EXHIBIT 10.272
LIGAND PHARMACEUTICALS INCORPORATED
DIRECTOR FEE STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has implemented a special director fee stock option
grant program under the Plan pursuant to which non-employee members of the Board
may, by prior irrevocable election, apply all or any portion of the annual
fee(s) otherwise payable to them in cash to the acquisition of a special stock
option grant.
B. Optionee is a non-employee Board member who made the requisite election
to apply a portion of his or her annual fee(s) to the acquisition of the special
option, and this Agreement is executed pursuant to, and is intended to carry out
the purposes of, the Plan in connection with the grant of such special option to
Optionee.
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 Stock 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 8.
3. LIMITED TRANSFERABILITY
(a) This option may be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's immediate 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 exercisable for
the Option Shares in a series of successive equal monthly installments as
specified in the Grant Notice. As the option becomes exercisable for those
installments, the 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 8.
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
exercise period, 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)
for which the option is exercisable on the date of Optionee's cessation of Board
service. Upon the EARLIER of (A) the expiration of such three (3)-year period or
(B) the specified Expiration Date, the option shall terminate and cease to be
exercisable with respect to any exercisable 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 this option shall automatically accelerate
and become immediately exercisable for all the Option Shares at the time subject
to this option so that Optionee (or the personal representative of Optionee's
estate or the person or persons to whom the option is transferred upon
Optionee's death or to whom the option is transferred during Optionee's lifetime
pursuant to a permitted transfer under Paragraph 3 or the designated beneficiary
or beneficiaries of this option, as the case may be) shall have the right to
exercise this option for any or all of those Option Shares as fully-vested
shares of Common Stock. Any such right to exercise this option shall lapse upon
the EARLIER of (A) the expiration of the three (3)-year period measured from the
date of Optionee's cessation of Board service or (B) the specified Expiration
Date.
(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
for which the option is not otherwise at that time exercisable.
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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, this option, to the extent outstanding at
that time but not otherwise fully exercisable for all the Option Shares, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Change in Control, become exercisable for all the Option
Shares at the time subject to this option and may be exercised for any or all of
those Option Shares as fully vested shares of Common Stock. Immediately
following such Change in Control, this option shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof) or otherwise continued in effect pursuant to the terms of the
Change in Control transaction.
(b) To the extent assumed by the successor corporation (or parent
thereof) in connection with the Change in Control or otherwise continued in
effect, 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, 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. This option, as so assumed or continued, shall remain fully exercisable
for all the Option Shares subject to such option until the EARLIEST to occur of
(i) the expiration of the three (3)-year period measured from the date of
Optionee's cessation of Board service, (ii) the specified Expiration Date or
(iii) the cash-out of this option pursuant to the provisions of Paragraph 8.
(c) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. HOSTILE TAKE-OVER.
(a) In the event of a Hostile Take-Over effected during
Optionee's period of Board service, this option, to the extent outstanding at
that time but not otherwise fully exercisable for all the Option Shares, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Hostile Take-Over, become exercisable for all the Option
Shares at the time subject to this option and may be exercised for any or all of
those Option Shares as fully vested shares of Common Stock.
(b) The option shall remain exercisable for such fully-vested
Option Shares until the EARLIEST to occur of (i) the expiration of the three
(3)-year period measured from the date of Optionee's cessation of Board service,
(ii) the specified Expiration Date, (iii) the
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termination of this option in connection with a Change in Control transaction or
(iv) the cash-out of this option pursuant to the provisions of Paragraph 8.
8. HOSTILE TENDER-OFFER Optionee is hereby granted a limited stock
appreciation right exercisable upon the following terms and conditions:
(a) Optionee shall have the unconditional right, exercisable at
any time during the thirty (30)-day period immediately following a Hostile
Tender-Offer effected during his or her period of Board service, to surrender
this option to the Corporation. In return for the surrendered option, Optionee
shall receive a cash distribution from the Corporation in an amount equal to the
excess of (A) the Tender-Offer Price of the shares of Common Stock which are at
the time subject to the surrendered option (whether or not the option is
otherwise at that time exercisable for those Option Shares) over (B) the
aggregate Exercise Price payable for such shares.
(b) To exercise this 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 the limited stock appreciation right in
accordance with the terms of this Paragraph 8 has been pre-approved pursuant to
the express provisions of the Plan, and no further approval of the Plan
Administrator or the Board shall be required at the time of the actual option
surrender and cash distribution. Upon receipt of such cash distribution, this
option shall be cancelled with respect to the Option Shares for which the option
has been surrendered, 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 of this Agreement, and the Corporation shall issue a replacement
stock option agreement (substantially in the same form as this Agreement) for
those remaining Option Shares.
(c) In no event may this limited stock appreciation right be
exercised when there is not a positive spread between the Fair Market Value of
the Option Shares subject to the surrendered option and the aggregate Exercise
Price payable for such shares. This 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.
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. 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
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without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the 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.
11. 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) Execute and deliver to the Corporation a Notice of Exercise (see
attached form) for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares in one
or more of the following forms:
(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) 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
Corporation-designated 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 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.
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.
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(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) 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.
(c) In no event may this option be exercised for any fractional
shares.
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, 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 director fee option grant program in effect
under the Plan and are in all respects limited by and subject to the terms of
that program.
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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APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Director Fee 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. CODE shall mean the Internal Revenue Code of 1986, as amended.
E. COMMON STOCK shall mean the Corporation's common stock.
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 such 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 selling
price quoted for the Common Stock on the date in question, then the Fair
Market Value shall be 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 serving 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 selling price quoted for the Common
Stock on the date in question, then the Fair Market Value shall be the
average of the high and low 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 Non-Employee
Director Stock Option Under Director Fee Option Grant Program 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
Securities Exchange Act of 1934, as amended) 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 STOCK OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.
Q. NOTICE OF EXERCISE shall mean the written notice of the option
exercise on the form provided by the Corporation for such purpose (see
attached).
R. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.
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 Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to be
of continuous duration of twelve (12) months or more.
U. PLAN shall mean the Corporation's 2002 Stock Incentive Plan.
V. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.
W. TENDER-OFFER PRICE per share shall mean the GREATER of (A) the Fair
Market Value per Option Share on the option surrender date under Paragraph 8 or
(B) the highest reported price per share of Common Stock paid by the tender
offeror in effecting the Hostile Tender-Offer.
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