Exhibit 10.1
LIGAND PHARMACEUTICALS
INCORPORATED
2002 STOCK INCENTIVE
PLAN
(AS AMENDED AND RESTATED
EFFECTIVE MAY 29, 2009)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE
PLAN
This 2002 Stock Incentive Plan is
intended to promote the interests of Ligand Pharmaceuticals
Incorporated, a Delaware corporation, by providing eligible persons
in the Corporation’s and its Subsidiaries’ service with
the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Corporation as an
incentive for them to remain in such service.
Capitalized terms shall have the
meanings assigned to such terms in the attached
Appendix.
II. STRUCTURE OF THE
PLAN
A. The Plan shall be divided into
three separate equity incentives programs:
1. the Discretionary Option Grant
Program under which eligible persons may, at the discretion of the
Plan Administrator, be granted options to purchase shares of Common
Stock,
2. the Stock Issuance Program under
which eligible persons may, at the discretion of the Plan
Administrator, be issued shares of Common Stock, and
3. the Other Stock Award Program
under which eligible persons may, at the discretion of the Plan
Administrator, be granted restricted stock units, stock
appreciation rights and dividend equivalents.
B. The provisions of Articles One,
Five and Six shall apply to all equity programs under the Plan and
shall govern the interests of all persons under the
Plan.
III. ADMINISTRATION OF THE
PLAN
A. The Primary Committee shall have
sole and exclusive authority to administer the Plan with respect to
Section 16 Insiders (other than non-employee Board members,
whose Awards shall be administered by the full Board, as provided
below). Administration of the Plan with respect to all other
persons eligible to participate in those programs may, at the
Board’s discretion, be vested in the Primary Committee or a
Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons.
However, any discretionary Awards for members of the Primary
Committee must be authorized by a disinterested majority of the
Board.
B. Members of the Primary Committee
or any Secondary Committee shall serve for such period of time as
the Board may determine and may be removed by the Board at any
time. The Board may also at any time terminate the functions of any
Secondary Committee and reassume all powers and authority
previously delegated to such committee.
C. Each Plan Administrator shall,
within the scope of its administrative functions under the Plan,
have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem
appropriate for proper administration of the Plan and to make such
determinations under, and issue such interpretations of, the
provisions of those programs and any outstanding Awards thereunder
as it may deem necessary or advisable. Decisions of the Plan
Administrator within the scope of its administrative functions
under the Plan shall be final and binding on all parties who have
an interest in the equity incentive programs under its jurisdiction
or any Award thereunder.
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D. Service on the Primary Committee
or the Secondary Committee shall constitute service as a Board
member, and members of each such committee shall accordingly be
entitled to full indemnification and reimbursement as Board members
for their service on such committee. No member of the Primary
Committee or the Secondary Committee shall be liable for any act or
omission made in good faith with respect to the Plan or any Awards
under the Plan.
E. Notwithstanding the foregoing,
the full Board shall administer the Plan with respect to any Awards
to the non-employee members of the Board. In addition, in its sole
discretion, the Board may at any time and from time to time
exercise any and all rights and duties of the Primary Committee or
any Secondary Committee under the Plan except with respect to
matters which under Rule 16b-3 under the Exchange Act or
Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the sole discretion of
the Primary Committee.
IV. ELIGIBILITY
A. The persons eligible to
participate in the Discretionary Option Grant, Stock Issuance and
Other Stock Award Programs are as follows:
(i) Employees,
(ii) non-employee members of the
Board or the board of directors of any Parent or Subsidiary,
and
(iii) consultants and other
independent advisors who provide services to the Corporation (or
any Parent or Subsidiary).
B. Each Plan Administrator shall,
within the scope of its administrative jurisdiction under the Plan,
have full authority to determine, (i) with respect to the
option grants under the Discretionary Option Grant Program, which
eligible persons are to receive such grants, the time or times when
those grants are to be made, the number of shares to be covered by
each such grant, the status of the granted option as either an
Incentive Option or a Non-Statutory Option, the time or times when
each option is to become exercisable, the vesting schedule (if any)
applicable to the option shares, the maximum term for which the
option is to remain outstanding and such other terms and conditions
of such option as the Plan Administrator determines are
appropriate, (ii) with respect to stock issuances under the
Stock Issuance Program, which eligible persons are to receive such
issuances, the time or times when the issuances are to be made, the
number of shares to be issued to each Participant, the vesting
schedule (if any) applicable to the issued shares, the purchase
price, if any, and consideration for such shares and such other
terms and conditions of such issued shares as the Plan
Administrator determines are appropriate, and (iii) with
respect to other Awards under the Other Stock Awards Program, which
eligible persons are to receive such Awards, the type of Award, the
time or times when the issuances are to be made, the number of
shares subject to such Award to be issued to each Participant, the
vesting schedule (if any) applicable to the Awards, the
consideration for such Awards and such other terms and conditions
of such Awards as the Plan Administrator determines are
appropriate.
V. STOCK SUBJECT TO THE
PLAN
A. The stock issuable under the Plan
shall be shares of authorized but unissued or reacquired Common
Stock, including shares repurchased by the Corporation on the open
market. The number of shares of Common Stock reserved for issuance
over the term of the Plan shall be 16,675,529 shares, consisting of
(i) the 6,075,529 shares that remained available for issuance,
as of the Original Plan Effective Date, under the Predecessor Plan
as last approved by the Corporation’s stockholders, including
the shares subject to outstanding options under the Predecessor
Plan, plus (ii) an additional increase of 750,000 shares that
was approved by the Corporation’s stockholders in connection
with the adoption of the Plan in 2002, plus (iii) an aggregate
of 9,850,000 additional shares approved by the Corporation’s
stockholders since the Original Plan Effective Date
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B. No one person participating in
the Plan may receive Awards for more than 1,000,000 shares of
Common Stock in the aggregate per calendar year.
C. Shares of Common Stock subject to
outstanding Awards (including options transferred to this Plan from
the Predecessor Plan) shall be available for subsequent issuance
under the Plan to the extent those Awards expire or terminate for
any reason prior to exercise in full. Unvested shares issued under
the Plan and subsequently cancelled or repurchased by the
Corporation pursuant to the Corporation’s repurchase rights
under the Plan shall be added back to the number of shares of
Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more
subsequent option grants or direct stock issuances under the Plan.
However, should the exercise price of an Award under the Plan be
paid with shares of Common Stock or should shares of Common Stock
otherwise issuable under the Plan be withheld by the Corporation in
satisfaction of the withholding taxes incurred in connection with
the exercise, vesting or payment of an Award under the Plan, then
the number of shares of Common Stock available for issuance under
the Plan shall be reduced by the gross number of shares for which
the Award is exercised, vests or is paid, and not by the net number
of shares of Common Stock issued to the holder of such
Award.
D. If any change is made to the
Common Stock by reason of any stock split, stock or cash dividend
(other than normal cash dividends), 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, equitable adjustments shall be made by
the Plan Administrator to (i) the maximum number and/or class
of securities issuable under the Plan, (ii) the maximum number
and/or class of securities for which any one person may be granted
Awards under the Plan per calendar year, (iii) the number
and/or class of securities for which grants are subsequently to be
made under the Automatic Option Grant Program to new and continuing
non-employee Board members, (iv) the number and/or class of
securities and the exercise or purchase price per share in effect
under each outstanding Award under the Plan, (v) the number
and/or class of securities and exercise price per share in effect
under each outstanding option transferred to this Plan from the
Predecessor Plan, and (vi) the terms and conditions of any
outstanding Awards (including, without limitation, any applicable
performance targets or criteria with respect thereto). Such
adjustments to the outstanding Awards are to be effected in a
manner which shall preclude the enlargement or dilution of rights
and benefits under such Awards. The adjustments determined by the
Plan Administrator shall be final, binding and
conclusive.
E. Subject to Article Two, Section
III, Article Three, Section II and Article Four, Section V, in the
event of any transaction or event described in Section V.D or any
unusual or nonrecurring transactions or events affecting the
Corporation, any affiliate of the Corporation, or the financial
statements of the Corporation or any affiliate, or of changes in
applicable laws, regulations or accounting principles, including,
without limitation, a Change in Control or a Hostile Take-Over, the
Plan Administrator, in its sole and absolute discretion, and on
such terms and conditions as it deems appropriate, either by the
terms of the Award or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the
Optionee’s or Participant’s request, is hereby
authorized to take any one or more of the following actions
whenever the Plan Administrator determines that such action is
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under
the Plan or with respect to any Award under the Plan, to facilitate
such transactions or events or to give effect to such changes in
laws, regulations or principles:
1. To provide for either
(A) termination of any such Award in exchange for an amount of
cash, if any, equal to the amount that would have been attained
upon the exercise of such Award or realization of the
Optionee’s or Participant’s rights (and, for the
avoidance of doubt, if as of the date of the occurrence of the
transaction or event described in this Section V.E the Plan
Administrator determines in good faith that no amount would have
been attained upon the exercise of such Award or realization of the
Optionee’s or Participant’s rights, then such Award may
be terminated by the Corporation without payment) or (B) the
replacement of such Award with other rights or property selected by
the Plan Administrator in its sole discretion;
2. To provide that such Award be
assumed by the successor or survivor corporation, or a parent or
subsidiary thereof, or shall be substituted for by similar Awards
covering the stock of the successor or survivor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to
the number and kind of shares and prices;
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3. To make adjustments in the number
and type of shares of Common Stock (or other securities or
property) subject to outstanding Awards, and in the number and/or
in the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding
Awards;
4. To provide that such Award shall
be exercisable or payable or fully vested with respect to all
shares covered thereby, notwithstanding anything to the contrary in
the Plan or the applicable award agreement; and
5. To provide that the Award cannot
vest, be exercised or become payable after such event.
F. In the event of any pending stock
dividend, stock split, combination or exchange of shares, merger,
consolidation or other distribution (other than normal cash
dividends) of Corporation assets to stockholders, or any other
change affecting the shares of Common Stock or the share price of
the Common Stock, for reasons of administrative convenience, the
Corporation in its sole discretion may refuse to permit the
exercise of any Award during a period of thirty (30) days
prior to the consummation of any such transaction.
ARTICLE TWO
DISCRETIONARY OPTION GRANT
PROGRAM
I. OPTION TERMS
Each option shall be evidenced by
one or more documents in the form approved by the Plan
Administrator; provided, however, that each such document shall
comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions
of the Plan applicable to such options.
A. EXERCISE PRICE.
1. The exercise price per share
shall be fixed by the Plan Administrator but shall not be less than
one hundred percent (100%) of the Fair Market Value per share
of Common Stock on the option grant date.
2. The exercise price shall become
immediately due upon exercise of the option and shall, subject to
the provisions of the documents evidencing the option, be payable
in one or more of the forms specified below:
(i) cash or check made payable to
the Corporation,
(ii) shares of Common Stock held by
the Optionee or otherwise issuable upon exercise of the option and
valued at Fair Market Value on the Exercise Date,
(iii) to the extent the option is
exercised for vested shares, through a special sale and remittance
procedure pursuant to which the Optionee shall concurrently provide
irrevocable instructions to (a) 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 and employment taxes required to be withheld by the
Corporation by reason of such exercise and (b) the Corporation
to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale, or
(iv) with the consent of the Plan
Administrator, a promissory note bearing interest at no less than
such rate as shall then preclude the imputation of interest under
the Code.
Except to the extent such sale and
remittance procedure is utilized, payment of the exercise price for
the purchased shares must be made on the Exercise Date.
Notwithstanding any other provision of the Plan to the contrary, no
Optionee who is a member of the Board or an “executive
officer” of the Corporation within the meaning of
Section 13(k) of the Exchange Act shall be permitted to pay
the exercise price of an option, or continue any extension of
credit with respect to the exercise of an option, with a loan from
the Corporation or a loan arranged by the Corporation in violation
of Section 13(k) of the Exchange Act.
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B. EXERCISE AND TERM OF OPTIONS.
Each option shall be exercisable at such time or times, during such
period and for such number of shares as shall be determined by the
Plan Administrator and set forth in the documents evidencing the
option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
C. EFFECT OF TERMINATION OF
SERVICE.
1. The following provisions shall
govern the exercise of any options held by the Optionee at the time
of cessation of Service or death:
(i) Any option outstanding at the
time of the Optionee’s cessation of Service for any reason
shall remain exercisable for such period of time thereafter as
shall be determined by the Plan Administrator and set forth in the
documents evidencing the option, but no such option shall be
exercisable after the expiration of the option term.
(ii) Any option held by the Optionee
at the time of death and exercisable in whole or in part at that
time may be subsequently exercised by the personal representative
of the Optionee’s estate or by the person or persons to whom
the option is transferred pursuant to the Optionee’s will or
the laws of inheritance or by the Optionee’s designated
beneficiary or beneficiaries of that option.
(iii) During the applicable
post-Service exercise period, the option may not be exercised in
the aggregate for more than the number of vested shares for which
the option is exercisable on the date of the Optionee’s
cessation of Service. Upon the expiration of the applicable
exercise period or (if earlier) upon the expiration of the option
term, option shall terminate and cease to be outstanding for any
vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee’s cessation
of Service, terminate and cease to be outstanding to the extent the
option is not otherwise at that time exercisable for vested
shares.
2. The Plan Administrator shall have
complete discretion, exercisable either at the time an option is
granted or at any time while the option remains outstanding,
to:
(i) extend the period of time for
which the option is to remain exercisable following the
Optionee’s cessation of Service from the limited exercise
period otherwise in effect for that option to such greater period
of time as the Plan Administrator shall deem appropriate, but in no
event beyond the expiration of the option term, and/or
(ii) permit the option to be
exercised, during the applicable post-Service exercise period, not
only with respect to the number of vested shares of Common Stock
for which such option is exercisable at the time of the
Optionee’s cessation of Service but also with respect to one
or more additional installments in which the Optionee would have
vested had the Optionee continued in Service.
D. STOCKHOLDER RIGHTS. The holder of
an option shall have no stockholder rights with respect to the
shares subject to the option until such person shall have exercised
the option, paid the exercise price and become a holder of record
of the purchased shares.
E. REPURCHASE RIGHTS. The Plan
Administrator shall have the discretion to grant options which are
exercisable for unvested shares of Common Stock. Should the
Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase any or all of those
unvested shares. The terms upon which such repurchase right shall
be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be
established by the Plan Administrator and set forth in the document
evidencing such repurchase right.
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F. LIMITED TRANSFERABILITY OF
OPTIONS. During the lifetime of the Optionee, Incentive Options
shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or the laws of
inheritance following the Optionee’s death. Non-Statutory
Options shall be subject to the same restriction, except that a
Non-Statutory Option may be assigned in whole or in part during the
Optionee’s lifetime to one or more members of the
Optionee’s family or to a trust established exclusively for
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 may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant
to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately
prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem
appropriate. Notwithstanding the foregoing, the Optionee may also
designate one or more persons as the beneficiary or beneficiaries
of his or her outstanding options under this Article Two, and those
options shall, in accordance with such designation, automatically
be transferred to such beneficiary or beneficiaries upon the
Optionee’s death while holding those options. Such
beneficiary or beneficiaries shall take the transferred options
subject to all the terms and conditions of the applicable agreement
evidencing each such transferred option, including (without
limitation) the limited time period during which the option may be
exercised following the Optionee’s death.
II. INCENTIVE
OPTIONS
The terms specified below shall be
applicable to all Incentive Options. Except as modified by the
provisions of this Section II, all the provisions of Articles One,
Five and Six shall be applicable to Incentive Options. To the
extent an option which is designated as an Incentive Option fails
to meet the requirements of Section 422 of the Code, then such
option shall be treated as a Non-Statutory Option. Options which
are specifically designated as Non-Statutory Options when issued
under the Plan shall not be subject to the terms of this Section
II.
A. ELIGIBILITY. Incentive Options
may only be granted to Employees.
B. DOLLAR LIMITATION. The aggregate
Fair Market Value of the shares of Common Stock (determined as of
the respective date or dates of grant) for which one or more
options granted to any Employee under the Plan (or any other option
plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one
calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). To the extent the Employee holds two
(2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on
the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are
granted.
C. 10% STOCKHOLDER. If any Employee
to whom an Incentive Option is granted is a 10% Stockholder, then
the exercise price per share shall not be less than one hundred ten
percent (110%) of the Fair Market Value per share of Common
Stock on the option grant date, and the option term shall not
exceed five (5) years measured from the option grant
date.
III. CHANGE IN CONTROL/HOSTILE
TAKE-OVER
A. In the event of a Change in
Control, each outstanding option under the Discretionary Option
Grant Program shall automatically accelerate so that each such
option shall, immediately prior to the effective date of that
Change in Control, become exercisable for all the shares of Common
Stock at the time subject to such option and may be exercised for
any or all of those shares as fully vested shares of Common Stock.
However, an outstanding option shall NOT become exercisable on such
an accelerated basis if and to the extent: (i) such option is
to be assumed by the successor corporation (or parent thereof) or
is otherwise to continue in full force and effect pursuant to the
terms of the Change in Control transaction or (ii) such option
is to be replaced with a cash incentive program of the successor
corporation which preserves the spread existing at the time of the
Change in Control on any shares for which the option is not
otherwise at that time exercisable and provides for subsequent
payout of that spread in accordance with the same exercise/vesting
schedule applicable to those option shares or (iii) the
acceleration of such option is subject to other limitations imposed
by the Plan Administrator at the time of the option
grant.
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B. All outstanding repurchase rights
under the Discretionary Option Grant Program shall automatically
terminate, and the shares of Common Stock subject to those
terminated rights shall immediately vest in full, in the event of a
Change in Control, except to the extent: (i) those repurchase
rights are to be assigned to the successor corporation (or parent
thereof) or are otherwise to continue in full force and effect
pursuant to the terms of the Change in Control transaction or
(ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
C. Immediately following the
consummation of the Change in Control, all outstanding options
under the Discretionary Option Grant Program shall terminate and
cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) or otherwise continued in
full force and effect pursuant to the terms of the Change in
Control transaction.
D. Each option which is assumed in
connection with a Change in Control or otherwise continued in
effect 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 the Optionee in consummation of
such Change in Control had the option been exercised immediately
prior to such Change in Control. Appropriate adjustments shall also
be made to the exercise price payable per share under each
outstanding option, provided the aggregate exercise price payable
for such securities shall remain the same (subject only to
reduction by reason of rounding). 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 the outstanding options under the Discretionary
Option Grant Program, 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.
E. The Plan Administrator shall have
the discretionary authority to structure one or more outstanding
options under the Discretionary Option Grant Program so that those
options shall, immediately prior to the effective date of a Change
in Control, become exercisable for all the shares of Common Stock
at the time subject to those options and may be exercised for any
or all of those shares as fully vested shares of Common Stock,
whether or not those options are to be assumed in the Change in
Control transaction or otherwise continued in effect. In addition,
the Plan Administrator shall have the discretionary authority to
structure one or more of the Corporation’s repurchase rights
under the Discretionary Option Grant Program so that those rights
shall immediately terminate upon the consummation of the Change in
Control transaction, and the shares subject to those terminated
rights shall thereupon vest in full.
F. The Plan Administrator shall have
full power and authority to structure one or more outstanding
options under the Discretionary Option Grant Program so that those
options shall become exercisable for all the shares of Common Stock
at the time subject to those options in the event the
Optionee’s Service is subsequently terminated by reason of an
Involuntary Termination within a designated period (not to exceed
eighteen (18) months) following the effective date of any
Change in Control transaction in which those options do not
otherwise accelerate. In addition, the Plan Administrator may
structure one or more of the Corporation’s repurchase rights
so that those rights shall immediately terminate with respect to
any shares held by the Optionee at the time of such Involuntary
Termination, and the shares subject to those terminated repurchase
rights shall accordingly vest in full at that time.
G. The Plan Administrator shall have
the discretionary authority to structure one or more outstanding
options under the Discretionary Option Grant Program so that those
options shall, immediately prior to the effective date of a Hostile
Take-Over, become exercisable for all the shares of Common Stock at
the time subject to those options and may be exercised for any or
all of those shares as fully vested shares of Common Stock. In
addition, the Plan Administrator shall have the discretionary
authority to structure one or more of the Corporation’s
repurchase rights under the Discretionary Option Grant Program so
that those rights shall terminate automatically upon the
consummation of such Hostile Take-Over, and the shares subject to
those terminated rights shall thereupon vest in full.
Alternatively, the Plan Administrator may condition the automatic
acceleration of one or more outstanding options under the
Discretionary Option Grant Program and the termination of one or
more of the Corporation’s outstanding repurchase rights under
such program upon the subsequent termination of the
Optionee’s Service by reason of an Involuntary Termination
within a designated period (not to exceed eighteen
(18) months) following the effective date of such Hostile
Take-Over.
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H. The portion of any Incentive
Option accelerated in connection with a Change in Control or
Hostile Take-Over shall remain exercisable as an Incentive Option
only to the extent the applicable One Hundred Thousand Dollar
($100,000) limitation is not exceeded. To the extent such dollar
limitation is exceeded, the accelerated portion of such option
shall be exercisable as a Nonstatutory Option under the Federal tax
laws.
I. The outstanding options shall in
no 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.
ARTICLE THREE
STOCK ISSUANCE
PROGRAM
I. STOCK ISSUANCE
TERMS
Shares of Common Stock may be issued
under the Stock Issuance Program through direct and immediate
issuances without any intervening option grants. Each such stock
issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below. Shares of Common Stock may
also be issued under the Stock Issuance Program pursuant to share
righ
