EXHIBIT 10.1
PETER W. CARTER
(612) 340-5635
FAX (612) 340-2868
CARTER.PETER@DORSEY.COM
February 26, 2007
Ligand Pharmaceuticals Incorporated
10275 Science Center Drive
San Diego, CA
92121
Attn: Warner Broaddus,
Esq., General Counsel
Re:
INDEMNITY FUND
AGREEMENT WITH LIGAND PHARMACEUTICALS INCORPORATED(THE
"COMPANY")
Dear Warner:
This letter will constitute the agreement between the Company
and
Dorsey as authorized by the Board of Directors of the Company (the
"Board") on
December 7, 2006.
For purposes of this agreement, "Legacy Directors" means,
collectively,
Henry F. Blissenbach, Alexander D. Cross, John Groom, Irving S.
Johnson, John W.
Kozarich, Carl Peck and Michael A. Rocca; "Restatement" means the
Company's
restatement of its consolidated financial statements as of December
31, 2003 and
for the years ended December 31, 2003 and 2002, and as of and for
the first
three quarters of 2004, and for the quarters of 2003; "SEC
Investigation" means
the SEC's pending investigation regarding certain matters in
connection with the
Restatement; "Legacy Matters" means, collectively, any matters in
connection
with the SEC Investigation or other matters relating to the periods
covered by
the Restatement; and "Legacy Matter Liabilities and Defense Costs"
means,
collectively, any liabilities and/or defense costs of the Legacy
Directors which
are a) incurred in connection with the SEC Investigation or other
Legacy Matters
and b) which the Company is obligated to pay or advance on behalf
of the Legacy
Directors or other directors named herein under the existing
indemnification
agreements between the Company and each such director (the
"Indemnification
Agreements").
Pursuant to the Board's authorization, Ligand will fund an
indemnity
fund account to be maintained by Dorsey in an interest-bearing
Dorsey trust
account in the amount of $10,000,000 (the "Indemnity Fund").
Subject to
fulfillment of the prerequisites of the Indemnification Agreements,
the
Indemnity Fund will be disbursed by Dorsey, on behalf of the Legacy
Directors,
against any Legacy Matter Liabilities and Defense Costs incurred by
the Legacy
Directors, including Dorsey's legal fees and disbursements and the
fees and
disbursements of any other advisor or counsel retained by the
Legacy Directors
with the consent of the Company or in accordance with the
Indemnification
Agreements. All disbursements must be made in accordance with
the
Indemnification Agreements, documented by appropriate invoices
which shall be
provided to the Company and approved by 1) Dorsey, 2) a
representative of the
Legacy Directors and 3) a duly authorized officer of the Company;
provided,
however, that as to any Legacy Matter Liabilities and Defense Costs
in
connection with the SEC Investigation, the
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Company acknowledges the following: (i) the prerequisites of the
Indemnification
Agreements have been fulfilled; (ii) the Company has determined
that the Legacy
Directors are entitled to indemnification and advancement under
the
Indemnification Agreements; (iii) Dorsey has been approved by the
Company to
represent the Legacy Directors in connection with the SEC
Investigation; and
(iv) that Dorsey is authorized to disburse from the Indemnity Fund
in connection
therewith without receipt of prior approval from the Company.
In the event that any of the following additional directors of
the
Company, Daniel S. Loeb, Jeffrey R. Perry, Brigitte Roberts or
Jason Aryeh,
should incur any Legacy Matter Liabilities or Defense Costs, the
Indemnity Fund
will also be available, on the terms and conditions outlined in the
foregoing
paragraph, to be disbursed by Do
