Allergan and Ligand propose a rights offering (see Section V.A) to their respective shareholders to subscribe for units of a newly-formed company, Allergan Ligand Retinoid Therapeutics ("ALRT") to discover, develop and commercialize drugs based on Retinoids in the Field, combining the parties' library of 1,400 retinoid compounds with Allergan's product development expertise and Ligand's intracellular receptor technology.
Upon consummation of the subscription offering, the JV (established in 6/92--see separate analysis) will be dissolved, and Allergan, Ligand and ALRT will effect the following agreements:
a) a Technology License Agreement;
b) a Research and Development Agreement;
c) a Commercialization Agreement;
d) an Administrative Agreement;
e) a Services Agreement;
f) a 1057 Purchase Agreement;
g) an Asset Purchase Agreement; and
h) a Tax Allocation Agreement.
The Field shall mean Retinoids, together with the receptors to which such compounds bind and all agonists and antagonists of such receptors, for any use in humans or animals, excluding:
(A) Compound 168;
(B) Compound 1069;
(C) Acquired Products and Independent Products;
(D) if the 1057 Purchase Option is exercised, Compound 1057; and
(E) the making and/or using of Compound 168, Compound 1069, Acquired Products, Independent Products, or, if the 1057 Purchase Option is exercised, Compound 1057 for any purpose (see Section I.F).
Retinoid shall mean any and all compounds included within the metabolic pathways of beta-carotene and other naturally occurring carotenes acting through the retinoid receptors to which such compounds bind and all agonists and antagonists of such receptors, excluding Compound 168 and Compound 1069.
Compound 168 shall mean the compound owned by Allergan known as tazarotene (AGN 190168) with the following molecular structure: Ethyl 6 - [2-(4, 4 - Dimethylthiochroman - 6 - yl) - Ethynyl] Nicotinate, its amides, other esters, free acid or salts thereof.
Compound 1069 shall mean the compound owned by Ligand designated as LG 1069 with the following molecular structure: 4'-[1-(3,5,5,8,8-pentamethyl-5,6,7,8-tetrahydro-2-naphthyl)ethenyl]benzoic acid, its amides, esters or salets thereof. [Definition of Compound 1057 CON.]
Acquired Product shall mean any Retinoid product, and any related technology licensed or otherwise acquired by Allergan or Ligand after signing of these Agreements, that was being commercially sold or for which an application to market had been filed in the US or in another Major Country at the time of its licensing or acquisition.
Independent Product shall mean any Program Compound that (i) has completed the research phase and for which the Board has determined not to enter into the development phase or (ii) has entered the development phase but for which the Board has determined not to continue Development.
Major Country shall mean any of the following countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, India, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Mexico, Monaco, Norway, PRC, Philippines, Portugal, Republic of Korea, Republic of China, Russia, South Africa, Spain, Sweden, Switzerland, The Netherlands, US and UK.
B. Research Period:
5 years
C. Cost Sharing & Reimbursement Basis:
In consideration of the research and development activities to be carried out by Allergan and Ligand, ALRT shall pay Allergan and Ligand separately out of Available Funds for all research and development costs (direct costs and an additional 260% as a standard overhead rate) invoiced to ALRT, respectively, plus an additional 10% of such costs, excluding third party contract costs.
Prior to ___, 1998, if the parties receive one or more quarterly financial statements of ALRT which show Available Funds of less than $10.0 million, Allergan and Ligand, at their option, may jointly provide ALRT with a written commitment to make a cash advance to ALRT in an amount considered sufficient by the Board. Additionally, with respect to one set of quarterly financial statements prior to ___, 1999, Allergan and Ligand, at their option, may choose to jointly provide ALRT with a written commitment to make a cash advance of not less than $10.0 million to ALRT ("Additional Contribution"). Any advances provided by Allergan and Ligand above shall be made pursuant to loans on terms reasonably acceptable to Ligand, Allergan and ALRT.
If Allergan and Ligand exercise the 1057 Purchase Option (see Section I.F.), all research and development shall cease with respect to Compound 1057. The Program Committee and the Board shall agree upon an allocation to one or more of the remaining Program Compounds, or to new Program Compounds.
Available Funds shall mean the sum of (i) the net proceeds to ALRT from the sale of the units, plus (ii) the Contributions (see Section I.D), plus (iii) the Additional Contributions, plus (iv) any licensing or marketing income earned by ALRT, plus (v) interest and other income earned, less (a) all general and administrative expenses, less (b) any amounts paid to Allergan or Ligand under the Research and Development Agreement, the Technology License Agreement and the Commercialization Agreement, less (c) $1.0 million to be retained by ALRT as working capital. Any funds received from Allergan and Ligand upon exercise of the 1057 Purchase Option shall be excluded from Available Funds.
D. Upfront Payment:
Immediately prior to the consummation of the subscription offering (see Section V.A), Allergan and Ligand will contribute $50.0 million and $17.5 million, respectively, in cash to ALRT (the Contributions) in consideration of certain purchase options that will be granted to Allergan and Ligand, as follows:
Allergan:
IA) $15.0 million for the 1057 Purchase Option (see Section V.F);
2A) $5.0 million for the Stock Purchase Option (see Section V.F); and
3A) $30.0 million for the Asset Purchase Option.
Ligand:
1L) $5.25 million for the 1057 Purchase Option; and
2L) $12.25 million for the Stock Purchase Option (see Section V.F).
E. Benchmark Amounts:
None
F. Technology Acquisition Fees:
1057 Purchase Option:
The 1057 Purchase Option may be exercised by Allergan and Ligand together or not at all, and upon exercise thereof each of the parties will receive an undivided one-half interest in the following assets of ALRT related to the Compound 1057:
1a) Compound 1057;
1b) all Compound 1057 Products;
1c) all Program Technology applicable solely to the Compound 1057 Products;
1d) all tangible manifestations of the Compound 1057 Technology Rights, including laboratory notebooks, patent applications, descriptions of chemical compounds, biological materials, biological systems and related process science; and
1e) all INDs, Drug Approval Applications and all regulatory approvals.
The 1057 Purchase Option is exercisable commencing on the earlier of (i) 6/3/97, and (ii) the receipt of regulatory approval in the US, the UK, Canada, France, Spain, Germany, Italy or Japan and ending on the earlier of (i) 90 days after receipt of such regulatory approval and (ii) 6/3/2000. The exercise price for the 1057 Purchase Option shall be paid by Allergan and Ligand as follows:
The exercise price may be paid in cash, in shares of Ligand or Allergan Common Stock or in any combination thereof, at the sole discretion of Ligand and Allergan; provided, however, that Allergan shall not use unregistered Ligand Common Stock to pay all or any portion of the exercise price unless Ligand uses Ligand Common Stock to pay all or any portion of the exercise price. The number of shares of Ligand or Allergan Stock, if any, to be delivered in payment of the exercise price shall be determined by dividing the portion of the exercise price to be paid in shares by the average of the closing prices of respective Common Stock for the 20 trading days immediately preceding the day prior to the closing of the 1057 Purchase Option.
Asset Purchase Option:
The Asset Purchase Option may be exercised by Allergan to acquire from ALRT the following:
1) an undivided one-half interest in all Program Technology of ALRT ("Technology Rights");
2) an undivided one-half interest in all tangible manifestations of the Technology Rights, including laboratory notebooks, patent applications, descriptions of chemical compounds and related process science useful in the Field;
3) an undivided one-half interest in all biological materials and biological systems of ALRT;
4) an undivided one-half interest in all INDs Drug Approval Applications and all regulatory approvals;
5) the entire amount of the consideration paid by Allergan to ALRT in connection with the exercise, if any, by Allergan and Ligand of the 1057 Purchase Option; and
6) 50% of all other assets of ALRT.
The Asset Purchase Option may be exercised by Allergan commencing from and after the date Ligand provide the notice to exercise the Stock Purchase Option. The exercise price for the Asset Purchase Option shall be paid by Allergan as follows:
The exercise price for the Asset Purchase Option shall be paid in cash, in registered shares of Ligand Common Stock then owned by Allergan, in registered shares of Allergan Common Stock or in any combination thereof, at the sole discretion of Allergan.
G. Payment Schedule:
Allergan and Ligand shall each invoice ALRT for all research and development incurred, or expected to be incurred during the period commencing 1/1/95 and ending on ____(UKN). Such invoice shall be paid by ALRT within 15 days of its receipt.
After the initial payment, ALRT shall pay to Allergan and Ligand monthly, in advance, one-third of all research and development costs budgeted for the calendar quarter.
H. Budgets:
Allergan and Ligand have provided ALRT with a workplan and budget acceptable to ALRT covering the period beginning on 1/1/95 and continuing through 12/31/99. Research costs and development costs incurred on behalf of ALRT by Allergan and Ligand shall not exceed 120% of the amount allocated to each party in the annual workplan and budget, unless otherwise approved by the Board.
I. Reimbursement Start Date:
1/1/95.
J. Regulatory Filings:
Allergan shall assume sole responsibility for (i) performing and managing all development activities for an Eye and Skin Compound (a Program Compound for development for use in an Eye and Skin Indication--see Section II.B), including clinical trials, and (ii) assembling suitable Drug Approval Applications for such compounds.
ALRT shall initially allocate the primary responsibility for development of other compounds, as follows:
a) by Ligand with respect to development in North America of Other Retinoid Compounds (a Program Compound for development for medical uses other than for Eye or Skin Indications) for use Eye and Skin Cancer (see Section II.B) where the dosage form involves systemic administration;
b) by Ligand with respect to development in North America of Other Retinoid Compounds for use in Eye and Skin Cancer where the dosage form involves topical administration;
c) by Ligand with respect to development in North America of Other Retinoid Compounds for use in Cancer Indications other than Eye and Skin Cancer;
d) by Allergan with respect to development outside North America of Other Retinoid Compounds for use in Cancer Indications, including Eye and Skin Cancer;
e) to be determined by ALRT with respect to development of Other Retinoid Compounds for use in indications other than a Cancer Indication.
Drug Approval Applications for Eye and Skin Compounds shall be prepared and filed in the name of Allergan. Drug Approval Applications for Other Retinoid Compounds shall be prepared and filed by the party with primary responsibility for the compound developed.
K. Special Capital Requirements
No provision.
L. Patent Ownership:
Each party owns its own Technology.
The Technology shall include all technical information including patent rights, know-how, data, pre-clinical and clinical results, license application materials and all supporting documents, methods, devices, techniques, discoveries, inventions, Retinoid compound libraries, and any materials which Allergan or Ligand (i) owns or controls as of signing or (ii) may discover, develop, acquire or control during the Research Term.
Allergan Technology shall not include Compound 168, Compound 168 Products, Independent Products or Allergan Acquired Products or, if the 1057 Purchase Option is exercised, Compound 1057 or Compound 1057 Products and such Technology acquired or controlled following signing pursuant to licenses from third parties.
Ligand Technology shall not include Compound 1069, Compound 1069 Products, Independent Products or Ligand Acquired Products or, if the 1057 Purchase Option is exercised, Compound 1057 or Compound 1057 Products and such Technology acquired or controlled following signing pursuant to licenses from third parties.
M. Patent Filing Costs:
Each of Allergan and Ligand shall, at ALRT's expense, file, prosecute, issue and maintain its patent applications and patents.
After the expiration or termination of the Stock Purchase Option (other than by exercise--see Section IV.F), ALRT shall have the exclusive right, at its sole expense, to prepare, prosecute and maintain patent applications and to maintain patents.
N. Patent Defense Costs:
The party who owns the patent that is alleged to be infringed by a third party shall be deemed the party best suited to carrying out an appropriate course of action to enforce such patent. Any recovery realized at the expense of a party (other than ALRT) resulting from infringement in the Field shall be retained by the party enforcing the patent; any recovery realized prior to the expiration or termination of the Stock Purchase Option at the expense of ALRT shall be deemed Available Funds.
After the expiration or termination of the Stock Purchase Option (other than by exercise), ALRT shall have the sole right to enforce patent for acts of infringement within the Field at its sole expense, and shall be entitled to retain any amounts recovered.
O. 3rd-Party Patents:
All paid by ALRT.
If the third party license to be secured for the benefit of ALRT has applications inside and outside the Field, the parties shall negotiate in good faith the allocation of any costs associated with securing such rights.
P. Non-Compete Provisions:
No provision
Q. Publications:
Each party shall submit to the other party manuscripts of any research applicable to the Field at least 30 days prior to presentation or submission for publication, for purposes of allowing the other party to comment on the manuscript, request the filing by the submitting party of a patent application, or initiate the filing of such patent application.
R. Core Technology:
Each owns its own.
At any time prior to the expiration or termination of the Stock Purchase Option and upon request by ALRT, each party shall provide to ALRT access to all physical manifestations of the Program Technology which they control.
For a period of 12 months after expiration or termination of the Stock Purchase Option, each party shall provide to ALRT reasonable technical assistance and instruction in understanding, interpreting and applying the Program Technology and commercially developing Products.
S. Cancellation Amounts:
None
T. Termination:
The Technology License Agreement may be terminated as follows:
a) by mutual agreement of the parties;
b) if the Stock Purchase Option is exercised by Ligand without Allergan exercising the Asset Purchase Option;
c) if the Stock Purchase Option is exercised by Allergan;
d) if both the Stock Purchase Option and the Asset Purchase Option are exercised;
e) with respect to Compound 1057 only if the 1057 Purchase Option is exercised;
f) by Allergan and Ligand upon uncured breach of material obligation or bankruptcy of ALRT; or
g) by ALRT upon uncured breach of material obligation or bankruptcy of Allergan or Ligand.
The Research and Development Agreement and/or the Commercialization Agreement may be terminated in accordance with a), b) or c) above.
The Commercialization Agreement will terminate upon occurrence of any of the following:
1) in the event the Stock Purchase Option is exercised by Ligand without Allergan exercising the Asset Purchase Option;
2) in the event the Stock Purchase Option is exercised by Allergan; or
3) with respect to Compound 1057 only if the 1057 Purchase Option is exercised.
U. Product Reversion:
In the event of termination by ALRT pursuant to uncured breach or bankruptcy of Allergan or Ligand, the license granted by the breaching party to ALRT and to the other party (the "non-breaching party") shall remain in full force and effect.
In the event the non-breaching party provides notice of its agreement to assume the breaching party's obligation, the Technology License Agreement, the Research and Development Agreement, the Commercialization Agreement and other Program Agreements shall continue in effect as to the non-breaching party. The breaching party's right to receive a 3% royalty shall survive termination of its rights.
If the non-breaching party reasonably requires supply of a Product to effectuate its rights on termination and the breaching party is engaged in the manufacture of such Product, the parties will negotiate in good faith an appropriate Manufacturing and Supply Agreement during an interim period (not to exceed 24 months) while the non-breaching party makes other supply arrangements.
V. Change in Control:
Neither party may assign any right or obligation under the Agreements without the prior written consent of the other party.
In the event of a change in control involving Allergan or Ligand, the other party, other than ALRT, (the Continuing Party) shall have the following rights:
a) if the acquiring party is developing or marketing products which would be directly competitive with Other Retinoid Compounds being developed or commercialized as part of the Retinoid Program, then the Continuing Party shall have the right to assume sole responsibility for the research, development and commercialization of such competing Other Retinoid Compounds.
In the event of a change in control of Allergan, the acquiring party shall assume Allergans rights to develop and commercialize Eye and Skin Compounds and Eye and Skin Products.
In the event of a change in control of Ligand, the warrants are subject to an accelerated exercise date (see Section V.E).
W. Options/Other:
ALRT shall give prompt written notice to Allergan and Ligand following the time that any Program Compound becomes an Independent Product. Allergan and Ligand may elect to develop and commercialize such Independent Product, either jointly or alone, using their own funds, subject to the following conditions:
a) the Board shall have made a reasonable determination that continued development of such product would not materially conflict with the interests of the Retinoid Program or impair a partys ability to perform its obligations under the Program Agreements; and
b) Allergan and/or Ligand shall commit to spend at least $1.0 million per year on development of the Independent Product for the initial indication or medical use during each of the first two years of independent development.
ALRT shall have a one-time right to resume participation in the development of an Independent Product (see Section I.A). Such right shall terminate as of the earlier of (i) the commencement of phase 3 clinical trials with respect to such Independent Product and (ii) termination of the Research and Development Agreement.
If ALRT exercises its right to resume participation in the development of an Independent Product, Allergan and/or Ligand shall deliver to ALRT a statement setting forth in reasonable detail the unreimbursed development costs incurred by the developing parties outside of the Retinoid Program with respect to such Independent Product. Upon receipt of such statement, ALRT shall promptly (i) reimburse the developing parties, as applicable, for the entire amount of such costs; (ii) pay the developing parties, as applicable, an additional amount representing a 25% internal rate of return on such unreimbursed costs; and (iii) pay a royalty of 4% of Net Sales of any Products resulting from such Independent Product to be shared equally by the developing parties (unless it is being developed solely by Allergan or Ligand).
2. Product License(s)
A. License Holder/Type:
ALRT shall be granted an exclusive license to employ Allergan Technology and Ligand Technology to make, have made, use, sell, supply, import and export Products in the Field (subject to the parties' Stock Purchase Option--see Section IV.F).
ALRT grants to Allergan and Ligand the following rights:
1) each of Allergan and Ligand shall have a co-exclusive license to use the Program Technology to make, have made, use, sell, supply, import and export Products to the extent necessary to perform their respective obligations under the Commercialization Agreement; and
2) Allergan shall have an exclusive license to use the Program Technology to make, have made, use, sell, supply and import Eye and Skin Products.
ALRT appoints Allergan and Ligand as its exclusive agent to manufacture, market, sell and distribute Products, as follows:
By Allergan
a) Eye and Skin Products throughout the Territory;
b) Other Retinoid Products to dermatologists and Eye Specialists in North America for use in Eye and Skin Cancer; and
c) Other Retinoid Products throughout the Territory for use in Cancer Indications, including Eye and Skin Cancer.
By Ligand
d) Other Retinoid Products to oncologists in North America for use in Eye and Skin Cancer; and
e) Other Retinoid Products in North America for use in Cancer Indications other than Eye and Skin Cancer.
ALRT retains the exclusive right to manufacture, market, sell and distribute Other Retinoid Products throughout the Territory.
Product shall mean any dosage form of a Program Compound developed by ALRT; provided, however, it shall not include Acquired Products, Independent Products, Compound 168 Products, Compound 1069 Products, or, if the 1057 Purchase Option is exercised, Compound 1057 Products.
B. Product Field of Use:
Cancer Indications shall mean the treatment or prevention of malignant neoplasms or direct precursors to malignant neoplasms, where "malignant" means having the property of uncontrolled growth, with the capacity to invade or destroy adjacent tissue or to metastasize to distant sites.
Eye and Skin Cancer shall mean Cancer Indications for the eye and skin.
Eye or Skin Indications shall mean the treatment or prevention of diseases, disorders, irritations or conditions of the eyes or skin, excluding Cancer Indications.
Eye Specialists shall mean any physician or clinician, including ophthalmologists, whose principal practice is the treatment or prevention of diseases, disorders, irritations or conditions of the eyes.
C. Territory Splits:
Worldwide
D. Royalty Rate:
ALRT shall pay Allergan and Ligand a royalty of 3% of Net Sales for each Product, to be paid by ALRT 50% to Allergan and 50% to Ligand.
The party(ies) developing and commercializing each Independent Product shall pay ALRT an royalty equal to 6% of Net Sales of such Independent Product.
Following termination of the Commercialization pursuant to exercise of the Stock Purchase Option, the exercising party shall pay the non-exercising party a royalty of 6% of Net Sales for each Product (see Section IV.F).
E. Right to Sublicense:
Any sublicenses may be granted only with the prior express written consent of the Program Committee, subject to the approval of the Board.
Neither Allergan nor Ligand shall have any obligation to approve the sublicensing to a third party of their respective Technology.
F. Term/Patent Life:
Royalty obligations shall expire on a country-by-country basis, as follows:
a) 10 years from the first sale of a Product in those countries where no patents covers such Product; or
b) upon the expiration of the last-to-expire patent covering the manufacture, use or sale of a Product in those countries where a patent(s) covers such Product.
G. Adv/Min Royalty & Diligence Requirement
No provision
H. Royalty Accounting:
Net Sales shall mean the amount actually received from commercial sales of Product less:
a) trade discounts, credits or allowances;
b) credits or allowances additionally granted upon returns;
c) freight, shipping and insurance charges;
d) taxes, duties or other government tariffs; and
e) government mandated rebates.
Party requesting audit pays costs unless audit reveals variance of greater than 5%, in which case the other party pays costs, balance and interest calculated at prime rate.
I. Patent-Royalty Tie-In:
NA
J. Options/Other:
ALRT shall pay Allergan and Ligand for their respective distribution and administration costs, advertising and promotion costs, trademark costs, and post-marketing study costs, plus a profit allocation of 10% of the aggregate amount of such costs being paid.
Allergan and Ligand shall supply ALRT with administrative, accounting and financial, treasury and personnel services (see attached Schedule 1) at 110% of Allergan's and Ligand's direct and indirect costs in providing such services. ALRT shall pay each of Allergan and Ligand an amount equal to 100% of Allergan's and Ligand's actual costs incurred and owing to third parties providing such services.
3. Manufacturing & Supply
A. Right Holder/Type:
Allergan shall be responsible for supply of Eye and Skin Products.
ALRT shall allocate responsibility for the manufacture of Other Retinoid Products to Allergan, Ligand or a third party based on its determination of relative quality and cost effectiveness.
B. Bulk/Dosage Form:
Final form.
C. Territory:
Worldwide
D. Reimbursement Basis:
ALRT will purchase Product from the manufacturing party at Manufacturing Cost, plus a profit margin to be negotiated, on a Product by Product basis, immediately prior to the commercial launch of a Product.
Manufacturing Costs shall mean all direct and indirect costs incurred in manufacturing, producing and formulating Product (see attached Schedule 1.2).
E. Proc. Dev. Terms:
NA
F. Clinical Use Manufacturing:
All by the manufacturing party.
G. Shipment Terms:
NA
H. Financing:
NA
I. Escape Clause:
NA
J. Product Liability:
ALRT shall indemnify each of Allergan and Ligand from all costs, risks and expenses relating to warranty of and product liability for the Products.
K. Options/Other:
None
4. Collaboration Management
A. Representation:
The Retinoid Program shall be governed by ALRT and its activities coordinated through a Program Committee, consisting of four members from each party, and the following subcommittees:
i) the Research Committee, consisting of three members from each party;
ii) the Development Committee, consisting of three members from each party; and
iii) the Marketing Committee, consisting of three members from each party.
B. Quorum:
Not specified
C. Basis of Actions:
All decisions of the respective Committee shall be made as follows:
a) by majority vote with respect to the Program Committee; and
b) by unanimous vote with respect to the Research Committee, the Development Committee and the Marketing Committee.
D. Meetings:
At least quarterly.
E. Disagreements:
If unanimity cannot be reached by
i) the Research Committee,
ii) the Development Committee, or
iii) the Marketing Committee,
the matter shall be referred for review by the Program Committee.
In the event that a decision cannot be reached by the Program Committee, the matter shall be referred to further review by the CEOs of Allergan and Ligand or through a procedure agreed upon by the CEOs. The parties agree that this procedure shall be the sole procedure to be followed in any case where a decision cannot be reached by the Program Committee.
F. Buyout/Windup:
ALRT grants Allergan and Ligand an exclusive irrevocable option ("Stock Purchase Option") to purchase all, but not less than all, the issued and outstanding shares of Callable Common Stock of ALRT. The Stock Purchase Option may be exercised at any time during the period beginning on the earlier of (a) 6/3/97 and (b) the date ALRT provides Ligand and Allergan with quarterly financial statement showing Available Funds of less than $10 million (the "Statement Date"), and ending on the date ("Stock Purchase Option Expiration Date") which is the earlier to occur of (i) 6/3/2000, ii) the 90th day after the Statement Date, and (iii) the date of termination by ALRT of the Technology License Agreement, the Research and Development Agreement or the Commercialization Agreement due to material breach by Allergan or Ligand.
Upon exercise of the Stock Purchase Option, Ligand or Allergan, as the case may be, shall pay an exercise price per share, as follows:
Exercise Price Per Share - Total Exercise Price - If the Option is exercised before
Ligand may exercise the Stock Purchase Option by delivery of a notice to ALRT on or before 20 days prior to the Stock Purchase Expiration Date ("Ligand Expiration Date") and, if such notice is not given by Ligand, thereafter Allergan may exercise the Stock Purchase Option after the Ligand Expiration Date and on or before the Stock Purchase Option Expiration Date.
The exercise price for the Stock Purchase Option may be paid by Ligand or Allergan, in cash, in shares of Ligand [or Allergan] Common Stock, or in any combination thereof, provided that the number of shares of Allergan [Ligand] Common Stock to be used to pay all or any portion of the exercise price shall not exceed the greater of (a) the number of shares of Allergan Common Stock then owned by ALRT and which were received in payment of all or a portion of the exercise price for the 1057 Purchase Option and (b) the number of shares of Allergan Common Stock received by ALRT in connection with Allergan's exercise price of the Asset Purchase Option.
At any time prior to the closing of the Stock Purchase Option, Ligand or Allergan, as the case may be, may determine to make payment of a greater amount of the Stock Purchase Option Exercise Price than set above. The Stock Purchase Option will terminate as to Ligand or Allergan upon the termination by ALRT of any of the Agreements upon uncured material breach or bankruptcy of Ligand or Allergan.
G. Options/Other:
None
5. Equity Investment
A. Type of Security:
In 6/95, ALRT closed a subscription offering whereby each Ligand stockholder received 0.061 Rights for each share of Ligand Common Stock and each Allergan stockholder received 0.028 Rights for each share of Allergan Common Stock to subscribe for one unit. However, stockholders of Allergan Common Stock and Ligand Common Stock who will receive Rights for more than 9.9% of the ALRT Common Stock have agreed to limit their subscriptions for units so as to own not more than 9.9% of the outstanding shares of ALRT.
Each unit consists of (i) one share of Callable Common Stock of ALRT and (ii) two Warrants, each entitling the holder to purchase one share of Ligand Common Stock.
Allergan will acquire $6.0 million of Ligand's Common Stock at a price equal to the average closing price for the 20 trading days ending on the trading day immediately preceding the expiration of the subscription offering. Ligand will use the proceeds of such sale to fund a portion of Ligand's Contribution.
B. Pricing:
The subscription offering grossed $32.5 million (3.25 million units at $10.00/share).
C. Board Seat:
The initial officers and directors of ALRT will be as follows:
- President--Marvin Rosenthale
- VP, CFO--Paul Majer
- William Respess--Secretary
- David Robinson--Director
- William Shepherd--Director
Paul Majer, William Respess and David Robinson are employees of Ligand; and William Shepherd is an employee of Allergan.
ALRT intends to appoint additional directors so that a majority of the members will be persons unaffiliated with either Ligand or Allergan.
D. Research Tie-Ins:
NA
E. Options & Rights:
The warrants may be exercised any time on or after the earliest of (i) 6/3/97, (ii) the exercise by Ligand or Allergan of the Stock Purchase Option, (iii) the termination of the Stock Purchase Option with respect to Ligand and/or Allergan and (iv) an Acceleration Date and will expire on 6/3/2000. The exercise price per share of the Warrant will be 20% above the average closing sale price for 20 trading days ending on the trading day immediately preceding the date of expiration of the Rights.
Acceleration Date shall mean the occurrence of any of the following events:
a) any capital reorganization of Ligand or reclassification of the Common Stock;
b) any consolidation of Ligand with any other person;
c) any sale, lease, transfer or conveyance of all or substantially all of the assets of Ligand; or
d) the announcement or commencement by any person of a bona fide tender offer or exchange offer.
6. Signatories
A. For Drug Company:
Unsigned
B. For Biotech Company:
David E. Robinson
President & CEO
Key: CON Confidential Treatment granted by SEC; material omitted from public filings. UKN Unknown NA Not applicable
