[LIGAND LETTERHEAD}
1 March 2006
[Employee]
Address
City, State Zip
Dear [Employee]:
The purpose of this letter agreement between you and Ligand
Pharmaceuticals, Inc. (the "Company") is to document the terms of a retention or
stay bonus to which you will become entitled under certain circumstances set
forth below.
DEFINITIONS. For purposes of this letter agreement the following
definitions will be in effect:
1. "Involuntary Termination" or "Involuntarily Terminated" means the
termination of your employment with the Company:
(i) upon your involuntary discharge or
dismissal, or
(ii) upon your resignation in connection
with any of the following changes to the terms and conditions of your
employment: (A) a change in your position with the Company which
materially reduces your level of responsibility, (B) a material
reduction in your level of compensation (including base salary, fringe
benefits and participation in non-discretionary bonus programs under
which awards are payable pursuant to objective financial or performance
standards, but excluding equity compensation) or (C) a relocation of
your principal place of employment by more than fifty (50) miles.
In no event shall an Involuntary Termination be deemed to
occur should your employment terminate by reason of death or permanent
disability.
2. "Termination for Cause" means an Involuntary Termination or
resignation of your employment with the Company by reason of your
conviction of any felony or other criminal act, your commission of any
act of fraud or embezzlement, your unauthorized use or disclosure of
confidential or proprietary information or trade secrets of the Company
or its subsidiaries, material violation of Company policy, or any
intentional misconduct on your part which adversely affects the
business or affairs of the Company in a material manner.
STAY BONUS. Provided that you are (a) continuously employed by the
Company and available for work (except normal holidays and approved paid time
off) (b) maintain a performance rating of fully meets expectations (FME) or
better and (c) are not subject to any disciplinary action or performance
improvement program, in each case from the date of this letter, up to and
including December 31, 2006, you will receive on or before January 15, 2007 a
lump-sum payment equal to [amount] less appropriate tax withholding and other
deductions (the "Stay Bonus"). In the event of your Involuntary Termination
other than a Termination for Cause prior to December 31, 2006, and provided you
have complied with each of the conditions set forth in clauses (a) - (c) above
from the date of this letter up to the date of such Involuntary Termination, you
will be entitled to receive within 15 calendar days of such Involuntary
Termination, in addition to any other benefits to which you may be entitled, the
full Stay Bonus in effect at the date of such Involuntary Termination.
Notwithstanding the foregoing, should your Involuntary Termination constitute a
Termination for Cause, then you shall not be entitled to any portion of the Stay
Bonus.
MISCELLANEOUS PROVISIONS
1. Entire Agreement; Amendments. This letter agreement sets forth the
complete understanding of the parties with respect to the subject
matter hereof and merges all prior communications, PROVIDED THAT, for
clarity, the payments for which you are eligible under this letter
agreement are separate from and in addition to (A) any payments or
benefits for which you are eligible under any severance or other
agreements between you and the Company (b) your regular salary and
annual bonus. No amendment of this letter agreement shall be effective
unless in writing and signed by both parties.
2. Term. This letter agreement shall expire on January 31, 2007.
3. General Creditor Status. The benefits to which you may become
entitled under this letter agreement will be paid, when due, from the
general assets of the Company. Your right (or the right of the
executors or administrators of your estate) to receive any such
payments will at all times be that of a general creditor of the Company
and will have no priority over the claims of other general creditors of
the Company.
4. Death. Should you die before receipt of all benefits to which you
become entitled under this letter agreement, then the payment of such
benefits will be made, on the due date or dates hereunder had you
survived, to the executors or administrators of your estate.
5. Miscellaneous. The provisions of this letter agreement will be
construed and interpreted under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). To the extent ERISA is inapplicable,
then the laws of the State of California shall control, without regard
to that state's choice of law provisions. If any provision of this
letter agreement as applied to any party or to any circumstance should
be adjudged by an arbitrator or court of competent jurisdiction to be
void or unenforceable for any reason, the invalidity of that provision
shall in no way affect (to the maximum extent permissible by law) the
application of such provision under circumstances different from those
so adjudicated, the application of any other provision of this letter
agreement, or the enforceability or invalidity of this letter agreement
as a whole. Should any provision of this letter agreement become or be
determined to be invalid, illegal or unenforceable in any jurisdiction
by reason of the scope, extent or duration of its coverage, then such
provision shall be deemed amended to the extent necessary to conform to
applicable law so as to be valid and enforceable or, if such provision
cannot be so amended without
materially altering the intention of the parties, then such provision
shall be stricken and the remainder of this letter agreement shall
continue in full force and effect.
6. Section 409A Compliance. Notwithstanding anything to the contrary in
this Agreement, the parties acknowledge and agree that any payment to
be made, or benefit provided, pursuant to this Agreement shall be
delayed if and to the extent necessary for this Agreement and such
payment or benefit to comply with Section 409A of the Internal Revenue
Code of 1986, as amended from time to time, and the Treasury
Regulations and other interpretive guidance issued thereunder.
7. Remedies. All rights and remedies provided pursuant to this letter
agreement or by law will be cumulative, and no such right or remedy
will be exclusive of any other. A party may pursue any one or more
rights or remedies hereunder or may seek damages or specific
performance in the event of another party's breach hereunder or may
pursue any other remedy by law or equity, whether or not stated in this
letter agreement.
8. Arbitration. Any controversy which may arise between you and the
Company with respect to the construction, interpretation or application
of any of the terms, provisions or conditions of this letter agreement
or any monetary claim arising from or relating to this letter agreement
will be submitted to and exclusively decided by final and binding
arbitration in San Diego, California in accordance with the National
Rules for the Resolution of Employment Disputes of the American
Arbitration Association then in effect.
9. No Employment or Service Contract. Nothing in this letter agreement
shall confer upon you any right to continue in the employment of the
Company for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company or you, which
rights are hereby expressly reserved by each, to terminate your
employment at any time for any reason whatsoever, with or without
cause.
10. Proprietary Information. You hereby acknowledge that the Company
may, from time to time during your employment with the Company,
disclose to you confidential information pertaining to the Company's
business and affairs. All information and data, whether or not in
writing, of a private or confidential nature concerning the business or
financial affairs of the Company is and will remain subject to a
separate Proprietary Information and Inventions Agreement (or the like)
between you and the Company.
11. Successors and Assigns. This letter agreement is intended to bind
and inure to the benefit of and be enforceable by you and the Company,
and upon any other person who is a successor to the Company by merger,
acquisition, consolidation or otherwise to the business formerly
carried on by the Company, and their respective successors, assigns,
heirs, executors and administrators, without regard to whether or not
such person actively assumes any rights or duties hereunder; provided,
however, that you may not assign any rights hereunder without the
written consent of the Company.
Please indicate your acceptance of the foregoing provisions of
this letter agreement by signing the enclosed copy of this letter agreement and
returning it to the Company. This letter agreement shall be effective as of the
first date written above.
Very truly yours,
LIGAND PHARMACEUTICALS INCORPORATED
By:
William A. Pettit
Senior Vice President
ACCEPTED BY AND AGREED TO
Signature: ___________________________________
Dated: ___________________________________