EXHIBIT 10.13
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 30th day of September,
1999, by and between Ligand Pharmaceuticals Incorporated, a Delaware corporation
(the "Company"), and Elan International Services, Ltd., a Bermuda corporation
("Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Shares.
1.1 Issuance and Sale of Shares. Subject to the terms and conditions of
this Agreement, Investor agrees to pay an aggregate of $455,063.25 (the
"Purchase Price") to the Company at the Closing and the Company agrees to sell
and issue to Investor at the Closing 52,742 shares (the "Shares") of the
Company's common stock, par value $.001 per share ("Common Stock"), at a per
share purchase price of $8.6281.
1.2 Closing. The closing for the purchase and sale of the Shares shall take
place at the offices of Brobeck, Phleger & Harrison LLP, 550 West "C" Street,
Suite 1200, San Diego, California, on September 30, 1999, or at such other time
and place as the Company and Investor mutually agree upon orally or in writing
(which shall be designated as the "Closing"). At the Closing, the Company shall
deliver to Investor a certificate representing the Shares (free and clear of all
liens, claims and other encumbrances except as otherwise provided herein and in
the Registration Rights Agreement (as defined below)). In consideration of such
delivery, Investor shall make payment for the Shares by delivery to the Company
of the Purchase Price. All such payments by Investor at the Closing shall be in
immediately available funds in the form of certified or cashier's check payable
to the Company's order or by wire transfer of funds to the Company's designated
bank account.
2. Representations and Warranties of the Company. Except as otherwise set
forth on the Schedule of Exceptions attached as Schedule A, the Company hereby
represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own and operate its properties and assets and to carry on its business as now
conducted and as proposed to be conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would be reasonably expected to have a material adverse
effect on the business, operations, properties, assets, or condition (financial
or otherwise) of the Company (a "Material Adverse Effect"). Except as disclosed
in the Form 10-K (as defined herein), the Company has no subsidiaries.
2.2 Authorization. The Company has all requisite corporate power and
authority (i) to execute, deliver and perform its obligations under this
Agreement and the Registration Rights Agreement (as defined below), (ii) to
issue the Shares in the manner and for the purpose contemplated by this
Agreement and (iii) to execute, deliver and perform its
obligations under all other agreements and instruments executed and
delivered by it pursuant to or in connection with this Agreement and the
Registration Rights Agreement. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the Fourteenth Addendum to the
Amended Registration Rights Agreement of even date herewith, which makes
Investor a party to the Amended Registration Rights Agreement between the
Company and certain of its stockholders (collectively, the "Registration Rights
Agreement"), the performance of all obligations of the Company hereunder and
thereunder and the authorization, issuance (or reservation for issuance) and
delivery of the Shares being sold hereunder has been taken or will be taken
prior to the Closing, and this Agreement and the Registration Rights Agreement
constitute valid and legally binding obligations of the Company, enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
2.3 Valid Issuance of Shares. The Shares which are being purchased
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable, free and clear of all liens and encumbrances and
restrictions other than as set forth in this Agreement or other than imposed by
applicable law or regulation and, based in part upon the representations of
Investor in this Agreement, the Shares will be issued in compliance with all
applicable federal and state securities laws.
2.4 SEC Reports. The Company has heretofore filed with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), all reports and other documents required to be
filed, including an Annual Report on Form 10-K for the year ended December 31,
1998 (the "Form 10-K"). None of such reports, or any other reports, documents,
registration statements, definitive proxy materials and other filings required
to be filed with the SEC under the rules and regulations of the SEC ("SEC
Filings") contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in order to make the
statements made, at the time and in light of the circumstances under which they
were made, not misleading. Since December 31, 1998, the Company has timely filed
with the SEC all SEC Filings and all such SEC Filings complied with all
applicable requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as applicable and the rules thereunder.
The audited financial statements of the Company included or incorporated by
reference in the 1998 Annual Report and the unaudited financial statements
contained in the quarterly reports on Form 10-Q filed since December 31, 1998
each have been prepared in accordance with such acts and rules and with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods indicated therein and with each other, except as may be
indicated therein or in the notes thereto and except that the unaudited interim
financial statements may not contain all footnotes and adjustments required by
United States generally accepted accounting principles, and fairly present the
financial condition of the Company as at the dates thereof and the results of
its operations and statements of cash flows for the periods then ended, subject,
in the case of unaudited interim financial statements, to normal year-end
adjustments. Except as reflected in such financial statements, the Company has
no material liabilities, absolute or
2
contingent, other than ordinary course liabilities incurred since the date
of the last such financial statements in connection with the conduct of the
business of the Company. Since December 31, 1998, and except as described in the
Company's SEC Filings since December 31, 1998, there has been no:
(a) change in the assets, liabilities, financial condition or operating
results of the Company from that reflected in the 1998 Annual Report, except
changes in the ordinary course of business that have not, individually or in the
aggregate, resulted in and are not reasonably expected to result in a Material
Adverse Effect (and except that the Company expects to continue to incur
substantial operating losses, which may be material);
(b) damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the business, properties or financial
condition of the Company (and except that the Company expects to continue to
incur substantial operating losses, which may be material);
(c) waiver or compromise by the Company of a material right or of a
material debt owed to it;
(d) satisfaction or discharge of any lien, claim or encumbrance by the
Company, except in the ordinary course of business and which is not material to
the business, properties or financial condition of the Company (as such business
is presently conducted);
(e) material change to a material contract or arrangement by which the
Company or any of its assets is bound or subject;
(f) sale, assignment or transfer to a third party that is not an Affiliate
(as hereafter defined) of any material patents, trademarks, copyrights, trade
secrets or other intangible assets for compensation which is less than fair
value;
(g) mortgage, pledge, transfer of a security interest in, or lien, created
by the Company, with respect to any of its material properties or assets, except
liens for taxes not yet due or payable;
(h) declaration, setting aside or payment or other distribution in respect
of any of the Company's capital stock, except any direct or indirect redemption,
purchase or other acquisition of any such stock by the Company; or
(i) event or condition of any type that has had or is reasonably expected
to have a Material Adverse Effect.
For purposes of this Section 2.4 of this Agreement, the term "Affiliate"
means any individual or entity directly or indirectly controlling, controlled by
or under common control with, a party to this Agreement. Without limiting the
foregoing, the direct or indirect ownership of 30% or more of the outstanding
voting securities of any entity, or the right to receive 30% or more of the
profits or earnings of an entity, shall be deemed to constitute control.
3
2.5 Contracts. With respect to each of the material contracts, commitments
and agreements of the Company, the Company is not, and has no actual knowledge
that any other party is, in default under or in respect of any such material
contract, commitment or agreement, the result of which default would have a
Material Adverse Effect. No party to any such material contract, commitment or
agreement, would be authorized or permitted to terminate its obligations
thereunder by reason of the execution and delivery of this Agreement or any of
the transactions contemplated herein.
2.6 Compliance. The Company has complied with, and is not in default under
or in violation of its Certificate of Incorporation, Bylaws or any and all laws,
ordinances and regulations or other governmental restrictions, orders, judgments
or decrees, applicable to the Company's business as presently conducted,
including individual products marketed by it, where any such default or
violation would have a Material Adverse Effect. The Company has not received
notice of any possible or actual violation of any applicable law, ordinance,
regulation, or order, the result of which violation would be reasonably expected
to have a Material Adverse Effect. The Company is not a party to any agreement
or instrument, or subject to any charter or other corporate restriction, or any
judgment, order, decree, law, ordinance, regulation or other governmental
restriction which would prevent or impede, or be breached or violated by, or
would result in the creation of any lien or encumbrance upon any assets of the
Company by, the transactions contemplated in this Agreement or the execution,
delivery or performance of the Registration Rights Agreement, except that no
representation or warranty is made with respect to filings required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 as amended.
2.7 Compliance with Other Instruments. The execution, delivery and
performance of this Agreement and of the transactions contemplated hereby will
not result in any violation of or constitute, with or without the passage of
time and the giving of notice, either a default under any provision of its
Certificate of Incorporation or Bylaws.
2.8 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of the
Company in connection with the Company's valid execution, delivery and
performance of this Agreement or the Registration Rights Agreement or the
consummation of any transaction contemplated hereby or thereby, except for any
filings under any applicable state securities laws and except for any filing
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 as amended. The
filings under state securities laws, if any, will be effected by the Company at
its cost within the applicable stipulated statutory period.
2.9 Litigation. There is no action, suit, proceeding or investigation
pending or currently threatened against the Company or its properties before any
court or governmental agency arising out of this Agreement or the Registration
Rights Agreement or the right of the Company to enter into such instruments or
to consummate the transactions contemplated hereby or thereby. Other than Sergio
M. Oliver et al. v. Boston University et al., C.A. No 16570-NC in the Delaware
Court of Chancery, there is no action, suit, proceeding or investigation pending
or currently threatened against the Company, which singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would materially
adversely affect the business,
4
properties, operations, financial condition, income or business prospects
or equity ownership of the Company or would result in any material liability on
the part of the Company.
2.10 Permits. Except as disclosed in SEC Filings (including, inter alia,
the lack of FDA approvals for the commercial sale of many of the Company's
product candidates), the Company has all governmental franchises, permits,
licenses, and any similar authority necessary for the conduct of its business as
now being conducted by it or as proposed to be conducted by it, the lack of
which could have a Material Adverse Effect. The Company is not in default in any
material respect under any of such franchises, permits, licenses or other
similar authority.
2.11 Taxes. The Company has filed all federal, state and other tax returns
which are required to be filed and has heretofore paid all taxes which have
become due and payable, except where the failure to file or pay would not be
reasonably expected to have a Material Adverse Effect. The provision for taxes
on the balance sheet as of December 31, 1998 is sufficient for the payment of
all accrued and unpaid taxes of the Company with respect to the period then
ended.
2.12 Title. The Company has good and marketable title to all material
property and assets reflected in the financial statements to the 1998 Annual
Report (or as described in the SEC Filings). Except where the failure to do so
would not have a Material Adverse Effect, the Company occupies its leased
properties under valid and binding leases conforming to the description thereof
set forth in the SEC Filings.
2.13 Intellectual Property. Except as disclosed in the SEC Filings, the
Company owns, or possesses adequate rights to use, all of its patents, patent
rights, trade secrets, know-how, proprietary techniques, including processes and
substances, trademarks, service marks, trade names and copyrights described or
referred to in the SEC Filings or owned or used by it or which is necessary for
the conduct of its business as presently conducted, except where the failure to
own or possess such patents, patent rights, trade secrets, know-how, proprietary
techniques, including processes and substances, trademarks, service marks, trade
names and copyrights would not have a Material Adverse Effect. Except as
disclosed in the SEC Filings, the Company has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
patents, patent rights, trade secrets, know-how, proprietary techniques,
including processes and substances, trademarks, service marks, trade names and
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would be reasonably expected to have a Material
Adverse Effect.
2.14 Capitalization; Options and Warrants. The authorized capital stock of
the Company consists of eighty five million (85,000,000) shares of which eighty
million (80,000,000) shares are Common Stock, par value $.001 per share, and
five million (5,000,000) shares are Preferred Stock, par value $.001 per share.
Except as disclosed in the SEC Filings, the Company has not granted any option
(except for stock options and purchase rights granted under the Company's stock
option and employee stock purchase plans), warrants, rights (including
conversion or preemptive rights, except for stock purchased under the Company's
employee stock purchase plans), or similar rights to any person or entity to
purchase or acquire any rights with respect to any shares of capital stock of
the Company.
5
2.15 Nasdaq National Market Designation. The Common Stock is currently
included in the Nasdaq National Market of the Nasdaq Stock Market and the
Company knows of no reason or set of facts which is likely to result in the
termination of inclusion of the Common Stock in the Nasdaq National Market or
the inability of such stock to continue to be included in the Nasdaq National
Market. The Company shall use all commercially reasonable efforts to maintain
the Non-Quantitative Designation Criteria contained in Section 5 of Part III of
Schedule D of the NASD's Bylaws to the extent such criteria are within the
control of the Company. Nothing in this Section shall be interpreted to preclude
the Company from listing its Common stock on a national securities exchange in
lieu of the Nasdaq National Market.
2.16 Registration Rights. Except as set forth in the Registration Rights
Agreement, the Company is not under any obligation to register any of its
presently outstanding securities or any of its securities that may hereafter
issue.
2.17 Offering. The offer, sale and issuance of the Shares to be issued in
conformity with the terms of this Agreement constitute transactions exempt from
the registration requirements of Section 5 of the Securities Act of 1933, as
amended (the "Securities Act").
2.18 Accuracy of Representations and Warranties. No representation or
warranty by the Company contained in this Agreement, and no statement contained
in this Agreement or any exhibit, schedule, disclosure, certificate, list or
other instrument delivered or to be delivered to the Investor pursuant hereto or
in connection with the transactions contemplated hereby contains any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make the statements contained herein or therein not misleading.
3. Representations and Warranties of Investor. Investor hereby represents
and warrants that:
3.1 Organization, Good Standing and Qualification. Investor is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted.
3.2 Authorization. All corporate action on the part of Investor, its
officers and directors necessary for the authorization, execution and delivery
of this Agreement and the Registration Rights Agreement, the performance of all
obligations of Investor hereunder and thereunder has been taken or will be taken
prior to the Closing, and this Agreement and the Registration Rights Agreement
constitute valid and legally binding obligations of Investor enforceable in
accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting the enforcement of creditors' rights generally, or (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
3.3 Purchase Entirely for Own Account. This Agreement is made with Investor
in reliance upon Investor's representation to the Company, which by Investor's
execution of this Agreement Investor hereby confirms, that the Shares to be
received by Investor
6
will be acquired for investment for Investor's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the
Securities Act or the California Corporate Securities Law of 1968. By executing
this Agreement, Investor further represents that Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares. Investor represents that it has full power and
authority to enter into this Agreement.
3.4 Investment Experience. Investor acknowledges that it is able to fend
for itself, can bear the economic risk of its investment and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Shares. Investor also represents
it has not been organized for the purpose of acquiring the Shares.
3.5 Accredited Investor. Investor is an "accredited investor" within the
meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.6 Restricted Securities. Investor understands that the Shares it is
purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Shares may be resold without registration under the
Securities Act, only in certain limited circumstances. In this connection,
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
3.7 Further Limitations on Disposition. Without in any way limiting the
representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Shares unless and until the transferee
has agreed in writing for the benefit of the Company to be bound by Sections 3.7
and 6.1 (except that Section 6.1 shall not apply to a transferee in a registered
public offering or a sale under Rule 144) of this Agreement and the Registration
Rights Agreement, if applicable, and:
(a) There is then in effect a Registration Statement under the Securities
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) (i) Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a reasonably detailed
statement of the circumstances surrounding the proposed disposition (for
purposes of securities law compliance), and (ii) if reasonably requested by the
Company, such Investor shall have furnished the Company with an opinion of
counsel (which may be Investor's inside counsel), in form and substance
reasonably satisfactory to the Company, that such disposition will not require
registration of such shares under the Securities Act. It is agreed that the
Company will not require opinions of counsel for transactions made pursuant to
Rule 144 except in unusual circumstances.
7
3.8 Legends. It is understood that the certificates evidencing the Shares
may bear one or all of the following legends:
(a) "These securities have not been registered under the Securities Act of
1933. They may not be sold, offered for sale, pledged or hypothecated in the
absence of a registration statement in effect with respect to the securities
under such Act or an opinion of counsel satisfactory to the Company that such
registration is not required or unless sold pursuant to Rule 144 of such Act."
(b) "These securities are subject to certain transfer restrictions
contained in a certain Stock Purchase Agreement dated as of September 30, 1999
as amended from time to time, a copy of which may be obtained from the
corporation without charge."
To the extent that such legends are no longer applicable, the Company shall
cause its transfer agent to remove the legends upon a permitted transfer by
Investor.
3.9 Governmental Consents. No consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority is required on the part of
Investor in connection with Investor's valid execution, delivery and performance
of this Agreement or the Registration Rights Agreement or the issuance of the
Shares, except for any filings under any applicable state securities laws and
except for any filing under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 as amended.
4. Conditions of Investor's Obligations at Closing. The obligations of
Investor under subsection 1.1 of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions, the waiver of
which shall not be effective without the consent of Investor thereto:
4.1 Representations and Warranties. The representations and warranties of
the Company contained in Section 2 shall be true and correct on and as of the
Closing with the same force and effect as though such representations and
warranties had been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing, all
corporate or other proceedings in connection with the transactions contemplated
at the Closing and all documents incident thereto shall be reasonably
satisfactory in form and in substance to Investor.
4.3 Compliance Certificate. An officer of the Company shall have delivered
to Investor a certificate certifying that (a) the conditions specified in
Sections 4.1 and 4.2 have been fulfilled, and (b) the Company has not filed a
petition in bankruptcy or insolvency or for reorganization or for an arrangement
or for the appointment of a receiver or trustee of its assets, nor is the
Company aware of any events or action that would make any such filing or
arrangement imminent.
8
4.4 Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to
Investor and it shall have received all such counterpart original and certified
or other copies of such documents as they may reasonably request.
4.5 Blue Sky. The Company shall have obtained all necessary Blue Sky law
permits and qualifications, or secured an exemption therefrom, required by any
state for the offer and sale of the Shares.
4.6 Shares. The Company shall have delivered to Investor the Shares.
4.7 Registration Rights Agreement. The Company shall have entered into the
Registration Rights Agreement.
4.8 Opinion of Company Counsel. Investor shall have received an opinion
from the Company's securities counsel, dated as of the Closing, in the form
attached hereto as Schedule B.
5. Conditions of the Company's Obligations at Closing. The obligations of
the Company to Investor under this Agreement are subject to the fulfillment on
or before the Closing of each of the following conditions by Investor:
5.1 Representations and Warranties. The representations and warranties of
Investor contained in Section 3 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the Closing.
5.2 Performance. Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing, all
corporate or other proceedings in connection with the transactions contemplated
at the Closing and all documents incident thereto shall be reasonably
satisfactory in form and in substance to the Company.
5.3 Compliance Certificate. An officer of Investor shall have delivered to
the Company a certificate certifying that the conditions specified in Sections
5.1 and 5.2 have been fulfilled.
5.4 Payment of Purchase Price. Investor shall have delivered the purchase
price specified in Section 1.1.
5.5 Registration Rights Agreement. The Investor shall have entered into the
Registration Rights Agreement.
6. Covenants of Investor.
6.1 Transfer Restriction. Notwithstanding any rights under the Registration
Rights Agreement, Investor hereby agrees that during the time period commencing
as of the
9
Closing and ending on *** (with the time period being referred to as the
"Restricted Period"), without the prior written consent of the Company (which
may be withheld in its sole discretion), neither it nor any affiliate (as
defined in Rule 144 of the Act promulgated by the SEC ("Affiliate")) shall,
directly or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any of the
Shares ("Restricted Securities"). Notwithstanding the foregoing, transfers
solely among Investor Affiliates shall not be subject to the transfer
restrictions set forth in this Section 6.1 provided the Affiliate transferee
agrees in writing to be bound by this Section 6.1. In order to enforce the
foregoing covenant, the Company may impose legends and/or stop-transfer
instructions with respect to the Restricted Securities held by Investor or any
Affiliate (and the Restricted Securities of every other person subject to the
foregoing restriction) until the end of such period.
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations and covenants
of the Company and Investor contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing and
shall in no way be affected by any investigation of the subject matter thereof
made by or on behalf of the Investor or the Company.
7.2 Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any of the Shares sold hereunder). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing by facsimile or personal delivery
to the party to be notified or by Federal Express or other overnight package
delivery service or registered or certified mail, postage prepaid and addressed
to the party to be notified at the following addresses, or at such other address
as such party may designate by five (5) days' advance written notice to the
other parties (with notice deemed given upon receipt):
- -----------------
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
10
If to the Company:
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, California 92121
Attn: William L. Respess, Esq.
Fax No: (858) 550-1825
with a copy to:
Brobeck, Phleger & Harrison LLP
555 West C Street, Suite 1300
San Diego, California 92101
Attn: Faye H. Russell, Esq.
Fax No.: (619) 234-3848
If to Investor:
Elan International Services, Ltd.
102 St. James Court
Flatts Smiths Parish
Bermuda, FL 04
Attn: Kevin Insley
Fax No: (441) 292-2224
with copies to:
Elan Corporation, plc
Lincoln House
Lincoln Place
Dublin 2, Ireland
Attn: William F. Daniel
Fax No: 353-1-662-4950
and
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: William M. Harnett, Esq.
Fax No: (212) 269-5420
7.7 Finder's Fee. Each party represents that it neither is nor will be
obligated for any finders' fee or commission in connection with this
transaction. Each party agrees to indemnify and to hold harmless the other from
any liability for any commission or compensation
11
in the nature of a finders' fee (and the costs and expenses of defending
against such liability or asserted liability) for which the indemnifying party
or any of its officers, partners, employees, or representatives is responsible.
7.8 Expenses. Irrespective of whether the Closing is effected, each party
shall pay all costs and expenses that it incurs with respect to the negotiation,
execution, delivery and performance of this Agreement. Notwithstanding the
foregoing, the Company shall pay any and all stamp, transfer and other similar
taxes payable or determined to be payable in connection with the execution and
delivery of this Agreement or the original issuance of the Shares, and shall
save and hold the Investor harmless from and against any and all liabilities
with respect to or resulting from any delay in paying, or omission to pay, such
taxes.
7.9 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and Investor. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding, each
future holder of all such securities, and the Company.
7.10 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations, or
covenants except as specifically set forth herein or therein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INVESTOR:
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Kevin Insley
Kevin Insley
President and Chief Financial Officer
THE COMPANY:
LIGAND PHARMACEUTICALS INCORPORATED
By: /s/ William L. Respess
William L. Respess
Senior Vice President, General Counsel
and Secretary
[SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT]
SCHEDULE A
SCHEDULE OF EXCEPTIONS
This Schedule of Exceptions is made and given pursuant to Section 2 of the
Stock Purchase Agreement dated as of September 30, 1999 (the "Agreement"). The
section numbers in this Schedule of Exceptions correspond to the section numbers
in the Agreement; however, any information disclosed herein under any section
number shall be deemed to be disclosed and incorporated into any other section
number under the Agreement where such disclosure would otherwise be appropriate.
Any terms defined in the Agreement shall have the same meaning when used in this
Schedule of Exceptions as when used in the Agreement unless the context
otherwise requires.
Nothing herein constitutes an admission of any liability or obligation of
the Company nor an admission against the Company's interest. The inclusion of
any agreement or other matter herein or any exhibit hereto should not be
interpreted as indicating that the Company has determined that such an agreement
or other matter is necessarily material to the Company. Investor acknowledges
that certain information contained in this schedule may constitute material
confidential information relating to the Company which may not be used for any
purpose other than in connection with Investor's decision to purchase certain
securities of the Company pursuant to the Agreement.
Section 2.1 - Organization, Good Standing and Qualification
In addition to the subsidiaries disclosed in the Form 10-K, the Company has
the following subsidiaries: Ligand JVR, Inc., Ligand Pharmaceuticals
International, Inc., Ligand Pharmaceuticals UK Limited and Marathon
Biopharmaceuticals, Inc.
Section 2.2 - Authorization
None
Section 2.3 - Valid Issuance of Shares
None
Section 2.4 - SEC Reports
2.4(e) On November 9, 1998, the Company and Elan Corporation, plc made an
agreement under which Ligand acquired certain rights to market Morphelan(TM), a
sustained release morpholine formulation. Under that agreement, Ligand agreed to
pay Elan certain consideration if milestones were met with respect to its
development and to undertake a limited commitment to conduct clinical trials for
Morphelan(TM). On August 20, 1999, the Company and Elan agreed to amend the
agreement relating to the payment of milestones and Ligand's commitment to
conduct clinical trials. The result of these amendments is that, if new
milestones are met, Ligand may owe Elan up to an additional $2,000,000 more than
would have been required under the original agreement.
Schedule A-1
Section 2.5 - Contracts
None
Section 2.6 - Compliance
None
Section 2.7 - Compliance with Other Instruments
None
Section 2.8 - Governmental Consents
None
Section 2.9 - Litigation
Seragen, Inc., a subsidiary of the Company, and the Company, are parties to
Sergio M. Oliver, et al. v. Boston University, et al., a putative shareholder
class action filed in the Court of Chancery in the State of Delaware in and for
New Castle County, C.A. No. 16570NC, by Sergio M. Oliver and others against
Boston University and others, including Seragen and its subsidiary Seragen
Technology, Inc. The initial complaint was brought as a direct shareholder
action and set forth causes of action related to alleged self-dealing
transactions involving Seragen and certain of its shareholders and directors,
and did not name the Company as a defendant. The complaint sought unspecified
damages and equitable relief to enjoin the holding of the meeting of Seragen's
shareholders scheduled for August 12, 1998, for the purpose of considering and
approving the transactions contemplated by the Agreement and Plan of
Reorganization among the Company, Seragen and Knight Acquisition Corp. (the
"Merger Agreement"), and other matters. In order to permit a timely decision
with respect to their request that the court enjoin the holding of the August
12, 1998 shareholders meeting, the plaintiffs sought expedited proceedings.
Following briefing by defendants and plaintiffs with respect to the plaintiffs'
request for expedited proceedings, the Vice Chancellor on August 7, 1998 entered
an order denying plaintiffs' motion for expedited proceedings, thereby
effectively denying plaintiffs' request to preliminarily enjoin the August 12,
1998 shareholders meeting. On August 12, 1998, the Company and Seragen announced
the closing under the Merger Agreement, whereby a wholly-owned subsidiary of the
Company was merged with Seragen. Plaintiffs subsequently amended the complaint
to recast their suit as a class action, and to add the Company as a defendant.
The amended complaint alleged that the Company aided and abetted purported
breaches of fiduciary duty by the Seragen related defendants in connection with
the merger and made certain misrepresentations in related proxy materials.
Defendants thereafter filed motions to dismiss all claims. Rather than oppose
the motion, plaintiffs sought and obtained permission to file a second amended
complaint asserting essentially the same claims with a shorter class period. On
August 23, 1999, defendants again filed motions to dismiss all claims of the
second amended complaint. The motions are now pending before the Court of
Chancery while briefing is completed.
Schedule A-2
Section 2.10 - Permits
None
Section 2.11 - Taxes
None
Section 2.12 - Title
None
Section 2.13 - Intellectual Property
The Company has become aware that a United States patent has been issued
to, and foreign counterparts have been filed by, Hoffman LaRoche ("LaRoche")
which covers pharmaceutical uses of 9-cis-retinoic acid (LGD1057) which may
conflict with the Company's right under the patent applications. The U.S. Patent
and Trademark Office ("PTO") has informed the Company that the overlapping
claims are patentable to the Company and has initiated an interference
proceeding to determine whether the Company or LaRoche is entitled to a patent
by having been first to invent the common subject matter. The Company cannot be
assured of a favorable outcome in the interference proceeding because of factors
not known at this time which may impact the outcome. In addition, the
interference proceeding may delay the decision of the PTO regarding the
Company's application for the current formulations of Oral and Topical Panretin
(LGD1057) products. The LaRoche patent does not cover the use of the current
formulations of Oral and Topical Panretin (LGD1057) to treat leukemias such as
APL and sarcomas such as KS, or the treatment of skin diseases such as
psoriasis. If the Company does not prevail in the interference proceeding, the
LaRoche patent might block the Company's use of Oral Panretin (LGD1057) in
certain cancers, and the Company may not be able to obtain patent protection for
the Oral and Topical Panretin (LGD1057) products.
The Company has received notice from Oncogene Science, Inc. ("OSI") stating
that the activities of the Company's STATs program may infringe one or more
patents issued to OSI. The Company believes a number of companies in the
biotechnology industry received similar letters. The Company has received a
preliminary opinion of its outside patent counsel that its activities do not
infringe OSI's patents.
Section 2.14 - Capitalization; Options and Warrants
None
Section 2.15 - Nasdaq National Market Designation
None
Section 2.16 - Registration Rights
None
Schedule A-3
Section 2.17 - Offering
None
Section 2.18 - Accuracy of Representations and Warranties
None
Schedule A-4