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EXHIBIT 10.169
OPTION AND
WHOLESALE
PURCHASE AGREEMENT
THIS OPTION AND WHOLESALE PURCHASE AGREEMENT (the "Agreement") is
entered into as of November 25, 1997 (the "Effective Date") at Indianapolis,
Indiana, between XXX XXXXX AND COMPANY ("Lilly") and LIGAND PHARMACEUTICALS
INCORPORATED ("Ligand").
Whereas, ***
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Whereas, Lilly desires to grant to Ligand an option pursuant to which,
if and when *** receives appropriate governmental approvals for marketing for
the treatment *** in humans, Lilly will, subject to the terms and conditions of
this Agreement ***
*** , utilize Ligand as Lilly's exclusive (even as to Lilly) wholesaler of
Lilly products consisting of, or containing as the active ingredient, *** (the
"Products"), to be sold under the *** name for the treatment of *** in the
territory defined below; and
Whereas, ***
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Now, therefore, in consideration of the foregoing, the mutual covenants
set forth below and other consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. LIGAND OPTION TO BECOME EXCLUSIVE WHOLESALER.
1.1 LIGAND OPTION. For a period equal to the earlier of (a) ninety (90)
days after the Effective Date of this Agreement, (b) until February 27, 1998, or
(c) until the date which is three (3) business days after the date on which
Ligand delivers to Lilly the notice referred to in Section 1.4, (the "Ligand
Option Period"), Ligand shall have the option (the "Ligand Option") to become
Lilly's exclusive wholesaler of the Products subject to the terms and conditions
contained in this Agreement.
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1.2 MANNER OF EXERCISE. To exercise the Ligand Option, Ligand shall
deliver written notice of exercise to Lilly prior to the end of the Ligand
Option Period in the manner set forth in Section 5.9 of this Agreement.
1.3 EFFECT OF LAPSE OF LIGAND OPTION. In the event Ligand does not
exercise the Ligand Option prior to the end of the Ligand Option Period, or, in
the event Ligand delivers written notice to Lilly prior to the end of the Ligand
Option Period informing Lilly of its decision not to exercise the Ligand Option
(the "Rejection Notice"), this Agreement shall automatically terminate and the
parties only surviving rights and obligations under this Agreement shall be as
follows:
(a) Subject to the terms and conditions set forth in the stock
purchase agreement described in Section 4.6, Lilly shall purchase from Ligand,
and Ligand shall sell and issue to Lilly, for Twenty Million Dollars
($20,000,000), the number of shares of Ligand's voting common stock (the
"Shares") equal to Twenty Million Dollars ($20,000,000) divided by one hundred
twenty percent (120%) of the average daily closing price for the Shares as
reported by the National Association of Securities Dealers, Inc. on the twenty
(20) consecutive trading days immediately preceding the date which is five (5)
days prior to the earlier of (A) the date of the Rejection Notice or (B) the
last day of the Ligand Option Period; and
(b) Ligand shall have the right to designate either Targretin (as
defined in that certain Development and License Agreement (Targretin) dated the
date of this Agreement), Compound 268 or Compound 324 (each as defined in that
certain Collaboration Agreement dated the date of this Agreement) for increased
royalties, which right shall be exercised in the manner set forth and on the
terms and conditions provided in Section 5.1(b) of the Targretin Agreement with
respect to Targretin, or Section 6.1(b) of the Collaboration Agreement with
respect to Compound 268 or Compound 324.
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2. CERTAIN COVENANTS OF LIGAND.
2.1 PROMOTION AND INVENTORIES.
(a) Ligand agrees to promote, sell and book sales of, the
Products in the Territory (as defined below) as the exclusive (even as to Lilly)
wholesaler of the Products
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*** *** in the Territory; and to purchase from Lilly
Ligand's entire requirements for the Products. ***
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The United States, Canada, and, upon Ligand's appointment as exclusive
wholesaler of the Products in the European Union, as provided for in Section 3,
the European Union and the European Union Countries *** are referred to
collectively in this Agreement as the "Territory."
(b) To the extent that Ligand shall, with the prior approval of
both Ligand and Lilly given or withheld in their respective sole discretion,
undertake the physical distribution of the Products, Ligand agrees to provide
full distribution efforts for the Products; to maintain the Products under
proper conditions, both in storage and in transit to its customers, ***
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damaged, or shopworn; provided, however, unless and until the parties agree
otherwise, Lilly shall provide the distribution services specified in Section
3.1(c). If Ligand does undertake physical distribution, Ligand shall provide to
Lilly quarterly upon Lilly's request a listing of Ligand's complete and current
inventory of Products by item and package size certified to be accurate by
Ligand.
2.2 SALES EFFORT. Ligand agrees to use commercially reasonable selling
efforts to, and otherwise promote, the Products, and not to:
(a) Refuse or fail to supply promptly the Products when
specified;
(b) Fail to include in its system for determining its prices to
its customers any provisions necessary to comply with the other provisions of
this Agreement or enter into any agreement which would preclude Ligand from
offering for sale a Product at any price acceptable to Ligand; or
(c) Sell any Products to any party Ligand has reason to believe
plans to use the Products or sell the Products for use outside the Territory.
Ligand agrees that it shall hire and maintain a sales force appropriate for
marketing of the Products in the Territory, develop and implement appropriate
marketing plans, develop and utilize sales literature and other promotional
aids, hold symposia for key physicians, and otherwise perform the duties
associated with a promoter of the Products in the Territory.
2.3 SALES REPORTS.
(a) Ligand shall have the right, but not the obligation, to
report information regarding its sales of Products to one or more third parties
organized to collect and report sales data to its subscribers.
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(b) During the term of this Agreement and after first commercial
sale of a Product, in the Territory, Ligand shall furnish or cause to be
furnished to Lilly on a quarterly basis a written report or reports covering
each calendar quarter (each such calendar quarter being sometimes referred to
herein as a "reporting period") showing
(i) the Net Sales (as defined in Schedule 3.1(a) to this
Agreement) of the Product in each country during the reporting period by Ligand,
its affiliates, sublicensees and assigns, and
(ii) the royalties which shall have accrued under this
Agreement in respect of such sales and the basis for calculating those
royalties. With respect to sales of the Products invoiced in United States
Dollars ("Dollars"), the Net Sales amounts and the amounts due to Lilly
hereunder shall be expressed in Dollars calculated by using Ligand's
then-current standard procedures and methodology.
With respect to sales of the Products invoiced in a currency
other than Dollars, the Net Sales shall be calculated using Ligand's then
current standard exchange rate methodology for the translation of foreign
currency sales into Dollars. Each quarterly report shall be accompanied by a
listing of the exchange rates used in calculating Net Sales for such quarterly
report. Ligand will at Lilly's reasonable request but not more frequently than
once a calendar quarter inform Lilly as to the specific exchange rate
translation methodology, if any, used for a particular country or countries. In
the event that any exchange rate translation methodology changes, Ligand will
inform Lilly of the change in the quarterly report next due.
Each quarterly report shall be due on the seventy-fifth (75th)
day following the close of each reporting period. Ligand shall keep accurate
records in sufficient detail to enable the amounts due hereunder to be
determined and to be verified by the independent public accountants described
hereunder. Ligand shall furnish annually to Lilly appropriate evidence of
payment of any tax or other amount required by applicable laws or regulations to
be deducted from any royalty payment, including any tax or withholding levied by
a foreign taxing authority in respect of the payment or accrual of any royalty.
(c) All payments shall be made in Dollars at the time of
quarterly reporting. If at any time legal restrictions prevent the prompt
remittance of any payments with respect to any country where the Products are
sold, Ligand, its affiliates, assigns and sublicensees or marketing partners
shall have the right and option to make such payments by depositing the amount
thereof in local currency to Lilly's account in a bank or depository in such
country.
(d) Upon the written request of Lilly, at Lilly's expense and not
more than once in or in respect of any calendar year, independent public
accountants designated by Lilly and reasonably acceptable to Ligand shall verify
the accuracy of the sales reports furnished by Ligand in respect of any calendar
year ending not more than thirty-six (36) months prior to the date of such
notice. Upon the expiration of thirty-six (36) months following the end of any
calendar year, the calculation of amounts payable with respect to such fiscal
year shall be binding and conclusive upon Lilly, and Ligand, its Affiliates, and
its sublicensees and
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marketing partners shall be released from any liability or accountability with
respect to payments for such year. The report prepared by the independent public
accountant, a copy of which shall be sent or otherwise provided to Ligand by
such independent public accountant at the same time it is sent or otherwise
provided to Lilly, shall contain the conclusions of such independent public
accountant regarding the audit and will specify that the amounts paid to Lilly
pursuant thereto were correct or, if incorrect, the amount of any underpayment
or overpayment. If such independent public accountant's report shows any
underpayment, Ligand shall remit or shall cause its sublicensees or marketing
partners to remit to Ligand within thirty (30) days after Ligand's receipt of
such report,
(i) the amount of such underpayment and
(ii) if such underpayment exceeds *** of the total amount
owed for the calendar year then being audited, the reasonable and necessary fees
and expenses of such independent public accountant performing the audit, subject
to reasonable substantiation thereof. Any overpayments shall be fully creditable
against amounts payable in subsequent payment periods. Lilly agrees that all
information delivered or subject to review under this Section 2.3 or under any
sublicensee or marketing agreement is Confidential Information (as defined in
Section 5.14) and that Lilly shall retain all such information in confidence.
2.4 PAYMENT FOR PRODUCTS. Ligand agrees to pay in full within thirty
(30) days *** *** each invoice delivered by Lilly to Ligand for the Products
sold under this Agreement in accordance with the applicable provisions of this
Agreement; and to pay interest on all overdue amounts owing from Ligand to Lilly
hereunder outstanding for more than 30 days ("overdue") at the Prime Rate as
published in The Wall Street Journal in effect from time to time plus *** per
annum (or the highest amount allowed by law, if such lawful amount is lower than
the foregoing) from the date the amounts become overdue. Ligand shall bear all
credit risk in the Territory relating to collections from customers and third
parties.
2.5 CONTROLLED SUBSTANCE DETERMINATION. In the event that any of the
Products are determined to be controlled substances or subject to any regulatory
requirements not provided for in this Agreement, the parties will agree on
reporting and other responsibilities sufficient to allow each of them to fulfill
their respective regulatory and other obligations relating thereto.
2.6 COMPLIANCE WITH APPLICABLE LAWS. Ligand agrees:
(a) To comply fully with all foreign, federal, state, and local
laws, regulations and rules applicable to its activities hereunder.
(b) To provide prompt notice to Lilly of any civil, criminal, or
administrative inquiry, inspection, investigation, or other action by any
foreign, federal, state, or local authority arising under or concerning any
laws, regulations or rules referred to in
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Section 2.6(a) or any other governmental inquiry, inspection, investigation or
action known to Ligand and arising under or concerning any other laws,
regulations or rules otherwise applicable in any way to the Products or any acts
or omissions of Ligand or Ligand's employees or other agents or affiliates
relating to the Products; to provide Lilly with full and complete information
regarding the status, prosecution, proceeding and disposition of any such
action; and, to the extent Lilly may become a party to or otherwise involved in
any such matter, to fully cooperate with and assist Lilly in the prompt and
lawful resolution of any such matter.
(c) To furnish promptly to Lilly such information as Lilly may
reasonably request from time to time to evidence that Ligand is in compliance
with the applicable requirements of the laws, regulations and rules referred to
in Section 2.6(a) and (subject to other applicable provisions of this Agreement
concerning the funding of costs of regulatory compliance) to cooperate with
Lilly in meeting any obligations of Ligand and/or Lilly with respect to prior
approval, filing requirements or other compliance under any foreign, federal,
state or local laws, regulations or rules applicable within the Territory to the
Products or any labeling, materials or activities incidental to the marketing of
the Products.
(d) Not to market, sell or otherwise promote the Products in
violation of any of the requirements of the appropriate governmental or
regulatory authorities of the applicable jurisdiction(s) in the Territory; not
to make any false or misleading representations to customers or others regarding
Ligand, Lilly or the Products or any representations, warranties or guarantees
with respect to specifications, features or capabilities of the Products except
as contained in package labeling, package inserts, promotional material or other
communication media approved by Lilly; and not to promote or advertise the
Products in any manner or with any labeling, inserts, packaging or ingredients
not approved in advance by Lilly.
(e) Not to engage directly or indirectly in any transaction,
activity, or other act or omission that would violate the Foreign Corrupt
Practices Act, Anti-Referral Payments Law, any laws administered by the FDA, or
other similar laws of any other jurisdiction in the Territory.
2.7 TAX EXEMPTION CERTIFICATES. Ligand agrees to provide to Lilly a copy
of Ligand's sales tax exemption certificate, whether it be a resale certificate,
blanket exemption, or direct payment exemption under applicable laws, and to
notify Lilly promptly of any change which affects Ligand's exemption status and
to provide such other information or certifications as Lilly may reasonably
request in order to minimize tax liability and to comply with applicable tax or
other regulations of each of the jurisdictions included in the Territory in
which Ligand sells Products.
2.8 CONTROLS. Ligand agrees to establish such internal controls and
maintain such records as will assure compliance with its obligations under this
Agreement and the ability of Lilly to conduct a meaningful review of such
records.
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2.9 EVIDENCE OF FINANCIAL CONDITION. Ligand agrees to furnish Lilly upon
request a copy of its complete annual financial statement and other such
evidence of its financial condition necessary to establish, in the opinion of
Lilly, Ligand's ability to perform its obligations under this Agreement,
provided that this Section 2.9 shall not apply to any financial reporting period
as to which Ligand remains subject to and in compliance with the reporting
requirements of the Securities Exchange Act of 1934, as amended from time to
time.
2.10 OFFSET RIGHTS. Upon failure to pay any amount when due,
cancellation or termination of this Agreement, or with evidence of a condition
of insolvency of Ligand or a Ligand subsidiary, affiliate or location materially
affecting Ligand's obligations under this Agreement, Lilly reserves the right to
offset any amount due and owing Lilly against amounts otherwise owing under this
Agreement to Ligand or Ligand's subsidiaries, affiliates or locations.
2.11 FORECASTS. Ligand agrees to provide sales forecasts at such times
and in such detail as Lilly may reasonably request in order to determine
manufacturing requirements, ***
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3. CERTAIN COVENANTS OF LILLY.
3.1 WHOLESALE, SHIPMENT AND DISTRIBUTION TERMS. Lilly agrees:
(a) To sell the Products exclusively to Ligand *** ***
within the Territory to the extent that
(i) applicable regulatory approvals for sale of the
Products in the relevant jurisdiction have been obtained,
(ii) the Products are ordered by Ligand during the Term
(defined in Section 5.12 below) in compliance with other applicable provisions
of this Agreement, and
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(b) To carry inventory of the Products, dropship the Products to
the location specified by Ligand in its orders and send a Ligand invoice to the
third party identified by Ligand.
(c) To use commercially reasonable efforts to maintain the
Products sold to Ligand under proper conditions, both in storage and in transit
to customers, ***
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or shopworn; and to provide to Ligand quarterly upon Ligand's request a listing
of Lilly's complete and current inventory of Products by item and package size
certified to be accurate by Lilly.
(d) Not to sell or market the Products directly or indirectly
within the Territory to any party other than Ligand, ***
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(e) Prior to the first commercial sale of the Products in the
Territory, the parties shall agree upon the terms of a manufacturing
requirements document which shall set forth procedures for ordering and
maintaining inventory, and the coordination and timing of manufacture and
delivery to meet customer orders, compliance with adverse event reporting and
other regulatory requirements and such other matters as are incidental to this
Agreement.
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(g) To exercise its option under the Seragen Agreements to
promote and distribute the Products in the European Union, if (i) Ligand
requests Lilly to do so in writing and (ii) Ligand is, in Lilly's reasonable
judgment, capable of supporting sales and promotion and to the extent necessary
regulatory operations in the European Union sufficient to perform
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the duties assigned to it under this Agreement. Upon the exercise of Lilly's
option under this Section 3.1(g), Ligand shall become Lilly's sole wholesaler in
the European Union Countries and the provisions of this Agreement shall be
amended with respect to Ligand's obligations in the European Union countries to
reflect such changes as are necessary to reflect customary business and
distribution practices in such countries.
3.2 TRANSPORTATION COSTS. Lilly shall ship the Products F.O.B. shipping
point, transportation prepaid, subject to the following. Lilly will prepay
transportation charges in a manner consistent with the method of packaging and
shipment and good industry practice when routing is selected by Lilly. If Ligand
or customer requests special routing of a shipment which results in a higher
transportation cost than would be incurred as a result of the routing of Lilly's
selection, then the extra cost shall be added to the invoice.
3.3 TITLE, RISK OF LOSS AND DAMAGE. Title and risk of loss shall pass to
Ligand when the Products are duly delivered to the carrier. Ligand shall give
Lilly written notice of any claimed shipping error within thirty (30) days after
the date of shipment from Lilly. Failure of Ligand to give such notice within
such 30-day period shall be deemed a waiver of Ligand's claim for shortages or
incorrect shipments. Lilly will not be liable for and will not grant a credit
with respect to damage to Products in the course of shipment from Lilly.
3.4 RETURN FOR CREDIT. Ligand shall have no right to return the Products
for any reason, except that Ligand may return for credit any Product that (i) is
unusable because of Lilly's delay or negligence in shipment, (ii) is not in
conformance with product specifications
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customers with an invoice to the customer stating that there is no additional
charge to the customer for such replacement. Ligand shall pay the cost of such
replacement product unless the return is for credit as provided above, and shall
in any event pay applicable shipping costs.
3.5 WARRANTY. Lilly warrants that the Products delivered to Ligand
pursuant to this Agreement shall (i) at the time of shipment not be adulterated
or misbranded within the meaning of applicable federal, state or foreign laws as
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EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, LILLY MAKES NO
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PRODUCTS. ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE, ARE HEREBY DISCLAIMED BY LILLY. IN NO
EVENT SHALL LILLY BE LIABLE FOR INDIRECT, INCIDENTAL
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OR CONSEQUENTIAL DAMAGES, INCLUDING, WITHOUT LIMITATION, LOST REVENUES OR
PROFITS OF LIGAND.
3.6 BILLING, REBATES, ETC. Ligand shall be solely responsible for
billing and collection activities, rebate programs, return credit procedures and
similar activities related to its sales of Products, it being understood that
Lilly's responsibilities hereunder relate solely to physical distribution of the
Products.
4. APPROVAL AND PRICING MILESTONES TO LILLY.
4.1 APPROVAL MILESTONE. Within thirty (30) days after the date on which
Ligand receives notice that the United States Food and Drug Administration
("FDA") has given final approval of the labeling for the *** Ligand shall issue
that number of shares (the "Approval Shares") of its voting common stock to
Lilly as shall equal the sum of $10 million divided by the average trading price
of Ligand's voting common stock over the twenty (20) consecutive trading days
immediately preceding the date which is five (5) consecutive days prior to the
date the notice referred to above is received.
4.2 PRICING MILESTONE. Within thirty (30) days after the date that the
Products are first sold at any time during the Term in the United States ***
(the "Product Pricing Date") at an average net selling price or equivalent over
a three-month period (the "Cycle Price") *** as reported to Lilly
in a manner consistent with the reporting of Net Sales information pursuant to
Section 2.3 (but excluding any prices which are clinical study, introductory, or
special discount prices), Ligand shall issue shares (the "Pricing Shares") of
its voting common stock to Lilly on the following terms and conditions
determined with reference to the Cycle Price and the average trading price of
Ligand's voting common stock over the twenty (20) consecutive trading days
immediately preceding the date which is five (5) consecutive days prior to the
Product Pricing Date (the "Average Stock Price"). If the Cycle Price never ***
or more during the Term, Lilly shall not be entitled to any Pricing Shares.
Otherwise, the number of Pricing Shares to be issued to Lilly shall equal the
number obtained by dividing the Target Value by the Average Stock Price, whereby
the Target Value is $10 million for a Cycle Price *** and the Target Value
declines, but not below $5 million, in inverse proportion to any increase in the
Cycle Price *** . Examples of such calculation for certain Cycle Prices are set
forth below:
Target Value (in millions) (No. of Pricing Shares=
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Cycle Price Relevant Target Value divided by Average Stock Price
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*** 6.25
*** 5.00
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4.3 PRODUCT DISAPPROVAL/TARGRETIN DISCONTINUANCE. If the *** is deemed
by the FDA to be not approved following review by the FDA, and if Lilly has
elected to terminate that certain Development and License Agreement (Targretin)
of even date herewith between the parties hereto relating to Targretin pursuant
to the provisions thereof granting certain rights of termination to Lilly
exercisable on or before December 15, 1998, Lilly, at Ligand's option
exercisable by giving written notice of exercise to Lilly referring to this
section, within thirty (30) days (subject to extensions by Ligand to not later
than one (1) year if Ligand is actively pursuing reversal of the FDA's
determination) after the later of the date of the notice that the FDA deems ***
unapprovable or termination by Lilly, shall within thirty (30) days after
receipt of such notice purchase $5 million of the voting common stock of Ligand
at the average trading price for the 20 consecutive trading days immediately
preceding the date which is five (5) days prior to the date of delivery of such
notice. Thereupon, all rights to the Products, including without limitation ***
shall revert to Lilly; the parties shall have no further rights hereunder; and
Ligand shall have no further obligation to issue additional shares under
Sections 3.1 and 3.2.
4.4 LOW CYCLE PRICE TERMINATION RIGHT. If the average price of the
Product sold in the United States *** over the first six months following the
Product Pricing Date (the "Low Price Termination Period") (excluding in
calculating such average price special introduction, or other promotional
pricing not indicative of normal pricing practices) *** Ligand may elect within
thirty (30) days after the last day of the Low Price Termination Period to
relinquish all of its rights under this Agreement by delivering notice of
termination of this Agreement to Lilly, and Lilly shall within thirty (30) days
after receipt of such notice purchase $5 million of the voting common stock of
Ligand at the average trading price for the twenty (20) consecutive trading days
immediately preceding the date which is five (5) consecutive days prior to the
date of delivery of such notice.
4.5 CERTAIN ADDITIONAL TERMINATION RIGHTS. ***
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Upon termination of this Agreement under this Section 4.5:
(a) All rights to Products shall revert to Lilly, and neither
party shall have any rights or obligations under this Agreement other than those
which may have accrued prior to termination; and
(b) If Lilly is the party exercising the right to terminate, ***
*** then Lilly shall,
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(i) subject to the terms and conditions set forth in the
stock purchase agreement described in Section 4.6, purchase from Ligand, and
Ligand shall sell and issue to Lilly, within thirty (30) days of the date of the
Termination Notice, for Twenty Million Dollars ($20,000,000), the number of the
common voting shares of Ligand ("Shares") equal to Twenty Million Dollars
divided by one hundred twenty percent (120%) of the average daily closing price
for Shares reported by the National Association of Securities Dealers, Inc. on
the twenty (20) consecutive trading days immediately preceding the date which is
five (5) days prior to the date of delivery of the Termination Notice; and
(ii) Ligand shall have the right to designate either
Targretin (as defined in that certain Development and License Agreement
(Targretin) dated the date of this Agreement), Compound 268 or Compound 324
(each as defined in that certain Collaboration Agreement dated the date of this
Agreement) for increased royalties, which right shall be exercised in the manner
set forth and on the terms and conditions provided in Section 5.1(b) of the
Targretin Agreement with respect to Targretin, or Section 6.1(b) of the
Collaboration Agreement with respect to Compound 268 or Compound 324.
(c) If Ligand is the party exercising the right to terminate and
(i) ***
(ii) the Product receives final approval from the FDA of
the *** *** then Lilly shall, within thirty (30) days of receipt of notice of
the *** purchase the Ligand stock referred to in subparagraph (b)(i) above and
permit Ligand to designate a compound for increased royalties as provided in
subparagraph (b)(ii) above. ***
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4.6 SHARE ISSUANCE PROCEDURE. Ligand shall issue and deliver to Lilly
duly prepared and endorsed stock certificates representing the shares, if any,
to be issued under this Section 4 no later than the dates respectively specified
in those sections, and in connection therewith Ligand and Lilly shall each
execute, deliver to each other and perform a Stock Purchase Agreement
containing, in the case of shares issued under Sections 4.1 or 4.2, terms
substantially similar to those set forth in Sections 3, 6, 7 and 9.11 of the
Stock Purchase Agreement between the parties of even date herewith (the "Stock
Purchase Agreement") and, in the case of shares issued pursuant to Sections 4.3,
4.4 or 4.5 as set forth in the form of Stock Purchase Agreement attached as
Schedule 4.6.
5. GENERAL PROVISIONS.
5.1 ORDERS FOR PRODUCTS.
(a) All orders for Products not inconsistent with the terms of
this Agreement shall be promptly accepted and executed by Lilly.
(b) In the event of a shortage of any of the Products, Lilly
shall have the right to delay or suspend deliveries of the Products to Ligand as
reasonably necessary. ***
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(c) Lilly and Ligand will designate, by mutual agreement, the
manner of packaging the Products.
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5.2 BILLING, CREDIT, AND PAYMENT.
(a) All orders for Products shall be invoiced as of the date
shipped.
(b) Subject to the other applicable provisions of this Agreement,
each invoice will be payable, without the application of Credit Memorandum, by
means of an electronic funds transfer ("EFT") system designated or approved by
the mutual agreement of Lilly and Ligand, subject to the following:
(i) Ligand warrants to Lilly that each entry transmitted
by it or its agents or employees on its behalf to a depository financial
institution for the purpose of initiating an EFT transaction is duly authorized
by Ligand. Without Ligand's prior written consent, Lilly shall not have the
right to debit electronically any account of Ligand.
(ii) Ligand shall not be deemed in default or lose any
cash discount by reason of any delay in receipt or non-receipt by Lilly of funds
transferred by EFT unless the delay or nonreceipt is the result of the negligent
or willful act or omission of Ligand.
(iii) With respect to any EFT entry originated by Lilly's
bank, or any delay in receipt by Ligand of approved credit funds transmitted by
Lilly by means of EFT, Lilly shall be liable to Ligand only for Lilly's or
Lilly's bank's negligent acts or omissions or failure to act in good faith and
Lilly's liability to Ligand shall be limited to reasonably foreseeable actual
damages proximately caused thereby.
(iv) With respect to the use of EFT by Ligand for the
payment of funds, Ligand shall be liable to Lilly only for Ligand's negligent
acts or omissions or failure to act in good faith and Ligand's liability to
Lilly shall be limited to reasonably foreseeable actual damages proximately
caused thereby.
(v) Except as provided in (iii) and (iv) immediately
above, neither party shall be liable to the other for the act or omission of any
financial institution or any automated clearing house in connection with the use
of EFT for payment of funds and neither party shall be liable for consequential
damages to the other arising out of the use of EFT for payment of funds.
(vi) Each party agrees promptly to return by EFT any
overpayment received by it.
(vii) Ligand agrees to execute all authorizations required
by Lilly or Lilly's or Ligand's depository financial institution(s) for payment
and receipt of funds by EFT and to notify Lilly promptly of any changes in those
authorizations.
(viii) To the extent applicable to the transfer of funds
by EFT under this Agreement, each party agrees to be bound by the Operating
Rules and Guidelines of the
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National Automated Clearing House Association as those Operating Rules and
Guidelines may be in effect from time to time.
(c) Lilly may require that each order from Ligand be accompanied
by a certified check or other form of payment satisfactory to Lilly in an amount
sufficient to cover the order less a cash discount of two percent (2%), or
require that Ligand provide security in an amount and form satisfactory to
Lilly, and may declare due and owing all outstanding indebtedness from Ligand,
including invoices on which extended dating has been granted, in the event (a)
reasonable grounds for insecurity arise with respect to the performance by
Ligand under this Agreement or (b) Ligand initiates or gives notice of its
intention to initiate, a filing under bankruptcy and insolvency or (c) Lilly has
given notice of termination of this Agreement or (d) Ligand becomes insolvent.
(d) Products shipped but not paid for at the time of the
cancellation or termination of this Agreement shall be paid for in accordance
with the terms of this Agreement.
5.3 INSPECTION OF INVENTORY AND RECORDS. *** Lilly representative(s)
will consult with and advise Ligand concerning Ligand's inventory of Products
and may inspect the same at a mutually agreed upon time. A Lilly representative
may also inspect records of Ligand to determine compliance with Ligand's
obligations under this Agreement provided that no such inspection shall relate
to transactions occurring more than eighteen (18) months prior to the date of
such inspection, and provided further that the inspection shall be performed by
Lilly's regularly retained independent auditors or employee. Any Confidential
Information disclosed by Ligand under this Section 5.3 shall be maintained in
confidence.
5.4 SALES OUTSIDE TERRITORY. This Agreement does not grant or imply to
Ligand any rights in any country outside the Territory.
5.5 BUYER-SELLER RELATIONSHIP. The relationship created by this
Agreement is solely a buyer-seller relationship and is not any form of joint
venture, partnership, franchise, or other agency relationship. Ligand shall not
under any circumstance have any authority or otherwise purport to bind Lilly to
any express or implied contract or to represent or otherwise bind Lilly before
or in connection with any proceeding by any governmental agency. Nothing herein
is intended to grant or imply any license or other rights in favor of Ligand to
any patent, trademark, copyright, trade secret, technology, know-how or other
rights of Lilly *** relating to the Products or the ingredients thereof.
5.6 REPURCHASE OF INVENTORY STOCK. Upon cancellation or termination of
this Agreement, by expiration or otherwise, Lilly shall have the option to
repurchase Ligand's salable stock of Products, if any, at the net wholesale
prices then in effect as between Lilly and Ligand.
*** Portions of this page have been omitted pursuant to a request for
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5.7 ASSIGNMENT. Neither party shall assign its rights or obligations
under this Agreement without first obtaining the written consent of the other
party, and any attempted assignment without such written consent shall be void
and of no effect, except that a merger, sale of all or substantially all of a
party's assets, tender or exchange offer, or other corporate reorganization in
which there is a change in control of a party, or a reorganization solely for
the purposes of changing a party's corporate domicile, shall not be considered
an assignment in violation of this Section 5.7.
5.8 CONTINGENCIES AFFECTING PERFORMANCE. Except as set forth in this
Agreement, neither party shall be liable for delay in performance or
nonperformance caused by fire, flood, storm, earthquake, or other act of God,
war, rebellion, riot, failure of carriers to furnish transportation, strikes,
lockouts or other labor disturbances, act of governmental authority, inability
to obtain material or equipment, or any other cause of like or different nature
beyond the control of such party.
5.9 NOTICES. All notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed given, upon receipt, if mailed
by registered or certified mail (return receipt requested), postage prepaid, or
sent by overnight delivery (receipt verified) to the address below, or given
personally or transmitted by facsimile to the number indicated below (with
confirmation).
To Lilly:
Xxx Xxxxx and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
To Ligand:
Ligand Pharmaceuticals Incorporated
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
Any party may, by written notice to the other, designate a new address
or fax number to which notices to the party giving the notice shall thereafter
be mailed or faxed.
5.10 INDEMNITY AND INSURANCE.
(a) Ligand shall hold harmless Lilly and its affiliates and their
respective employees and agents from and against any and all liabilities,
claims, demands, actions, suits, losses, damages, costs and expenses (including
reasonable attorney's fees) based upon
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(i) sale of the Products in the Territory, including
without limitation any product liability claims, regardless of the theory under
which such claims are brought, including any claims for death, bodily injury or
property damage arising from the use of the Products,
(ii) any of Ligand's activities under this Agreement
including Ligand's storage, promotion, marketing or distribution of the Products
or the use or sale of the Products in the Territory or (iii) which otherwise
results from Ligand's negligence or willful misconduct or its material breach of
this Agreement, except in the case of (i), (ii) or
(iii) to the extent caused by the negligence or willful
misconduct of Lilly or the material breach by Lilly of this Agreement or with
respect to product liability claims only, to the extent the injury alleged is
caused by ***
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(b) Lilly shall indemnify and hold harmless Ligand and its
affiliates and their respective employees and agents from and against any and
all liabilities, claims, demands, actions, suits, losses, damages, costs and
expenses (including reasonable attorney's fees) based upon the death or any
bodily injury or property damages resulting from
(i) Lilly's ***
*** (including product liability claims, regardless of the theory under which
such claims are brought),
(ii) Lilly's activities outside the Territory or
(iii) otherwise results from the negligence or willful
misconduct of Lilly or its material breach of this Agreement, except to the
extent caused by the negligence or willful misconduct of Ligand or the material
breach by Ligand of this Agreement; provided that, with respect to product
liability claims only, Lilly shall only have an obligation to indemnify or hold
harmless Ligand, its affiliates and their respective employees and agents to the
extent the injury alleged is caused by ***
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(c) Each of the parties shall promptly notify the other of any
such claim or potential claim covered by any of the above subsections in this
Section 5.10 and shall include sufficient information to enable the other party
to assess the facts. Each of the parties shall cooperate fully with the other
party in the defense of all such claims. No settlement or compromise shall be
binding on a party hereto without its prior written consent, which shall not be
unreasonably withheld.
(d) ***
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(e) Ligand and Lilly shall each have and maintain such type and
amounts of liability insurance covering their respective activities under this
Agreement as is normal and customary in the pharmaceutical industry generally
for parties similarly situated, and will upon request provide the other party
with a copy of its policies of insurance in that regard, along with any
amendments and revisions thereto.
5.11 RECALLS. In the event of a recall, whether voluntary or ordered by
a government agency in the Territory ("Recall"), and Lilly is then providing
physical distribution services, Lilly shall be responsible for the coordination
of Recall activities. Ligand and Lilly shall each bear and timely pay, as
coordinated and required by Lilly, an equal share of the costs of notification,
shipping and handling, retrieving the Products subject to Recall already
delivered to customers, and other expenses and costs of the Recall. Lilly shall
provide Ligand with supporting documentation of all reimbursable expenses and
costs.
5.12 TERMINATION OR CANCELLATION.
(a) ***
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(b) Either party shall have the right to terminate this Agreement
after 60 days written notice to the other in the event the other party is in
material breach of this Agreement, unless the other party cures the breach
before the expiration of such period of time. Such notice shall set forth in
reasonable detail the specifics of the breach. Without limiting the generality
of the foregoing, any failure by Ligand to comply in all material respects with
the provisions of this Agreement concerning compliance with applicable laws,
regulations and rules shall constitute a material breach of this Agreement by
Ligand.
(c) This Agreement shall be terminated upon termination under
Sections 4.3, 4.4, and 4.5 as of the applicable dates specified therein.
(d) Upon termination of this Agreement for any reason, all then
accrued rights under purchase orders and invoices issued in compliance with this
Agreement, all then accrued rights of Lilly to acquire stock of Ligand under
Section 4, the indemnity and recall provisions of Sections 5.10 and 5.11, and
any rights either party may then have as a result of any breach of this
Agreement by the other party shall survive termination of this Agreement. Upon
termination of this Agreement for any reason, and except as provided in the
preceding sentence, Ligand shall have no rights to require Lilly to sell the
Products to Ligand or otherwise grant to Ligand any license or other rights to
the Products or the technology relating thereto, and the parties shall have no
obligations to each other under this Agreement.
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(h) To the knowledge of Lilly, the sale of Product by Ligand as
contemplated by this Agreement will not infringe the patent or other
intellectual property rights of any third party. In the case of any claim of
infringement of a patent owned by a third party based upon the making, having
made, using, having used, importing, offering for sale, selling or having sold
Product, Ligand shall have the right to obtain a license from the third party
and credit *** *** of any royalty payable to the third party against the amounts
payable to Lilly under this Agreement but in no event will Lilly's royalty be
reduced by more than *** If Lilly and/or Ligand is sued for infringement by such
third party, Ligand shall control and defend or settle the action at its expense
and shall pay any damages or other monetary awards resulting therefrom, and
Ligand shall be entitled to credit *** of such monetary awards against amounts
payable to Lilly, but in no event will Lilly's payments each year be reduced by
more than *** .
(i) Ligand shall have the royalty-free right to use the trademark
*** in connection with sales of the Products. If for any reason such trademark
is not available, Ligand shall be entitled to adopt such other trademark as it
may desire, subject to the consent of Lilly, which consent shall not be
unreasonably withheld. All expenses of registering and maintaining such
alternative xxxx shall be paid by Ligand.
5.14 CONFIDENTIAL INFORMATION. As used in this Agreement, "Confidential
Information" shall mean all information, inventions, know-how and data disclosed
by one party to the other party, or its respective affiliates or agents,
pursuant to this Agreement, whether in oral, written, graphic or electronic form
and whether in existence as of the effective date or developed or acquired in
the future, except where such information (i) is public knowledge at the time of
disclosure by the disclosing party, (ii) becomes public knowledge through no
fault of the receiving party, (iii) was in the possession of the receiving party
at the time of disclosure by the disclosing party as evidenced by proper
business records or (iv) is disclosed to the receiving party by a third party,
to the extent such third party's disclosure was not in violation of any
obligation of confidentiality.
*** Portions of this page have been omitted pursuant to a request for
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5.15 ENTIRE AGREEMENT. This Agreement shall (1) supersede all prior
proposals, letters, negotiations, contracts, agreements, and understandings
between Ligand and Lilly relating to the subject matter hereof, all of which are
hereby terminated; (2) constitute the complete agreement between Ligand and
Lilly; and (3) be controlling to the exclusion of all terms and conditions of
Ligand's purchase orders or other documents in conflict with this Agreement.
5.16 WAIVER. The failure of any party to enforce at any time any
provision of this Agreement shall not be a waiver of such provision or effect
the right of such party thereafter to enforce such provision. No waiver shall be
deemed a waiver of any other provision or of a subsequent breach whether of the
same or another provision.
5.17 GOVERNING LAW. This Agreement shall be interpreted in accordance
with, and governed by, the laws of the State of Indiana without regard to
principles of conflicts of law.
5.18 NONDISCLOSURE OF AGREEMENT. Neither party shall disclose any
information about this Agreement without the prior written consent of the other.
Consent shall not be required, however, for (a) disclosures to tax or other
governmental authorities, provided, that in connection with such disclosure,
each party agrees to use its commercially reasonable efforts to secure
confidential treatment of such information, (b) disclosures of information for
which consent has previously been obtained or (c) information which has
previously been publicly disclosed. Each party shall have the further right to
disclose the terms of this Agreement as required by applicable law, including
the rules and regulations promulgated by the Securities and Exchange Commission,
and to disclose such information to shareholders or potential investors as is
customary for publicly-held companies. Without limiting the generality of the
foregoing and except in the circumstance where a party's outside counsel advises
the party that immediate disclosure is required, in the event that a Receiving
Party intends to disclose information about this Agreement as permitted
hereunder, such a party will provide to the other party a copy of the
information to be disclosed and an opportunity to comment thereon prior to such
disclosure, and, to the extent practicable, consult with the other on the
necessity for the disclosure and the text of the proposed release within a
reasonable time in advance of the proposed disclosure.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first written above.
Ligand:
LIGAND PHARMACEUTICALS INCORPORATED
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
By: /s/ Xxxxx X. Xxxxxxxx
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LILLY:
XXX XXXXX AND COMPANY
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
By /s/ August X. Xxxxxxxx
-----------------------------------------
August X. Xxxxxxxx
Executive Vice President
[Option and Wholesale Agreement
Signature Page]
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SCHEDULE 3.1(a)
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Schedule 4.6
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the
____ day of ___________, ____ (the "Effective Date"), by and between Ligand
Pharmaceuticals Incorporated, a Delaware corporation (the "Company"), and Xxx
Xxxxx and Company, an Indiana corporation ("Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Shares.
1.1 Sale and Issuance of Shares. Subject to the terms and
conditions of this Agreement and Section [4.3/4.4] of that certain Option and
Wholesale Purchase Agreement dated October __, 1997 (the "Wholesale Agreement"),
Investor agrees to pay ____________________________________ ($__________ ) (the
"Purchase Price") to the Company at the Closing and the Company agrees to sell
and issue to Investor at the Closing the number of shares (the "Shares") of the
Company's Common Stock equal to the Purchase Price divided by the average daily
closing price of the Company's Common Stock reported by the National Association
of Securities Dealers ("NASD") on the twenty (20) consecutive trading days
preceding the date of delivery of notice under Section [4.3/414] of the
Wholesale Purchase Agreement.
1.2 Closing. The closing for the purchase and sale of the
Shares shall take place within thirty (30) days after receipt of notice given
pursuant to Section [4.3/4.4] of the Wholesale Agreement at the offices of
Xxxxxxx, Phleger & Xxxxxxxx LLP, 000 Xxxx "X" Xxxxxx, Xxxxx 0000, Xxx Xxxxx,
Xxxxxxxxxx, or at such other time and place as the Company and Investor mutually
agree upon orally or in writing (which time and place are designated as the
"Closing"). At the Closing, the Company shall deliver to Investor a certificate
representing the Shares. In consideration of such delivery, Investor shall make
payment therefor by delivery to the Company by Investor of a check in the amount
of the Purchase Price payable to the Company's order or by wire transfer of
funds in such amount to the Company's designated bank account.
2. Representations and Warranties of the Company. Except as
otherwise set forth on the Schedule of Exceptions attached hereto as Exhibit A,
the Company hereby represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify would be
reasonably expected to have a material adverse effect on the business,
27
operations, properties, assets, prospects or condition (financial or otherwise)
of the Company (a "Material Adverse Effect"). Except as disclosed in the Form
10-K (as defined herein), the Company has no subsidiaries.
2.2 Authorization. The Company has all requisite corporate
power and authority (i) to execute, deliver and perform its obligations under
this Agreement; (ii) to issue the Shares in the manner and for the purpose
contemplated by this Agreement, and (iii) to execute, deliver and perform its
obligations under all other agreements and instruments executed and delivered by
it pursuant to or in connection with this Agreement. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder and the authorization, issuance (or
reservation for issuance) and delivery of the Shares has been taken or will be
taken prior to the Closing, and this Agreement constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies.
2.3 Valid Issuance of Securities. The Shares which are
being purchased hereunder, when issued, sold and delivered in accordance with
the terms hereof for the consideration expressed herein, will be duly and
validly issued, fully paid and nonassessable and, based in part upon the
representations of Investor in this Agreement, the Shares will be issued in
compliance with all applicable federal and state securities laws.
2.4 SEC Reports. The Company has heretofore filed with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), all reports and other
documents required to be filed, including an Annual Report on Form 10-K for the
year ended December 31, [fiscal year prior to issuance of Shares] (the "Form
10-K"). None of such reports, or any other reports, documents, registration
statements, definitive proxy materials and other filings required to be filed
with the SEC under the rules and regulations of the SEC (the "SEC Filings")
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary in order to make the statements
made, at the time and in light of the circumstances under which they were made,
not misleading. Since December 31, [fiscal year prior to issuance of Shares],
the Company has timely filed with the SEC all SEC Filings and all such SEC
Filings complied in all material respects with all applicable requirements of
the Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act,
and the rules thereunder. The audited financial statements of the Company
included or incorporated by reference in the [fiscal year prior to issuance of
Shares] Annual Report to the Stockholders (the "Annual Report") and the
unaudited financial statements contained in the Quarterly Reports on Form 10-Q
each have been prepared in accordance with such acts and rules and with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods indicated therein and with each other (except as may be
indicated therein or in the notes thereto and except that the unaudited interim
financial statements may
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not contain all footnotes and adjustments required by United States generally
accepted accounting principles) and fairly present the financial condition of
the Company as at the dates thereof and the results of its operations and
statements of cash flows for the periods then ended, subject, in the case of
unaudited interim financial statements, to normal year-end adjustments. Except
as reflected in such financial statements, the Company has no material
liabilities, absolute or contingent, other than ordinary course liabilities
incurred since the date of the last such financial statements in connection with
the conduct of the business of the Company. Since December 31, [fiscal year
prior to issuance of Shares], except as set forth in the Company's SEC Filings,
there has been no:
(a) change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the Annual
Report, except changes in the ordinary course of business that have not,
individually or in the aggregate, resulted in and are not reasonably expected to
result in a Material Adverse Effect (and except that the Company expects to
continue to incur substantial operating losses, which may be material);
(b) damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the business,
properties or financial condition of the Company (and except that the Company
expects to continue to incur substantial operating losses, which may be
material);
(c) waiver or compromise by the Company of a
material right or of a material debt owed to it;
(d) satisfaction or discharge of any lien, claim
or encumbrance by the Company, except in the ordinary course of business and
which is not material to the business, properties or financial condition of the
Company (as such business is presently conducted);
(e) material change to a material contract or
arrangement by which the Company or any of its assets is bound or subject;
(f) sale, assignment or transfer to a third party
that is not an affiliate of the Company (as hereafter defined) of any material
patents, trademarks, copyrights, trade secrets or other intangible assets for
compensation which is less than fair value;
(g) mortgage, pledge, transfer of a security
interest in, or lien, created by the Company, with respect to any of its
material properties or assets, except liens for taxes not yet due or payable;
(h) declaration, setting aside or payment or other
distribution in respect of any of the Company's capital stock, except any direct
or indirect redemption, purchase or other acquisition of any such stock by the
Company; or
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(i) event or condition of any type that has had
or is reasonably expected to have a Material Adverse Effect.
For purposes of this Section 2.4 of this Agreement, the
term "affiliate of the Company" means any individual or entity directly or
indirectly controlling, controlled by or under common control with, the Company.
Without limiting the foregoing, the direct or indirect ownership of 50% or more
of the outstanding voting securities of any entity, or the right to receive 50%
or more of the profits or earnings of an entity, shall be deemed to constitute
control.
2.5 Contracts. With respect to each of the material contracts,
commitments and agreements of the Company, the Company is not, and has no actual
knowledge that any other party is, in default under or in respect of any such
material contract, commitment or agreement, the result of which default would
have a Material Adverse Effect. No party to any such material contract,
commitment or agreement, would be authorized or permitted to terminate its
obligations thereunder by reason of the execution and delivery of this Agreement
or any of the transactions contemplated herein.
2.6 Compliance. The Company has complied with, and is not in
default under or in violation of its Certificate of Incorporation or Bylaws,
each as amended through the date hereof, or any and all laws, ordinances and
regulations or other governmental restrictions, orders, judgments or decrees,
applicable to the Company's business as presently conducted and as proposed to
be conducted, including individual products marketed by it, where any such
default or violation would have a Material Adverse Effect. The Company has not
received notice of any possible or actual violation of any applicable law,
ordinance, regulation or order, the result of which violation would be
reasonably expected to have a Material Adverse Effect. The Company is not a
party to any agreement or instrument, or subject to any charter or other
corporate restriction, or any judgment, order, decree, law, ordinance,
regulation or other governmental restriction which would prevent or impede, or
be breached or violated by, or would result in the creation of any event of
default or the creation of any lien or encumbrance upon any assets of the
Company by, the transactions contemplated in this Agreement, except that no
representation or warranty is made with respect to filings required by the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "H-S-R
Act").
2.7 Compliance with Other Instruments. The execution, delivery
and performance of this Agreement and of the transactions contemplated hereby
will not result in any violation of or constitute, with or without the passage
of time and the giving of notice, either a default under any provision of the
Company's Amended and Restated Certificate of Incorporation or Bylaws, each as
amended through the date hereof.
2.8 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of the Company in connection with the Company's valid execution,
delivery and performance of this Agreement, except for any
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filings under any applicable state securities laws and except for any filing
under the H-S-R Act. The filings under state securities laws, if any, will be
effected by the Company at its cost within the applicable stipulated statutory
period.
2.9 Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement, or the right of the Company to enter
into such agreement or to consummate the transactions contemplated hereby. There
is no action, suit, proceeding or investigation pending or currently threatened
against the Company, which singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would be reasonably expected to have a
Material Adverse Effect.
2.10 Permits. Except as disclosed in the SEC Filings (including,
among other things, the lack of FDA approvals for the commercial sale of the
Company's product candidates), the Company has all governmental franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now being conducted by it or as proposed to be conducted by it, the
lack of which could have a Material Adverse Effect. The Company is not in
default in any material respect under any of such franchises, permits, licenses
or other similar authority.
2.11 Taxes. The Company has filed all federal, state and other
tax returns which are required to be filed and has heretofore paid all taxes
which have become due and payable, except where the failure to file or pay would
not be reasonably expected to have a Material Adverse Effect. The provision for
taxes on the balance sheet as of December 31, [fiscal year prior to issuance of
Shares], is sufficient for the payment of all accrued and unpaid taxes of the
Company with respect to the period then ended.
2.12 Title. The Company has good and marketable title to all
material property and assets reflected in the financial statements to the Annual
Report (or as described in the SEC Filings). The Company occupies its leased
properties under valid and binding leases conforming to the description thereof
set forth in the SEC Filings.
2.13 Intellectual Property. The Company owns, or possesses
adequate rights to use, all of its patents, patent rights, trade secrets,
know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names and copyrights described or referred to
in the SEC Filings or owned or used by it or which is necessary for the conduct
of its business as presently conducted, except where the failure to own or
possess such patents, patent rights, trade secrets, know-how, proprietary
techniques, including processes and substances, trademarks, service marks, trade
names and copyrights would not have a Material Adverse Effect. The Company has
not received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, trade secrets, know-how,
proprietary techniques, including processes and substances, trademarks, service
marks, trade names and copyrights which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would be reasonably
expected to have a Material Adverse Effect.
31
2.14 Capitalization; Options and Warrants. The authorized capital
stock of the Company consists of Eighty-Five million (85,000,000) shares, of
which Eighty million (80,000,000) shares are Common Stock, par value $0.001 per
share, and Five million (5,000,000) shares are Preferred Stock, par value $0.001
per share, of which Eighty thousand (80,000) shares have been designated Serial
A Participating Preferred Stock. As of [date set forth in most recently
published SEC filing, number of shares so set forth] shares of the Company's
Common Stock and no shares of Preferred Stock were issued and outstanding.
Except for the transactions contemplated hereby and except as set forth in the
Company's SEC Filings, since December 31, [fiscal year prior to issuance of
Shares], the Company has not granted any option (except for stock options
granted under the Company's stock option plans), warrants, rights (including
conversion or preemptive rights, except for stock purchased under the Company's
stock purchase plans), or similar rights to any person or entity to purchase or
acquire any rights with respect to any shares of capital stock of the Company
that in the aggregate exceed two million (2,000,000) shares.
2.15 Nasdaq National Market Designation. The Company's Common
Stock is currently included in the Nasdaq National Market and the Company knows
of no reason or set of facts which is likely to result in the termination of
inclusion of the Common Stock in the Nasdaq National Market or the inability of
such stock to continue to be included in the Nasdaq National Market. Nothing in
this Agreement shall be interpreted to preclude the Company from listing its
Common Stock on a national securities exchange in lieu of the Nasdaq National
Market.
2.16 Accuracy of Representations and Warranties. No
representation or warranty by the Company contained in this Agreement, and no
statement contained in any exhibit, schedule, disclosure, certificate, list or
other instrument delivered or to be delivered to the Investor pursuant hereto or
in connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements contained herein or therein not misleading.
3. Representations and Warranties of the Investor. Investor hereby
represents and warrants that:
3.1 Organization, Good Standing and Qualification. Investor is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Indiana and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted.
3.2 Authorization. All corporate action on the part of Investor,
its officers and directors necessary for the authorization, execution and
delivery of this Agreement, the performance of all obligations of Investor
hereunder has been taken or will be taken prior to the Closing, and this
Agreement constitutes a valid and legally binding obligation of Investor
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the
32
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.
3.3 Purchase Entirely for Own Account. The Shares to be received
by Investor will be acquired for investment for Investor's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Investor further represents that Investor does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Shares. Investor represents that it has full power and authority to enter into
this Agreement.
3.4 Investment Experience. Investor acknowledges that it is able
to fend for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Shares. Investor also
represents it has not been organized for the purpose of acquiring the Shares.
3.5 Accredited Investor. Investor an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.6 Restricted Securities. Investor understands that the Shares
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Shares may be resold without registration under the
Securities Act, only in certain limited circumstances. In this connection,
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
3.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, Investor further agrees not to
make any disposition of all or any portion of the Shares unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
Sections 3.7 and 6 of this Agreement, if applicable, and:
(a) There is then in effect a Registration Statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such Registration Statement; or
(b) (i) Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a reasonably
detailed statement of the circumstances surrounding the proposed disposition,
and (ii) if reasonably requested by the Company, such Investor shall have
furnished the Company with an opinion of counsel (which may be Investor's inside
counsel), in form and substance reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
33
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
Notwithstanding the foregoing, this Section 3.7 and Section 6 shall not apply to
a transferee in a registered public offering or a sale under Rule 144; provided
that Section 4.2 of that certain Stock Purchase Agreement dated _____________,
1997 between the Company and the Investor (the "Purchase Agreement"), which is
incorporated herein pursuant to Section 6 of this Agreement, shall not apply to
a transferee which receives less than one percent (1%) of the outstanding Common
Stock of the Company at such time as the Investor owns Shares which represent
less than three percent (3%) of the outstanding Common Stock of the Company;
provided further Section 5 of the Purchase Agreement, which is incorporated
herein pursuant to Section 6 of this Agreement, by its terms does not apply at
such time as the Investor owns Restricted Securities which represent less than
three percent (3%) of the outstanding Common Stock of the Company.
3.8 Legends. It is understood that the certificates evidencing
the Shares may bear one or all of the following legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the Company that such registration is not required or unless
sold pursuant to Rule 144 of such Act."
(b) "These securities are subject to certain transfer
restrictions contained in a certain Stock Purchase Agreement dated
_____________, ____, as amended from time to time, a copy of which may be
obtained from the corporation without charge."
(c) Any legend required by any applicable state securities
laws.
To the extent that such legends are no longer applicable, the Company
shall cause its transfer agent to remove the legends upon request by Investor.
3.9 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of Investor in connection with the Investor's valid execution, delivery
and performance of this Agreement or the issuance of the Shares, except for any
filings under any applicable federal or state securities law and except for any
filing under the H-S-R Act.
4. Conditions of Investor's Obligations at Closing. The obligations of
Investor under Section 1 of this Agreement are subject to the fulfillment on or
before the Closing of each of the following conditions, the waiver of which
shall not be effective without the consent of Investor thereto:
34
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing,
and all corporate or other proceedings in connection with the transactions
contemplated at the Closing. In addition, all documents shall be reasonably
satisfactory in form and in substance to Investor.
4.3 Compliance Certificate. An officer of the Company shall have
delivered to Investor a certificate certifying that (a) the conditions specified
in Sections 4.1 and 4.2 have been fulfilled; (b) the Company has not filed a
petition in bankruptcy or insolvency or for reorganization or for an arrangement
or for the appointment of a receiver or trustee of its assets, nor is the
Company aware of any events or action that would make any such filing or
arrangement imminent; and (c) no action or event has occurred, nor is any action
or event imminent, that would impair the Company's ability to perform as
contemplated under the Wholesale Agreement.
4.4 Governmental Authorizations. All authorizations, approvals,
or permits, if any, of any governmental authority or regulatory body of the
United States or of any state that are required as of the Closing in connection
with the lawful issuance and sale of the Shares pursuant to this Agreement shall
have been duly obtained and shall be effective as of the Closing. The parties
shall have timely complied with all filing requirements of the H-S-R Act, all
time periods for governmental comment thereunder shall have expired and no
requirements or conditions shall have been imposed in connection therewith which
are not reasonably satisfactory to the Investor.
4.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
at the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to Investor and they shall have received all
such counterpart original and certified or other copies of such documents as
they may reasonably request.
4.6 Wholesale Agreement. The Company shall not be in breach or
default of any of its obligations under the Wholesale Agreement.
4.7 Opinion of Company Counsel. Investor shall have received an
opinion from the Company's General Counsel, dated as of the Closing, in form and
substance reasonably acceptable to Investor.
5. Conditions of the Company's Obligations at Closing. The obligations
of the Company to Investor under Section 1.1 of this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
Investor:
35
5.1 Representations and Warranties. The representations and
warranties of Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Performance. Investor shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing and all
corporate or other proceedings in connection with the transactions contemplated
at the Closing. In addition, all documents shall be reasonably satisfactory in
form and in substance to the Company.
5.3 Compliance Certificate. An officer of Investor shall have
delivered to the Company a certificate certifying that the conditions specified
in Sections 5.1 and 5.2 have been fulfilled.
5.4 Payment of Purchase Price. Investor shall have delivered the
Purchase Price specified in Section 1.1.
5.5 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required as of the Closing in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective as of the Closing.
5.6 Wholesale Agreement. Investor shall not be in breach or
default of any of its obligations under the Wholesale Agreement.
6. Covenant of Investor. Investor acknowledges and agrees that, to the
extent its rights and obligations under Sections 4, 5 and 7.11 continue in
effect under the Purchase Agreement, they shall apply with equal force to
Investor, any actions with respect to the Shares or otherwise as set forth in
such agreement.
7. Additional Covenants.
7.1 Nasdaq National Market Designation. The Company shall give
the Nasdaq National Market timely notice of the issuance of the Shares and shall
use all commercially reasonable efforts to maintain the Non-Quantitative
Designation Criteria contained in Rule 4460 of the NASD Manual to the extent
such criteria are within the control of the Company.
7.2 Reports Under Exchange Act. With a view to making available
to the Investor the benefits of Rule 144 and any other rule or regulation of the
SEC that may at any time permit the Investor to sell the Shares to the public
without registration, the Company agrees to: (a) make and keep public
information available, as those terms are understood and defined in Rule 144, at
all times; (a) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
36
and (c) furnish to the Investor, so long as the Investor owns any Shares,
forthwith upon request (i) a written statement by the Company that it has
complied with the reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing the Investor
of any rule or regulation of the SEC which permits the selling of any Shares
without registration.
7.3 Filings under the H-S-R Act. Each of the Company and the
Investor shall use its commercially reasonable efforts to make all filings
required under the H-S-R Act within two (2) business days of the execution of
this Agreement, and thereafter to promptly respond to any requests for
additional information in connection with such filings.
8. Miscellaneous.
8.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the Company.
8.2 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any of the Shares sold hereunder). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
8.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to agreements among
Delaware residents entered into and to be performed entirely within Delaware.
8.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing by personal delivery to
the party to be notified or by Federal Express or other overnight package
delivery service or by registered or certified mail, postage prepaid and
addressed to the party to be notified at the following
37
addresses, or at such other address as such party may designate by five (5)
days' advance written notice to the other parties (with notice deemed given upon
receipt):
If to the Company:
Ligand Pharmaceuticals Incorporated
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
If to Investor:
Xxx Lilly and Company
Lilly Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: General Counsel
8.7 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Each party agrees to indemnify and to hold harmless the other party
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the indemnifying party or any of its officers,
partners, employees or representatives is responsible.
8.8 Expenses. Irrespective of whether the Closing is effected,
each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
8.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively
but only if so expressly stated), only with the written consent of the Company
and Investor. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased under this
Agreement at the time outstanding, each future holder of all such securities,
and the Company.
8.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.
38
8.11 Entire Agreement. This Agreement and the documents referred
to herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party regarding the subject matter hereof and
thereof in any manner by any warranties, representations, or covenants except as
specifically set forth herein or therein.
39
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
LIGAND PHARMACEUTICALS
INCORPORATED
By: ______________________________________
Title: ______________________________________
INVESTOR:
XXX XXXXX AND COMPANY
By: ______________________________________
Title: ______________________________________
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
40
AMENDMENT TO OPTION AND WHOLESALE PURCHASE AGREEMENT
This Amendment is executed as of the 23rd day of February, 1998 by and
between Xxx Lilly and Company ("Lilly") and Ligand Pharmaceuticals Incorporated
("Ligand").
Whereas, Lilly and Ligand have entered into an Option and Wholesale
Purchase Agreement dated as of November 25, 1997 (the "Agreement"), and
Whereas the parties now desire to amend the Agreement to extend the
period of time pursuant to which Ligand may exercise the Ligand Option (as
defined in the Agreement).
Now, therefore, in consideration of the foregoing, the mutual covenants
set forth below and other consideration, receipt sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Section 1.1 of the Agreement is hereby amended to read in its
entirety as follows: "Until the later of (a) April 27, 1998, or (b) the date
which is three (3) business days after the date Ligand delivers to Lilly the
notice referred to in Section 1.4 (the "Ligand Option Period"), Ligand shall
have the option (the "Ligand Option") to become Lilly's exclusive wholesaler of
the Products, subject to the terms and conditions contained in this Agreement.
2. All other terms and conditions of the Agreement shall remain in full
force and effect.
3. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one in the same.
LIGAND PHARMACEUTICALS INC. XXX XXXXX AND COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ August X. Xxxxxxxx
------------------------------------ -------------------------
Sr. Vice President, August X. Xxxxxxxx
General Counsel, Government Relations Executive Vice President
Science and Technology
Date: February 28, 1998 Date: February 28, 1998
----------------- -----------------
41
AMENDMENT #2 TO OPTION AND WHOLESALE PURCHASE AGREEMENT
This Amendment is executed as of the 16th day of March, 1998 by and between
Xxx Xxxxx and Company ("Lilly") and Ligand Pharmaceuticals Incorporated
("Ligand").
Whereas, Lilly and Ligand have entered into an Option and Wholesale
Purchase Agreement dated as of November 25, 1997, and amended on February 23,
1998 (the "Agreement"), and
Whereas the parties now desire to amend the Agreement to extend the period
of time pursuant to which Ligand may exercise the Ligand Option (as defined in
the Agreement).
Now, therefore, in consideration of the foregoing, the mutual covenants set
forth below and other consideration, receipt sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Section 1.1 of the Agreement is hereby amended to read in its
entirety as follows:
"Ligand Option. Until the date that is seven (7) days after the date on which
Lilly gives written notice (the "Option Termination Notice") to Ligand of
Lilly's desire to terminate the Ligand Option (the "Ligand Option Period"),
Ligand shall have the option (the "Ligand Option") to become Lilly's exclusive
wholesaler of the Products, subject to the terms and conditions contained in
this Agreement. Lilly shall not give the Option Termination Notice prior to
April 27, 1998. If Lilly gives the Option Termination Notice prior to May 28,
1998, it will, upon written request made by both Ligand and Seragen and
delivered to Lilly within five (5) days of the date of the Option Termination
Notice, defer effectiveness of the Option Termination Notice until May 28, 1998,
(with the effect that the Ligand Option would expire on June 4, 1998, if not
previously exercised). ***
***
***
***
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2. All other terms and conditions of the Agreement shall remain in full
force and effect.
3. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one in the same.
LIGAND PHARMACEUTICALS INC. XXX XXXXX AND COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ August X. Xxxxxxxx
--------------------------- -----------------------------
Sr. Vice President, General August X. Xxxxxxxx
Counsel, Government Affairs Executive Vice President
Science and Technology
Date: February 28, 1998 Date: February 28, 1998
----------------- -----------------
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
