Exhibit 99.4
1992 Employee Stock Purchase Plan
(as amended May 25, 2001)
EXHIBIT 99.4
LIGAND PHARMACEUTICALS INCORPORATED
1992 EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED THROUGH MAY 25, 2001
I. PURPOSE
The Ligand Pharmaceuticals Incorporated 1992 Employee Stock Purchase
Plan (the "Plan") is intended to provide eligible employees of the Company and
one or more of its Corporate Affiliates with the opportunity to acquire a
proprietary interest in the Company through the periodic application of their
payroll deductions to the purchase of shares of the Company's common stock.
II. DEFINITIONS
For purposes of plan administration, the following terms shall have
the meanings indicated:
BASE SALARY means the regular basic earnings paid to a Participant by
one or more Participating Companies before deduction for any pre-tax
contributions made by the Participant to any Code Section 401(k) salary deferral
plan or any Code Section 125 cafeteria benefit program now or hereafter
established by the Company or any Corporate Affiliate. There shall be excluded
from the calculation of Base Salary (i) all overtime payments, bonuses,
commissions, profit-sharing distributions and other incentive-type payments and
(ii) all contributions (other than Code Section 401(k) or Code Section 125
contributions) made on the Participant's behalf by the Company or one or more
Corporate Affiliates under any employee benefit or welfare plan now or hereafter
established.
BOARD means the Company's Board of Directors.
CODE means the Internal Revenue Code of 1986, as amended from time to
time.
COMMON STOCK means shares of the Company's common stock.
COMPANY means Ligand Pharmaceuticals Incorporated, a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Ligand Pharmaceuticals Incorporated which shall by
appropriate action adopt the Plan.
CORPORATE AFFILIATE means any company which is a parent or subsidiary
corporation of the Company (as determined in accordance with Code Section 424),
including any parent or subsidiary corporation which becomes such after the
Effective Date.
EFFECTIVE DATE meaning November 17, 1992, the start date of the
initial offering period under the Plan. However, for any Corporate Affiliate
which becomes a Participating Company in the Plan after such start date, a
subsequent Effective Date shall be designated with respect to participation by
its Eligible Employees.
ELIGIBLE EMPLOYEE means any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week and more than
five (5) months per calendar year, in the rendition of personal services to the
Company or any other Participating Company for earnings considered wages under
Section 3121(a) of the Code.
ENTRY DATE means the date an Eligible Employee first joins the
offering period in effect under the Plan. The earliest Entry Date under the Plan
shall be the Effective Date.
PARTICIPANT means any Eligible Employee of a Participating Company who
is actively participating in the Plan.
PARTICIPATING COMPANY means the Company and such Corporate Affiliate
or Affiliates as may be designated from time to time by the Board.
QUARTERLY ENTRY DATE means the first business day of January, the
first business day of April, the first business day of July and the first
business day of October during each offering period in effect under the Plan.
The earliest Quarterly Entry Date for an individual who is not otherwise
eligible to join the Plan on the Effective Date shall be January 1, 1993.
QUARTERLY PERIOD OF PARTICIPATION means each quarterly period for
which the Participant actually participates in an offering period in effect
under the Plan. Except as otherwise designated by the Plan Administrator, each
quarterly period shall begin on the first business day of each calendar quarter
and shall end on the last business day of such quarter.
QUARTERLY PURCHASE DATE means the last business day of March, June,
September and December each year on which shares of Common Stock are
automatically purchased for Participants under the Plan.
SERVICE means the period during which an individual remains in the
employ of the Company or any Corporate Affiliate, whether or not in Eligible
Employee status, and shall be measured from such individual's most recent date
of hire by the Company or such Corporate Affiliate.
III. ADMINISTRATION
The Plan shall be administered by a committee (the "Plan
Administrator") comprised of two or more non-employee Board members appointed
from time to time by the Board. The Plan Administrator shall have full authority
to administer the Plan, including authority to interpret and construe any
provision of the Plan. Decisions of the Plan Administrator shall be final and
binding on all parties who have an interest in the Plan.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase under the Plan
through a series of successive offering periods until such time as (i) the
maximum number of shares of Common Stock available for issuance under the Plan
shall have been purchased or (ii) the Plan shall have been sooner terminated in
accordance with Article X.
B. The initial offering period began on November 17, 1992, and ended
on the last business day in December 1993. Subsequent offering periods shall be
coincidental with the calendar year and shall accordingly commence on the first
business day in January each year.
C. The Participant shall be granted a separate purchase right for each
offering period in which he/she participates. The purchase right shall be
granted on the Entry Date on which such individual first joins the offering
period in effect under the Plan and shall be automatically exercised in
successive installments on each Quarterly Purchase Date within the offering
period.
D. The acquisition of Common Stock through participation in the Plan
for any offering period shall neither limit nor require the acquisition of
Common Stock by the Participant in any subsequent offering period.
V. ELIGIBILITY AND PARTICIPATION
A. Each Eligible Employee of a Participating Company shall be eligible
to participate in the Plan in accordance with the following provisions:
- An Eligible Employee with at least five (5) months of Service on the
start date of the offering period may enter that offering period on such
start date, provided such individual enrolls in the offering period on or
before such date in accordance with Section V.B
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below. That start date shall then become such individual's Entry Date
for the offering period, and on that date such individual shall be granted
his/her purchase right for the offering period. Should such Eligible
Employee not enter the offering period on the start date, then he/she may
not subsequently join that particular offering period on any later date.
- An individual who is not an Eligible Employee with at least five (5)
months of Service on the start date of the offering period may subsequently
enter that offering period on the first Quarterly Entry Date on which
he/she is an Eligible Employee with at least five (5) months of Service,
provided he/she enrolls in the offering period on or before such date in
accordance with Section V.B below. That Quarterly Entry Date shall then
become such individual's Entry Date for the offering period, and on that
date such individual shall be granted his/her purchase right for the
offering period. Should such Eligible Employee not enter the offering
period on the first Quarterly Entry Date on which he/she is first eligible
to join the offering period, then he/she may not subsequently join that
particular offering period on any later date.
B. To participate for a particular offering period, the Eligible
Employee must complete the enrollment forms prescribed by the Plan Administrator
(including the purchase agreement and payroll deduction authorization) and file
such forms with the Plan Administrator on or before his/her scheduled Entry
Date.
C. The payroll deduction authorized by the Participant for purposes of
acquiring shares of Common Stock under the Plan may be any multiple of one
percent (1%) of the Base Salary paid to the Participant during each Quarterly
Period of Participation within the offering period, up to a maximum of ten
percent (10%). The deduction rate so authorized shall continue in effect for the
remainder of the offering period, except to the extent such rate is changed in
accordance with the following guidelines:
- The Participant may, at any time during the Quarterly Period of
Participation, reduce his/her rate of payroll deduction. Such reduction
shall become effective as soon as possible after filing of the requisite
reduction form with the Plan Administrator (or its designate), but the
Participant may not effect more than one such reduction during the same
Quarterly Period of Participation.
- The Participant may, prior to the commencement of any new Quarterly
Period of Participation within the offering period, increase or decrease
the rate of his/her payroll deduction by filing the appropriate form with
the Plan Administrator (or its designate). The new rate (which may not
exceed the ten percent (10%) maximum) shall become effective as of the
first date of the first Quarterly Period of Participation following the
filing of such form.
- Payroll deductions will automatically cease upon the termination of
the Participant's purchase right in accordance with the applicable
provisions of Section VII below.
VI. STOCK SUBJECT TO PLAN
A. The Common Stock purchasable by Participants under the Plan shall,
solely in the discretion of the Plan Administrator, be made available from
either authorized but unissued shares of Common Stock or from shares of Common
Stock reacquired by the Company, including shares of Common Stock purchased on
the open market. The total number of shares which may be issued under the Plan
shall not exceed 465,000 shares of Common Stock (provided that, for this
purpose, each issuance of Class A Common Stock occurring prior to November 24,
1994 shall be treated as if it were an issuance of 1.33 shares of Common Stock).
Such share reserve includes the 60,000-share increase approved by the Board in
March 2001, and approved by the stockholders at the 2001 Annual Meeting. The
number of shares of Common Stock issuable under the Plan shall be adjusted from
time to time in accordance with Section VI.B hereof.
B. In the event any change is made to the Company's outstanding Common
Stock by reason of any stock dividend, stock split, combination of shares or
other change affecting such outstanding Common Stock
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as a class without receipt of consideration, then appropriate adjustments shall
be made by the Plan Administrator to (i) the class and maximum number of shares
issuable over the term of the Plan, (ii) the class and maximum number of shares
purchasable per Participant during any one offering period and (iii) the class
and number of shares and the price per share in effect under each purchase right
at the time outstanding under the Plan. Such adjustments shall be designed to
preclude the dilution or enlargement of rights and benefits under the Plan.
VII. PURCHASE RIGHTS
An Employee who participates in the Plan for a particular offering
period shall have the right to purchase shares of Common Stock, in a series of
successive quarterly installments during such offering period, upon the terms
and conditions set forth below and shall execute a purchase agreement embodying
such terms and conditions and such other provisions (not inconsistent with the
Plan) as the Plan Administrator may deem advisable.
PURCHASE PRICE. Common Stock shall be issuable at the end of each
Quarterly Period of Participation at a purchase price equal to eighty-five
percent (85%) of the lower of (i) the fair market value per share on the
Participant's Entry Date into the offering period or (ii) the fair market value
per share on the Quarterly Purchase Date on which such Quarterly Period of
Participation ends. However, for each Participant whose Entry Date is other than
the start date of the offering period in effect under the Plan, the clause (i)
amount shall in no event be less than the fair market value of the Common Stock
on the start date of such offering period.
VALUATION. For purposes of determining the fair market value per share
of Common Stock on any relevant date the fair market value shall be the closing
selling price on that date, as officially quoted on the Nasdaq National Market.
If there is no quoted selling price for such date, then the closing selling
price on the next preceding day for which there does exist such a quotation
shall be determinative of fair market value.
NUMBER OF PURCHASABLE SHARES. The number of shares purchasable per
Participant for each Quarterly Period of Participation shall be the number of
whole shares obtained by dividing the amount collected from the Participant
through payroll deductions during such Quarterly Period of Participation by the
purchase price in effect for the Quarterly Purchase Date on which such Quarterly
Period of Participation ends. However, no Participant may, during any one
offering period, purchase more than 1,330 shares of Common Stock, subject to
periodic adjustment under Section VI.B.
Under no circumstances shall purchase rights be granted under the Plan
to any Eligible Employee if such individual would, immediately after the grant,
own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the
total combined voting power or value of all classes of stock of the Company or
any of its Corporate Affiliates.
PAYMENT. Payment for the Common Stock purchased under the Plan shall
be effected by means of the Participant's authorized payroll deductions. Such
deductions shall begin on the first pay day coincident with or immediately
following the Participant's Entry Date into the offering period and shall
(unless sooner terminated by the Participant) continue through the pay day
ending with or immediately prior to the last day of the offering period. The
amounts so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to time
outstanding in such account. The amounts collected from a Participant may be
commingled with the general assets of the Company and may be used for general
corporate purposes.
TERMINATION OF PURCHASE RIGHT. The following provisions shall govern
the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the last five (5) business
days of the Quarterly Period of Participation, terminate his/her
outstanding purchase right under the Plan by filing the prescribed
notification form with the Plan Administrator (or its designate). No
further payroll deductions shall be collected from the Participant with
respect to the terminated purchase right, and any payroll deductions
collected for the Quarterly Period of Participation in which such
termination occurs shall, at the Participant's election, be immediately
refunded or held for the purchase of shares on the next Quarterly Purchase
Date. If no such election is made, then such
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funds shall be refunded as soon as possible after the close of such
Quarterly Period of Participation.
(ii) The termination of such purchase right shall be irrevocable, and
the Participant may not subsequently rejoin the offering period for which
such terminated purchase right was granted. In order to resume
participation in any subsequent offering period, such individual must
re-enroll in the Plan (by making a timely filing of a new purchase
agreement and payroll deduction authorization) during the applicable
enrollment period for the new offering.
(iii) If the Participant ceases to remain an Eligible Employee while
his/her purchase right remains outstanding, then such individual (or the
personal representative of the estate of a deceased Participant) shall have
the following election, exercisable up until the end of the Quarterly
Period of Participation in which the Participant ceases Eligible Employee
status:
- to withdraw all of the Participant's payroll deductions for such
Quarterly Period of Participation, or
- to have such funds held for the purchase of shares on the Quarterly
Purchase Date immediately following such cessation of Eligible Employee
status.
If no such election is made, then such funds shall be refunded as soon
as possible after the close of such Quarterly Period of Participation. In
no event, however, may any payroll deductions be made on the Participant's
behalf following his/her cessation of Eligible Employee status.
STOCK PURCHASE. Shares of Common Stock shall automatically be
purchased on behalf of each Participant (other than Participants whose payroll
deductions have previously been refunded in accordance with the Termination of
Purchase Right provisions above) on each Quarterly Purchase Date. The purchase
shall be effected by applying each Participant's payroll deductions for the
Quarterly Period of Participation ending on such Quarterly Purchase Date
(together with any carryover deductions from the preceding Quarterly Period of
Participation) to the purchase of whole shares of Common Stock (subject to the
limitation on the maximum number of purchasable shares set forth above) at the
purchase price in effect for such Quarterly Period of Participation. Any payroll
deductions not applied to such purchase because they are not sufficient to
purchase a whole share shall be held for the purchase of Common Stock in the
next Quarterly Period of Participation. However, any payroll deductions not
applied to the purchase of Common Stock by reason of the limitation on the
maximum number of shares purchasable by the Participant for that offering period
shall be promptly refunded to the Participant.
PRORATION OF PURCHASE RIGHTS. Should the total number of shares of
Common Stock which are to be purchased pursuant to outstanding purchase rights
on any particular date exceed the number of shares then available for issuance
under the Plan, the Plan Administrator shall make a pro-rata allocation of the
available shares on a uniform and nondiscriminatory basis, and the payroll
deductions of each Participant, to the extent in excess of the aggregate
purchase price payable for the Common Stock pro-rated to such individual, shall
be refunded to such Participant.
RIGHTS AS STOCKHOLDER. A Participant shall have no stockholder rights
with respect to the shares subject to his/her outstanding purchase right until
the shares are actually purchased on the Participant's behalf in accordance with
the applicable provisions of the Plan. No adjustments shall be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.
A Participant shall be entitled to receive, as soon as practicable
after each Quarterly Purchase Date, a stock certificate for the number of shares
purchased on the Participant's behalf. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as community property or as joint tenants with right of survivorship.
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ASSIGNABILITY. No purchase right granted under the Plan shall be
assignable or transferable by the Participant other than by will or by the laws
of descent and distribution following the Participant's death, and during the
Participant's lifetime the purchase right shall be exercisable only by the
Participant.
CHANGE IN OWNERSHIP. Should the Company or its stockholders enter into
an agreement to dispose of all or substantially all of the assets or outstanding
capital stock of the Company by means of:
(i) a sale, merger or other reorganization in which the Company will
not be the surviving corporation (other than a reorganization effected
primarily to change the State in which the Company is incorporated), or
(ii) a reverse merger in which the Company is the surviving
corporation but in which more than 50% of the Company's outstanding voting
stock is transferred to holders different from those who held the stock
immediately prior to the reverse merger,
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the consummation of such sale,
merger, reorganization or reverse merger by applying the payroll deductions of
each Participant for the Quarterly Period of Participation in which such
transaction occurs to the purchase of whole shares of Common Stock at
eighty-five percent (85%) of the lower of (i) the fair market value of the
Common Stock on the Participant's Entry Date into the offering period in which
such transaction occurs or (ii) the fair market value of the Common Stock
immediately prior to the consummation of such transaction. However, the
applicable share limitations of Articles VII and VIII shall continue to apply to
any such purchase, and the clause (i) amount above shall not, for any
Participant whose Entry Date for the offering period is other than the start
date of such offering period, be less than the fair market value of the Common
Stock on such start date.
The Company shall use its best efforts to provide at least ten
(10)-days advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall, following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Article VII.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to acquire Common
Stock pursuant to any purchase right outstanding under this Plan if and to the
extent such accrual, when aggregated with (I) rights to purchase Common Stock
accrued under any other purchase right outstanding under this Plan and (II)
similar rights accrued under other employee stock purchase plans (within the
meaning of Section 423 of the Code) of the Company or its Corporate Affiliates,
would otherwise permit such Participant to purchase more than $25,000 worth of
stock of the Company or any Corporate Affiliate (determined on the basis of the
fair market value of such stock on the date or dates such rights are granted to
the Participant) for each calendar year such rights are at any time outstanding.
B. For purposes of applying such accrual limitations the right to
acquire Common Stock pursuant to each purchase right outstanding under the Plan
shall accrue as follows:
(i) The right to admire (Common Stock under each such purchase right
shall accrue in a series of successive quarterly installments as and when
the purchase right first becomes exercisable for each quarterly installment
on the last business day of each Quarterly Period of Participation for
which the right remains outstanding.
(ii) No right to acquire Common Stock under any outstanding purchase
right shall accrue to the extent the Participant has already accrued in the
same calendar year the right to acquire $25,000 worth of Common Stock
(determined on the basis of the fair market value on the date or dates of
grant) pursuant to one or more purchase rights held by the Participant
during such calendar year.
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(iii) If by reason of such accrual limitations any purchase right of a
Participant does not accrue for a particular Quarterly Period of
Participation? then the payroll deductions which the Participant made
during that Quarterly Period of Participation with respect to such purchase
right shall be promptly refunded.
C. In the event there is any conflict between the provisions of this
Article VIII and one or more provisions of the Plan or any instrument issued
thereunder, the provisions of this Article VIII shall be controlling.
IX. STATUS OF PLAN UNDER FEDERAL TAX LAWS
The Plan is designed to qualify as an employee stock purchase plan
under Code Section 423. Accordingly, the Participant will not recognize any
taxable income at the time one or more shares of Common Stock are purchased on
his/her behalf on any Quarterly Purchase Date under the Plan.
X. AMENDMENT AND TERMINATION
A. The Board may alter, amend, suspend or discontinue the Plan
following the close of any Quarterly Period of Participation. However, the Board
may not, without the approval of the Company's stockholders:
(i) increase the number of shares issuable under the Plan or the
maximum number of shares which may be purchased per Participant during any
one offering period under the Plan, except that the Plan Administrator
shall have the authority, exercisable without such stockholder approval, to
effect adjustments to the extent necessary to reflect changes in the
Company's capital structure pursuant to Section VI.B;
(ii) alter the purchase price formula so as to reduce the purchase
price payable for the shares issuable under the Plan; or
(iii) materially increase the benefits accruing to Participants under
the Plan or materially modify the requirements for eligibility to
participate in the Plan.
B. The Company shall have the right, exercisable in the sole
discretion of the Plan Administrator, to terminate all outstanding purchase
rights under the Plan immediately following the close of any Quarterly Period of
Participation. Should the Company elect to exercise such right, then the Plan
shall terminate in its entirety. No further purchase rights shall thereafter be
granted or exercised, and no further payroll deductions shall thereafter be
collected, under the Plan.
C. In March 2001, the Board amended the Plan to increase the maximum
number of shares of Common Stock authorized for issuance over the term of the
Plan from 405,000 shares to 465,000 shares. This amendment to the Plan was
approved by the stockholders at the 2001 Annual Meeting.
XI. GENERAL PROVISIONS
A. The Plan shall terminate upon the earlier of (i) December 31, 2002
or (ii) the date on which all shares available for issuance under the Plan shall
have been sold pursuant to purchase rights exercised under the Plan.
B. All costs and expenses incurred in the administration of the Plan
shall be paid by the Company.
C. Neither the action of the Company in establishing the Plan, nor any
action taken under the Plan by the Board or the Plan Administrator, nor any
provision of the Plan itself shall be construed so as to grant
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any person the right to remain in the employ of the Company or any of its
Corporate Affiliates for any period of specific duration, and such person's
employment may be terminated at any time, with or without cause.
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