EXHIBIT 10.1
EXECUTION COPY
STOCKHOLDERS AGREEMENT
dated as of December 2, 2005
by and among
LIGAND PHARMACEUTICALS INCORPORATED,
THIRD POINT LLC,
THIRD POINT OFFSHORE FUND, LTD.,
THIRD POINT PARTNERS LP,
THIRD POINT ULTRA LTD.,
LYXOR/THIRD POINT FUND LTD., and
THIRD POINT PARTNERS QUALIFIED LP
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This STOCKHOLDERS AGREEMENT dated as of December 2, 2005 (this
"STOCKHOLDERS AGREEMENT") is made and
entered into by and among Ligand
Pharmaceuticals Incorporated, a Delaware
corporation (the "COMPANY"), and Third
Point LLC, a Delaware limited liability
company ("THIRD POINT"), and Third Point
Offshore Fund, Ltd., a Cayman Islands
limited liability exempted company, Third
Point Partners LP, a Delaware limited
partnership, Third Point Ultra Ltd., a
British Virgin Islands limited liability
company, Lyxor/Third Point Fund Ltd., a
Jersey public company with limited
liability, and Third Point Partners Qualified
LP, a Delaware limited partnership (each a
"STOCKHOLDER" and, collectively, the
"STOCKHOLDERS").
WHEREAS, each Stockholder is the beneficial owner of the
number of shares of common stock, par value
$.001 per share, of the Company (the
"COMMON STOCK") listed next to such
Stockholder's name on SCHEDULE I hereto (the
"THIRD POINT SHARES"); and
WHEREAS, the Stockholders and the Company wish to provide for
representation on the Board of Directors of
the Company (the "BOARD OF
DIRECTORS") for the Stockholders and
certain agreements as to the Common Stock
beneficially owned by the Stockholders, or
otherwise as to which a Stockholder
has voting power, all as hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Stockholders
Agreement, and for other good and
valuable consideration, the receipt and
sufficiency of which are hereby
acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS.
(a) Except as otherwise specifically indicated, the following
terms have the following meanings for all
purposes of this Stockholders
Agreement:
"AFFILIATE" has the meaning assigned thereto in Rule 12b-2
promulgated under the Exchange Act.
"BENEFICIALLY OWNS" (or comparable variations thereof) has the
meaning set forth in Rule 13d-3 promulgated
under the Exchange Act.
"BYLAWS" means the Amended and Restated Bylaws of the Company,
as the same may be amended and
restated from time to time.
"CERTIFICATE OF INCORPORATION" means the Amended and Restated
Certificate of Incorporation of the
Company, as the same may be amended and
restated from time to time.
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"COMMISSION" means the Securities and Exchange Commission.
"DIRECTOR TERMINATION DATE" means the earliest of: (i) the
first date on which (x) any member of the
Restricted Group engages in any of the
activities prohibited by ARTICLE IV if such
violation is not wholly cured within
three (3) business days following written
notice thereof by the Company, (y) any
member of the Restricted Group engages in a
Schedule 13D Transaction, or (z) the
filing of an amendment to the Schedule 13D
previously filed by certain of the
Stockholders with the Commission indicating
that any member of the Restricted
Group has a plan or proposal to engage in,
or that it has engaged in, a Schedule
13D Transaction (other than an amendment
filed following the execution and
delivery of this Stockholders Agreement
announcing such execution and delivery
or subsequent filings necessitated by the
terms of this Agreement and actions by
the parties hereunder); (ii) the first date
on which the members of the
Restricted Group sell, transfer or
otherwise dispose of any or all of the Voting
Securities such that the Restricted Group's
aggregate beneficial ownership of
Voting Securities is reduced; (iii) the
first date on which there shall be no
Third Point Designees then in office as
members of the Board of Directors and
the Stockholders shall not have named a
successor to any of the Third Point
Designees in accordance with Section
2.01(c) hereof; or (iv) the Standstill
Termination Date.
"EQUITY SECURITIES" means Voting Securities, Convertible
Securities and Rights to Purchase Voting
Securities.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations
promulgated thereunder.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court,
tribunal, arbitrator, authority, agency,
commission, official or other
instrumentality of the United States, any
foreign country or any domestic or
foreign state, county, city or other
political subdivision, or any stock
exchange or market in which the Common
Stock is listed for trading or traded.
"INDEPENDENT DIRECTOR" means any member of the Board of
Directors who is not excluded from
qualification as an independent director (for
all purposes other than service on the
Company's audit or compensation
committees) by the enumerated PER SE
exclusions from such qualification
contained in the listing requirements of
the Nasdaq National Market for listed
companies not utilizing the "controlled
company" exception, including a
subjective determination by the Board of
Directors.
"PERSON" means any individual, corporation, limited liability
company, partnership, trust, other entity
or group (within the meaning of
Section 13(d)(3) of the Exchange Act).
"REPRESENTATIVES" of any Person means such Person's directors,
officers, employees, legal, investment
banking and financial advisors,
accountants and any other agents and
representatives of such entity.
"RESTRICTED GROUP" means, collectively, (i) each Stockholder,
(ii) any and all Affiliates of any
Stockholder and any Person as to which voting
power over Voting Securities,
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directly or indirectly, is controlled or
shared by a Stockholder, (iii) the
then current officers, directors or
managing members of any Person described in
clauses (i) or (ii) above, (iv) with
respect to any Person described in clauses
(i) or (ii) above who is an individual, (a)
any and all immediate family members
of such Person, (b) the heirs, executors,
personal representatives and
administrators of any of the foregoing
Persons, (c) any and all trusts
established for the benefit of any of the
foregoing Persons and (d) any and all
charitable foundations the investment
decisions of which are controlled by any
of the foregoing Persons, and (v) the other
members of any and all groups
(within the meaning of Section 13(d)(3) of
the Exchange Act) of which any
Stockholder or any Person described in
clauses (i) or (ii) above is a member.
"RIGHTS PLAN" means the amended and restated preferred shares
rights agreement dated as of September 13,
1996, as amended through March 22,
2004, between the Company and Mellon
Investor Services LLC, as rights agent, as
the same may be further amended from time
to time, and "RIGHTS" has the meaning
given such term in the Rights
Agreement.
"SCHEDULE 13D TRANSACTION" means any action or transaction
described in any of paragraphs (a) through
(j) of Item 4 of Schedule 13D
promulgated by the Commission. "Schedule
13D Transaction" shall not include any
transaction described in paragraph (a) of
Item 4 of Schedule 13D if, after
taking into account all such
contemporaneous transactions, the aggregate
beneficial ownership of the Stockholders
shall not have changed.
"STANDSTILL TERMINATION DATE" has the meaning set forth in
Section 4.01.
"STRATEGIC PROCESS" means that certain evaluation of strategic
alternatives by the Company publicly
announced pursuant to a press release by
the Company on November 18, 2005.
"THIRD POINT DESIGNEE(S)" means Daniel S. Loeb, Jeffrey R.
Perry and Brigette Roberts, M.D. and any
other individuals subsequently
designated from time to time pursuant to
SECTION 2.01 by the Stockholders;
PROVIDED, HOWEVER, that no individual who
is an officer, director, partner or
stockholder of any competitor of the
Company or any of its subsidiaries (other
than a stockholder which owns less than 5%
of the voting stock or power of a
competitor which is a publicly-traded
company) shall serve as a Third Point
Designee.
"VOTING SECURITIES" means the Common Stock and any other
securities of the Company of any kind or
class having the power generally to
vote for the election of directors;
"CONVERTIBLE SECURITIES" means securities of
the Company which are convertible or
exchangeable (whether presently convertible
or exchangeable or not) into Voting
Securities; "RIGHTS TO PURCHASE VOTING
SECURITIES" means options and rights issued
by the Company (whether presently
exercisable or not) to purchase Voting
Securities or Convertible Voting
Securities (but not including the Rights);
and "OUTSTANDING VOTING SECURITIES"
means at any time the then issued and
outstanding Voting Securities (not
including shares issuable upon the
conversion of any Convertible Securities or
upon the exercise of any Rights to Purchase
Voting Securities).
(b) In addition, the following terms are defined in the
Sections set forth below:
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"Board of Directors"
-- Preamble
"Common Stock"
-- Preamble
"Company"
-- Preamble
"Stockholder" and "Stockholders"
-- Preamble
"Stockholders Agreement"
-- Preamble
"Third Point Shares"
-- Preamble
(c) Unless the context of this Stockholders Agreement
otherwise requires, (i) words of any gender
include each other gender; (ii)
words using the singular or plural number
also include the plural or singular
number, respectively; (iii) the terms
"hereof," "herein," "hereby" and
derivative or similar words refer to this
entire Stockholders Agreement; (iv)
the terms "Article" or "Section" refer to
the specified Article or Section of
this Stockholders Agreement and (v) all
references to statutes, rules and
regulations are to the enumerated statutes,
rules and regulations and any
successor statute, rule or regulation.
Whenever this Stockholders Agreement
refers to a number of days, such number
shall refer to calendar days unless
business or trading days are specified.
ARTICLE II
BOARD OF DIRECTORS
2.01 COMPOSITION OF
BOARD OF DIRECTORS.
(a) No later than December 8, 2005, the Board of Directors
shall, pursuant to the powers granted to it
under the Bylaws, increase the size
of the Board of Directors by three and
elect the initial Third Point Designees
named in this Stockholders Agreement to
fill the new directorships so created on
the Board of Directors and to serve in such
capacity from such date of election
through the Director Termination Date.
(b) Until and including the earlier of (i) the Director
Termination Date and (ii) an annual meeting
of the Company to be held during
2007, the Board of Directors shall, at each
meeting of stockholders of the
Company at which the terms of the Third
Point Designees are scheduled to expire,
nominate the Third Point Designees to stand
for election as directors of the
Company for a succeeding term in accordance
with the Company's procedures for
nomination of directors as provided for in
its Bylaws, recommend such election
and solicit proxies in respect thereof and
vote the shares of Common Stock
represented by all proxies granted by
stockholders in connection with the
solicitation of proxies by the Board of
Directors in connection with such
meeting in favor of the Third Point
Designees, except for such proxies that
specifically indicate a vote to withhold
authority with respect to the Third
Point Designees.
(c) Until the Director Termination Date, the Board of
Directors shall cause any vacancy created
on the Board of Directors by reason of
the death, resignation or removal of a then
serving Third Point Designee to be
filled promptly by a successor Third Point
Designee named by the Stockholders as
follows:
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(i) In the event of the death or disability of a
Third Point Designee, or following the
termination of all employment of a
Third Point Designee with all of the
Stockholders, the Stockholders shall be
entitled to designate a replacement for the
vacancy left by the death or
disability, or termination of such
full-time employment, of such Third Point
Designee by written notice delivered to the
Company to serve on the Board of
Directors in accordance with SECTION 7.03
of this Agreement. Such subsequently
designated Third Point Designee shall be an
individual of high personal
integrity and ethics, relevant expertise
and professional experience and such
other qualifications, as determined by the
nominating committee of the Board of
Directors. Such subsequent nomination shall
be promptly reviewed by and subject
to the approval of the nominating committee
and thereafter such replacement
shall be promptly elected to the Board of
Directors, provided such approval of
the nominating committee and of the Board
of Directors shall not be unreasonably
withheld or delayed.
(ii) Other than pursuant to SECTION 2.01(C)(I) above,
and only following June 2, 2006, the
Stockholders shall only be entitled to
replace one of the initial Third Point
Designees (or any substitute Third
Point Designee permitted under SECTION
2.01(C)(I) above). Such subsequently
designated Third Point Designee shall be an
individual of high personal
integrity and ethics, relevant expertise
and professional experience and such
other qualifications, as determined by the
nominating committee of the Board of
Directors. Such subsequent nomination shall
be promptly reviewed by and subject
to the approval of the nominating committee
and thereafter such replacement
shall be promptly elected to the Board of
Directors, provided such approval of
the nominating committee and of the Board
of Directors shall not be unreasonably
withheld or delayed. In the event the
Stockholders desire to replace one of the
Third Point Designees as permitted pursuant
to this SECTION 2.01(C)(II), the
Stockholders shall provide written notice
of their desire to replace such Third
Point Designee in accordance with SECTION
7.03 of this Agreement.
(iii) The Stockholders shall provide the information
requested pursuant to SECTION 2.03 to the
Company and the Board of Directors
regarding any substitute Third Point
Designee permitted under this
SECTION 2.01(C).
(d) While serving on the Board of Directors and any committee
thereof, each Third Point Designee shall be
entitled to all the rights and
privileges of the other directors and
committee members, including, without
limitation, access to the Company's outside
advisors; PROVIDED that each Third
Point Designee shall not be entitled to
participate in or observe, and shall
upon the good faith request of the Board of
Directors or any such committee
recuse himself or herself from, any meeting
or portion thereof at which the
Board of Directors or any such committee is
evaluating and/or taking action with
respect to (x) the ownership of Voting
Securities specifically by any member of
the Restricted Group, (y) the exercise of
any of the Company's rights or
enforcement of any of the obligations of
any member of the Restricted Group
under this Stockholders Agreement or (z)
any transaction proposed by, or with,
any member of the Restricted Group. The
Board of Directors or any such committee
shall be entitled to take such actions as
it shall deem reasonably necessary or
appropriate to carry out the provisions of
the preceding sentence.
(e) The Stockholders shall no longer be entitled to have the
Third Point Designees serve on the Board of
Directors from and after the
Director Termination Date, at
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which time the Stockholders will cause the Third Point Designees
immediately to resign from the Board of
Directors. In
furtherance thereof, each
Third Point Designee shall provide, upon
electio
