SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
LIGAND PHARMACEUTICALS INCORPORATED
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(Name of Issuer)
Common Stock, $0.001 par value
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(Title of Class of Securities)
53220K 20 7
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(CUSIP Number)
William F. Daniel
Elan Corporation, plc
Lincoln House
Lincoln Place
Dublin 2, Ireland
(353) 1-709-4000
Copy to:
Lisabeth F. Murphy, Esq.
Athena Neurosciences, Inc.
800 Gateway Boulevard
South San Francisco, California 94080
(650) 877-0900
Telecopy: (650) 875-3620
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 9, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box / /.
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP No. 53220K 20 7
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES
ONLY)
Elan Corporation, plc
I.R.S. Employer Identification No.: NA
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
N/A
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
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WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) N/A
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ireland
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7 SOLE VOTING POWER
NUMBER OF 5,041,160
SHARES __________________________________________________
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH None
REPORTING __________________________________________________
PERSON WITH 9 SOLE DISPOSITIVE POWER
5,041,160
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10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,041,160
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.8 (based upon outstanding common stock as of October 31,
1998)
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14 TYPE OF REPORTING PERSON
CO
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Item 1. Security and Issuer.
This statement relates to the Common Stock, $0.001 par value ("Common
Stock"), of Ligand Pharmaceuticals Incorporated (the "Issuer"), a Delaware
corporation, whose principal executive offices are located at 10275 Science
Center Drive, San Diego, California 92121.
Item 2. Identity and Background.
This Form 13-D is filed on behalf of Elan Corporation, plc ("Elan"), a
public limited company organized and existing under the laws of Ireland.
Elan is a leading worldwide specialty pharmaceutical company. The principal
business and office address of Elan is: Lincoln House, Lincoln Place, Dublin 2,
Ireland. Information as to the name, business address, present principal
occupation or employment and organization in which such occupation or employment
is conducted and citizenship of each director, executive officer and controlling
person of Elan is annexed hereto as Schedule A, and is incorporated herein by
reference.
Neither Elan nor, to the best of Elan's knowledge, any of the persons
listed on Schedule A hereto, has during the last five years (i) been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors)
or (ii) been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Item 3. Sources and Amount of Funds or Other Consideration.
Pursuant to a Stock Purchase Agreement, dated as of September 30, 1998, by
and between the Issuer and Elan International Services, Ltd., a wholly-owned
subsidiary of Elan ("EIS"), EIS acquired 1,278,970 shares of Common Stock (the
"First Shares") on September 30, 1998 for an aggregate cash purchase price of
$14,900,000.50. In addition, pursuant to a Securities Purchase Agreement, dated
as of November 6, 1998, by and among the Issuer, EIS and Elan (the "Purchase
Agreement") (a copy of which is filed as an exhibit to this Schedule 13D), on
November 9, 1998, EIS acquired (i) an additional 437,768 shares of Common Stock
(the "Second Shares") for an aggregate cash purchase price of $5,099,997.20 and
(ii) zero coupon convertible senior notes due 2008 of the Issuer with an 8.0%
per annum yield to maturity (the "Notes") and an issue price of $30,000,000 (the
"Initial Notes"). The issue price plus all accrued interest on the Initial Notes
is convertible into Common Stock of the Issuer at any time at the option of EIS
at a conversion price of $14.00 per share. Finally, pursuant to a Development,
License and Supply Agreement, dated as of November 6, 1998 (the "License
Agreement") (a copy of which is filed as an exhibit to this Schedule 13D), by
and between the Issuer and Elan, on November 9, 1998, Elan acquired (i) 429,185
shares of Common Stock of the Issuer (the "Third Shares") and (ii) Notes of the
Issuer (the
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"Additional Notes" and, together with the First Shares, the Second Shares, the
Third Shares and the Initial Notes, the "Securities") with an issue price of
$10,000,000, in each case, in lieu of certain cash license fees payable by the
Issuer to Elan pursuant to the License Agreement. The issue price plus all
accrued interest on the Additional Notes is convertible into Common Stock of the
Issuer at any time at the option of Elan at a conversion price of $14.00 per
share. The First Shares, the Second Shares and the Initial Notes were purchased
by EIS with general corporate funds. None of such funds were borrowed.
Item 4. Purpose of Transaction.
Elan acquired the Securities for the purpose of making an investment in the
Issuer and in connection with the execution of the License Agreement.
Each of the Initial Notes and the Additional Notes are convertible into
Common Stock of the Issuer at the option of EIS and Elan, respectively, at a
conversion price of $14.00 per share. The number of shares of Common Stock into
which the Initial Notes and the Additional Notes may be converted is based upon
the quotient obtained by dividing the issue price thereof plus all accrued
interest thereon to the conversion date by $14.00.
The Issuer has granted to Elan and EIS certain registration rights for the
First Shares, the Second Shares and the Third Shares and the shares of Common
Stock issuable upon conversion of the Initial Notes and the Additional Notes.
Pursuant to the Purchase Agreement, subject to certain conditions, at the
Issuer's request, EIS will purchase additional Notes with an issue price of up
to $70,000,000 on or before December 31, 1999. Such Notes will be convertible
into Common Stock of the Issuer at the option of EIS at a conversion price equal
to the average of the closing prices of the Common Stock for the 20 consecutive
trading days immediately preceding the issue date of such Notes, plus a premium;
provided that the conversion price of such Notes will not be less than $14.00 or
greater than $20.00 per share. In addition, pursuant to the License Agreement,
Elan may, at the option of the Issuer, acquire additional shares of Common Stock
in lieu of certain cash fees which may become payable by the Issuer to Elan
pursuant thereto upon the achievement of certain milestones.
Other than as set forth above, neither Elan nor EIS has any present plans
or intentions which would result in or relate to any of the transactions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
The foregoing descriptions of the Purchase Agreement and the License
Agreement do not purport to be complete and are qualified in their entirety by
reference to the full text thereof, copies of which are filed herewith as
Exhibits 1 and 2 and are incorporated herein by reference.
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Item 5. Interest in Securities of the Issuer.
(a) Elan is the beneficial owner of 5,041,160 shares of Common Stock, or
approximately 11.8%, of the outstanding shares of Common Stock (based upon the
outstanding shares of Common Stock as of October 31, 1998 and the shares of
Common Stock issuable upon conversion of the Initial Notes and the Additional
Notes). To the best knowledge of Elan, no other person named in Item 2 above
beneficially owns any shares of Common Stock of the Issuer.
(b) Elan has sole power to vote and sole authority to dispose or direct the
disposition of all shares of Common Stock reported by this Schedule 13D.
(c) See Items 3 and 4 above.
(d) N/A
(e) N/A
Item 6. Contracts, Arrangements, Understandings
or Relationships with Respect to
Securities of the Issuer.
There are no contracts, arrangements, understandings or relationships
described in Item 6 of Schedule 13D.
Item 7. Items to be Filed as Exhibits.
Exhibit 1* Securities Purchase Agreement, dated as of November 6, 1998, by
and among Elan, EIS and the Issuer.
Exhibit 2* Development, License and Supply Agreement, dated as of
November 9, 1998, by and between Elan and the Issuer.
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* Certain confidential portions of these Exhibits were omitted by means of
marking such portions with an asterisk (the "Mark"). These Exhibits have
been filed separately with the Secretary of the Commission without the Mark
pursuant to Elan's Request for Confidential Treatment under Rule 24b-2 of
the Securities Exchange Act of 1934.
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<PAGE>
Signature
The undersigned certifies that, after reasonable inquiry and to the best of
its knowledge and belief, the information set forth in this statement is true,
complete and correct.
January 6, 1999
ELAN CORPORATION, PLC
By: /s/ William F. Daniel
-----------------------------------
Name: William F. Daniel
Title: Group Financial Controller
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<PAGE>
Schedule A
The (a) name, (b) business address, (c) principal occupation or employment
and the organization in which such occupation or employment is conducted and (d)
citizenship of each director (other than Messrs. Armen, Balog, Boushel, Crowley,
Gillespie, McIntyre, McLaughlin, Selkoe and Thornburgh) and officer of Elan
Corporation, plc ("Elan") are set forth in the following table:
1. (a) Donal J. Geaney
(b) Lincoln House, Lincoln Place, Dublin 2, Ireland
(c) Director, Chairman of the Board and Chief Executive
Officer of Elan
(d) Ireland
2. (a) John Groom
(b) Lincoln House, Lincoln Place, Dublin 2, Ireland
(c) Director, President and Chief Operating Officer of Elan
(d) United Kingdom
3. (a) Thomas G. Lynch
(b) Lincoln House, Lincoln Place, Dublin 2, Ireland
(c) Director, Executive Vice President and Chief Financial
Officer of Elan
(d) United Kingdom
4. (a) William F. Daniel
(b) Lincoln House, Lincoln Place, Dublin 2, Ireland
(c) Group Vice President, Finance and Group Controller of Elan
(d) Ireland
5. (a) Lisabeth F. Murphy
(b) 800 Gateway Boulevard, South San Francisco, CA 94080
(c) Vice President and General Counsel of Elan
(d) United States
6. (a) Mark A. Pearson
(b) Lincoln House, Lincoln Place, Dublin 2, Ireland
(c) Partner, McCann FitzGerald; Secretary of Elan
(d) Ireland
The (a) name, (b) business address, (c) principal occupation or
employment and the organization in which such occupation or employment is
conducted and (d) citizenship of each director (other than Messrs. Geaney,
Groom, and Lynch) are set forth in the following table:
1. (a) Garo H. Armen, Ph.D.
(b) 630 Fifth Avenue, Suite 2167, New York, New York 10111
(c) Managing General Partner, Armen Partners, L.P.; Chairman of
the Board and Chief Executive Officer of Antigenics, LLC
(d) United States
A-1
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2. (a) James Balog
(b) c/o Elan Corporation, plc, Lincoln House, Lincoln Place,
Dublin 2, Ireland
(c) Retired
(d) United States
3. (a) Brendan E. Boushel
(b) 9 Upper Mount Street, Dublin 2, Ireland
(c) Retired
(d) Ireland
4. (a) Laurence G. Crowley
(b) c/o Elan Corporation, plc, Lincoln House, Lincoln Place,
Dublin 2, Ireland
(c) Executive Chairman, Michael Smurfit Graduate School of
Business of University College Dublin
(d) Ireland
5. (a) Alan R. Gillespie, Ph.D.
(b) c/o Elan Corporation, plc, Lincoln House, Lincoln Place,
Dublin 2, Ireland
(c) Managing Director, Goldman Sachs International
(d) United Kingdom
6. (a) Kevin McIntyre, M.D.
(b) c/o Elan Corporation, plc, Lincoln House, Lincoln Place,
Dublin 2, Ireland
(c) Associate Clinical Professor of Medicine at Harvard
Medical School
(d) United States
7. (a) Kyran McLaughlin
(b) Davy House, 49 Dawson Street, Dublin 2, Ireland
(c) Joint Chief Executive, Davy Stockbrokers
(d) Ireland
8. (a) Dennis J. Selkoe, M.D.
(b) c/o Elan Corporation, plc, Lincoln House, Lincoln Place,
Dublin 2, Ireland
(c) Professor of Neurology and Neuroscience at Harvard Medical
School
(d) United States
A-2
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9. (a) Richard L. Thornburgh
(b) c/o Elan Corporation, plc, Lincoln House, Lincoln Place,
Dublin 2, Ireland
(C) Counsel to the law firm of Kirkpatrick & Lockhart LLP
(d) United States
10. (a) Kieran McGowan
(b) c/o Elan Corporation, plc, Lincoln House, Lincoln Place,
Dublin 2, Ireland
(c) Retired
(d) Ireland
A-3
<PAGE>
Exhibit Index
Exhibit No. Exhibit
1* Securities Purchase Agreement, dated
as of November 6, 1998, by and among
Elan Corporation, plc and Ligand
Pharmaceuticals Incorporated.
2* Development, License and Supply Agreement, dated as of November 9,
1998, by and between Elan Corporation, plc and Ligand Pharmaceuti-
cals Incorporated.
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* Certain confidential portions of these Exhibits were omitted by means of
marking such portions with an asterisk (the "Mark"). These Exhibits have
been filed separately with the Secretary of the Commission without the Mark
pursuant to Elan's Request for Confidential Treatment under Rule 24b-2 of
the Securities Exchange Act of 1934.
Exhibit 1
CONFIDENTIAL TREATMENT REQUESTED
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of November 6,
1998, by and among Ligand Pharmaceuticals Incorporated, a Delaware corporation
(the "Company"), Elan International Services, Ltd., a Bermuda corporation (the
"Purchaser"), and Elan Corporation, plc, a public limited company organized
under the laws of Ireland ("Elan").
RECITALS
WHEREAS, the Company, the Purchaser and Elan have entered into a binding
letter of intent, dated as of September 28, 1998 (the "Letter of Intent");
WHEREAS, pursuant to the Letter of Intent, the Purchaser has agreed to
purchase from the Company shares of the Company's common stock, par value $0.001
per share (the "Common Stock"), and Zero Coupon Convertible Senior Notes due
2008 (the "Notes") of the Company, in each case, on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
SECTION 1. Purchase and Sale of Common Stock and Notes.
(a) Shares and Initial Notes. On the basis of the representations,
warranties, agreements and covenants herein contained and subject to the terms
and conditions herein set forth, at the Initial Closing (as defined in Section
2(a)) the Company shall sell to the Purchaser, and the Purchaser shall purchase
from the Company, (i) 437,768 shares of Common Stock (the "Shares") at a
purchase price of $11.65 per share (the "Share Purchase Price"), (ii) Notes (the
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"Initial Notes") hav-ing an issue price of $30,000,000 (the "Initial Note Issue
Price") and the Initial Note Conversion Price (as defined in Section 12(a)), to
be issued in the form of the promissory note attached hereto as Exhibit A and
(iii) Notes (the "License Notes") having an issue price of $10,000,000 (the
"License Note Issue Price") and the License Note Conversion Price (as defined in
Section 12(b)), to be issued in the form of the promissory note attached hereto
as Exhibit A and in lieu of the payment by the Company to Elan of $10,000,000 in
cash pursuant to clause 10.1.1(2) of the License Agreement (as defined in
Section 6(f)).
(b) Additional Notes. On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company may, upon [ * * * ] on or prior to
December 31, 1999 and upon not less than 60 days' prior written notice (the
"Purchase Request"), request that the Purchaser purchase from the Company
additional Notes (the "Additional Notes" and, together with the Initial Notes
and the License Notes, the "Securities"), having an aggregate issue price of not
more than $70,000,000 (the aggregate issue price of the Additional Notes to be
issued and sold on each such occasion being referred to herein as the
"Additional Note Issue Price") and having the Additional Note Conversion Price
(as defined in Section 12(c)), to be issued in the form of the promissory note
attached hereto as Exhibit A; provided, however, that the gross proceeds to be
received by the Company as a result of the issuance and sale of such Additional
Notes shall be used solely to, without duplication, (i) make all remaining
milestone payments, if any, due and payable to the stockholders, creditors and
other obligees of Seragen, Inc. ("Seragen"), pursuant to and in accordance with
the terms of that certain Agreement and Plan of Reorganization, dated as of May
11, 1998, by and among Seragen, the Company and Knight Acquisition Corp., as in
effect on the date of this Agreement, or as amended with the Purchaser's written
consent (the "Seragen Payments"), (ii) pay the purchase price for the assets of
Marathon Biopharmaceuticals, LLC ("Marathon"), pursuant to and in accordance
with the terms of that certain Option and Asset Purchase Agreement, dated as of
May 11, 1998, by and among the Company, Marathon, 520 Commonwealth Avenue Real
Estate Corp. and 660 Corporation, as in effect on the date of this Agreement, or
as amended with the Purchaser's written consent (the "Marathon Payment"), and
(iii) otherwise finance the development of the Company's business. Each Purchase
Request shall set forth (i) the proposed closing date of such purchase and sale
of Additional Notes, which shall be a date at least 60 days but not more than
180
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days prior to such Additional Closing Date (each such date, an "Additional
Closing Date"), (ii) the Additional Note Issue Price of the Additional Notes
proposed to be issued and sold by the Company on such Additional Closing Date
and (iii) a description in reasonable detail of the transaction or transactions
pursuant to which the Company proposes to utilize the gross proceeds to be
received by the Company from such proposed issuance and sale of Additional
Notes, which description shall be accompanied by all documents and agreements
entered into or proposed to be entered into in connection with such transaction
or transactions, to the extent such documents or any preliminary drafts thereof
are available at the time such Purchase Request is provided by the Company.
(c) License Shares. On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, pursuant to the License Agreement, the Company may,
at its option, issue to Elan shares of Common Stock (the "License Shares") in
lieu of making cash payments thereunder (each such issuance, a "License Share
Issuance") at the times set forth in, and in accordance with the terms of,
clauses 10.1.1(1), (3) and (4) of the License Agreement.
SECTION 2. Closings.
(a) Initial Closing. The closing of the sale and purchase of each of the
Shares, the Initial Notes, the License Notes and the License Shares to be issued
under clause 10.1.1(1) of the License Agreement (the "Initial Closing") shall
take place at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York,
NY 10005, at 10:00 AM, New York City time, on November 9, 1998, or such other
time and place as the Company and the Purchaser may agree (the "Initial Closing
Date"). At the Initial Closing, the Company shall deliver to the Purchaser (i) a
certificate or certificates, registered in the name of the Purchaser,
representing the Shares, against payment of the Share Purchase Price, (ii) one
or more promissory notes in the form attached hereto as Exhibit A, registered in
the name of the Purchaser, representing the Initial Notes, against payment of
the Initial Note Issue Price and (iii) one or more promissory notes in the form
attached hereto as Exhibit A, registered in the name of the Purchaser,
representing the License Notes.
(b) Additional Closings. The closing of each purchase and sale of
Additional Notes (each such closing, an "Additional Closing") shall take place
at the offices of Ca-
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hill, Gordon & Reindel, 80 Pine Street, New York, NY 10005, at 10:00 AM, New
York City time, on the Additional Closing Date set forth in the Purchase Notice
delivered to the Purchaser by the Company in accordance with Section 1(b), or
such other time and place as the Company and the Purchaser may agree. At each
Additional Closing, the Company shall deliver to the Purchaser one or more
promissory notes in the form attached hereto as Exhibit A, registered in the
name of the Purchaser and/or in the name of one or more of its Affiliates (as
defined in Section 14(a)) (subject to compliance with Regulation S under the
Securities Act of 1933, as amended (the "Securities Act")) and in such
denomination or denominations as the Purchaser may direct in writing,
representing such Additional Notes, against payment of the Additional Note Issue
Price.
(c) License Share Issuances. Each License Share Issuance shall take place
at the offices of Cahill Gordon & Reindel, 80 Pine Street, New York, NY 10005,
at 10:00 AM, New York City time, on the applicable dates set forth in clauses
10.1.1(1), (3) and (4) of the License Agreement, or such other time and place as
the Company and Elan may agree (each such date, a "License Share Issuance
Date"). At each such License Share Issuance, the Company shall deliver to Elan a
certificate or certificates, registered in the name of Elan and/or in the name
of one or more of its Affiliates, (subject to compliance with Regulation S under
the Securities Act) as Elan may direct in writing, representing the License
Shares to be issued pursuant to and in accordance with the License Agreement.
(d) Payments. Each payment required to be made by the Purchaser to the
Company pursuant to this Section 2 shall be made by wire transfer in immediately
available funds to an account designated in writing by the Company
SECTION 3. Representations of the Company. Except as otherwise set forth in
the Schedule of Exceptions attached hereto, the Company represents and warrants
to and agrees with the Purchaser as follows:
(a) Each of the Company and the Subsidiaries (as defined in paragraph
(f) of this Section 3) is duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
requisite corporate power and authority to own its properties and conduct
its business as now being conducted. Each of the Company and the
Subsidiaries is duly qualified to do business as a foreign corporation and
is in good standing in all other jurisdictions where the ownership or
leasing
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of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, liabilities (contingent or otherwise), operations,
condition (financial or otherwise), solvency, properties, prospects or
material agreements of the Company and its Subsidiaries, taken as a whole
(any such event, a "Material Adverse Effect").
(b) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Initial
Notes and the License Notes. The Initial Notes and the License Notes have
each been duly and validly authorized by the Company and, when executed by
the Company and delivered to the Purchaser in accordance with the terms of
this Agreement, will constitute valid and legally binding obligations of
the Company, enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(c) Other than any stockholder approval that may be required by law,
the Company has all requisite corporate power and authority to execute,
deliver and perform each of its obligations under the Additional Notes. The
Additional Notes, if and when issued, will have been duly and validly
authorized by the Company and, when executed by the Company and delivered
to the Purchaser in accordance with the terms of this Agreement, will
constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought.
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under this Agreement.
This Agreement has been duly and validly authorized, executed and delivered
by the Company and constitutes a valid and legally binding agree-
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ment of the Company, enforceable against the Company in accordance with its
terms, except that the enforcement hereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(e) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement (as defined in Section 6(d) hereof). The Registration Rights
Agreement has been duly and validly authorized by the Company and, when
executed and delivered by the Company, will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that (A) the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought and (B) any
rights to indemnity or contribution thereunder may be limited by federal
and state securities laws and public policy considerations.
(f) The authorized, issued and outstanding capitalization of the
Company as of the date hereof consists of: (i) 80,000,000 shares of Common
Stock, of which 42,526,245 shares were issued and outstanding as of
September 30, 1998, and (ii) 5,000,000 shares of convertible preferred
stock (80,000 shares of which have been designated as "Series A
Participating Preferred Stock"), of which no shares are issued and
outstanding as of the date of this Agreement; all of the subsidiaries of
the Company are listed on Schedule 3(f)(i) hereto (each, a "Subsidiary" and
collectively, the "Subsidiaries"); all of the outstanding shares of capital
stock of the Company and the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights; all of the outstanding
shares of capital stock of the Subsidiaries are owned, directly or
indirectly, by the Company, free and clear of all liens, encumbrances,
equities and claims or restrictions on transferability (other than those
imposed by the Securities Act and the securities or "Blue Sky" laws of
certain jurisdictions) or voting; except for
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the Securities and except as described in the SEC Reports (as defined in
paragraph (m) of this Section 3) or as otherwise set forth on Schedule
3(f)(ii) hereto, there are no (i) options, warrants or other rights to
purchase, (ii) agreements or other obligations to issue or (iii) other
rights to convert any obligation into or exchange any securities for,
shares of capital stock of or ownership interests in the Company or any of
the Subsidiaries; except for the Subsidiaries, the Company does not own,
directly or indirectly, any shares of capital stock or any other equity or
long-term debt securities or have any equity interest in any firm,
partnership, joint venture or other entity.
(g) The Shares, when issued, sold and delivered to the Purchaser at
the Initial Closing against payment therefor in accordance with the terms
of this Agreement, will be duly and validly issued, fully paid and
nonassessable, will not be issued in violation of any preemptive or similar
rights and will be free of any liens, encumbrances or restrictions on
transfer other than those imposed by the Securities Act and applicable
state securities or "Blue Sky" laws.
(h) The License Shares, if and when issued and delivered to Elan in
accordance with the terms of this Agreement and the License Agreement, will
be duly and validly issued, fully paid and nonassessable, will not be
issued in violation of any preemptive or similar rights and will be free of
any liens, encumbrances or restrictions on transfer other than those
imposed by the Securities Act and applicable state securities or "Blue Sky"
laws.
(i) The shares of Common Stock issuable upon conversion of the Initial
Notes and the License Notes have been, and, upon the issuance of any
Additional Notes, the shares of Common Stock issuable upon conversion of
such Additional Notes will be, reserved for issuance upon such conversion
and, if and when issued upon such conversion, will be duly and validly
issued, fully paid and nonassessable, will not be issued in violation of
any preemptive or similar rights and will be free of any liens,
encumbrances or restrictions on transfer other than those imposed by the
Securities Act and applicable state securities or "Blue Sky" laws. The
shares of Common Stock issuable upon conversion of the Securities are
referred to herein as the "Conversion Shares."
<PAGE>
-8-
(j) No consent, approval, authorization or order of any court or
governmental agency or body or third party is required for the issuance and
sale by the Company of the Shares, the Conversion Shares, the License
Shares or the Securities or the consummation by the Company of the other
transactions contemplated hereby or by the Registration Rights Agreement
and, in the case of the Additional Notes and the License Shares, no such
consent, approval, authorization or order will be required upon any
issuance and sale thereof by the Company, except that no representation or
warranty is made with respect to filings required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), in
connection with the issuance of the License Shares or upon conversion of
the Securities. None of the Company or the Subsidiaries is (i) in violation
of its certificate of incorporation or bylaws, (ii) in breach or violation
of any statute, judgment, decree, order, rule or regulation applicable to
it or any of its properties or assets, except for any such breach or
violation which would not, individually or in the aggregate, have a
Material Adverse Effect, or (iii) in breach of or default under (nor has
any event occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the terms or
provisions of any indenture, mortgage, deed of trust, loan agreement, note,
lease, license, franchise agreement, permit, certificate, contract or other
agreement or instrument to which any of them is a party or to which any of
them or their respective properties or assets is subject (collectively,
"Contracts"), except for any such breach, default, violation or event which
would not, individually or in the aggregate, have a Material Adverse
Effect.
(k) None of the Company, the Subsidiaries, any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities
Act) or any person acting on its or their behalf has engaged in any
directed selling efforts (as that term is defined in Regulation S under the
Securities Act ("Regulation S")) with respect to the Shares, the Securities
or the License Shares; the Company, the Subsidiaries and their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Securities
Act) and any person acting on its or their behalf have complied and will
comply with the offering restrictions requirement of Regulation S.
<PAGE>
-9-
(l) The execution, delivery and performance by the Company of this
Agreement and the Registration Rights Agreement and the consummation by the
Company of the transactions contemplated hereby and thereby will not
conflict with or constitute or result in a breach of or a default under (or
an event which with notice or passage of time or both would constitute a
default under) or violation of any of (i) the terms or provisions of any
Contract, except for any such conflict, breach, default, violation or event
which would not, individually or in the aggregate, have a Material Adverse
Effect, (ii) the certificate of incorporation or bylaws of the Company or
any of the Subsidiaries or (iii) (assuming compliance with all applicable
state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Purchaser and Elan set forth in
Section 4 of this Agreement) any statute, judgment, decree, order, rule or
regulation applicable to the Company or any of the Subsidiaries or any of
their respective properties or assets, except for any such conflict, breach
or violation which would not, individually or in the aggregate, have a
Material Adverse Effect.
(m) The Company has filed with the Securities and Exchange Commission
(the "SEC") all required forms, reports, registration statements and
documents required to be filed by it with the SEC since December 31, 1996
(collectively, the "SEC Reports"), all of which complied as to form when
filed in all material respects with the applicable provisions of the
Securities Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as the case may be. As of their respective dates, the SEC
Reports (including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(n) The audited consolidated financial statements and unaudited
consolidated interim financial statements of the Company and the
Subsidiaries included or incorporated by reference in any of the SEC
Reports have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved,
except as otherwise stated therein, and present fairly, in all material
respects, the consolidated finan-
<PAGE>
-10-
cial position of the Company and the Subsidiaries at the dates thereof and
the consolidated results of operations and cash flows for the periods then
ended (subject, in the case of any unaudited interim financial statements,
to normal year-end adjustments and to the extent they include footnotes or
may be condensed or summary statements) and such audited financial
statements are accompanied by an unqualified opinion thereon by the
Company's independent auditors.
(o) Except as set forth on Schedule 3(o), there is not pending or, to
the knowledge of the Company, threatened any action, suit, proceeding,
inquiry or investigation to which the Company or any of the Subsidiaries is
a party, or to which the property or assets of the Company or any of the
Subsidiaries are subject, before or brought by any court, arbitrator or
governmental agency or body which, if determined adversely to the Company
or any such Subsidiary, would, individually or in the aggregate, have a
Material Adverse Effect, or which seeks to restrain, enjoin, prevent the
consummation of or otherwise challenge (i) the issuance or sale of the
Shares, the License Shares or the Securities, (ii) the consummation of the
other transactions contemplated by this Agreement or the Registration
Rights Agreement or (iii) the issuance of the License Shares pursuant to
the License Agreement.
(p) Each of the Company and the Subsidiaries possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all federal, state,
local and other governmental authorities, all self-regulatory organizations
and all courts and other tribunals presently required or necessary to own
or lease, as the case may be, and to operate its respective properties and
to carry on its respective businesses as now conducted and as proposed to
be conducted ("Permits"), except as disclosed in the SEC Reports and except
where the failure to obtain such Permits would not, individually or in the
aggregate, have a Material Adverse Effect; each of the Company and the
Subsidiaries has fulfilled and performed all of its obligations with
respect to such Permits and no event has occurred which allows, or after
notice or lapse of time would allow, revocation or termination thereof or
results in any other material impairment of the rights of the holder of any
such Permit; and none of the Company or the Subsidiaries has received any
notice of any proceeding relating to revocation or modification of any such
Permit,
<PAGE>
-11-
except where such revocation or modification would not, individually or in
the aggregate, have a Material Adverse Effect.
(q) Since June 30, 1998 and except as otherwise set forth in the SEC
Reports, (i) except as set forth on Schedule 3(q), none of the Company or
the Subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business, which
liabilities, obligations, transactions or contracts would, individually or
in the aggregate, be material to the business, assets, liabilities
(contingent or otherwise), operations, condition (financial or otherwise),
solvency or prospects of the Company and the Subsidiaries, taken as a
whole, (ii) none of the Company or the Subsidiaries has purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock (other than with
respect to the Subsidiaries, the purchase of, or dividend or distribution
on, capital stock owned by the Company) and (iii) there has not been any
material change in the capital stock or long-term indebtedness of the
Company or the Subsidiaries.
(r) Each of the Company and the Subsidiaries has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as
due thereon; and other than tax deficiencies which the Company or any
Subsidiary is contesting in good faith and for which the Company or such
Subsidiary has provided adequate reserves, there is no tax deficiency that
has been asserted against the Company or any of the Subsidiaries that
would, individually or in the aggregate, have a Material Adverse Effect.
(s) Each of the Company and the Subsidiaries has good and marketable
title to all real property and good title to all personal property owned by
it and good and marketable title to all leasehold estates in the real and
personal property being leased by it free and clear of all liens, charges,
encumbrances or restrictions, except as set forth on Schedule 3(s) and
except to the extent the failure to have such title or the existence of
such liens, charges, encumbrances or restrictions would not, individually
or in the aggregate, have a Material Adverse Effect.
<PAGE>
-12-
(t) Each of the Contracts is valid and enforceable against the Company
or the Subsidiaries, as the case may be, and to the best of the Company's
knowledge, is valid and enforceable against the other party or parties
thereto and the Company is not, and has no actual knowledge that any other
party is, in default under or in respect of any such Contract, with only
such exceptions as would not, individually or in the aggregate, have a
Material Adverse Effect.
(u) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other valid rights to use all patents and applications
therefore, trademarks, service marks, trade names, copyrights and know-how
(collectively, "Proprietary Rights") necessary to conduct the businesses
now or proposed to be conducted by it, except for such lack of or defects
in ownership as would not, individually or in the aggregate, have a
Material Adverse Effect. None of the Company or the Subsidiaries has
received any notice that any Proprietary Rights have been declared
unenforceable or otherwise invalid by any court or governmental agency
other than notices relating to Proprietary Rights the loss of which would
not, individually or in the aggregate, have a Material Adverse Effect.
Except as set forth on Schedule 3(u), none of the Company or the
Subsidiaries has received any notice of infringement of or conflict with
(or knows of any such infringement of or conflict with) asserted rights of
others with respect to any Proprietary Rights which, if such assertion of
infringement or conflict were sustained, would have a Material Adverse
Effect.
(v) Except as would not, individually or in the aggregate, have a
Material Adverse Effect (A) each of the Company and the Subsidiaries is in
compliance with and not subject to liability under applicable Environmental
Laws (as defined below), (B) each of the Company and the Subsidiaries has
made all filings and provided all notices required under any applicable
Environmental Law, and has and is in compliance with all Permits required
under any applicable Environmental Laws and each of them is in full force
and effect, (C) there is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding,
notice or demand letter or request for information pending or, to the
knowledge of the Company or the Subsidiaries, threatened against the
Company or any Subsidiary under any Environmental Law, (D) no lien, charge,
encumbrance or restric-
<PAGE>
-13-
tion has been recorded under any Environmental Law with respect to any
assets, facility or property owned, operated, leased or controlled by the
Company or any Subsidiary, (E) none of the Company or the Subsidiaries has
received notice that it has been identified as a potentially responsible
party under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), or any comparable state law,
(F) no property or facility of the Company or any Subsidiary is (i) listed
or proposed for listing on the National Priorities List under CERCLA or
(ii) listed in the Comprehensive Environmental Response, Compensation and
Liability Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the common
law and all applicable federal, state and local laws or regulations, codes,
orders, decrees, judgments or injunctions issued, promulgated, approved or
entered thereunder, relating to pollution or protection of public or
employee health and safety or the environment, including, without
limitation, laws relating to (i) emissions, discharges, releases or
threatened releases of hazardous materials into the environment (including,
without limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), (ii) the manufacture, processing, distribution, use,
generation, treatment, storage, disposal, transport or handling of
hazardous materials, and (iii) underground and aboveground storage tanks
and related piping, and emissions, discharges, releases or threatened
releases therefrom.
(w) There is no strike, labor dispute, slowdown or work stoppage with
the employees of the Company or the Subsidiaries which is pending or, to
the knowledge of the Company or the Subsidiaries, threatened, other than
any such strike, labor dispute, slowdown or work stoppage which would not,
individually or in the aggregate, have a Material Adverse Effect.
(x) Each of the Company and the Subsidiaries carries insurance in such
amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties.
(y) None of the Company or the Subsidiaries has any liability for any
prohibited transaction or funding defi-
<PAGE>
-14-
ciency or any complete or partial withdrawal liability with respect to any
pension, profit sharing or other plan which is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), to which the
Company or any Subsidiary makes or ever has made a contribution and in
which any employee of the Company or any Subsidiary is or has ever been a
participant. With respect to such plans, the Company and the Subsidiaries
are in compliance in all material respects with all applicable provisions
of ERISA.
(z) Each of the Company and the Subsidiaries (i) makes and keeps
accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D) the
reported accountability for its assets is compared with existing assets at
reasonable intervals.
(aa) Except as provided in the Registration Rights Agreement, the
Company has not granted or agreed to grant any registration rights to any
person or entity.
(bb) Immediately after the issuance of each of the Initial Notes, the
License Notes and any Additional Notes, the fair value and present fair
saleable value of the assets of the Company (on a consolidated basis) will
exceed the sum of its stated liabilities and identified contingent
liabilities; the Company (on a consolidated basis) is not and will not be
(on a consolidated basis) after giving effect to the issuance of each of
the Initial Notes, the License Notes or any Additional Notes, (a) left with
unreasonably small capital with which to carry on its business as it is
proposed to be conducted, (b) unable to pay its debts (contingent or
otherwise) as they mature or (c) otherwise insolvent.
(cc) Under the Preferred Share Rights Agreement, dated as of September
13, 1996, between the Company and Wells Fargo Bank, N.A., as amended (the
"Rights Agreement"), no event has occurred that has caused or will cause,
and none of the execution of this Agreement, the Registration Rights
Agreement or the License Agreement, or the consummation of the transactions
contemplated hereby
<PAGE>
-15-
or thereby, including the issuance and sale of the Shares, the Conversion
Shares, the License Shares and the Securities, will cause, rights issued
thereunder to become exercisable or a "Distribution Date" to occur,
assuming compliance by Elan and its Affiliates with the provisions of
Section 14(c) of this Agreement.
(dd) Except as otherwise disclosed to the Purchaser, no person has or
will have, as a result of the transactions contemplated by this Agreement
or the License Agreement, any right, interest or valid claim against or
upon the Company for any commission, fee or other compensation as a finder
or broker because of any act by the Company or of any agent of the Company.
The Company will pay, and hold the Purchaser harmless against, any
liability, loss or expense (including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses) arising in connection with any
claim for any such commission, fee or other compensation.
Elan is intended to be a third-party beneficiary of each of the
representations, warranties and agreements set forth in this Section 3,
excluding Section 3(b), (c), (h), (i) and (bb).
SECTION 4. Representations of the Purchaser and Elan.
(a) The Purchaser represents and warrants to and agrees with the Company as
follows:
(i) The Purchaser has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement. This
Agreement has been duly and validly authorized, executed and delivered by
the Purchaser and constitutes a valid and legally binding agreement of the
Purchaser enforceable against the Purchaser in accordance with its terms,
except that the enforcement hereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(ii) The Purchaser has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Registration Rights
Agreement. The Regis-
<PAGE>
-16-
tration Rights Agreement has been duly and validly authorized by the
Purchaser and, when executed and delivered by the Purchaser, will
constitute a valid and legally binding agreement of the Purchaser
enforceable against the Purchaser in accordance with its terms, except that
(A) the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought and (B) any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations.
(iii) The Purchaser acknowledges that none of the Shares or the
Initial Notes have been, nor will the Additional Notes or the Conversion
Shares be, registered under the Securities Act or any other applicable
securities laws, are being issued or sold, or will be issued or sold, in
transactions not requiring registration under the Securities Act and,
unless so registered, may not be offered, sold or otherwise transferred
except in compliance with the registration requirements of the Securities
Act or any other applicable securities law, pursuant to an exemption
therefrom or in a transaction not subject thereto and in each case in
compliance with the conditions for transfer set forth in clause (v) of this
paragraph (a).
(iv) The Purchaser is outside the United States and is not a "U.S.
person" (as such term is defined in Regulation S).
(v) Until the expiration of the "one-year distribution compliance
period" within the meaning of Rule 903 of Regulation S, the Purchaser will
not sell or otherwise transfer the Shares, the Securities or the Conversion
Shares, except (i) to the Company or its Subsidiaries, (ii) pursuant to an
effective registration statement which has been declared effective under
the Securities Act, (iii) in an offshore transaction in accordance with
Rule 904 of Regulation S or (iv) pursuant to any other available exemption
from the registration requirements of the Securities Act, including Rule
144 thereunder ("Rule 144"). After the expiration of such "one-year
distribution compliance period," the Purchaser will not sell or otherwise
transfer the Shares, the Securities or the Conversion Shares, except
pursuant to registration under the Securities Act or an available exemption
therefrom and, in
<PAGE>
-17-
any case, in accordance with the provisions of Regulation S and applicable
state securities laws.
(vi) The Purchaser understands that the certificates representing the
Shares and any Conversion Shares will, so long as appropriate, bear the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR PURSUANT TO A VALID
EXEMPTION THEREFROM AND HAVE BEEN SOLD IN RELIANCE ON THE EXEMPTION
FROM REGISTRATION PROVIDED BY REGULATION S UNDER THE ACT ("REGULATION
S"). THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S (ss.230.901 THROUGH ss.230.905, AND
PRELIMINARY NOTES). HEDGING TRANSACTIONS INVOLVING THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE ACT.
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE CONDITIONS SPECIFIED IN A SECURITIES PURCHASE AGREEMENT, DATED
AS OF NOVEMBER 6, 1998, BY AND AMONG THE COMPANY, ELAN INTERNATIONAL
SERVICES, LTD. AND ELAN CORPORATION, PLC, AND THE COMPANY RESERVES THE
RIGHT TO REFUSE THE TRANSFER OF SUCH SHARES UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS WILL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF
WITHOUT CHARGE.
(vii) The Purchaser agrees that the Company shall be entitled to make
a notation on its records and give instructions to any transfer agent of
the Common Stock in order to implement the restrictions on transfer set
forth in this Agreement.
(viii) The Purchaser acknowledges that it believes that it has
received all information it considers necessary or appropriate and has had
an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the issuance and sale of the Shares
and
<PAGE>
-18-
the Securities and the business, properties, prospects and financial
condition of the Company; provided that this clause (viii) shall in no way
limit or modify the representations and warranties of the Company set forth
in Section 3 of this Agreement or the right of the Purchaser to rely
thereon. The Purchaser acknowledges that it is a sophisticated investor and
that an investment in the Shares and the Securities involves a high degree
of risk. The Purchaser further acknowledges that the Share Purchase Price
may or may not exceed the latest publicly quoted per share "asked" price of
the Common Stock.
(ix) The Purchaser is purchasing the Shares and the Securities, and,
to the extent that the Purchaser converts the Securities, will acquire the
Conversion Shares, for its own account for the purpose of investment and
not (i) with a view to, or for sale in connection with, any distribution
thereof or (ii) for the account or on behalf of any "U.S. person" (as such
term is defined in Regulation S). The Purchaser understands, acknowledges
and agrees that it must bear the economic risk of its investment in the
Shares, the Conversion Shares and the Securities for an indefinite period
of time and that prior to any offer or sale of such securities, the Company
may require, as a condition to effecting a transfer of the Shares, the
Conversion Shares or the Securities, an opinion of counsel to the
Purchaser, acceptable to the Company, as to the registration or exemption
therefrom under the Securities Act.
(x) The Purchaser was not formed specifically for the purpose of
acquiring the Shares or the Securities purchased or to be purchased
pursuant to this Agreement.
(xi) The execution, delivery and performance by the Purchaser of this
Agreement and the Registration Rights Agreement and the consummation by the
Purchaser of the transactions contemplated hereby and thereby will not
conflict with or constitute or result in a breach of or a default under (or
an event which with notice or passage of time or both would constitute a
default under) or violation of any of (i) the terms or provisions of any
indenture, mortgage, deed of trust, loan agreement, note, lease, license,
franchise agreement, permit, certificate, contract or other agreement or
instrument to which the Purchaser is a party, except for any such conflict,
breach, default, violation or event which would not, individually or in the
aggregate, have a material adverse ef-
<PAGE>
-19-
fect on the business, assets, liabilities (contingent or otherwise),
operations, condition (financial or otherwise), solvency, properties,
prospects or material agreements of the Purchaser and its subsidiaries,
taken as a whole, (ii) the certificate of incorporation or bylaws of the
Purchaser or (iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Company set forth in Section 3 of
this Agreement) any statute, judgment, decree, order, rule or regulation
applicable to the Purchaser or any of its respective properties or assets,
except for any such conflict, breach or violation which would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, liabilities (contingent or otherwise), operations,
condition (financial or otherwise), solvency, properties, prospects or
material agreements of the Purchaser and its subsidiaries, taken as a
whole.
(xii) No consent, approval, authorization or order of any court or
governmental agency or body or third party is required for the execution,
delivery or performance of this Agreement or the Registration Rights
Agreement by the Purchaser or the consummation of the transactions
contemplated hereby or thereby, except that no representation or warranty
is made with respect to filings required by the HSR Act in connection with
the conversion of the Securities.
(xiii) Except as otherwise disclosed to the Company, no person has or
will have, as a result of the transactions contemplated by this Agreement,
any right, interest or valid claim against or upon the Purchaser for any
commission, fee or other compensation as a finder or broker because of any
act by the Purchaser or of any agent of the Purchaser. The Purchaser will
pay, and hold the Company harmless against, any liability, loss or expense
(including without limitation, reasonable attorneys' fees and out-of-pocket
expenses) arising in connection with any claim for any such commission, fee
or other compensation.
(b) Elan represents and warrants to and agrees with the Company as follows:
(i) Elan has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement. This Agreement
has been duly and validly authorized, executed and delivered by Elan and
<PAGE>
-20-
constitutes a valid and legally binding agreement of Elan enforceable
against Elan in accordance with its terms, except that the enforcement
hereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought.
(ii) Elan acknowledges that the License Shares will not be registered
under the Securities Act or any other applicable securities laws, will be
issued in transactions not requiring registration under the Securities Act
and, unless so registered, may not be offered, sold or otherwise
transferred except in compliance with the registration requirements of the
Securities Act or any other applicable securities law, pursuant to an
exemption therefrom or in a transaction not subject thereto and in each
case in compliance with the conditions for transfer set forth in paragraph
(v) of this paragraph (b).
(iii) Elan is outside the United States and is not a "U.S. person" (as
such term is defined in Regulation S).
(iv) Until the expiration of the "one-year distribution compliance
period" within the meaning of Rule 903 of Regulation S, Elan will not sell
or otherwise transfer the License Shares, except (i) to the Company or its
Subsidiaries, (ii) pursuant to an effective registration statement which
has been declared effective under the Securities Act, (iii) in an offshore
transaction in accordance with Rule 904 of Regulation S or (iv) pursuant to
any other available exemption from the registration requirements of the
Securities Act, including Rule 144. After the expiration of such "one-year
distribution compliance period," Elan will not sell or otherwise transfer
the License Shares, except pursuant to registration under the Securities
Act or an available exemption therefrom and, in any case, in accordance
with the provisions of Regulation S and applicable state securities laws.
(v) Elan understand that the certificates representing the License
Shares will, so long as appropriate, bear the legend set forth in clause
(vi) of paragraph (a) of this Section 4.
(vi) Elan agrees that the Company shall be entitled to make a notation
on its records and give instructions to
<PAGE>
-21-
any transfer agent of the Common Stock in order to implement the
restrictions on transfer set forth in this Agreement.
(vii) Elan acknowledges that it believes that it has received all
information it considers necessary or appropriate and has had an
opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the issuance and sale of the License Shares and
the business, properties, prospects and financial condition of the Company;
provided that this clause (viii) shall in no way limit or modify the
representations and warranties of the Company set forth in Section 3 of
this Agreement or the right of Elan to rely thereon. Elan acknowledges that
it is a sophisticated investor and that an investment in the License Shares
involves a high degree of risk. Elan further acknowledges that the
valuation price of the License Shares set forth in clauses 10.1.1(1), (3)
and (4) of the License Agreement may or may not exceed the last publicly
quoted per share "asked" price of the Common Stock on any License Share
Issuance Date.
(viii) Elan will be acquiring the License Shares for its own account
for the purpose of investment and not (i) with a view to, or for sale in
connection with, any distribution thereof or (ii) for the account or on
behalf of any "U.S. person" (as such term is defined in Regulation S). Elan
understands, acknowledges and agrees that it must bear the economic risk of
its investment in the License Shares for an indefinite period of time and
that prior to any offer or sale of such securities, the Company may
require, as a condition to effecting a transfer of the License Shares, an
opinion of counsel to Elan , acceptable to the Company, as to the
registration or exemption therefrom under the Securities Act.
(ix) Elan was not formed specifically for the purpose of acquiring the
License Shares purchased pursuant to this Agreement.
(x) Neither Elan nor any of its Affiliates has, directly or
indirectly, within the past 90 days nor will such persons until the
expiration of the "one-year distribution compliance period" within the
meaning of Rule 903 of Regulation S commencing from the later to occur of
(i) the last Additional Closing occurring on or before December 31, 1999
and (ii) the last License Share Issuance occurring on or before the
expiration or termination of the
<PAGE>
-22-
License Agreement directly or indirectly, enter into any short selling of
any equity security of the Company (including, without limitation, the
Common Stock) or any hedging transaction with respect to any equity
security of the Company, including, without limitation, puts, calls, or
other option transactions, option writing and equity swaps, unless in
compliance with the Securities Act.
(xi) The execution, delivery and performance by Elan of this Agreement
and the Registration Rights Agreement and the consummation by Elan of the
transactions contemplated hereby and thereby will not conflict with or
constitute or result in a breach of or a default under (or an event which
with notice or passage of time or both would constitute a default under) or
violation of any of (i) the terms or provisions of any indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise agreement,
permit, certificate, contract or other agreement or instrument to which
Elan is a party, except for any such conflict, breach, default, violation
or event which would not, individually or in the aggregate, have a material
adverse effect on the business, assets, liabilities (contingent or
otherwise), operations, condition (financial or otherwise), solvency,
properties, prospects or material agreements of Elan and its subsidiaries,
taken as a whole, (ii) the certificate of incorporation or bylaws of Elan
or (iii) (assuming compliance with all applicable state securities or "Blue
Sky" laws and assuming the accuracy of the representations and warranties
of the Company set forth in Section 3 of this Agreement) any statute,
judgment, decree, order, rule or regulation applicable to Elan or any of
its respective properties or assets, except for any such conflict, breach
or violation which would not, individually or in the aggregate, have a
material adverse effect on the business, assets, liabilities (contingent or
otherwise), operations, condition (financial or otherwise), solvency,
properties, prospects or material agreements of Elan and its subsidiaries,
taken as a whole.
(xii) No consent, approval, authorization or order of any court or
governmental agency or body or third party is required for the execution,
delivery or performance of this Agreement by Elan or the consummation of
the transactions contemplated hereby, except that no representation or
warranty is made with respect to filings required by the HSR Act in
connection with the issuance and sale of
<PAGE>
-23-
the License Shares pursuant to clauses 10.1.1(3) and (4) of the License
Agreement.
(xiii) Except as otherwise disclosed to the Company, no person has or
will have, as a result of the transactions contemplated by this Agreement,
any right, interest or valid claim against or upon Elan for any commission,
fee or other compensation as a finder or broker because of any act by Elan
or of any agent of Elan. Elan will pay, and hold the Company harmless
against, any liability, loss or expense (including without limitation,
reasonable attorneys' fees and out-of-pocket expenses) arising in
connection with any claim for any such commission, fee or other
compensation.
SECTION 5. Conditions to Company's and Purchaser's Obligations at Initial
Closing. The respective obligations of each of the Company and the Purchaser to
consummate the purchase and sale of each of the Shares, the Initial Notes and
the License Notes, in each case, pursuant to Section 1(a) of this Agreement
shall be subject to the satisfaction of the following conditions at or prior to
the Initial Closing Date:
(a) The sale of the Shares, the Initial Notes and the License Notes
hereunder shall not be enjoined (temporarily or permanently) on the Initial
Closing Date.
(b) All consents, approvals, authorizations and orders of any court or
governmental agency or body, or third party required in connection with the
execution and delivery of this Agreement, the Registration Rights Agreement
and the License Agreement and the consummation of the transactions
contemplated hereby and thereby shall have been obtained.
SECTION 6. Conditions to Purchaser's Obligations at Initial Closing. The
obligation of the Purchaser to purchase the Shares, the Initial Notes and the
License Notes, in each case, pursuant to Section 1(a) of this Agreement shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Initial Closing Date:
(a) Each of the representations and warranties of the Company set
forth in Section 3 hereof that are qualified by Material Adverse Effect or
materiality shall be true and correct in all respects and each of the
representations and warranties of the Company set forth in Section 3 hereof
that are not so qualified shall be true and cor-
<PAGE>
-24-
rect in all material respects, in each case, on and as of the date hereof
and on and as of the Initial Closing Date as if made on and as of the
Initial Closing Date, except to the extent that such representations and
warranties expressly relate to an earlier date; the statements of the
Company's officers made pursuant to any certificate delivered in accordance
with the provisions hereof shall be true and correct on and as of the date
made; the Company shall have performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied hereunder
at or prior to the Initial Closing Date; since June 30, 1998, and except as
disclosed in the Company's (i) Registration Statement on Form S-4 filed
with the SEC on July 9, 1998, (ii) Form 10-Q filed with the SEC on August
14, 1998, (iii) Form 8-K filed with the SEC on August 25, 1998 and (iv)
Form 8-K/A filed with the SEC on September 25, 1998 (the "Additional SEC
Reports"), there shall have been no event or development, and no
information shall have become known, that, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(b) On the Initial Closing Date, the Purchaser shall have received the
opinion, dated as of the Initial Closing Date and addressed to the Purchaser, of
each of Brobeck, Phleger & Harrison LLP, counsel for the Company, and the
General Counsel of the Company, substantially in the form attached hereto as
Exhibit B1 and Exhibit B2, respectively.
(c) The Purchaser shall have received a certificate of the Company, dated
the Initial Closing Date, signed on behalf of the Company by its Chief Executive
Officer and its Chief Financial Officer, to the effect that:
(i) Each of the representations and warranties of the Company
contained in this Agreement that are qualified by Material Adverse Effect
or materiality are true and correct in all respects and the representations
and warranties of the Company contained in this Agreement that are not so
qualified are true and correct in all material respects, in each case, on
and as of the Initial Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date, and the
Company has performed all covenants and agreements and satisfied all
conditions on its part to be performed or
<PAGE>
-25-
satisfied hereunder at or prior to the Initial Closing Date;
(ii) At the Initial Closing Date and since June 30, 1998, except as
disclosed in the Additional SEC Reports, no event or development has
occurred, and no information has become known, that, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect; and
(iii) The sale of the Shares, the Initial Notes and the License Notes
hereunder has not been enjoined (temporarily or permanently).
(d) On the Initial Closing Date, the Purchaser shall have received the
Eleventh Addendum to the Amended Registration Rights Agreement, dated as of June
24, 1994, by and among the Company and those entities party thereto (the
"Registration Rights Agreement"), duly executed by the Company, and such
agreement shall be in full force and effect and there shall exist at and as of
the Initial Closing Date no condition that would constitute or result in a
breach of or a default under (or an event which with notice or passage of time
or both would constitute a default under) the Registration Rights Agreement.
(e) On or prior to the Initial Closing Date, the Purchaser shall have
received a true and correct copy of the Rights Agreement, as amended through the
Initial Closing Date.
(f) On the Initial Closing Date, the Company shall have delivered to the
Purchaser a duly executed copy of the Development, License and Supply Agreement,
dated as of the Initial Closing Date, by and between the Company and Elan (the
"License Agreement"); the License Agreement shall be in full force and effect
and there shall exist at and as of the Initial Closing Date no condition that
would constitute or result in a breach of or a default under (or an event which
with notice or passage of time or both would constitute a default under) the
License Agreement by the Company.
All such documents, certificates, schedules or instruments delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory in all material respects to the Purchaser and
counsel for the Purchaser.
<PAGE>
-26-
SECTION 7. Conditions to Company's Obligations at Initial Closing. The
obligation of the Company to issue and sell the Shares, the Initial Notes and
the License Notes, in each case, pursuant to Section 1(a) of this Agreement
shall be subject to satisfaction or waiver of the following conditions at or
prior to the Initial Closing Date:
(a) Each of the representations and warranties of each of the
Purchaser and Elan set forth in Section 4 hereof that are qualified by
materiality shall be true and correct in all respects and each of the
representations and warranties of each of the Purchaser and Elan set forth
in Section 4 hereof that are not so qualified shall be true and correct in
all material respects, in each case, on and as of the date hereof and on
and as of the Initial Closing Date as if made on and as of the Initial
Closing Date, except to the extent that such representations and warranties
expressly relate to an earlier date; the statements of each of the
Purchaser's and Elan's officers made pursuant to any certificate delivered
in accordance with the provisions hereof shall be true and correct on and
as of the date made; each of the Purchaser and Elan shall have performed
all covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Initial Closing Date.
(b) The Company shall have received a certificate of the Purchaser,
dated the Initial Closing Date, signed on behalf of the Purchaser by its
President and Chief Financial Officer, to the effect that the
representations and warranties of the Purchaser contained in this Agreement
that are qualified by materiality are true and correct in all respects and
the representations and warranties of the Purchaser contained in this
Agreement that are not so qualified are true and correct in all material
respects, in each case, on and as of the Initial Closing Date, except to
the extent that such representations and warranties expressly relate to an
earlier date, and the Purchaser has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Initial Closing Date.
(c) The sale of the Shares and the Initial Notes hereunder has not
been enjoined (temporarily or permanently).
(d) The Purchaser shall have delivered the Share Purchase Price, the
Initial Note Issue Price and the Li-
<PAGE>
-27-
cense Note Issue Price in accordance with Section 2(a) hereof.
(e) On the Initial Closing Date, Elan shall have delivered to the
Company a duly executed copy of the License Agreement; the License
Agreement shall be in full force and effect and there shall exist at and as
of the Initial Closing Date no condition that would constitute or result in
a breach of or a default under (or an event which with notice or passage of
time or both would constitute a default under) the License Agreement by
Elan.
All such documents, certificates, schedules or instruments delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory in all material respects to the Company and counsel
for the Company.
SECTION 8. Conditions to Purchaser's Obligations at Additional Closings.
(a) The obligation of the Purchaser to purchase Additional Notes pursuant
to Section 1(b) of this Agreement, the gross proceeds of which are to be used by
the Company to make the Seragen Payments or the Marathon Payment, as set forth
in the Purchase Request applicable thereto, shall be subject to satisfaction or
waiver of the following conditions at or prior to the Additional Closing Date
applicable thereto:
(i) Each of the representations and warranties of the Company set
forth in Section 3 hereof that are qualified by Material Adverse Effect or
materiality shall be true and correct in all respects and each of the
representations and warranties of the Company set forth in Section 3 hereof
that are not so qualified shall be true and correct in all material
respects, in each case, on and as of such Additional Closing Date as if
made on and as of such Additional Closing Date, except to the extent that
such representations and warranties expressly relate to an earlier date;
the statements of the Company's officers made pursuant to any certificate
delivered in accordance with the provisions hereof shall be true and
correct on and as of the date made; the Company shall have performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Additional Closing
Date; since June 30, 1998 and except as disclosed in Additional SEC
Reports, there shall have been no event or development, and no informa-
<PAGE>
-28-
tion shall have become known, that, individually or in the aggregate, has
or would be reasonably likely to have a Material Adverse Effect.
(ii) On such Additional Closing Date, the Purchaser shall have
received the opinion, dated as of such Additional Closing Date and
addressed to the Purchaser, of each of Brobeck, Phleger & Harrison LLP,
counsel for the Company (or such other counsel as is reasonably acceptable
to the Purchaser), and the General Counsel of the Company substantially in
the form attached hereto as Exhibit C1 and Exhibit C2, respectively.
(iii) The Purchaser shall have received a certificate of the Company,
dated such Additional Closing Date, signed on behalf of the Company by its
Chief Executive Officer and its Chief Financial Officer, to the effect
that:
(1) The representations and warranties of the Company contained
in this Agreement that are qualified by Material Adverse Effect or
materiality are true and correct in all respects and the
representations and warranties of the Company contained in this
Agreement that are not so qualified are true and correct in all
material respects, in each case, on and as of such Additional Closing
Date, except to the extent that such representations and warranties
expressly relate to an earlier date, and the Company has performed all
covenants and agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to such Additional
Closing Date;
(2) At such Additional Closing Date and since June 30, 1998,
except as set forth in the Additional SEC Reports, no event or
development has occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect;
(3) The sale of such Additional Notes hereunder has not been
enjoined (temporarily or permanently); and
(4) Each of this Agreement, the Registration Rights Agreement or
the New Registration Rights Agreement, as the case may be, the License
Agreement (to the extent not previously terminated by mutual
<PAGE>
-29-
agreement of the parties thereto) and, to the extent outstanding, the
Securities, are, and after giving effect to the issuance and sale of
such Additional Notes, will be, valid and enforceable against the
Company, except that (A) the enforcement hereof and thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought and (B) any rights to indemnity or contribution under the
Registration Rights Agreement or the New Registration Rights
Agreement, as the case may be, may be limited by federal and state
securities laws and public policy considerations, and no event that
constitutes a material breach of or a material default under (or an
event which, with notice or passage of time or both would constitute a
material default under) this Agreement, the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may
be, the License Agreement (to the extent not previously terminated by
mutual agreement of the parties thereto) or, to the extent
outstanding, the Securities, by the Company has occurred and is
continuing or, after giving effect to the issuance and sale of such
Additional Notes, will have occurred and be continuing.
(iv) Both before and after giving effect to the issuance and sale of
such Additional Notes, each of this Agreement, the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may be, the
License Agreement (to the extent not previously terminated by mutual
agreement of the parties thereto) and, to the extent outstanding, the
Securities, shall be valid and enforceable against the Company, except that
(A) the enforcement hereof and thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought and (B) any rights to indemnity or
contribution under the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, may be limited by
federal and state securities laws and public policy considerations, and no
event that constitutes a material breach of or a material default under (or
an event which, with notice or passage of
<PAGE>
-30-
time or both would constitute a material default under) this Agreement, the
Registration Rights Agreement or the New Registration Rights Agreement, as
the case may be, the License Agreement (to the extent not previously
terminated by mutual agreement of the parties thereto) or, to the extent
outstanding, the Securities, by the Company shall have occurred and be
continuing.
(v) The Company shall have delivered to the Purchaser a Purchase
Request relating to such Additional Notes in accordance with Section 1(b)
of this Agreement.
(vi) The Purchaser shall have completed a confirmatory due diligence
investigation relating to Seragen or Marathon, as the case may be
(including confirmatory legal, accounting and business due diligence), and
shall be satisfied, in its reasonable judgment, with the results thereof.
(vii) All consents, approvals, authorizations and orders of any court
or governmental agency or body, or third party required in connection with
the issuance and sale of such Additional Notes shall have been obtained,
except for any filings required by the HSR Act upon conversion of such
Additional Notes.
(viii) The issuance and sale of such Additional Notes hereunder shall
not be enjoined (temporarily or permanently) on the Additional Closing Date
applicable thereto.
(b) The obligation of the Purchaser to purchase Additional Notes pursuant
to Section 1(b) of this Agreement the gross proceeds of which are to be used by
the Company for any purpose other than to make the Seragen Payments or the
Marathon Payment, as set forth in the Purchase Request applicable thereto, shall
be subject to the prior written consent of the Purchaser, which consent may be
withheld in the Purchaser's sole discretion whether or not the conditions set
forth in paragraph (a) of this Section 8 have been satisfied or previously
waived.
All such documents, certificates, schedules, notices and instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Purchaser
and counsel for the Purchaser.
<PAGE>
-31-
SECTION 9. Conditions to the Company's Obligations at Additional Closings.
The obligation of the Company to issue Additional Notes pursuant to Section 1(b)
of this Agreement shall be subject to satisfaction or waiver of the following
conditions at or prior to the Additional Closing Date applicable thereto:
(a) Each of the representations and warranties of the Purchaser set
forth in Section 4(a) hereof that are qualified by materiality shall be
true and correct in all respects and each of the representations and
warranties of the Purchaser set forth in Section 4(a) hereof that are not
so qualified shall be true and correct in all material respects, in each
case, on and as of such Additional Closing Date as if made on and as of
such Additional Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date; the
statements of the Purchaser's officers made pursuant to any certificate
delivered in accordance with the provisions hereof shall be true and
correct on and as of the date made; the Purchaser shall have performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to such Additional Closing
Date.
(b) The Company shall have received a certificate of the Purchaser,
dated the Initial Closing Date, signed on behalf of the Purchaser by its
President and Chief Financial Officer, to the effect that:
(i) the representation and warranties of the Purchaser contained
in this Agreement that are qualified by materiality are true and
correct in all respects and the representations and warranties of the
Purchaser contained in this Agreement that are not so qualified are
true and correct in all material respects, in each case, on and as of
such Additional Closing Date, except to the extent that such
representations and warranties expressly relate to an earlier date,
and the Purchaser has performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Additional Closing Date; and
(ii) each of this Agreement, the Registration Rights Agreement or
the New Registration Rights Agreement, as the case may be, and the
License Agreement (to the extent not previously terminated by mu-
<PAGE>
-32-
tual agreement of the parties thereto) are valid and enforceable
against the Purchaser and Elan, to the extent a party thereto, except
that (A) the enforcement hereof and thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of
the court before which any proceeding therefor may be brought and (B)
any rights to indemnity or contribution under the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may
be, may be limited by federal and state securities laws and public
policy considerations, and no event that constitutes a material breach
of or a material default under (or an event which, with notice or
passage of time or both would constitute a material default under)
this Agreement, the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, or the License
Agreement (to the extent not previously terminated by mutual agreement
of the parties thereto) by the Purchaser or Elan, to the extent a
party thereto, has occurred and is continuing.
(c) All consents, approvals, authorizations and orders of any court or
governmental agency or body, or third party required in connection with the
issuance and sale of such Additional Notes shall have been obtained, except
for any filings required by the HSR Act upon conversion of such Additional
Notes.
(d) The sale of such Additional Notes hereunder has not been enjoined
(temporarily or permanently).
(e) The Purchaser shall have delivered the Additional Note Issue Price
in accordance with Section 2(a) hereof.
All such documents, certificates, schedule, notices and instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Company and
counsel for the Company.
SECTION 10. Conditions to Elan's Obligations at License Share Issuances.
The obligation of Elan to accept the issuance of License Shares in lieu of cash
payments pursuant to
<PAGE>
-33-
and in accordance with the terms of clauses 10.1.1(1), (3) and (4) of the
License Agreement shall be subject to satisfaction or waiver of the following
conditions at or prior to each License Share Issuance Date applicable thereto
(provided that, nothing in this Agreement shall relieve the Company from its
obligation to make cash payments to Elan pursuant to clauses 10.1.1(1), 10.1(3)
and (4) of the License Agreement in the event that any of the following
conditions is not so satisfied or waived at or prior to such License Share
Issuance Date):
(a) Each of the representations and warranties of the Company set
forth in Section 3 hereof that are qualified by Material Adverse Effect or
materiality shall be true and correct in all respects and each of the
representations and warranties of the Company set forth in Section 3 hereof
that are not so qualified shall be true and correct in all material
respects, in each case, on and as of such License Share Issuance Date as if
made on and as of such License Share Issuance Date, except to the extent
that such representations and warranties expressly relate to an earlier
date; the statements of the Company's officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be
true and correct on and as of the date made; the Company shall have
performed all covenants and agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to such License
Share Issuance Date; since June 30, 1998 and except as disclosed in the
Additional SEC Reports, there shall have been no event or development, and
no information shall have become known, that, individually or in the
aggregate, has or would be reasonably likely to have a Material Adverse
Effect.
(b) On such License Share Issuance Date, Elan shall have received the
opinion, dated as of such License Share Issuance Date and addressed to the
Purchaser, of each of Brobeck, Phleger & Harrison LLP, counsel for the
Company (or such other counsel as is reasonably satisfactory to Elan), and
the General Counsel of the Company substantially in the form attached
hereto as Exhibits D1 and D2, respectively; provided that, in the case of
License Shares to be issued to Elan pursuant to clause 10.1.1(1) of the
License Agreement, such opinions shall be substantially in the form
attached hereto as Exhibits D3 and D4, respectively.
(c) Elan shall have received a certificate of the Company, dated such
License Share Issuance Date, signed on
<PAGE>
-34-
behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Company contained
in this Agreement that are qualified by Material Adverse Effect or
materiality are true and correct in all respects and the
representations and warranties of the Company contained in this
Agreement that are not so qualified are true and correct in all
material respects, in each case, on and as of such License Share
Issuance Date, except to the extent that such representations and
warranties expressly relate to an earlier date, and the Company has
performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied hereunder at or prior to such
License Share Issuance Date;
(ii) At such License Share Issuance Date and since June 30, 1998,
except as set forth in the Additional SEC Reports, no event or
development has occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably likely to
have a Material Adverse Effect;
(iii) The issuance of such License Shares has not been enjoined
(temporarily or permanently); and
(iv) Each of this Agreement, the Registration Rights Agreement or
the New Registration Rights Agreement, as the case may be, the License
Agreement and, to the extent outstanding, the Securities, are, and
after giving effect to the issuance of such License Shares, will be,
valid and enforceable against the Company, except that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought and (B) any rights to indemnity or
contribution under the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, may be limited by
federal and state securities laws and public policy considerations,
and no event that constitutes a breach of or a default under (or an
event which, with notice or passage of time or both would constitute a
default un-
<PAGE>
-35-
der) this Agreement, the Registration Rights Agreement or the New
Registration Rights Agreement, as the case may be, the License
Agreement or, to the extent outstanding, the Securities, by the
Company has occurred and is continuing or, after giving effect to the
issuance and sale of such License Shares, will have occurred and be
continuing.
(d) Both before and after giving effect to the issuance of such
License Shares, each of this Agreement, the Registration Rights Agreement
or the New Registration Rights Agreement, as the case may be, the License
Agreement and, to the extent outstanding, the Securities, shall be valid
and enforceable against the Company, except that (A) the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
and (B) any rights to indemnity or contribution under the Registration
Rights Agreement or the New Registration Rights Agreement, as the case may
be, may be limited by federal and state securities laws and public policy
considerations, and no event that constitutes a breach of or a default
under (or an event which, with notice or passage of time or both would
constitute a default under) this Agreement, the Registration Rights
Agreement or the New Registration Rights Agreement, as the case may be, the
License Agreement or, to the extent outstanding, the Securities, by the
Company shall have occurred and be continuing.
(e) All consents, approvals, authorizations and orders of any court or
governmental agency or body, or third party required in connection with the
issuance of such License Shares shall have been obtained.
(f) The issuance of such License Shares shall not be enjoined
(temporarily or permanently) on the License Share Issuance Date applicable
thereto.
All such documents, certificates, schedules, notices and instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Purchaser
and counsel for the Purchaser.
<PAGE>
-36-
SECTION 11. Conditions to the Company's Obligations at License Share
Issuances. The obligation of the Company to issue License Shares in lieu of cash
payments (after the Company, at its option, has elected to issue License Shares)
pursuant to clauses 10.1.1(1), 10.1(3) and (4) of the License Agreement, shall
be subject to satisfaction or waiver of the following conditions at or prior to
the License Share Issuance Date applicable thereto; provided that, nothing in
this Agreement shall relieve the Company from its obligation to make cash
payments to Elan pursuant to clauses 10.1.1(1), 10.1(3) and (4) of the License
Agreement in the event that any of the following conditions is not so satisfied
or waived at or prior to such License Share Issuance Date; provided, further,
that, in the event that Elan is unable to satisfy the following conditions or
such conditions have not been waived prior to such License Share Issuance Date,
the Company and Elan shall negotiate in good faith to agree, on or prior to such
License Share Issuance Date, upon customary terms and conditions which will
enable the Company to issue the License Shares pursuant to a transaction exempt
from the registration requirements of the Securities Act pursuant Regulation D
thereunder, including the giving by Elan, to the extent possible, of
representations and warranties in connection therewith, so long as such
negotiation does not delay any License Share Issuance Date:
(a) Each of the representations and warranties of Elan set forth in
Section 4(b) hereof that are qualified by materiality shall be true and
correct in all respects and each of the representations and warranties of
Elan set forth in Section 4(b) hereof that are not so qualified shall be
true and correct in all material respects, in each case, on and as of such
License Share Issuance Date as if made on and as of such License Share
Issuance Date, except to the extent that such representations and
warranties expressly relate to an earlier date; the statements of Elan's
officers made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct on and as of the date made;
Elan shall have performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to such Additional Closing Date.
(b) The Company shall have received a certificate of Elan, dated such
License Share Issuance Date, signed on behalf of Elan by its President and
Chief Financial Officer, to the effect that the representation and
warranties of Elan contained in this Agreement that are qualified by
materiality are true and correct in all respects and the
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representations and warranties of Elan contained in this Agreement that are
not so qualified are true and correct in all material respects, in each
case, on and as of such License Share Issuance Date, except to the extent
that such representations and warranties expressly relate to an earlier
date and Elan has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior
to such License Share Issuance Date.
(c) All consents, approvals, authorizations and orders of any court or
governmental agency or body, or third party required in connection with the
issuance of such License Shares shall have been obtained.
(d) The issuance of such License Shares shall not be enjoined
(temporarily or permanently) on the License Share Issuance Date applicable
thereto.
All such documents, certificates, schedule, notices and instruments
delivered pursuant to this Agreement will comply with the provisions hereof only
if they are reasonably satisfactory in all material respects to the Company and
counsel for the Company.
SECTION 12. Conversion Prices.
(a) The Initial Notes shall be convertible by the Purchaser in accordance
with their terms into Common Stock at a conversion price of $14.00 per share
(the "Initial Note Conversion Price").
(b) The License Notes shall be convertible by the Purchaser in accordance
with their terms into Common Stock at a per share conversion price equal to the
sum of (i) [ * * * ] to the Initial Closing Date [ * * * ] plus (ii) the [ * * *
] (the "License Note Conversion Price"); provided that in no event shall the
License Note Conversion Price be less than $14.00 per share or greater than
$20.00 per share.
(c) Any Additional Note shall be convertible by the Purchaser in accordance
with its terms into Common Stock at a per share conversion price equal to the
sum of (i) [ * * * ] plus (ii) [ * * * ] (the "Additional Note Conversion
Price"); provided that in no event shall the Additional Note Conversion Price be
less than $14.00 per share (the "Minimum Conversion Price") or greater than
$20.00 per share
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(the "Maximum Conversion Price"). Each of the Minimum Conversion Price and the
Maximum Conversion Price shall be subject to adjustment from time to time in
accordance with paragraph 6(i)(i), (ii), (iii), (iv) or (v) of the promissory
note attached hereto as Exhibit A.
(d) For purposes of this Section 12, the "Closing Price" of the Common
Stock on any trading day shall mean the last reported sales price of the Common
Stock on such trading day, as reported by the Nasdaq National Market or, if the
Common Stock is listed on a United States securities exchange, the closing per
share sales price, regular way, on such trading day on the principal United
States securities exchange on which the Common Stock is traded or, if no such
sale takes place on such trading day, the average of the closing bid and asked
prices on such day.
SECTION 13. Covenants of the Company.
(a) The Company agrees that, prior to the termination of all rights
provided for in the Registration Rights Agreement in accordance with Section
1.17 thereof, the Company will prepare, execute and deliver to the Purchaser a
registration rights agreement (the "New Registration Rights Agreement"), to be
effective upon such termination, in form and substance substantially identical
to the Registration Rights Agreement; provided that the New Registration Rights
Agreement shall expire on the later of (i) December 31, 2003 and (ii) the date
on which no Securities are outstanding.
(b) Subject to the terms and conditions specified in this paragraph (b),
the Company hereby grants to the Purchaser and Elan a right to purchase up to
the number of Additional Shares (as defined below) in connection with any
Transaction (as defined below) undertaken by the Company.
(i) Each time the Company proposes to offer, sell or otherwise issue
shares of any class of its capital stock or securities convertible into, or
exercisable or exchangeable for, a class of capital stock ("Capital
Stock"), in a public or private transaction (a "Transaction"), the Company
shall deliver a notice in person, by air courier or by facsimile
("Notice"), to the Purchaser and Elan stating (a) the Company's bona fide
intention to undertake such Transaction, (b) the number of shares of
Capital Stock to be offered in the Transaction (the "Transaction Shares"),
(c) the number of Additional Shares up to which the Purchaser and Elan may
elect to
<PAGE>
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purchase in such Transaction (which would be added to the Transaction
Shares), and (d) the price and terms, if any, upon which it proposes to
offer, sell or otherwise issue Capital Stock in the Transaction.
(ii) Within 10 business days after receipt by the Purchaser and Elan
of the Notice, each of the Purchaser and Elan may elect to purchase, at the
price and on the terms specified in the Notice, up to the number of
Additional Shares set forth in the Notice. The number of shares of Capital
Stock ("Additional Shares") that the Purchaser and Elan may elect to
purchase and include in the Transaction shall be calculated as follows:
Additional Shares = Transaction Shares -- Transaction Shares
1 - X%
X% represents the percentage (stated as a decimal) of the outstanding
shares of Common Stock then held by the Purchaser or Elan, as the case may
be, (assuming the conversion of all Securities then held by the Purchaser
or Elan, as the case may be, and the conversion, exercise or exchange of
all Capital Stock then held by the Purchaser or Elan, as the case may be,
and acquired pursuant to this paragraph (b)).
In the event that the price or terms upon which the Company proposes to
offer, sell or otherwise issue Capital Stock in the Transaction or the
number of Transaction Shares to be included in such Transaction changes for
any reason (other than including the Additional Shares) after the Notice is
delivered to the Purchaser and Elan, the number of Additional Shares shall,
with respect to a change in the number of Transaction Shares, be
recalculated using the new number of Transaction Shares and, in any case,
the Company shall promptly provide a revised Notice to the Purchaser and
Elan reflecting such recalculated Additional Shares and any change to such
price or terms. If the Company proposes to offer, sell or issue any Capital
Stock for consideration other than cash, each of the Purchaser and Elan may
exercise the right set forth in this paragraph (b) and purchase Additional
Shares for cash at a per share purchase price equal to (i)(a) the face
amount of any cash received for such Capital Stock plus (b) the fair market
value of the non-cash consideration expressly received for such Capital
Stock divided by (ii) the number of Transaction Shares issued in such
Transaction (excluding any Additional Shares). The fair
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market value of any such non-cash consideration shall be determined by an
independent appraisal firm of nationally-recognized standing chosen jointly
by the Company and the Purchaser and Elan.
(iii) The rights of the Purchaser set forth in this paragraph (b)
shall not be applicable to (a) the issuance or sale of Capital Stock under
any plan, agreement or arrangement applicable only to employees, directors
or consultants and approved by the Company's board of directors or (b) the
issuance of securities pursuant to the conversion, exercise or exchange of
convertible, exercisable or exchangeable securities.
(iv) The rights and obligations of the Purchaser and Elan under this
paragraph (b) shall not be assignable, except that such rights may be
assigned by the each of the Purchaser and Elan to any of its Affiliates
that agrees in writing to be bound by the provisions of this paragraph (b).
(v) Notwithstanding anything to the contrary in this paragraph (b),
the provisions of this paragraph (b) shall terminate and be of no further
force and effect upon the consummation of (x) any consolidation of the
Company with, or merger of the Company with or into, any person (including
any individual, partnership, joint venture, corporation, trust or group
thereof) ("Person") other than a consolidation or merger pursuant to which
the stockholders of the Company immediately prior to such consolidation or
merger own more than 50% of the outstanding securities entitled, under
general circumstances, to vote in the election of directors of the
surviving Person after such consolidation or merger or (y) any sale,
transfer or conveyance of all or substantially all of the assets of the
Company.
(c) Upon the later of (i) the termination of all rights provided for in the
Registration Rights Agreement in accordance with Section 1.17 thereof and (ii)
the expiration of the New Registration Rights Agreement, and so long as any of
the Purchaser, Elan or any of their Affiliates continues to hold any Securities
or any Shares, Conversion Shares, License Shares or shares of Common Stock or
other Capital Stock issued pursuant to paragraph (b) of this Section 13, in
order to permit each of the Purchaser, Elan and their Affiliates to sell such
securities (subject to Section 14(a) hereof), from time to time, pursuant to
Rule 144, or any successor to such rule or
<PAGE>
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any other rule or regulation of the SEC that may at any time permit the
Purchaser to sell the Shares without registration, the Company shall:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times during which the Company
is subject to the reporting requirements of the Securities Act or the
Exchange Act;
(ii) use its best efforts to file with the SEC in a timely manner all
reports and other documents required to be filed by the Company under the
Securities Act or the Exchange Act (at all times during which it is subject
to such reporting requirements thereof); and
(iii) (x) furnish to the Purchaser and Elan promptly upon request, a
written statement by the Company as to its compliance with the reporting
requirements of the Securities Act and the Exchange Act (at any time during
which it is subject to such to such reporting requirements), a copy of the
most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the
possession of or reasonably obtainable by the Company as the Purchaser or
Elan may reasonably request in availing itself of Rule 144, or any
successor to such rule or any other rule or regulation of the SEC that may
at any time permit the Purchaser or Elan to sell such securities without
registration and (y) take any action (including cooperating with the
Purchaser and Elan to cause the transfer agent for the Common Stock to
remove any restrictive legend on the certificates evidencing such Common
Stock) as shall be reasonably requested by the Purchaser and Elan or which
shall otherwise facilitate the sale of such securities from time to time by
the Purchaser and Elan pursuant to Rule 144, or any successor to such rule
or any other rule or regulation of the SEC that may at any time permit the
Purchaser or Elan to sell such securities without registration.
(d) At such time as Elan acquires beneficial ownership (as defined under
Rule 13d-3 under the Exchange Act) of not less than 15.0% of the outstanding
Common Stock (assuming, for such purpose, the conversion of all Securities held
by Elan and its Affiliates and the conversion, exercise or exchange of all
Capital Stock held by Elan and its Affiliates and acquired pursuant to Section
13(b) hereof, in each case, regardless of the date on which such Securities or
Capital Stock become convertible, exercisable or exchangeable) (the "Beneficial
Owner-
<PAGE>
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ship Threshold"), Elan shall be entitled to designate one member of the
Company's Board of Directors (the "Elan Designee"); provided that, in the event
that Mr. John Groom is a member of the Board of Directors of the Company at such
time as Elan's ownership of Common Stock exceeds the Beneficial Ownership
Threshold (as determined pursuant to this paragraph (d)), Mr. Groom shall be the
Elan Designee. Within five business days following such designation, the Company
shall cause the Elan Designee, if not then a member of the Company's Board of
Directors, to be appointed to the Company's Board of Directors. Thereafter, so
long as Elan's ownership of Common Stock, as determined pursuant to the
immediately preceding sentence, exceeds the Beneficial Ownership Threshold, a
committee of the Company's Board of Directors (or, if no such committee exists
and the full Board of Directors of the Company performs such function, the full
Board of Directors) shall include the Elan Designee in the slate of nominees
recommended by the Company's Board of Directors to stockholders for election as
a director at each annual meeting of stockholders of the Company. If, as a
result of death, disability, retirement, resignation or removal (with or without
cause) of the Elan Designee, Elan shall be entitled to designate a replacement
director to fill the vacancy created by such death, disability, retirement,
resignation or removal and, within five business days following such
designation, the Company shall cause such Elan Designee to be appointed to the
Company's Board of Directors.
(e) Upon the request of the Purchaser, the Company agrees that, with
respect to the issuance and sale of Additional Notes by the Company on
Additional Closing Dates, it will cooperate with the Purchaser in good faith to
make such changes to the form of the Additional Notes (including to bifurcate
any Additional Notes into two or more separate securities) in order to minimize,
to the greatest extent possible, any withholding or deduction for future Taxes
which might be required in connection with payments made by the Company under or
with respect to the Securities (including the issuance of Common Stock upon
conversion of the Securities), so long as any such change does not materially
adversely affect the Company or delay any Additional Closing Date.
(f) In the event that the Company exercises its option to issue License
Shares on any License Share Issuance Date pursuant to either of clauses
10.1.1(3) or (4) of the License Agreement and the issuance of such License
Shares to Elan or its Affiliates would require a filing by the Company under the
HSR Act, the Company shall, as soon as practicable prior to such License Share
Issuance Date and, in any event, use all
<PAGE>
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commercially reasonable efforts to prepare and file or cause to be filed such
required filing on a timely basis in order that the waiting period under the HSR
Act shall expire on or before such License Share Issuance Date.
Elan is intended to be a third-party beneficiary of the covenants set forth
in this Section 13.
SECTION 14. Covenants of Elan.
(a) Elan agrees that, until the [ * * * ] of the Initial Closing Date, it
shall not, and shall not permit any of its Affiliates to, directly or
indirectly, without the prior written consent of the Company, sell, offer to
sell, contract to sell, grant any option to purchase or otherwise transfer or
dispose of ("Transfer"), the Shares, the Conversion Shares, the License Shares
or the Securities; provided that Elan may Transfer the Shares, the Conversion
Shares, the License Shares and the Securities to any of its Affiliates and any
Affiliate of Elan may Transfer the Shares, the Conversion Shares, the License
Shares and the Securities to Elan or to any other Affiliate of Elan, subject to
Elan's agreements set forth in Section 4(b) hereof.
For purposes of this Agreement, except as otherwise expressly provided
herein, the term "Affiliate" shall mean, with respect to any specified person or
entity, any other person or entity controlling, controlled by, or under common
control with such specified person or entity. For purposes of this definition,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person or entity,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative of the
foregoing.
(b) Except for Transfers between or among Elan and its Affiliates, as
permitted by Section 14(a) hereof, Elan agrees that if, at any time after the
date hereof, it or any of its Affiliates (each, an "Offeror") shall desire to
Transfer all or any part of the Securities owned by it for cash, the Offeror
shall first submit to the Company a notice (the "Notice") which shall set forth
a reasonably detailed description of the price and the terms of the proposed
Transfer and shall contain an irrevocable offer to the Company to sell to the
Company all, but not less than all, of the Securities to be Transferred at such
price and on such terms. At any time within 10 days after the Notice is given,
the Company may accept the offer made to
<PAGE>
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it in the Notice by furnishing written notice to the Offeror and may purchase
not less than all of the Securities offered at the price and upon the terms
specified in the Notice by delivering such price to the Offeror, by wire
transfer in immediately available funds to an account designated in the Notice,
against delivery of the promissory note or notes evidencing such Securities. If,
at the end of such 10-day period, the offer contained in the Notice has not been
accepted with respect to all Securities proposed to be Transferred, the Offeror
shall have 60 days in which to Transfer all such Securities to a third party, at
a price not less than [* * *] of the price, and on terms not materially
different from the terms, in each case, set forth in the Notice. If, at the end
of such 60-day period, the Offeror has not completed such Transfer, all
restrictions on Transfer of such Securities set forth in this Section 14(b)
shall again be in effect.
(c) Except as otherwise set forth in this paragraph (c), Elan agrees that,
until the [ * * * ] of the Initial Closing Date, it shall not, and shall not
permit any of its Affiliates to, without the consent of the Company:
(i) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, beneficial ownership (as defined
under Rule 13d-3 under the Exchange Act) of any Common Stock, any
securities which at such time are convertible or exchangeable into or
exercisable for shares of Common Stock, or any direct or indirect rights to
acquire any Common Stock or any securities which at such time are
convertible or exchangeable into or exercisable for shares for Common
Stock, if, after giving effect to any such acquisition, Elan would be the
beneficial owner (as defined under Rule 13d-3 under the Exchange Act) of
more than 25.0% of the outstanding Common Stock, on a fully diluted basis;
(ii) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" to vote (as such terms are used in the rules of
the SEC) or seek to advise or influence any person or entity with respect
to the voting of any Voting Stock of the Company;
(iii) make any public announcement with respect to, or submit a
proposal for, or offer of (with or without conditions) any extraordinary
transaction involving the Company or any of its securities or assets;
<PAGE>
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(iv) form, join or in any way participate in a Group (as defined
below) in connection with any of the foregoing;
(v) take any action that could reasonably be expected to require the
Company to make a public announcement regarding the possibility of any of
the events described in clauses (i) and (ii) above; or
(vi) request that the Company, directly or indirectly, amend or waive
any provision of this paragraph (c).
Notwithstanding the foregoing, this paragraph (c) shall in no way limit or
otherwise restrict or impair the ability of Elan and its Affiliates to convert
the Securities in accordance with their terms. This provision shall terminate
and be of no further force and effect upon the acquisition of, or public
announcement of an intent to acquire, beneficial ownership (as defined under
Rule 13d-3 under the Exchange Act) by any person or group of related persons for
purposes of Section 13(d) of the Exchange Act ("Group") of more than [* * *]% of
the outstanding Common Stock. For purposes of clause (i) of this paragraph (c),
any securities of the Company beneficially owned (as defined under Rule 13d-3
under the Exchange Act) by Elan or any of its Affiliates and acquired pursuant
to this Agreement, the License Agreement or upon conversion of the Securities,
or which are beneficially owned (as defined under Rule 13d-3 under the Exchange
Act) by Elan or any of its Affiliates as a result of their ownership of the
Securities, shall not be counted unless Elan or any of its Affiliates shall
beneficially own (as defined under 13d-3 under the Exchange Act) any other
securities of the Company that are acquired other than pursuant to this
Agreement, the Stock Purchase Agreement, the License Agreement or the
Securities. Notwithstanding this paragraph (c), at any time on or after [ * * *
] of the Initial Closing Date, Elan and its Affiliates may communicate with a
committee of the Company's then independent directors regarding a negotiated
acquisition of all, but not less than all, of the Common Stock then outstanding.
Such committee of independent directors may, in its sole discretion, refuse any
proposal from Elan or its Affiliates regarding a negotiated acquisition. Upon
such refusal, Elan and its Affiliates shall continue to be subject to the
limitations set forth in this paragraph (c) until [ * * * ] of the Initial
Closing Date. For purposes of this paragraph (c), "independent directors" shall
mean those directors of the Company who are
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not directors, officers or Affiliates of Elan or its Affiliates.
(d) Elan agrees that, within 10 days following a Change of Control of Elan
occurring prior to [ * * * ], Elan will notify the Company in writing of such
Change of Control (the "Elan Change of Control Notice") and the Company may, at
its option, not later than the 10th day following receipt of such Elan Change of
Control Notice (the "Purchase Election Date"), notify Elan of the Company's
irrevocable election to purchase, no earlier than 10 days and no later than 20
days following such election, all, but not less than all, of the Shares, the
Conversion Shares, the License Shares and the shares of Common Stock (the
"Initial Shares") purchased by the Purchaser pursuant to the Stock Purchase
Agreement, dated as of September 30, 1998, by and between the Company and the
Purchaser (the "Stock Purchase Agreement"), in each case, owned by Elan and its
Affiliates on the date of such Change of Control, at a per share purchase price
equal to the greater of [ * * * ]; provided, however, that, as a condition to
such repurchase, the Company shall repurchase all, but not less than all, of the
Securities then owned by Elan and it Affiliates pursuant to the terms of such
Securities. Elan agrees that it will not, and will cause its Affiliates not to,
convert any Security after the date of the Change of Control of Elan and prior
to the later of (x) the receipt of a notice from the Company of its election to
purchase and (y) the Purchase Election Date.
For purposes of this paragraph (d), a "Change of Control" of Elan shall be
deemed to have occurred at such time as (i) any other person or Group becomes
the beneficial owner (as defined under Rule 13d-3 under the Exchange Act),
directly or indirectly, of 50.0% or more of the total Voting Stock (as defined
below) of Elan, (ii) there shall be consummated any consolidation or merger of
Elan in which Elan is not the continuing or surviving corporation or pursuant to
which the Voting Stock of Elan would be converted into cash, securities or other
property, other than a merger or consolidation of Elan in which the holders of
the Voting Stock of Elan outstanding immediately prior to the consolidation or
merger hold, directly or indirectly, at least a majority of all Voting Stock of
the continuing or surviving corporation immediately after such consolidation or
merger or (iii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of Elan
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of Elan has been approved by a
majority of the directors then still in office
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who either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of Directors of Elan. The term "Voting Stock" means stock
of any class or classes, however designated, having general voting power under
ordinary circumstances to elect a majority of the board of directors, managers
or trustees of Elan, other than stock having such powers only by reason of the
occurrence of a contingency.
(e) In the event that the Company exercises its option to issue License
Shares on any License Share Issuance Date pursuant to either of clauses
10.1.1(3) or (4) of the License Agreement and the issuance of such License
Shares to Elan or its Affiliates would require a filing by Elan under the HSR
Act, Elan shall use all commercially reasonably efforts to prepare and file or
cause to be filed such required filing on a timely basis in order that the
waiting period under the HSR Act shall expire on or before such License Share
Issuance Date. Subject to compliance by the Company with the provisions of
Section 13(f) hereof, Elan agrees that any License Share Issuance Date may be
postponed until the expiration or, if earlier, the termination of the waiting
period under HSR Act applicable to the filing thereunder made by Elan and, if
required, the Company.
SECTION 15. Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if delivered personally or sent
by nationally recognized overnight delivery service or facsimile (receipt
confirmed) addressed as follows or to such other address of which the parties
may have given written notice:
(i) if to the Company, to:
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, California 92121
Attn: General Counsel
Fax No.: (619) 550-1825
with a copy to:
Brobeck, Phleger & Harrison LLP
550 West C Street, Suite 1300
San Diego, California 92101-3532
Attn: Faye H. Russell, Esq.
Fax No.: (619) 234-3848
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(ii) if to the Purchaser, to:
Elan International Services, Ltd.
102 St. James Court
Flatts Smiths FL 04
Bermuda
Attn: President
Fax No.: (441) 292-2224
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: William M. Hartnett, Esq.
Fax No.: (212) 269-5420
(iii) if to Elan, to:
Elan Corporation, plc
Lincoln House
Lincoln Place
Dublin 2, Ireland
Attn: William F. Daniel
Fax No.: 353-1-709-4000
with a copy to:
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
Attn: William M. Hartnett, Esq.
Fax No.: (212) 269-5420
(iv) (a) on the date delivered, if delivered by facsimile or
personally or (b) on the day after the notice is delivered into the
possession and control of a nationally recognized overnight delivery
service, duly marked for delivery to the receiving party.
SECTION 16. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided that no party may assign its rights or obligations hereunder without
the prior written consent of the other parties. Notwithstanding this Section 16,
each of the Purchaser and Elan may assign any of its rights and obligations
hereunder to any of its Affiliates, subject to its agreements set forth in
Section 4 of this
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Agreement; provided, further, that the Company may assign its obligations
hereunder in connection with the transfer or sale of all or substantially all of
its assets or in the event of its merger or consolidation with or into another
entity, in each case, in a transaction in which the Company is not the surviving
entity. Any assignment in contravention of this Section 16 shall be void. No
assignment shall release the Purchaser, Elan or the Company from any obligation
or liability under this Agreement unless expressly agreed to by the
non-assigning parties.
SECTION 17. Entire Agreement; Amendments. This Agreement and the other
writings referred to herein or delivered pursuant hereto contain the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral and written and all
contemporaneous oral negotiations, commitments and understandings between such
parties, including, but not limited to, the Letter of Intent. This Agreement may
be amended only by a written amendment executed by both parties.
SECTION 18. Severability. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement invalid,
illegal or unenforceable in any other jurisdiction.
SECTION 19. Expenses. Except as otherwise expressly provided herein, the
Purchaser, Elan and the Company will pay the respective fees and expenses
(including, without limitation, legal and accounting fees and expenses) incurred
by each of them in connection with the transactions contemplated hereby.
SECTION 20. Survival of Representations and Warranties. All representations
and warranties made in this Agreement or any other instrument or document
delivered in connection herewith or therewith, shall survive the execution and
delivery hereof or thereof until December 31, 2001.
SECTION 21. Waiver. No failure or delay on the part of a party hereto in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any sin-
<PAGE>
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gle or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder.
SECTION 22. Further Assurances. From and after the date of this Agreement,
upon the reasonable request of one party hereto, the other party hereto shall
execute and deliver such instruments, documents and other writings as may be
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
SECTION 23. GOVERNING LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
SECTION 24. Section Headings. The section headings are for the convenience
of the parties and in no way alter, modify, amend, limit, or restrict the
contractual obligations of the parties.
SECTION 25. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
<PAGE>
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IN WITNESS WHEREOF, this Agreement has been duly executed under seal by the
parties hereto and delivered as of the date first above written.
LIGAND PHARMACEUTICALS
INCORPORATED
By: /s/ William L. Respess
-------------------------------------
Name: William L. Respess
Title: Senior Vice President, General
Counsel Government Affairs
ELAN INTERNATIONAL SERVICES, LTD.
By: /s/ Kevin Insley
------------------------------------
Name: Kevin Insley
Title: President and Chief
Financial Officer
For purposes of Section 1(c), 2(c),
4(b), 10, 11, 13 and 14 only:
ELAN CORPORATION, PLC
By: /s/ Liam Daniel
------------------------------------
Name: Liam Daniel
Title: Group Vice President, Finance
EXHIBIT 2
CONFIDENTIAL TREATMENT REQUESTED
Dated November 9, 1998
ELAN CORPORATION, plc
AND
LIGAND PHARMACEUTICALS INCORPORATED
DEVELOPMENT, LICENCE AND SUPPLY AGREEMENT
<PAGE>
CONTENTS
Page
CLAUSE 1 - PRELIMINARY.......................................................3
CLAUSE 2 - THE LICENCE.......................................................8
CLAUSE 3 - INTELLECTUAL PROPERTY............................................10
CLAUSE 4 - LIGAND COMPETING PRODUCTS........................................15
CLAUSE 5 - DEVELOPMENT OF THE PRODUCT.......................................15
CLAUSE 6 - PROJECT TEAM AND PROJECT MANAGEMENT..............................17
CLAUSE 7 - REGISTRATION OF THE PRODUCT......................................18
CLAUSE 8 - MARKETING AND PROMOTION OF THE PRODUCT...........................19
CLAUSE 9 - SUPPLY OF THE PRODUCT...........................................20
CLAUSE 10 - FINANCIAL PROVISIONS............................................25
CLAUSE 11 - PAYMENTS, REPORTS AND AUDITS....................................27
CLAUSE 12 - DURATION AND TERMINATION........................................29
CLAUSE 13 - CONSEQUENCES OF TERMINATION.....................................30
CLAUSE 14 - WARRANTY AND INDEMNITY..........................................31
CLAUSE 15 - ADVERSE EVENTS AND PRODUCT RECALL...............................34
CLAUSE 16 - MISCELLANEOUS PROVISIONS........................................35
SCHEDULE 1 ELAN PATENT RIGHTS
SCHEDULE 2 SPECIFICATIONS
SCHEDULE 3 ELAN CLINICAL TRIALS
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<PAGE>
THIS AGREEMENT is made on November 9, 1998.
BETWEEN:
(1) ELAN CORPORATION, PLC, a company incorporated in Ireland having its
registered office at Lincoln House, Lincoln Place, Dublin 2, Ireland
("ELAN") and
(2) LIGAND PHARMACEUTICALS INCORPORATED, a company organized under the laws of
Delaware, with offices at 10275 Science Center Drive, San Diego, California
92121, United States of America ("LIGAND").
RECITALS:
A. ELAN is beneficially entitled to the use of various patents, including the
ELAN PATENTS, which have been granted or are pending under the
International Convention in relation to the development and production of
drug specific dosage forms for pharmaceutical products and processes.
B. ELAN is knowledgeable in the development of drug specific dosage forms and
has developed a unique range of delivery systems designed to provide newer
and better formulations of medicaments.
C. LIGAND is desirous of entering into a licensing agreement with ELAN by
virtue of which it will be free to have manufactured in accordance with the
terms of this Agreement and to market the PRODUCT in the TERRITORY without
infringing any of the ELAN INTELLECTUAL PROPERTY rights held by ELAN.
D. ELAN is prepared to licence the ELAN PATENTS in the TERRITORY to LIGAND and
ELAN is prepared to supply the PRODUCT to LIGAND.
E. ELAN and LIGAND are desirous of entering into an agreement to give effect
to the arrangements described at Recitals C and D.
NOW IT IS HEREBY AGREED AS FOLLOWS:
CLAUSE 1 - PRELIMINARY
Definitions: In this Agreement unless the context otherwise requires:
1.1.1 AFFILIATE shall mean any corporation or entity controlling or
controlled or under common control with ELAN or LIGAND, as the case
may be. For the purposes of this Agreement, "control" shall mean
the direct or indirect ownership of more than 50% of the issued
voting shares or other voting rights of the subject entity to elect
directors, or if not meeting the preceding criteria, any entity
owned or controlled by or owning or controlling at the maximum
control or ownership right permitted in the country where such
entity exists.
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<PAGE>
1.1.2 cGCP, cGMP, cGLP shall mean respectively current Good Clinical
Practice, as defined in the Good Clinical Practice Guideline as
published in 62 Federal Register 90 (May 9, 1997), and current Good
Manufacturing Practice and current Good Laboratory Practice as
defined in the FFDCA.
1.1.3 CFR shall mean the US Code of Federal Regulations 21, as amended
from time to time.
1.1.4 CLOSING PRICE shall mean, with respect to the Common Stock of
LIGAND on any trading day, the last reported per share sales price
on [**********] as reported by the NASDAQ National Market or, if
the Common Stock is listed on a United States securities exchange,
the closing per share sales price, regular way, on [**********] on
the principal United States securities exchange on which the Common
Stock is traded, or if no such sale takes place on [**********],
the average of the closing bid and asked prices on [**********].
1.1.5 CMC SECTION shall mean the chemistry, manufacturing, and controls
section of the NDA in the USA as defined in CFR Section 314.50 (1),
as may be amended from time to time, and/or its equivalent in
foreign NDAs.
1.1.6 COMPOUND shall mean the active drug substance morphine and its
salts.
1.1.7 CONVERTIBLE NOTE shall mean the Zero Coupon Convertible Senior Note
due 2008 of November 9 executed by Ligand Pharmaceuticals
Incorporated and issued pursuant to the PURCHASE AGREEMENT.
1.1.8 DMF shall mean Drug Master File, as defined in the CFR Section
314.420 and/or its equivalent in the other countries of the
TERRITORY.
1.1.9 EFFECTIVE DATE shall mean September 30, 1998.
1.1.10 ELAN shall mean Elan Corporation, plc and any of its AFFILIATES.
1.1.11 ELAN IMPROVEMENTS shall mean any improvement or enhancement to the
ELAN PATENTS that is created, conceived or invented during the
INITIAL PERIOD which ELAN is free to license and which are not
subject to contractual obligations with any third party,.
1.1.12 ELAN INTELLECTUAL PROPERTY shall mean the ELAN PATENTS and/or the
ELAN KNOW-HOW and shall include the improvements made by LIGAND as
referred to in Clause 3.1.3 to the extent such improvements relate
to the PRODUCT.
1.1.13 ELAN KNOW-HOW shall mean all knowledge, information, trade secrets,
data and expertise relating to the PRODUCT and which is not
generally known to the public, owned or licensed by ELAN as of the
EFFECTIVE DATE, or developed by ELAN whether before or during the
INITIAL PERIOD relating to the
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<PAGE>
PRODUCT, and which ELAN is free to license and which is not
subject to contractual obligations with any third party, whether
or not covered by any patent, copyright, design patent,
trademark, trade secret or other industrial or any intellectual
property rights.
In the event that ELAN acquires or merges with a third party
entity, ELAN KNOW-HOW shall not include any know-how to the
extent that such know-how relates to a product containing the
COMPOUND which has been approved for marketing or is in
development by the said third party entity. For the avoidance
of doubt, the occurrence of any such acquisition or merger
shall not affect the licence of the ELAN KNOW-HOW granted to
LIGAND hereunder.
For the avoidance of doubt, ELAN KNOW-HOW shall exclude any
know-how owned, licenced or controlled by [**********]
(collectively, the "EXCLUDED KNOW-HOW").
For the avoidance of doubt, ELAN KNOW-HOW shall include any
know-how relating to the PRODUCT owned, licenced or controlled
by [**********], if any.
1.1.14 ELAN PATENTS shall mean all patents and patent applications listed
in Schedule 1. ELAN PATENTS shall also include all continuations,
continuations-in-part, divisionals, ELAN IMPROVEMENTS, and any
patents issuing thereon, and re-issues or re-examinations of such
patents and extensions of any patents licenced hereunder.
Extensions of patents shall include extensions under the U.S.
Patent Term Restoration Act.
For the avoidance of doubt, ELAN PATENTS shall exclude any
patents owned, licenced or controlled by [**********] (the
"EXCLUDED PATENTS").
For the avoidance of doubt, ELAN PATENTS shall include any
patents relating to the PRODUCT owned, licenced or controlled
by [**********], if any.
In the event that ELAN acquires or merges with a third party
entity, ELAN PATENTS shall not include any patent rights of
such third party entity to the extent that such patent rights
relate to a product containing the COMPOUND which has been
approved for marketing or is in development by the said third
party entity. For the avoidance of doubt, the occurrence of
any such acquisition or merger shall not affect the licence of
the ELAN PATENTS granted to LIGAND hereunder.
1.1.15 ELAN TRADEMARK shall mean the trademark, Morphelan(TM).
1.1.16 ENFORCEMENT PROCEEDINGS shall mean the proceedings referred to in
Clause 3.3.2.
1.1.17 EU shall mean the Member States of the European Union, as same may
change from time to time in terms of Member States.
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<PAGE>
1.1.18 EX WORKS shall have the meaning as such term is defined in the ICC
Incoterms, 1990, International Rules for the Interpretation of
Trade Terms, ICC Publication No. 460.
1.1.19 FDA shall mean the United States Food and Drug Administration or
any other successor agency whose approval is necessary to market
the PRODUCT in the United States of America and/or its foreign
equivalents in any other country of the TERRITORY.
1.1.20 FFDCA shall mean the US Federal Food, Drug and Cosmetic Act, and
the regulations promulgated thereunder, as may be amended from time
to time.
1.1.21 FINANCE AGREEMENTS means the PURCHASE AGREEMENT and CONVERTIBLE
NOTE entered into between Elan International Services, Ltd., Elan
Corporation, plc and Ligand Pharmaceuticals Incorporated.
1.1.22 FULLY ALLOCATED COST shall mean, with respect to a party, the fully
allocated cost which is the sum total of all production related
costs for the PRODUCT including direct labour, direct materials and
supplies, variable labour, reasonable overhead and allocable
administration, quality control, quality assurance and other costs;
such costs to be calculated in accordance with a [**********].
1.1.23 INITIAL PERIOD shall mean the initial period of this Agreement, as
more fully described in Clause 12.1.
1.1.24 IN MARKET shall mean the sale of the PRODUCT by LIGAND or by a
distributor of LIGAND to an unaffiliated third party including but
not limited to a wholesaler, chain store, managed care
organisation, hospital, pharmacy or governmental agency.
1.1.25 LAUNCH STOCKS shall mean the quantities of stocks of the PRODUCT
required by LIGAND in relation to the launch of the PRODUCT
following NDA APPROVAL in each country of the TERRITORY, as more
fully described in Clause 9.6.
1.1.26 LIGAND shall mean Ligand Pharmaceuticals Incorporated and any of
its AFFILIATES.
1.1.27 NDA shall mean the New Drug Application or any other application
for regulatory approval which ELAN intends to file and any
supplements or amendments thereto which LIGAND may file, for the
PRODUCT in the United States of America and its foreign equivalent
in Canada.
1.1.28 NDA APPROVAL shall mean the final approval to market the PRODUCT in
the United States of America and/or its foreign equivalent in
Canada and in the case
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<PAGE>
of Clause 2.2. its foreign equivalent in the applicable Member
States of the EU (excluding Ireland and the United Kingdom).
1.1.29 NSP shall, subject to the provisions of Clause 10.3.7, mean in the
case of PRODUCT sold by LIGAND or by a distributor of LIGAND, that
sum determined by [**********] by LIGAND in accordance with
LIGAND's standard accounting principles, expenses incurred by
LIGAND under Clause 3.2.2 if, as a result thereof, a patent is
granted to ELAN and a maximum deduction of [**********] to cover
the following:-
(a) customs duties or other taxes (excluding income or
corporation tax), directly related to the sale of the
PRODUCT which are paid by LIGAND;
(b) a discount from the gross sales proceeds to cover
such normal costs as are incurred by LIGAND in
respect of transport, shipping insurance, returns,
rebates, allowances for bad debt actually taken, and
discounts directly related to the sale of the
PRODUCT.
1.1.30 PRODUCT shall mean the [**********] of the once-daily oral dosage
microparticulate formulation being developed and manufactured by
ELAN containing the COMPOUND as its primary active ingredient.
1.1.31 PROJECT TEAM shall mean the group to be established pursuant to
Clause 6.
1.1.32 PURCHASE AGREEMENT shall mean the Securities Purchase Agreement,
dated as of November 6, 1998 by and among Elan Corporation plc,
Elan International Services, Ltd. and Ligand Pharmaceuticals
Incorporated.
1.1.33 SPECIFICATIONS shall mean the specifications for the PRODUCT set by
the parties for the NDA, as well as such other specifications such
as additional specifications for the PRODUCT as may be agreed by
the parties in writing.
1.1.34 TECHNOLOGICAL COMPETITOR shall mean [**********].
1.1.35 TERRITORY shall mean the United States of America and its
territories and Canada.
1.1.36 $ shall mean United States Dollars.
1.1.37 US or USA shall mean the United States of America.
Interpretation: In this Agreement:
1.2.1 the singular includes the plural and vice versa, the masculine
includes the feminine and vice versa and references to natural
persons include corporate bodies, partnerships and vice versa.
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<PAGE>
1.2.2 any reference to a Clause or Schedule, unless otherwise
specifically provided, shall be respectively to a Clause or
Schedule of this Agreement.
1.2.3 the headings of this Agreement are for ease of reference only and
shall not affect its construction or interpretation.
CLAUSE 2 - THE LICENCE
2.1 Licence to LIGAND:
2.1.1 Subject to the terms of this Agreement, ELAN hereby grants to
LIGAND and LIGAND hereby accepts for the INITIAL PERIOD an
exclusive licence (even as to ELAN) of the ELAN INTELLECTUAL
PROPERTY to import, use, offer for sale and sell the PRODUCT in the
TERRITORY; provided that LIGAND shall grant back to ELAN a non
exclusive royalty-free license to make, use and co-promote the
PRODUCT in the TERRITORY so as to enable ELAN to perform its
obligations pursuant to this Agreement, to enable ELAN to exercise
its rights as set forth in Clause 2.2.1, and for the avoidance of
doubt to conduct further research, development and manufacturing
within the TERRITORY with regard to ELAN's commercialisation of the
PRODUCT outside the TERRITORY.
2.1.2 [**********] shall [**********]; provided, however, LIGAND can
appoint distributors or wholesalers for the PRODUCT in any country
of the TERRITORY to perform those activities which are within
customary boundaries of pharmaceutical product distribution for the
sole purpose of delivering the PRODUCT to retailers for final
commercial sale to patients without such prior consent.
2.1.3 ELAN covenants that neither ELAN nor any of its AFFILIATES will
prosecute any suit against LIGAND regarding any EXCLUDED KNOW-HOW
and EXCLUDED PATENTS by reason of LIGAND exercising its rights
under this Agreement. ELAN further covenants that after the
EFFECTIVE DATE it will not incorporate any know-how or patented
technology of any third party into the PRODUCT without the ability
to licence such know-how or patented technology without LIGAND's
written permission.
2.2 Co-Promotion of the PRODUCT:
ELAN
2.2.1 For the period from the EFFECTIVE DATE up until [**********] in
each country of the TERRITORY, ELAN shall have [**********] to
co-promote the PRODUCT in such country of the TERRITORY for
[**********] on other terms to be agreed in good faith between the
parties and having regard to standard industry practices in such
country of the TERRITORY.
LIGAND
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<PAGE>
2.2.2 For the period from the EFFECTIVE DATE up until [**********] in
each Member State of the EU (excluding Ireland and the United
Kingdom), whether on an individual approval basis or through the
European decentralised procedure, LIGAND shall have a [**********]
to co-promote the PRODUCT in such Member State of the EU for
[**********] on other terms to be agreed in good faith between the
parties (including supply provisions) and having regard to standard
industry practices in such Member State of the EU; provided that
LIGAND has an established sales force in [**********] in such
Member State.
2.3 Exercise of Co-Promotion Option
2.3.1 To exercise the option granted to ELAN in Clause 2.2.1, ELAN shall
deliver written notice of exercise to LIGAND prior to the end of
such option period described in Clause 2.2.1. Thereafter, the
parties shall diligently attempt to reach an agreement of the terms
and conditions governing the co-promotion of the PRODUCT for
[**********] in the TERRITORY. If the parties are unable to reach
in good faith such an agreement within [*****] of the receipt of
such notice, either party may seek arbitration pursuant to Clause
2.3.3.
2.3.2 To exercise the option granted to LIGAND in Clause 2.2.2, LIGAND
shall deliver written notice of exercise to ELAN prior to the end
of such option period described in Clause 2.2.2, specifying which
Member State or Member States in the EU LIGAND intends to
co-promote the PRODUCT. Thereafter, the parties shall diligently
attempt to reach an agreement of the terms and conditions governing
the co-promotion of the PRODUCT for [**********] in such Member
State or Member States, as the case may be. If the parties are
unable to reach in good faith such an agreement within [*****] of
the receipt of such notice, either party may seek arbitration
pursuant to Clause 2.3.3.
2.3.3 In the event that the parties are unable to agree upon the terms
for co-promotion of the PRODUCT by either party as set out at
Clauses 2.2.1. and 2.2.2. above, the parties shall appoint an
arbitrator who is technically knowledgeable in the pharmaceutical
industry to choose either ELAN's last proposed terms or LIGAND's
last proposed terms for the co-promotion on the basis of which
terms he determines to be closer to standard industry practice in
the relevant country or Member State, as the case may be. LIGAND
and ELAN each shall be responsible for [**********] of the total
costs of arbitration incurred in connection with this Clause 2.
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<PAGE>
CLAUSE 3 - INTELLECTUAL PROPERTY
3.1 Ownership of ELAN INTELLECTUAL PROPERTY:
3.1.1 ELAN shall remain the sole owner of the ELAN INTELLECTUAL PROPERTY.
3.1.2 ELAN shall be entitled to use the ELAN INTELLECTUAL PROPERTY, and
all technical, clinical and other data, generated by ELAN and/or by
LIGAND pursuant to this Agreement in connection with:
(a) ELAN's commercial arrangements otherwise than in relation
to the PRODUCT; and
(b) ELAN's promotion of the PRODUCT for [**********] only
in the event that ELAN exercises the option set out
in Clause 2.2.1.; and
(c) the commercialization of the PRODUCT in any countries
outside of the TERRITORY or those which cease to be
part of the TERRITORY; and in the TERRITORY following
termination of this Agreement; and
3.1.3 In consideration for the licences granted by ELAN pursuant to this
Agreement, any improvements relating to the ELAN INTELLECTUAL
PROPERTY, including improvements relating to the formulation,
process or manufacturing of the PRODUCT, made solely by LIGAND, its
officers, servants, agents, and pursuant to the conduct of clinical
trials conducted by or on behalf of LIGAND, its officers, servants,
agents, during the INITIAL PERIOD shall be assigned by LIGAND to
ELAN and shall form part of the ELAN INTELLECTUAL PROPERTY licenced
to LIGAND pursuant to Clause 2.1.
3.2 Filing and maintenance of patents:
3.2.1 ELAN will be entitled but not obliged, at its own expense, to file
and prosecute ELAN PATENTS; to determine the patent filing strategy
in relation to same at its sole discretion and upon grant of any
letters patent of the ELAN PATENTS, to maintain such letters patent
in force.
3.2.2 Should ELAN elect not to file or not to continue the maintenance or
prosecution of any case under the ELAN PATENTS in the TERRITORY, it
shall at LIGAND's request and at LIGAND's expense and within the
rules and regulations of the appropriate patent issuing office
attempt to secure a proprietary position for LIGAND provided,
however, that ELAN shall not be obliged to perform such acts in any
country of the TERRITORY at LIGAND's request where to do so would
violate any law (statutory or judge-made) or regulations in such
country. Any such patent applications shall be made in the name of
ELAN and ownership of such patent applications or patents, if
granted, shall remain with ELAN and will become part of the ELAN
PATENTS for the purpose of this Agreement.
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<PAGE>
3.3 Enforcement
3.3.1 LIGAND and ELAN shall promptly inform the other in writing of any
alleged infringement or unauthorised use of which it shall become
aware by a third party of any intellectual property within the ELAN
INTELLECTUAL PROPERTY and provide such other with any available
evidence of infringement or unauthorized use.
3.3.2 ELAN, at its option, shall be entitled to institute enforcement
proceedings ("ENFORCEMENT PROCEEDINGS") in respect of any
infringement or unauthorised use of the ELAN INTELLECTUAL PROPERTY.
LIGAND agrees to provide all reasonable co-operation and assistance
to ELAN in relation to any such ENFORCEMENT PROCEEDINGS (and agrees
to be named as a party if legally required) at ELAN's expense. Any
reasonable fees and costs borne by LIGAND shall be reimbursed by
ELAN. ELAN shall be entitled to deduct its reasonable expenses in
relation to such ENFORCEMENT PROCEEDINGS (including reasonable
attorney's fees and expenses) from any recovery [**********]. ELAN
and LIGAND each recognise that it is in both parties interest to
enforce ELAN INTELLECTUAL PROPERTY to the full amount provided by
law, and neither party shall, except as required by law, knowingly
make any admission to jeopardise, compromise or otherwise limit the
scope of such ELAN INTELLECTUAL PROPERTY.
3.3.3 In the event that ELAN does not want to institute, or to continue
already instituted, ENFORCEMENT PROCEEDINGS, then LIGAND, using
attorneys of LIGAND's choosing reasonably acceptable to ELAN, can
enforce such rights at its own expense. In such event, LIGAND must
keep ELAN fully and timely informed of the action so as to enable
ELAN to provide input which LIGAND shall reasonably consider.
LIGAND [**********] relating to the invalidity, unenforceability or
non-infringement of the ELAN INTELLECTUAL PROPERTY without ELAN's
prior written consent. ELAN agrees to provide all reasonable
co-operation and assistance to LIGAND in relation to any such
ENFORCEMENT PROCEEDINGS at LIGAND's expense and agrees to be named
as a party in any ENFORCEMENT PROCEEDINGS. Any reasonable fees and
costs borne by ELAN shall be reimbursed by LIGAND. In the event
that LIGAND enforces ELAN INTELLECTUAL PROPERTY in accordance with
this paragraph, LIGAND shall be entitled to deduct its reasonable
expenses in relation to such ENFORCEMENT PROCEEDINGS (including
reasonable attorney's fees and expenses and reimbursements to ELAN)
from any recovery [**********].
3.4 Defence
3.4.1 In the event that a claim or proceeding is brought against LIGAND
or ELAN by a third party alleging that the sale, manufacture, offer
for sale or use of the PRODUCT infringes the patent rights of such
a third party in the TERRITORY, LIGAND shall promptly advise ELAN
of such claim or proceeding and the party
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<PAGE>
against whom the claim or proceeding is brought and the other
party shall meet to discuss in what manner such claim or
proceeding should be defended. Such discussion shall include,
among other things, responsibility of defense, financial
undertaking, cessation of the sale of the PRODUCT and
modification of the PRODUCT to avoid unauthorised use.
3.4.2 In the circumstance where (i) LIGAND or ELAN, or both LIGAND and
ELAN, are sued for infringement of a patent and ELAN is in breach
of its representation and warranty under Clause 14.13 and (ii) no
agreement is made by ELAN and LIGAND under Clause 3.4.1 concerning
a defense, then LIGAND shall defend such action at its expense.
ELAN shall reasonably cooperate with LIGAND in such defense and
shall bear its own expenses (including reasonable attorney fees) to
the extent it participates in the action. LIGAND shall be
responsible for [**********], except that neither party shall be
liable for [**********] against the other for [**********] (or, in
the U.S., as otherwise provided in [**********]) or for any
[**********] (or, in the U.S., as otherwise provided in
[**********]) to the third party against the other arising from
[**********]. LIGAND must keep ELAN fully and timely informed of
the action, including any offers of settlement made to or by
LIGAND, so as to enable ELAN to provide input which LIGAND shall
reasonably consider. LIGAND shall have the right to settle any
claim against LIGAND based on such patent without ELAN's approval
[**********]. LIGAND shall have [**********]. If ELAN [**********]
of a settlement, then ELAN [**********] of such action [**********]
as and from such date, in which case LIGAND [**********] of any
award of [**********] (including the legal costs incurred by LIGAND
up to the date of ELAN [**********] of the action) and shall have
no obligation to contribute to [**********] (or, in the U.S., as
otherwise provided in [**********]) or for [**********] (or, in the
U.S., as otherwise provided in [**********]) arising from
[**********]. In the case in which ELAN [**********] of an action,
LIGAND's contribution to an award of [**********] ELAN shall be
[********************] ELAN and (ii) [**********] LIGAND,
[**********] by [**********] LIGAND; provided however, that in the
event that such sum paid by LIGAND to [**********] LIGAND
[**********] shall be [**********] LIGAND to ELAN. In no event,
shall ELAN be obliged to make any payment to LIGAND arising from
any award [**********] ELAN where ELAN has [**********] of an
action pursuant to this Clause 3.4.2.
3.4.3. In the circumstance where (i) LIGAND or ELAN, or both LIGAND and
ELAN, are sued for infringement of a patent and [**********] of its
[**********] and (ii) no agreement is made by ELAN and LIGAND under
Clause 3.4.1 concerning a defense, then LIGAND shall defend such
action at its expense including the reasonable expenses of ELAN
(not including ELAN's attorney fees) incurred in cooperating with
LIGAND in such defense. LIGAND shall be obligated to pay
[**********] to the third party except that LIGAND shall not be
obligated to pay [**********] (or, in the U.S., as otherwise
provided in [**********]) or for [**********] (or, in the U.S., as
otherwise provided in [**********]) to the
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<PAGE>
third party against ELAN arising from [**********]. LIGAND must
keep ELAN fully and timely informed of the action, including
offers of settlement made to or by LIGAND, so as to enable ELAN
to provide input which LIGAND shall reasonably consider. LIGAND
shall have the right to settle any claim against LIGAND based on
such patent without ELAN's approval. LIGAND shall have no right
to settle a claim against ELAN without ELAN's written approval.
If ELAN [**********] of a settlement, then ELAN shall
[**********] of such action [**********] as and from such date,
in which case [**********] to (i) [**********] by LIGAND up to
the date of ELAN [**********] of the action, and (ii)
[**********] and LIGAND shall have no obligation to contribute to
any [**********] (or, in the U.S., as otherwise provided in
[**********]) or for [**********] (or, in the U.S., as otherwise
provided in [**********]) arising from [**********] by ELAN.
3.4.4 In the situation where (i) LIGAND settles an action against LIGAND
and ceases distribution of the PRODUCT and (ii) ELAN [**********]
of any claim against ELAN under either Clause 3.4.2 or Clause 3.4.3
and, if applicable, ELAN is selling the PRODUCT on its own behalf
or through a distributor in accordance with Clause 2.2.1, then
LIGAND shall have [**********] to an award of damages against ELAN
for the manufacture, use or sale of the PRODUCT which is referable
to the period after LIGAND and/or its distributor ceases
distribution of the PRODUCT.
3.4.5 ELAN shall have no liability to LIGAND whatsoever or howsoever
arising for any losses incurred by LIGAND as a result of having to
cease selling the PRODUCT or having to defer the launch of selling
the PRODUCT, whether as a result of a court order or otherwise
3.5 Trademarks
3.5.1 LIGAND shall be entitled to market the PRODUCT in the TERRITORY
under the ELAN TRADEMARK.
3.5.2 ELAN hereby grants to LIGAND a non-exclusive royalty free license
in the TERRITORY for the INITIAL PERIOD (and thereafter for as long
as LIGAND continues to import, make or have made, use, offer for
sale or sell the PRODUCT in the TERRITORY in accordance with the
provisions of Clause 12.2) to use the ELAN TRADEMARK solely for the
purposes of exercising its rights and performing its obligations
under this Agreement and the following provisions shall apply as
regards the use of the ELAN TRADEMARK by LIGAND:
(1) LIGAND shall ensure that each reference to and use of the ELAN
TRADEMARK by LIGAND is in a manner from time to time approved by
ELAN and accompanied by an acknowledgement, in a form approved by
ELAN, that the same is a trademark (or registered trademark) of
ELAN.
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(2) LIGAND shall not use the ELAN TRADEMARK in any way which might
materially prejudice its distinctiveness or validity or the
goodwill of ELAN therein.
(3) LIGAND shall not use in relation to the PRODUCT any trademarks
other than the ELAN TRADEMARK without obtaining the prior consent
in writing of ELAN, which consent may not be unreasonably
withheld, and except that LIGAND shall have the right to employ
in connection with the PRODUCT, the trademark "LIGAND" and the
tradename "Ligand Pharmaceuticals Incorporated" and such other
trademarks and tradenames as required by law.
(4) LIGAND shall not use in the TERRITORY any trademarks or trade
names so resembling the ELAN TRADEMARK as to be likely to cause
confusion or deception.
(5) LIGAND shall promptly notify ELAN in writing of any alleged
infringement of which it becomes aware by a third party of the
ELAN TRADEMARK and provide ELAN with any applicable evidence of
infringement.
3.5.3 ELAN shall, at its expense, file and prosecute applications to
register and maintain registrations of the TRADEMARK in the
TERRITORY.
3.5.4 ELAN will be entitled to conduct all enforcement proceedings
relating to the ELAN TRADEMARK and shall at its sole discretion
decide what action, if any, to take in respect of any infringement
or alleged infringement of the ELAN TRADEMARK or passing-off or any
other claim or counter-claim brought or threatened in respect of
the use or registration of the ELAN TRADEMARK. Any such proceedings
shall be conducted at ELAN's expense and for its own benefit.
In the event that ELAN fails to take action in respect of any
infringement or alleged infringement of the ELAN TRADEMARK or
passing-off or any other claim or counter-claim brought or
threatened in respect of the use or registration of the ELAN
TRADEMARK, LIGAND may require ELAN defend such action, at
LIGAND's expense, when there is evidence of actual mistake,
confusion, or deception. LIGAND may request ELAN to take action
in respect of acts it deems likely to cause mistake, confusion or
deception at LIGAND's expense. If ELAN denies LIGAND's request,
LIGAND can request an independent attorney skilled in trademark
law to render an opinion, at LIGAND's expense, with respect to
whether such acts are likely to cause mistake, confusion or
deception and if such attorney opines that such acts constitute
an infringement then ELAN shall take such action at LIGAND's
expense; provided however that such independent attorney shall
not be retained by either party in any such subsequent action.
Any amount remaining after the deduction of any reasonable
expenses (including reasonable attorney fees and expenses) shall
be distributed [**********] among
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the parties in which LIGAND shall receive [**********] and ELAN
shall receive [**********].
3.5.5 Except as provided in this Clause 3.5, LIGAND will have no
ownership rights in respect of the ELAN TRADEMARK or any trade
names or trademarks used by ELAN in relation to the PRODUCT or of
the goodwill associated therewith, and LIGAND hereby acknowledges
that, except as expressly provided in this Agreement, it shall not
acquire any rights in respect thereof and that all such rights and
goodwill are, and will remain, vested in ELAN.
LIGAND shall not, at any time during or after the INITIAL
PERIOD, challenge or assist others to challenge the ELAN
TRADEMARK, or the registration thereof or attempt to register
any trademarks, marks, or trade names confusingly similar to
the ELAN TRADEMARK.
CLAUSE 4 - LIGAND COMPETING PRODUCTS
4.1 LIGAND undertakes [**********] in the TERRITORY during the INITIAL PERIOD
and for [**********] thereafter.
CLAUSE 5 - DEVELOPMENT OF THE PRODUCT
5.1 ELAN shall diligently apply its technical skill and expertise, including
the ELAN PATENTS and ELAN KNOW-HOW, in the development of the PRODUCT on
behalf of LIGAND. However, it is acknowledged that pharmaceutical research
and development incorporates inherent risk in terms of outcomes and, save
for acts of negligence or omission by ELAN, ELAN shall have no liability to
LIGAND as a result of any failure or delay of the PRODUCT to obtain the NDA
APPROVAL in one or more of the other countries of the TERRITORY.
5.2 ELAN and LIGAND hereby confirm that each shall undertake its respective
part of the development of the PRODUCT as a collaborative effort and that
the provisions of this Agreement requires that each party diligently
carries out those tasks assigned to it. Each party shall co-operate with
the other in good faith particularly with respect to unknown problems or
contingencies and shall perform its obligations in good faith and in a
commercially reasonable, diligent and workmanlike manner.
5.3 In the event that LIGAND wishes to have more than [**********] developed
pursuant to this Agreement, the parties shall negotiate in good faith as to
the additional costs to be paid to ELAN for such development. The parties
agree that ELAN's charges to LIGAND for any such work shall be as set out
in Clause 10.2 of the Agreement.
5.4 ELAN shall be responsible, [**********], for the completion of the clinical
studies for the PRODUCT listed in Schedule 3 which are currently in
progress. LIGAND shall be responsible for the cost of all development work
and/or clinical trials on the PRODUCT in relation to the NDA APPROVAL and
commercialisation of the PRODUCT in the TERRITORY in addition to such
ongoing clinical trials but shall have no obligation to
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perform such development, work and/or clinical trials. [**********]. In the
event that LIGAND decides not to incur any [**********] or [**********] on
the PRODUCT , the provisions of Clause 7.4 shall be applicable. In relation
to the conduct of all clinical studies other than those listed in Schedule
3, ELAN shall be entitled to charge LIGAND for all research, development
and manufacturing work conducted by ELAN, including the oversight of the
conduct of such clinical studies by one or more third parties, on the basis
set forth in Clause 10.2.
5.5 For the [**********] following submission of the NDA in the USA, LIGAND
shall commit to undertake additional clinical expenditure, including
[**********] (including FULLY ALLOCATED COST of LIGAND and the sums paid by
LIGAND to ELAN as referred to in Clause 5.4 above). The objective of the
programme so conducted shall be to [**********]. LIGAND agrees to carry out
and complete the clinical efficacy programme to a standard and timeframe
that LIGAND would otherwise find acceptable for one of its major branded
products. LIGAND shall keep ELAN informed as to the [**********]. LIGAND
undertakes that it shall carry out all [**********] to prevailing cGCP and
cGLP and most specifically in accordance with FDA standards and guidelines.
In the event that LIGAND does not expend [**********] during the
[**********] following submission of the NDA in the USA, then, unless
otherwise agreed in writing between the parties, LIGAND shall pay any
shortfall between the [**********] and the actual sum expended by LIGAND to
ELAN, provided however, in the event the FDA notifies ELAN of its refusal
to grant the NDA submitted by ELAN and LIGAND, after discussion with ELAN,
determines that it is not commercially viable for LIGAND to incur any
additional development expenses as provided in Clause 5.4, LIGAND shall
have no further obligation to expend or remit sums under this Clause 5.5.
In such event, ELAN shall have the right to terminate this Agreement.
Thereafter, ELAN shall be entitled to research, develop and commercialise
the PRODUCT in the TERRITORY. In the event of such termination, all monies
paid to ELAN by LIGAND pursuant to this Agreement shall not be recoverable
by LIGAND.
5.6 During the development of the PRODUCT, the parties shall review and agree
on interim specifications for the PRODUCT and shall also agree on the final
SPECIFICATIONS following the filing of the NDA in the United States of
America, which shall at that time be attached to this Agreement as Schedule
2. The SPECIFICATIONS may thereafter be amended as agreed by the parties or
as may otherwise be requested or mandated by the regulatory authorities in
the TERRITORY, most specifically the FDA.
5.7 For the avoidance of doubt, the parties hereby confirm that the primary
objective of the development work on the PRODUCT is to generate data
required for inclusion in the NDA and secure NDA APPROVAL for the PRODUCT
in the United States of America. As of the date of this Agreement, it is
the parties' expectation that the body of data so generated in the
development of the PRODUCT will also be used to support such applications
for regulatory approval that LIGAND shall make in the other countries of
the TERRITORY.
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5.8 In the event however that such expectation proves unfounded or incorrect
and further data is required to obtain such other NDA APPROVAL as are
pursued by LIGAND in the other countries of the TERRITORY, LIGAND shall
determine the viability of proceeding further with the regulatory
application and generation of the further data requirements. In the event
that LIGAND elects to continue, the parties shall agree on the programme of
work to be undertaken to generate such additional data and the apportioning
of tasks and costs therefor. LIGAND shall reimburse ELAN for all such
additional work which it requires ELAN to carry out in accordance with
ELAN's charges as set out in Clause 10.2 of the Agreement.
CLAUSE 6 - PROJECT TEAM AND PROJECT MANAGEMENT
6.1 It is recognised by the parties that a significant commitment of resources
shall be required from each party to accomplish successful NDA APPROVAL in
the TERRITORY and launch of the PRODUCT, particularly in the co-ordination
of logistics, finalisation of various specifications, preparation and
agreement of clinical study designs and protocols (other than in relation
to the clinical trials listed in Schedule 3), methodologies transfer,
supply and packaging configurations, shipping and handling procedures etc.
and for this purpose, the parties will establish a PROJECT TEAM.
6.2 The PROJECT TEAM shall consist of a chief representative from each party
together with such additional business and development personnel from each
party who are appropriately skilled and knowledgeable in relation to the
development of the PRODUCT and who are deemed necessary to accomplish such
work. The PROJECT TEAM shall have an equal number of members from each of
the parties.
6.3 Unless otherwise agreed by the parties, the PROJECT TEAM shall meet at
least once each calendar quarter, such meetings to continue until the time
of launch or such later time as may be agreed. The PROJECT TEAM shall meet
alternately at the Georgia offices of ELAN and the San Diego offices of
LIGAND or as otherwise agreed by the parties. Meetings shall be co-chaired
by the chief representatives of the parties. At and between meetings of the
PROJECT TEAM, each party shall keep the other fully and regularly informed
as to its progress with its respective obligations.
6.4 In the event of a dispute amongst the PROJECT TEAM which cannot be resolved
by consensus, such dispute shall be resolved by a management committee
which shall have an equal number of members from each of the parties. In
the event that the dispute cannot be resolved by the management committee,
the dispute shall be referred to the Vice President, Marketing of LIGAND
and the Vice President, Commercial Development, Elan Pharmaceutical
Technologies, a division of ELAN, who shall discuss the matter and attempt
to reach an amicable solution. In the event that the foregoing officers
cannot resolve the dispute amicably, the said officers shall refer the
dispute to the Chairmen of LIGAND and ELAN who shall discuss the matter and
attempt to reach an amicable solution. The provisions of this Clause 6.4.
shall be without prejudice to the parties' other rights and remedies.
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CLAUSE 7 - REGISTRATION OF THE PRODUCT
7.1 ELAN shall be responsible for the compilation, preparation, submission and
prosecution to approval of the NDA for the PRODUCT in each country of the
TERRITORY. ELAN will use its reasonable efforts in prosecuting the NDA to
approval. ELAN shall thereafter maintain at its own cost the NDA and the
NDA APPROVAL in each country of the TERRITORY for the INITIAL PERIOD. The
NDAs shall remain the property of ELAN, provided that ELAN shall allow
LIGAND access thereto to enable LIGAND to fulfill its obligations and
exercise its rights hereunder, including the confidential portions of the
CMC SECTION relating to the formulation and manufacturing processes.
7.2 At meetings of the PROJECT TEAM, ELAN shall consult with LIGAND on the
preparation of the NDA. Notwithstanding the foregoing, ELAN shall at its
sole discretion decide on the ultimate content of the NDA. ELAN shall
notify LIGAND of the NDA APPROVAL in each country of the TERRITORY.
7.3 ELAN shall bear the costs and expenses of filing the NDA with the FDA in
the USA provided that such costs as of the date of submission and filing of
the NDA are consistent with the filing charges prevailing as of the date of
this Agreement. All costs associated with maintaining the NDA APPROVAL
(other than maintaining the manufacturer's licence, the costs of which
shall be borne by ELAN) in each country of the TERRITORY including any post
approval studies required by the FDA in respect of the PRODUCT shall be
paid by ELAN. LIGAND may elect to conduct [**********] in conjunction with
ELAN whether or not [**********] are mandated by the FDA provided that
LIGAND shall bear [**********] in relation to commercialisation of the
PRODUCT in the TERRITORY. Such costs incurred by LIGAND shall be deemed
[**********] under Clause 5.5 of this Agreement.
7.4 If any information or clinical data are requested by the FDA in addition to
the data generated from the clinical trials specified in Schedule 3 in
order to obtain NDA APPROVAL in any country of the TERRITORY, LIGAND, at
its option and at its own cost, may undertake to supply said information or
data. If LIGAND so requests, ELAN will assist LIGAND, at LIGAND's expense,
in the collection of said information or data. [**********], if incurred by
LIGAND, will be deemed [**********] under Clause 5.5 of this Agreement. In
the event that LIGAND decides not to generate any additional information or
clinical data which is requested by the FDA to obtain NDA APPROVAL in any
country of the TERRITORY, then, ELAN shall have the right to terminate the
license granted to LIGAND pursuant to Clause 2.1. for any such country or
countries of the TERRITORY. Thereafter, ELAN shall be entitled to research,
develop and commercialise the PRODUCT in such country or countries of the
TERRITORY. In the event of such termination, all monies paid to ELAN by
LIGAND pursuant to this Agreement shall not be recoverable by LIGAND.
7.5 ELAN shall at its option file DMF(s) for the PRODUCT in its own name and
shall be responsible for all interaction with FDA, and where applicable
other REGULATORY AUTHORITIES, concerning the DMF.
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7.6 ELAN [**********] LIGAND, its agents and employees [**********] to which
LIGAND, its agents and employees [**********] in connection with
[**********] or failure to [**********].
7.7 It is hereby acknowledged that there are inherent uncertainties involved in
the development and registration of pharmaceutical products with the FDA
insofar as obtaining approval is concerned and such uncertainties form part
of the business risk involved in undertaking the form of commercial
collaboration as set forth in this Agreement. Therefore, save for using its
reasonable efforts, neither party shall have any liability to the other
solely as a result of any failure of the PRODUCT to successfully achieve
the interim specifications or to achieve the NDA APPROVAL by the FDA.
7.8 LIGAND shall not conduct any technical analysis, study or test on the
formulations of the PRODUCT without the prior agreement of ELAN, save for
the routine quality tests required to verify conformance with the
SPECIFICATIONS.
CLAUSE 8 - MARKETING AND PROMOTION OF THE PRODUCT
8.1 LIGAND shall control and be responsible for the content and format of the
promotional campaign to be submitted to the FDA; provided that ELAN has the
opportunity to review and provide input into such promotional campaign.
LIGAND shall use reasonable endeavours to obtain approval by the FDA of the
promotional campaign for the PRODUCT.
8.2 Within [**********] after the filing of the NDA in each country of the
TERRITORY, LIGAND and ELAN shall agree upon appropriate due diligence
obligations on LIGAND for marketing the PRODUCT, including the promotional
support budget and minimum sales figures for the [**********] following
commercial launch of the PRODUCT in each country of the TERRITORY, having
regard to standard industry practises. In the event that the parties are
unable to agree upon such due diligence obligations for the PRODUCT within
the time period as set out above, the parties shall appoint an arbitrator
who is technically knowledgeable in the pharmaceutical industry to choose
either ELAN's proposed terms or LIGAND's proposed terms on the basis of
which terms he determines to be closer to standard industry practice in the
relevant country of the Territory. LIGAND and ELAN each shall be
responsible for [**********] of the costs of arbitration incurred in
connection with this Clause 8.2.
8.3 LIGAND shall diligently pursue the commercialisation of the PRODUCT and
shall use all [******] efforts to market and promote the PRODUCT throughout
the TERRITORY and in doing so, shall use the same level of effort as with
other similar products of similar sales potential which it markets. LIGAND
covenants that it shall not use the PRODUCT as a "loss leader" in its
marketing programs and shall at all times use its reasonable efforts in
marketing the PRODUCT.
8.4 LIGAND shall submit to ELAN for ELAN's information, copies of all
promotional and other printed materials which LIGAND proposes at any time
to use in relation to the sale
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of the PRODUCT provided always that the provisions of this Clause 8.4 shall
be without prejudice to the obligations and responsibilities of LIGAND
under Clauses 8.1 and 14.9 and LIGAND shall indemnify and hold harmless
ELAN from and against all claims, damages, losses, liabilities and expenses
to which ELAN may become liable arising out of LIGAND's bad faith, gross
negligence or intentional misconduct in connection with the activities
described in this Clause 8.
8.5 To the extent permitted by law, such materials shall include due
acknowledgement that the PRODUCT is developed and manufactured by ELAN.
8.6 LIGAND shall effect the first full scale national commercial launch of the
PRODUCT in the each country of the TERRITORY within [**********] of the NDA
APPROVAL in such country, provided that LIGAND shall have received the
agreed quantities of LAUNCH STOCKS ordered pursuant to firm purchase orders
at least [**********] in advance of the launch date. ELAN shall not
unreasonably withhold its agreement to a request by LIGAND for an extension
of the said [**********] period if there are legitimate commercial reasons
for such an extension.
8.7 The parties shall meet to discuss the sales performance of the PRODUCT on a
quarterly basis for the first year following the initial launch of the
PRODUCT, on a semi-annual basis for the second and third years and on an
annual basis thereafter. At such meetings, LIGAND shall report on the
ongoing marketing and sales strategy related to the PRODUCT in the
TERRITORY, including marketing approaches educational campaigns,
promotional and advertising materials and campaigns, sales plans and
results, performance against competitors, its objectives for the PRODUCT
and its plans for the next year of the Agreement.
8.8 LIGAND shall mark or have marked all patent number(s) of the ELAN PATENTS
on all PRODUCT or otherwise communicate to the trade the existence of the
ELAN PATENTS in the countries of the TERRITORY in such a manner as to give
constructive or actual notice of infringement under applicable laws.
CLAUSE 9 - SUPPLY OF THE PRODUCT
9.1 Save as otherwise provided in this Agreement, ELAN shall produce and supply
to LIGAND its entire requirements of the PRODUCT. ELAN shall be the sole
and exclusive supplier of the PRODUCT to LIGAND in the TERRITORY and LIGAND
will purchase the PRODUCT exclusively from ELAN in the TERRITORY.
9.2 As a consequence of the restrictions currently imposed upon the
importation, use and distribution of the COMPOUND in and into the countries
of the TERRITORY, the parties acknowledge the requirement to order the
appropriate quantity of COMPOUND in sufficient time to enable the supplier
of the COMPOUND to obtain the appropriate aggregate quota from the Drug
Enforcement Agency in the U.S.A. or its successor agency,, and its
equivalent in Canada (where applicable). In this regard, the parties shall
negotiate and agree upon a binding forecast for the supply of COMPOUND for
the
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applicable calendar year (or part thereof) including the quantity of
COMPOUND which is necessary for the manufacture of the LAUNCH STOCKS. In
the event that LIGAND does not order sufficient PRODUCT to utilise the
quantity of COMPOUND, LIGAND shall reimburse ELAN for the cost of the
unutilised COMPOUND.
9.3 The PRODUCT to be supplied to LIGAND by ELAN shall be in
[******************] complying with the SPECIFICATIONS. ELAN shall deliver
the PRODUCT to LIGAND and/or any party designated by LIGAND in proper
packaging so as to permit safe storage and transport. ELAN shall bear all
the costs of labeling the PRODUCT so as to appropriately display the LIGAND
name provided that LIGAND supplies all the appropriate graphics, designs,
logos and related and appropriate artwork.
9.4 As a consequence of the restrictions currently imposed upon the
importation, use and distribution of COMPOUND into the countries of the
TERRITORY, the parties currently envisage that the PRODUCT shall be
manufactured by ELAN or a nominated sub-contractor in the USA for supply in
the USA and Canada. In the event that the relevant authorities in Canada
prohibit the importation of the PRODUCT from the USA, the parties shall
review alternative arrangements which can be put in place having regard to
such expenditure as is justified and the commercial opportunities available
in the country or countries concerned. In the event that ELAN appoints a
third party manufacturer, such appointment shall be subject to the secrecy
provisions of Clause 16.1 and ELAN shall be solely responsible and liable
to LIGAND for the performance of the said manufacturer. ELAN shall ensure
that the said manufacturer's facility is approved by and complies in all
material respects with the requirements of the FDA of the country where the
PRODUCT is manufactured and sold and that LIGAND has the customary rights
of audit and inspection of such third party manufacturer.
9.5 Within [**********] following the signing hereof, LIGAND shall provide ELAN
with a forecast of LIGAND requirements for the PRODUCT for the 18 month
period following the first anticipated NDA APPROVAL in the TERRITORY. The
said forecast will be updated quarterly until the first NDA APPROVAL in the
TERRITORY. Except as otherwise provided herein (and specifically except as
set out in Clause 9.2. regarding ordering of the COMPOUND), all forecasts
made hereunder shall be made to assist ELAN in planning its production and
LIGAND in planning marketing and sales. Such forecasts shall not be binding
purchase orders, shall not be the basis for a binding commitment under
Clause 9.2 and shall be without prejudice to LIGAND's subsequent firm
purchase orders for the PRODUCT in accordance with the terms of this
Agreement.
9.6 In advance of the first NDA APPROVAL in the TERRITORY and in advance of NDA
APPROVAL in the USA where such approval is not the first NDA APPROVAL in
the TERRITORY, the parties shall discuss and agree upon the manufacture and
purchase of specific quantities of LAUNCH STOCKS; however, for the
avoidance of doubt, the parties hereby confirm that ELAN's manufacturing
obligations shall only arise on receipt of firm purchase orders.
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9.7 ELAN shall deliver the PRODUCT to LIGAND within [**********] of the receipt
of a firm purchase order therefor ([**********] in the case of LAUNCH
STOCKS). In any event and notwithstanding any firm purchase orders for
LAUNCH STOCKS which LIGAND has already placed with ELAN, ELAN will notify
LIGAND within 5 working days of ELAN's receipt of an approval letter, or a
pre-approval letter in respect of a NDA from FDA. LIGAND shall within
[*****] of such notification place a firm purchase order with ELAN for
LAUNCH STOCKS, unless such a purchase order has already been submitted to
ELAN prior to that date. In addition, LIGAND will use its reasonable
efforts to provide forecasts for deliveries in addition to the LAUNCH
STOCKS for the balance of the year in which the NDA APPROVAL is obtained.
9.8 Within [**********] after the first NDA APPROVAL in the TERRITORY and on or
before the 23rd day of each calendar month thereafter, LIGAND shall provide
a rolling 18 month-forecast for the period beginning on the first day of
the relevant calendar month. The format of such 18 month-forecasts shall be
comprised of a 12 month-forecast together with 2 quarterly forecasts. The
first calendar quarter of such 18 month-forecast shall be a binding
purchase commitment of LIGAND. In addition to the obligation of LIGAND
regarding rolling 18 month-forecasts outlined herein, LIGAND shall provide
ELAN with rolling 3 years' forecasts on 1st August of each year of this
Agreement.
9.9 Subject to the agreement of ELAN, the 12 month forecasts (other than for
LAUNCH STOCKS) may increase or decrease from one quarter to the next,
provided, however, ELAN shall not be obligated to produce an amount of
PRODUCT which differs by more than [**********] in terms of volume of
PRODUCT ordered as compared to the preceding quarter. Notwithstanding the
foregoing, ELAN will use its reasonable efforts to fulfil LIGAND's
requirements in excess of forecasted amounts, but shall not be obliged to
meet such requirements if it is not reasonably practicable to do so
provided that ELAN shall supply the PRODUCT so ordered but not immediately
available as soon thereafter as reasonably practicable.
9.10 The parties shall agree upon a minimum order quantity for the manufacture
and supply of each dosage strength the PRODUCT. ELAN shall have the right
to refuse to fulfil orders which do not conform with the provisions of this
Clause 9.10. Where ELAN in its absolute discretion, fulfils any order which
does not conform with the provisions of this Clause 9.10, the fulfillment
of such order by ELAN shall not affect ELAN's right to refuse to fulfil any
subsequent order which does not conform with the provisions hereof.
9.11 Save as otherwise agreed between the parties, delivery of consignments of
PRODUCT shall be effected by ELAN EX-WORKS the manufacturing facility
designated by ELAN. Risk of loss of or damage to any consignment of the
PRODUCT shall pass to LIGAND when each such consignment of the PRODUCT is
loaded onto the vehicle of LIGAND's agent on which it is to be despatched
from the manufacturing facility designated by ELAN. LIGAND shall fully
insure or procure the insurance of all consignments of the PRODUCT from the
time when risk passes as aforesaid and shall produce the supporting
insurance when requested by ELAN.
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9.12 All claims for failure of any delivery of the PRODUCT to conform to the
SPECIFICATIONS under Clause 14 shall be made by LIGAND to ELAN in writing
within [******] following delivery except in the case of latent defects.
Claims for latent defects, which could not reasonably have been discovered
during the routine testing protocol (to be agreed by LIGAND and ELAN),
shall be made by LIGAND to ELAN in writing within [******] of discovery.
Failure to make timely claims in the manner prescribed shall constitute
acceptance of the delivery.
9.13 PRODUCT which has been delivered and which has been shown within the period
designated in Clause 9.12 not to conform to the SPECIFICATIONS where such
non-conformity is attributable to negligent acts or omissions of ELAN shall
be replaced at ELAN's cost within [******] of the receipt by ELAN of the
failed PRODUCT except where such non-conformity is attributable to
negligent acts or omissions of LIGAND.
9.14 In the event of an unresolved dispute as to conformity of the PRODUCT with
the SPECIFICATIONS, the parties shall within 30 days appoint an independent
first class laboratory to undertake the relevant testing and its findings
shall be conclusive and binding upon the parties. All costs relating to
this process shall be borne solely by the unsuccessful party. In the event
that the parties should fail to agree a mutually acceptable independent
laboratory within such 30 day period, the Head of the School of Pharmacy,
Trinity College, Dublin, Ireland shall be entrusted with appointing such
independent laboratory.
9.15 In the event that ELAN fails to deliver to LIGAND a significant portion of
an order of PRODUCT for a period exceeding [******] from the due delivery
date therefor, or there are [***************************************] are
caused by the supplier of the COMPOUND or other raw materials or due to the
applicable governmental imposed quota system for the COMPOUND), ELAN shall,
if requested by LIGAND, meet with LIGAND as soon as possible thereafter to
discuss the reasons for the [******] and outline to LIGAND its plans to
remedy the situation. If following such meeting, or further meetings which
may be agreed by the parties, the parties agree that ELAN is unlikely to
remedy the situation within 90 days of the last such meeting, upon written
request by LIGAND, ELAN shall for so long as such conditions exist:
9.15.1 grant to LIGAND a production licence in the applicable country or
countries of the TERRITORY so that LIGAND may manufacture the
relevant PRODUCT without infringing any of the ELAN INTELLECTUAL
PROPERTY. Any such licence shall apply only in regard to the
relevant PRODUCT as well as to the applications of technology
derived from the ELAN PATENT RIGHTS related to its use with such
PRODUCT;
9.15.2 provide LIGAND with any technical data incorporated in the ELAN
KNOW-HOW, including but not limited to, access to the CMC SECTION,
to give effect to the provisions of Clause 9.15.1 and ELAN shall
promptly provide to LIGAND the documentation constituting the
required material support, more particularly
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practical performance advice, shop practice, specifications as to
materials to be used and control methods; and
9.15.3 assist LIGAND with the working up and use of the technology and
with the training of LIGAND's personnel to the extent which may
reasonably be necessary in relation to the manufacture of the
PRODUCT by LIGAND. In this regard, ELAN will receive LIGAND's
scientific staff in its premises for certain periods, the term of
which will be agreed by the parties.
For the avoidance of doubt, the parties confirm that a royalty of
[**********] shall be payable by LIGAND to ELAN on sales of
PRODUCT manufactured by LIGAND hereunder.
9.16 When ELAN has remedied the cause of its failure to satisfy LIGAND's
requirements and is once again able to fulfil its obligations to supply the
PRODUCT, LIGAND shall cease manufacturing the PRODUCT and shall resume
purchasing the PRODUCT exclusively from ELAN pursuant to the terms of this
Agreement provided that LIGAND shall be entitled to manufacture the PRODUCT
for such period as is [*************] to enable LIGAND to [*************]
by LIGAND in establishing its manufacturing capability for the PRODUCT
prior to commercial production of the PRODUCT as provided for in this
Clause 9.16. To the extent LIGAND's FULLY ALLOCATED COST of manufacturing
the PRODUCT is [*************] to which ELAN would be entitled to under
Clause 10.3.1, such [*************] of LIGAND's FULLY ALLOCATED COST
expended in establishing such manufacturing capability for the PRODUCT.
Furthermore, the royalty payable by LIGAND to ELAN pursuant to Clause 9.15
on sales of PRODUCT manufactured by LIGAND shall be [*********] from
[**********] to [**********]. Such [*********] in the royalty shall be
[*********] towards [*********] of such FULLY ALLOCATED COST [*********] by
LIGAND establishing such manufacturing capability for the PRODUCT. At such
time LIGAND [*********] such FULLY ALLOCATED COST from the [*********]
price of PRODUCT and the reduction in royalty payments, the royalty payable
pursuant to Clause 9.15 shall revert to [**********]. Upon cessation of
manufacture by LIGAND under this Clause 9.16, the production licence
granted by ELAN to LIGAND under Clause 9.15 shall automatically terminate.
9.17 In manufacturing the PRODUCT under Clause 9.15, LIGAND shall be responsible
for all process and equipment validation required by the FDA and the
regulations thereunder and shall take all steps reasonably necessary to
pass government inspection by the FDA.
9.18 At any time during the INITIAL PERIOD, ELAN shall be entitled to notify
LIGAND of its intention to cease manufacture of the PRODUCT due to poor
economic return on the PRODUCT, provided, however, that such notice is
given to LIGAND at least [**********] prior to the date ELAN intends to
cease manufacturing the PRODUCT. In such event, ELAN shall grant LIGAND a
production licence in accordance with Clauses 9.15 and 9.17. For the
avoidance of doubt, the parties confirm that a royalty of
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[**********] shall be payable by LIGAND to ELAN on sales of PRODUCT
manufactured by LIGAND hereunder.
9.19 ELAN will grant to [**********] or any other subsidiaries of ELAN, as
necessary or appropriate, a licence of the ELAN PATENTS and ELAN KNOW-HOW
and other intellectual property rights necessary for such company or
companies to manufacture the PRODUCT in accordance with the terms of this
Agreement.
CLAUSE 10 - FINANCIAL PROVISIONS
10.1 Licence Royalties:
10.1.1 In consideration of the licence of the ELAN PATENTS granted to
LIGAND under this Agreement, LIGAND shall pay to ELAN the following
amounts:-
(1) $5 million in cash or in shares of Common Stock of LIGAND, par
value $.001 per share (the "Common Stock") (valued at $11.65 per
share), at LIGAND's option, upon the execution of the Agreement
by both parties;
(2) $10 million in cash, or at LIGAND's option, in cash through an
increase in the issue amount of the CONVERTIBLE NOTE, upon the
execution of the Agreement by both parties;
(3) [**********] in cash or in shares of Common Stock of LIGAND
(valued at a price per share equal to [**********]; and
(4) [**********] in cash or in shares of Common Stock of LIGAND
(valued at a price per share equal to [**********].
10.1.2. In the event that LIGAND elects to issue shares of the Common Stock
pursuant to Clause 10.1.1(1), (3) or (4) or the CONVERTIBLE NOTE
pursuant to Clause 10.1.1(2), each such issuance shall be made
pursuant to, and subject to the terms and conditions set forth in,
the PURCHASE AGREEMENT. Nothing in this Agreement shall relieve
LIGAND from its obligations to make the payments set forth in
Clauses 10.1.1(1), (2), (3), or (4), in cash, in the event that any
of the applicable conditions set forth in the PURCHASE AGREEMENT
are not satisfied or waived on or prior to the required payment
date thereof; provided however, that in the event that LIGAND
elects to issues shares of Common Stock pursuant to Clause
10.1.1.(1), (3) or (4) and ELAN is unable to satisfy the conditions
to such issuance as set forth in the PURCHASE AGREEMENT or if such
conditions have not been waived by LIGAND, as the case may be,
LIGAND and ELAN shall negotiate in good faith to agree upon
customary terms and conditions which will enable LIGAND to issue
such shares pursuant to a transaction exempt from the registration
requirements of the Securities Act pursuant to Regulation D
thereunder, including the giving by ELAN, to the extent possible,
of representations and warranties in connection therewith.
10.2 Additional Assistance and Work:
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In the event that work or technical assistance beyond that
specified in Schedule 3 ("ADDITIONAL WORK") is requested by
LIGAND, or is necessary to complete the development of the
PRODUCT, LIGAND shall reimburse ELAN in respect of the cost of
such ADDITIONAL WORK requested by LIGAND or required pursuant to
the terms of this Agreement provided that:
10.2.1 where ELAN conducts ADDITIONAL WORK under Clause 10.2, ELAN's
charges for such work shall be ELAN's [**********] except where
ELAN is supervising any clinical studies for LIGAND, ELAN's charges
for such supervisory work shall be ELAN's [**********].
10.2.2 payment for all ADDITIONAL WORK carried out by ELAN hereunder shall
be effected in U.S. Dollars within [**********] of the date of
receipt of the relevant invoice for completed ADDITIONAL WORK.
10.3 Price of PRODUCT:
10.3.1 The price of the PRODUCT to be charged by ELAN to LIGAND for
commercial sale shall be :
(1) [**********] of NSP for the [**********] in the TERRITORY;
(2) [**********] of NSP for the [**********] in the TERRITORY; and
(3) [**********] of NSP for [**********] during the INITIAL PERIOD of
the Agreement.
Said price shall apply to PRODUCT supplied EX WORKS ELAN's
facility to LIGAND. Notwithstanding the other provisions of this
Agreement, ELAN shall in no circumstances be obliged to supply
PRODUCT to LIGAND for commercial sale at less than [**********]
("FLOOR PRICE").
10.3.2 The price of the PRODUCT to be charged to LIGAND for supplies of
PRODUCT for distribution as [**********] promotional samples
(including an indigent patient program not to exceed [**********]
of PRODUCT sold IN MARKET by LIGAND in each country of the
TERRITORY) in its marketing of the PRODUCT shall be equivalent to
[**********] which price shall apply to PRODUCT supplied EX WORKS
ELAN's facility to LIGAND.
10.3.3 ELAN shall supply the PRODUCT to LIGAND at the [**********]. The
purchase price of the PRODUCT may be adjusted by ELAN each calendar
quarter with the understanding that such purchase price is intended
to represent the [**********].
10.3.4 Within 45 days of the end of each calendar quarter, LIGAND shall
notify ELAN of the NSP of PRODUCT for that previous calendar
quarter and pay to ELAN the excess of: (i) the percentage of NSP of
PRODUCT for that previous calendar
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quarter calculated in accordance with Clause 10.3.1. over (ii)
the [**********] paid by LIGAND for such PRODUCT pursuant to
Clause 10.3.4.
10.3.5 Payment for all PRODUCT supplied by ELAN to LIGAND shall be made in
$ within [****] of the date of the relevant invoice.
10.3.6 All prices for the PRODUCT are exclusive of any applicable value
added or any other sales tax, for which LIGAND will be additionally
liable.
10.3.7 In the event that LIGAND shall sell the PRODUCT together with other
products of LIGAND to third parties (by the method commonly known
in the pharmaceutical industry as "bundling") and the price
attributable to the PRODUCT is less than the average price of "arms
length" sales to similar customers for the reporting period in
which sales occur (such sales to be excluded from the calculation
of the average price of "arms length" sales), NSP for any such
sales shall be the average price of "arms length" sales by LIGAND
to similar customers in the country where such bundling occurs
during the reporting period in which such sales occur.
10.3.8 For the avoidance of doubt the parties agree that if for whatever
reason the PRODUCT supplied by ELAN to LIGAND is not sold by
LIGAND, payment to ELAN for such PRODUCT shall nonetheless be
effected at [**********].
CLAUSE 11 - PAYMENTS, REPORTS AND AUDITS
11.1 LIGAND shall keep true and accurate records of gross sales of the PRODUCT,
the items deducted from the gross amount in calculating the NSP, the NSP
and the royalties payable to ELAN under Clause 10. LIGAND shall deliver to
ELAN a written statement ("the STATEMENT") thereof within 45 days following
the end of each calendar quarter, (or any part thereof in the first or last
calendar quarter of this Agreement) for such calendar quarter. The
STATEMENT shall outline on a country-by-country basis, the calculation of
the NSP from gross revenues during that calendar quarter, the applicable
percentage rate, and a computation of the sums due to ELAN (i.e. the price
of the PRODUCT determined in accordance with Clause 10.3.1 less
[**********]). The parties' financial officers shall agree upon the precise
format of the STATEMENT.
11.2 Payments due on NSP of the PRODUCT based on sales amounts in a currency
other than US Dollars shall first be calculated in the foreign currency and
then converted to US Dollars on the basis of the exchange rate in effect
for the purchase of US Dollars with such foreign currency quoted in the
Wall Street Journal (or comparable publication if not quoted in the Wall
Street Journal) with respect to the sale of currency of the country of
origin of such payment for the day prior to the date on which the payment
by LIGAND is being made.
11.3 Any income or other taxes which LIGAND is required by law to pay or
withhold on behalf of ELAN with respect to royalties and any other monies
payable to ELAN under
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this Agreement shall be deducted from the amount of such NSP payments,
royalties and other monies due. LIGAND shall furnish ELAN with proof of
such payments. Any such tax required to be paid or withheld shall be an
expense of and borne solely by ELAN. LIGAND shall promptly provide ELAN
with a certificate or other documentary evidence to enable ELAN to support
a claim for a refund or a foreign tax credit with respect to any such tax
so withheld or deducted by LIGAND. The parties will reasonably cooperate in
completing and filing documents required under the provisions of any
applicable tax treaty or under any other applicable law, in order to enable
LIGAND to make such payments to ELAN without any deduction or withholding.
11.4 All payments due hereunder shall be made to the designated bank account of
ELAN in accordance with such timely written instructions as ELAN shall from
time to time provide.
11.5 LIGAND shall pay interest to ELAN at the Prime Rate publicly announced by
Morgan Guaranty Trust Company of New York at its principal office on the
date (or next to occur business day, if such date is not a business day) on
which payment should have been made pursuant to the applicable provisions
of this Agreement plus [****] on all late payments more than 10 days past
due under this Agreement applicable from the date on which payment should
have been made pursuant to the applicable provisions of this Agreement
until the date of payment.
11.6 Where meetings of the PROJECT TEAM have ceased and where ELAN so requests
to supplement the information available to ELAN at the meetings of the
parties under Clause 8.7, LIGAND shall provide ELAN with annual sales
reports outlining the status of the PRODUCT in the TERRITORY, including a
report on the competitive position of the PRODUCT in its relevant market
segment(s).
11.7 For the 180 day period following the close of each calendar year of the
Agreement, ELAN and LIGAND will, in the event that the other party
reasonably requests such access, provide each other's independent certified
accountants (reasonably acceptable to the other party) with access, during
regular business hours and subject to the confidentiality provisions as
contained in this Agreement, to such party's books and records relating to
the PRODUCT, solely for the purpose of verifying the accuracy and
reasonable composition of the calculations hereunder for the calendar year
then ended.
11.8 In the event of a discovery of a discrepancy which exceeds [***] of the
amount due or charged by a party for any period, the cost of such
accountants shall be borne by the audited party; otherwise, such cost shall
be borne by the auditing party.
11.9 ELAN shall make (and where relevant shall procure that ELAN's subcontractor
shall make) that portion of its manufacturing, testing or storage facility
where PRODUCT is manufactured, tested or stored, including all record and
reference samples relating to the PRODUCT available for inspection by
LIGAND's duly qualified person or by the relevant governmental or
regulatory authority. The investigation shall be limited to
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determining whether there is compliance with cGMP and other requirements of
applicable law.
CLAUSE 12 - DURATION AND TERMINATION
12.1 This Agreement shall be deemed to have come into force on the EFFECTIVE
DATE and, subject to the rights of termination outlined in this Clause 12
will expire on a country by country basis:
12.1.1 on the [**********] of the date of the launch of the PRODUCT in the
country concerned; or
12.1.2 in any country upon the expiration of the life of the last to
expire patent included in the ELAN PATENTS in that country;
whichever date is later to occur ("the INITIAL PERIOD").
12.2 Not later than [**********] prior to the end of the INITIAL PERIOD on a
country by country basis, ELAN and LIGAND shall enter into a long-term
supply agreement upon terms and conditions to be mutually agreed between
the parties. If the parties fail to enter into such a long-term supply
agreement, ELAN shall grant LIGAND a licence to the ELAN KNOW-HOW to
manufacture the PRODUCT for sale in the TERRITORY and access to the CMC
SECTION of the NDA APPROVAL upon terms and conditions to be mutually agreed
between the parties, including a [**********] on NSP of sales of such
PRODUCT.
12.3 In addition to the rights of termination provided for elsewhere in this
Agreement, either party will be entitled forthwith to terminate this
Agreement by written notice to the other party if:
12.3.1 that other party commits any material breach of this Agreement, and
(A) in the case of a breach capable of cure, fails to cure the same
within 60 days after receipt of a written notice giving full
particulars of the breach and requiring it to be remedied or (B) in
the case of a breach not capable of cure, the non-breaching party
has a remedy at law;
12.3.2 that other party goes into liquidation (except for the purposes of
amalgamation or reconstruction and in such manner that the company
resulting therefrom effectively agrees to be bound by or assume the
obligations imposed on that other party under this Agreement);
12.3.3 an encumbrancer takes possession or a receiver is appointed over
any of the property or assets of that other party;
12.3.4 any proceedings are filed or commenced by that other party under
bankruptcy, insolvency or debtor relief laws or anything analogous
to any of the foregoing
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under the laws of any jurisdiction occurs in relation to that
other party, and such proceeding is not dismissed within 90 days;
12.4 For the purposes of Clause 12.3.1, a breach will be considered capable of
remedy if the party in breach can comply with the provision in question in
all respects other than as to the time of performance (provided that time
of performance is not of the essence).
12.5 In further addition to the rights and termination provided for elsewhere in
this Agreement, ELAN shall be entitled to terminate the licence granted to
LIGAND under this Agreement for any country or countries of the TERRITORY
in the event that:-
12.5.1 LIGAND fails to effect any one of the commercial launches required
by Clause 8 in accordance with the provisions thereof; or
12.5.2 a TECHNOLOGICAL COMPETITOR of ELAN shall directly or indirectly,
acquire [**********] or more of LIGAND's capital stock, or
otherwise control or influence in any material respect the
management or business of LIGAND, or
12.5.3 any person or entity other than a TECHNOLOGICAL COMPETITOR shall
acquire [**********] or more of the voting stock of LIGAND, or
otherwise merge, consolidate or enter into any similar transaction
(or binding agreement in respect thereof) with LIGAND; provided,
however, that the foregoing shall not apply in relation to any
exercise of any options by ELAN as contemplated herein or by the
FINANCE AGREEMENTS.
CLAUSE 13 - CONSEQUENCES OF TERMINATION
13.1 Upon exercise of those rights of termination specified in Clause 12 or
elsewhere in this Agreement, this Agreement shall, subject to the
provisions of the Agreement which survive the termination of the Agreement
automatically terminate forthwith and be of no further legal force or
effect.
13.2 Upon termination of the Agreement by either party, or upon termination by
ELAN of a licence for a particular country under Clause 12.5, the following
shall be the consequences relating to the TERRITORY or the particular
country, as applicable:
13.2.1 any sums that were due from LIGAND to ELAN under the provisions of
Clause 10 or otherwise howsoever prior to the exercise of the right
to terminate this Agreement as set forth herein shall be paid in
full within 30 days of termination of this Agreement and, subject
to Clause 13.2.4, ELAN shall not be liable to repay to LIGAND any
amount of money paid or payable by LIGAND to ELAN up to the date of
the termination of this Agreement;
13.2.2 all confidentiality provisions set out herein shall remain in full
force and effect for a period of [******] from the date of
termination of this Agreement;
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13.2.3 all responsibilities and warranties shall insofar are appropriate
remain in full force and effect;
13.2.4 the rights of inspection and audit shall continue in force for the
period referred to in the relevant provisions of this Agreement;
13.2.5 ELAN shall be entitled to research, develop and commercialise the
PRODUCT for its own benefit in the TERRITORY or in the relevant
country or countries of the TERRITORY;
13.2.6 the licence granted by ELAN to LIGAND of the ELAN TRADEMARK under
Clause 3.5 shall automatically terminate; and
13.2.7 the option granted by ELAN to LIGAND to co-promote the PRODUCT in
the Member States of the EU (excluding Ireland and Great Britain)
under Clause 2.2.2. shall automatically terminate.
CLAUSE 14 - WARRANTY AND INDEMNITY
14.1 ELAN represents and warrants that it has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly and validly authorized, executed
and delivered by ELAN and constitutes a valid and legally binding agreement
of ELAN enforceable against ELAN in accordance with its terms, except that
(A) the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought and (B) any rights to indemnity or contribution thereunder
may be limited by federal and state securities laws and public policy
considerations.
14.2 ELAN represents and warrants that it has the sole, exclusive and
unencumbered right to grant the licences and rights herein granted to
LIGAND, and that it has not granted any option, licence, right or interest
in or to the ELAN PATENTS or ELAN KNOW-HOW to any third party which would
conflict with the rights granted by this Agreement. ELAN also represents
and warrants that none of the EXCLUDED PATENTS or EXCLUDED KNOW-HOW is
necessary to import, use, offer for sale, sell and make or have made the
PRODUCT. ELAN agrees to hold LIGAND harmless from any and all damages and
reasonable out-of-pocket expenses and costs (including reasonable
attorneys' fees) incurred or sustained by LIGAND as the result of any third
party's challenges to ELAN's right to grant the licences and rights herein
granted to LIGAND.
14.3 ELAN represents and warrants that the execution of this Agreement and the
consummation of the transactions contemplated hereby will not breach or in
any way conflict with the terms and conditions of any licence, contract,
understanding or agreement, whether express, implied, written or oral
between ELAN and any third party.
14.4 ELAN represents and warrants that no consent, approval, authorization or
order of any
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court or governmental agency or body or third party is required for the
execution and delivery by ELAN of this Agreement of the consummation by
ELAN of the transactions contemplated hereby, except that no representation
or warranty is made with repsect to filings required by the Hart-Scot
Rodino Antitrust Improvements Act of 1976, as amended, upon issuance of
shares of Common Stock of LIGAND pursuant to Clauses 10.1.1 (3) and (4)
hereof.
14.5 ELAN represents and warrants that, once successfully developed, the PRODUCT
supplied by ELAN to LIGAND under this Agreement will conform to:
14.5.1 the SPECIFICATIONS;
14.5.2 all applicable regulations and requirements of the FDA including
the then cGMP regulations which apply to the manufacture and supply
of the PRODUCT.
EXCEPT AS EXPRESSLY STATED IN THIS CLAUSE 14, ALL OTHER
WARRANTIES, CONDITIONS AND REPRESENTATIONS, EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE, INCLUDING A WARRANTY AS TO THE QUALITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OF THE PRODUCT ARE HEREBY
EXCLUDED AND EXCEPT AS EXPRESSLY STATED IN THIS CLAUSE 14, ELAN
SHALL NOT BE LIABLE IN CONTRACT, TORT OR OTHERWISE FOR ANY LOSS,
DAMAGE, EXPENSE OR INJURY, ARISING OUT OF OR IN CONNECTION WITH
THE PRODUCT OR ANY DEFECT IN THE PRODUCT OR FROM ANY OTHER CAUSE.
14.6 LIGAND represents and warrants that it has all requisite corporate power
and authority to execute, deliver and perform its obligations under this
Agreement. This Agreement has been duly and validly authorized , executed
and delivered by LIGAND and constitutes a valid and legally binding
agreement of LIGAND enforceable against LIGAND in accordance with its
terms, except that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought and (B) any rights to indemnity or
contribution thereunder may be limited by federal and state securities laws
and public policy considerations.
14.7 LIGAND represents and warrants that the execution, delivery and performance
by LIGAND of this Agreement and the consummation by LIGAND of the
transactions contemplated hereby will not conflict with or constitute or
result in a breach of or a default under (or an event which with notice or
passage of time or both would constitute a default under) or violation of
any of (i) the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which LIGAND is
bound or to which any of its properties or assets is subject, except for
any such conflict, breach, default, violation or event which would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, liabilities (contingent or otherwise,
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operations, condition (financial or otherwise), solvency, properties,
prospects or material agreements of the LIGAND (any such event, a "Material
Adverse Effect"), (ii) the certificate of incorporation or bylaws of LIGAND
or (iii) (assuming compliance with all applicable state securities or "Blue
Sky" laws and assuming the accuracy of the representations and warranties
of each of ELAN set forth in this Clause 14 of this Agreement and the
accuracy of the representations and warranties of ELAN and Elan
International Services, Ltd., set forth in Section 4 of the SECURITIES
PURCHASE AGREEMENT of even date herewith) any statute, judgment, decree,
order, rule or regulation applicable to LIGAND or any of its properties or
assets, except for any such conflict, breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect.
14.8 LIGAND represents and warrants that no consent, approval, authorization or
order of any court or governmental agency or body or third party is
required for the execution and delivery by LIGAND of this Agreement of the
consummation by LIGAND of the transactions contemplated hereby, except that
no representation or warranty is made with repsect to filings required by
the Hart-Scot Rodino Antitrust Improvements Act of 1976, as amended, upon
issuance of shares of Common Stock of LIGAND pursuant to Clauses 10.1.1 (3)
and (4) hereof.
14.9 LIGAND represents and warrants to ELAN that in the promotion, marketing,
transporting, storing, handling, distributing and selling the PRODUCT
hereunder:
14.9.1 it will exercise all due skill, care and diligence in conducting
such activities; and
14.9.2 it will comply with the provisions of this Agreement, all FDA and
other approvals, all applicable state and local regulatory
approvals and all applicable laws, ordinances and regulations.
14.10 LIGAND represent and warrants that immediately after the consummation of
the transactions contemplated by this Agreement. the fair value and present
fair saleable value of the assets of LIGAND (on a consolidated basis) will
exceed the sum of its stated liabilities and identified contingent
liabilities; LIGAND (on a consolidated basis) is, nor will LIGAND (on a
consolidated basis) be, after giving effect to the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby and thereby, (a) left with unreasonably small capital
with which to carry on its business as it is proposed to be conducted, (b)
unable to pay its debts (contingent or otherwise) as they mature or (c)
otherwise insolvent.
14.11 ELAN is cognisant in all material respects of all applicable statutes,
ordinances and regulations of the TERRITORY with respect to the manufacture
of the PRODUCT including, but not limited to the FFDCA, including cGLP and
cGMP. ELAN shall manufacture or procure the manufacture the PRODUCT in
conformance with the SPECIFICATIONS and the relevant NDA or DMF and in a
manner which complies in all material respects with such statutes,
ordinances, regulations and practises.
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14.12 Each of the parties shall indemnify, defend and hold harmless the other
party from all actions, losses, claims, demands, damages, costs and
liabilities (including reasonable attorneys' fees) to which the other party
is or may become liable insofar as they arise out of any breach by the
first party of any of its obligations or warranties under this Agreement.
14.13 ELAN represents and warrants that, as of the date of this Agreement, to
the best of its knowledge and belief, that making, using or selling the
PRODUCT would not infringe any patent of any third party in the TERRITORY.
14.14 As a condition of obtaining an indemnity in the circumstances set out in
Clauses 14.5, 14.6 and 14.9, the party seeking an ------------ ---- ----
indemnity shall:
14.14.1 fully and promptly notify the other party of any claim or
proceedings, or threatened claim or proceedings;
14.14.2 permit the indemnifying party to take full control of such claim or
proceedings;
14.14.3 assist in the investigation and defence of such claim or
proceedings;
14.14.4 not compromise or otherwise settle any such claim or proceedings
without the prior written consent of the other party, which consent
shall not be unreasonably withheld; and
14.14.5 take all reasonable steps to mitigate any loss or liability in
respect of any such claim or proceedings.
14.15 Notwithstanding anything to the contrary in this Agreement, ELAN and
LIGAND shall not be liable to the other by reason of any representation or
warranty, condition or other term or any duty of common law, or under the
express terms of this Agreement, for any consequential or incidental or
punitive loss or damage (whether for loss of profits or otherwise) and
whether occasioned by the negligence of the respective parties, their
employees or agents or otherwise.
CLAUSE 15 - ADVERSE EVENTS AND PRODUCT RECALL
15.1 Each party shall notify the other party promptly:
15.1.1 of any complaints from third parties reported to such party
involving any serious and unexpected adverse reactions resulting
from the use of the PRODUCT; and
15.1.2 of any potential recall of the PRODUCT by any governmental
authority.
15.2 LIGAND and ELAN shall establish a procedure for formal adverse event
handling and reporting. It is envisaged that LIGAND shall be responsible
for
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furnishing post-marketing reports to ELAN and where applicable, ELAN will
be responsible for furnishing such reports to the FDA. LIGAND and ELAN
shall keep each other informed and shall copy the other party with all
communications with the FDA and other relevant regulatory agencies with
respect to the PRODUCT.
15.3 In the event of any recall of the PRODUCT, as suggested or requested by any
governmental authority:
15.3.1 LIGAND shall perform the recall of the PRODUCT in the TERRITORY and
save as provided in Clause 15.3.2, [**********].
15.3.2 If the recall arises from ELAN's negligent acts or omissions in
manufacturing the PRODUCT, the recall costs [**********] provided
that LIGAND [**********] of the PRODUCT [**********].
In the event that ELAN [**********] hereunder, ELAN shall be
entitled but shall not obliged to [**********] of the PRODUCT
described in Clause 15.3.1 and LIGAND shall provide ELAN
[**********] by ELAN.
15.3.3 Neither party shall be liable to the other party or to any third
party for consequential or incidental damages which may arise as a
result of the recall of the PRODUCT.
15.4 In the event that ELAN exercises its option pursuant to Clause 2.2, the
parties shall review, and if appropriate, negotiate and amend the
provisions of Clause 15, as appropriate.
CLAUSE 16 - MISCELLANEOUS PROVISIONS
16.1 Secrecy:
16.1.1 Any information, whether written or oral (oral information shall be
reduced to writing within one month by the party giving the oral
information and the written form shall be furnished to the other
party) pertaining to the PRODUCT that has been or will be
communicated or delivered by ELAN to LIGAND, or by LIGAND to ELAN,
including, without limitation, trade secrets, business methods, and
cost, supplier, manufacturing and customer information, shall be
treated by LIGAND and ELAN, respectively, as confidential
information, and shall not be disclosed or revealed to any third
party whatsoever or used in any manner except as expressly provided
for herein; provided, however, that such confidential information
shall not be subject to the restrictions and prohibitions set forth
herein to the extent that such confidential information:
(1) is available to the public in public literature or otherwise, or
after disclosure by one party to the other becomes public
knowledge through no default of the party receiving such
confidential information; or
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(2) was known to the party receiving such confidential information
prior to the receipt of such confidential information by such
party, whether received before or after the date of this
Agreement; or
(3) is obtained by the party receiving such confidential information
from a third party not subject to a requirement of
confidentiality with respect to such confidential information; or
(4) is required to be disclosed pursuant to: (A) any order of a court
having jurisdiction and power to order such information to be
released or made public; or (B) any lawful action of a
governmental or regulatory agency provided that each party shall
notify the other in writing of any disclosure of information
required hereunder prior to such disclosure.
16.1.2 Each party shall take in relation to the confidential information
of the other party all such precautions as it normally takes with
its own confidential information to prevent any improper disclosure
of such confidential information to any third party; provided,
however, that such confidential information may be disclosed within
the limits required to obtain any authorisation from the applicable
FDA or any governmental or regulatory agency or, with the prior
written consent of the other party, which shall not be unreasonably
withheld, or as may otherwise be required in connection with the
purposes of this Agreement.
16.1.3 LIGAND agrees that it will not use, directly or indirectly, any
ELAN KNOW-HOW, or other confidential information disclosed to it by
ELAN or obtained by it from ELAN pursuant to this Agreement, other
than as expressly provided herein.
16.1.4 Neither party will publicise the existence of this Agreement in any
way without the prior written consent of the other party subject to
the disclosure requirements of applicable laws and regulations. In
the event that either party wishes to make an announcement
concerning the Agreement, that party will seek the consent of the
other party. The terms of any such announcement shall be agreed in
good faith.
16.1.5 At the request of a party in writing, the other party shall not
disseminate any public announcement for a period of 60 days from
the receipt of such request regarding this Agreement or the
transactions contemplated hereby or regarding such requesting
party, without such requesting party's consent, which shall not be
unreasonably withheld, provided, however, a party may disseminate a
public announcement regarding the foregoing if such party obtains
an opinion of independent counsel that such party is obligated by
law to disseminate such information to the public.
16.2 Specific Performance:
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Each of ELAN and LIGAND acknowledges and agrees that in the event either
party materially breaches an obligations under this Agreement which can be
specifically performed, the aggrieved party shall be entitled to seek
specific performance of this Agreement and to enjoin any continuing breach
of this Agreement (without the necessity of proving actual damages and
without posting bond or other security), in addition to any other remedy
which such aggrieved party may be entitled to at law or in equity and each
of ELAN and LIGAND will waive the defence in any action for specific
performance or other equitable relief that a remedy at law would be
adequate or that the services provided hereunder are personal in nature.
16.3 Assignments/Sub-contracting:
Neither party shall be permitted to assign or sub-licence any of its rights
under this Agreement without the prior written consent of the other;
provided that ELAN and LIGAND may assign this Agreement to an AFFILIATE
without such consent provided that such assignment has no adverse tax
implications for the other party and provided further that such assigning
party is not relieved of its obligations hereunder. Notwithstanding the
foregoing, but subject to ELAN's right to terminate this Agreement in
Clause 12.5.3, LIGAND may transfer or assign its rights under this
Agreement without the prior written consent of ELAN to a person that
acquires all or substantially all of the assets or capital stock of LIGAND,
provided that such assignment has no adverse tax implications for ELAN
under this Agreement (but not in connection with the transfer of Shares of
Common Stock of LIGAND granted to ELAN pursuant to this Agreement or the
Securities Purchase Agreement). ELAN shall also have the right to
subcontract all or any portion of the manufacturing or packaging of the
PRODUCT to one or more third parties. LIGAND shall also have the right to
subcontract all or any of its obligation regarding development of the
PRODUCT. Each party shall be responsible for the acts and/or omissions of
its respective AFFILIATES and subcontractors.
16.4 Parties bound:
This Agreement shall be binding upon and enure for the benefit of parties
hereto, their successors and permitted assigns.
16.5 Severability:
If any provision in this Agreement is agreed by the parties to be, or is
deemed to be, or becomes invalid, illegal, void or unenforceable under any
law that is applicable hereto:
16.5.1 such provision will be deemed amended to conform to applicable laws
so as to be valid and enforceable or, if it cannot be so amended
without materially altering the intention of the parties, it will
be deleted, with effect from the date of such agreement or such
earlier date as the parties may agree; and
16.5.2 the validity, legality and enforceability of the remaining
provisions of this Agreement shall not be impaired or affected in
any way.
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16.6 Force Majeure:
Neither party to this Agreement shall be liable for delay in the
performance of any of its obligations hereunder if such delay results from
causes beyond its reasonable control, including, without limitation, acts
of God, fires, strikes, acts of war, or intervention of a government
authority, non-availability of raw materials, but any such delay or failure
shall be remedied by such party as soon as practicable.
16.7 Relationship of the parties:
Nothing contained in this Agreement is intended or is to be construed to
constitute ELAN and LIGAND as partners or members of a joint venture or
either party as an employee of the other. Neither party hereto shall have
any express or implied right or authority to assume or create any
obligations on behalf of or in the name of the other party or to bind the
other party to any contract, agreement or undertaking with any third party.
16.8 Amendments:
No amendment, modification or addition hereto shall be effective or binding
on either party unless set forth in writing and executed by a duly
authorised representative of both parties.
16.9 Waiver:
No waiver of any right under this Agreement shall be deemed effective
unless contained in a written document signed by the party charged with
such waiver, and no waiver of any breach or failure to perform shall be
deemed to be a waiver of any future breach or failure to perform or of any
other right arising under this Agreement.
16.10 No effect on other agreements:
This Agreement supersedes that certain Letter of Intent dated September 28,
1998 between the parties as such Letter of Intent relates to the subject
matter hereof. Except as limited by the foregoing sentence, no provision of
this Agreement shall be construed so as to negate, modify or affect in any
way the provisions of any other agreement between the parties unless
specifically referred to, and solely to the extent provided, in any such
other agreement.
16.11 Governing law and jurisdiction:
This Agreement is construed under and ruled by the laws of New York. For
the purposes of this Agreement the parties submit to the non-exclusive
jurisdiction of the courts of New York.
16.12 Notice:
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16.12.1 Any notice or communications to be given under this Agreement shall
be written in English and shall be sufficiently given if delivered
personally or sent by nationally recognised overnight delivery
service, or telecopier (receipt confirmed), addressed as follows:
ELAN at
Elan Corporation, plc.
Lincoln House
Lincoln Place
Dublin 2
Ireland.
Attention: Vice-President & General Counsel,
Elan Pharmaceutical Technologies
Telephone: 353 1 7094000
Telefax: 353 1 6624960
LIGAND at
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego
California 92121
USA.
Attention: General Counsel
Telephone: (619) 550-7500
Telefax: (619) 550-7506
or to such other address(es) and telecopier numbers as may
from time to time be notified by either party to the other
hereunder.
16.12.2 Any notice sent by mail shall be deemed to have been delivered
within 7 working days after dispatch and any notice sent by
telecopy shall be deemed to have been delivered within 24 hours of
the time of the despatch. Notice of change of address shall be
effective upon receipt.
IN WITNESS of which the parties have executed this Agreement.
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Executed by LIGAND on November , 1998
By : /s/ William L. Respess
-----------------------------------
Name: William L. Respess
-----------------------------------
Senior Vice President General
-----------------------------------
Title: Counsel, Government Affairs
-----------------------------------
Executed by ELAN on November , 1998
By: /s/ Liam Daniel
-----------------------------------
Name: Liam Daniel
-----------------------------------
Title: Group Vice President, Finance
-----------------------------------
<PAGE>
SCHEDULE 1
ELAN PATENTS
[**********] [**********]
[**********] [**********]
[**********] [**********]
<PAGE>
SCHEDULE 2
SPECIFICATIONS
<PAGE>
SCHEDULE 3
CLINICAL TRIALS
[**********]
