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EXHIBIT 10.6
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of September
30, 1998, by and between Ligand Pharmaceuticals Incorporated, a Delaware
corporation (the "Company"), and Elan International Services, Ltd., a Bermuda
corporation (the "Purchaser").
RECITALS
WHEREAS, the Company, the Purchaser and Elan Corporation, plc, a
public limited company organized under the laws of Ireland and the parent of the
Purchaser ("Elan"), have entered into a binding letter of intent, dated as of
September 29, 1998 (the "Letter of Intent");
WHEREAS, pursuant to the Letter of Intent, the Purchaser has
agreed to purchase from the Company shares of the Company's common stock, par
value $0.001 per share (the "Common Stock"), on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
SECTION 1. Purchase and Sale of Common Stock. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions set forth herein, at the Closing (as defined
in Section 2(a)) the Company shall sell to the Purchaser, and the Purchaser
shall purchase from the Company, 1,278,970 shares of Common Stock (the "Shares")
at a purchase price equal to $11.65 per share (the "Purchase Price").
SECTION 2. Closing.
(a) The closing of the sale and purchase of the Shares (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, at 2:00 PM, New York City time, on the date hereof,
or such other time and place as the Company and the Purchaser may agree. The
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time at which the Closing is concluded is herein called the "Closing Date."
(b) At the Closing, the Company shall deliver to the Purchaser a
certificate or certificates, registered in the name of the Purchaser, or such
other name or names as the Purchaser may direct in writing, representing the
Shares, against payment of the Purchase Price, by certified or official bank
check payable in immediately available funds to the order of the Company or by
wire transfer in immediately available funds to an account designated in writing
by the Company.
SECTION 3. Representations of the Company. Except as otherwise set forth
in the Schedule of Exceptions attached hereto, the Company represents and
warrants to and agrees with the Purchaser as follows:
(a) Each of the Company and the Subsidiaries (as defined in
paragraph (d) of this Section 3) is duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of organization and has all
requisite corporate power and authority to own its properties and conduct its
business as now being conducted. Each of the Company and the Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in all other jurisdictions where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the business, assets, liabilities (contingent or
otherwise), operations, condition (financial or otherwise), solvency,
properties, prospects or material agreements of the Company and its
Subsidiaries, taken as a whole (any such event, a "Material Adverse Effect").
(b) The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized by the Company and, when executed
and delivered by the Company, will constitute a valid and legally binding
agreement of the Company enforceable against the Company in accordance with its
terms, except that (A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor may
be brought and (B) any rights to indemnity or contribution hereunder may be
limited by federal and state securities laws and public policy considerations.
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(c) The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under the Registration Rights
Agreement (as defined in Section 6(d)). The Registration Rights Agreement has
been duly and validly authorized by the Company and, when executed and delivered
by the Company, will constitute a valid and legally binding agreement of the
Company enforceable against the Company in accordance with its terms, except
that (A) the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought and (B) any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy considerations.
(d) The authorized, issued and outstanding capitalization of the
Company consists of: (i) 80,000,000 shares of Common Stock, of which 39,309,031
shares were issued and outstanding as of July 31, 1998, and (ii) 5,000,000
shares of convertible preferred stock (80,000 shares of which have been
designated as "Series A Participating Preferred Stock"), of which no shares are
issued and outstanding; all of the Subsidiaries of the Company are listed on
Schedule 3(d)(i) hereto (each, a "Subsidiary" and collectively, the
"Subsidiaries"); all of the outstanding shares of capital stock of the Company
and the Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable and were not issued in violation of any preemptive or
similar rights; all of the outstanding shares of capital stock of the
Subsidiaries are owned, directly or indirectly, by the Company, free and clear
of all liens, encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Securities Act of 1933, as
amended (the "Securities Act") and the securities or "Blue Sky" laws of certain
jurisdictions) or voting; except as described in the SEC Reports (as defined in
paragraph (i) of this Section 3) or as otherwise set forth on Schedule 3(d)(ii)
hereto, there are no (i) options, warrants or other rights to purchase, (ii)
agreements or other obligations to issue or (iii) other rights to convert any
obligation into or exchange any securities for, shares of capital stock of or
ownership interests in the Company or any of the Subsidiaries; except for the
Subsidiaries, the Company does not own, directly or indirectly, any shares of
capital stock or any other equity or long-term debt securities or have any
equity interest in any firm, partnership, joint venture or other entity.
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(e) The Shares, when issued, sold and delivered to the Purchaser
at the Closing against payment therefor in accordance with the terms of this
Agreement, will be duly and validly issued, fully paid and nonassessable, will
not be issued in violation of any preemptive or similar rights and will be free
of any liens, encumbrances, restrictions on transfer other than those imposed by
the Securities Act and applicable state securities or "Blue Sky" laws.
(f) No consent, approval, authorization or order of any court or
governmental agency or body, or third party is required for the issuance and
sale by the Company of the Shares or the consummation by the Company of the
other transactions contemplated hereby, 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, with respect to transactions
contemplated by the Letter of Intent. None of the Company or the Subsidiaries is
(i) in violation of its certificate of incorporation or bylaws, (ii) in breach
or violation of any statute, judgment, decree, order, rule or regulation
applicable to it or any of its properties or assets, except for any such breach
or violation which would not, individually or in the aggregate, have a Material
Adverse Effect, or (iii) in breach of or default under (nor has any event
occurred which, with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which any of them is a party or to which any of them or their
respective properties or assets is subject (collectively, "Contracts"), except
for any such breach, default, violation or event which would not, individually
or in the aggregate, have a Material Adverse Effect.
(g) None of the Company, the Subsidiaries, any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act) or any person acting on its or their behalf has engaged in any
directed selling efforts (as that term is defined in Regulation S under the
Securities Act ("Regulation S")) with respect to the Common Stock; the Company,
the Subsidiaries and their respective Affiliates and any person acting on its or
their behalf have complied with the offering restrictions requirements of
Regulation S.
(h) The execution, delivery and performance by the Company of
this Agreement and the Registration Rights Agreement and the consummation by the
Company of the transactions contem-
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plated hereby and thereby (including, without limitation, the issuance and sale
of the Shares to the Purchaser) will not conflict with or constitute or result
in a breach of or a default under (or an event which with notice or passage of
time or both would constitute a default under) or violation of any of (i) the
terms or provisions of any Contract, except for any such conflict, breach,
violation, default or event which would not, individually or in the aggregate,
have a Material Adverse Effect, (ii) the certificate of incorporation or bylaws
of the Company or any of the Subsidiaries, or (iii) (assuming compliance with
all applicable state securities or "Blue Sky" laws and assuming the accuracy of
the representations and warranties of the Purchaser set forth in Section 4 of
this Agreement) any statute, judgment, decree, order, rule or regulation
applicable to the Company or any of the Subsidiaries or any of their respective
properties or assets, except for any such conflict, breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect.
(i) The Company has filed with the Securities and Exchange
Commission (the "SEC") all required forms, reports, registration statements and
documents required to be filed by it with the SEC since December 31, 1996
(collectively, the "SEC Reports"), all of which complied as to form when filed
in all material respects with the applicable provisions of the Securities Act
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
case may be. As of their respective dates, the SEC Reports (including all
exhibits and schedules thereto and documents incorporated by reference therein)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(j) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company and the Subsidiaries
included or incorporated by reference in any of the SEC Reports have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis during the periods involved, except as otherwise stated
therein, and present fairly, in all material respects, the consolidated
financial position of the Company and the Subsidiaries at the dates thereof and
the consolidated results of operations and cash flows for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments and to the extent they include footnotes or may be
condensed or summary statements) and such
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audited financial statements are accompanied by an unqualified opinion thereon
by the Company's independent auditors.
(k) Except as set forth on Schedule 3(k), there is not pending
or, to the knowledge of the Company, threatened any action, suit, proceeding,
inquiry or investigation to which the Company or any of the Subsidiaries is a
party, or to which the property or assets of the Company or any of the
Subsidiaries are subject, before or brought by any court, arbitrator or
governmental agency or body which, if determined adversely to the Company or any
such Subsidiary, would, individually or in the aggregate, have a Material
Adverse Effect, or which seeks to restrain, enjoin, prevent the consummation of
or otherwise challenge the issuance or sale of the Shares to be sold hereunder
or the consummation of the other transactions contemplated by this Agreement.
(l) Each of the Company and the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with, all
federal, state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals presently required or necessary
to own or lease, as the case may be, and to operate its respective properties
and to carry on its respective businesses as now conducted and as proposed to be
conducted ("Permits"), except where the failure to obtain such Permits would
not, individually or in the aggregate, have a Material Adverse Effect and except
as disclosed in the SEC Reports; each of the Company and the Subsidiaries has
fulfilled and performed all of its obligations with respect to such Permits and
no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit; and none of the
Company or the Subsidiaries has received any notice of any proceeding relating
to revocation or modification of any such Permit, except where such revocation
or modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(m) Since June 30, 1998, (i) except as set forth on Schedule
3(m), none of the Company or the Subsidiaries has incurred any liabilities or
obligations, direct or contingent, or entered into or agreed to enter into any
transactions or contracts (written or oral) not in the ordinary course of
business, which liabilities, obligations, transactions or contracts would,
individually or in the aggregate, be material to the business, assets,
liabilities (contingent or otherwise), opera-
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tions, condition (financial or otherwise), solvency or prospects of the Company
and the Subsidiaries, taken as a whole, (ii) none of the Company or the
Subsidiaries has purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind on its capital
stock (other than with respect to the Subsidiaries, the purchase of, or dividend
or distribution on, capital stock owned by the Company) and (iii) there shall
not have been any material change in the capital stock or long-term indebtedness
of the Company or the Subsidiaries.
(n) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns, except
where the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company or any Subsidiary is
contesting in good faith and for which the Company or such Subsidiary has
provided adequate reserves, there is no tax deficiency that has been asserted
against the Company or any of the Subsidiaries that would, individually or in
the aggregate, have a Material Adverse Effect.
(o) Each of the Company and the Subsidiaries has good and
marketable title to all real property and good title to all personal property
owned by it and good and marketable title to all leasehold estates in the real
and personal property being leased by it free and clear of all liens, charges,
encumbrances or restrictions, except as set forth on Schedule 3(o) and except to
the extent the failure to have such title or the existence of such liens,
charges, encumbrances or restrictions would not, individually or in the
aggregate, have a Material Adverse Effect.
(p) Each of the Contracts is valid and enforceable against the
Company or the Subsidiaries, as the case may be, and is valid and enforceable
against the other party or parties thereto and the Company is not, and has no
actual knowledge that any other party is, in default under or in respect of any
such Contract, with only such exceptions as would not, individually or in the
aggregate, have a Material Adverse Effect.
(q) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other valid rights to use all patents and applications
therefore, trademarks, service marks, trade names, copyrights and know-how
(collectively "Proprietary Rights") necessary to conduct the businesses now or
proposed to be conducted by it, except for such lack of or defects in own-
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ership as would not, individually or in the aggregate, have a Material Adverse
Effect. None of the Company or the Subsidiaries has received any notice that any
Proprietary Rights have been declared unenforceable or otherwise invalid by any
court or governmental agency other than notices relating to Proprietary Rights
the loss of which would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth on Schedule 3(q), none of the Company or the
Subsidiaries has received any notice of infringement of or conflict with (or
knows of any such infringement of or conflict with) asserted rights of others
with respect to any Proprietary Rights which, if such assertion of infringement
or conflict were sustained, would have a Material Adverse Effect.
(r) Except as would not, individually or in the aggregate, have a
Material Adverse Effect (A) each of the Company and the Subsidiaries is in
compliance with and not subject to liability under applicable Environmental Laws
(as defined below), (B) each of the Company and the Subsidiaries has made all
filings and provided all notices required under any applicable Environmental
Law, and has and is in compliance with all Permits required under any applicable
Environmental Laws and each of them is in full force and effect, (C) there is no
civil, criminal or administrative action, suit, demand, claim, hearing, notice
of violation, investigation, proceeding, notice or demand letter or request for
information pending or, to the knowledge of the Company or the Subsidiaries,
threatened against the Company or any Subsidiary under any Environmental Law,
(D) no lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property owned,
operated, leased or controlled by the Company or any Subsidiary, (E) none of the
Company or the Subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any comparable
state law, (F) no property or facility of the Company or any Subsidiary is (i)
listed or proposed for listing on the National Priorities List under CERCLA or
(ii) listed in the Comprehensive Environmental Response, Compensation and
Liability Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or regulations,
codes, orders, decrees, judgments or injunctions issued, promulgated, approved
or entered thereunder, relating to pollution or protection of public or employee
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health and safety or the environment, including, without limitation, laws
relating to (i) emissions, discharges, releases or threatened releases of
hazardous materials into the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of hazardous materials, and (iii) underground
and aboveground storage tanks and related piping, and emissions, discharges,
releases or threatened releases therefrom.
(s) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or the Subsidiaries which is pending or, to
the knowledge of the Company or the Subsidiaries, threatened.
(t) Each of the Company and the Subsidiaries carries insurance in
such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties.
(u) None of the Company or the Subsidiaries has any liability for
any prohibited transaction or funding deficiency or any complete or partial
withdrawal liability with respect to any pension, profit sharing or other plan
which is subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), to which the Company or any Subsidiary makes or ever has made
a contribution and in which any employee of the Company or any Subsidiary is or
has ever been a participant. With respect to such plans, the Company and the
Subsidiaries are in compliance in all material respects with all applicable
provisions of ERISA.
(v) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(w) Except as provided in the Registration Rights Agreement, the
Company has not granted or agreed to grant any registration rights to any person
or entity.
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(x) Under the Preferred Share Rights Agreement, dated as of
September 13, 1996, between the Company and Xxxxx Fargo Bank, N.A., as amended
to the date hereof (the "Rights Agreement"), none of the execution of this
Agreement or the Registration Rights Agreement, or the consummation of the
transactions contemplated hereby or thereby, will cause a "distribution date" to
occur or cause rights issued thereunder to become exercisable.
(y) Except as otherwise disclosed to the Purchaser, no person has
or will have, as a result of the transactions contemplated by this Agreement,
any right, interest or valid claim against or upon the Company for any
commission, fee or other compensation as a finder or broker because of any act
by the Company or of any agent of the Company. The Company will pay, and hold
the Purchaser harmless against, any liability, loss or expense (including,
without limitation, reasonable attorneys' fees and out-of-pocket expenses)
arising in connection with any claim for any such commission, fee or other
compensation.
SECTION 4. Representations of the Purchaser. The Purchaser represents
and warrants to and agrees with the Company as follows:
(a) The Purchaser has all requisite corporate power and authority
to execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized by the Purchaser and, when
executed and delivered by the Purchaser, will constitute a valid and legally
binding agreement of the Purchaser enforceable against the Purchaser in
accordance with its terms, except that the enforcement hereof may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought.
(b) The Purchaser has all requisite corporate power and authority
to execute, deliver and perform its obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and validly
authorized by the Purchaser and, when executed and delivered by the Purchaser,
will constitute a valid and legally binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to
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creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought and
(B) any rights to indemnity or contribution thereunder may be limited by federal
and state securities laws and public policy considerations.
(c) The Purchaser acknowledges that the Shares have not been
registered under the Securities Act or any other applicable securities laws, are
being sold in a transaction not requiring registration under the Securities Act
and, unless so registered, may not be offered, sold or otherwise transferred
except in compliance with the registration requirements of the Securities Act or
any other applicable securities law, pursuant to an exemption therefrom or in a
transaction not subject thereto and in each case in compliance with the
conditions for transfer set forth in paragraph (e) of this Section 4.
(d) The Purchaser is outside the United States and is not a "U.S.
person" (as such term is defined in Regulation S) and is purchasing the Shares
for its own account.
(e) Until the expiration of the "one-year distribution compliance
period" within the meaning of Rule 903 of Regulation S, the Purchaser will not
sell or otherwise transfer the Shares except (i) to the Company or its
Subsidiaries, (ii) pursuant to an effective registration statement which has
been declared effective under the Securities Act, (iii) in an offshore
transaction in accordance with Rule 904 of Regulation S or (iv) pursuant to any
other available exemption from the registration requirements of the Securities
Act, including Rule 144 thereunder ("Rule 144"). After the expiration of such
"one-year distribution compliance period," the Purchaser will not sell or
otherwise transfer the Shares except pursuant to registration under the
Securities Act or an available exemption therefrom and, in any case, in
accordance with the provisions of Regulation S and applicable state securities
laws.
(f) The Purchaser understands that the certificates representing
the Shares will, so long as appropriate, bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO A VALID
EXEMPTION THEREFROM AND HAVE BEEN SOLD IN RELIANCE ON THE EXEMPTION FROM
REGISTRATION PROVIDED
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BY REGULATION S UNDER THE ACT ("REGULATION S"). THE SHARES REPRESENTED
BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S
(SECTION 230.901 THROUGH SECTION 230.905, AND PRELIMINARY NOTES).
HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT.
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
THE CONDITIONS SPECIFIED IN A STOCK PURCHASE AGREEMENT, DATED AS OF
SEPTEMBER 30, 1998, BETWEEN THE COMPANY AND ELAN INTERNATIONAL SERVICES,
LTD., AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH
SHARES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH
TRANSFER. A COPY OF SUCH CONDITIONS WILL BE FURNISHED BY THE COMPANY TO
THE HOLDER HEREOF WITHOUT CHARGE.
(g) The Purchaser agrees that the Company shall be entitled to
make a notation on its records and give instructions to any transfer agent of
the Shares in order to implement the restrictions on transfer set forth in this
Agreement.
(h) The Purchaser acknowledges that, in making the decision to
purchase the Shares, it has relied solely upon independent investigations made
by it and not upon any representations made by the Company with respect to the
Company or the Shares. The Purchaser acknowledges that it is a sophisticated
investor and that an investment in the Shares involves a high degree of risk.
The Purchaser further acknowledges that the Purchase Price may or may not exceed
the latest publicly quoted per share "asked" price of the Common Stock.
(i) The Purchaser is purchasing the Shares for its own account
for the purpose of investment and not (i) with a view to, or for sale in
connection with, any distribution thereof or (ii) for the account or on behalf
of any "U.S. person" (as such term is defined in Regulation S). The Purchaser
understands, acknowledges and agrees that it must bear the economic risk of its
investment in the Shares for an indefinite period of time and that prior to any
offer or sale of such securities, the Company may require, as a condition to
effecting a transfer of the Shares, an opinion of counsel to Purchaser,
acceptable to the Company, as to the registration or exemption therefrom under
the Securities Act.
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(j) The Purchaser was not formed specifically for the purpose of
acquiring the Shares purchased pursuant to this Agreement.
(k) Neither the Purchaser nor any of its affiliates directly or
indirectly have within the past 90 days nor will such persons for a period of
one year from the Closing Date directly or indirectly enter into any short
selling of any equity security of the Company (including, without limitation,
the Common Stock) or any hedging transaction with respect to any equity security
of the Company, including, without limitation, puts, calls, or other option
transactions, option writing and equity swaps, unless in compliance with the
Securities Act.
SECTION 5. Conditions to Company's and Purchaser's Obligations.
The respective obligation of each of the Company and the Purchaser to consummate
the purchase and sale of the Shares pursuant to Section 1 of this Agreement
shall be subject to the satisfaction of the following conditions at or prior to
the Closing Date:
(a) The sale of the Shares hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(b) All consents, approvals, authorizations and orders of any
court or governmental agency or body, or third party required in connection with
the execution and delivery of this Agreement and the Registration Rights
Agreement and the consummation of the transactions contemplated hereby and
thereby shall have been obtained.
SECTION 6. Conditions to Purchaser's Obligations. The obligation of the
Purchaser to purchase the Shares pursuant to Section 1 of this Agreement shall,
in its sole discretion, be subject to satisfaction or waiver of the following
conditions at or prior to the Closing Date:
(a) Each of the representations and warranties of the Company set
forth in Section 3 hereof shall be true and correct on and as of the date hereof
and on and as of the Closing Date as if made on and as of the Closing Date,
except to the extent that such representations and warranties expressly relate
to an earlier date; the statements of the Company's officers made pursuant to
any certificate delivered in accordance with the provisions hereof shall be true
and correct on and as of the date made and on and as of the Closing Date; the
Company shall have performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied
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hereunder at or prior to the Closing Date; since June 30, 1998, and except as
disclosed in SEC Reports filed since such date, there shall have been no event
or development, and no information shall have become known, that, individually
or in the aggregate, has or would be reasonably likely to have a Material
Adverse Effect.
(b) On the Closing Date, the Purchaser shall have received the
opinion, dated as of the Closing Date and addressed to the Purchaser, of
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Company, substantially in the
form attached hereto as Exhibit A.
(c) The Purchaser shall have received a certificate of the
Company, dated the Closing Date, signed on behalf of the Company by its Chief
Executive Officer and the Chief Financial Officer, to the effect that:
(i) The representations and warranties of the Company contained
in this Agreement are true and correct on and as of the date hereof and
on and as of the Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier time, and
the Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date;
(ii) At the Closing Date and since June 30, 1998, no event or
development has occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect; and
(iii) The sale of the Shares hereunder has not been enjoined
(temporarily or permanently).
(d) On the Closing Date, the Purchaser shall have received the
Tenth Addendum to the Amended Registration Rights Agreement, dated as of June
24, 1994, by and among the Company and those entities party thereto (the
"Registration Rights Agreement"), providing for the registration rights for the
Shares upon the terms and conditions set forth therein and such agreement shall
be in full force and effect at all times from and after the Closing Date.
All such documents, certificates, schedules or instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory
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in all material respects to the Purchaser and counsel for the Purchaser.
SECTION 7. Conditions to Company's Obligations.
The obligation of the Company to issue and sell the Shares
pursuant to Section 1 of this Agreement shall, in its sole discretion, be
subject to satisfaction or waiver of the following conditions at or prior to the
Closing Date:
(a) Each of the representations and warranties of the Purchaser
set forth in Section 4 hereof shall be true and correct on and as of the date
hereof and on and as of the Closing Date as if made on and as of the Closing
Date, except to the extent that such representations and warranties expressly
relate to an earlier date; the statements of the Purchaser's officers made
pursuant to any certificate delivered in accordance with the provisions hereof
shall be true and correct on and as of the date made and on and as of the
Closing Date; the Purchaser shall have performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Closing Date.
(b) The Company shall have received a certificate of the
Purchaser, dated the Closing Date, signed on behalf of the Purchaser by its
President and Chief Financial Officer, to the effect that the representations
and warranties of the Purchaser contained in this Agreement are true and correct
on and as of the date hereof and on and as of the Closing Date, except to the
extent that such representations and warranties expressly relate to an earlier
time, and the Purchaser has performed all covenants and agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date.
(c) The Purchaser shall have delivered the Purchase Price in
accordance with Section 2(b) hereof.
All such documents, certificates, schedules or instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Company and
counsel for the Company.
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SECTION 8. Covenants of the Company.
(a) The Company agrees that, prior to the termination of all
rights provided for in the Registration Rights Agreement in accordance with
Section 1.17 thereof, the Company will prepare, execute and deliver to the
Purchaser a registration rights agreement (the "New Registration Rights
Agreement"), to be effective upon such termination, providing registration
rights for the Shares on substantially identical terms and conditions as those
provided for in the Registration Rights Agreement. The New Registration Rights
Agreement shall expire on December 31, 2003.
(b) Subject to the terms and conditions specified in this
paragraph (b), the Company hereby grants to the Purchaser a right to purchase up
to the number of Additional Shares (as defined below) in connection with any
Transaction (as defined below) undertaken by the Company.
(i) Each time the Company proposes to offer, sell or otherwise
issue shares of any class of its capital stock or securities convertible
into or exercisable or exchangeable for a class of capital stock
("Capital Stock"), in a public or private transaction (a "Transaction"),
the Company shall deliver a notice in person, by air courier or by
facsimile ("Notice") to the Purchaser stating (a) the Company's bona
fide intention to undertake such Transaction, (b) the number of shares
of Capital Stock to be offered in the Transaction (the "Transaction
Shares"), (c) the number of Additional Shares up to which the Purchaser
may elect to purchase in such Transaction (which would be added to the
Transaction Shares), and (d) the price and terms, if any, upon which it
proposes to offer, sell or otherwise issue Capital Stock in the
Transaction.
(ii) Within 10 business days after giving of the Notice, the
Purchaser may elect to purchase, at the price and on the terms specified
in the Notice, up to the number of Additional Shares set forth in the
Notice. The number of shares of Capital Stock ("Additional Shares") that
the Purchaser may elect to purchase and include in the Transaction shall
be calculated as follows:
Additional Shares = Transaction Shares Transaction Shares
------------------
1 - X%
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X% represents the percentage (stated as a decimal) of the
outstanding shares of Common Stock then held by the Purchaser
(assuming the conversion exercise or exchange of all Capital
Stock then held by the Purchaser and acquired pursuant to this
paragraph (b)).
In the event that the price or terms upon which the Company proposes to
offer, sell or otherwise issue Capital Stock in the Transaction or the
number of Transaction Shares to be included in such Transaction changes
for any reason (other than including the Additional Shares) after the
Notice is delivered to the Purchaser, the number of Additional Shares
shall, with respect to a change in the number of Transaction Shares, be
recalculated using the new number of Transaction Shares and, in any
case, the Company shall promptly provide a revised Notice to the
Purchaser reflecting such recalculated Additional Shares and any change
to such price or terms. If the Company proposes to offer, sell or issue
any Capital Stock for consideration other than cash, the Purchaser may
exercise the right set forth in this paragraph (b) and purchase
Additional Shares for cash at a per share purchase price equal to (i)(a)
the face amount of any cash received for such Capital Stock plus (b) the
fair market value of the non-cash consideration expressly received for
such Capital Stock divided by (ii) the number of Transaction Shares
issued in such Transaction (excluding any Additional Shares). The fair
market value of any such non-cash consideration shall be determined by
an independent appraisal firm of nationally-recognized standing chosen
jointly by the Company and the Purchaser.
(iii) The right of the Purchaser in this paragraph (b) shall not
be applicable to (a) the issuance or sale of Capital Stock under any
plan, agreement or arrangement applicable only to employees, directors
or consultants and approved by the Company's board of directors or (b)
the issuance of securities pursuant to the conversion, exercise or
exchange of convertible, exercisable or exchangeable securities.
(iv) The Purchaser's rights and obligations under this paragraph
(b) shall not be assignable, except that such rights may be assigned by
the Purchaser to any Affiliate that agrees in writing to be bound by the
provisions of this paragraph (b).
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(v) Notwithstanding anything to the contrary in this paragraph
(b), the provisions of this paragraph (b) shall terminate and be of no
further force and effect upon the earlier of (i) the termination of the
Letter of Intent pursuant to Section 3(c) thereof and (ii) the
consummation of (x) any consolidation of the Company with, or merger of
the Company with or into, any person (including any individual,
partnership, joint venture, corporation, trust or group thereof)
("Person") other than a consolidation or merger pursuant to which the
stockholders of the Company immediately prior to such consolidation or
merger own more than 50% of the outstanding securities entitled to vote
in the election of directors of the surviving Person after such
consolidation or merger or (y) any sale, transfer or conveyance of all
or substantially all of the assets of the Company.
(c) Upon the later of (i) the termination of all rights under the
Registration Rights Agreement and (ii) the expiration of the New Registration
Rights Agreement, and so long as Purchaser continues to hold any Shares, in
order to permit the Purchaser to sell the Shares (subject to Section 9(a)
hereof), from time to time, pursuant to Rule 144, or any successor to such rule
or any other rule or regulation of the SEC that may at any time permit the
Purchaser to sell the Shares without registration, the Company shall:
(i) make and keep public information available, as those terms
are understood and defined in Rule 144, at all times during which the
Company is subject to the reporting requirements of the Securities Act
or the Exchange Act;
(ii) use its best efforts to file with the SEC in a timely manner
all reports and other documents required to be filed by the Company
under the Securities Act or the Exchange Act (at all times during which
it is subject to such reporting requirements thereof); and
(iii) (x) furnish to the Purchaser promptly upon request, a
written statement by the Company as to its compliance with the reporting
requirements of the Securities Act and the Exchange Act (at any time
during which it is subject to such to such reporting requirements), a
copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company and other information in
the possession of or reasonably obtainable by the Company as the
Purchaser may reasonably request in availing itself of Rule 144, or any
successor
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to such rule or any other rule or regulation of the SEC that may at any
time permit the Purchaser to sell the Shares without registration and
(y) take any action (including cooperating with the Purchaser to cause
the transfer agent for the Common Stock to remove any restrictive legend
on the certificates evidencing the Shares) as shall be reasonably
requested by the Purchaser or which shall otherwise facilitate the sale
of the Shares from time to time by the Purchaser pursuant to Rule 144,
or any successor to such rule or any other rule or regulation of the SEC
that may at any time permit the Purchaser to sell the Shares without
registration.
SECTION 9. Covenants of the Purchaser.
(a) The Purchaser agrees that, during the period beginning on the
date of this Agreement and ending on the later of (i) September 30, 2000 and
(ii) the *** after the consummation of the transactions contemplated by the
Letter of Intent, it shall not, and shall not permit any of its Affiliates (as
defined below) to, directly or indirectly, without the prior written consent of
the Company, sell, offer to sell, contract to sell, grant any option to purchase
or otherwise transfer or dispose of ("Transfer"), the Shares; provided that Elan
may Transfer the Shares to any of its Affiliates and any Affiliate of Elan may
Transfer the Shares to Elan or to any other Affiliate of Elan, subject to the
Purchaser's agreements set forth in Section 4 of this Agreement.
(b) For purposes of this Section 9, the term "Affiliate" shall
mean, with respect to any specified person or entity, any other person or entity
controlling, controlled by, or under common control with such specified person
or entity. For purposes of this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through the ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative of the foregoing.
(c) Notwithstanding anything to the contrary in this Section 9,
the provisions of this Section 9 shall terminate and be of no further force and
effect upon the termination of the Letter of Intent pursuant to Section 3(c)
thereof.
SECTION 10. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
20
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delivered personally or sent by telex, nationally recognized overnight delivery
service, facsimile (receipt confirmed), registered or certified mail, postage
prepaid, addressed as follows or to such other address of which the parties may
have given written notice:
(i) if to the Company, to:
Ligand Pharmaceuticals Incorporated
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Fax No.: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
000 Xxxx X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
(ii) if to the Purchaser, to:
Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxx
Xxxxxx Xxxxxx XX 04
Bermuda
Attn: President
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
(iii) (a) on the date delivered, if delivered by facsimile or
personally; (b) on the day after the notice is delivered into the
possession and control of a nationally recognized overnight delivery
service, duly marked for delivery to the receiving party; or (c) three
business days after being sent, if sent by registered or certified mail.
SECTION 11. Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties hereto and their
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respective successors and assigns, except that neither the Purchaser nor the
Company may assign its obligations hereunder without the prior written consent
of the other party; provided that the Purchaser may assign any of its rights and
obligations hereunder to Elan or any Affiliate of Elan, subject to the
Purchaser's agreements set forth in Section 4 of this Agreement; provided,
further, that the Company may assign its obligations hereunder in connection
with the transfer or sale of all or substantially all of its assets, or in the
event of its merger or consolidation with or into another entity in a
transaction in which the Company is not the surviving entity. Any assignment in
contravention of this Section 11 shall be void. No assignment shall release the
Purchaser or the Company from any obligation or liability under this Agreement
unless expressly agreed to by the non-assigning party.
SECTION 12. Entire Agreement; Amendments. This Agreement and the other
writings referred to herein or delivered pursuant hereto contain the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral and written and all
contemporaneous oral negotiations, commitments and understandings between such
parties. This Agreement may be amended only by a written amendment executed by
both parties.
SECTION 13. Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
SECTION 14. Expenses. Except as otherwise expressly provided herein, the
Purchaser and the Company will pay the respective fees and expenses (including,
without limitation, legal and accounting fees and expenses) incurred by each of
them in connection with the transactions contemplated hereby.
SECTION 15. Survival of Representations and Warranties. All
representations and warranties made in this Agreement or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof for a period of two (2) years.
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SECTION 16. Waiver. No failure or delay on the part of a party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy hereunder.
SECTION 17. Further Assurances. From and after the date of this
Agreement, upon the reasonable request of one party hereto, the other party
hereto shall execute and deliver such instruments, documents and other writings
as may be necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
SECTION 18. GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
SECTION 19. Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit, or
restrict the contractual obligations of the parties.
SECTION 20. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
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IN WITNESS WHEREOF, this Agreement has been duly executed under
seal by the parties hereto and delivered as of the date first above written.
LIGAND PHARMACEUTICALS
INCORPORATED
By: /s/ XXXXX X. XXXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief
Executive Officer
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ XXXXX XXXXXX
-------------------------------
Name: Xxxxx Xxxxxx
Title: President and Chief
Financial Officer
24
EXHIBIT A
Opinion of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
