Exhibit 1
CONFIDENTIAL TREATMENT REQUESTED
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of November 6,
1998, by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation
(the "Company"), Elan International Services, Ltd., a Bermuda corporation (the
"Purchaser"), and Elan Corporation, plc, a public limited company organized
under the laws of Ireland ("Elan").
RECITALS
WHEREAS, the Company, the Purchaser and Elan have entered into a binding
letter of intent, dated as of September 28, 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"), and Zero Coupon Convertible Senior Notes due
2008 (the "Notes") of the Company, in each case, 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 and Notes.
(a) Shares and Initial Notes. On the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
and conditions herein set forth, at the Initial Closing (as defined in Section
2(a)) the Company shall sell to the Purchaser, and the Purchaser shall purchase
from the Company, (i) 437,768 shares of Common Stock (the "Shares") at a
purchase price of $11.65 per share (the "Share Purchase Price"), (ii) Notes (the
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"Initial Notes") hav-ing an issue price of $30,000,000 (the "Initial Note Issue
Price") and the Initial Note Conversion Price (as defined in Section 12(a)), to
be issued in the form of the promissory note attached hereto as Exhibit A and
(iii) Notes (the "License Notes") having an issue price of $10,000,000 (the
"License Note Issue Price") and the License Note Conversion Price (as defined in
Section 12(b)), to be issued in the form of the promissory note attached hereto
as Exhibit A and in lieu of the payment by the Company to Elan of $10,000,000 in
cash pursuant to clause 10.1.1(2) of the License Agreement (as defined in
Section 6(f)).
(b) Additional Notes. On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company may, upon [ * * * ] on or prior to
December 31, 1999 and upon not less than 60 days' prior written notice (the
"Purchase Request"), request that the Purchaser purchase from the Company
additional Notes (the "Additional Notes" and, together with the Initial Notes
and the License Notes, the "Securities"), having an aggregate issue price of not
more than $70,000,000 (the aggregate issue price of the Additional Notes to be
issued and sold on each such occasion being referred to herein as the
"Additional Note Issue Price") and having the Additional Note Conversion Price
(as defined in Section 12(c)), to be issued in the form of the promissory note
attached hereto as Exhibit A; provided, however, that the gross proceeds to be
received by the Company as a result of the issuance and sale of such Additional
Notes shall be used solely to, without duplication, (i) make all remaining
milestone payments, if any, due and payable to the stockholders, creditors and
other obligees of Seragen, Inc. ("Seragen"), pursuant to and in accordance with
the terms of that certain Agreement and Plan of Reorganization, dated as of May
11, 1998, by and among Seragen, the Company and Knight Acquisition Corp., as in
effect on the date of this Agreement, or as amended with the Purchaser's written
consent (the "Seragen Payments"), (ii) pay the purchase price for the assets of
Marathon Biopharmaceuticals, LLC ("Marathon"), pursuant to and in accordance
with the terms of that certain Option and Asset Purchase Agreement, dated as of
May 11, 1998, by and among the Company, Marathon, 000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxxx Corp. and 660 Corporation, as in effect on the date of this Agreement, or
as amended with the Purchaser's written consent (the "Marathon Payment"), and
(iii) otherwise finance the development of the Company's business. Each Purchase
Request shall set forth (i) the proposed closing date of such purchase and sale
of Additional Notes, which shall be a date at least 60 days but not more than
180
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days prior to such Additional Closing Date (each such date, an "Additional
Closing Date"), (ii) the Additional Note Issue Price of the Additional Notes
proposed to be issued and sold by the Company on such Additional Closing Date
and (iii) a description in reasonable detail of the transaction or transactions
pursuant to which the Company proposes to utilize the gross proceeds to be
received by the Company from such proposed issuance and sale of Additional
Notes, which description shall be accompanied by all documents and agreements
entered into or proposed to be entered into in connection with such transaction
or transactions, to the extent such documents or any preliminary drafts thereof
are available at the time such Purchase Request is provided by the Company.
(c) License Shares. On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, pursuant to the License Agreement, the Company may,
at its option, issue to Elan shares of Common Stock (the "License Shares") in
lieu of making cash payments thereunder (each such issuance, a "License Share
Issuance") at the times set forth in, and in accordance with the terms of,
clauses 10.1.1(1), (3) and (4) of the License Agreement.
SECTION 2. Closings.
(a) Initial Closing. The closing of the sale and purchase of each of the
Shares, the Initial Notes, the License Notes and the License Shares to be issued
under clause 10.1.1(1) of the License Agreement (the "Initial Closing") shall
take place at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx,
XX 00000, at 10:00 AM, New York City time, on November 9, 1998, or such other
time and place as the Company and the Purchaser may agree (the "Initial Closing
Date"). At the Initial Closing, the Company shall deliver to the Purchaser (i) a
certificate or certificates, registered in the name of the Purchaser,
representing the Shares, against payment of the Share Purchase Price, (ii) one
or more promissory notes in the form attached hereto as Exhibit A, registered in
the name of the Purchaser, representing the Initial Notes, against payment of
the Initial Note Issue Price and (iii) one or more promissory notes in the form
attached hereto as Exhibit A, registered in the name of the Purchaser,
representing the License Notes.
(b) Additional Closings. The closing of each purchase and sale of
Additional Notes (each such closing, an "Additional Closing") shall take place
at the offices of Ca-
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xxxx, Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000, at 10:00 AM, New
York City time, on the Additional Closing Date set forth in the Purchase Notice
delivered to the Purchaser by the Company in accordance with Section 1(b), or
such other time and place as the Company and the Purchaser may agree. At each
Additional Closing, the Company shall deliver to the Purchaser one or more
promissory notes in the form attached hereto as Exhibit A, registered in the
name of the Purchaser and/or in the name of one or more of its Affiliates (as
defined in Section 14(a)) (subject to compliance with Regulation S under the
Securities Act of 1933, as amended (the "Securities Act")) and in such
denomination or denominations as the Purchaser may direct in writing,
representing such Additional Notes, against payment of the Additional Note Issue
Price.
(c) License Share Issuances. Each License Share Issuance shall take place
at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx Xxxxxx, Xxx Xxxx, XX 00000,
at 10:00 AM, New York City time, on the applicable dates set forth in clauses
10.1.1(1), (3) and (4) of the License Agreement, or such other time and place as
the Company and Elan may agree (each such date, a "License Share Issuance
Date"). At each such License Share Issuance, the Company shall deliver to Elan a
certificate or certificates, registered in the name of Elan and/or in the name
of one or more of its Affiliates, (subject to compliance with Regulation S under
the Securities Act) as Elan may direct in writing, representing the License
Shares to be issued pursuant to and in accordance with the License Agreement.
(d) Payments. Each payment required to be made by the Purchaser to the
Company pursuant to this Section 2 shall be made 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
(f) 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
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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 each of its obligations under the Initial
Notes and the License Notes. The Initial Notes and the License Notes have
each been duly and validly authorized by the Company and, when executed by
the Company and delivered to the Purchaser in accordance with the terms of
this Agreement, will constitute valid and legally binding obligations of
the Company, enforceable against the Company in accordance with their
terms, except that 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.
(c) Other than any stockholder approval that may be required by law,
the Company has all requisite corporate power and authority to execute,
deliver and perform each of its obligations under the Additional Notes. The
Additional Notes, if and when issued, will have been duly and validly
authorized by the Company and, when executed by the Company and delivered
to the Purchaser in accordance with the terms of this Agreement, will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, except that
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.
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under this Agreement.
This Agreement has been duly and validly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agree-
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ment of the Company, enforceable against the Company 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.
(e) 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) hereof). 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.
(f) The authorized, issued and outstanding capitalization of the
Company as of the date hereof consists of: (i) 80,000,000 shares of Common
Stock, of which 42,526,245 shares were issued and outstanding as of
September 30, 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 as of the date of this Agreement; all of the subsidiaries of
the Company are listed on Schedule 3(f)(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 and the securities or "Blue Sky" laws of
certain jurisdictions) or voting; except for
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the Securities and except as described in the SEC Reports (as defined in
paragraph (m) of this Section 3) or as otherwise set forth on Schedule
3(f)(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.
(g) The Shares, when issued, sold and delivered to the Purchaser at
the Initial 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 or restrictions on
transfer other than those imposed by the Securities Act and applicable
state securities or "Blue Sky" laws.
(h) The License Shares, if and when issued and delivered to Elan in
accordance with the terms of this Agreement and the License 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 or restrictions on transfer other than those
imposed by the Securities Act and applicable state securities or "Blue Sky"
laws.
(i) The shares of Common Stock issuable upon conversion of the Initial
Notes and the License Notes have been, and, upon the issuance of any
Additional Notes, the shares of Common Stock issuable upon conversion of
such Additional Notes will be, reserved for issuance upon such conversion
and, if and when issued upon such conversion, 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 or restrictions on transfer other than those imposed by the
Securities Act and applicable state securities or "Blue Sky" laws. The
shares of Common Stock issuable upon conversion of the Securities are
referred to herein as the "Conversion Shares."
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(j) 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, the Conversion Shares, the License
Shares or the Securities or the consummation by the Company of the other
transactions contemplated hereby or by the Registration Rights Agreement
and, in the case of the Additional Notes and the License Shares, no such
consent, approval, authorization or order will be required upon any
issuance and sale thereof by the Company, 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 "HSR Act"), in
connection with the issuance of the License Shares or upon conversion of
the Securities. 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.
(k) 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 Shares, the Securities
or the License Shares; the Company, the Subsidiaries and their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities
Act) and any person acting on its or their behalf have complied and will
comply with the offering restrictions requirement of Regulation S.
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(l) 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 contemplated hereby and thereby 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, default, violation 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 and Elan 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.
(m) 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.
(n) 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 xxxxx-
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cial 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 audited financial
statements are accompanied by an unqualified opinion thereon by the
Company's independent auditors.
(o) Except as set forth on Schedule 3(o), 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 (i) the issuance or sale of the
Shares, the License Shares or the Securities, (ii) the consummation of the
other transactions contemplated by this Agreement or the Registration
Rights Agreement or (iii) the issuance of the License Shares pursuant to
the License Agreement.
(p) 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 as disclosed in the SEC Reports and except
where the failure to obtain such Permits would not, individually or in the
aggregate, have a Material Adverse Effect; 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,
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except where such revocation or modification would not, individually or in
the aggregate, have a Material Adverse Effect.
(q) Since June 30, 1998 and except as otherwise set forth in the SEC
Reports, (i) except as set forth on Schedule 3(q), 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), operations, 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 has not been any
material change in the capital stock or long-term indebtedness of the
Company or the Subsidiaries.
(r) 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.
(s) 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(s) 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.
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(t) Each of the Contracts is valid and enforceable against the Company
or the Subsidiaries, as the case may be, and to the best of the Company's
knowledge, 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.
(u) 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 ownership 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(u), 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.
(v) 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 restric-
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tion 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 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.
(w) 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, other than
any such strike, labor dispute, slowdown or work stoppage which would not,
individually or in the aggregate, have a Material Adverse Effect.
(x) 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.
(y) None of the Company or the Subsidiaries has any liability for any
prohibited transaction or funding defi-
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ciency 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.
(z) 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.
(aa) 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.
(bb) Immediately after the issuance of each of the Initial Notes, the
License Notes and any Additional Notes, the fair value and present fair
saleable value of the assets of the Company (on a consolidated basis) will
exceed the sum of its stated liabilities and identified contingent
liabilities; the Company (on a consolidated basis) is not and will not be
(on a consolidated basis) after giving effect to the issuance of each of
the Initial Notes, the License Notes or any Additional Notes, (a) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (b) unable to pay its debts (contingent or
otherwise) as they mature or (c) otherwise insolvent.
(cc) Under the Preferred Share Rights Agreement, dated as of September
13, 1996, between the Company and Xxxxx Fargo Bank, N.A., as amended (the
"Rights Agreement"), no event has occurred that has caused or will cause,
and none of the execution of this Agreement, the Registration Rights
Agreement or the License Agreement, or the consummation of the transactions
contemplated hereby
-15-
or thereby, including the issuance and sale of the Shares, the Conversion
Shares, the License Shares and the Securities, will cause, rights issued
thereunder to become exercisable or a "Distribution Date" to occur,
assuming compliance by Elan and its Affiliates with the provisions of
Section 14(c) of this Agreement.
(dd) Except as otherwise disclosed to the Purchaser, no person has or
will have, as a result of the transactions contemplated by this Agreement
or the License 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.
Elan is intended to be a third-party beneficiary of each of the
representations, warranties and agreements set forth in this Xxxxxxx 0,
xxxxxxxxx Xxxxxxx 0(x), (x), (x), (x) and (bb).
SECTION 4. Representations of the Purchaser and Elan.
(a) The Purchaser represents and warrants to and agrees with the Company as
follows:
(i) 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, executed and delivered by
the Purchaser and constitutes 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.
(ii) The Purchaser has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Regis-
-16-
tration 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 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.
(iii) The Purchaser acknowledges that none of the Shares or the
Initial Notes have been, nor will the Additional Notes or the Conversion
Shares be, registered under the Securities Act or any other applicable
securities laws, are being issued or sold, or will be issued or sold, in
transactions 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 clause (v) of this
paragraph (a).
(iv) The Purchaser is outside the United States and is not a "U.S.
person" (as such term is defined in Regulation S).
(v) 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, the Securities or the Conversion
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, the Securities or the Conversion Shares, except
pursuant to registration under the Securities Act or an available exemption
therefrom and, in
-17-
any case, in accordance with the provisions of Regulation S and applicable
state securities laws.
(vi) The Purchaser understands that the certificates representing the
Shares and any Conversion 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 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 (ss.230.901 THROUGH ss.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 SECURITIES PURCHASE AGREEMENT, DATED
AS OF NOVEMBER 6, 1998, BY AND AMONG THE COMPANY, ELAN INTERNATIONAL
SERVICES, LTD. AND ELAN CORPORATION, PLC, 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.
(vii) 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 Common Stock in order to implement the restrictions on transfer set
forth in this Agreement.
(viii) The Purchaser acknowledges that it believes that it has
received all information it considers necessary or appropriate and has had
an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the issuance and sale of the Shares
and
-18-
the Securities and the business, properties, prospects and financial
condition of the Company; provided that this clause (viii) shall in no way
limit or modify the representations and warranties of the Company set forth
in Section 3 of this Agreement or the right of the Purchaser to rely
thereon. The Purchaser acknowledges that it is a sophisticated investor and
that an investment in the Shares and the Securities involves a high degree
of risk. The Purchaser further acknowledges that the Share Purchase Price
may or may not exceed the latest publicly quoted per share "asked" price of
the Common Stock.
(ix) The Purchaser is purchasing the Shares and the Securities, and,
to the extent that the Purchaser converts the Securities, will acquire the
Conversion 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, the Conversion Shares and the Securities 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, the
Conversion Shares or the Securities, an opinion of counsel to the
Purchaser, acceptable to the Company, as to the registration or exemption
therefrom under the Securities Act.
(x) The Purchaser was not formed specifically for the purpose of
acquiring the Shares or the Securities purchased or to be purchased
pursuant to this Agreement.
(xi) The execution, delivery and performance by the Purchaser of this
Agreement and the Registration Rights Agreement and the consummation by the
Purchaser of the transactions contemplated hereby and thereby 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
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which the Purchaser is a party, except for any such conflict,
breach, default, violation or event which would not, individually or in the
aggregate, have a material adverse ef-
-19-
fect on the business, assets, liabilities (contingent or otherwise),
operations, condition (financial or otherwise), solvency, properties,
prospects or material agreements of the Purchaser and its subsidiaries,
taken as a whole, (ii) the certificate of incorporation or bylaws of the
Purchaser or (iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Company set forth in Section 3 of
this Agreement) any statute, judgment, decree, order, rule or regulation
applicable to the Purchaser or any of its 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 on the
business, assets, liabilities (contingent or otherwise), operations,
condition (financial or otherwise), solvency, properties, prospects or
material agreements of the Purchaser and its subsidiaries, taken as a
whole.
(xii) No consent, approval, authorization or order of any court or
governmental agency or body or third party is required for the execution,
delivery or performance of this Agreement or the Registration Rights
Agreement by the Purchaser or the consummation of the transactions
contemplated hereby or thereby, except that no representation or warranty
is made with respect to filings required by the HSR Act in connection with
the conversion of the Securities.
(xiii) Except as otherwise disclosed to the Company, 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 Purchaser for any
commission, fee or other compensation as a finder or broker because of any
act by the Purchaser or of any agent of the Purchaser. The Purchaser will
pay, and hold the Company 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.
(b) Elan represents and warrants to and agrees with the Company as follows:
(i) Elan 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, executed and delivered by Elan and
-20-
constitutes a valid and legally binding agreement of Elan enforceable
against Elan 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.
(ii) Elan acknowledges that the License Shares will not be registered
under the Securities Act or any other applicable securities laws, will be
issued in transactions 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
(v) of this paragraph (b).
(iii) Elan is outside the United States and is not a "U.S. person" (as
such term is defined in Regulation S).
(iv) Until the expiration of the "one-year distribution compliance
period" within the meaning of Rule 903 of Regulation S, Elan will not sell
or otherwise transfer the License 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. After the expiration of such "one-year
distribution compliance period," Elan will not sell or otherwise transfer
the License 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.
(v) Elan understand that the certificates representing the License
Shares will, so long as appropriate, bear the legend set forth in clause
(vi) of paragraph (a) of this Section 4.
(vi) Elan agrees that the Company shall be entitled to make a notation
on its records and give instructions to
-21-
any transfer agent of the Common Stock in order to implement the
restrictions on transfer set forth in this Agreement.
(vii) Elan acknowledges that it believes that it has received all
information it considers necessary or appropriate and has had an
opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the issuance and sale of the License Shares and
the business, properties, prospects and financial condition of the Company;
provided that this clause (viii) shall in no way limit or modify the
representations and warranties of the Company set forth in Section 3 of
this Agreement or the right of Elan to rely thereon. Elan acknowledges that
it is a sophisticated investor and that an investment in the License Shares
involves a high degree of risk. Elan further acknowledges that the
valuation price of the License Shares set forth in clauses 10.1.1(1), (3)
and (4) of the License Agreement may or may not exceed the last publicly
quoted per share "asked" price of the Common Stock on any License Share
Issuance Date.
(viii) Elan will be acquiring the License 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). Elan
understands, acknowledges and agrees that it must bear the economic risk of
its investment in the License 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 License Shares, an
opinion of counsel to Elan , acceptable to the Company, as to the
registration or exemption therefrom under the Securities Act.
(ix) Elan was not formed specifically for the purpose of acquiring the
License Shares purchased pursuant to this Agreement.
(x) Neither Elan nor any of its Affiliates has, directly or
indirectly, within the past 90 days nor will such persons until the
expiration of the "one-year distribution compliance period" within the
meaning of Rule 903 of Regulation S commencing from the later to occur of
(i) the last Additional Closing occurring on or before December 31, 1999
and (ii) the last License Share Issuance occurring on or before the
expiration or termination of the
-22-
License Agreement 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.
(xi) The execution, delivery and performance by Elan of this Agreement
and the Registration Rights Agreement and the consummation by Elan of the
transactions contemplated hereby and thereby 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 indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument to which
Elan is a party, except for any such conflict, breach, default, violation
or event which 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 Elan and its subsidiaries,
taken as a whole, (ii) the certificate of incorporation or bylaws of Elan
or (iii) (assuming compliance with all applicable state securities or "Blue
Sky" laws and assuming the accuracy of the representations and warranties
of the Company set forth in Section 3 of this Agreement) any statute,
judgment, decree, order, rule or regulation applicable to Elan or any of
its 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 on the business, assets, liabilities (contingent or
otherwise), operations, condition (financial or otherwise), solvency,
properties, prospects or material agreements of Elan and its subsidiaries,
taken as a whole.
(xii) No consent, approval, authorization or order of any court or
governmental agency or body or third party is required for the execution,
delivery or performance of this Agreement by Elan or the consummation of
the transactions contemplated hereby, except that no representation or
warranty is made with respect to filings required by the HSR Act in
connection with the issuance and sale of
-23-
the License Shares pursuant to clauses 10.1.1(3) and (4) of the License
Agreement.
(xiii) Except as otherwise disclosed to the Company, 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 Elan for any commission,
fee or other compensation as a finder or broker because of any act by Elan
or of any agent of Elan. Elan will pay, and hold the Company 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 5. Conditions to Company's and Purchaser's Obligations at Initial
Closing. The respective obligations of each of the Company and the Purchaser to
consummate the purchase and sale of each of the Shares, the Initial Notes and
the License Notes, in each case, pursuant to Section 1(a) of this Agreement
shall be subject to the satisfaction of the following conditions at or prior to
the Initial Closing Date:
(a) The sale of the Shares, the Initial Notes and the License Notes
hereunder shall not be enjoined (temporarily or permanently) on the Initial
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, the Registration Rights Agreement
and the License Agreement and the consummation of the transactions
contemplated hereby and thereby shall have been obtained.
SECTION 6. Conditions to Purchaser's Obligations at Initial Closing. The
obligation of the Purchaser to purchase the Shares, the Initial Notes and the
License Notes, in each case, pursuant to Section 1(a) of this Agreement shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Initial Closing Date:
(a) Each of the representations and warranties of the Company set
forth in Section 3 hereof that are qualified by Material Adverse Effect or
materiality shall be true and correct in all respects and each of the
representations and warranties of the Company set forth in Section 3 hereof
that are not so qualified shall be true and cor-
-24-
rect in all material respects, in each case, on and as of the date hereof
and on and as of the Initial Closing Date as if made on and as of the
Initial 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; the Company 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 Initial Closing Date; since June 30, 1998, and except as
disclosed in the Company's (i) Registration Statement on Form S-4 filed
with the SEC on July 9, 1998, (ii) Form 10-Q filed with the SEC on August
14, 1998, (iii) Form 8-K filed with the SEC on August 25, 1998 and (iv)
Form 8-K/A filed with the SEC on September 25, 1998 (the "Additional SEC
Reports"), 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 Initial Closing Date, the Purchaser shall have received the
opinion, dated as of the Initial Closing Date and addressed to the Purchaser, of
each of Xxxxxxx, Phleger & Xxxxxxxx LLP, counsel for the Company, and the
General Counsel of the Company, substantially in the form attached hereto as
Exhibit B1 and Exhibit B2, respectively.
(c) The Purchaser shall have received a certificate of the Company, dated
the Initial Closing Date, signed on behalf of the Company by its Chief Executive
Officer and its Chief Financial Officer, to the effect that:
(i) Each of the representations and warranties of the Company
contained in this Agreement that are qualified by Material Adverse Effect
or materiality are true and correct in all respects and the representations
and warranties of the Company contained in this Agreement that are not so
qualified are true and correct in all material respects, in each case, on
and as of the Initial Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date, and the
Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or
-25-
satisfied hereunder at or prior to the Initial Closing Date;
(ii) At the Initial Closing Date and since June 30, 1998, except as
disclosed in the Additional SEC Reports, 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, the Initial Notes and the License Notes
hereunder has not been enjoined (temporarily or permanently).
(d) On the Initial Closing Date, the Purchaser shall have received the
Eleventh 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"), duly executed by the Company, and such
agreement shall be in full force and effect and there shall exist at and as of
the Initial Closing Date no condition that would 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) the Registration Rights Agreement.
(e) On or prior to the Initial Closing Date, the Purchaser shall have
received a true and correct copy of the Rights Agreement, as amended through the
Initial Closing Date.
(f) On the Initial Closing Date, the Company shall have delivered to the
Purchaser a duly executed copy of the Development, License and Supply Agreement,
dated as of the Initial Closing Date, by and between the Company and Elan (the
"License Agreement"); the License Agreement shall be in full force and effect
and there shall exist at and as of the Initial Closing Date no condition that
would 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) the
License Agreement by the Company.
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 Purchaser and
counsel for the Purchaser.
-26-
SECTION 7. Conditions to Company's Obligations at Initial Closing. The
obligation of the Company to issue and sell the Shares, the Initial Notes and
the License Notes, in each case, pursuant to Section 1(a) of this Agreement
shall be subject to satisfaction or waiver of the following conditions at or
prior to the Initial Closing Date:
(a) Each of the representations and warranties of each of the
Purchaser and Elan set forth in Section 4 hereof that are qualified by
materiality shall be true and correct in all respects and each of the
representations and warranties of each of the Purchaser and Elan set forth
in Section 4 hereof that are not so qualified shall be true and correct in
all material respects, in each case, on and as of the date hereof and on
and as of the Initial Closing Date as if made on and as of the Initial
Closing Date, except to the extent that such representations and warranties
expressly relate to an earlier date; the statements of each of the
Purchaser's and Elan'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; each of the Purchaser and Elan 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 Initial Closing Date.
(b) The Company shall have received a certificate of the Purchaser,
dated the Initial 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
that are qualified by materiality are true and correct in all respects and
the representations and warranties of the Purchaser contained in this
Agreement that are not so qualified are true and correct in all material
respects, in each case, on and as of the Initial Closing Date, except to
the extent that such representations and warranties expressly relate to an
earlier date, 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 Initial Closing Date.
(c) The sale of the Shares and the Initial Notes hereunder has not
been enjoined (temporarily or permanently).
(d) The Purchaser shall have delivered the Share Purchase Price, the
Initial Note Issue Price and the Li-
-27-
cense Note Issue Price in accordance with Section 2(a) hereof.
(e) On the Initial Closing Date, Elan shall have delivered to the
Company a duly executed copy of the License Agreement; the License
Agreement shall be in full force and effect and there shall exist at and as
of the Initial Closing Date no condition that would 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) the License Agreement by
Elan.
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.
SECTION 8. Conditions to Purchaser's Obligations at Additional Closings.
(a) The obligation of the Purchaser to purchase Additional Notes pursuant
to Section 1(b) of this Agreement, the gross proceeds of which are to be used by
the Company to make the Seragen Payments or the Marathon Payment, as set forth
in the Purchase Request applicable thereto, shall be subject to satisfaction or
waiver of the following conditions at or prior to the Additional Closing Date
applicable thereto:
(i) Each of the representations and warranties of the Company set
forth in Section 3 hereof that are qualified by Material Adverse Effect or
materiality shall be true and correct in all respects and each of the
representations and warranties of the Company set forth in Section 3 hereof
that are not so qualified shall be true and correct in all material
respects, in each case, on and as of such Additional Closing Date as if
made on and as of such Additional 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; the Company shall have performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Additional Closing
Date; since June 30, 1998 and except as disclosed in Additional SEC
Reports, there shall have been no event or development, and no informa-
-28-
tion shall have become known, that, individually or in the aggregate, has
or would be reasonably likely to have a Material Adverse Effect.
(ii) On such Additional Closing Date, the Purchaser shall have
received the opinion, dated as of such Additional Closing Date and
addressed to the Purchaser, of each of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
counsel for the Company (or such other counsel as is reasonably acceptable
to the Purchaser), and the General Counsel of the Company substantially in
the form attached hereto as Exhibit C1 and Exhibit C2, respectively.
(iii) The Purchaser shall have received a certificate of the Company,
dated such Additional Closing Date, signed on behalf of the Company by its
Chief Executive Officer and its Chief Financial Officer, to the effect
that:
(1) The representations and warranties of the Company contained
in this Agreement that are qualified by Material Adverse Effect or
materiality are true and correct in all respects and the
representations and warranties of the Company contained in this
Agreement that are not so qualified are true and correct in all
material respects, in each case, on and as of such Additional Closing
Date, except to the extent that such representations and warranties
expressly relate to an earlier date, 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 such Additional
Closing Date;
(2) At such Additional Closing Date and since June 30, 1998,
except as set forth in the Additional SEC Reports, 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;
(3) The sale of such Additional Notes hereunder has not been
enjoined (temporarily or permanently); and
(4) Each of this Agreement, the Registration Rights Agreement or
the New Registration Rights Agreement, as the case may be, the License
Agreement (to the extent not previously terminated by mutual
-29-
agreement of the parties thereto) and, to the extent outstanding, the
Securities, are, and after giving effect to the issuance and sale of
such Additional Notes, will be, valid and enforceable against the
Company, except that (A) the enforcement hereof and 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 under the
Registration Rights Agreement or the New Registration Rights
Agreement, as the case may be, may be limited by federal and state
securities laws and public policy considerations, and no event that
constitutes a material breach of or a material default under (or an
event which, with notice or passage of time or both would constitute a
material default under) this Agreement, the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may
be, the License Agreement (to the extent not previously terminated by
mutual agreement of the parties thereto) or, to the extent
outstanding, the Securities, by the Company has occurred and is
continuing or, after giving effect to the issuance and sale of such
Additional Notes, will have occurred and be continuing.
(iv) Both before and after giving effect to the issuance and sale of
such Additional Notes, each of this Agreement, the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may be, the
License Agreement (to the extent not previously terminated by mutual
agreement of the parties thereto) and, to the extent outstanding, the
Securities, shall be valid and enforceable against the Company, except that
(A) the enforcement hereof and 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 under the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, may be limited by
federal and state securities laws and public policy considerations, and no
event that constitutes a material breach of or a material default under (or
an event which, with notice or passage of
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time or both would constitute a material default under) this Agreement, the
Registration Rights Agreement or the New Registration Rights Agreement, as
the case may be, the License Agreement (to the extent not previously
terminated by mutual agreement of the parties thereto) or, to the extent
outstanding, the Securities, by the Company shall have occurred and be
continuing.
(v) The Company shall have delivered to the Purchaser a Purchase
Request relating to such Additional Notes in accordance with Section 1(b)
of this Agreement.
(vi) The Purchaser shall have completed a confirmatory due diligence
investigation relating to Seragen or Marathon, as the case may be
(including confirmatory legal, accounting and business due diligence), and
shall be satisfied, in its reasonable judgment, with the results thereof.
(vii) All consents, approvals, authorizations and orders of any court
or governmental agency or body, or third party required in connection with
the issuance and sale of such Additional Notes shall have been obtained,
except for any filings required by the HSR Act upon conversion of such
Additional Notes.
(viii) The issuance and sale of such Additional Notes hereunder shall
not be enjoined (temporarily or permanently) on the Additional Closing Date
applicable thereto.
(b) The obligation of the Purchaser to purchase Additional Notes pursuant
to Section 1(b) of this Agreement the gross proceeds of which are to be used by
the Company for any purpose other than to make the Seragen Payments or the
Marathon Payment, as set forth in the Purchase Request applicable thereto, shall
be subject to the prior written consent of the Purchaser, which consent may be
withheld in the Purchaser's sole discretion whether or not the conditions set
forth in paragraph (a) of this Section 8 have been satisfied or previously
waived.
All such documents, certificates, schedules, notices and instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Purchaser
and counsel for the Purchaser.
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SECTION 9. Conditions to the Company's Obligations at Additional Closings.
The obligation of the Company to issue Additional Notes pursuant to Section 1(b)
of this Agreement shall be subject to satisfaction or waiver of the following
conditions at or prior to the Additional Closing Date applicable thereto:
(a) Each of the representations and warranties of the Purchaser set
forth in Section 4(a) hereof that are qualified by materiality shall be
true and correct in all respects and each of the representations and
warranties of the Purchaser set forth in Section 4(a) hereof that are not
so qualified shall be true and correct in all material respects, in each
case, on and as of such Additional Closing Date as if made on and as of
such Additional 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; 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 such Additional Closing
Date.
(b) The Company shall have received a certificate of the Purchaser,
dated the Initial Closing Date, signed on behalf of the Purchaser by its
President and Chief Financial Officer, to the effect that:
(i) the representation and warranties of the Purchaser contained
in this Agreement that are qualified by materiality are true and
correct in all respects and the representations and warranties of the
Purchaser contained in this Agreement that are not so qualified are
true and correct in all material respects, in each case, on and as of
such Additional Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date,
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 such Additional Closing Date; and
(ii) each of this Agreement, the Registration Rights Agreement or
the New Registration Rights Agreement, as the case may be, and the
License Agreement (to the extent not previously terminated by mu-
-32-
tual agreement of the parties thereto) are valid and enforceable
against the Purchaser and Elan, to the extent a party thereto, except
that (A) the enforcement hereof and 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 under the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may
be, may be limited by federal and state securities laws and public
policy considerations, and no event that constitutes a material breach
of or a material default under (or an event which, with notice or
passage of time or both would constitute a material default under)
this Agreement, the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, or the License
Agreement (to the extent not previously terminated by mutual agreement
of the parties thereto) by the Purchaser or Elan, to the extent a
party thereto, has occurred and is continuing.
(c) All consents, approvals, authorizations and orders of any court or
governmental agency or body, or third party required in connection with the
issuance and sale of such Additional Notes shall have been obtained, except
for any filings required by the HSR Act upon conversion of such Additional
Notes.
(d) The sale of such Additional Notes hereunder has not been enjoined
(temporarily or permanently).
(e) The Purchaser shall have delivered the Additional Note Issue Price
in accordance with Section 2(a) hereof.
All such documents, certificates, schedule, notices and 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.
SECTION 10. Conditions to Elan's Obligations at License Share Issuances.
The obligation of Elan to accept the issuance of License Shares in lieu of cash
payments pursuant to
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and in accordance with the terms of clauses 10.1.1(1), (3) and (4) of the
License Agreement shall be subject to satisfaction or waiver of the following
conditions at or prior to each License Share Issuance Date applicable thereto
(provided that, nothing in this Agreement shall relieve the Company from its
obligation to make cash payments to Elan pursuant to clauses 10.1.1(1), 10.1(3)
and (4) of the License Agreement in the event that any of the following
conditions is not so satisfied or waived at or prior to such License Share
Issuance Date):
(a) Each of the representations and warranties of the Company set
forth in Section 3 hereof that are qualified by Material Adverse Effect or
materiality shall be true and correct in all respects and each of the
representations and warranties of the Company set forth in Section 3 hereof
that are not so qualified shall be true and correct in all material
respects, in each case, on and as of such License Share Issuance Date as if
made on and as of such License Share Issuance 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; the Company shall have
performed all covenants and agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such License
Share Issuance Date; since June 30, 1998 and except as disclosed in the
Additional SEC Reports, 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 such License Share Issuance Date, Elan shall have received the
opinion, dated as of such License Share Issuance Date and addressed to the
Purchaser, of each of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the
Company (or such other counsel as is reasonably satisfactory to Elan), and
the General Counsel of the Company substantially in the form attached
hereto as Exhibits D1 and D2, respectively; provided that, in the case of
License Shares to be issued to Elan pursuant to clause 10.1.1(1) of the
License Agreement, such opinions shall be substantially in the form
attached hereto as Exhibits D3 and D4, respectively.
(c) Elan shall have received a certificate of the Company, dated such
License Share Issuance Date, signed on
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behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Company contained
in this Agreement that are qualified by Material Adverse Effect or
materiality are true and correct in all respects and the
representations and warranties of the Company contained in this
Agreement that are not so qualified are true and correct in all
material respects, in each case, on and as of such License Share
Issuance Date, except to the extent that such representations and
warranties expressly relate to an earlier date, 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 such
License Share Issuance Date;
(ii) At such License Share Issuance Date and since June 30, 1998,
except as set forth in the Additional SEC Reports, 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;
(iii) The issuance of such License Shares has not been enjoined
(temporarily or permanently); and
(iv) Each of this Agreement, the Registration Rights Agreement or
the New Registration Rights Agreement, as the case may be, the License
Agreement and, to the extent outstanding, the Securities, are, and
after giving effect to the issuance of such License Shares, will be,
valid and enforceable against the Company, 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 under the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, may be limited by
federal and state securities laws and public policy considerations,
and no event that constitutes a breach of or a default under (or an
event which, with notice or passage of time or both would constitute a
default un-
-35-
der) this Agreement, the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, the License
Agreement or, to the extent outstanding, the Securities, by the
Company has occurred and is continuing or, after giving effect to the
issuance and sale of such License Shares, will have occurred and be
continuing.
(d) Both before and after giving effect to the issuance of such
License Shares, each of this Agreement, the Registration Rights Agreement
or the New Registration Rights Agreement, as the case may be, the License
Agreement and, to the extent outstanding, the Securities, shall be valid
and enforceable against the Company, 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 under the Registration
Rights Agreement or the New Registration Rights Agreement, as the case may
be, may be limited by federal and state securities laws and public policy
considerations, and no event that constitutes a breach of or a default
under (or an event which, with notice or passage of time or both would
constitute a default under) this Agreement, the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may be, the
License Agreement or, to the extent outstanding, the Securities, by the
Company shall have occurred and be continuing.
(e) All consents, approvals, authorizations and orders of any court or
governmental agency or body, or third party required in connection with the
issuance of such License Shares shall have been obtained.
(f) The issuance of such License Shares shall not be enjoined
(temporarily or permanently) on the License Share Issuance Date applicable
thereto.
All such documents, certificates, schedules, notices and instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Purchaser
and counsel for the Purchaser.
-36-
SECTION 11. Conditions to the Company's Obligations at License Share
Issuances. The obligation of the Company to issue License Shares in lieu of cash
payments (after the Company, at its option, has elected to issue License Shares)
pursuant to clauses 10.1.1(1), 10.1(3) and (4) of the License Agreement, shall
be subject to satisfaction or waiver of the following conditions at or prior to
the License Share Issuance Date applicable thereto; provided that, nothing in
this Agreement shall relieve the Company from its obligation to make cash
payments to Elan pursuant to clauses 10.1.1(1), 10.1(3) and (4) of the License
Agreement in the event that any of the following conditions is not so satisfied
or waived at or prior to such License Share Issuance Date; provided, further,
that, in the event that Elan is unable to satisfy the following conditions or
such conditions have not been waived prior to such License Share Issuance Date,
the Company and Elan shall negotiate in good faith to agree, on or prior to such
License Share Issuance Date, upon customary terms and conditions which will
enable the Company to issue the License Shares pursuant to a transaction exempt
from the registration requirements of the Securities Act pursuant Regulation D
thereunder, including the giving by Elan, to the extent possible, of
representations and warranties in connection therewith, so long as such
negotiation does not delay any License Share Issuance Date:
(a) Each of the representations and warranties of Elan set forth in
Section 4(b) hereof that are qualified by materiality shall be true and
correct in all respects and each of the representations and warranties of
Elan set forth in Section 4(b) hereof that are not so qualified shall be
true and correct in all material respects, in each case, on and as of such
License Share Issuance Date as if made on and as of such License Share
Issuance Date, except to the extent that such representations and
warranties expressly relate to an earlier date; the statements of Elan'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;
Elan shall have performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to such Additional Closing Date.
(b) The Company shall have received a certificate of Elan, dated such
License Share Issuance Date, signed on behalf of Elan by its President and
Chief Financial Officer, to the effect that the representation and
warranties of Elan contained in this Agreement that are qualified by
materiality are true and correct in all respects and the
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representations and warranties of Elan contained in this Agreement that are
not so qualified are true and correct in all material respects, in each
case, on and as of such License Share Issuance Date, except to the extent
that such representations and warranties expressly relate to an earlier
date and Elan has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to such License Share Issuance Date.
(c) All consents, approvals, authorizations and orders of any court or
governmental agency or body, or third party required in connection with the
issuance of such License Shares shall have been obtained.
(d) The issuance of such License Shares shall not be enjoined
(temporarily or permanently) on the License Share Issuance Date applicable
thereto.
All such documents, certificates, schedule, notices and 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.
SECTION 12. Conversion Prices.
(a) The Initial Notes shall be convertible by the Purchaser in accordance
with their terms into Common Stock at a conversion price of $14.00 per share
(the "Initial Note Conversion Price").
(b) The License Notes shall be convertible by the Purchaser in accordance
with their terms into Common Stock at a per share conversion price equal to the
sum of (i) [ * * * ] to the Initial Closing Date [ * * * ] plus (ii) the [ * * *
] (the "License Note Conversion Price"); provided that in no event shall the
License Note Conversion Price be less than $14.00 per share or greater than
$20.00 per share.
(c) Any Additional Note shall be convertible by the Purchaser in accordance
with its terms into Common Stock at a per share conversion price equal to the
sum of (i) [ * * * ] plus (ii) [ * * * ] (the "Additional Note Conversion
Price"); provided that in no event shall the Additional Note Conversion Price be
less than $14.00 per share (the "Minimum Conversion Price") or greater than
$20.00 per share
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(the "Maximum Conversion Price"). Each of the Minimum Conversion Price and the
Maximum Conversion Price shall be subject to adjustment from time to time in
accordance with paragraph 6(i)(i), (ii), (iii), (iv) or (v) of the promissory
note attached hereto as Exhibit A.
(d) For purposes of this Section 12, the "Closing Price" of the Common
Stock on any trading day shall mean the last reported sales price of the Common
Stock on such trading day, as reported by the Nasdaq National Market or, if the
Common Stock is listed on a United States securities exchange, the closing per
share sales price, regular way, on such trading day on the principal United
States securities exchange on which the Common Stock is traded or, if no such
sale takes place on such trading day, the average of the closing bid and asked
prices on such day.
SECTION 13. 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, in form and substance substantially identical
to the Registration Rights Agreement; provided that the New Registration Rights
Agreement shall expire on the later of (i) December 31, 2003 and (ii) the date
on which no Securities are outstanding.
(b) Subject to the terms and conditions specified in this paragraph (b),
the Company hereby grants to the Purchaser and Elan 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 and Elan 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 and Elan may
elect to
-39-
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 receipt by the Purchaser and Elan
of the Notice, each of the Purchaser and Elan 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 and Elan may elect to
purchase and include in the Transaction shall be calculated as follows:
Additional Shares = Transaction Shares -- Transaction Shares
1 - X%
X% represents the percentage (stated as a decimal) of the outstanding
shares of Common Stock then held by the Purchaser or Elan, as the case may
be, (assuming the conversion of all Securities then held by the Purchaser
or Elan, as the case may be, and the conversion, exercise or exchange of
all Capital Stock then held by the Purchaser or Elan, as the case may be,
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 and Elan, 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 and
Elan 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, each of the Purchaser and Elan 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
-40-
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 and Elan.
(iii) The rights of the Purchaser set forth 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 rights and obligations of the Purchaser and Elan under this
paragraph (b) shall not be assignable, except that such rights may be
assigned by the each of the Purchaser and Elan to any of its Affiliates
that agrees in writing to be bound by the provisions of this paragraph (b).
(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 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, under
general circumstances, 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 provided for in the
Registration Rights Agreement in accordance with Section 1.17 thereof and (ii)
the expiration of the New Registration Rights Agreement, and so long as any of
the Purchaser, Elan or any of their Affiliates continues to hold any Securities
or any Shares, Conversion Shares, License Shares or shares of Common Stock or
other Capital Stock issued pursuant to paragraph (b) of this Section 13, in
order to permit each of the Purchaser, Elan and their Affiliates to sell such
securities (subject to Section 14(a) hereof), from time to time, pursuant to
Rule 144, or any successor to such rule or
-41-
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 and Elan 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 or
Elan may reasonably request in availing itself of 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 or Elan to sell such securities without
registration and (y) take any action (including cooperating with the
Purchaser and Elan to cause the transfer agent for the Common Stock to
remove any restrictive legend on the certificates evidencing such Common
Stock) as shall be reasonably requested by the Purchaser and Elan or which
shall otherwise facilitate the sale of such securities from time to time by
the Purchaser and Elan 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 or Elan to sell such securities without registration.
(d) At such time as Elan acquires beneficial ownership (as defined under
Rule 13d-3 under the Exchange Act) of not less than 15.0% of the outstanding
Common Stock (assuming, for such purpose, the conversion of all Securities held
by Elan and its Affiliates and the conversion, exercise or exchange of all
Capital Stock held by Elan and its Affiliates and acquired pursuant to Section
13(b) hereof, in each case, regardless of the date on which such Securities or
Capital Stock become convertible, exercisable or exchangeable) (the "Beneficial
Owner-
-42-
ship Threshold"), Elan shall be entitled to designate one member of the
Company's Board of Directors (the "Elan Designee"); provided that, in the event
that Mr. Xxxx Xxxxx is a member of the Board of Directors of the Company at such
time as Elan's ownership of Common Stock exceeds the Beneficial Ownership
Threshold (as determined pursuant to this paragraph (d)), Mr. Groom shall be the
Elan Designee. Within five business days following such designation, the Company
shall cause the Elan Designee, if not then a member of the Company's Board of
Directors, to be appointed to the Company's Board of Directors. Thereafter, so
long as Elan's ownership of Common Stock, as determined pursuant to the
immediately preceding sentence, exceeds the Beneficial Ownership Threshold, a
committee of the Company's Board of Directors (or, if no such committee exists
and the full Board of Directors of the Company performs such function, the full
Board of Directors) shall include the Elan Designee in the slate of nominees
recommended by the Company's Board of Directors to stockholders for election as
a director at each annual meeting of stockholders of the Company. If, as a
result of death, disability, retirement, resignation or removal (with or without
cause) of the Elan Designee, Elan shall be entitled to designate a replacement
director to fill the vacancy created by such death, disability, retirement,
resignation or removal and, within five business days following such
designation, the Company shall cause such Elan Designee to be appointed to the
Company's Board of Directors.
(e) Upon the request of the Purchaser, the Company agrees that, with
respect to the issuance and sale of Additional Notes by the Company on
Additional Closing Dates, it will cooperate with the Purchaser in good faith to
make such changes to the form of the Additional Notes (including to bifurcate
any Additional Notes into two or more separate securities) in order to minimize,
to the greatest extent possible, any withholding or deduction for future Taxes
which might be required in connection with payments made by the Company under or
with respect to the Securities (including the issuance of Common Stock upon
conversion of the Securities), so long as any such change does not materially
adversely affect the Company or delay any Additional Closing Date.
(f) In the event that the Company exercises its option to issue License
Shares on any License Share Issuance Date pursuant to either of clauses
10.1.1(3) or (4) of the License Agreement and the issuance of such License
Shares to Elan or its Affiliates would require a filing by the Company under the
HSR Act, the Company shall, as soon as practicable prior to such License Share
Issuance Date and, in any event, use all
-43-
commercially reasonable efforts to prepare and file or cause to be filed such
required filing on a timely basis in order that the waiting period under the HSR
Act shall expire on or before such License Share Issuance Date.
Elan is intended to be a third-party beneficiary of the covenants set forth
in this Section 13.
SECTION 14. Covenants of Elan.
(a) Elan agrees that, until the [ * * * ] of the Initial Closing Date, it
shall not, and shall not permit any of its Affiliates 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, the Conversion Shares, the License Shares
or the Securities; provided that Elan may Transfer the Shares, the Conversion
Shares, the License Shares and the Securities to any of its Affiliates and any
Affiliate of Elan may Transfer the Shares, the Conversion Shares, the License
Shares and the Securities to Elan or to any other Affiliate of Elan, subject to
Elan's agreements set forth in Section 4(b) hereof.
For purposes of this Agreement, except as otherwise expressly provided
herein, 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.
(b) Except for Transfers between or among Elan and its Affiliates, as
permitted by Section 14(a) hereof, Elan agrees that if, at any time after the
date hereof, it or any of its Affiliates (each, an "Offeror") shall desire to
Transfer all or any part of the Securities owned by it for cash, the Offeror
shall first submit to the Company a notice (the "Notice") which shall set forth
a reasonably detailed description of the price and the terms of the proposed
Transfer and shall contain an irrevocable offer to the Company to sell to the
Company all, but not less than all, of the Securities to be Transferred at such
price and on such terms. At any time within 10 days after the Notice is given,
the Company may accept the offer made to
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it in the Notice by furnishing written notice to the Offeror and may purchase
not less than all of the Securities offered at the price and upon the terms
specified in the Notice by delivering such price to the Offeror, by wire
transfer in immediately available funds to an account designated in the Notice,
against delivery of the promissory note or notes evidencing such Securities. If,
at the end of such 10-day period, the offer contained in the Notice has not been
accepted with respect to all Securities proposed to be Transferred, the Offeror
shall have 60 days in which to Transfer all such Securities to a third party, at
a price not less than [* * *] of the price, and on terms not materially
different from the terms, in each case, set forth in the Notice. If, at the end
of such 60-day period, the Offeror has not completed such Transfer, all
restrictions on Transfer of such Securities set forth in this Section 14(b)
shall again be in effect.
(c) Except as otherwise set forth in this paragraph (c), Elan agrees that,
until the [ * * * ] of the Initial Closing Date, it shall not, and shall not
permit any of its Affiliates to, without the consent of the Company:
(i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, beneficial ownership (as defined
under Rule 13d-3 under the Exchange Act) of any Common Stock, any
securities which at such time are convertible or exchangeable into or
exercisable for shares of Common Stock, or any direct or indirect rights to
acquire any Common Stock or any securities which at such time are
convertible or exchangeable into or exercisable for shares for Common
Stock, if, after giving effect to any such acquisition, Elan would be the
beneficial owner (as defined under Rule 13d-3 under the Exchange Act) of
more than 25.0% of the outstanding Common Stock, on a fully diluted basis;
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" to vote (as such terms are used in the rules of
the SEC) or seek to advise or influence any person or entity with respect
to the voting of any Voting Stock of the Company;
(iii) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any extraordinary
transaction involving the Company or any of its securities or assets;
-45-
(iv) form, join or in any way participate in a Group (as defined
below) in connection with any of the foregoing;
(v) take any action that could reasonably be expected to require the
Company to make a public announcement regarding the possibility of any of
the events described in clauses (i) and (ii) above; or
(vi) request that the Company, directly or indirectly, amend or waive
any provision of this paragraph (c).
Notwithstanding the foregoing, this paragraph (c) shall in no way limit or
otherwise restrict or impair the ability of Elan and its Affiliates to convert
the Securities in accordance with their terms. This provision shall terminate
and be of no further force and effect upon the acquisition of, or public
announcement of an intent to acquire, beneficial ownership (as defined under
Rule 13d-3 under the Exchange Act) by any person or group of related persons for
purposes of Section 13(d) of the Exchange Act ("Group") of more than [* * *]% of
the outstanding Common Stock. For purposes of clause (i) of this paragraph (c),
any securities of the Company beneficially owned (as defined under Rule 13d-3
under the Exchange Act) by Elan or any of its Affiliates and acquired pursuant
to this Agreement, the License Agreement or upon conversion of the Securities,
or which are beneficially owned (as defined under Rule 13d-3 under the Exchange
Act) by Elan or any of its Affiliates as a result of their ownership of the
Securities, shall not be counted unless Elan or any of its Affiliates shall
beneficially own (as defined under 13d-3 under the Exchange Act) any other
securities of the Company that are acquired other than pursuant to this
Agreement, the Stock Purchase Agreement, the License Agreement or the
Securities. Notwithstanding this paragraph (c), at any time on or after [ * * *
] of the Initial Closing Date, Elan and its Affiliates may communicate with a
committee of the Company's then independent directors regarding a negotiated
acquisition of all, but not less than all, of the Common Stock then outstanding.
Such committee of independent directors may, in its sole discretion, refuse any
proposal from Elan or its Affiliates regarding a negotiated acquisition. Upon
such refusal, Elan and its Affiliates shall continue to be subject to the
limitations set forth in this paragraph (c) until [ * * * ] of the Initial
Closing Date. For purposes of this paragraph (c), "independent directors" shall
mean those directors of the Company who are
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not directors, officers or Affiliates of Elan or its Affiliates.
(d) Elan agrees that, within 10 days following a Change of Control of Elan
occurring prior to [ * * * ], Elan will notify the Company in writing of such
Change of Control (the "Elan Change of Control Notice") and the Company may, at
its option, not later than the 10th day following receipt of such Elan Change of
Control Notice (the "Purchase Election Date"), notify Elan of the Company's
irrevocable election to purchase, no earlier than 10 days and no later than 20
days following such election, all, but not less than all, of the Shares, the
Conversion Shares, the License Shares and the shares of Common Stock (the
"Initial Shares") purchased by the Purchaser pursuant to the Stock Purchase
Agreement, dated as of September 30, 1998, by and between the Company and the
Purchaser (the "Stock Purchase Agreement"), in each case, owned by Elan and its
Affiliates on the date of such Change of Control, at a per share purchase price
equal to the greater of [ * * * ]; provided, however, that, as a condition to
such repurchase, the Company shall repurchase all, but not less than all, of the
Securities then owned by Elan and it Affiliates pursuant to the terms of such
Securities. Elan agrees that it will not, and will cause its Affiliates not to,
convert any Security after the date of the Change of Control of Elan and prior
to the later of (x) the receipt of a notice from the Company of its election to
purchase and (y) the Purchase Election Date.
For purposes of this paragraph (d), a "Change of Control" of Elan shall be
deemed to have occurred at such time as (i) any other person or Group becomes
the beneficial owner (as defined under Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50.0% or more of the total Voting Stock (as defined
below) of Elan, (ii) there shall be consummated any consolidation or merger of
Elan in which Elan is not the continuing or surviving corporation or pursuant to
which the Voting Stock of Elan would be converted into cash, securities or other
property, other than a merger or consolidation of Elan in which the holders of
the Voting Stock of Elan outstanding immediately prior to the consolidation or
merger hold, directly or indirectly, at least a majority of all Voting Stock of
the continuing or surviving corporation immediately after such consolidation or
merger or (iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of Elan
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of Elan has been approved by a
majority of the directors then still in office
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who either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of Directors of Elan. The term "Voting Stock" means stock
of any class or classes, however designated, having general voting power under
ordinary circumstances to elect a majority of the board of directors, managers
or trustees of Elan, other than stock having such powers only by reason of the
occurrence of a contingency.
(e) In the event that the Company exercises its option to issue License
Shares on any License Share Issuance Date pursuant to either of clauses
10.1.1(3) or (4) of the License Agreement and the issuance of such License
Shares to Elan or its Affiliates would require a filing by Elan under the HSR
Act, Elan shall use all commercially reasonably efforts to prepare and file or
cause to be filed such required filing on a timely basis in order that the
waiting period under the HSR Act shall expire on or before such License Share
Issuance Date. Subject to compliance by the Company with the provisions of
Section 13(f) hereof, Elan agrees that any License Share Issuance Date may be
postponed until the expiration or, if earlier, the termination of the waiting
period under HSR Act applicable to the filing thereunder made by Elan and, if
required, the Company.
SECTION 15. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered personally or sent
by nationally recognized overnight delivery service or facsimile (receipt
confirmed) 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
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(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) if to Elan, to:
Elan Corporation, plc
Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Xxxxxx 0, Xxxxxxx
Attn: Xxxxxxx X. Xxxxxx
Fax No.: 000-0-000-0000
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
(iv) (a) on the date delivered, if delivered by facsimile or
personally or (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.
SECTION 16. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided that no party may assign its rights or obligations hereunder without
the prior written consent of the other parties. Notwithstanding this Section 16,
each of the Purchaser and Elan may assign any of its rights and obligations
hereunder to any of its Affiliates, subject to its agreements set forth in
Section 4 of this
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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 each case, in a transaction in which the Company is not the surviving
entity. Any assignment in contravention of this Section 16 shall be void. No
assignment shall release the Purchaser, Elan or the Company from any obligation
or liability under this Agreement unless expressly agreed to by the
non-assigning parties.
SECTION 17. 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, including, but not limited to, the Letter of Intent. This Agreement may
be amended only by a written amendment executed by both parties.
SECTION 18. 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 19. Expenses. Except as otherwise expressly provided herein, the
Purchaser, Elan 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 20. 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 until December 31, 2001.
SECTION 21. 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 sin-
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gle 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 22. 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 23. 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 24. 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 25. 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/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President, General
Counsel Government Affairs
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: President and Chief
Financial Officer
For purposes of Section 1(c), 2(c),
4(b), 10, 11, 13 and 14 only:
ELAN CORPORATION, PLC
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
Title: Group Vice President, Finance
