EXHIBIT 4.6
CONTROL AGREEMENT
This CONTROL AGREEMENT (this "CONTROL AGREEMENT") dated as of November 26,
2002 by and among LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation
(the "PLEDGOR"), X.X. XXXXXX TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association (the "TRUSTEE"), in its capacity as trustee for the Holders
(as defined in the Pledge Agreement referred to below), and JPMORGAN CHASE BANK,
a New York banking corporation (the "ACCOUNT INTERMEDIARY"), in its capacity as
securities intermediary and depository bank.
W I T N E S S E T H
WHEREAS, the Pledgor and the Trustee have entered into that certain Pledge
Agreement dated as of November 26, 2002 (capitalized terms used herein without
definition shall have the respective meanings ascribed to them in the Pledge
Agreement).
WHEREAS, the Pledgor is, or will be, the beneficial owner of certain
Pledged Security Entitlements with respect to (i) the United States Treasury
securities identified by CUSIP number in SCHEDULE I hereto, and credited to the
Trustee's account with the Account Intermediary, ABA No. 000000000, BNF: CTCC
Operating Acct, A/C: 000-000-000, Ref.: Ligand Pharmaceuticals Incorporated
Pledge Account at its office at New York City, in the name of "X.X. Xxxxxx Trust
Company, National Association, as Trustee for the ratable benefit of the Holders
of the 6% Convertible Subordinated Notes due 2007 of Ligand Pharmaceuticals
Incorporated, Collateral Pledge Account" (the "PLEDGE ACCOUNT"); and (ii) all
other financial assets credited from time to time to the Pledge Account
(collectively with the assets described in clause (i) above, the "PLEDGED
FINANCIAL ASSETS");
WHEREAS, the Pledgor has granted to the Trustee, pursuant to the Pledge
Agreement, a security interest (the "SECURITY INTEREST") in certain Collateral
consisting of, among other things and as more particularly described in the
Pledge Agreement, the Pledged Financial Assets, Pledged Security Entitlements
and the Pledge Account.
WHEREAS, terms defined in Article 8 or 9 of the UCC (as defined below) are
used in this Control Agreement (including, without limitation, the immediately
preceding paragraphs) as such terms are defined in such Article 8 or 9. The term
"UCC" shall mean the Uniform Commercial Code as in effect, from time to time, in
the State of New York; PROVIDED, that if perfection or the effect of perfection
or non-perfection or the priority of any security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, "UCC" shall mean the Uniform Commercial Code as in
effect, from time to time, in such other jurisdiction for purposes of the
provisions hereof related to such perfection or the effect of perfection or
non-perfection or priority.
WHEREAS, the Pledgor, the Trustee and the Account Intermediary are
delivering this Control Agreement pursuant to the terms of the Pledge Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto hereby agree as follows:
SECTION 1. NOTICE OF EXCLUSIVE CONTROL. The Pledgor, the Trustee and the
Account Intermediary are entering into this Control Agreement to perfect, and
confirm the first-priority lien of, the Trustee's security interest in the
Collateral. The Account Intermediary agrees to promptly make all necessary
entries or notations in its books and records to reflect the Trustee's security
interest in the Collateral and to apply any value distributed on account of any
Pledged Financial Assets as directed in writing by the Trustee without further
consent from the Pledgor. The Account Intermediary acknowledges that the Trustee
has exclusive control over the Pledge Account and all Pledged Security
Entitlements contained therein from time to time.
SECTION 2. THE ACCOUNT. The Account Intermediary hereby represents and
warrants to, and agrees with, the Pledgor, the Trustee and the Holders of the
Notes:
(a) that the Account Intermediary has established the Pledge Account
and shall not change the name or account number of the Pledge Account
without the prior written consent of the Trustee;
(b) that the Account Intermediary maintains the Pledge Account for the
Trustee, and all property (including, without limitation, all funds and
financial assets) held by the Account Intermediary for the account of the
Trustee is, and will continue to be, credited to the Pledge Account;
(c) that (i) (A) to the extent that funds are credited to the Pledge
Account, the Pledge Account is a deposit account; (B) to the extent that
financial assets are credited to the Pledge Account, the Pledge Account is
a securities account; (ii) the Account Intermediary is (A) the bank with
which the Pledge Account is maintained and (B) the securities intermediary
with respect to financial assets held in the Pledge Account; (iii) the
Trustee is (A) the Account Intermediary's customer with respect to the
Pledge Account and (B) the entitlement holder with respect to financial
assets credited from time to time to the Pledge Account;
(d) that all financial assets in registered form or payable to or to
the order of and credited to the Pledge Account shall be registered in the
name of, payable to or to the order of, or endorsed in the name of, the
Account Intermediary, and in no case during the term of the Pledge
Agreement will any financial asset credited to the Pledge Account be
registered in the name of, payable to or to the order of, or endorsed in
the name of, the Pledgor, except to the extent the foregoing have been
subsequently endorsed by the Pledgor to the Account Intermediary or in
blank;
(e) that, notwithstanding any other agreement to the contrary, the
Account Intermediary's jurisdiction with respect to the Pledge Account for
purposes of the UCC
is, and will continue to be for so long as the Security Interest shall
be in effect, the State of New York;
(f) that the Account Intermediary does not know of any claim to or
interest in the Pledge Account or any property (including, without
limitation, all funds and financial assets) credited to the Pledge Account,
except for claims and interests of the parties referred to in this Control
Agreement;
(g) that it is a commercial bank that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity hereunder and with respect to the Pledge Account;
(h) that the Pledge Account shall be an account to which funds or
financial assets may be credited, and it undertakes to treat the Trustee
(in its capacity as such) as entitled to exercise rights that comprise
(and, therefore, entitled to the benefits of) such funds or financial
assets, and entitled to exercise the rights of an entitlement holder in the
manner contemplated by the UCC;
(i) that, subject to applicable law, it has not granted, and covenants
that so long as it acts as a securities intermediary or bank hereunder it
shall not grant control over, or with respect to, any Collateral credited
to any Pledge Account from time to time to any "PERSON" (as defined in the
Indenture) other than the Trustee in its capacity as such;
(j) that it shall not, subject to applicable law, knowingly take any
action inconsistent with, and represents and covenants that it is not and
so long as this Control Agreement remains in effect will not knowingly
become party to any agreement the terms of which are inconsistent with, the
provisions of this Control Agreement;
(k) that any funds that are credited to the Pledge Account shall be
treated as funds, and any item of property credited to the Pledge Account
shall be treated a financial asset;
(l) that no item of Collateral credited to the Pledge Account shall be
subject to any security interest, lien or right of setoff in favor of it as
securities intermediary or account intermediary, except as may be expressly
permitted under the Indenture and the Pledge Agreement;
(m) that it will maintain the Pledge Account and appropriate books and
records in respect thereof in accordance with its usual procedures and
subject to the terms of this Control Agreement; and
(n) that, with respect to any Collateral that constitutes a security
entitlement, it shall comply with the provisions of Section 3(a) of this
Control Agreement and, with respect to any Collateral that constitutes a
securities account, it shall comply with the provisions of Section 3(a) of
this Control Agreement with respect to all security entitlements carried in
such securities account.
SECTION 3. CONTROL BY THE TRUSTEE.
(a) The Account Intermediary shall comply with (i) all written
instructions directing disposition of the funds in the Pledge Account (such
instructions, a "PAYMENT ORDER"); (ii) all notifications and entitlement
orders that the Account Intermediary receives directing it to transfer or
redeem any financial asset in the Pledge Account; and (iii) all other
directions concerning the Collateral, including, without limitation,
directions to distribute to the Trustee proceeds of any such transfer or
redemption or interest on any property in the Pledge Account (any such
instruction, notification or direction referred to in clause (i), (ii) or
(iii) above being an "ACCOUNT DIRECTION"), in each case of clauses (i),
(ii) and (iii) above originated by the Trustee without further consent by
the Pledgor or any other person.
(b) The Trustee hereby acknowledges that it shall maintain and
exercise control of the Pledge Account on behalf of the Holders of the
Notes.
(c) The Account Intermediary shall not (i) comply with Account
Directions or other directions concerning the Collateral that are not
originated by the Trustee or (ii) distribute to the Pledgor interest or
other distributions on or in respect of the Collateral.
SECTION 4. PRIORITY OF TRUSTEE'S SECURITY INTEREST.
(a) The Account Intermediary waives any security interest, lien or
right of setoff the Account Intermediary may have, now or in the future,
against the Pledge Account or property in the Pledge Account, except that
the Account Intermediary shall retain its prior lien on property credited
to the Pledge Account to secure or satisfy, and only to secure or satisfy,
payment for (i) property purchased for the Pledge Account; (ii) normal
commissions and customary fees and expenses for the routine maintenance and
operation of the Pledge Account; and (iii) to the extent that the Pledge
Account is a deposit account, the face amount of any items that have been
credited to the Pledge Account but which are subsequently returned unpaid
because of uncollected or insufficient funds.
(b) The Account Intermediary will not enter into any other agreement
with any person relating to Account Directions or other directions with
respect to the Pledge Account.
SECTION 5. STATEMENTS, CONFIRMATIONS AND NOTICES OF ADVERSE CLAIMS.
(a) The Account Intermediary shall send copies of all statements and
confirmations for the Pledge Account simultaneously to the Pledgor and the
Trustee.
(b) When the Account Intermediary knows of any claim or interest in
the Pledge Account or any property (including, without limitation, all
funds and financial assets) credited to the Pledge Account other than the
claims and interests of the parties referred to in this Control Agreement,
the Account Intermediary shall promptly notify the Trustee and the Pledgor
of such claim or interest.
SECTION 6. THE ACCOUNT INTERMEDIARY'S RESPONSIBILITIES.
(a) The Account Intermediary shall not be liable to the Pledgor for
complying with an Account Direction or other direction concerning the
Collateral originated by the Trustee, even if the Pledgor notifies the
Account Intermediary that the Trustee is not legally entitled to issue the
Account Direction or such other direction unless the Account Intermediary
takes the action after it is served with an injunction, restraining order,
or other legal process enjoining it from doing so, issued by a court of
competent jurisdiction, and had a reasonable opportunity to act on the
injunction, restraining order or other legal process.
(b) This Control Agreement does not create any obligation of the
Account Intermediary except for those expressly set forth in this Control
Agreement and, to the extent that the Pledge Account is a securities
account, in Part 5 of Article 8 of the UCC and, to the extent that the
Pledge Account is a deposit account, in Article 4 of the UCC. In
particular, the Account Intermediary need not investigate whether the
Trustee is entitled under the Trustee's agreements with the Pledgor to give
an Account Direction or other direction concerning the Pledge Account. The
Account Intermediary may conclusively rely on notices and communications it
believes are given by the appropriate party.
(c) The Account Intermediary shall give prompt written notice to the
Pledgor and the Trustee of any attachment, levy, stay, injunction or legal
process which is served upon the Account Intermediary and which relates to
the Pledged Account.
SECTION 7. PAYMENT OF EXPENSES. The Pledgor shall pay to the Account
Intermediary, within forty five (45) days of demand by the Account Intermediary,
normal commissions and customary fees and expenses for the routine maintenance
and operation of the Pledge Account.
SECTION 8. INDEMNITY. The Pledgor shall indemnify the Account Intermediary
and its officers, directors, employees and agents against claims, liabilities
and expenses arising out of this Control Agreement (including, without
limitation, reasonable attorneys' fees and disbursements), except to the extent
that any such claims, liabilities or expenses are caused by the Account
Intermediary's negligence or willful misconduct as found by a court of competent
jurisdiction in a final, non-appealable judgment.
SECTION 9. TERMINATION; SURVIVAL.
(a) This Control Agreement shall terminate automatically upon receipt
by the Account Intermediary of written notice executed by an officer of the
Trustee that either (i) all of the Secured Obligations have been paid in
full in cash or otherwise satisfied or (ii) all of the Collateral has been
released, whichever is earlier, and the Account Intermediary shall
thereafter be relieved of all duties and obligations hereunder. The Account
Intermediary may terminate this Control Agreement on sixty (60) days' prior
notice to the Trustee and the Pledgor, provided that before such
termination the Account Intermediary and the Pledgor shall make
arrangements to transfer the property in the Pledge Account to another
securities intermediary that shall have executed, together with the Trustee
and the Pledgor, a control agreement in favor of the Trustee for the
ratable benefit of the Holders of the Notes in respect of such property in
substantially the form of this Control Agreement or otherwise in form and
substance satisfactory to the Trustee.
(b) In the event that the Trustee ceases to serve as trustee under the
Indenture, the Trustee, the Account Intermediary and the Pledgor shall make
arrangements for a successor trustee appointed in accordance with the
Indenture to assume the rights and obligations of the Trustee hereunder,
and such successor trustee shall execute, together with the Account
Intermediary and the Pledgor, a control agreement in favor of such
successor trustee for the ratable benefit of the Holders of the Notes in
substantially the form of this Control Agreement or otherwise in form and
substance reasonably satisfactory to such successor trustee.
(c) Sections 7 and 8 shall survive termination of this Control
Agreement.
SECTION 10. CONFLICT WITH OTHER AGREEMENTS.
(a) In the event of any conflict between this Control Agreement (or
any portion thereof) and any other agreement now existing or hereafter
entered into, the terms of this Control Agreement shall prevail;
(b) No amendment or modification of this Control Agreement or waiver
of any right hereunder shall be binding on any party hereto unless it is in
writing and is signed by all of the parties hereto;
(c) The Account Intermediary hereby confirms and agrees that:
(i) there are no other agreements entered into between the
Account Intermediary and the Pledgor or Trustee with respect to the
Pledge Account;
(ii) it has not entered into, and until the termination of this
Control Agreement will not enter into, any agreement with any other
person relating to the Pledge Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply with
entitlement orders (as defined in Section 8-102(a)(8) of the UCC) of
such other person; and
(iii) it has not entered into, and until the termination of this
Control Agreement will not enter into, any agreement with the Pledgor
or the Trustee purporting to limit or condition the obligation of the
Account Intermediary to comply with Account Directions as set forth in
Section 3 hereof.
SECTION 11. PERMITTED INVESTMENTS. In accordance with the Pledge Agreement,
the Trustee shall direct, pursuant to an Account Direction, the Account
Intermediary with respect to the selection of investments to be made with the
funds in the Pledge Account.
SECTION 12. ENTIRE AGREEMENT. This Control Agreement is the entire
agreement, and supersedes any prior agreements and contemporaneous oral
agreements, of the parties concerning its subject matter.
SECTION 13. AMENDMENTS. No modification, amendment or waiver of, or consent
to any departure by any party from, any provision of this Control Agreement
shall be effective unless made in writing signed by the parties hereto, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given.
SECTION 14. FINANCIAL ASSETS. The Account Intermediary agrees with the
Trustee and the Pledgor that, to the fullest extent permitted by applicable law,
all property credited from time to time to the Pledge Account shall be treated
as financial assets under Article 8 of the UCC.
SECTION 15. NOTICES. All notices, demands, requests, consents, approvals
and other communications required or permitted hereunder shall be in writing
(except that Account Directions may be given orally) and will be effective upon
receipt if delivered personally, or if sent by facsimile transmission with
confirmation of delivery, or by nationally recognized overnight courier service,
to the Pledgor's or the Trustee's respective address as set forth in the Pledge
Agreement, and to the Account Intermediary's address as set forth below, or to
such other address as any party may give to the other parties in writing for
such purpose.
If to the Account Intermediary:
JPMorgan Chase Bank
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Fax: (000) 000-0000
with a copy to:
X.X. Xxxxxx Trust Company, National Association
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Fax: (000) 000-0000
SECTION 16. BINDING EFFECT. This Control Agreement shall become effective
when it shall have been executed by the Pledgor, the Trustee and the Account
Intermediary, and thereafter shall be binding upon and inure to the benefit of
the Pledgor, the Trustee and the Account Intermediary and their respective
successors and assigns. If the Pledgor consolidates or merges into any other
person in a transaction in which the Pledgor is not the surviving corporation,
or conveys, transfers or leases its properties and assets substantially as an
entirety to, any person, then the successor entity, transferee or lessee, as the
case may be, shall expressly assume the Pledgor's obligations under this Control
Agreement in writing.
SECTION 17. EXECUTION IN COUNTERPARTS. This Control Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Control Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Control Agreement.
SECTION 18. GOVERNING LAW AND JURISDICTION. THIS CONTROL AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
EXCLUSIVE OF ITS CHOICE OF LAW PROVISIONS AND REGARDLESS OF THE LAWS THAT MIGHT
OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICT OF LAWS. Each of the
parties hereby irrevocably submits for itself and its property in any legal
action or proceeding relating to this Control Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction and venue of the courts of the State of New York, the courts of the
United States of America in New York and appellate courts from any thereof.
SECTION 19. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) OF ANY NATURE
RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH PARTY
HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Control
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
Pledgor: LIGAND PHARMACEUTICALS INCORPORATED
By: /S/ XXXXX X. XXXXXXXX
Name:
Title:
Trustee: X.X. XXXXXX TRUST COMPANY, NATIONAL ASSOCIATION
By: /S/ XXXXX XXXXXXX
Name:
Title:
Account Intermediary: JPMORGAN CHASE BANK
By: /S/ XXXXX XXXXXXX
Name:
Title:
SCHEDULE I
PLEDGED FINANCIAL ASSETS
Security Coupon Date CUSIP No.
-------- ------------ ---------
X.X. Xxxxxxxx Xxxxx 00-00-00 000000XX0
X.X. Treasury Strip 11-15-03 000000XX0
U.S. Treasury Strip 05-15-04 000000XX0
U.S. Treasury Strip 11-15-04 000000XX0
