EXHIBIT 10.271
LIGAND PHARMACEUTICALS INCORPORATED
AUTOMATIC STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has implemented an automatic option grant program under
the Plan pursuant to which eligible non-employee members of the Board will
automatically receive special option grants at periodic intervals over their
period of Board service in order to provide such individuals with a meaningful
incentive to continue to serve as members of the Board.
B. Optionee is an eligible non-employee Board member, and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the automatic grant of an option to purchase shares of Common
Stock under the Plan.
C. All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of
the Grant Date, a Non-Statutory Option to purchase up to the number of Option
Shares specified in the Grant Notice. The Option Shares shall be purchasable
from time to time during the option term specified in Paragraph 2 at the
Exercise Price.
2. OPTION TERM. This option shall have a term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6 or 7.
3. LIMITED TRANSFERABILITY.
(a) This option may be assigned in whole or in part during
Optionee's lifetime to one or more members of Optionee's family or to a trust
established for the exclusive benefit of one or more such family members or to
Optionee's former spouse, to the extent such assignment is in connection with
the Optionee's estate plan or pursuant to a domestic relations order. The
assigned portion shall be exercisable only by the person or persons who acquire
a proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment.
(b) Should the Optionee die while holding this option, then this
option shall be transferred in accordance with Optionee's will or the laws of
inheritance. However, Optionee may designate one or more persons as the
beneficiary or beneficiaries of this option, and this option shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee's death while holding this
option. Such
beneficiary or beneficiaries shall take the transferred option subject to all
the terms and conditions of this Agreement, including (without limitation) the
limited time period during which this option may, pursuant to Paragraph 5, be
exercised following Optionee's death.
4. EXERCISABILITY/VESTING. This option shall become vested and
exercisable for the Option Shares in one or more installments as specified in
the Grant Notice. As the option becomes exercisable for such installments, those
installments shall accumulate, and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under Paragraph 5, 6 or 7. The Option Shares shall, however, be
subject to accelerated vesting pursuant to the provisions of Paragraph 5, 6 or
7, but in no event shall any additional Option Shares vest following Optionee's
cessation of service as a Board member.
5. CESSATION OF BOARD SERVICE. Should Optionee's service as a Board
member cease while this option remains outstanding, then the option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date in accordance with the following
provisions:
(a) Should Optionee cease to serve as a Board member for any
reason while this option is outstanding, then the period during which this
option may be exercised shall be reduced to a three (3)-year period measured
from the date of such cessation of Board service, but in no event shall this
option be exercisable at any time after the Expiration Date. During such limited
period of exercisability, Optionee (or the person or persons to whom this option
is transferred pursuant to a permitted transfer under Paragraph 3) may not
exercise this option in the aggregate for more than the number of Option Shares
(if any) in which Optionee is vested on the date of his or her cessation of
Board service. Upon the EARLIER of (i) the expiration of such three (3)-year
period or (ii) the specified Expiration Date, the option shall terminate and
cease to be exercisable with respect to any vested Option Shares for which the
option has not been exercised.
(b) Should Optionee cease service as a Board member by reason of
death or Permanent Disability, then any Option Shares at the time subject to
this option but not otherwise vested shall vest in full so that this option may
be exercised for any or all of the Option Shares as fully vested shares of
Common Stock at any time prior to the EARLIER of (i) the expiration of the three
(3)-year period measured from the date of Optionee's cessation of Board service
or (ii) the specified Expiration Date, whereupon this option shall terminate and
cease to be outstanding.
(c) Upon Optionee's cessation of Board service for any reason
other than death or Permanent Disability, this option shall immediately
terminate and cease to be outstanding with respect to any and all Option Shares
in which Optionee is not otherwise at that time vested in accordance with the
normal Vesting Schedule or the special vesting acceleration provisions of
Paragraphs 6 and 7 below.
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6. CHANGE IN CONTROL.
(a) In the event of a Change in Control effected during
Optionee's period of Board service, any Option Shares at the time subject to
this option but not otherwise vested shall automatically vest so that this
option shall, immediately prior to the specified effective date for that Change
in Control, become exercisable for all of the Option Shares as fully vested
shares of Common Stock and may be exercised for any or all of those vested
shares. Immediately following the consummation of the Change in Control, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation or its parent company or otherwise continued in
effect pursuant to the terms of the Change in Control transaction.
(b) If this option is assumed in connection with a Change in
Control or otherwise continued in effect, then this option shall be
appropriately adjusted, immediately after such Change in Control, to apply to
the number and class of securities which would have been issuable to Optionee in
consummation of such Change in Control had the option been exercised immediately
prior to such Change in Control, and appropriate adjustments shall also be made
to the Exercise Price, PROVIDED the aggregate Exercise Price shall remain the
same. To the extent the actual holders of the Corporation's outstanding Common
Stock receive cash consideration for their Common Stock in consummation of the
Change in Control transaction, the successor corporation may, in connection with
the assumption of this option, substitute one or more shares of its own common
stock with a fair market value equivalent to the cash consideration paid per
share of Common Stock in such Change in Control transaction.
7. HOSTILE TAKE-OVER/HOSTILE TENDER-OFFER.
(a) In the event of a Hostile Take-Over effected during
Optionee's period of Board service, any Option Shares at the time subject to
this option but not otherwise vested shall automatically vest so that this
option shall, immediately prior to the effective date of that Hostile Take-Over,
become exercisable for all of the Option Shares as fully vested shares of Common
Stock and may be exercised for any or all of those vested shares. This option
shall remain exercisable for such fully vested Option Shares until the EARLIEST
to occur of (i) the specified Expiration Date, (ii) the sooner termination of
this option in accordance with Paragraph 5 or 6 or (iii) the surrender of this
option under Paragraph 7(b).
(b) Optionee shall have an unconditional right, exercisable at
any time during the thirty (30)-day period immediately following the
consummation of a Hostile Tender-Offer effected during his or her period of
Board service, to surrender this option to the Corporation in exchange for a
cash distribution from the Corporation in an amount equal to the excess of (i)
the Tender-Offer Price of the Option Shares at the time subject to the
surrendered option (whether or not those Option Shares are otherwise at the time
vested) over (ii) the aggregate Exercise Price payable for such shares. This
Paragraph 7(b) limited stock appreciation right shall in all events terminate
upon the expiration or sooner termination of the option term and may not be
assigned or transferred by Optionee, except to the extent the option is
transferred in accordance with the provisions of this Agreement.
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(c) To exercise the Paragraph 7(b) limited stock appreciation
right, Optionee must, during the applicable thirty (30)-day exercise period,
provide the Corporation with written notice of the option surrender in which
there is specified the number of Option Shares as to which the option is being
surrendered. Such notice must be accompanied by the return of Optionee's copy of
this Agreement, together with any written amendments to such Agreement. The cash
distribution shall be paid to Optionee within five (5) business days following
such delivery date. The exercise of such limited stock appreciation right in
accordance with the terms of this Paragraph 7 has been pre-approved pursuant to
the express provisions of the Automatic Option Grant Program, and neither the
approval of the Plan Administrator nor the consent of the Board shall be
required at the time of the actual option surrender and cash distribution. Upon
receipt of the cash distribution, this option shall be cancelled with respect to
the shares subject to the surrendered option (or the surrendered portion), and
Optionee shall cease to have any further right to acquire those Option Shares
under this Agreement. The option shall, however, remain outstanding for the
balance of the Option Shares (if any) in accordance with the terms and
provisions of this Agreement, and the Corporation shall accordingly issue a
replacement stock option agreement (substantially in the same form as this
Agreement) for those remaining Option Shares.
8. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
9. STOCKHOLDER RIGHTS. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
10. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) To the extent the option is exercised for vested Option Shares,
execute and deliver to the Corporation a Notice of Exercise (see attached
form) for the Option Shares for which the option is exercised. To the
extent this option is exercised for unvested Option Shares, execute and
deliver to the Corporation a Purchase Agreement for those unvested Option
Shares.
(ii) Pay the aggregate Exercise Price for the purchased shares in one
or more of the following forms:
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(A) cash or check made payable to the Corporation (includes cash
paid from Optionee's brokerage pursuant to a presale of shares in a
so-called "cashless" exercise),
(B) shares of Common Stock held by Optionee (or any other person
or persons exercising the option) for the requisite period necessary
to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise
Date, or
(C) to the extent the option is exercised for vested Option
Shares, through a special sale and remittance procedure pursuant to
which Optionee (or any other person or persons exercising the option)
shall concurrently provide irrevocable instructions (I) to a brokerage
firm to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Exercise Price payable
for the purchased shares plus all applicable income and employment
taxes required to be withheld by the Corporation by reason of such
exercise and (II) to the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
Payment forms (B), and (C) above shall be accepted solely at the
option of the Plan Administrator.
(iii) Furnish to the Corporation appropriate documentation that the
person or persons exercising the option (if other than Optionee) have the
right to exercise this option.
(b) Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price
must accompany the Notice of Exercise (or the Purchase Agreement) delivered to
the Corporation in connection with the option exercise.
(c) As soon after the Exercise Date as practical, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto. To the extent any such Option Shares are
unvested, the certificates for those Option Shares shall be endorsed with an
appropriate legend evidencing the Corporation's repurchase rights and may be
held in escrow with the Corporation until such shares vest.
(d) In no event may this option be exercised for any fractional
shares.
11. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise make changes in its
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capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets. In addition, this
Agreement shall not in any way be construed or interpreted so as to affect
adversely or otherwise impair the right of the Corporation or the stockholders
to remove Optionee from the Board at any time in accordance with the provisions
of applicable law.
12. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.
(b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
13. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in
Paragraph 3 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's assigns, the legal representatives, heirs and legatees of
Optionee's estate and any beneficiaries of this option designated by Optionee.
14. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the Grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
15. CONSTRUCTION. This Agreement and the option evidenced hereby are
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan.
16. GOVERNING LAW. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
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EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Ligand Pharmaceuticals Incorporated (the
"Corporation") that I elect to purchase _____________ shares of the
Corporation's Common Stock (the "Purchased Shares") at the option exercise price
of $__________ per share (the "Exercise Price") pursuant to that certain option
(the "Option") granted to me under the Corporation's 2002 Stock Incentive Plan
on _________________, ________.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price for any Purchased Shares in which I am vested at the time of exercise of
the Option.
__________________, ___________
Date
___________________________________________
Optionee
___________________________________________
Address:___________________________________
___________________________________________
Print name in exact manner
it is to appear on the
stock certificate: ___________________________________________
Address to which certificate
is to be sent, if different
from address above: ___________________________________________
___________________________________________
Social Security Number: ___________________________________________
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Automatic Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through any of the following transactions:
(i) a merger, consolidation or other reorganization approved by the
Corporation's stockholders, UNLESS securities representing more than fifty
percent (50%) of the total combined voting power of the voting securities
of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the
persons who beneficially owned the Corporation's outstanding voting
securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation, or
(iii) .the acquisition, directly or indirectly, by any person or
related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) of beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders.
D. COMMON STOCK shall mean shares of the Corporation's common stock.
E. CODE shall mean the Internal Revenue Code of 1986, as amended.
F. CORPORATION shall mean Ligand Pharmaceuticals Incorporated, a
Delaware corporation, and any successor corporation to all or substantially all
of the assets or voting stock of Ligand Pharmaceuticals Incorporated which shall
by appropriate action adopt the Plan.
G. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 10 of the Agreement.
H. EXERCISE PRICE shall mean the exercise price per share as specified
in the Grant Notice.
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I. EXPIRATION DATE shall mean the date on which the option expires as
specified in the Grant Notice.
J. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question, as the price is reported by
the National Association of Securities Dealers on the Nasdaq National
Market and published in THE WALL STREET JOURNAL. If there is no closing
selling price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding date
for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the Stock Exchange which serves as
the primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange and published in THE
WALL STREET JOURNAL. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.
K. GRANT DATE shall mean the date of grant of the option as specified
in the Grant Notice.
L. GRANT NOTICE shall mean the Notice of Grant of Automatic Stock
Option accompanying the Agreement, pursuant to which Optionee has been informed
of the basic terms of the option evidenced hereby.
M. HOSTILE TAKE-OVER shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:
(i) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time the Board approved such election or
nomination; or
(ii) a Hostile Tender-Offer.
N. HOSTILE TENDER-OFFER shall mean the acquisition, directly or
indirectly, by any person or related group of persons (other than the
Corporation or a person that directly or
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indirectly controls, is controlled by, or is under common control with, the
Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders which
the Board does not recommend such stockholders to accept.
O. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
P. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
Q. NOTICE OF EXERCISE shall mean the notice of exercise in the form of
Exhibit I.
R. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option.
S. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
T. PERMANENT DISABILITY shall mean the inability of Optionee to
perform his or her usual duties as a member of the Board by reason of any
medically determinable physical or mental impairment which is expected to result
in death or has lasted or can be expected to last for a continuous period of
twelve (12) months or more.
U. PLAN shall mean the Corporation's 2002 Stock Incentive Plan.
V. PURCHASE AGREEMENT shall mean the stock purchase agreement (in form
and substance satisfactory to the Corporation) which grants the Corporation the
right to repurchase, at the Exercise Price, any and all unvested Option Shares
held by Optionee at the time of Optionee's cessation of Board service and which
precludes the sale, transfer or other disposition of any purchased Option Shares
while those shares are unvested and subject to such repurchase right.
W. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.
X. TENDER-OFFER PRICE shall mean the GREATER of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Tender-Offer or (ii) the highest
reported price per share of Common Stock paid by the tender offeror in effecting
the Hostile Tender-Offer.
Y. VESTING SCHEDULE shall mean the vesting schedule specified in the
Grant Notice, pursuant to which the Option Shares will vest in one or more
installments over the Optionee's period of Board service, subject to
acceleration in accordance with the provisions of the Agreement.
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