EXHIBIT 4.5
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "PLEDGE AGREEMENT") is made and entered into as
of November 26, 2002 by and between LIGAND PHARMACEUTICALS INCORPORATED, a
Delaware corporation (the "PLEDGOR"), and J.P. MORGAN TRUST COMPANY, NATIONAL
ASSOCIATION, a national banking association (the "TRUSTEE"), in its capacity as
trustee for the holders from time to time (the "HOLDERS") of the Notes (as
defined below) issued by the Pledgor under the Indenture (as defined below), and
as collateral agent for the Holders. Capitalized terms used herein without
definition shall have the respective meanings ascribed to them in the Indenture.
W I T N E S S E T H
WHEREAS, the Pledgor and UBS Warburg LLC (the "INITIAL PURCHASER") are
parties to a Purchase Agreement, dated as of November 21, 2002 (the "PURCHASE
AGREEMENT"), pursuant to which the Pledgor will issue and sell to the Initial
Purchaser $135,000,000 aggregate principal amount of 6% Convertible Subordinated
Notes due 2007 (the "FIRM NOTES") and pursuant to which the Pledgor has granted
to the Initial Purchaser an option to purchase up to an additional $20,250,000
aggregate principal amount of the Notes (the "ADDITIONAL NOTES" and, together
with the Firm Notes, the "NOTES");
WHEREAS, the Pledgor and the Trustee are simultaneously herewith entering
into that certain Indenture, dated as of the date hereof (such Indenture, as
amended, restated, supplemented or otherwise modified from time to time, the
"INDENTURE"), pursuant to which the Pledgor is issuing the Firm Notes on the
date hereof;
WHEREAS, the Pledgor is, or will be, the beneficial owner of certain
security entitlements (the "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 JPMorgan Chase Bank (the
"ACCOUNT INTERMEDIARY"), ABA No. 021000021, BNF: CTCC Operating Acct, A/C:
507-874-439, Ref.: Ligand Pharmaceuticals Incorporated Pledge Account at its
office at New York City, in the name of "J.P. Morgan 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, to secure the obligations of the Pledgor under this Pledge
Agreement, the Registration Rights Agreement, the Indenture and the Notes to pay
in full each of the first four scheduled interest payments, including Liquidated
Damages (as defined in Section 19(f)(ii)), if any, on the Notes when due and to
secure repayment of a portion of the principal, premium (if any) and interest on
the Notes in the event that the Notes become due and payable prior to such time
as the first four scheduled interest payments thereon shall have been paid in
full (collectively, the "OBLIGATIONS"), the Pledgor has agreed to pledge to the
Trustee for the ratable
benefit of the Holders of the Notes a security interest in the Collateral (as
defined below) securing the payment and performance by the Pledgor of all of the
Obligations;
WHEREAS, it is a condition precedent to the initial purchase of the Notes
by the Initial Purchaser that the Pledgor shall have executed and delivered this
Pledge Agreement; and
WHEREAS, unless otherwise defined herein or in the Indenture, terms defined
in Article 8 or 9 of the UCC (as defined below) and/or in the Federal Book Entry
Regulations (as defined below) are used in this Pledge Agreement as such terms
are defined in such Article 8 or 9 and/or the Federal Book Entry Regulations.
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 (as defined below) 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. The term "FEDERAL BOOK
ENTRY REGULATIONS" shall mean (i) the federal regulations contained in Subpart B
governing book-entry securities consisting of U.S. Treasury bonds, notes and
bills and Subpart D of 31 C.F.R. Part 357, 31 C.F.R. Section 357.2, Section
357.10 through Section 357.14 and Section 357.41 through Section 357.44; and
(ii) to the extent substantially identical to the federal regulations referred
to in clause (i) above (as in effect from time to time), the federal regulations
governing other book-entry securities.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises contained herein, and in
order to induce the Holders to purchase the Notes, the Pledgor hereby agrees
with the Trustee, for the ratable benefit of the Holders of the Notes, as
follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTEREST. The Pledgor hereby
pledges to the Trustee, for the ratable benefit of the Holders of the Notes, and
hereby grants to the Trustee, a security interest and continuing lien in all of
the Pledgor's right, title and interest in and to the following, in each case,
as to each type of property described below, whether now owned or hereafter
acquired by the Pledgor, wherever located and whether now or hereafter existing
or arising (hereinafter collectively referred to as the "COLLATERAL"):
(a) the Pledged Financial Assets and the certificates, if any,
representing the Pledged Financial Assets, and all dividends, interest,
money (as defined in the UCC), instruments (as defined in the UCC, the
"INSTRUMENTS") and other property from time to time received, receivable or
otherwise distributed or distributable in respect of, or in exchange for,
any or all of the Pledged Financial Assets;
(b) the Pledge Account and all security entitlements with respect
thereto, all Pledged Security Entitlements with respect to all Pledged
Financial Assets from time to time credited to the Pledge Account, any and
all securities accounts in which the Pledged Security Entitlements are
carried and all dividends, interest, cash, instruments and other
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property from time to time received, receivable or otherwise
distributed or distributable in respect of, or in exchange for, any or all
of the Pledged Security Entitlements;
(c) all other securities, securities entitlements and other financial
assets hereafter acquired by the Pledgor pursuant to Article XII of the
Indenture; and
(d) all proceeds of any and all of the foregoing Collateral
(including, without limitation, proceeds that constitute property of the
types described in subsections (a), (b) and/or (c) of this Section 1) and,
to the extent not otherwise included, all cash.
SECTION 2. SECURITY FOR OBLIGATIONS. This Pledge Agreement secures, and the
Collateral is collateral security for, the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all the Obligations, whether for principal, interest, fees or otherwise, now
or hereafter existing, under this Pledge Agreement, the Notes, the Registration
Rights Agreement or the Indenture (all such obligations, collectively, the
"SECURED OBLIGATIONS"). Without limiting the generality of the foregoing, this
Pledge Agreement secures, and the Collateral is collateral security for, the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by the Pledgor to the Holders of the Notes or to the Trustee on behalf
of the Holders of the Notes under this Pledge Agreement, the Notes, the
Registration Rights Agreement or the Indenture but for the fact that such
amounts are unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Pledgor.
SECTION 3. MAINTAINING THE PLEDGE ACCOUNT. So long as any Secured
Obligation shall remain outstanding:
(a) The Trustee shall separately maintain the Pledge Account with the
Account Intermediary.
(b) Notwithstanding any term or condition to the contrary in any other
agreement relating to the Pledge Account, and except as otherwise provided
by the provisions of Section 5 and Section 18 hereof, no funds shall be
paid or released to or for the account of, or withdrawn by or for the
account of, the Pledgor or any other "PERSON" (as defined in the Indenture)
from the Pledge Account.
The Pledge Account shall be subject to such applicable laws, and such
applicable regulations of the Board of Governors of the Federal Reserve System
and of any other appropriate banking or governmental authority, as may now or
hereafter be in effect.
SECTION 4. DELIVERY OF COLLATERAL.
(a) All cash, certificates or instruments representing or evidencing
the Pledged Financial Assets, the Pledged Security Entitlements or the
Pledge Account shall be delivered to, and held by or on behalf of, the
Trustee pursuant hereto and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to
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the Trustee. The Trustee shall have the right, at any time in its
discretion and without notice to the Pledgor, to transfer to, or to
register in the name of, the Trustee or any of its nominees any or all of
the Collateral. In addition, the Trustee shall have the right at any time
to exchange certificates or instruments representing or evidencing any or
all of the Collateral for certificates or instruments of smaller or larger
denominations. The Trustee shall have the right at any time to convert
Collateral consisting of financial assets credited to the Pledge Account to
Collateral consisting of financial assets held directly by the Trustee, and
to convert Collateral consisting of financial assets held directly by the
Trustee to Collateral consisting of financial assets credited to the Pledge
Account.
(b) With respect to any Collateral in which the Pledgor has any right,
title or interest and that constitutes an uncertificated security, the
Pledgor shall cause the issuer thereof either (i) to register the Trustee
as the registered owner of such security or (ii) to agree in writing with
the Pledgor and the Trustee that such issuer will comply with instructions
with respect to such security originated by the Trustee without further
consent of the Pledgor, such agreement to be in form and substance
satisfactory to the Trustee.
(c) With respect to any Collateral in which the Pledgor has any right,
title or interest and that constitutes a security entitlement, the Pledgor
shall cause the securities intermediary with respect to such security
entitlement either (i) to identify in its records the Trustee as the
entitlement holder of such security entitlement against such securities
intermediary or (ii) to agree in writing with the Pledgor and the Trustee
that such securities intermediary will comply with entitlement orders (that
is, notifications communicated to such securities intermediary directing
the transfer or redemption of the financial asset to which the Pledgor has
a security entitlement) originated by the Trustee without further consent
of the Pledgor, such agreement to be in substantially the form of ANNEX A
hereto or otherwise in form and substance satisfactory to the Trustee.
(d) With respect to any Collateral that constitutes a securities
account, the Pledgor shall comply with subsection (c) of this Section 4
with respect to all security entitlements carried in such securities
account.
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(e) Prior to, or concurrently with, the execution and delivery hereof,
and prior to the transfer to the Trustee of the Pledged Security
Entitlements, as provided in subsections (a) through (c), inclusive, of
this Section 4, the Trustee shall establish the Pledge Account with the
Account Intermediary. Upon transfer of the Pledged Financial Assets to the
Trustee, as confirmed to the Trustee by the securities intermediary, the
Trustee shall make appropriate book entries indicating that the Pledged
Financial Assets have been credited to, and are held in, the Pledge
Account. Subject to the other terms and conditions of this Pledge
Agreement, all funds or other property held by the Trustee pursuant to this
Pledge Agreement shall be held in the Pledge Account subject (except as
expressly provided in subsections (a), (b) and (c) of Section 5 hereof) to
the exclusive dominion and control of the Trustee and exclusively for the
ratable benefit of the Holders of the Notes and segregated from all other
funds or other property otherwise held by the Trustee.
(f) All Collateral shall be retained in the Pledge Account pending
disbursement pursuant to the terms hereof.
(g) Concurrently with the execution and delivery of this Pledge
Agreement, the Trustee and the Account Intermediary are delivering to the
Pledgor a duly executed Control Agreement (the "CONTROL AGREEMENT"), in the
form of ANNEX A attached hereto.
(h) The Trustee shall deliver to the Pledgor and the Initial
Purchaser, concurrently with the execution and delivery of this Pledge
Agreement and concurrently with the execution of each and any supplement to
this Pledge Agreement, in each case, a duly executed certificate, in the
form of ANNEX B attached hereto, of a duly appointed, qualified and acting
officer of the Trustee.
(i) Concurrently with the execution and delivery of this Pledge
Agreement, the Pledgor shall deliver to the Trustee acknowledgment copies
or stamped receipt copies of proper financing statements, duly filed on or
before the date hereof under the UCC, covering the Collateral described in
this Pledge Agreement.
(j) Concurrently with the execution and delivery of this Pledge
Agreement, the Pledgor shall deliver to the Trustee a Written Independent
Accountant Report (as defined below) stating that, in the opinion of the
Independent Public Accountant, the Pledged Financial Assets are sufficient,
upon receipt of the scheduled interest and principal payments of the
Pledged Financial Assets, to provide for payment in full of the first four
scheduled interest payments on the Notes when due.
SECTION 5. DISBURSEMENTS.
(a) At least three (3) "BUSINESS DAYS" (as defined in the
Indenture) prior to the due date of any of the first four scheduled
interest payments due on the Notes, the Pledgor may, pursuant to
written instructions given by the Pledgor to the Trustee (an "ISSUER
ORDER"), direct the Trustee to release from the Pledge Account and
pay, on such due date, to the Holders of the Notes proceeds sufficient
to provide for payment in full of such
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interest then due on the Notes. Upon receipt of an Issuer Order,
the Trustee shall (i) issue a Payment Order (as defined in the Control
Agreement) to the Account Intermediary for the release, from the
Pledge Account, of funds to the Trustee in an amount sufficient to
provide for the payment of the interest on the Notes in accordance
with such Issuer Order; and (ii) pay such funds to the Holders of the
Notes in accordance with the Indenture and the Notes. Nothing in this
Section 5 shall affect the Trustee's rights to apply the Collateral to
the payments of amounts due on the Notes upon acceleration thereof.
(b) If the Pledgor makes any of the first four scheduled interest
payments on the Notes or a portion of such interest payment from a
source of funds other than the Pledge Account (such source, the
"PLEDGOR Funds"), the Pledgor may, after payment in full of such
interest payment, direct the Trustee pursuant to an Issuer Order to
issue a Payment Order (as defined in the Control Agreement) to the
Account Intermediary for the release, to the Pledgor or to another
party at the direction of the Pledgor (such party, the "PLEDGOR'S
DESIGNEE"), of proceeds from the Pledge Account in an amount less than
or equal to the amount of Pledgor Funds applied to such interest
payment. Upon receipt by the Trustee of such Issuer Order, and
provided the Trustee has received such interest payment, the Trustee
shall direct the Account Intermediary pursuant to a Payment Order to
pay to the Pledgor or the Pledgor's Designee, as the case may be, the
requested amount from proceeds in the Pledge Account as soon as
practicable.
(c) At least three (3) business days prior to the due date of
each of the first four scheduled interest payments due on the Notes,
the Pledgor shall give the Trustee notice (by Issuer Order) as to
whether such interest payment will be made pursuant to Section 5(a) or
Section 5(b) and the respective amounts of interest that will be paid
from the Pledge Account and from Pledgor Funds. Any Pledgor Funds to
be used to make any interest payment shall be delivered to the
Trustee, in immediately available funds, prior to 10:00 a.m. (New York
City time) on the due date of such interest payment. If no such notice
is given or such Pledgor Funds have not been so delivered, the Trustee
shall act pursuant to Section 5(a) as if it had received an Issuer
Order pursuant thereto for the payment in full of the interest then
due from the Pledge Account.
(d) The Trustee shall instruct the Account Intermediary to
liquidate Collateral in the Pledge Account in order to make any of the
scheduled payments of interest on the Notes, unless there are
sufficient funds in the Pledge Account on the due date of such
interest payment. The Trustee shall be entitled to instruct the
Account Intermediary to sell any Collateral as contemplated hereunder
prior to the maturity of such Collateral and shall not be responsible
for any costs and expenses of such sale.
(e) Nothing contained in this Pledge Agreement shall (i) afford
the Pledgor any right to issue entitlement orders with respect to any
of the Pledged Security Entitlements or any securities account in
which any such security entitlements may be carried, or otherwise
afford the Pledgor control of any Pledged Security Entitlement or (ii)
otherwise give rise to any rights of the Pledgor with respect to the
Pledged Financial Assets or any securities account in which any of
such security entitlements may be carried, other than
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the Pledgor's rights under this Pledge Agreement as the
beneficial owner of collateral pledged to, and subject to the
exclusive dominion and control (except as expressly provided in
subsections (a), (b), (f) and (g) of this Section 5) of, the Trustee
in its capacity as such (and not as a securities intermediary) before
the payment in full, when due, of the Obligations. The Pledgor
acknowledges, confirms and agrees that the Trustee is an entitlement
holder of the Pledged Security Entitlements solely as Trustee for the
ratable benefit of the Holders of the Notes and not as a securities
intermediary.
(f) If, prior to the payment of the fourth scheduled interest
payment due on the Notes, repayment of the principal amount of the
Notes shall be accelerated under the Indenture, the Trustee shall
liquidate all Collateral in the Pledge Account for payment to the
Holders of the Notes, subject to the automatic stay provisions of
bankruptcy law, if applicable. Distributions from the Pledge Account
shall be applied first to any accrued and unpaid interest on the Notes
and second, to the extent available, to the repayment of a portion of
the principal amount of the Notes.
(g) If, prior to the payment of the fourth scheduled interest
payment due on the Notes, any Notes are converted in accordance with
the Indenture or any Notes are repurchased by the Pledgor, then, upon
the written request of the Pledgor to the Trustee and satisfaction of
the conditions precedent specified below, the Trustee shall promptly
instruct the Account Intermediary to liquidate Collateral to the
extent (but only to the extent) necessary to generate an amount of
cash proceeds equal to the Release Amount (as defined below) and shall
distribute to the Pledgor (such distribution, a "RELEASE ---------
Distribution") such amount in immediately available funds. Upon each
Release Distribution, the Trustee shall release the security interest
and continuing lien in that portion of the Collateral, and proceeds
derived therefrom, distributed to the Pledgor pursuant to such Release
Distribution, and shall execute such documents as the Pledgor may
reasonably request to evidence such release. No Release Distribution
or liquidation to facilitate a Release Distribution shall occur unless
all of the following shall have been satisfied:
(i) the Pledgor has delivered to the Trustee an opinion of
counsel to the effect that (A) the Notes referred to above have
been duly converted or repurchased by the Pledgor and (B) all
conditions precedent to the Release Distribution have been
satisfied;
(ii) the Pledgor has delivered to the Trustee an Officer's
Certificate that (A) identifies the Notes that have been so
converted or so repurchased, (B) affirms that such Notes have
been duly converted or repurchased, (C) states that all
conditions precedent relating to the Release Distribution have
been satisfied and (D) states the Release Amount;
(iii) the Pledgor has delivered to the Trustee a Written
Independent Accountant Report (as defined below) stating that the
Collateral to be remaining after the proposed Release
Distribution and related liquidation of Collateral will be
sufficient, upon receipt of the scheduled interest and principal
payments on the
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remaining Pledged Financial Assets, to provide for payment
in full of the remaining first four scheduled interest payments
on the Remaining Notes (as defined below) when due;
(iv) no Event of Default (as defined in Section 13) has
occurred and is continuing;
(v) no Event (as defined in the Registration Rights
Agreement) has occurred and is continuing; and
(vi) no Notes that have been repurchased by the Pledgor have
subsequently been resold.
"RELEASE AMOUNT" shall mean an amount equal to the net proceeds (after
deducting expenses related in any way to the related Release Distribution
and liquidation of Collateral) from the liquidation of that portion of the
Collateral not necessary to remain in the Pledge Account in order to
provide, from the receipt of the scheduled interest and principal payments
on the remaining Pledged Financial Assets, for payment in full of the
remaining first four scheduled interest payments on the Remaining Notes
when due.
"REMAINING NOTES" shall mean the Notes other than the Notes specified
in the Officer's Certificate referred to above as having been converted or
repurchased.
SECTION 6. INVESTING OF AMOUNTS IN THE PLEDGE ACCOUNT. If requested and as
directed by the Pledgor in writing, the Trustee shall, subject to the provisions
of Sections 3, 5 and 14 of this Pledge Agreement, from time to time, instruct
the Account Intermediary to invest interest paid on the Pledged Financial Assets
and reinvest other proceeds of any Pledged Financial Assets that may mature or
be sold (including, without limitation, pursuant to Section 5(g)), in each case,
in (i) identified United States Treasury securities or (ii) selected shares of a
money market fund registered under the Investment Company Act of 1940, as
amended, the portfolio of which consists of United States Treasury securities,
in each case credited to the Pledge Account, including any portfolios for which
the Trustee or any of its affiliates provides investment advisory or management
services.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
(a) The Pledgor hereby represents and warrants that:
(i) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Pledgor and constitutes a legal, valid
and binding agreement of the Pledgor, enforceable against the Pledgor
in accordance with its terms, except as (A) the enforceability hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to or affecting
creditors' rights or remedies generally; (B) the availability of
equitable remedies may be limited by equitable principles of general
applicability
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and the discretion of the court before which any proceeding
therefor may be brought; (C) the exculpation provisions and rights to
indemnification hereunder may be limited by U.S. federal and state
securities laws and public policy considerations; and (D) the waiver
of rights and defenses contained in Section 19(h) and Section 19(l)
hereof may be limited by applicable law.
(ii) The Pledgor is a corporation organized solely under the laws
of the State of Delaware and not of any other State or jurisdiction,
and the State of Delaware must maintain a public record showing the
Pledgor to have been so organized. The Pledgor's exact legal name,
within the meaning of Section 9-503(a)(1) of the UCC, is Ligand
Pharmaceuticals Incorporated. The Pledgor is located, within the
meaning of Section 9-307 of the UCC, in the State of Delaware. The
Pledgor's organizational identification number in the State of
Delaware is 2138989.
(iii) The Pledgor is the legal and beneficial owner of the
Collateral free and clear of any Lien, claim, option or right of
others (except for the security interest created by this Pledge
Agreement). No effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on
file in any public or recording office, other than the financing
statements filed pursuant to this Pledge Agreement.
(iv) Upon the delivery of the Collateral in accordance with the
terms hereof, all filings and other actions (including, without
limitation, (A) actions necessary to obtain control of the Collateral
as provided in Sections 9-104, 9-105, 9-106 or 9-107 of the UCC, as
applicable; and (B) actions necessary to perfect the Trustee's
security interest with respect to the Collateral evidenced by a
certificate of ownership) necessary to perfect the security interest
in the Collateral created under this Pledge Agreement have been duly
made or taken and are in full force and effect, and this Pledge
Agreement creates in favor of the Trustee for the ratable benefit of
the Holders of the Notes a valid and, together with such filings and
other actions, perfected first-priority security interest in the
Collateral, securing the payment of the Secured Obligations.
(v) The execution and delivery by the Pledgor of, and the
performance by the Pledgor of its obligations under, this Pledge
Agreement will not contravene any provision of applicable law or the
Certificate of Incorporation of the Pledgor or any material agreement
or other material instrument binding upon the Pledgor or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Pledgor, or result in the creation or imposition
of any Lien on any assets of the Pledgor, except for the lien and
security interest granted under this Pledge Agreement.
(vi) No consent of any other person and no approval,
authorization or order of, action by, notice to, or filing or
qualification with, any governmental authority, regulatory body,
agency or other third party is required: (A) for the
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grant by the Pledgor of the assignment, pledge and security
interest granted under this Pledge Agreement; (B) for the execution or
delivery by the Pledgor of, or the performance by the Pledgor of its
obligations under, this Pledge Agreement; (C) for the perfection or
maintenance of the assignment, pledge or security interest created
hereunder (including the first-priority nature of such assignment,
pledge or security interest), except for (I) the execution of the
Control Agreement by the parties thereto and (II) the filing of
financing statements under the UCC, which financing statements have
been delivered to the Trustee for filing pursuant to Section 4(i); or
(D) other than such consents, approvals, authorizations or orders
required to be obtained by the Trustee (or the Holders) for reasons
other than the consummation of this transaction, for the exercise by
the Trustee of its rights provided for in this Pledge Agreement or the
remedies in respect of the Collateral pursuant to this Pledge
Agreement, except as may be required in connection with the
disposition of any portion of the Collateral by laws affecting the
offering and sale of securities generally.
(vii) There are no legal or governmental proceedings pending or,
to the Pledgor's knowledge, threatened to which the Pledgor or any of
the properties of the Pledgor is subject that would materially
adversely affect the power or ability of the Pledgor to perform its
obligations under this Pledge Agreement or to consummate the
transactions contemplated hereby.
(viii) The pledge of the Collateral pursuant to this Pledge
Agreement is not prohibited by law or governmental regulation
(including, without limitation, Regulations T, U and X of the Board of
Governors of the Federal Reserve System) applicable to the Pledgor.
(ix) No Event of Default (as defined below) exists.
(x) Based on the Account Intermediary's representation, warranty
and agreement set forth in Section 2(e) of the Control Agreement and
on Section 18 of the Control Agreement, the jurisdiction (for purposes
of Section 8-110(e) of the UCC) of the securities intermediary that
maintains the Pledge Account and all securities accounts carrying the
Pledged Security Entitlements is New York. To the extent that any
portion of the Pledge Account is deemed to constitute a deposit
account, the jurisdiction (for purposes of the UCC) of the securities
intermediary that maintains the Pledge Account is New York.
(b) The Trustee hereby represents and warrants that:
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(i) This Pledge Agreement has been duly authorized, validly
executed and delivered by the Trustee and constitutes a legal, valid
and binding agreement of the Trustee, enforceable against the Trustee
in accordance with its terms, except as the availability of equitable
remedies may be limited by equitable principles of general
applicability and the discretion of the court before which any
proceeding therefor may be brought.
(ii) The execution and delivery by the Trustee of, and the
performance by the Trustee of its obligations under, this Pledge
Agreement will not contravene any provision of applicable law or the
organizational documents of the Trustee or any material agreement or
other material instrument binding upon the Trustee or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over the Trustee.
(iii) No consent of any other person and no approval,
authorization or order of, action by notice to, or filing or
qualification with, any governmental authority, regulatory body,
agency or other third party is required (A) for the execution or
delivery by the Trustee of, or the performance by the Trustee of its
obligations under, this Pledge Agreement; or (B) other than such
consents, approvals, authorizations or orders required to be obtained
by the Trustee (or the Holders) for reasons other than the
consummation of this transaction, for the exercise by the Trustee of
its rights provided for in this Pledge Agreement or the remedies in
respect of the Collateral pursuant to this Pledge Agreement, except as
may be required in connection with the disposition of any portion of
the Collateral by laws affecting the offering and sale of securities
generally.
(iv) There are no legal or governmental proceedings pending or,
to the Trustee's knowledge, threatened to which the Trustee or any of
the properties of the Trustee is subject that would materially
adversely affect the power or ability of the Trustee to perform its
obligations under this Pledge Agreement or to consummate the
transactions contemplated hereby.
SECTION 8. FURTHER ASSURANCES.
(a) The Pledgor agrees that from time to time, at the expense of the
Pledgor, the Pledgor shall promptly execute or otherwise authenticate, as
necessary, and deliver all further instruments and documents and take all
further action that may be necessary or desirable, or that the Trustee may
reasonably request, in order to perfect, protect or preserve any pledge or
security interest granted or purported to be granted hereunder or to enable
the Trustee to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the
foregoing, the Pledgor shall (i) if any Collateral shall be evidenced by a
promissory note or other instrument, promptly deliver and pledge to the
Trustee hereunder such note or instrument, duly indorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and
substance satisfactory to the Trustee; (ii) if necessary, execute or
otherwise authenticate, as necessary, and file such financing or
continuation statements, or amendments thereto,
11
and such other instruments, notices or records, as may be necessary or
desirable, or as the Trustee may reasonably request, in order to perfect,
protect or preserve any pledge or security interest granted or purported to
be granted hereby; (iii) promptly deliver and pledge to the Trustee for the
ratable benefit of the Holders of the Notes certificates representing
Collateral that constitutes certificated securities, accompanied by undated
stock or bond powers executed in blank; and (iv) promptly deliver to the
Trustee evidence that all other action that the Trustee may deem necessary
or desirable in order to perfect and protect the security interest created
by the Pledgor under this Pledge Agreement has been taken.
(b) The Pledgor hereby authorizes the Trustee to file one or more
financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral, in each case without the signature of
the Pledgor, and regardless of whether any particular asset described in
such financing statements falls within the scope of the UCC or the granting
clause of this Pledge Agreement. A photocopy or other reproduction of this
Pledge Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted
by law. The Pledgor ratifies its authorization for the Trustee to have
filed such financing statements, continuation statements or amendments
filed prior to the date hereof.
(c) The Pledgor shall furnish to the Trustee from time to time
statements and schedules further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.
(d) The Pledgor will promptly pay all reasonable costs incurred in
connection with any of the foregoing within forty five (45) days of receipt
of an invoice therefor. The Pledgor also agrees, whether or not requested
by the Trustee, to take all actions that are necessary or desirable to
perfect or continue the perfection of, or to protect the first priority of,
the Trustee's security interest in and to the Collateral, including the
filing of all necessary financing and continuation statements, and any
amendments thereto, and to protect the Collateral against the rights,
claims or interests of third persons (other than any such rights, claims or
interests created by or arising through the Trustee).
SECTION 9. COVENANTS. The Pledgor covenants and agrees with the Trustee for
the ratable benefit of the Holders of the Notes that from and after the date of
this Pledge Agreement until the earlier of payment in full in cash of (x) each
of the first four scheduled interest payments on the Notes when due under the
terms of the Indenture and the Notes and (y) all obligations due and owing under
the Indenture and the Notes in the event such obligations become due and payable
prior to the payment of the first four scheduled interest payments on the Notes:
(a) (i) it will not (and will not purport to) sell, assign or
otherwise dispose of, or grant any option or warrant with respect to, any
of the Collateral or the Pledgor's beneficial interest therein; and (ii) it
will not create or suffer to exist any Lien or other adverse interest upon,
or with respect to, any of the Collateral or the Pledgor's beneficial
12
interest therein (except for the security interest granted under this
Pledge Agreement and any Lien arising under the Indenture in favor of the
Trustee);
(b) it will not (i) enter into any agreement or understanding that
restricts or inhibits or purports to restrict or inhibit the Trustee's
rights or remedies hereunder, including, without limitation, the Trustee's
right to sell or otherwise dispose of the Collateral; or (ii) fail to pay
or discharge any tax, assessment or levy of any nature with respect to its
beneficial interest in the Collateral not later than five (5) days prior to
the date of any proposed sale under any judgment, writ or warrant of
attachment with respect to such beneficial interest;
(c) it will not change its name, type of organization, jurisdiction of
organization, organizational identification number or location from those
set forth in Section 7(a)(ii) hereof without first giving at least thirty
(30) days' prior written notice to the Trustee and taking all action
reasonably required by the Trustee under this Pledge Agreement for the
purpose of perfecting, protecting or preserving the security interest
granted by this Pledge Agreement;
(d) it will, and will cause the Trustee to, execute and deliver on or
prior to any sale of Additional Notes, a supplement to this Pledge
Agreement, in substantially the form attached hereto as Annex C, providing
for the pledge of additional Collateral in such amount as will, according
to a Written Independent Accountant Report (as defined below) delivered to
the Trustee, be sufficient, upon receipt of scheduled interest and
principal payments of the Pledged Financial Assets comprising such
additional Collateral, to provide for payment in full of the first four
scheduled interest payments due on the Additional Notes.
(e) in the event of an Event (as defined in the Registration Rights
Agreement) by reason of which Liquidated Damages (as defined in Section
19(f)(ii)) become due as provided in the Registration Rights Agreement, the
Pledgor shall, at its sole cost, promptly deliver to the Trustee additional
Pledged Security Entitlements in such amount as will, according to a
Written Independent Accountant Report (as defined below) delivered to the
Trustee, be sufficient, upon receipt of scheduled interest and/or principal
payments of all Pledged Security Entitlements thereafter held in the Pledge
Account, to provide payment of the first four scheduled interest payments
due on the Notes, including the Liquidated Damages payable under the
Registration Rights Agreement during the period beginning on the Event Date
(as defined in the Registration Rights Agreement) and ending on the date of
the fourth scheduled interest payment due on the Notes (assuming that
Liquidated Damages remain payable under the Registration Rights Agreement
for the entirety of such period). Such additional Pledged Security
Entitlements shall be subject to the pledge set forth in Section 1 by the
Pledgor to the Trustee for the ratable benefit of the Holders of the Notes
and shall be held by the Trustee in the Pledge Account.
(f) it shall select and engage, and pay the expenses of, a nationally
recognized firm of independent public accountants (the "INDEPENDENT PUBLIC
ACCOUNTANT") for the
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purpose of performing agreed-upon procedures to verify, in a written
report to be delivered to the Pledgor, the Trustee and the Initial
Purchaser (a "WRITTEN INDEPENDENT ACCOUNTANT REPORT"), the computational
accuracy of the sufficiency of the Collateral to secure the Obligations to
the extent described in, and required by, Section 4(j), Section 5(g),
Section 9(d) and Section 9(e), which Written Independent Accountant Report
shall be in form and substance reasonably satisfactory to the Trustee.
SECTION 10. POWER OF ATTORNEY. In addition to all of the powers granted to
the Trustee pursuant to the Indenture, the Pledgor hereby irrevocably appoints
the Trustee as the Pledgor's attorney-in-fact (with full power of substitution),
with full authority in the place and stead of the Pledgor and in the name of the
Pledgor or otherwise, from time to time in the Trustee's discretion, if an Event
of Default (as defined in Section 13) has occurred and is continuing, to take
any action and to execute any instrument that is necessary or advisable or as
the Trustee may deem necessary or advisable to accomplish the purposes of this
Pledge Agreement, including:
(a) to ask for, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipts for moneys due and to become due under,
or in respect of, any of the Collateral;
(b) to receive, indorse and collect any and all checks, notes, drafts
or other (negotiable or non-negotiable) instruments, documents or chattel
paper, in connection with subsection (a) above, and the Pledgor hereby
waives notice of presentment, protest and non-payment of any instrument,
document or chattel paper so indorsed or assigned;
(c) to file any claims or take any action or institute any proceedings
that the Trustee may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Trustee with
respect to any of the Collateral; and
(d) to pay or discharge taxes or Liens levied or placed upon the
Collateral that the Pledgor has failed to pay or discharge in accordance
herewith, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Trustee in its sole reasonable
discretion, and such payments made by the Trustee to become part of the
Obligations of the Pledgor to the Trustee, due and payable immediately upon
demand; PROVIDED, HOWEVER, that the Trustee shall have no obligation to
perform any of the foregoing actions under this Section 10.
The Trustee's authority under this Section 10 shall include, without
limitation, the authority to (i) indorse and negotiate any checks or instruments
representing proceeds of Collateral in the name of the Pledgor; (ii) execute and
give receipt for any certificate of ownership or any document constituting
Collateral; (iii) transfer title to any item of Collateral; (iv) sign the
Pledgor's name on all financing statements (to the extent permitted by
applicable law) or any other documents deemed necessary or appropriate by the
Trustee to preserve, protect or perfect the security interest in the Collateral
granted hereunder and to file the same; (v) prepare and file, and sign the
Pledgor's name on, any notice of Lien; and (vi) take any other actions arising
from or incident to the powers granted to the Trustee by this Pledge Agreement.
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This power of attorney is coupled with an interest and is irrevocable by the
Pledgor.
SECTION 11. NO ASSUMPTION OF DUTIES; REASONABLE CARE. The powers conferred
on the Trustee hereunder are solely to protect the security interest of the
Trustee for the ratable benefit of the Holders of the Notes in the Collateral
and shall not impose any duty on the Trustee to exercise any such powers other
than those expressly provided herein or imposed by applicable law. Except as
otherwise set forth in the Indenture and except as necessary for the safe
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, the Trustee shall have no duty as to any
Collateral to (i) ascertain or take action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not the Trustee has or is deemed to have knowledge of such matters;
(ii) take any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral; or (iii) except as otherwise set
forth in Section 6 hereof, investing or reinvesting any of the Collateral or any
loss on any investment. The Trustee shall be deemed to have exercised reasonable
care in the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which the Trustee
accords its own property. The Trustee shall be entitled to all the rights,
benefits, privileges and immunities accorded to it under the Indenture.
SECTION 12. INDEMNITY AND EXPENSES.
(a) The Pledgor agrees to indemnify, defend and save and hold
harmless each of the Trustee and its officers, directors, employees,
agents and advisors (each, an "INDEMNIFIED PARTY") from and against,
and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable
fees and expenses of counsel) that may be incurred by or asserted or
awarded against any Indemnified Party, in each case arising out of or
in connection with or resulting from this Pledge Agreement (including,
without limitation, the enforcement of this Pledge Agreement), except
to the extent such claims, damages, losses, liabilities or expenses
result from such Indemnified Party's negligence or willful misconduct
as found by a court of competent jurisdiction in a final,
non-appealable judgment.
(b) The Pledgor will, upon demand, pay to the Trustee the amount
of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and
agents, that the Trustee may incur in connection with (i) the review,
negotiation and administration of this Pledge Agreement; (ii) the
custody or preservation of, or the sale of, collection from or other
realization upon, any of the Collateral; (iii) the exercise or
enforcement of any of the rights of the Trustee or the Holders of the
Notes hereunder; or (iv) the failure by the Pledgor to perform or
observe any of the provisions hereof.
SECTION 13. REMEDIES. If any Event of Default under the Indenture or
default hereunder (any such Event of Default or default being referred to in
this Pledge Agreement as an "EVENT OF DEFAULT") shall have occurred and be
continuing:
(a) The Trustee and the Holders of the Notes may (i) exercise in
respect of the
15
Collateral, in addition to all other rights and remedies given by
law or by this Pledge Agreement or the Indenture, all of the rights
and remedies of a secured party under the UCC (whether or not the UCC
applies to the affected Collateral); (ii) require the Pledgor to, and
the Pledgor hereby agrees that it shall at its expense and upon the
request of the Trustee forthwith, assemble all or part of the
Collateral as directed by the Trustee and make it available to the
Trustee at a place and time to be designated by the Trustee that is
reasonably convenient to both parties; and (iii) without notice except
as specified below, sell the Collateral or any part thereof in one or
more parcels at any broker's board or at a public or private sale, in
one or more sales or lots, at any of the Trustee's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Trustee may deem commercially reasonable. The
Pledgor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days' notice to the Pledgor of the time and
place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. The Trustee shall
not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Trustee may adjourn any public or
private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at
the time and place to which it is so adjourned. The purchaser of any
or all Collateral so sold shall thereafter hold the same absolutely
free from any claim, encumbrance or right of any kind whatsoever
created by or through the Pledgor. Any sale of the Collateral
conducted in conformity with reasonable commercial practices of banks,
insurance companies, commercial finance companies or other financial
institutions disposing of property similar to the Collateral shall be
deemed to be commercially reasonable. The Trustee or any Holder of
Notes may, in its own name or in the name of a designee or nominee,
buy any of the Collateral at any public sale and, if permitted by
applicable law, at any private sale. All expenses (including court
costs and reasonable attorneys' fees, expenses and disbursements) of,
or incident to, the enforcement, by the Trustee or by or on behalf of
the Holders of the Notes, of any of the provisions hereof shall be
recoverable from the proceeds of the sale or other disposition of the
Collateral.
(b) Except as otherwise provided in the Indenture, any cash held
by or on behalf of the Trustee and all cash proceeds received by or on
behalf of the Trustee in respect of any sale of, collection from, or
other realization upon all or any part of the Collateral may, in the
discretion of the Trustee, be held by the Trustee as collateral for,
and/or then or at any time thereafter applied (after payment of any
amounts payable to the Trustee pursuant to Section 12(b) of this
Pledge Agreement) in whole or in part by the Trustee for the ratable
benefit of the Holders of the Notes against, all or any part of the
Secured Obligations in such order as the Trustee shall elect in its
sole discretion. Any surplus of such cash or cash proceeds held by or
on behalf of the Trustee and remaining after payment in full of all
the Secured Obligations shall be paid to the Pledgor or to whomsoever
may be lawfully entitled to receive such surplus.
(c) The Trustee may at any time or from time to time, without
notice to the Pledgor except as required by law, charge, set off and
otherwise apply all or any part of the Secured Obligations against the
Pledge Account or any part thereof.
16
(d) The Pledgor agrees to (i) provide the Trustee with such
information as may be necessary or, in the opinion of the Trustee,
advisable to enable the Trustee to effect the sale of the Collateral;
and (ii) use its best efforts to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of all
or any portion of the Collateral pursuant to this Section 13 valid and
binding and in compliance with any and all other applicable
requirements of law. The Pledgor further agrees that a breach of any
of the covenants contained in this Section 13(d) will cause
irreparable injury to the Trustee and the Holders of the Notes, that
the Trustee and the Holders of the Notes have no adequate remedy at
law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 13(d) shall be specifically
enforceable against the Pledgor, and the Pledgor hereby, to the extent
permitted by law, waives and agrees not to assert any defenses against
an action for specific performance of such covenants except for a
defense that no Event of Default has occurred and is continuing.
SECTION 14. SECURITY INTEREST ABSOLUTE. All rights of the Trustee and the
Holders of the Notes and the pledges, assignments and security interests
hereunder, and all obligations of the Pledgor hereunder, shall be irrevocable,
absolute and unconditional, and the rights of the Trustee hereunder shall be
enforceable irrespective of any or all of the following:
(a) any lack of validity or enforceability of the Indenture or
Notes or any other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of, consent to, or departure from, the Indenture
or Notes or any other agreement or instrument relating thereto;
(c) any taking, exchange or release of, or non-perfection of any
Liens on, any Collateral or any other collateral for all or any of the
Secured Obligations;
(d) any manner of application of any Collateral or any other
collateral, or proceeds thereof, to all or any of the Secured
Obligations, or any manner of sale or other disposition of any
Collateral or any other collateral for all or any of the Secured
Obligations or any other assets of the Pledgor;
(e) any change, restructuring or termination of the corporate
structure or existence of the Pledgor; or
(f) to the extent permitted by applicable law, any other
circumstance (including, without limitation, any statute of
limitations) or any existence of, or reliance on, any representation
by the Trustee or any Holder of the Notes, which might otherwise
constitute a defense available to, or a discharge of, the Pledgor in
respect of the Secured Obligations or of this Pledge Agreement.
This Pledge Agreement shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the Secured Obligations is
rescinded or must
17
otherwise be returned by the Trustee or any Holder of the Notes or by any other
person upon the insolvency, bankruptcy or reorganization of the Pledgor or
otherwise, all as though such payment had not been made.
SECTION 15. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any
provision of this Pledge Agreement, and no consent to any departure by the
Pledgor from any provision of this Pledge Agreement, shall in any event be
effective unless the same shall be in writing and signed by the Trustee, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No failure on the part of the Trustee
or any Holder of the Notes to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
SECTION 16. NOTICES. Any notice or communication given hereunder shall be
sufficiently given if in writing and delivered in person or by telecopier
communication or mailed by first class mail or commercial courier service,
addressed as follows; or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties:
If to the Pledgor:
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, California 92121-1117
Attention: General Counsel
Fax: (858) 550-7506
If to the Trustee:
J.P. Morgan Trust Company, National Association
560 Mission Street, 13th Floor
San Francisco, CA 94105
Attention: Mitch Gardner
Fax: (415) 315-7585
with a copy to:
Nixon Peabody LLP
2 Embarcadero Center, Suite 2700
San Francisco, CA 94111
Attention: Varya Simpson
Fax: (415) 984-8300
All such notices and other communications shall, when mailed, delivered or
telecopied, respectively, be effective when deposited in the mails, delivered or
telecopied, respectively, addressed as aforesaid.
18
SECTION 17. CONTINUING SECURITY INTEREST. This Pledge Agreement shall
create a continuing security interest in the Collateral and (a) shall, unless
otherwise provided in this Pledge Agreement, remain in full force and effect
until terminated in accordance with Section 18 hereof; (b) be binding upon the
Pledgor and its successors, transferees and assigns; and (c) inure, together
with the rights and remedies of the Trustee hereunder, to the Holders of the
Notes and their respective successors, transferees and assigns.
SECTION 18. TERMINATION. So long as no Event of Default shall have occurred
and be continuing, this Pledge Agreement (other than the Pledgor's obligations
under Section 12 hereof) shall terminate upon the earliest of (a) the redemption
of the Notes in whole, (b) the payment in full of each of the first four
scheduled interest payments due on the Notes under the terms of the Indenture,
(c) the payment in full of all obligations due and owing under the Notes and the
Indenture in the event the obligations become due and payable prior to payment
of the first four scheduled interest payments on the Notes, and (d) the
discharge of the Indenture. Upon any such termination, without any necessary
action on the part of the Pledgor, (i) the Control Agreement(s) shall terminate
and control of the Pledge Account and the Pledged Security Entitlements shall
revert to the Pledgor, (ii) the Trustee shall promptly obtain from the Account
Intermediary and deliver to the Pledgor all certificates and instruments
representing any portion of the Pledged Financial Assets constituting
certificated securities, (iii) the Trustee shall execute and deliver such
documents and instruments, at the Pledgor's expense, as the Pledgor may
reasonably request in connection with the termination of this Pledge Agreement
and the security interest and lien in the Collateral, and (iv) the Trustee shall
no longer have any rights in any of the Collateral.
SECTION 19. MISCELLANEOUS PROVISIONS.
(a) NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Pledge
Agreement may not be used to interpret another pledge, security or
debt agreement of the Pledgor or any subsidiary thereof. No such
pledge, security or debt agreement (other than the Indenture and
Registration Rights Agreement) may be used to interpret this Pledge
Agreement.
(b) SEVERABILITY. The provisions of this Pledge Agreement are
severable, and if any clause or provision shall be held invalid,
illegal or unenforceable in whole or in part in any jurisdiction, such
invalidity, illegality or unenforceability shall affect in that
jurisdiction only such clause or provision, or part thereof, and shall
not in any manner affect such clause or provision in any other
jurisdiction or any other clause or provision of this Pledge Agreement
in any jurisdiction.
(c) HEADINGS. The headings in this Pledge Agreement have been
inserted for convenience of reference only, are not to be considered a
part hereof and shall in no way modify or restrict any of the terms or
provisions hereof.
(d) COUNTERPART ORIGINALS. This Pledge Agreement may be signed in
two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Pledge
Agreement by telecopier shall be effective as delivery of an
19
original executed counterpart of this Pledge Agreement.
(e) BENEFITS OF PLEDGE AGREEMENT. Nothing in this Pledge
Agreement, express or implied, shall give to any person, other than
the parties hereto and their successors hereunder, and the Holders of
the Notes and the Account Intermediary, any benefit or any legal or
equitable right, remedy or claim under this Pledge Agreement. 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 shall expressly assume the Pledgor's obligations under this
Pledge Agreement in writing.
(f) INTERPRETATION OF AGREEMENT.
(i) To the extent a term or provision of this Pledge
Agreement conflicts with the Indenture, the Indenture shall
control with respect to the subject matter of such term or
provision. Acceptance of or acquiescence in a course of
performance rendered under this Pledge Agreement shall not be
relevant to determine the meaning of this Pledge Agreement even
though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
(ii) All references in this Pledge Agreement to "scheduled
interest" or "scheduled interest payment," or words to like
effect, shall be deemed to include all Liquidated Damages (as
defined below), if any, payable on the Notes, determined in
accordance with the Registration Rights Agreement, for the period
with respect to which such interest or interest payment is
payable. "LIQUIDATED DAMAGES" shall have the meaning ascribed to
"Liquidated Damages Amount" in the Registration Rights Agreement.
(g) SURVIVAL OF REPRESENTATIONS AND COVENANTS. All
representations, warranties and covenants contained herein shall
survive the execution and delivery of this Pledge Agreement and shall
terminate only upon the termination of this Pledge Agreement, except
as otherwise specified in such representations, warranties and
covenants.
(h) WAIVERS. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or
default with respect to any of the Obligations and all other notices
to which the Pledgor might otherwise be entitled, in each case except
as otherwise expressly provided herein or in the Indenture.
(i) AUTHORITY OF THE TRUSTEE.
(i) The Trustee shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Trustee by
the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties
hereunder or in connection with the Collateral by or through
agents or employees and shall be entitled to retain counsel and
to act in reliance
20
upon the advice of counsel concerning all such matters.
Except as otherwise expressly provided in this Pledge Agreement
or the Indenture, neither the Trustee nor any director, officer,
employee, attorney or agent of the Trustee shall be liable to the
Pledgor for any action taken or omitted to be taken by the
Trustee, in its capacity as collateral agent, hereunder, except
for its own gross negligence or willful misconduct, and the
Trustee shall not be responsible for the validity, effectiveness
or sufficiency hereof or of any document or security furnished
pursuant hereto. The Trustee and its directors, officers,
employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to
be genuine and correct and to have been signed or sent by the
proper person or persons.
(ii) The Pledgor acknowledges that the rights and
responsibilities of the Trustee under this Pledge Agreement with
respect to any action taken by the Trustee or the exercise or
non-exercise by the Trustee of any option, right, request,
judgment or other right or remedy provided for herein or
resulting or arising out of this Pledge Agreement shall, as
between the Trustee and the Holders of the Notes, be governed by
the Indenture and by such other agreements with respect thereto
as may exist from time to time among them; PROVIDED, HOWEVER,
that as between the Trustee and the Pledgor, the Trustee shall be
conclusively presumed to be acting as agent for the Holders of
the Notes with full and valid authority so to act or refrain from
acting, and the Pledgor shall not be obligated or entitled to
make any inquiry respecting such authority.
(j) FINAL EXPRESSION. This Pledge Agreement, together with the
Indenture, the Control Agreement and any other agreement executed in
connection herewith, is intended by the parties as a final expression
of this Pledge Agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.
(k) RIGHTS OF HOLDERS OF THE NOTES. No Holder of Notes shall have
any independent rights hereunder other than those rights of individual
Holders of the Notes described in Section 6.06 of the Indenture;
provided that nothing in this subsection shall limit any rights
granted to the Trustee under the Notes or the Indenture.
(l) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS PLEDGE 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.
(ii) The Pledgor agrees that the Trustee shall, in its
capacity as collateral agent and trustee or in the name and on
behalf of any Holder of Notes, have the right, to the extent
permitted by applicable law, to proceed against the
21
Pledgor or the Collateral in a court in any location
reasonably selected in good faith (and having personal or in rem
jurisdiction over the Pledgor or the Collateral, as the case may
be) to enable the Trustee to realize on the Collateral, or to
enforce a judgment or other court order entered in favor of the
Trustee. The Pledgor agrees that it will not assert any
counterclaims, setoffs or crossclaims in any proceeding brought
by the Trustee to realize on the Collateral or to enforce a
judgment or other court order in favor of the Trustee, except for
such counterclaims, setoffs or crossclaims which, if not asserted
in any such proceeding, could not otherwise be brought or
asserted. The Pledgor waives, to the extent permitted by
applicable law, any objection that it may have to the location of
the court in the State of New York once the Trustee has commenced
a proceeding described in this paragraph including, without
limitation, any objection to the laying of venue or based on the
grounds of forum non conveniens.
(iii) The Pledgor agrees that neither any Holder of Notes
nor (except as otherwise provided in this Pledge Agreement or the
Indenture) the Trustee in its capacity as trustee shall have any
liability to the Pledgor (whether arising in tort, contract or
otherwise) for losses suffered by the Pledgor in connection with,
arising out of, or in any way related to, the transactions
contemplated and the relationship established by this Pledge
Agreement, or any act, omission or event occurring in connection
therewith, unless it is determined by a final and nonappealable
judgment of a court that is binding on the the Trustee or such
Holder of Notes, as the case may be, that such losses were the
result of acts or omissions on the part of the Trustee or such
Holder of Notes, as the case may be, constituting gross
negligence or willful misconduct.
(iv) To the extent permitted by applicable law, the Pledgor
waives the posting of any bond otherwise required of the Trustee
or any Holder of Notes in connection with any judicial process or
proceeding to enforce any judgment or other court order
pertaining to this Pledge Agreement or any related agreement or
document entered in favor of the Trustee or any Holder of Notes,
or to enforce by specific performance, temporary restraining
order or preliminary or permanent injunction, this Pledge
Agreement or any related agreement or document between the
Pledgor on the one hand and the Trustee and/or the Holders of the
Notes on the other hand.
(v) 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.
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[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
23
IN WITNESS WHEREOF, the Pledgor and the Trustee have each caused this
Pledge Agreement to be duly executed and delivered as of the date first above
written.
Pledgor: LIGAND PHARMACEUTICALS INCORPORATED
By: /S/ DAVID E. ROBINSON
Name:
Title:
Trustee: J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
By: /S/ MITCH GARDNER
Name:
Title:
SCHEDULE I
PLEDGED FINANCIAL ASSETS
Security Coupon Date CUSIP No.
- -------- ----------- ---------
U.S. Treasury Strip 05-15-03 912833FS4
U.S. Treasury Strip 11-15-03 912820DJ3
U.S. Treasury Strip 05-15-04 912833FU9
U.S. Treasury Strip 11-15-04 912833FV7
ANNEX A
CONTROL AGREEMENT
--------------------
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"), J.P. MORGAN 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. 021000021, BNF: CTCC
Operating Acct, A/C: 507-874-439, Ref.: Ligand Pharmaceuticals Incorporated
Pledge Account at its office at New York City, in the name of "J.P. Morgan 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
2
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.
3
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.
4
(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
5
(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
6
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
600 Travis Street, 11th Floor
Houston, TX 77002
Attention: Kirk Dodson
Fax: (713) 577-5200
with a copy to:
J.P. Morgan Trust Company, National Association
560 Mission Street, 13th Floor
San Francisco, CA 94105
Attention: Mitch Gardner
Fax: (415) 315-7585
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
7
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.
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8
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:
Name:
Title:
Trustee: J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
By:
Name:
Title:
Account Intermediary: JPMORGAN CHASE BANK
By:
Name:
Title:
SCHEDULE I
PLEDGED FINANCIAL ASSETS
Security Coupon Date CUSIP No.
- -------- ----------- ---------
U.S. Treasury Strip 05-15-03 912833FS4
U.S. Treasury Strip 11-15-03 912820DJ3
U.S. Treasury Strip 05-15-04 912833FU9
U.S. Treasury Strip 11-15-04 912833FV7
ANNEX B
TRUSTEE CERTIFICATE
--------------------------
J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
PURSUANT TO SECTION 4(h) OF THE PLEDGE AGREEMENT, dated as of November 26, 2002
(as amended, restated, supplemented or otherwise modified from time to time, the
"PLEDGE AGREEMENT"), by and between LIGAND PHARMACEUTICALS INCORPORATED, a
Delaware corporation (the "PLEDGOR"), and J.P. MORGAN TRUST COMPANY, NATIONAL
ASSOCIATION, a national banking association (the "TRUSTEE"), in its capacity as
trustee for the holders from time to time (the "HOLDERS") of the Notes (as
defined in the Pledge Agreement) and as collateral agent for the Holders, the
undersigned officer of the Trustee, on behalf of the Trustee, makes the
following certifications to the Pledgor and the Initial Purchaser. Capitalized
terms used herein without definition shall have the respective meanings ascribed
to them in the Pledge Agreement.
1. Substantially contemporaneously with the execution and delivery of this
Officer's Certificate, the Trustee has acquired its security entitlement to
the initial Pledged Financial Assets through a "securities account" (as
defined in Section 8-501(a) of the New York Uniform Commercial Code)
maintained by the Trustee, for value and without notice of any adverse
claim thereto. Without limiting the generality of the foregoing, the Pledge
Account, the Pledged Financial Assets and the other Collateral are not, and
the Trustee's security entitlement to the Collateral is not, to the actual
knowledge of the corporate trust officer having responsibility for the
administration of the Pledge Agreement on behalf of the Trustee, subject to
any Lien granted by or to or arising through or in favor of any securities
intermediary (including, without limitation, J.P. Morgan Trust Company,
National Association) through which the Trustee derives its security
entitlement to the Collateral.
2. The Trustee has not knowingly caused or permitted the Pledge Account or its
security entitlement thereto to become subject to any Lien created by or
arising through the Trustee.
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IN WITNESS WHEREOF, the undersigned officer has executed this Officer's
Certificate on behalf of J.P. Morgan Trust Company, National Association, as
Trustee as of the date first above written.
J.P. MORGAN TRUST
COMPANY, NATIONAL ASSOCIATION
By:
Name:
Title:
J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
OFFICER'S CERTIFICATE
PURSUANT TO SECTION 4(h) OF THE PLEDGE AGREEMENT, dated as of November 26, 2002
(as amended, restated, supplemented or otherwise modified from time to time, the
"PLEDGE AGREEMENT"), by and between LIGAND PHARMACEUTICALS INCORPORATED, a
Delaware corporation (the "PLEDGOR"), and J.P. MORGAN TRUST COMPANY, NATIONAL
ASSOCIATION, a national banking association (the "TRUSTEE"), in its capacity as
trustee for the holders from time to time (the "HOLDERS") of the Notes (as
defined in the Pledge Agreement) and as collateral agent for the Holders, the
undersigned officer of the Trustee, on behalf of the Trustee, makes the
following certifications to the Pledgor and the Initial Purchaser. Capitalized
terms used herein without definition shall have the respective meanings ascribed
to them in the Pledge Agreement.
3. Substantially contemporaneously with the execution and delivery of this
Officer's Certificate, the Trustee has acquired its security entitlement to
the additional Pledged Financial Assets identified in Supplement No. 1 to
the Pledge Agreement through a "securities account" (as defined in Section
8-501(a) of the New York Uniform Commercial Code) maintained by the
Trustee, for value and without notice of any adverse claim thereto. Without
limiting the generality of the foregoing, the Pledge Account, the Pledged
Financial Assets and the other Collateral are not, and the Trustee's
security entitlement to the Collateral is not, to the actual knowledge of
the corporate trust officer having responsibility for the administration of
the Pledge Agreement on behalf of the Trustee, subject to any Lien granted
by or to or arising through or in favor of any securities intermediary
(including, without limitation, J.P. Morgan Trust Company, National
Association) through which the Trustee derives its security entitlement to
the Collateral.
4. The Trustee has not knowingly caused or permitted the Pledge Account or its
security entitlement thereto to become subject to any Lien created by or
arising through the Trustee.
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IN WITNESS WHEREOF, the undersigned officer has executed this Officer's
Certificate on this November 27, 2002 on behalf of J.P. Morgan Trust Company,
National Association, as Trustee.
J.P. MORGAN TRUST
COMPANY, NATIONAL ASSOCIATION
By:
Name:
Title:
ANNEX C
SUPPLEMENT TO THE PLEDGE AGREEMENT
---------------------------------------------------
SUPPLEMENT TO THE PLEDGE AGREEMENT
This SUPPLEMENT NO. 1 (this "SUPPLEMENT") dated as of November 27, 2002 to
the PLEDGE AGREEMENT dated as of November 26, 2002 (as amended, restated,
supplemented or otherwise modified from time to time, the "PLEDGE AGREEMENT") by
and between LIGAND PHARMACEUTICALS INCORPORATED, a Delaware corporation (the
"PLEDGOR"), and J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association (the "TRUSTEE"), in its capacity as trustee for the holders
from time to time (the "HOLDERS") of the Notes (as defined in the Pledge
Agreement), and as collateral agent for the Holders. Capitalized terms used
herein without definition shall have the respective meanings ascribed to them in
the Pledge Agreement.
W I T N E S S E T H
WHEREAS, the Pledgor and UBS Warburg LLC (the "INITIAL PURCHASER") are
parties to a Purchase Agreement, dated as of November 21, 2002 (the "PURCHASE
AGREEMENT"), pursuant to which the Pledgor has granted to the Initial Purchaser
an option to purchase up to an additional $20,250,000 aggregate principal amount
of the Notes;
WHEREAS, the Pledgor and the Trustee have entered into that certain
Indenture dated as of November 26, 2002 (as amended, restated, supplemented or
otherwise modified from time to time, the "INDENTURE"), pursuant to which the
Pledgor is issuing the Notes;
WHEREAS, pursuant to the Indenture, the Pledgor is required to purchase, or
cause the purchase of, and pledge to the Trustee for the ratable benefit of the
Holders of the Notes, on or prior to any sale of the Additional Notes,
Additional Collateral (as defined below) securities in an amount that will be
sufficient, upon receipt of scheduled interest and principal payments of the
securities comprising the Additional Collateral, according to a written report
of a nationally recognized firm of independent public accountants selected by
the Pledgor and delivered to the Trustee, to provide payment in full of the
first four scheduled interest payments due on the Notes;
WHEREAS, the Pledgor and the Trustee have entered into the Pledge
Agreement, pursuant to which the Pledgor has previously pledged the Collateral
to the Trustee for the ratable benefit of the Holders of the Notes in connection
with the purchase by the Initial Purchaser of $135,000,000 aggregate principal
amount of Firm Notes;
WHEREAS, the Initial Purchaser has exercised its option under the Purchase
Agreement to purchase $20,250,000 aggregate principal amount of the Additional
Notes; and
WHEREAS, it is a condition precedent to the purchase of the Notes by the
Initial Purchaser pursuant to the option granted in the Purchase Agreement that
the Pledgor purchase Additional Collateral (as defined below) and deposit such
Additional Collateral into the Pledge Account to be held therein subject to the
terms of the Pledge Agreement and shall have granted the assignment and security
interest and made the pledge and assignment contemplated by the Pledge
Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises herein contained, and in
order to induce the Initial Purchaser to purchase the Additional Notes, the
Pledgor and the Trustee hereby agree, for the benefit of the Initial Purchaser
and for the ratable benefit of the Holders of the Notes, as follows:
SECTION 1. PLEDGE AND GRANT OF SECURITY INTEREST. Pursuant to Section 1 of
the Pledge Agreement, as security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, the Pledgor hereby assigns and pledges to the
Trustee for the ratable benefit of the Holders of the Notes, and hereby grants
to the Trustee for the ratable benefit of the Holders of the Notes, a lien on
and security interest in all of the Pledgor's right, title and interest in, to
and under the government securities identified by CUSIP number in Schedule I
hereto (the "ADDITIONAL COLLATERAL") and the certificates representing the
Additional Collateral, the scheduled payments of principal and interest thereon
which will be sufficient to provide for payment in full of the first four
scheduled interest payments due on the Notes issued in connection herewith. The
Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. SUPPLEMENT TO SCHEDULE I. The parties hereto agree that Schedule
I to the Pledge Agreement shall be supplemented by Schedule I hereto.
SECTION 3. TRANSFER OF ADDITIONAL COLLATERAL. Pursuant to Section 9(d) of
the Pledge Agreement, on or prior to the date hereof, the Pledgor agrees to
transfer, or caused to be transferred, to the Pledge Account, the Additional
Collateral in such amount as will, according to a Written Independent Accountant
Report delivered to the Trustee, be sufficient, upon receipt of scheduled
interest and principal payments of the Pledged Financial Assets comprising the
Additional Collateral, to provide for payment in full of the first four
scheduled interest payments due on the Notes.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
(a) The Pledgor hereby represents and warrants to the Trustee that:
(i) Each of this Supplement and the Pledge Agreement as supplemented
hereby has been duly authorized, validly executed and delivered by the
Pledgor and constitutes a legal, valid and binding agreement of the
Pledgor, enforceable against the Pledgor in accordance with its terms,
except as (A) the enforceability hereof and thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to or affecting creditors' rights or remedies
generally; (B) the availability of equitable remedies may be limited by
equitable principles of general applicability and the discretion of the
court before which any proceeding therefor may be brought; (C) the
exculpation provisions and rights to indemnification under the Pledge
Agreement may be limited by U.S. federal and state securities laws and
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public policy considerations; and (D) the waiver of rights and defenses
contained in Section 19(h) and Section 19(l) of the Pledge Agreement may be
limited by applicable law.
(ii) The representations and warranties of the Pledgor set forth in
Section 7(a) of the Pledge Agreement are true and correct in all material
respects with the same effect as if made on and as of the date hereof.
(b) The Trustee hereby represents and warrants to the Pledgor that:
(i) Each of this Supplement and the Pledge Agreement as supplemented
hereby has been duly authorized, validly executed and delivered by the
Trustee and constitutes a legal, valid and binding agreement of the
Trustee, enforceable against the Trustee in accordance with its terms,
except as the availability of equitable remedies may be limited by
equitable principles of general applicability and the discretion of the
court before which any proceeding therefor may be brought.
(ii) The representations and warranties of the Trustee set forth in
Section 7(b) of the Pledge Agreement are true and correct in all material
respects with the same effect as if made on and as of the date hereof.
SECTION 5. EXECUTION IN COUNTERPARTS. This Supplement may be signed in two
or more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Supplement by telecopier shall
be effective as delivery of an original executed counterpart of this Supplement.
SECTION 6. EFFECT OF SUPPLEMENT. Except as expressly supplemented hereby,
the Pledge Agreement shall remain in full force and effect.
SECTION 7. GOVERNING LAW. THIS SUPPLEMENT 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.
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IN WITNESS WHEREOF, the Pledgor and the Trustee have each caused this
Supplement to be duly executed and delivered as of the date first above written.
Pledgor: LIGAND PHARMACEUTICALS INCORPORATED
By: /s/ PAUL V. MAIER
Name:
Title:
Trustee: J.P. MORGAN TRUST COMPANY, NATIONAL ASSOCIATION
By: /s/ MITCH GARDNER
Name:
Title:
SCHEDULE I
ADDITIONAL COLLATERAL
Security Coupon Date CUSIP No.
- -------- ----------- ---------
U.S. Treasury Strip 05-15-03 912833FS4
U.S. Treasury Strip 11-15-03 912820DJ3
U.S. Treasury Strip 05-15-04 912833FU9
U.S. Treasury Strip 11-15-04 912833FV7