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Purchase Agreement - Pharmaceutical Royalties International (Cayman) Ltd. and Ligand Pharmaceuticals Inc.

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                               PURCHASE AGREEMENT

                                     BETWEEN

              PHARMACEUTICAL ROYALTIES INTERNATIONAL (CAYMAN) LTD.


                                       and


                       LIGAND PHARMACEUTICALS INCORPORATED

                          Dated as of December 30, 2002





                              TARGRETIN(R) CAPSULES



<PAGE>

                                TABLE OF CONTENTS


                                                                            PAGE
                                                                      
ARTICLE I      DEFINITIONS....................................................3
               1.01     Definitions...........................................3

ARTICLE II     PURCHASE AND SALE OF RIGHTS....................................4
               2.01     Purchase and Sale.....................................4
               2.02     Expiration of Rights to Receive Payments..............5
               2.03     Excluded Liabilities and Obligations..................5
               2.04     Excluded Assets.......................................5

ARTICLE III    REPRESENTATIONS AND WARRANTIES OF SELLER.......................6
               3.01     Corporate Existence and Power.........................6
               3.02     Corporate Authorization...............................6
               3.03     Governmental Authorization............................6
               3.04     Non-Contravention.....................................6
               3.05     No Undisclosed Material Liabilities...................6
               3.06     Litigation............................................7
               3.07     Compliance with Laws..................................7
               3.08     No Prior Transfer.....................................7
               3.09     Intellectual Property.................................7
               3.10     Finders' Fees.........................................7
               3.11     Other Information.....................................7

ARTICLE IV     REPRESENTATIONS AND WARRANTIES OF BUYER........................8
               4.01     Organization and Existence............................8
               4.02     Corporate Authorization...............................8
               4.03     Governmental Authorization............................8
               4.04     Non-Contravention.....................................8
               4.05     Finders' Fees.........................................8
               4.06     Financing.............................................8
               4.07     Litigation............................................8
               4.08     Compliance with Laws..................................8

ARTICLE V      COVENANTS......................................................9
               5.01     Maintenance of Rights.................................9
               5.02     Confidentiality.......................................9
               5.03     Public Announcement...................................9
               5.04     Payments..............................................9
               5.05     Audits................................................9
               5.06     Commercially Reasonable Efforts; Further Assurances..10

ARTICLE VI     SURVIVAL; INDEMNIFICATION.....................................10
               6.01     Indemnification......................................10


                                       i

<PAGE>

                               TABLE OF CONTENTS
                                  (Continued)


                                                                        
ARTICLE VII    TERM..........................................................11
               7.01     Term.................................................11

ARTICLE VIII   MISCELLANEOUS.................................................11
               8.01     Notices..............................................11
               8.02     Amendments; No Waivers...............................12
               8.03     Expenses.............................................12
               8.04     Successors and Assigns...............................12
               8.05     Governing Law; Jurisdiction..........................12
               8.06     Counterparts; Effectiveness..........................12
               8.07     Entire Agreement.....................................12
               8.08     Captions.............................................13

EXHIBITS

Exhibit A.........Patents and Patent Applications









                                       ii

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                             PURCHASE AGREEMENT


     AGREEMENT dated as of December 30, 2002 between Ligand Pharmaceuticals
Incorporated, a Delaware corporation ("Seller"), and Pharmaceutical Royalties
International (Cayman) Ltd., a company organized under the laws of the Cayman
Islands (including each of its successors, assigns and legal representatives,
"Buyer").

                              W I T N E S S E T H:

     WHEREAS, Buyer desires to purchase the rights to receive certain
sales-based payments from Seller, and Seller desires to sell, assign and
transfer such rights to Buyer, upon the terms and subject to the conditions
hereinafter set forth;

     NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements herein contained, the parties hereto agree
as follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.01 DEFINITIONS. The following terms, as used herein, have the following
meanings:

     "Affiliate" means with respect to any Person, any Person directly or
indirectly controlling, controlled by or under common control with such other
Person. For the avoidance of doubt, none of Elan Corporation plc and its
affiliates shall be considered to be "Affiliates" of Seller for any purpose
under this Agreement.

     "Agreement" means this Purchase Agreement between Buyer and Seller.

     "Business Day" means any day that is not a Saturday, Sunday or a day on
which banks are required or permitted to be closed in the city of New York, New
York.

     "Calendar Quarter" has the meaning set forth in Section 5.04(a).

     "Closing" has the meaning set forth in Section 2.01.

     "Confidential Disclosure Agreement" has the meaning set forth in Section
5.02.

     "Distributor" means any Person with which Seller has entered into an
agreement to market and/or promote the Product in any jurisdiction. For the
avoidance of doubt, "Distributor" shall not include any Sublicensee except with
respect to the United States.

     "Excluded Liabilities and Obligations" has the meaning set forth in Section
2.03.

     "Governmental Authority" means any government, court, regulatory or
administrative agency or commission, or other governmental authority, agency or
instrumentality, whether federal, state or local (domestic or foreign),
including, without limitation, the PTO and the U.S. National Institutes of
Health.



*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission

<PAGE>

     "Indemnified Party" has the meaning set forth in Section 6.02.

     "Indemnifying Party" has the meaning set forth in Section 6.02.

     "License Agreements" means that certain Settlement Agreement, License and
Mutual General Release by and among Seller, Allergan Ligand, Allergan Ligand
Retinoid Therapeutics, Inc., La Jolla Cancer Research Foundation, SelectRA
Pharmaceuticals, Inc. and SRI International dated as of August 23, 1995,
together with that certain letter from Seller to La Jolla Cancer Research
Foundation and SRI International dated as of November 21, 1995 and that certain
letter from Seller to The Burnham Institute dated as of November 26, 1996.

     "Lien" means, with respect to any agreement or other asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset.

     "Loss" has the meaning set forth in Section 6.01.

     "Net Sales" means the gross amount actually received by Seller, its
Affiliates or its Sublicensees in connection with the sale of the Product
(including, with respect to Seller and its Affiliates, from any Distributor), as
reflected in Seller's books and records and in accordance with Seller's standard
accounting principles and generally accepted accounting principles (or, with
respect to sales of the Product by any of Seller's Affiliates or Sublicensees,
as reflected in the books and records of such Affiliate or Sublicensee, as
applicable, and in accordance with the standard accounting principles of such
Affiliate or Sublicensee, as applicable, and generally accepted accounting
principles), less the following:

     (i)customary trade, quantity or cash discounts to the extent actually
allowed and taken;

     (ii)amounts repaid or credited by reason of rejection or return;

     (iii)to the extent separately stated on purchase orders, invoices or other
documents of sale, any taxes or other governmental charges levied on the
production, sale, transportation, delivery or use of the Product which is paid
by or on behalf of the Seller or its Affiliates or Sublicensees;

     (iv)outbound transportation costs prepaid or allowed and costs of insurance
in transit; and

     (v)discounts, refunds, rebates, chargebacks, retroactive price adjustments
and any other allowances which effectively reduce the net selling price;

     PROVIDED, HOWEVER, that gross amounts received by Seller or its Affiliates
or Sublicensees in connection with the sale of the Product to an end user in a
country other than the United States in which the only indication for which use
of the Product is approved by the appropriate Governmental Authority in such
country is Cutaneous T-Cell Lymphoma ("CTCL") shall not be included in "Net
Sales" unless and until use of the Product is approved by the appropriate
Governmental Authority in such country for an indication other than CTCL, at
which point all sales (including sales for CTCL indications) in such country
shall be included in "Net Sales"; and, PROVIDED FURTHER, that such limitation on
inclusion of sales shall apply on a country-by-country basis. Product shall be
considered "sold" when such Product is reflected as sold in Seller's books and
records in accordance with Seller's standard accounting principles and generally
accepted accounting principles.

                                       2

<PAGE>


     "Patents" means the patents and patent applications listed in EXHIBIT A
hereto.

     "Person" means an individual, corporation, partnership, association, trust
or other entity or organization, but not including a government or political
subdivision or any agency or instrumentality of such government or political
subdivision.

     "Product" means bexarotene in oral form (currently marketed as Targretin(R)
Capsules) sold by Seller for any indication.

     "PTO" means the United States Patent and Trademark Office.

     "Purchase Price" has the meaning set forth in Section 2.01.

     "SEC" has the meaning set forth in Section 3.09.

     "Seller's Knowledge" means the actual knowledge of the executive officers
of Seller.

     "Sublicensee" means any Person that Seller grants a license or sublicense
to make, have made, use, offer to sell, sell and import any Product worldwide.
As used herein, "Sublicensee" shall include any Distributor appointed by Seller
for the United States, but, for the avoidance of doubt, shall not include any
Distributor appointed by Seller for any other jurisdiction.

     "UCC" means the U.S. Uniform Commercial Code as in effect in the State of
California and any successor statute, as in effect from time to time.

                                   ARTICLE II

                           PURCHASE AND SALE OF RIGHTS

     2.01 PURCHASE AND SALE. Upon the terms and subject to the conditions of
this Agreement:

     (a) Buyer agrees to purchase from Seller, and Seller agrees to sell,
transfer, assign and deliver, or cause to be sold, transferred, assigned or
delivered, to Buyer, upon execution of this Agreement, free and clear of all
Liens, the right to receive from Seller royalty payments of one per cent (1.00%)
of the Net Sales of Product beginning with royalty payments for sales made on
and after January 1, 2003. In order to secure its obligations to Buyer under
this Agreement, Seller hereby grants to Buyer a continuing first security
interest in and lien to all of Seller's right, title and interest in and to the
Product, including without limitation the Patents, and the rights granted to
Seller under the License Agreements.


                                       3

<PAGE>

     (b) For and in consideration of this right, Buyer shall pay to Seller ***
(the "Purchase Price"). The payment of the Purchase Price by Buyer to Seller
shall be made no later than December 31, 2002. The occurrence of such payment is
sometimes hereinafter referred to as the "Closing." Except to the extent
otherwise provided in Section 6.01, the Purchase Price is non-refundable.

     (c) At the Closing, Seller shall cause to be delivered to Buyer:

     (i) a certified copy of the resolutions of the Board of Directors of Seller
authorizing this Agreement and the transactions contemplated hereby;

     (ii) a receipt for the Purchase Price;

     (iii) an opinion of counsel to Seller addressed to Buyer confirming the
matters warranted in Sections 3.01, 3.02, 3.03, 3.04, 3.06 and 3.07; and

     (iv) a letter authorizing Buyer to file, pursuant to the security interest
granted by Seller to Buyer in Section 2.01(a), a UCC financing statement on Form
UCC-1, and all amendments and modifications thereto, securing Buyer's rights
hereunder.

     At and after the Closing, if requested by Buyer, Seller will execute and
deliver to Buyer such instruments and documents as may be reasonably requested
by Buyer in order to evidence its ownership of the rights acquired hereunder,
including without limitation such further UCC registration forms as Buyer may
request.

     2.02 EXPIRATION OF RIGHTS TO RECEIVE PAYMENTS. Each of the rights set forth
in Section 2.01 shall expire on the later of (a) December 31, 2016 and (b) the
expiration of the last to expire of the Patents, notwithstanding the future
issuance of any patent having claims covering making, having made, using,
offering to sell, selling or importing the Product.

     2.03 EXCLUDED LIABILITIES AND OBLIGATIONS. Notwithstanding any provision in
this Agreement or any other writing to the contrary, Buyer is acquiring only the
rights to receive payments from Seller as expressly set forth herein and is not
assuming any liability or obligation of Seller of whatever nature, whether
presently in existence or arising or asserted hereafter. All such liabilities
and obligations shall be retained by and remain obligations and liabilities of
Seller (the "Excluded Liabilities and Obligations").

     2.04 EXCLUDED ASSETS. Buyer does not, by purchase of the rights granted
hereunder, acquire any assets or contract rights of Seller whether presently in
existence or arising or asserted hereafter, except to the extent of the security
interest granted by Seller to Buyer pursuant to Section 2.01(a).

                                  ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF SELLER



*** Portions of this page have been omitted pursuant to a request for
    Confidential Treatment and filed separately with the Commission


                                       4

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     Seller hereby represents and warrants to Buyer that:

     3.01 CORPORATE EXISTENCE AND POWER. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.

     3.02 CORPORATE AUTHORIZATION. The execution, delivery and performance by
Seller of this Agreement, and the consummation by Seller of the transactions
contemplated hereby are within Seller's corporate powers and have been duly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly executed and delivered and constitutes a valid and
binding agreement of Seller, enforceable against Seller 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.
3.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by
Seller of this Agreement does not require any notice to, action or consent by or
in respect of, or filing with, any Governmental Authority except for filings
required by the Securities Act of 1933, the Securities Exchange Act of 1934 or
actions taken or filings made, if any.

     3.04 NON-CONTRAVENTION.

     (a) The execution, delivery and performance by Seller of this Agreement
does not and will not (i) contravene or conflict with the corporate charter or
bylaws of Seller, (ii) contravene or conflict with or constitute a violation of
any provision of any law or regulation binding upon or applicable to Seller,
which contravention, conflict or violation could reasonably be expected to have
a material adverse effect on Buyer's right to receive payments hereunder; (iii)
contravene or conflict with or constitute a violation of any judgment,
injunction, order or decree binding upon or applicable to the Seller, which
contravention, conflict or violation could reasonably be expected to have a
material adverse effect on Buyer's right to receive payments hereunder; (iv)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of Seller or to a loss
of any benefit relating to Buyer's right to receive payments hereunder, or (v)
result in the creation or imposition of any Lien on the Patents or Seller's
rights under the License Agreements (except for any Lien in favor of the Buyer).

     (b) Other than pursuant to this Agreement, Seller has not granted, and
there does not currently exist, any Lien on the Patents or Seller's rights under
the License Agreements.

     3.05 NO UNDISCLOSED MATERIAL LIABILITIES. There are no material liabilities
or obligations of Seller related to Buyer's right to receive payments hereunder
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, other than those which could not reasonably be
expected to adversely affect Buyer's rights hereunder, and there is no existing
condition, situation or set of circumstances which could reasonably be expected
to result in such a liability or obligation, other than those which could not
reasonably be expected to adversely affect Buyer's rights hereunder.


                                       5

<PAGE>

     3.06 LITIGATION. There is no action, suit, investigation or proceeding (or
any basis therefor), of which Seller has received notice, pending or, to
Seller's Knowledge, threatened, before any Governmental Authority or arbitrator
related to the Product which could reasonably be expected to have a material
adverse effect on Buyer's rights hereunder. To Seller's Knowledge, there have
been no claims made by any Person with respect to, and no actions, suits or
other proceedings which could reasonably be expected to have a material adverse
effect on Buyer's rights hereunder.

     3.07 COMPLIANCE WITH LAWS. Seller is not in violation of, has not violated,
and to the knowledge of Seller, is not under investigation with respect to and
has not been threatened to be charged with or given notice of any violation of,
any law, rule, ordinance or regulation, or judgment, order or decree entered by
any Governmental Authority which could reasonably be expected to have a material
adverse effect on Buyer's rights hereunder.

     3.08 NO PRIOR TRANSFER. Seller has not assigned and has not in any other
way conveyed, transferred, or encumbered all or any portion of its right, title
and interest to the Patents or its rights under the License Agreements, except
as could not reasonably be expected to adversely affect Buyer's rights
hereunder.

     3.09 LICENSE AGREEMENTS. A true and correct copy of each of the License
Agreements has been delivered to Buyer, and each such copy is (a) if redacted,
in the form filed with the United States Securities and Exchange Commission (the
"SEC"), and (b) if not filed with the SEC, complete. Each of the License
Agreements is in full force and effect in the form so delivered. There have been
no amendments or modifications to any of the License Agreements, other than as
delivered to Buyer. Seller is in compliance with the License Agreements and is
not in breach or default of its obligations under any of the License Agreements
which breach or default could reasonably be expected to have a material adverse
effect on Buyer's rights to receive payments hereunder. The execution, delivery
and performance by Seller of this Agreement does not and will not contravene or
constitute a breach or default of any provision of any of the License
Agreements.

     3.10 INTELLECTUAL PROPERTY.

     (a) EXHIBIT A specifies as to each Patent, as applicable (i) the owner(s);
and (ii) the jurisdictions by or in which each Patent has issued or an
application for patent has been filed, including the respective patent or
application numbers.

     (b) Seller has taken all commercially reasonable actions in the United
States and in all applicable foreign jurisdictions to protect its ownership
interests in the Patents in each such jurisdiction.

     (c) (i) To Seller's Knowledge there is no set of facts that could
reasonably be expected to render the Patents invalid or unenforceable;


                                       6

<PAGE>

     (ii) All assignments from each inventor, as the case may be, to Seller or
to a predecessor in interest of Seller, have been executed and recorded with the
PTO for each of the Patents, except as could not reasonably be expected to
adversely affect Buyer's rights to receive payments hereunder;

     (iii) Seller does not lack any material intellectual property rights or
licenses to exploit the Patents or to make, have made, use, sell, or offer for
sale the Product for the purposes currently contemplated by Seller;

     (iv) To Seller's Knowledge, there are no pending U.S. or foreign patent
applications which, if issued, would limit or prohibit the ability of Seller to
make, have made, use, sell, or offer for sale the Product for the purposes
currently contemplated by Seller;

     (v) To Seller's Knowledge, there is no pending or threatened (x) action,
suit, proceeding or claim by others that Seller is infringing or would infringe
any patent or other intellectual property right of any other Person by making,
having made, using, selling, or offering for sale the Product, or (y) any
proceeding or claim by others that any claim under any of the Patents is
invalid; and

     (vi) To Seller's Knowledge, the Patents have not been, and are not being,
infringed by any third parties, except as could not reasonably be expected to
adversely affect Buyer's rights to receive payments hereunder.

     3.11 FINDERS' FEES. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of
Seller who might be entitled to any fee or commission from Buyer or any of its
Affiliates upon consummation of the transactions contemplated by this Agreement.

     3.12 OTHER INFORMATION. Neither this Agreement nor any of the exhibits
appended hereto contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained
therein not misleading, except as could not reasonably be expected to have a
material adverse effect on Buyer's rights hereunder.

                                   ARTICLE IV

                     REPRESENTATIONS AND WARRANTIES OF BUYER

     Buyer hereby represents and warrants to Seller that:

     4.01 ORGANIZATION AND EXISTENCE. Buyer is duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and has
all applicable powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.

     4.02 CORPORATE AUTHORIZATION. The execution, delivery and performance by
Buyer of this Agreement and the consummation by Buyer of the transactions
contemplated hereby are within the powers of Buyer and have been duly authorized
by all necessary action on the part of Buyer. This Agreement constitutes a valid
and binding agreement of Buyer.


                                       7

<PAGE>

     4.03 GOVERNMENTAL AUTHORIZATION. The execution, delivery and performance by
Buyer of this Agreement does not require any action by or in respect of, or
filing with, any Governmental Authority (except for actions taken or filings
made, if any).

     4.04 NON-CONTRAVENTION. The execution, delivery and performance by Buyer of
this Agreement does not and will not (i) contravene or conflict with the
organizational documents of Buyer, (ii) contravene or conflict with or
constitute a violation of any provision of any law or regulation binding upon or
applicable to Buyer; or (iii) contravene or conflict with or constitute a
violation of any judgment, injunction, order or decree binding upon or
applicable to Buyer, except as could not reasonably be expected to materially
adversely affect Seller's rights to receive or retain the Purchase Price paid
hereunder.

     4.05 FINDERS' FEES. There is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Buyer who might be entitled to any fee or commission from Seller upon
consummation of the transactions contemplated by this Agreement.

     4.06 FINANCING. At the Closing, Buyer will have sufficient funds available
to pay the Purchase Price.

     4.07 LITIGATION. There is no action, suit, investigation or proceeding (or
any basis therefor), of which Buyer has received notice, pending against, or to
the knowledge of Buyer, threatened against or affecting, Buyer before any court
or arbitrator or any governmental body, agency or official which could
reasonably be expected to materially adversely affect Seller's rights to receive
or retain the Purchase Price paid hereunder.

     4.08 COMPLIANCE WITH LAWS. Buyer is not in violation of, has not violated,
and to the knowledge of Buyer, is not under investigation with respect to and
has not been threatened to be charged with or given notice of any violation of,
any law, rule, ordinance or regulation, or judgment, order or decree entered by
any Governmental Authority which could reasonably be expected to materially
adversely affect Seller's rights to receive or retain the Purchase Price paid
hereunder.

                                    ARTICLE V

                                    COVENANTS

     Buyer and Seller agree that:

     5.01 MAINTENANCE OF RIGHTS.

     (a) Seller shall use commercially reasonable efforts (as such term relates
to Seller's business taken as a whole) to maintain the Patents and to enforce
the Patents against infringers.



                                       8

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     (b) Seller shall exercise fully all of its rights, and comply fully with
all of its obligations, under the License Agreements, except as could not
reasonably be expected to adversely affect Net Sales. Seller shall not permit
any amendment or modification to the License Agreements that could reasonably be
expected to reduce Net Sales. Seller shall provide to Buyer a copy of any
amendment or modification to, or waiver under, any of the License Agreements.

     (c) Seller shall not sell, transfer, assign, license or otherwise dispose
of any right, title or interest in or to the Patents, its interest in the
License Agreements or its business of selling or having sold the Product without
making such sale, transfer, assignment, license or disposition subject to
Buyer's rights hereunder (including Buyer's rights to receive 1% on Net Sales of
the Product).

     (d) Seller shall not grant any Lien on the Product, Patents or the License
Agreements except any such Lien as would be subordinate in priority and right of
payment to the security interest granted by Seller to Buyer pursuant to Section
2.01(a) hereof.

     5.02 CONFIDENTIALITY. The parties have entered into a Confidential
Disclosure Agreement dated January 24, 2002 (the "Confidential Disclosure
Agreement") which, to the extent not otherwise inconsistent with this Agreement,
remains in full force and effect.

     5.03 PUBLIC ANNOUNCEMENT. The Confidential Disclosure Agreement
notwithstanding, each party shall have the right to make disclosures relevant to
this Agreement that are required by law, governmental rules and regulations or
the rules and regulations of any applicable securities exchange or trading
system. The parties agree to consult with each other before issuing any other
press release or making any other public statement with respect to this
Agreement.

     5.04 PAYMENTS.

     (a) The royalty payments due pursuant to Section 2.01 hereof shall be
calculated quarterly as of the end of each Calendar Quarter and shall be paid
within thirty (30) Business Days next following such date. Every such payment
shall be supported by the accounting described in Section 5.05 of this
Agreement. All payments shall be made in United States dollars by federal funds
wire transfer at New York pursuant to instructions received from Buyer. When
Product is sold for currency other than United States dollars, the earned
royalties will be determined based on the corresponding United States dollar
amounts appearing in Seller's books and records. "Calendar Quarter" shall mean
the period of three (3) consecutive calendar months ending on March 31, June 30,
September 30 or December 31, as the case may be.

     (b) Any payment due hereunder (pursuant to Section 2.01) which is not made
when due shall bear interest until paid at the prime interest rate as announced
by Citibank, N.A., plus 2%, compounded monthly. Any payment due hereunder
(pursuant to Section 2.01) shall be made without offset or deduction for any
claim of rescission, offset or counterclaim or for any defense or other
liability or obligation of Seller or any of its Affiliates. By notice to Seller
in writing, Buyer may instruct Seller to make such payments to another of its
accounts or the account(s) of Buyer's Affiliate(s); provided that Buyer provides
to Seller any applicable tax forms exempting Seller from any withholding,
transfer, value-added or sales tax imposed against Seller by any Governmental
Authority.


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<PAGE>

     5.05 ACCOUNTING REPORTS. With each quarterly payment, Seller shall deliver
to Buyer a full and accurate accounting to include at least the following
information relating to such payment: (a) Total receipts for each Product
subject to royalty, by country and, to the extent used in any royalty
calculations during such quarter, the applicable currency exchange rate used
pursuant to Section 5.04;

     (b) Deductions applicable as provided in the definition of Net Sales in
Section 1.01;

     (c) Amounts received from Sublicensees relating to sales of Products; and

     (d) Names and addresses of all Sublicensees.

     5.06 AUDITS. Not more than once in any calendar year, at Buyer's request
and at Buyer's expense, Seller shall cause a certified public accountant
mutually acceptable to the parties to conduct an audit of the relevant books and
records of Seller, for the purposes of verifying amounts due Buyer hereunder.
Buyer's then-current independent accountant shall be deemed mutually acceptable
to the parties under the preceding sentence. Such books and records are
confidential information of Seller and may not be disclosed to Buyer. Accountant
shall report to Buyer only that the amounts paid hereunder have been correct, or
the amount of shortfall or overpayment, if any. Seller shall promptly pay any
shortfall reported by such accountant and Buyer shall promptly refund any
overpayment. If any shortfall in payments owed to Buyer exceeds 5% of the
aggregate payments for Buyer for such calendar year, then Seller shall reimburse
Buyer for the cost of such audit.

     5.07 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES. Subject to the
terms and conditions of this Agreement, each party will use its commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary under applicable laws and regulations to
consummate the transactions contemplated by this Agreement; provided that Buyer
shall not be obligated to pay any amount of money or deliver any goods or
services to Seller or any third party except as otherwise expressly provided in
this Agreement. Buyer and Seller agree to execute and deliver such other
documents, certificates, agreements and other writings (including any UCC
filings requested by Buyer) and to take such other actions as may be reasonably
necessary in order to consummate or implement expeditiously the transactions
contemplated by this Agreement.

                                   ARTICLE VI

                            SURVIVAL; INDEMNIFICATION

     6.01 INDEMNIFICATION.

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<PAGE>

     (a) Seller hereby indemnifies Buyer and its Affiliates against, and agrees
to hold each of them harmless from, any and all damage, loss, liability and
expense (including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) (collectively, "Loss") incurred or suffered by Buyer and its
Affiliates arising out of any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by the Seller pursuant to this Agreement,
including any failure by the Seller to satisfy any of the Excluded Liabilities
and Obligations.

     (b) Buyer hereby indemnifies Seller and its Affiliates against, and agrees
to hold each of them harmless from, any and all Loss incurred or suffered by
Seller and its Affiliates arising out of (i) any misrepresentation or breach of
warranty contained in Article IV; and (ii) any breach of Section 5.02.

     6.02 PROCEDURES; NO WAIVER; EXCLUSIVITY.

     (a) The party seeking indemnification under Section 6.01 (the "Indemnified
Party") agrees to give prompt notice to the party against whom indemnity is
sought (the "Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding in respect of which indemnity may
be sought under Section 6.01; provided that the failure to give such notice
shall not affect the Indemnified Party's rights hereunder except to the extent
the Indemnifying Party is materially prejudiced by such failure. The
Indemnifying Party shall control the defense of any such third party suit,
action or proceeding at its own expense. The Indemnifying Party shall not be
liable under Section 6.01 for any settlement effected without its prior consent
of any claim, litigation or proceeding in respect of which indemnity may be
sought hereunder; provided that such consent may not be unreasonably withheld.

     (b) No investigation by either party of other matters shall limit such
party's rights to indemnification hereunder.

     (c) After the Closing, Section 6.01 will provide the exclusive remedy for
any misrepresentation, breach of warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions contemplated hereby.

     (d) The representations, warranties, covenants and agreements contained
herein shall survive the Closing. The expiration of any term of this Agreement
shall not excuse any party hereto from its liability in respect of any breach
hereof prior to such expiration.

                                   ARTICLE VII

                                      TERM

     7.01 TERM. This Agreement will expire simultaneously with the last to
expire right to receive payment under Section 2.02; provided, that Buyer shall
have received all applicable payments due hereunder. The provisions of Section
5.02, Section 8.03 and Article VI in respect of any breaches prior to the
expiration date of this Agreement, shall survive any expiration of this
Agreement.


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<PAGE>

                                  ARTICLE VIII

                                  MISCELLANEOUS

     8.01 NOTICES. All notices, requests and other communications to either
party hereunder shall be in writing and shall be given by regular mail or
courier as follows:

     (a) if to Buyer, to:

                           c/o Royalty Pharma Management, LLC
                           675 Third Avenue, Suite 3000
                           New York, NY 10017
                           Attention:  Alexander B. Kwit, Esq.
                           Telecopy:  (917) 368-0021

                           with a copy to:

                           Testa, Hurwitz & Thibeault, LLP
                           125 High Street
                           Boston, MA  02110
                           Attention:  F. George Davitt, Esq.
                           Telecopy:  (617) 248-7100

     (b) if to Seller, to:

                           Ligand Pharmaceuticals Incorporated
                           10275 Science Center Drive
                           San Diego, CA  92121
                           Attention:  General Counsel
                           Facsimile:  (858) 550-1825

or to such other address as any party may have furnished to the other in
writing in accordance herewith. All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

     8.02 AMENDMENTS; NO WAIVERS.

     (a) Any provisions of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by Buyer and Seller or in the case of a waiver, by the party against
whom the waiver is to be effective.

     (b) No failure or delay by either party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.


                                       12

<PAGE>

     8.03 EXPENSES. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.

     8.04 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. After the Closing, without limiting the generality of
the foregoing, nothing herein shall prohibit or restrict Buyer from assigning
any of its rights and obligations hereunder to any Affiliate of Buyer or any
other Person; provided that, without the consent of Seller, no such assignment
shall relieve Buyer from its obligations hereunder.

     8.05 GOVERNING LAW; JURISDICTION. This Agreement shall be construed in
accordance with and governed by the law of the State of New York. Process in any
such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court.

     8.06 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.

     8.07 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, and the
Confidential Disclosure Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all prior
agreements, understandings and negotiations, both written and oral, between the
parties with respect to the subject matter of this Agreement; provided that in
the event of any inconsistency between this Agreement and the Confidential
Disclosure Agreement, the provisions of this Agreement shall govern. No
representation, inducement, promise, understanding, condition or warranty not
set forth herein has been made or relied upon by either party hereto. None of
this Agreement, nor any provision hereof, is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.

     8.08 CAPTIONS. The titles and captions herein are included for convenience
of reference only and shall be ignored in the construction or interpretation
hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                       13

<PAGE>



     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as a deed by their respective authorized officers as of the day
and year first above written.


                            LIGAND PHARMACEUTICALS INCORPORATED

                            By:/S/DAVID E. ROBINSON

                            Name:       ________________________________

                            Title:      ________________________________

                            By:/S/WARNER R. BROADDUS

                            Name:       Warner R. Broaddus

                            Title:      VP & General Counsel



                            PHARMACEUTICAL ROYALTIES INTERNATIONAL (CAYMAN) LTD.

                            By:/S/DAVID MADDEN

                            Name: D. Madden

                            Title:      Director





                   [SIGNATURE PAGE TO PURCHASE AGREEMENT]

<PAGE>

                                    EXHIBIT A

                         PATENTS AND PATENT APPLICATIONS

1. U.S. Patent No. 5,780,676, which issued from U.S. Serial No. 08/485,386,
filed June 7, 1995. Owner, Seller.

2. U.S. Patent No. 5,962,731, which issued from U.S. Serial No. 08/472,784,
filed June 7, 1995. Owner, Seller.

3. U.S. Patent No. 5,466,861, which issued from U.S. Serial No. 07/982,305,
filed November 25, 1992. Owners, SRI International and The Burnham Institute.

4. Australian Patent No. 694177, which issued from Serial No. 55864/94, filed
April 22, 1993. Owner, Seller.

5. Brazilian Patent Application Serial No. PI 1100895-4, filed May 14, 1997.
Owner, Seller.

6. Brazilian Patent Application Serial No. PI 1100880-6, filed October 22, 1993.
Owner, Seller.

7. Canadian Patent Application Serial No. 2,133,587, filed April 22, 1993.
Owner, Seller.

8. Canadian Patent Application Serial No. 2,153,235, filed October 22, 1993.
Owner, Seller.

9. European Patent No. 0637297, which issued from Serial No. 93910835.3, filed
April 22, 1993 (including any corresponding national patents, applications
and/or supplemental protection certificates). Owner, Seller.

10. European Patent Application Serial No. 99118827.7, filed April 22, 1993
(including any corresponding national patents, applications and/or supplemental
protection certificates). Owner, Seller.

11. European Patent Application Serial No. 99118828.5, filed April 22, 1993
(including any corresponding national patents, applications and/or supplemental
protection certificates). Owner, Seller.

12. Japanese Patent Application Serial No. 518708/1993, filed April 22, 1993.
Owner, Seller.

13. Japanese Patent Application Serial No. 515962/1994, filed October 22, 1993.
Owner, Seller.

14. Korean Patent No. 10-305154, which issued from Serial No. 703747/1994, filed
April 22, 1993. Owner, Seller.

15. Korean Patent No. 306855, which issued from Serial No. 702842/1995, filed
October 22, 1993. Owner, Seller.

16. Mexican Patent No. 208320, which issued from Serial No. 932349, filed April
22, 1993. Owner, Seller.

17. Norwegian Patent No. 303936, which issued from Serial No. 943943, filed
April 22, 1993. Owner, Seller.

18. Russian Patent No. 2144913, which issued from Serial No. 94046449.00, filed
April 22, 1993. Owner, Seller.



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