Exhibit 10.3

 

July 20, 2005

 

CONFIDENTIAL

 

Paul Royalty Fund, L.P.

Paul Royalty Fund Holdings II

c/o Paul Capital Management, L.L.C.

50 California Street

Suite 3000

San Francisco, CA 94111

Attention: Chief Financial Officer

 

Walter Flamenbaum, M.D.

Mr. Lionel Leventhal

Paul Capital Partners

140 East 45th Street, 44th Floor

New York, NY 10017

 

Ladies and Gentlemen:

 

Reference is made to the Revenue Interest Assignment Agreement dated October 28,
2003 (the “RIAA”), among Artery, LLC (“Assignor”), Guilford Pharmaceuticals Inc.
(“Guilford”), GPI Holdings, Inc., Paul Royalty Fund, L.P. (“PRF”), and Paul
Royalty Fund Holdings II (together with PRF, the “Assignees”). Capitalized terms
used in this letter without definition shall have the meanings given to those
terms in the RIAA.

 

Guilford has advised Assignees that Guilford may enter into a transaction (the
“Transaction”) with MGI Pharma, Inc. (the “Purchaser”) that, if consummated,
will result in the Change of Control of Guilford. As a condition to entering
into the Transaction, the Purchaser has asked Assignees to confirm, by their
signatures below, that Purchaser may repurchase the Assigned Interests in whole,
without any recourse, representation or warranty by the Assignees, for the
amount calculated in accordance with Schedule A of this letter (the “Repurchase
Amount”), and upon such repurchase terminate any and all obligations of Guilford
(including its Subsidiaries and Affiliates) under the Transaction Documents
(except to the extent that such obligations survive the termination of the
Transaction Documents in accordance with their respective terms and excluding
the Warrants). Upon payment in full of the Repurchase Amount, the Assignees will
terminate, release and discharge all security interests and liens which it may
have on any real or personal property of Guilford (including its Subsidiaries
and Affiliates) and file UCC termination statements with respect to any such
security interests or liens.

--------------------------------------------------------------------------------

Paul Royalty Fund, L.P.

Paul Royalty Fund Holdings II

Walter Flamenbaum, M.D.

Mr. Lionel Leventhal

July 20, 2005

Page 2 of 4

 

In consideration for the confirmation provided by Assignees pursuant to this
letter, Purchaser, by its signature below, agrees to repurchase the Assigned
Interests for the Repurchase Amount on or before the consummation of the
Transaction. The agreements set forth in this letter shall terminate if (i) the
agreement regarding the Transaction is terminated prior to the consummation of
the Transaction, (ii) a definitive agreement regarding the Transaction is not
executed by Guilford and the Purchaser prior to August 31, 2005, or (iii) the
Transaction does not close on or before December 31, 2005.

 

The parties understand and agree that until such time as the Repurchase Amount
is paid, the RIAA and Transaction Documents shall remain in full force and
effect.

 

Please indicate your acceptance of matters set forth in this letter by counter
signing this letter in the space provided and returning this letter by overnight
mail to Guilford Pharmaceuticals Inc., 6611 Tributary Street, Baltimore, MD
21224, Attention: Asher M. Rubin, Senior Vice President, General Counsel and
Secretary, and by facsimile ((410)-631-6899).

 

Sincerely,

GUILFORD PHARMACEUTICALS INC.

By:

   

Name:

Title:

 

PAUL ROYALTY FUND, L.P.

By:  

Paul Capital Management, LLC,

Its General Partner

   

By:

       

Name:

   

Title:

 

[signatures continued]

--------------------------------------------------------------------------------

Paul Royalty Fund, L.P.

Paul Royalty Fund Holdings II

Walter Flamenbaum, M.D.

Mr. Lionel Leventhal

July 20, 2005

Page 3 of 4

 

 

PAUL ROYALTY FUND HOLDINGS II By:   Paul Royalty Fund II, L.P.,    

Its Managing Partner

    By:  

Paul Capital Royalty Management, LLC,

Its General Partner

        By:            

Name:

           

Title:

   

 

 

MGI PHARMA, INC.

By:    

Name:

Title:

   

 

 

 

 

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Schedule A

 

The Repurchase Amount shall be an amount equal to the Assignees Option
Repurchase Price (calculated at the time of payment of the Repurchase Amount in
accordance with Schedule 5.07(a) of the RIAA) less payments previously made by
Guilford and Artery to Assignees, but without the application of the factors set
forth on Schedule 5.07(c) of the RIAA to such payments and without any
adjustment for the Warrants (which shall be retained by Assignees). For
illustrative purposes, if the Repurchase Amount would have been paid as of June
30, 2005, the Repurchase Amount would have been $59.29 million, calculated as
follows:

 

All amount in table are in millions

 

Assignees Option Repurchase Price Calculation as of 6/30/05 (Schedule 5.07(a))

   $ 68.32

Credits to Assignees Option Repurchase Price (no multiplication factor, as
negotiated) for amounts received:

                         2003    $ 0.14              2004    $ 5.76     
6/30/2005    $ 3.13      Total credits through 6/30/05    $ 9.03

Illustrative Repurchase Amount

   $ 59.29

 

Initials:

 

GUILFORD PHARMACEUTICALS INC.

 

            _____

 

PAUL ROYALTY FUND, L.P.

 

            _____

 

PAUL ROYALTY FUND HOLDINGS II.

 

            _____

 

MGI PHARMA, INC.

 

            _____