Exhibit 10.1

LIGAND PHARMACEUTICALS, INCORPORATED

LOAN AND SECURITY AGREEMENT

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This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of
March 31, 2011, by and between Square 1 Bank (“Bank”) and LIGAND
PHARMACEUTICALS, INCORPORATED (“Borrower”).

RECITALS

Borrower wishes to obtain credit from time to time from Bank, and Bank desires
to extend credit to Borrower. This Agreement sets forth the terms on which Bank
will advance credit to Borrower, and Borrower will repay the amounts owing to
Bank.

AGREEMENT

The parties agree as follows:

 

  1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, all capitalized terms shall have the
definitions set forth on Exhibit A. Any term used in the Code and not defined
herein shall have the meaning given to the term in the Code.

1.2 Accounting Terms. Any accounting term not specifically defined on Exhibit A
shall be construed in accordance with GAAP and all calculations shall be made in
accordance with GAAP. The term “financial statements” shall include the
accompanying notes and schedules.

 

  2. LOAN AND TERMS OF PAYMENT.

2.1 Credit Extensions.

(a) Promise to Pay. Borrower promises to pay to Bank, in lawful money of the
United States of America, the aggregate unpaid principal amount of all Credit
Extensions made by Bank to Borrower, together with interest on the unpaid
principal amount of such Credit Extensions at rates in accordance with the terms
hereof.

(b) Advances Under Revolving Line.

(i) Amount. Subject to and upon the terms and conditions of this Agreement
(1) Borrower may request Advances in an aggregate outstanding principal amount
not to exceed the Revolving Line and (2) amounts borrowed pursuant to this
Section 2.1(b) may be repaid and reborrowed at any time prior to the Revolving
Maturity Date, at which time all Advances under this Section 2.1(b) shall be
immediately due and payable. Borrower may prepay any Advances without penalty or
premium.

(ii) Form of Request. Whenever Borrower desires an Advance, Borrower will notify
Bank by facsimile transmission, telephone or email no later than 3:30 p.m.
Eastern time (2:30 p.m. Eastern time for wire transfers), on the Business Day
that the Advance is to be made. Each such notification shall be promptly
confirmed by a Loan Advance/Paydown Request Form in substantially the form of
Exhibit B. Bank is authorized to make Advances under this Agreement, based upon
instructions received from an Authorized Officer or a designee of an Authorized
Officer, or without instructions if in Bank’s discretion such Advances are
necessary to meet Obligations which have become due and remain unpaid. Bank
shall be entitled to rely on any telephonic or email notice given by a person
whom Bank reasonably believes to be an Authorized Officer or a designee thereof,
and Borrower shall indemnify and hold Bank harmless for any damages, loss, costs
and expenses suffered by Bank as a result of such reliance. Bank will credit the
amount of Advances made under this Section 2.1(b) to Borrower’s deposit account.

2.2 Intentionally Omitted.

 

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2.3 Interest Rates, Payments, and Calculations.

(a) Interest Rate for Advances. Except as set forth in Section 2.3(b), the
Advances shall bear interest, on the outstanding daily balance thereof, at a
variable annual rate equal to 2.00% above the Prime Rate then in effect.

(b) Late Fee; Default Rate. If any payment is not made within 15 days after the
date such payment is due, Borrower shall pay Bank a late fee equal to the lesser
of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount
permitted to be charged under applicable law. All Obligations shall bear
interest, from and after the occurrence and during the continuance of an Event
of Default, at a rate equal to 5 percentage points above the interest rate
applicable immediately prior to the occurrence of the Event of Default.

(c) Payments. Interest under the Revolving Line shall be due and payable on the
first calendar day of each month during the term hereof. Bank may, if not
otherwise paid by Borrower when due, charge such interest, all Bank Expenses,
and all Periodic Payments against any of Borrower’s deposit accounts or against
the Revolving Line, in which case those amounts shall thereafter accrue interest
at the rate then applicable hereunder. Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.

(d) Computation. In the event the Prime Rate is changed from time to time
hereafter, the applicable rate of interest hereunder shall be increased or
decreased, effective as of the day the Prime Rate is changed, by an amount equal
to such change in the Prime Rate. All interest chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed.

2.4 Crediting Payments. Prior to the occurrence of an Event of Default, Bank
shall credit a wire transfer of funds, check or other item of payment to such
deposit account or Obligation as Borrower specifies. After the occurrence and
during the continuance of an Event of Default, Bank shall have the right, in its
sole discretion, to immediately apply any wire transfer of funds, check, or
other item of payment Bank may receive to conditionally reduce Obligations, but
such applications of funds shall not be considered a payment on account unless
such payment is of immediately available federal funds or unless and until such
check or other item of payment is honored when presented for payment.
Notwithstanding anything to the contrary contained herein, any wire transfer or
payment received by Bank after 5:30 p.m. Eastern time shall be deemed to have
been received by Bank as of the opening of business on the immediately following
Business Day. Whenever any payment to Bank under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable for
the period of such extension.

2.5 Fees. Borrower shall pay to Bank the following:

(a) Facility Fee. On or before the Closing Date, a fee equal to $20,000, which
shall be nonrefundable;

(b) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the
Closing Date, provided that legal expenses incurred in preparation of the Loan
Documents shall be no more than $15,000. After the Closing Date, all Bank
Expenses, as and when they become due.

2.6 Term. This Agreement shall become effective on the Closing Date and, subject
to Section 12.7, shall continue in full force and effect for so long as any
Obligations remain outstanding or Bank has any obligation to make Credit
Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make Credit Extensions under this
Agreement immediately and without notice upon the occurrence and during the
continuance of an Event of Default.

 

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  3. CONDITIONS OF LOANS.

3.1 Conditions Precedent to Closing. The agreement of Bank to enter into this
Agreement as of the Closing Date is subject to the condition precedent that Bank
shall have received, in form and substance satisfactory to Bank, each the
following items and completed each of the following requirements:

(a) this Agreement;

(b) an officer’s certificate of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this Agreement;

(c) payment of the fees and Bank Expenses then due specified in Section 2.5,
which may be debited from any of Borrower’s accounts with Bank;

(d) a Borrower Information Certificate;

(e) Borrower shall open and fund not less than $5,000,000 in the Cash Security
Account as collateral for Borrower’s Obligations hereunder;

(f) Borrower shall open and fund not less than $10,000 in deposit accounts held
with Bank, such amount being exclusive of the Cash Security Account for
Obligations provided hereunder as referenced in Section 3.1(e) above; and

(g) such other documents or certificates, and completion of such other matters,
as Bank may reasonably request,

3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to
make each Credit Extension, including the initial Credit Extension, is
contingent upon Borrower’s compliance with Section 3.1 above, and is further
subject to the following conditions:

(a) timely receipt by Bank of the Loan Advance/Paydown Request Form as provided
in Section 2.1; and

(b) the representations and warranties contained in Section 5 shall be true and
correct in all material respects on and as of the date of such Loan
Advance/Paydown Request Form and on the effective date of each Credit Extension
as though made at and as of each such date, and no Event of Default shall have
occurred and be continuing, or would exist after giving effect to such Credit
Extension (provided, however, that those representations and warranties
expressly referring to another date shall be true, correct and complete in all
material respects as of such date). The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrower on the date of such
Credit Extension as to the accuracy of the facts referred to in this
Section 3.2.

 

  4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing
security interest in the Collateral to secure prompt repayment of any and all
Obligations and to secure prompt performance by Borrower of each of its
covenants and duties under the Loan Documents. Such security interest
constitutes a valid, first priority security interest in the presently existing
Collateral, and will constitute a valid, first priority security interest in
later-acquired Collateral.

4.2 Perfection of Security Interest. Borrower from time to time may deposit with
Bank specific cash collateral to secure specific Obligations; Borrower
authorizes Bank to hold such specific balances in pledge and to decline to honor
any drafts thereon or any request by Borrower or any other Person to pay or
otherwise transfer any part of such balances for so long as the specific
Obligations are outstanding. Borrower shall take such other actions as Bank
requests to perfect its security interest granted under this Agreement.

 

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  5. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants as follows:

5.1 Due Organization and Qualification. Borrower is a corporation duly existing
under the laws of the state in which it is organized and qualified and licensed
to do business in any state in which the conduct of its business or its
ownership of property requires that it be so qualified, except where the failure
to do so would not reasonably be expected to cause a Material Adverse Effect.

5.2 Due Authorization; No Conflict. The execution, delivery, and performance of
the Loan Documents are within Borrower’s powers, have been duly authorized, and
are not in conflict with nor constitute a breach of any provision contained in
Borrower’s Certificate of Incorporation or Bylaws, nor will they constitute an
event of default under any material agreement by which Borrower is bound.
Borrower is not in default under any agreement by which it is bound, except to
the extent such default would not reasonably be expected to cause a Material
Adverse Effect.

5.3 Collateral. Borrower has rights in or the power to transfer the Collateral.

5.4 Name; Location of Chief Executive Office. Except as disclosed in the
Schedule, Borrower has not done business under any name other than that
specified on the signature page hereof, and its exact legal name is as set forth
in the first paragraph of this Agreement. The chief executive office of Borrower
is located at the address indicated in Section 10 hereof.

5.5 Litigation. Except as set forth in the Schedule, there are no actions or
proceedings pending by or against Borrower or any Subsidiary before any court or
administrative agency in which a likely adverse decision would reasonably be
expected to have a Material Adverse Effect.

5.6 No Material Adverse Change in Financial Statements. All consolidated and
consolidating financial statements related to Borrower and any Subsidiary that
are delivered by Borrower to Bank fairly present in all material respects
Borrower’s consolidated and consolidating financial condition as of the date
thereof and Borrower’s consolidated and consolidating results of operations for
the period then ended. There has not been a material adverse change in the
consolidated or in the consolidating financial condition of Borrower since the
date of the most recent of such financial statements submitted to Bank.

5.7 Solvency, Payment of Debts. Borrower is able to pay its debts (including
trade debts) as they mature; the fair saleable value of Borrower’s assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; and Borrower is not left with unreasonably small capital after the
transactions contemplated by this Agreement.

5.8 Compliance with Laws and Regulations. Borrower has met the minimum funding
requirements of ERISA with respect to any employee benefit plans subject to
ERISA. No event has occurred resulting from Borrower’s failure to comply with
ERISA that is reasonably likely to result in Borrower’s incurring any liability
that could have a Material Adverse Effect. Borrower is not an “investment
company” or a company “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940. Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T and U of the Board of Governors of the Federal Reserve System).
Borrower has not violated any statutes, laws, ordinances or rules applicable to
it, the violation of which would reasonably be expected to have a Material
Adverse Effect. Borrower has filed or caused to be filed all tax returns
required to be filed, and have paid, or have made adequate provision for the
payment of, all taxes reflected therein except those being contested in good
faith with adequate reserves under GAAP or where the failure to file such
returns or pay such taxes would not reasonably be expected to have a Material
Adverse Effect.

5.9 Government Consents. Borrower has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all governmental authorities that are

 

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necessary for the continued operation of Borrower’s business as currently
conducted, except where the failure to do so would not reasonably be expected to
cause a Material Adverse Effect.

5.10 Full Disclosure. No representation, warranty or other statement made by
Borrower in any certificate or written statement furnished to Bank taken
together with all such certificates and written statements furnished to Bank
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates or
statements not misleading in light of the circumstances in which they were made,
it being recognized by Bank that the projections and forecasts provided by
Borrower in good faith and based upon reasonable assumptions are not to be
viewed as facts and that actual results during the period or periods covered by
any such projections and forecasts may differ from the projected or forecasted
results.

 

  6. AFFIRMATIVE COVENANTS.

Borrower covenants that, until payment in full of all outstanding Obligations,
and for so long as Bank may have any commitment to make a Credit Extension
hereunder, Borrower shall do all of the following:

6.1 Good Standing and Government Compliance. Borrower shall maintain its and
each of its Subsidiaries’ corporate existence and good standing in the
respective states of formation, shall maintain qualification and good standing
in each other jurisdiction in which the failure to so qualify would reasonably
be expected to have a Material Adverse Effect, and shall furnish to Bank the
organizational identification number issued to Borrower by the authorities of
the state in which Borrower is organized, if applicable. Borrower shall meet,
and shall cause each Subsidiary to meet, the minimum funding requirements of
ERISA with respect to any employee benefit plans subject to ERISA. Borrower
shall comply, and shall cause each Subsidiary to comply, with all statutes,
laws, ordinances and government rules and regulations to which it is subject,
and shall maintain, and shall cause each of its Subsidiaries to maintain, in
force all licenses, approvals and agreements, the loss of which or failure to
comply with which would reasonably be expected to have a Material Adverse
Effect.

6.2 Taxes. Borrower shall make, and cause each Subsidiary to make, due and
timely payment or deposit of all material federal, state, and local taxes,
assessments, or contributions required of it by law, including, but not limited
to, those laws concerning income taxes, F.I.C.A., F.U.T.A. and state disability,
and will execute and deliver to Bank, on demand, proof satisfactory to Bank
indicating that Borrower or a Subsidiary has made such payments or deposits and
any appropriate certificates attesting to the payment or deposit thereof;
provided that Borrower or a Subsidiary need not make any payment if the amount
or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by Borrower
or such Subsidiary.

6.3 Cash Security Account. Borrower shall at all times maintain the Cash
Security Account, with a balance of Cash in such Cash Security Account at all
times of not less than $5,000,000.

6.4 Financial Statements, Reports, Certificates. Borrower shall deliver to Bank:
(i) as soon as available, but in any event within 30 days after the end of each
calendar month, a company prepared consolidated and consolidating balance sheet
and income statement covering Borrower’s operations during such period, in a
form reasonably acceptable to Bank and certified by a Responsible Officer;
(ii) as soon as available, but in any event within 180 days after the end of
Borrower’s fiscal year, audited consolidated and consolidating financial
statements of Borrower prepared in accordance with GAAP, consistently applied,
together with an opinion which is either unqualified, qualified only for going
concern so long as Borrower’s investors provide additional equity as needed or
otherwise consented to in writing by Bank on such financial statements of an
independent certified public accounting firm reasonably acceptable to Bank;
(iii) all reports on Forms 10-K and 10-Q filed with the Securities and Exchange
Commission; and (iv) such budgets, sales projections, operating plans or other
financial information generally prepared by Borrower in the ordinary course of
business as Bank may reasonably request from time to time.

(a) Within 30 days after the last day of each month, Borrower shall deliver to
Bank with the monthly financial statements a Compliance Certificate certified as
of the last day of the applicable month and signed by a Responsible Officer in
substantially the form of Exhibit C hereto.

 

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6.5 Further Assurances. At any time and from time to time Borrower shall execute
and deliver such further instruments and take such further action as may
reasonably be requested by Bank to effect the purposes of this Agreement.

 

  7. NEGATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until the outstanding Obligations are paid in full or for so long
as Bank may have any commitment to make any Credit Extensions, Borrower will not
do any of the following without Bank’s prior written consent, which shall not be
unreasonably withheld:

7.1 Change in Name, Location or Executive Office; Change in Business; Change in
Fiscal Year; Change in Control. Change its name or the state of Borrower’s
formation or relocate its chief executive office without 30 days prior written
notification to Bank; engage in any business, or permit any of its Subsidiaries
to engage in any business, other than or reasonably related or incidental to the
businesses currently engaged in by Borrower; change its fiscal year end; have a
Change in Control.

 

  8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an Event of Default by
Borrower under this Agreement:

8.1 Payment Default. If Borrower fails to pay any of the Obligations when due;

8.2 Other Defaults.

(a) If Borrower fails to perform any obligation under Section 6.2 (Taxes),
Section 6.3 (Cash Security Account), Section 6.4 (Financial Statements, Reports,
Certificates), or violates any of the covenants contained in Article 7 of this
Agreement; or

(b) If Borrower fails or neglects to perform or observe any other material term,
provision, condition, covenant contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between Borrower and Bank
and as to any default under such other term, provision, condition or covenant
that can be cured, has failed to cure such default within 10 days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof;
provided, however, that if the default cannot by its nature be cured within the
10 day period or cannot after diligent attempts by Borrower be cured within such
10 day period, and such default is likely to be cured within a reasonable time,
then Borrower shall have an additional reasonable period (which shall not in any
case exceed 30 days) to attempt to cure such default, and within such reasonable
time period the failure to have cured such default shall not be deemed an Event
of Default but no Credit Extensions will be made;

8.3 Material Adverse Change. If there occurs any circumstance or any
circumstances which would reasonably be expected to have a Material Adverse
Effect;

8.4 Attachment. If any material portion of Borrower’s assets is attached,
seized, subjected to a writ or distress warrant, or is levied upon, or comes
into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within 10 days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower’s assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any material portion of Borrower’s assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, and the same is not paid
within ten days after Borrower receives notice thereof, provided that none of
the foregoing shall

 

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constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Credit Extensions will be made during such cure period);

8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding is
commenced by Borrower, or if an Insolvency Proceeding is commenced against
Borrower and is not dismissed or stayed within 30 days (provided that no Credit
Extensions will be made prior to the dismissal of such Insolvency Proceeding);

8.6 Other Agreements. If there is a default or other failure to perform in any
agreement to which Borrower is a party with a third party or parties resulting
in a right by such third party or parties, whether or not exercised, to
accelerate the maturity of any Indebtedness in an amount in excess of $100,000
or that would reasonably be expected to have a Material Adverse Effect;

8.7 Judgments. If a final, uninsured judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least $100,000 shall
be rendered against Borrower and shall remain unsatisfied and unstayed for a
period of 10 days (provided that no Credit Extensions will be made prior to the
satisfaction or stay of the judgment); or

8.8 Misrepresentations. If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set forth
herein or in any certificate delivered to Bank by any Responsible Officer
pursuant to this Agreement or to induce Bank to enter into this Agreement or any
other Loan Document.

 

  9. BANK’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence and during the continuance of an
Event of Default, Bank may, at its election, without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:

(a) Declare all Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable (provided that
upon the occurrence of an Event of Default described in Section 8.5
(insolvency), all Obligations shall become immediately due and payable without
any action by Bank);

(b) Demand that Borrower (i) deposit cash with Bank in an amount equal to the
amount of any Letters of Credit remaining undrawn, as collateral security for
the repayment of any future drawings under such Letters of Credit, and (ii) pay
in advance all Letter of Credit fees scheduled to be paid or payable over the
remaining term of the Letters of Credit, and Borrower shall promptly deposit and
pay such amounts;

(c) Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement or under any other agreement between Borrower and Bank;

(d) Make such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower agrees
to make the Collateral available to Bank as Bank may designate. Borrower
authorizes Bank to take and maintain possession of the Collateral, or any part
of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or
lien which in Bank’s determination appears to be prior or superior to its
security interest and to pay all expenses incurred in connection therewith;

(e) Set off and apply to the Obligations any and all (i) balances and deposits
of Borrower held by Bank, including specifically and without limitation any
balances and deposits held in the Cash Security Account, and (ii) indebtedness
at any time owing to or for the credit or the account of Borrower held by Bank;

 

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(f) Apply for the appointment of a receiver, trustee, liquidator or conservator
of the Collateral, without notice and without regard to the adequacy of the
security for the Obligations and without regard to the solvency of Borrower, any
guarantor or any other Person liable for any of the Obligations; and

(g) Any deficiency that exists after disposition of the Collateral as provided
above will be paid immediately by Borrower.

Bank may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of any sale of the
Collateral.

9.2 No Obligation to Pursue Others. Bank has no obligation to attempt to satisfy
the Obligations by collecting them from any other person liable for them and
Bank may release, modify or waive any collateral provided by any other Person to
secure any of the Obligations, all without affecting Bank’s rights against
Borrower. Borrower waives any right it may have to require Bank to pursue any
other Person for any of the Obligations.

9.3 Remedies Cumulative. Bank’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative. Bank shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity. No exercise by Bank of one right or remedy shall be
deemed an election, and no waiver by Bank of any Event of Default on Borrower’s
part shall be deemed a continuing waiver. No delay by Bank shall constitute a
waiver, election, or acquiescence by it. No waiver by Bank shall be effective
unless made in a written document signed on behalf of Bank and then shall be
effective only in the specific instance and for the specific purpose for which
it was given. Borrower expressly agrees that this Section 9.7 may not be waived
or modified by Bank by course of performance, conduct, estoppel or otherwise.

9.4 Demand; Protest. Except as otherwise provided in this Agreement, Borrower
waives demand, protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment and any other notices relating to the Obligations.

 

  10. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by any party
relating to this Agreement or any other agreement entered into in connection
herewith shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by a recognized overnight delivery
service, certified mail, postage prepaid, return receipt requested, or by
telefacsimile to Borrower or to Bank, as the case may be, at its addresses set
forth below:

 

If to Borrower:    LIGAND PHARMACEUTICALS, INC.    11085 North Torrey Pines,
Suite 300    La Jolla, CA 92037    Attn: General Counsel    FAX: (858) 550-7272
If to Bank:    Square 1 Bank    406 Blackwell Street, Suite 240    Durham, North
Carolina 27701    Attn: Loan Operations Manager    FAX: (919) 314-3080 with a
copy to:    Square 1 Bank    12481 High Bluff Drive, Suite 350    San Diego, CA
92130    Attn: Scott Foote    FAX: (858) 436-3501

 

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The parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.

 

  11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of North Carolina, without regard to principles of
conflicts of law. Jurisdiction shall lie in the State of North Carolina. All
disputes, controversies, claims, actions and similar proceedings arising with
respect to Borrower’s account or any related agreement or transaction shall be
brought in the General Court of Justice of North Carolina sitting in Durham
County, North Carolina or the United States District Court for the Middle
District of North Carolina except as provided below with respect to arbitration
of such matters. BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH OF THEM, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM
MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM. THESE PROVISIONS SHALL NOT
BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR
BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM. If the jury
waiver set forth in this Section 11 is not enforceable, then any dispute,
controversy, claim, action or similar proceeding arising out of or relating to
this Agreement, the Loan Documents or any of the transactions contemplated
therein shall be settled by final and binding arbitration held in Durham County,
North Carolina in accordance with the then current Commercial Arbitration Rules
of the American Arbitration Association by one arbitrator appointed in
accordance with those rules. The arbitrator shall apply North Carolina law to
the resolution of any dispute, without reference to rules of conflicts of law or
rules of statutory arbitration. Judgment upon any award resulting from
arbitration may be entered into and enforced by any state or federal court
having jurisdiction thereof. Notwithstanding the foregoing, the parties may
apply to any court of competent jurisdiction for preliminary or interim
equitable relief, or to compel arbitration in accordance with this Section. The
costs and expenses of the arbitration, including without limitation, the
arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees,
incurred by the parties to the arbitration may be awarded to the prevailing
party, in the discretion of the arbitrator, or may be apportioned between the
parties in any manner deemed appropriate by the arbitrator. Unless and until the
arbitrator decides that one party is to pay for all (or a share) of such costs
and expenses, both parties shall share equally in the payment of the
arbitrator’s fees as and when billed by the arbitrator.

 

  12. GENERAL PROVISIONS.

12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit
of the respective successors and permitted assigns of each of the parties and
shall bind all persons who become bound as a debtor to this Agreement; provided,
however, that neither this Agreement nor any rights hereunder may be assigned by
Borrower without Bank’s prior written consent, which consent may be granted or
withheld in Bank’s sole discretion. Bank shall have the right without the
consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant
participation in all or any part of, or any interest in, Bank’s obligations,
rights and benefits hereunder.

12.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank
and its officers, employees, and agents against: (a) all obligations, demands,
claims, and liabilities claimed or asserted by any other party in connection
with the transactions contemplated by this Agreement; and (b) all losses or Bank
Expenses in any way suffered, incurred, or paid by Bank, its officers, employees
and agents as a result of or in any way arising out of, following, or
consequential to transactions between Bank and Borrower whether under this
Agreement, or otherwise (including without limitation reasonable attorneys fees
and expenses), except for losses caused by Bank’s gross negligence or willful
misconduct.

12.3 Time of Essence. Time is of the essence for the performance of all
obligations set forth in this Agreement.

 

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12.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

12.5 Amendments in Writing, Integration. All amendments to or terminations of
this Agreement or the other Loan Documents must be in writing. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties hereto with respect to the subject matter of this Agreement
and the other Loan Documents, if any, are merged into this Agreement and the
Loan Documents.

12.6 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, shall be deemed to be an original, and all of which, when taken
together, shall constitute but one and the same Agreement. Executed copies of
the signature pages of this Agreement sent by facsimile or transmitted
electronically in Portable Document Format (“PDF”), or any similar format, shall
be treated as originals, fully binding and with full legal force and effect, and
the parties waive any rights they may have to object to such treatment.

12.7 Survival. All covenants, representations and warranties made in this
Agreement shall continue in full force and effect so long as any Obligations
remain outstanding or Bank has any obligation to make any Credit Extension to
Borrower. The obligations of Borrower to indemnify Bank with respect to the
expenses, damages, losses, costs and liabilities described in Section 12.2 shall
survive until all applicable statute of limitations periods with respect to
actions that may be brought against Bank have run.

12.8 Confidentiality. In handling any confidential information, Bank and all
employees and agents of Bank shall exercise the same degree of care that Bank
exercises with respect to its own proprietary information of the same types to
maintain the confidentiality of any non-public information thereby received or
received pursuant to this Agreement except that disclosure of such information
may be made (i) to the subsidiaries or Affiliates of Bank or Borrower in
connection with their present or prospective business relations with Borrower,
(ii) to prospective transferees or purchasers of any interest in the Credit
Extensions, provided that they have entered into a comparable confidentiality
agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar
order, (iv) as may be required in connection with the examination, audit or
similar investigation of Bank and (v) as Bank may determine in connection with
the enforcement of any remedies hereunder. Confidential information hereunder
shall not include information that either: (a) is in the public domain or in the
knowledge or possession of Bank when disclosed to Bank, or becomes part of the
public domain after disclosure to Bank through no fault of Bank; or (b) is
disclosed to Bank by a third party, provided Bank does not have actual knowledge
that such third party is prohibited from disclosing such information.

[Balance of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

 

LIGAND PHARMACEUTICALS,

INCORPORATED

By:  

/s/ John Sharp

Title:  

Vice President, Finance and
Chief Financial Officer

SQUARE 1 BANK By:  

/s/ Evan Travis

Title:  

Venture Banking Officer, Life Sciences

[Signature Page to Loan and Security Agreement]

 

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EXHIBIT A

DEFINITIONS

“Advance” or “Advances” means a cash advance or cash advances under the
Revolving Line.

“Affiliate” means, with respect to any Person, any Person that owns or controls
directly or indirectly such Person, any Person that controls or is controlled by
or is under common control with such Person, and each of such Person’s senior
executive officers, directors, and general partners.

“Authorized Officer” means someone designated as such in the corporate
resolution provided by Borrower to Bank in which this Agreement and the
transactions contemplated hereunder are authorized by Borrower’s board of
directors. If Borrower provides subsequent corporate resolutions to Bank after
the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the
most-recently provided resolution shall be the only “Authorized Officers” for
purposes of this Agreement.

“Bank Expenses” means all reasonable costs or expenses (including reasonable
attorneys’ fees and expenses) incurred in connection with the preparation,
negotiation, administration, and enforcement of the Loan Documents; and Bank’s
reasonable attorneys’ fees and expenses (whether generated in-house or by
outside counsel) incurred in amending, enforcing or defending the Loan Documents
(including fees and expenses of appeal), incurred before, during and after an
Insolvency Proceeding, whether or not suit is brought.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks in the State of North Carolina are authorized or required to close.

“Cash” means unrestricted cash and cash equivalents.

“Cash Security Account” means segregated Certificate of Deposit, account
No. 60100378, held at Bank as collateral for Borrower’s Obligations, in a
minimum amount of $5,000,000.

“Change in Control” shall mean a transaction other than a bona fide equity
financing or series of financings on terms and from investors reasonably
acceptable to Bank in which any “person” or “group” (within the meaning of
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of a sufficient number of shares of all
classes of stock then outstanding of Borrower ordinarily entitled to vote in the
election of directors, empowering such “person” or “group” to elect a majority
of the Board of Directors of Borrower, who did not have such power before such
transaction; provided that any such transaction occurring solely in the
secondary securities markets and without any action by or on behalf of the
Borrower shall not be considered a Change in Control.

“Closing Date” means the date of this Agreement.

“Code” means the North Carolina Uniform Commercial Code as amended or
supplemented from time to time.

“Collateral” means Cash in the amount of at least $5,000,000 held in the Cash
Security Account and pledged to Bank as security for the Obligations.

“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of that Person with respect to (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed, co-made or discounted or sold with recourse by that
Person, or in respect of which that Person is otherwise directly or indirectly
liable; (ii) any obligations with respect to undrawn letters of credit,
corporate credit cards or merchant services issued for the account of that
Person; and (iii) all obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a Person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term “Contingent Obligation” shall not
include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the

 

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stated or determined amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by such Person
in good faith; provided, however, that such amount shall not in any event exceed
the maximum amount of the obligations under the guarantee or other support
arrangement.

“Credit Extension” means each Advance or any other extension of credit by Bank,
to or for the benefit of Borrower hereunder.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations thereunder.

“Event of Default” has the meaning assigned in Article 8.

“GAAP” means generally accepted accounting principles, consistently applied, as
in effect from time to time in the United States.

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred
purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations, and (d) all Contingent
Obligations, including but not limited to any sublimit contained herein.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
or entity under any provision of the United States Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency law, including assignments for the
benefit of creditors, formal or informal moratoria, compositions, extension
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

“Letter of Credit” means a commercial or standby letter of credit or similar
undertaking issued by Bank at Borrower’s request.

“Loan Documents” means, collectively, this Agreement, any note or notes executed
by Borrower, and any other document, instrument or agreement entered into in
connection with this Agreement, all as amended or extended from time to time.

“Material Adverse Effect” means a material adverse effect on (i) the operations,
business or financial condition of Borrower and its Subsidiaries taken as a
whole, (ii) the ability of Borrower to repay the Obligations or otherwise
perform its obligations under the Loan Documents, or (iii) Borrower’s interest
in, or the value, perfection or priority of Bank’s security interest in the
Collateral.

“Obligations” means all debt, principal, interest, Bank Expenses and other
amounts owed to Bank by Borrower pursuant to this Agreement or any other
agreement, whether absolute or contingent, due or to become due, now existing or
hereafter arising, including any interest that accrues after the commencement of
an Insolvency Proceeding and including any debt, liability, or obligation owing
from Borrower to others that Bank may have obtained by assignment or otherwise.

“Periodic Payments” means all installments or similar recurring payments that
Borrower may now or hereafter become obligated to pay to Bank pursuant to the
terms and provisions of any instrument, or agreement now or hereafter in
existence between Borrower and Bank.

“Person” means any individual, sole proprietorship, partnership, limited
liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.

 

2

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“Prime Rate” means the variable rate of interest, per annum, most recently
announced by Bank, as its “prime rate,” whether or not such announced rate is
the lowest rate available from Bank.

“Responsible Officer” means each of the Chief Executive Officer, the Chief
Operating Officer, the Chief Financial Officer and the Controller of Borrower,
as well as any other officer or employee identified as an Authorized Officer in
the corporate resolution delivered by Borrower to Bank in connection with this
Agreement.

“Revolving Line” means 1 or more Credit Extensions in an aggregate amount of up
to $5,000,000.

“Revolving Maturity Date” means March 29, 2012.

“Schedule” means the schedule of exceptions attached hereto and approved by
Bank, if any.

“Subsidiary” means any corporation, partnership or limited liability company or
joint venture in which (i) any general partnership interest or (ii) more than
50% of the stock, limited liability company interest or joint venture of which
by the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity, at the time as of which any determination is
being made, is owned by Borrower, either directly or through an Affiliate.

 

3

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EXHIBIT B

LOAN ADVANCE / PAYDOWN REQUEST FORM

[Please refer to New Borrower Kit]

EXHIBIT C

COMPLIANCE CERTIFICATE

[Please refer to New Borrower Kit]

 

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SCHEDULE OF EXCEPTIONS

Prior Names (Section 5.5) – None.

Litigation (Section 5.6) – None.

 

2

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CORPORATE RESOLUTION

The undersigned duly elected and qualified Secretary of Ligand Pharmaceuticals,
Incorporated (the “Company”) do hereby certify that the following is a true and
correct copy of certain resolutions adopted at a meeting of the Company’s Board
of Directors held on March 6, 2003 in accordance with applicable law and the
Company’s bylaws, and that such resolutions are now unmodified and in full force
and effect:

BE IT RESOLVED, that:

1. Any one (1) of the following, duly elected officers of the Company (each, an
“Authorized Officer”) whose genuine original signature appears next to his or
her name is authorized to act for, on behalf of, and in the name of the Company
in connection with the resolutions below:

 

Title

  

Name

  

Authorized Signature

Vice President, General Counsel & Secretary    Charles S. Berkman   

 

Vice President, Finance and Chief Financial Officer    John P. Sharp   

 

 

  

 

  

 

 

  

 

  

 

2. The Authorized Officers are hereby empowered to execute a Square 1 Bank
(“Bank”) Signature Card and/or Funds Transfer Agreement, and any other
agreements or documents required by Bank in connection therewith, on behalf of
the Company upon the terms and conditions set out in the Signature Card and/or
Funds Transfer Agreement and other Agreements and, from time to time, to make
changes to the Signature Card, Funds Transfer Agreement and/or other Agreements
or any Exhibit thereto, including without limitation the list of Authorized
Representatives;

3. Any Authorized Officer may borrow money from time to time from Bank, and may
negotiate and procure loans, letters of credit, foreign exchange contracts and
other financial accommodations from Bank, including without limitation, that
certain Loan and Security Agreement dated as of March 31, 2011, and also to
execute and deliver to Bank one or more renewals, extensions, or modifications
thereof;

4. Give security for any liabilities of the Company to Bank by grant, security
interest, assignment, lien, deed of trust or mortgage upon any real or personal
property, tangible or intangible of the Company;

5. Purchase, sell, exchange, assign, endorse for transfer and/or deliver
certificates and/or instruments representing stocks, bonds, evidences of
Indebtedness or other securities owned by the Company, whether or not registered
in the name of the Company;

6. Discount with the Bank, commercial or other business paper belonging to the
Company made or drawn by or upon third parties, without limit as to amount;

7. The Bank is authorized and directed to pay the proceeds of any such loans or
discounts as directed by the persons so authorized to sign; and

8. Execute and deliver in form and content as may be required by the Bank any
and all notes, evidences of indebtedness, applications for letters of credit,
guaranties, subordination agreements, loan and security agreements, financing
statements, assignments, liens, deeds of trust, mortgages, trust receipts and
other agreements, instruments or documents to carry out the purposes of these
Resolutions, any or all of which may relate to all or to substantially all of
the Company’s property and assets;

The Authorized Officers may designate additional or alternate individuals as
being authorized to request loan advances, to do and perform such other acts and
things, to pay any and all fees and costs, and to execute and deliver such other
documents and agreements as he or she may in his or her discretion deem
reasonably necessary or proper in order to carry into effect the provisions of
these Resolutions.

 

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Any and all acts authorized pursuant to these resolutions and performed prior to
the passage of these resolutions are hereby ratified and approved, and the
authority conferred herein may be exercised singly by any such officer, and
these resolutions shall continue in full force and effect until written notice
of modification or revocation is received and accepted Bank (such notice to have
no effect on any action previously taken by the Bank in reliance on these
Resolutions). Bank may rely upon any form of notice, which it in good faith
believes to be genuine or what it purports to be.

The Resolutions are in full force and effect as of the date of this Certificate
and are intended to replace, as of this date, any Resolutions previously given
by the Company to Bank in connection with the matters described herein; these
Resolutions and any borrowings or financial accommodations under these
Resolutions have been properly noted in the corporate books and records, and
have not been rescinded, revoked or modified; neither the foregoing Resolutions
nor any actions to be taken pursuant to them are or will be in contravention of
any provision of the articles of incorporation or bylaws of the Company or of
any agreement, indenture or other instrument to which the Company is a party or
by which it is bound; and to the extent the articles of incorporation or bylaws
of the Company or any agreement, indenture or other instrument to which the
Company is a party or by which it is bound require the vote or consent of
shareholders of the Company to authorize any act, matter or thing described in
the foregoing Resolutions, such vote or consent has been obtained.

In Witness Whereof, I have affixed my name as Secretary and have caused the
corporate seal (where available) of said Company to be affixed on March 30,
2011.

 

 

Secretary*

 

* If the certifying officer is designated as the only signer in these
resolutions then another corporate officer must also sign.

 

 

 

2

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USA PATRIOT ACT

NOTICE

OF

CUSTOMER IDENTIFICATION

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify,
and record information that identifies each person who opens an account.

WHAT THIS MEANS FOR YOU: when you open an account, we will ask your name,
address, date of birth, and other information that will allow us to identify
you. We may also ask to see your driver’s license or other identifying
documents.

 

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SQUARE 1 BANK     AUTOMATIC DEBIT AUTHORIZATION Member FDIC    

 

To: Square 1 Bank    

Re: Loan #                                              

   

You are hereby authorized and instructed to charge account No.
                         in the name of LIGAND PHARMACEUTICALS, INCORPORATED.

for facility fees, principal, interest and other payments due on above
referenced loan as set forth below and credit the loan referenced above.

x Debit the Facility Fee as it becomes due according to the terms of the Loan
and Security Agreement and any renewals or amendments thereof.

x Debit each interest payment as it becomes due according to the terms of the
Loan and Security Agreement and any renewals or amendments thereof.

x Debit each principal payment as it becomes due according to the terms of the
Loan and Security Agreement and any renewals or amendments thereof.

x Debit each payment for Bank Expenses as it becomes due according to the terms
of the Loan and Security Agreement and any renewals or amendments thereof.

This Authorization is to remain in full force and effect until revoked in
writing.

 

Borrower Signature     Date

 

   

 

 

   

 

 

   

 

 

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Phone:                        SQUARE 1 BANK Fax                            
CLIENT AUTHORIZATION

 

General Authorization

I hereby authorize Square 1 Bank to use my company name, logo, and information
relating to our banking relationship in its marketing and advertising campaigns
which is intended for Square 1 Bank’s customers, prospects and shareholders.

Square 1 Bank will forward any advertising or article including client for prior
review and approval.

 

 

Signature

   

 

Printed Name                         Title

   

 

Company

   

 

Mailing Address

   

 

City, State, Zip Code

   

 

Phone Number

   

 

Fax Number

   

 

E-Mail

    March     , 2011     Date    

 

 

 

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