EXHIBIT 10.1
[LIGAND LETTERHEAD]
10 January 2007
John L. Higgins
820 Stanford Avenue
Menlo Park, California 94025
Dear John:
Ligand Pharmaceuticals Incorporated (the "Company") is pleased
to offer you employment on the following terms:
1. POSITION.
Your title will be President and Chief
Executive Officer and Director, and you will report to the
Company's Board of
Directors (the "Board"). This is a full-time position. While you
render services
to the Company, you will not engage in any other employment,
consulting or other
business activity (whether full-time or part-time) that would
create a conflict
of interest with the Company or your duties, in each case as
determined by the
Board. By signing this letter agreement, you confirm to the Company
that you
have no contractual commitments or other legal obligations that
would prohibit
you from performing your duties for the Company. Upon hire and
assuming your
compliance with all Company policies applicable to directors, you
will be
elected a director of the Company to serve until the next annual
meeting and
while you are serving as the Company's President and Chief
Executive Officer,
the Company will make all reasonable efforts to cause you to be
elected by our
stockholders to our Board of Directors.
2. CASH
COMPENSATION. The Company will pay you a starting
salary at the rate of $400,000 per year, payable in accordance with
the
Company's standard payroll schedule. This salary will be subject to
adjustment
pursuant to the Company's employee compensation policies in effect
from time to
time. In addition, you will be eligible to be considered for an
incentive bonus
for each fiscal year of the Company. The bonus (if any) will be
awarded against
your performance of the Company, and you personally. Company
performance targets
and other objective or subjective criteria will be established by
the Company's
Board of Directors or its Compensation Committee, in consultation
with you. Your
target bonus will be 50% of your annual base salary, with a maximum
of 75%. Any
bonus for the fiscal year in which your employment begins will be
prorated,
based on the number of days you are employed by the Company during
that fiscal
year. The bonus for a fiscal year will be paid after the Company's
books for
that year have been closed and will be paid only if you are
employed by the
Company at the fiscal year end. The determinations of the Company's
Compensation
Committee or its Board of Directors with respect to your bonus will
be final and
binding.
3. RELOCATION
BENEFITS. The Company will pay you $100,000
in a lump sum upon hire to defray the costs of relocating your
residence to San
Diego. You agree to reimburse this amount to the Company if you
voluntarily
terminate your employment without good reason within one year of
the start date
of your employment.
<PAGE>
4. EMPLOYEE
BENEFITS AND OFFICER INDEMNIFICATION. As a
regular employee of the Company, you will be eligible to
participate in the
standard package of Company-sponsored benefits including health
insurance,
401(k), employee stock purchase plans and other benefits offered to
all senior
executives. The Company will purchase and pay the premiums on a
term life
insurance on your life with you as owner and beneficiary. In
addition, you will
be entitled to four weeks of paid vacation in accordance with the
Company's
vacation policy, as in effect from time to time. We will also
provide a standard
indemnification agreement for you as an executive officer, in
accordance with
our bylaws.
5. RESTRICTED
STOCK GRANT. Subject to the approval of the
Company's Board of Directors or its Compensation Committee, you
will be granted
150,000 shares of the Company's common stock under the Company's
2002 Stock
Incentive Plan, subject to a right of repurchase or "vesting" and
other
customary restrictions (the "Restricted Stock"). The purchase price
per share
will be equal to the fair market value of the Company's Common
Stock at the
close of business on the date of grant, and will be paid in future
services
rendered by you to the Company over the next two years with no out
of pocket
cost to you. You shall have full stockholder rights to these
shares, regardless
of whether they are vested, including voting rights and the right
to receive any
applicable dividends, splits and the like. You will vest in 50% of
the
Restricted Stock after 12 months of continuous service after the
date of grant,
and the balance will vest at the end of your second year of
continuous service
after the date of grant. You will be eligible for future restricted
stock awards
and/or option awards at the discretion of the Compensation
Committee during the
term of this Agreement.
6.
SEVERANCE BENEFITS. The Company will enter into a
Severance Agreement with you that will include the terms of this
Section 6. If
the Company terminates your employment for any reason other than
Cause or
Permanent Disability or you terminate for Good Reason and there has
not been a
Change of Control in the prior 12 months, then you will be entitled
to the
following benefits:
(a) The Company will continue to pay your base
salary for a period of eighteen months following the termination of
your employment. Your base salary will be paid at the rate in
effect at
the time of the termination of your employment and in accordance
with
the Company's standard payroll procedures. However, your severance
payments will in no event start before the earliest date permitted
by
Section 409A(a)(2)of the Internal Revenue Code. If the commencement
of
the severance payments must be delayed, as determined by the
Company,
then the deferred installments will be paid to you in a lump sum on
the
earliest practicable
date permitted by Section 409A(a)(2). The
amount of the salary
continuation payments
under this Subsection (a)
will be reduced by the amount of any severance pay or pay in lieu
of
notice that you receive from the Company under a federal or
state
statute (including,
without limitation,
the WARN Act).
(b) If you elect to
continue your health insurance
coverage under the Consolidated Omnibus Budget Reconciliation
Act
("COBRA") following the termination of your employment, then
the
Company will pay the same portion of your monthly premium under
COBRA
as it pays for active
<PAGE>
employees until the earliest of (i) the close of the
eighteen-month
period following the termination of your employment, (ii) the
expiration of your continuation coverage under COBRA or (iii) the
date
when you become eligible for substantially equivalent health
insurance
coverage in connection with new employment or self-employment.
(c) accelerated
vesting of any outstanding, unvested
stock or options
If the Company terminates your employment for any reason other than
Cause or
Permanent Disability or you terminate for Good Reason, and within
12 months
after a Change of Control, then you will be entitled to the
following benefits:
(d) The Company will pay you a lump sum amount
equal
to two times (i) your
annual base
salary plus (ii) the average of
your annual bonuses for your period of service. Your base salary
will be paid at the rate in effect at the time of the termination
of
your employment and in
accordance with the
Company's standard
payroll procedures.
However, your
severance payments
will in no
event start before the earliest date permitted by Section 409A(a)(2)of
the Internal Revenue Code. If the
