EXHIBIT 2.1
AMENDMENT NUMBER 2 TO PURCHASE AGREEMENT
THIS AMENDMENT NUMBER 2 TO PURCHASE AGREEMENT, (this "AMENDMENT")
entered into and effective this the 26th day of February, 2007 (the "EFFECTIVE
DATE OF THIS AMENDMENT"), is made by and between LIGAND PHARMACEUTICALS
INCORPORATED, a Delaware corporation, and all of its successors and assigns (the
"SELLER"), KING PHARMACEUTICALS, INC., a Tennessee corporation ("KING") and KING
PHARMACEUTICALS RESEARCH AND DEVELOPMENT, INC., a Delaware corporation and
wholly owned subsidiary of King ("KING R & D; King R & D together with King, the
"PURCHASER"). Each of Seller and Purchaser is referred to herein, individually,
as a "PARTY" and, collectively, as the "PARTIES."
WHEREAS, the Seller and Purchaser entered into that certain Purchase
Agreement, dated as of September 6, 2006, as amended by Amendment Number 1 to
Purchase Agreement, Contract Sales Force Agreement and Confidentiality
Agreement, dated as of November 30, 2006 (the "PURCHASE AGREEMENT"); and
WHEREAS, the Seller and Purchaser desire to amend the Purchase
Agreement, as described in this Amendment.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:
1. The terms in this Amendment with initial letters capitalized shall
have the meanings set forth in this Amendment and, if not defined in this
Amendment, shall have the meaning set forth in the Purchase Agreement.
2. All references to the Second Source Supply Agreement, Second Source
Supply Agreement Assignment, Quality Agreement for Avinza(R), Quality Agreement
for Avinza(R) Assignment, Technical Agreement Avinza(R) and Technical Agreement
Avinza(R) Assignment throughout the Purchase Agreement shall be deleted.
3. SECTION 1.1 of the Purchase Agreement shall be amended to add the
following definition:
"CARDINAL CONFIDENTIAL RECORDS" means, the documents set forth
on SCHEDULE 1.1(1).
4. The definition of "Other Agreements" shall be amended in its
entirety to read as follows:
"OTHER AGREEMENTS" means, collectively, the Assignment of
Product Intellectual Property, the Xxxx of Sale and Assignment
and Assumption Agreement, the Transition Services Agreement,
the Termination and Return of Rights Agreement Assignment, and
the Escrow Agreement.
5. The definition of "Pre-Existing Assigned Contracts" shall be amended
in its entirety to read as follows:
"PRE-EXISTING ASSIGNED CONTRACTS" means those Contracts,
including purchase orders, related primarily or exclusively to
the Product and the Product Line Business which are identified
on SCHEDULE 1.1(B) hereto.
6. The definition of "Product Records" shall be amended in its entirety
to read as follows:
"PRODUCT RECORDS" means, in whatever medium (e.g., audio,
visual, print or electronic) relating to the Product or the
Product Line Business: (a) any and all data and correspondence
supporting and/or utilized or made in connection with
obtaining and/or maintaining any of the Registrations and/or
the drug master file for the Product, (b) raw and/or analysis
data for pivotal trials and integrated summaries (ISE/ISS) and
all bio-analytical data in SAS transport, PC SAS Version 6.06,
or above, or other agreed format, (c) all clinical data (phase
I - IV), (d) all data from ongoing development of the compound
utilized in the Product (including marketing studies), (e)
programs (analysis, reports and supporting documentation) for
trials for which data is provided, (f) copies of SAS libraries
(with non-exclusive rights to use same) from Seller's analysis
programs relating to the Product, and (g) all books and
records owned by Seller relating to the
Product (which shall be copies to the extent not exclusive to
the Product), including copies of all customer and supplier
lists, account lists, call data, sales history, call notes,
research data, marketing studies, consultant reports,
physician databases, and correspondence (including invoices)
with respect to the Product, and all complaint files and
adverse event reports and files, and (h) copies of all data
and information in the possession of Seller relating to the
activities of Organon and/or IHS or other entity providing
support services to Seller which relate to the Product,
including for commercial rebates, discounts, administrative
fees, chargebacks and/or Government Rebates; PROVIDED,
HOWEVER, that (i) in each case, Seller may exclude any
Excluded Intellectual Property and Cardinal Confidential
Records contained therein, (ii) Seller may retain: (A) a copy
of any such books and records to the extent necessary for Tax,
accounting, litigation or other valid business purposes other
than the conduct of any business competitive with the Product
or the Product Line Business, (B)a copy of all such books and
records which relate to the Excluded Assets, and (C) all
books, documents, records and files (1) prepared in connection
with the Transactions,including bids received from other
parties and strategic,financial or Tax analyses relating to
the divestiture of the Purchased Assets, the Assumed
Liabilities, the Product and the Product Line Business, or (2)
maintained by Seller and/or its Representatives, agents or
licensees in connection with their respective Tax, legal,
regulatory or reporting requirements other than those relating
to the Product or the Product Line Business, (iii) any
attorney work product, attorney-client communications and
other items protected by privilege shall be excluded except to
the extent relating to the Product or the Product Line
Business and (iv) Seller shall be entitled to redact from any
such books and records any information that does not relate to
the Product or Product Line Business.
7. Subsection (a) "Requires Consent" of SCHEDULE 1.1(B) "PRE-EXISTING
ASSIGNED CONTRACTS" of the Seller Disclosure Schedule is hereby deleted in its
entirety and replaced with the following two entries:
"Amended and Restated License and Supply Agreement between
Elan Pharma International (successor in interest to Elan
Corporation plc), Elan Management Limited and Ligand
Pharmaceuticals Incorporated dated
dateMonth11Day12Year2002November 12, 2002.
McKesson Health Solutions Arizona Inc. to the assignment to
Purchaser of (a) the Trial Script(R) Program Agreement dated
February 9, 2004 and (b) the First Amendment to Ligand
Pharmaceuticals TrialScript(R) Program Agreement For Avinza,
in each case between McKesson Health Solutions Arizona Inc.
and Seller."
8. Subsection (b) "Consent not Required" of SCHEDULE 1.1(B)
"PRE-EXISTING ASSIGNED CONTRACTS" of the Seller Disclosure Schedule is hereby
amended to add the following entries:
"Co-Promotion Agreement by and between Ligand Pharmaceuticals
Incorporated and Organon Pharmaceuticals USA, Inc. dated 1st
January 2003; First Amendment to the Co-Promotion Agreement
effective as of October 1, 2003
Termination & Return of Rights Agreement by and between Ligand
Pharmaceuticals Incorporated and Organon USA Inc. (assignee of
Organon Pharmaceuticals USA, Inc.)
effective as of January 1, 2006."
9. The Seller Disclosure Schedule is hereby amended to add the
following SCHEDULE 1.1(L) "CARDINAL CONFIDENTIAL RECORDS":
"SCHEDULE 1.1(L)
CARDINAL CONFIDENTIAL RECORDS
To the extent relating to Product manufacturing by Cardinal:
o Specifications (materials and product)
o Analytical protocols
o Master batch records (executed or not)
o Engineering protocols and reports
o Validation protocols and reports (analytical and process)
o Equipment qualification protocols/reports
o Stability reports
o Deviation/investigation reports
o DMF (to the extent not covered above)"
10. SCHEDULE 2.5 shall be amended to replace the listed contracts with
the following:
"1. ELAN PHARMA INTERNATIONAL (successor in interest to Elan
Corporation, plc) and ELAN MANAGEMENT LIMITED to the
assignment to Purchaser of the Amended and Restated License
and Supply Agreement, dated November 12, 2002, between Elan
Corporation plc, Elan Management Limited and Seller.
2. MCKESSON HEALTH SOLUTIONS ARIZONA INC., to the assignment
to Purchaser of (a) the Trial Script(R) Program Agreement
dated February 9, 2004 and (b) the First Amendment to Ligand
Pharmaceuticals TrialScript(R) Program Agreement For Avinza,
between McKesson Health Solutions Arizona Inc. and Seller."
11. SECTION 2.8(A) shall be amended in its entirety to read as follows:
On the Closing Date, Seller shall provide Purchaser with a report based
on Product Inventory Data provided by the Seller in accordance with
this Agreement setting forth (i) the calculated amounts for each of the
items enumerated on SCHEDULE 2.8(B) together with all supporting data
used to calculate the same, (ii) whether, and to the extent to which,
the Wholesale Target and the Retail Target have been met, and (iii)
Seller's out-of-pocket cost (without markup) paid as a purchase price
to Elan and/or Cardinal between the Execution Date and the Effective
Time for finished Product (including API used in the manufacture of the
Purchaser Labeled Cardinal Manufactured Product). The foregoing report
shall be accompanied by a written certification of the CFO of Seller as
to the good faith completeness and accuracy of such report.
12. SCHEDULE 2.8(B) "INVENTORY VALUE ADJUSTMENTS" of the Seller
Disclosure Schedule is hereby amended to add the following definition:
"SECOND SOURCE INVENTORY COST ADJUSTMENT" means Six Million Dollars
($6,000,000).
13. The definition of "EXCESS WHOLESALE INVENTORY VALUE" on SCHEDULE
2.8(B) "INVENTORY VALUE ADJUSTMENTS" of the Seller Disclosure Schedule is hereby
amended to read as follows:
"EXCESS WHOLESALE INVENTORY VALUE" is calculated as follows:
Any positive number obtained by the sum of (a) $6,000,000 and
(b) any positive number resulting from the difference between
(X) the product of $10,000,000 times [the difference between
the Wholesale Channel Inventory Months on Hand and 1, provided
if such amount is a negative number it shall be deemed zero ]
and (Y) Seller's out-of-pocket cost (without markup) paid as
purchase price to Elan and/or Cardinal between the Execution
Date and the Effective Time for finished Product (including
API used in the manufacture of the Purchaser Labeled Cardinal
Manufactured Product).
For sake of illustration:
If the Wholesale Channel Inventory Months on Hand is equal to
0.95 and Seller's out-of-pocket cost is $1,500,000, then the
calculation will be as follows: $6,000,000 + (($10,000,000 X
[0.95-1]) - $1,500,000) = $6,000,000
If the Wholesale Channel Inventory Months on Hand is equal to
1.1 and Seller's out-of-pocket cost is $1,500,000, then the
calculation will be as follows:
$6,000,000 + (($10,000,000 X [1.1-1]) - $1,500,000) = $6,000,000."
14. SECTION 2.8(B) shall be amended in its entirety to read as follows:
"If at Closing, the Excess Wholesale Inventory Value is a
positive number, then the Purchase Price shall be adjusted
downward by the Excess Wholesale Inventory Value."
15. SECTION 6.1(B) shall be amended as follows:
"(b) retail data comprised of (i) IMS prescription data for
the Product, which Seller shall supply on a weekly basis, and
(ii) APPROV" study data for the Product, which Seller shall
supply at the Closing to the extent available and update as of
the Closing as soon as reasonably practical following the
Closing to the extent such information is not available as of
the Closing Date."
16. A new SECTION 6.9(C) of the Purchase Agreement is hereby added to
read as follows:
"(c) Notwithstanding Section 6.9(b), Seller shall purchase
from Cardinal, cause Cardinal to ship to ICS and include as
part of the Inventory being transferred to Purchaser at
Closing those certain two (2) lots of Cardinal manufactured
Purchaser labeled 60mg Product from Cardinal's Red Lion
facility (the "PURCHASER LABELED CARDINAL MANUFACTURED
PRODUCT")."
17. A new SECTION 7.2(G) is hereby added to read as follows:
"(g) (i) Purchaser shall have received a copy of the executed
letter between Seller and Elan providing that the Technical
Agreement entered into by Elan's affiliate, Elan Holdings,
Inc, and Assignor dated June 10, 2003, as amended on May 28,
2004, shall terminate as of the Closing Date in accordance
with the letter of termination executed by Elan Holdings and
Seller, and (ii) the Pharmaceutical Quality Agreement shall
have been entered into and shall come into force as of the
Closing Date between Elan Holdings, Inc. and Purchaser in
reference to Product supplied by Elan to Purchaser under the
License and Supply Agreement."
18. A new SECTION 7.2(H) is hereby added to read as follows:
"(h) Purchaser's receipt of written confirmation from a common
carrier that it has taken receipt of the Labeled Cardinal
Manufactured Product which is to be delivered to ICS."
19. A new SECTION 8.13 of the Purchase Agreement is hereby added to
read as follows:
"Notwithstanding SECTION 9.1(C), the Parties acknowledge and
agree that Seller shall have no obligation to obtain the
consent or approval of Purchaser as to the form and substance
of any release of all possible legal claims against Seller and
Purchaser to be executed by certain severance pay-eligible
Product Employees and RBMs severed by Seller prior to February
1, 2007; PROVIDED that Seller shall obtain the consent or
approval of Purchaser as to the form and substance of any
release of all possible legal claims against Seller and
Purchaser to be executed by Product Employees and RBMs severed
on or after February 1, 2007 as provided in SECTION 9.1(C)
With respect to Product Employees and RBMs severed in
accordance with this paragraph, Purchaser shall reimburse
Seller for their severance pay and Seller shall remain solely
responsible for all liability for which Seller is responsible
under SECTION 9.1(C) of the Purchase Agreement, including
without limitation any Losses resulting from Seller's use of
its form of release in connection with severing Product
Employees prior to February 1, 2007 (all such liabilities with
respect to such severance pay-eligible Product Employees, the
"UNILATERALLY RELEASED EMPLOYEE LIABILITIES")."
20. A new SECTION 8.14 of the Purchase Agreement is hereby added to
read as follows:
"(a) Seller shall be and remain fully responsible for and the
sole party to (with Cardinal Health PTS, LLC and/or Elan
Corporation, plc, and their respective successors and
assignees, as the case may be) (i) the Manufacturing and
Packaging Agreement, dated as of February 13, 2004, between
Seller and Cardinal Health PTS, LLC (and amendments thereto)
(the "CARDINAL MANUFACTURING AGREEMENT"), (ii) the Quality
Agreement for Avinza(R) dated April 10, 2006, by and between
Seller and Cardinal Health PTS, LLC (the "QUALITY AGREEMENT
FOR AVINZA(R)"), (iii) the Agreement dated September 20, 2003
between Cardinal Health PTS, LLC, Elan Corporation, plc and
Seller, and the Amended and Restated Confidentiality Agreement
Avinza(R) dated February 13, 2004 and effective as of August
30, 2003, between Cardinal Health PTS, LLC, Elan Corporation,
plc and Seller, (iv) three way CDA Elan, Ligand, Cardinal
dated _____ (together, with the Cardinal Manufacturing
Agreement and the Quality Agreement for Avinza(R), the
"CARDINAL AGREEMENTS"), including without limitation any and
all Liabilities arising in connection with the Cardinal
Agreements and/or any amendment or termination thereof and/or
the issuance, delivery, amendment, or cancellation of any
purchase order for Products placed under the Cardinal
Manufacturing Agreement as well as any and all Losses relating
to any of the foregoing and Losses due to unavailability of
Purchaser Labeled Cardinal Manufactured Product, other than
Losses of Purchaser due to lack of ongoing supply of Product
to Purchaser from Cardinal or Losses related to the
replacement of such Product from any third party
(collectively, "CARDINAL RELATED LIABILITIES"). In addition,
Cardinal Related Liabilities shall include without limitation
all Liabilities as well as Losses to Purchaser arising from
(x) any product recall of any Cardinal manufactured Product
due to uncompleted stability studies and/or any regulatory
compliance activities required to be performed by Cardinal,
and (y) any claims made by Elan relating to any activities
under or in connection with the Cardinal Agreements (whether
or not Purchaser is aware of or has acknowledged such
activities).
(b) The Parties acknowledge and agree that the Excluded
Liabilities shall include, without limitation, all Cardinal
Related Liabilities and Unilaterally Released Employee
Liabilities and Purchaser shall have the right to be
indemnified under SECTION 10.1(D) of the Purchase Agreement
for all Losses arising from any Cardinal Related Liabilities
or Unilaterally Released Employee Liabilities, PROVIDED that
SECTIONS 10.4 and 10.6 of the Purchase Agreement shall not
apply to, and shall not in any way limit, the Seller's
indemnification of or liability to Purchaser for any of the
Cardinal Related Liabilities and Unilaterally Released
Employee Liabilities. Purchaser may, in its sole discretion,
direct that any Losses arising from any Cardinal Related
Liabilities or Unilaterally Released Employee Liabilities be
paid to Purchaser from the Indemnification Escrow Fund in lieu
of direct payment to Purchaser from Seller, in accordance with
the terms of the Escrow Agreement. Seller acknowledges that
except to the extent Purchaser elects to seek repayment from
the Escrow Account (as provided in the last clause of the
preceding sentence), Seller shall have no right to look to the
Escrow Amount to cover or otherwise discharge any Losses
arising from the Cardinal Related Liabilities or the
Unilaterally Released Employee Liabilities, and Seller shall
in such event promptly pay all such amounts to Purchaser.
(c) Purchaser acknowledges that following Closing Seller shall
take such actions as it determines in good faith to be
commercially reasonable in connection with the Cardinal
Agreements so that unless otherwise agreed in a duly executed
written agreement between the Parties, (i) by no later than
one-hundred and twenty (120) days after the Closing (subject
to such extensions as may be consented to by Purchaser, which
shall not be unreasonably withheld, delayed or conditioned),
Seller shall have ensured that Cardinal shall have ceased all
manufacturing of the Product and completed physical
decommissioning relate to such manufacturing, and (ii) by no
later than one hundred fifty (150) days after the Closing
(subject to such extensions as may be consented to by
Purchaser, which shall not be unreasonably withheld, delayed
or conditioned) Seller shall have completed all regulatory
compliance with respect to such cessation and
decommissioning of manufacturing as well as completed
discussions with Cardinal including, as Seller may deem
appropriate, having entered into any agreement(s) with
Cardinal regarding the termination of the Cardinal Agreements.
Notwithstanding the foregoing, from and after the Closing (a)
Seller shall have no right, and hereby covenants not, to
introduce any Product into commerce or to sell or offer for
sale any Product or to transfer to any wholesaler or customer
any Product, and (b)except as otherwise may be agreed in
writing by the Purchaser after the Closing in a new agreement,
Cardinal shall have no right to introduce any Product into
commerce or to sell or offer for sale any Product or to
transfer to any wholesaler or customer any Product. Seller
acknowledges and agrees that Purchaser shall have no
obligation to purchase from Seller or Cardinal any Cardinal
manufactured Product (other than Purchaser Labeled Cardinal
Manufactured Product which shall be transferred as part of the
Product inventory to Purchaser at Closing as partial
consideration for the Purchase Price), or to enter into any
further agreement with Seller or Cardinal with respect to
same. Seller agrees that neither it nor any of its directors,
officers, employees or representatives shall make or assist
others in making any statements to Cardinal or its directors,
officers, employees or representatives, whether written or
oral, of a disparaging nature referring to the Purchaser or
the Purchaser's directors, officers, employees or
representatives.
(d) With respect to all lots of Product manufactured by
Cardinal at any time, Seller shall (at Seller's sole expense)
ensure that all FDA required stability testing is completed in
a timely manner and that all data from such stability testing
is provided to King in a timely manner sufficiently in advance
of applicable regulatory filing deadlines to allow King and/or
Elan to make the appropriate filings using such data.
(e) Seller acknowledges that after the Closing Purchaser may
enter into negotiations and/or execute agreements with
Cardinal, including but not limited to relating to Cardinal
(at Purchaser's sole expense) repacking using Purchaser's
label some or all Seller labeled lots of Product manufactured
by Elan that are at ICS as of Closing.
(f) In the event the Closing does not occur, Purchaser shall
have no liability to Seller with respect to or otherwise in
connection with (a) the Cardinal Agreements, (b) the
negotiation and execution of this Amendment, and/or (c) any
action or inaction of Seller or Purchaser relating thereto."
21. A new SECTION 8.15 of the Purchase Agreement is hereby added to
read as follows:
"During the Royalty Term, Seller shall not market in the
Territory for once-daily administration any controlled release
solid oral dosage formulation containing morphine and its
salts as its sole active ingredient."
22. The Parties acknowledge and agree that the financial accommodations
and other agreements and covenants set forth in this Amendment have been agreed
to by the Parties to compensate Purchaser for the lack of ongoing supply of
Product to Purchaser from Cardinal and the cost of replacing such supply of
Product from any third party, as necessary in addition to other good and
valuable consideration. In consideration for, and in reliance upon, such
financial accommodations and other agreements and covenants, Purchaser
acknowledges and agrees not to seek indemnification or otherwise seek
compensation from Seller due such lack of ongoing supply of Product to Purchaser
from Cardinal.
23. For the avoidance of doubt, the Parties acknowledge and agree that
the assignment of the Cardinal Agreements and the Technical Agreement Avinza(R)
dated June 10, 2003, by and between Seller and Elan Holdings, Incorporated, as
amended to Purchaser shall no longer be a condition to or contemplated by
Closing under the Purchase Agreement.
24. This Amendment shall not amend or modify the covenants, terms,
conditions, rights and obligations of the Parties under the Agreements, except
as specifically set forth herein. The Agreements shall continue in full force
and effect in accordance with their terms as amended by this Amendment.
* * *
[signature page follows]
IN WITNESS WHEREOF, the Parties have executed this Amendment in
multiple counterparts.
LIGAND PHARMACEUTICALS KING PHARMACEUTICALS, INC.
INCORPORATED
By: /s/ Xxxx X. Xxxxxxx By: /s/Xxxxx Xxxxxxxx
---------------------- ----------------------------------------
Title: CEO Title: President and CEO
------------------- ---------------------------------------
KING PHARMACEUTICALS RESEARCH
AND DEVELOPMENT, INC.
By: /s/Xxxxx Xxxxxxxx
----------------------------------------
Title: President and CEO
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