guaranty shall operate as a continuing, unconditional
and absolute guaranty of the due and punctual performance of the
Guaranteed Obligations, and not of their collectibility only. If Obligor
defaults in the performance of any Guaranteed Obligation, the obligation
of Guarantor under this Guaranty to perform such Guaranteed Obligation
shall be immediate in accordance with Section 1.2 below. The liability of
the Guarantor under this Guaranty shall be unlimited and the Guarantor
hereby irrevocably and unconditionally covenants and agrees that it is
liable for the Guaranteed Obligations as a primary obligor and not merely
as a surety.
SECTION 1.2. PERFORMANCE BY GUARANTOR. If all or any part of the
Guaranteed Obligations are not punctually performed, including the expiration of
any applicable grace or cure period, Guarantor shall, immediately upon written
demand by Guaranteed Party, and without presentment, protest, notice of protest,
notice of non-payment, notice of non-performance, or any other notice
whatsoever, all of which are expressly waived, perform the Guaranteed
Obligations in question. Such demand may be made from time to time with respect
to the same or different Guaranteed Obligations, and shall be deemed made, given
and received in accordance with the notice provisions of the License Agreement.
SECTION 1.3. LIABILITY OF GUARANTOR ABSOLUTE. Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance that constitutes a legal or
equitable discharge of a guarantor or surety other than performance in full of
the Guaranteed Obligations. In furtherance of the foregoing and without limiting
the generality thereof, Guarantor agrees as follows:
(a) Guaranteed Party may enforce this Guaranty upon the
occurrence and during the continuance of any default under the License
Agreement notwithstanding the existence of any dispute between the Obligor
and Guaranteed Party with respect to the existence of such default,
provided that such right to enforce shall be suspended for the duration of
such dispute if the dispute resolution procedures set forth in Article
XIII of the License Agreement are being carried out by the Parties thereto
and if Guarantor intervenes in the litigation or arbitration (to which
Guaranteed Party may not object), provided further that such intervention
shall permit Guarantor to assert against Guaranteed party, inconsistently
with its rights and obligations hereunder, defenses, set-offs or
counterclaims, if any, available to Obligor under the License Agreement.
(b) The obligations of Guarantor hereunder are independent of
the obligations of Obligor under the License Agreement, and subject to
Section 1.3(a) a separate action or actions may be brought and prosecuted
against Guarantor whether or not any action is brought against the Obligor
or any other person and whether or not Obligor is joined in any such
action or actions.
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(c) Performance by Guarantor of a portion of, but not all, the
Guaranteed Obligations shall not affect Guarantor's liability for any
portion of the Guaranteed Obligations that has not been performed.
(d) If Guarantor is awarded a judgment in any suit brought to
enforce its performance of a portion of the Guaranteed Obligations, in the
absence of a specific ruling to the contrary such judgment shall not be
deemed to release Guarantor from its covenant to perform the portion of
the Guaranteed Obligations not the subject of such suit.
(e) Guaranteed Party, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or
enforceability of this Guaranty or giving rise to any change in
Guarantor's liability hereunder, from time to time may
(i) change the terms of performance of the Guaranteed
Obligations;
(ii) compromise or release, or accept or refuse any
offer of performance with respect to, or substitutions for, the
Guaranteed Obligations; and
(iii) accept other guaranties of the Guaranteed
Obligations.
(f) This Guaranty and the obligations of Guarantor hereunder
shall be valid and enforceable and shall not be subject to any change for
any reason (other than performance in full of the Guaranteed Obligations)
including any of the following, whether or not Guarantor had notice of any
of them:
(i) any failure or omission by Guaranteed Party to
assert or enforce, or agreement or election not to assert or
enforce, or the stay or enjoining, by order of court, by operation
of law or otherwise, of the exercise or enforcement of, any claim or
demand or any right, power or remedy (whether arising under the
License Agreement, at law, in equity or otherwise) with respect to
the Guaranteed Obligations or any agreement relating thereto, or
with respect to any other guaranty of the Guaranteed Obligations;
(ii) any amendment of or consent to departure from any
of the terms of the License Agreement or any agreement or instrument
executed pursuant thereto, or of any other guaranty of the
Guaranteed Obligations, in each case whether or not in accordance
with the terms of the License Agreement, or any agreement relating
to such other guaranty;
(iii) the Guaranteed Obligations or any agreement
relating thereto are found to be unenforceable for any reason or in
any respect;
(iv) the validity of any defenses, set-offs or
counterclaims that Obligor may allege or assert against Guaranteed
Party in respect of the
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Guaranteed Obligations other than full performance or accord and
satisfaction; and
(v) any act or omission, or delay in acting, that
changes the risk of Guarantor in respect of the Guaranteed
Obligations.
SECTION 1.4. WAIVERS BY GUARANTOR. Guarantor hereby waives for the benefit
of Guaranteed Party and to the fullest extent permitted by law:
(a) any right to require Guaranteed Party, as a condition of
performance by Guarantor, to (i) proceed against Obligor, or any other
person, or (ii) pursue any other remedy in the power of Guaranteed Party;
(b) any defense arising by reason of the incapacity, lack of
authority or any disability of Obligor or based on or arising out of the
lack of validity or the unenforceability of the Guaranteed Obligations or
any agreement or instrument relating thereto or by reason of the cessation
of the liability of Obligor from any cause other than performance in full
of all Guaranteed Obligations;
(c) any defense based upon any statute or rule of law that
provides that the obligation of a surety must be neither larger in amount
nor in other respects more burdensome than that of the principal;
(d) any defense based upon Guaranteed Party's errors or
omissions in the administration of the Guaranteed Obligations, except to
the extent behavior amounts to bad faith or willful misconduct;
(e) (i) any principles or provisions of law, statutory or
otherwise, in conflict with this Guaranty and (ii) promptness, diligence
and any requirement that Guaranteed Party protect, secure, perfect or
insure any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of
protest, notices of dishonor and notices of any action or inaction,
including acceptance of this Guaranty, notices of default under the
License Agreement or any agreement or instrument related thereto, notices
of any renewal, extension or modification of the Guaranteed Obligations,
notices of any of the matters referred to in Section 1.3 and any right to
consent to any thereof; and
(g) any defenses or benefits that may be derived from or
afforded by law that limit the liability of or exonerate guarantors or
sureties, or that may conflict with this Guaranty.
SECTION 1.5. GUARANTOR'S RIGHTS OF SUBROGATION, CONTRIBUTION, ETC. SUBJECT
TO SECTION 1.5(c), until the performance of all Guaranteed Obligations,
Guarantor waives any claim that Guarantor now has or may hereafter have against
Obligor or any of its assets in connection
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with this Guaranty or the performance by Guarantor of its obligations hereunder,
in each case whether such claim arises in equity, under contract, by statute or
under common law including:
(a) any right of subrogation, reimbursement, indemnification
or contribution that Guarantor now has or may hereafter have against
Obligor or against any collateral or security granted by Obligor for any
of the Guaranteed Obligations; and
(b) any right to enforce, or to participate in, any claim that
Guaranteed Party now has or may hereafter have against Obligor, and to the
extent the waiver or agreement to withhold the exercise of its rights of
subrogation, reimbursement, indemnification or contribution as set forth
herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement,
indemnification or contribution Guarantor may have against Obligor shall
be junior and subordinate to any rights Guaranteed Party may have against
Obligor, to all right, title and interest Guaranteed Party may have in any
such collateral or security, and to any right Guaranteed Party may have
against such other guarantor. If any amount is paid to Guarantor on
account of any such subrogation, reimbursement, indemnification or
contribution at any time when all Guaranteed Obligations have not been
paid in full, such amount shall be held in trust for Guaranteed Party and
shall forthwith be paid over to Guaranteed Party to be credited and
applied against the Guaranteed Obligations, whether matured or unmatured,
in accordance with the terms hereof.
(c) The foregoing subsections shall not apply so long as
Obligor remains an Affiliate of Guarantor.
SECTION 1.6. SUBORDINATION OF OTHER OBLIGATIONS. Any obligations of
Obligor now or hereafter held by Guarantor are subordinated in right to the
performance of the Guaranteed Obligations, and any indebtedness of Obligor to
Guarantor received by Guarantor after default under the License Agreement has
occurred and is continuing shall be held in trust for Guaranteed Party and shall
forthwith be paid over to Guaranteed Party to be credited and applied against
the Guaranteed Obligations but without affecting the liability of Guarantor
under any other provision of this Guaranty, provided that the foregoing shall
not apply so long as Obligor remains an Affiliate of Guarantor.
SECTION 1.7. EXPENSES. Guarantor shall pay, or cause to be paid, on
demand, and to save Guaranteed Party harmless against liability for, any and all
out-of-pocket costs and expenses (including fees and disbursements of counsel)
incurred by Guaranteed Party in connection with the enforcement or preservation
of any rights under this Guaranty.
SECTION 1.8. CONTINUING GUARANTY; TERMINATION OF GUARANTY. This Guaranty
is a continuing guaranty and shall remain in effect until full performance of
the Guaranteed Obligations. Guarantor irrevocably waives any right to revoke
this Guaranty as to future transactions giving rise to any Guaranteed
Obligations.
SECTION 1.9. AUTHORITY OF GUARANTOR OR OBLIGOR. Guaranteed Party shall not
be required to inquire into the capacity or powers of Guarantor or Obligor or
the managers, officers, directors or any agents acting or purporting to act on
behalf of any of them.
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SECTION 1.10. RIGHTS CUMULATIVE. The rights given to Guaranteed Party by
this Guaranty are cumulative and shall be in addition to and independent of all
rights given to Guaranteed Party by any statute or rule of law or in the License
Agreement or any agreement between Guarantor and Guaranteed Party or between
Obligor and Guaranteed Party. Any forbearance or failure to exercise, and any
delay by Guaranteed Party in exercising, any right hereunder shall not affect
any such right or be construed to be a waiver thereof, nor shall it preclude the
further exercise of any such right.
SECTION 1.11. BANKRUPTCY; POST-PETITION INTEREST; REINSTATEMENT OF
GUARANTY.
(a) So long as any Guaranteed Obligation remains outstanding,
Guarantor shall not commence or join with any other person in commencing
any bankruptcy, reorganization or insolvency proceedings of or against
Obligor. The obligations of Guarantor under this Guaranty shall not be
affected by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or
arrangement of Obligor or by any defense that Obligor may have by reason
of the ruling of any court or administrative body resulting from any such
proceeding.
(b) Any interest on any portion of the Guaranteed Obligations
that accrues after the commencement of any proceeding referred to in
clause (a) above (or, if interest on any portion of the Guaranteed
Obligations ceases to accrue by operation of law by reason of the
commencement of such proceeding, such interest as would have accrued on
such portion of the Guaranteed Obligations if the proceedings had not been
commenced) shall be included in the Guaranteed Obligations whether or not
Obligor is relieved thereby of any portion of such Guaranteed Obligations.
Guarantor shall permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to pay
Guaranteed Party, or allow the claim of Guaranteed Party in respect of,
any such interest accruing after the date on which such proceeding is
commenced.
(c) The Guaranteed Obligations shall continue and remain in
full force and effect or be reinstated, as the case may be, if all or any
part thereof is rescinded or recovered directly or indirectly from
Guaranteed Party as a preference, fraudulent transfer or otherwise, and
any such payments that are so rescinded or recovered shall again
constitute Guaranteed Obligations.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
Guarantor hereby represents and warrants to Guaranteed Party as
follows:
SECTION 2.1. GUARANTOR. Guarantor has been duly organized and is validly
existing as a company formed under the laws of Canada.
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SECTION 2.2. POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. Guarantor has
the power, authority and legal right to execute, deliver and perform this
Guaranty and all obligations required hereunder and has taken all necessary
corporate action to authorize its guaranty hereunder. No consent of any other
person and no license, approval or authorization of, exemption by, notice or
report to, or registration, filing or declaration with, any governmental
authority is required by Guarantor in connection with this Guaranty or its
execution, delivery and performance of this Guaranty, except for such as have
been obtained and are in effect on the date hereof. This Guaranty constitutes,
and each instrument or document required hereunder when executed and delivered
hereunder will constitute, the legally valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws or equitable principles relating to or limiting
creditors' rights generally.
SECTION 2.3. NO LEGAL BAR TO THIS GUARANTY. The execution, delivery and
performance of this Guaranty and the documents or instruments required hereunder
will not violate any provision of any existing law or regulation binding on
Guarantor, or any ruling or award of any court, arbitrator or governmental
authority binding on Guarantor, or the organizational documents of Guarantor or
any securities issued by Guarantor, or any mortgage, indenture, lease, contract
or other agreement, instrument or undertaking to which Guarantor is a party or
by which Guarantor or any of its assets may be bound.
ARTICLE III - AFFIRMATIVE COVENANTS
Guarantor covenants that, until performance of all the Guaranteed
Obligations, unless Guaranteed Party shall otherwise consent in writing:
SECTION 3.1. CORPORATE STATUS, ETC. Guarantor shall preserve and keep in
full force and effect its status as a company under the laws of Canada and all
rights and franchises material to its business.
SECTION 3.2. BOOKS AND RECORDS. Guarantor shall keep and maintain books of
record and account with respect to its operations in accordance with generally
accepted accounting principles and shall permit Guaranteed Party and its
officers, employees and authorized agents, to the extent Guaranteed Party in
good faith deems necessary for the proper administration of this Guaranty, to
examine, copy and make excerpts from such books and records of Guarantor at such
reasonable times as Guaranteed Party may request.
SECTION 3.3. NOTICE OF DEFAULT. Guarantor shall promptly advise Guaranteed
Party of any material adverse change in the business, operations, condition
(financial or otherwise) of Guarantor or of the occurrence of a default under
the License Agreement of which Guarantor has actual knowledge and shall advise
Guaranteed Party of the nature and period of existence of such material adverse
change or default and shall specify what action Guarantor has taken, is taking
and proposes to take with respect thereto.
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ARTICLE IV - MISCELLANEOUS
SECTION 4.1. SURVIVAL OF WARRANTIES. All agreements, representations and
warranties made herein shall survive the execution and delivery of this Guaranty
and the License Agreement.
SECTION 4.2. NOTICES.
If to Guarantor, to:
Biovail Corporation
2488 Dunwin Drive
Mississauga, Ontario L5L 1J9
Attention: Mr. Ken Cancellarar
Senior Vice-President and General Counsel
With a copy to:
Deeth Williams Wall
400-150 York Street
Toronto, Canada M5H 3S5
Attention: Douglas N. Deeth, Esq.
If to Guaranteed Party, to:
DOV Pharmaceutical, Inc.
433 Hackensack Avenue
Hackensack, New Jersey 07601
Attention: Chief Executive Officer
With a Copy to:
Goodwin Procter LLP
599 Lexington Avenue
New York, New York, 10022
Attention: J. Robert Horton, Esq.
SECTION 4.3. SEVERABILITY. If any term hereof is unenforceable in any
jurisdiction, the enforceability of the remaining terms hereof shall not be
affected.
SECTION 4.4. AMENDMENTS AND WAIVERS. No amendment or waiver of any
provision of this Guaranty, and no consent to any departure by Guarantor
therefrom, shall be effective without the written concurrence of Guaranteed
Party and, in the case of any such amendment, Guarantor. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it is given.
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SECTION 4.5. HEADINGS. Section and subsection headings in this Guaranty
are included herein for convenience of reference only and shall not constitute a
part of this Guaranty.
SECTION 4.6. APPLICABLE LAW. This Guaranty and the rights and obligations
of Guarantor and Guaranteed Party hereunder shall be governed by, and shall be
construed and enforced in accordance with, the internal laws of the State of New
York, without regard to conflicts of laws principles.
SECTION 4.7. SUCCESSORS AND ASSIGNS. This Guaranty is a continuing
guaranty and shall be binding upon Guarantor and its successors and assigns.
This Guaranty shall inure to the benefit of Guaranteed Party and its respective
successors and assigns. Guarantor shall not assign this Guaranty or any of the
rights or obligations of Guarantor hereunder without the prior written consent
of Guaranteed Party. Guaranteed Party may, without notice or consent, assign its
interest in this Guaranty in whole or in part. The terms of this Guaranty shall
inure to the benefit of any transferee or assignee of License Agreement, and
upon such transfer or assignment the rights of Guaranteed Party hereunder shall
automatically extend to such transferee or assignee as if a party hereto, all
subject to the terms and conditions hereof.
SECTION 4.8. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All judicial
proceedings brought against Guarantor arising out of or relating to this
Guaranty may be brought in any state or federal court of competent jurisdiction
in the State, County and City of New York. By executing and delivering this
agreement, Guarantor irrevocably:
(a) Accepts unconditionally the non-exclusive jurisdiction and
venue of such courts;
(b) Waives any defense of FORUM NON CONVENIENS;
(c) Agrees that service of all process in any such proceeding
in any such court may be made by registered or certified mail, return
receipt requested, or by hand delivery, to Guarantor at its address
provided in accordance with Section 4.2;
(d) Agrees that service as provided in clause (c) above is
sufficient to confer personal jurisdiction over Guarantor in any such
proceeding in any such court, and otherwise constitutes effective and
binding service;
(e) Agrees that Guaranteed Party retains the right to serve
process in any other manner permitted by law or to bring proceedings
against guarantor in the courts of any other jurisdiction; and
(f) Agrees that the provisions of this Section 4.8 relating to
jurisdiction and venue shall be binding and enforceable to the fullest
extent permissible under the laws of the State of New York.
SECTION 4.9. WAIVER OF TRIAL BY JURY. Guarantor and, by its acceptance of
the benefits hereof, Guaranteed Party each hereby agrees to waive its respective
rights to a jury trial of any claim or cause of action based upon or arising out
of this Guaranty. The scope of this
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waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Guarantor and, by its acceptance of the
benefits hereof, Guaranteed Party each (i) acknowledges that this waiver is a
material inducement for Guarantor and Guaranteed Party to enter into a business
relationship, that Guarantor and Guaranteed Party have already relied on this
waiver in entering into this Guaranty or accepting the benefits thereof, as the
case may be, and that each will continue to rely on this waiver in their related
future dealings and (ii) further warrants and represents that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. This
waiver is irrevocable, and may not be amended except by a mutual written waiver
referring to this Section 4.9 and executed by Guaranteed Party and Guarantor,
and such waiver shall apply to any subsequent amendments hereto. This Guaranty
may be filed as a written consent to a trial by the court.
SECTION 4.10. NO OTHER WRITING. This writing is intended by Guarantor and
Guaranteed Party as the final expression of this Guaranty and is also intended
as a complete and exclusive statement of the terms of their agreement with
respect to the matters covered hereby. No course of dealing, course of
performance or trade usage, and no parol evidence of any nature, shall be used
to change any term of this Guaranty. There are no conditions to the full
effectiveness of this Guaranty.
SECTION 4.11. FURTHER ASSURANCES. Upon the request of Guaranteed Party,
Guarantor shall execute and deliver such further documents and do such other
acts and things as Guaranteed Party may reasonably request in order to effect
fully the purposes of this Guaranty.
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IN WITNESS WHEREOF, each of Guarantor and Guaranteed Party has
caused this Guaranty to be duly executed and delivered by its duly authorized
officer as of the date first written above.
GUARANTOR: BIOVAIL CORPORATION
By: ____________________________________
Name: Mr. Eugene Melnyk
Title: Chairman
GUARANTEED PARTY: DOV PHARMACEUTICAL, INC.,
By: /s/ Arnold Lippa
------------------------------------
Name: Arnold Lippa
Title: Chief Executive Officer
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IN WITNESS WHEREOF, each of Guarantor and Guaranteed Party has caused this
Guaranty to be duly executed and delivered by its duly authorized officer as of
the date first written above.
GUARANTOR: BIOVAIL CORPORATION
By: ___________________________________
Name: Mr. Robert Podruzny
Title: President
GUARANTEED PARTY: DOV PHARMACEUTICAL, INC.,
By: /s/ Arnold Lippa
-----------------------------------
Name: Arnold Lippa
Title: Chief Executive Officer
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IN WITNESS WHEREOF, each of Guarantor and Guaranteed Party has
caused this Guaranty to be duly executed and delivered by its duly authorized
officer as of the date first written above.
GUARANTOR: BIOVAIL CORPORATION
By: /s/ Eugene Melnyk
-----------------------------------
Name: Mr. Eugene Melnyk
Title: Chairman
GUARANTEED PARTY: DOV PHARMACEUTICAL, INC.,
By: ___________________________________
Name: Arnold Lippa
Title: Chief Executive Officer
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