Document:

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                                                                  EXHIBIT 10.286

                               [Ligand Letterhead]

July 28, 2005

Mr. Taylor J. Crouch
Senior Vice President,
Regulatory Affairs and Compliance
LIGAND PHARMACEUTICALS INCORPORATED
10275 Science Center Drive
San Diego, CA  92121

Dear Taylor:

                  The purpose of this letter agreement is to document the terms
of the severance package to which you will be entitled should your employment
with Ligand Pharmaceuticals Incorporated (the "Company") terminate under certain
specified circumstances.

                  Part One of this letter agreement sets forth certain
definitional provisions to be in effect for purposes of determining your benefit
entitlements. Part Two specifies the terms and conditions upon which you may
become entitled to receive severance benefits. Severance benefits accrue under
this letter agreement in the event your employment with the Company were to be
terminated involuntarily in connection with certain changes in control of the
Company. Part Three concludes this letter agreement with a series of general
terms and conditions applicable to your severance benefits.

                             PART ONE -- DEFINITIONS

                  Definitions. For purposes of this letter agreement, including
in particular the application of the special benefit limitations of Part Three,
the following definitions will be in effect:

      1.    Average Compensation means your average W-2 wages from the Company
            for the five (5) calendar years completed immediately prior to the
            calendar year in which the Change in Control is effected. Any W-2
            wages for a partial year of employment will be annualized, in
            accordance with the frequency with which such wages are paid during
            such partial year, before inclusion within your Average
            Compensation.

      2.    Board means the Company's Board of Directors.

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Mr. Taylor J. Crouch
July 28, 2005
Page 2

      3.    Change in Control means any of the following events:

                  (i) a merger or consolidation in which the Company is not the
            surviving entity, except for a transaction the principal purpose of
            which is to change the state in which the Company is incorporated,

                  (ii) the sale, transfer or other disposition of all or
            substantially all of the assets of the Company other than in the
            ordinary course of business,

                  (iii) any reverse merger in which the Company ceases to exist
            as an independent corporation and becomes the subsidiary of another
            corporation, except where there is an insubstantial change in the de
            facto voting control of the Company (e.g. the creation of a holding
            company),

                  (iv) any Hostile Take-Over,

                  (v) the acquisition by any person (or related group of
            persons), whether by tender or exchange offer made directly to the
            Company's stockholders, private purchases from one or more of the
            Company's stockholders, open market purchases or any other
            transaction, of beneficial ownership of securities possessing more
            than thirty percent (30%) of the total combined voting power of the
            Company's outstanding securities,

                  (vi) the acquisition by any person (or related group of
            persons), whether by tender or exchange offer made directly to the
            Company's stockholders, private purchases from one or more of the
            Company's stockholders, open market purchases or any other
            transaction, of additional securities of the Company which increase
            the total holdings of such person (or group) to a level of
            securities possessing more than fifty percent (50%) of the total
            combined voting power of the Company's outstanding securities, or

                  (vii) the acquisition by any person (or related group of
            persons), whether by tender or exchange offer made directly to the
            Company's stockholders, private purchases from one or more of the
            Company's stockholders, open market purchases or any other
            transaction, of securities of the Company possessing sufficient
            voting power in the aggregate to elect an absolute majority of the
            members of the Board (rounded up to the nearest whole number).

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Mr. Taylor J. Crouch
July 28, 2005
Page 3

      4.    COBRA means the continuation-of-coverage provisions of the
            Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

      5.    Code means the Internal Revenue Code of 1986, as amended.

      6.    Common Stock means the Company's common stock, par value $0.001 per
            share.

      7.    Equity Incentive Plans means any of the following equity incentive
            plans of the Company: 1992 Stock Option/Stock Issuance Plan, the
            2002 Stock Incentive Plan, and the Restricted Stock Purchase Plan,
            together with any amendments or successors to such plans.

      8.    Equity Parachute Payment means, with respect to any Option (whether
            Acquisition-Accelerated or Severance-Accelerated) or unvested Stock
            Issuance, the portion deemed to be a parachute payment under Code
            Section 280G and the Treasury Regulations issued thereunder. Such
            Equity Parachute Payment shall be calculated in accordance with the
            valuation provisions established under Code Section 280G and the
            applicable Treasury Regulations and will include an appropriate
            dollar adjustment to reflect the lapse of your obligation to remain
            in the Company's employ as a condition to your vesting in the
            accelerated portion of such Option or Stock Issuance.

      9.    ERISA means the Employee Retirement Income Security Act of 1974, as
            amended.

      10.   Health Care Coverage means the health care benefits provided by the
            Company to you and your eligible dependents for which you are
            eligible to continue coverage under the provisions of COBRA.

      11.   Hostile Take-Over means either of the following events:

                  (i) the acquisition by any person (or related group of
            persons) whether by tender or exchange offer made directly to the
            Company's stockholders, private purchases from one or more of the
            Company's stockholders, open market purchases or any other
            transaction, of beneficial ownership of securities possessing more
            than thirty percent (30%) of the total combined voting power of the
            Company's outstanding securities pursuant to a tender offer made
            directly to the Company's

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Mr. Taylor J. Crouch
July 28, 2005
Page 4

            stockholders which the Board does not recommend such stockholders to
            accept, or

                  (ii) a change in the composition of the Board over a period of
            thirty-six (36) consecutive months or less such that a majority of
            the Board members (rounded up to the next whole number) ceases, by
            reason of one or more contested elections for Board membership, to
            be comprised of individuals who either (a) have been Board members
            continuously since the beginning of such period or (b) have been
            elected or nominated for election as Board members during such
            period by at least a majority of the Board members described in
            clause (a) who were still in office at the time such election or
            nomination was approved by the Board.

      12.   Involuntary Termination means the termination of your employment
            with the Company:

                  (i) upon your involuntary discharge or dismissal, or

                  (ii) upon your resignation in connection with any of the
            following changes to the terms and conditions of your employment:
            (A) a change in your position with the Company which materially
            reduces your level of responsibility, (B) a greater than ten percent
            (10%) reduction in your level of compensation (including base
            salary, fringe benefits and participation in non-discretionary bonus
            programs under which awards are payable pursuant to objective
            financial or performance standards, but excluding equity
            compensation) or (C) a relocation of your principal place of
            employment by more than fifty (50) miles.

                        The following guidelines shall determine whether one or
            more reductions in compensation should be taken into account for
            purposes of clause (ii)(B):

                        (a) Any reduction in compensation which occurs in
                  connection with an across-the-board reduction in the level of
                  compensation payable to the Company's executive officers or
                  senior management shall not constitute grounds for a clause
                  (ii)(B) resignation, unless implemented within eighteen (18)
                  months after a Change in Control.

                        (b) In the event of a Hostile Take-Over, the greater
                  than ten percent (10%) standard of clause (ii)(B) shall be
                  reduced to zero percent (0%) so that any reduction in the
                  level of your

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Mr. Taylor J. Crouch
July 28, 2005
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                  compensation shall constitute grounds for a clause (ii)(B)
                  resignation.

                        In no event shall an Involuntary Termination be deemed
            to occur should your employment terminate by reason of death or
            permanent disability.

      13.   Option means any option granted to you under any of the Equity
            Incentive Plans which is outstanding at the time of your Involuntary
            Termination or any earlier Change in Control. Your outstanding
            options are to be divided into two separate categories as follows:

                  (i) Acquisition-Accelerated Options: any outstanding Option
            (or installment thereof) which accelerates upon a Change in Control
            in accordance with the automatic acceleration provisions of the
            Equity Incentive Plans.

                  (ii) Severance-Accelerated Options: any outstanding Option (or
            installment thereof) which is not an Acquisition-Accelerated Option
            but which accelerates upon your Involuntary Termination, whether or
            not in connection with a Change in Control, as part of your
            severance benefits under this letter agreement.

      14.   Other Parachute Payments mean any payments in the nature of
            compensation to which you may become entitled under this letter
            agreement (other than the Equity Parachute Payment) or any other
            arrangement with the Company, to the extent such payments qualify as
            parachute payments within the meaning of Code Section 280G(b)(2) and
            the Treasury Regulations issued thereunder or would so qualify if
            the aggregate present value of such payments exceeded the amount
            specified in Code Section 280G(b)(2)(ii).

      15.   Stock Issuance means the issuance of unvested shares of Common Stock
            under the Company's Restricted Stock Plan or any other Equity
            Incentive Plan.

      16.   Termination for Cause means an Involuntary Termination or
            resignation of your employment with the Company by reason of your
            conviction of any felony or other criminal act, your commission of
            any act of fraud or embezzlement, your unauthorized use or
            disclosure of confidential or proprietary information or trade
            secrets of the Company or its subsidiaries, or any other intentional
            misconduct on your part which adversely affects the business or
            affairs of the Company in a material manner.

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Mr. Taylor J. Crouch
July 28, 2005
Page 6

                  PART TWO -- INVOLUNTARY TERMINATION BENEFITS

                  You will be entitled to receive the severance benefits
specified below should there occur an Involuntary Termination of your employment
during the term of this letter agreement effected in connection with a Change in
Control, other than a Termination for Cause. However, in the absence of a
Hostile Take-Over, these benefits will continue to be paid you only for so long
as you remain available for any consulting services required of you under Part
Two, Paragraph 4 and abide by the restrictive covenants set forth in Part Two,
Paragraph 5.

      1.    Severance Payments. You will receive severance payments from the
            Company for a period of twelve (12) months following your
            Involuntary Termination in an aggregate amount equal to the sum of
            (A) one (1) times the annual rate of base salary in effect for you
            at the time of your Involuntary Termination or at the time of the
            relevant Change in Control, whichever is higher plus (B) one (1)
            times the average of the bonuses (excluding any signing bonus) paid
            to you for services rendered in the two (2) fiscal years immediately
            preceding the fiscal year of your Involuntary Termination
            (annualized if paid for a partial fiscal year). If a bonus is paid
            to you for only one of those years, then the bonus amount under
            Clause (B) will be equal to one (1) times such bonus amount. The
            aggregate severance payments shall be paid to you in equal
            installments over the twelve-month period in accordance with the
            Company's normal payroll practices and subject to all applicable
            withholding taxes. The severance payments will immediately terminate
            if and only if (i) you should cease to remain available for the
            consulting services required of you under Section 4, or (ii) you
            fail to abide by the restrictive covenants set forth in Section 5 .
            However, in the event your Involuntary Termination occurs in
            connection with a Hostile Take-Over, your severance payments will be
            paid to you in the form of a single lump sum amount within thirty
            (30) days after such Involuntary Termination, and the provisions of
            Sections 4 and 5 of this Part Two will not apply.

      2.    Health Care Coverage. The Company will, at its expense, make any
            COBRA payments for you and your eligible dependents in order to
            continue your Health Care Coverage until the earlier of (i) twelve
            (12) months after the effective date of your Involuntary Termination
            (other than a Termination for Cause) or (ii) the first date that you
            are covered under another employer's (or, in the event of rehire,
            the Company's) health benefit program which provides substantially
            the same level of benefits without exclusion for pre-existing
            medical conditions. Such payments will be in lieu of any other
            continued health care coverage to

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Mr. Taylor J. Crouch
July 28, 2005
Page 7

            which you or your dependents would otherwise be entitled pursuant to
            the requirements of Code Section 4980B by reason of your termination
            of employment.

      3.    Option Acceleration and Lapse of Restrictions. Each of your
            outstanding Options under the Equity Incentive Plans will (to the
            extent not then otherwise exercisable) automatically accelerate so
            that each such Option will become immediately exercisable for the
            total number of shares of Common Stock at the time subject to that
            Option. Each such accelerated Option, together with all of your
            other vested Options, will remain exercisable for a period of twelve
            (12) months following your Involuntary Termination until the end of
            the specified ten (10)-year option term. Such Option(s) may be
            exercised for any or all of the option shares in accordance with the
            exercise provisions of the option agreement evidencing the grant. In
            addition, all restrictions applicable to the Stock Issuances you
            hold (to the extent those restrictions have not previously lapsed in
            accordance with the terms of the issuance agreements) will
            automatically lapse upon your Involuntary Termination (except a
            Termination for Cause).

      4.    Consulting Services. Unless your Involuntary Termination occurs in
            connection with a Hostile Take-Over, you will make yourself
            available to perform consulting services reasonably requested of you
            during the twelve (12)-month period following your Involuntary
            Termination. You will be compensated at an hourly rate to be agreed
            upon by you and the Company at the time such consulting services are
            to be rendered, and you will be reimbursed for all reasonable
            out-of-pocket expenses incurred in rendering such services upon your
            submission of appropriate documentation for those expenses.

      5.    Restrictive Covenants. For the one hundred twenty (120)-day period
            following your Involuntary Termination:

                  (i) You will not directly or indirectly, whether for your own
            account or as an employee, director, consultant or advisor, provide
            services to any business enterprise which is at the time in
            competition with any of the Company's then existing or formally
            planned product lines and which is located geographically in an area
            where the Company maintains substantial business activities, unless
            you obtain the prior written consent of the Board of Directors.

                  (ii) You will not directly or indirectly encourage or solicit
            any individual to leave the Company's employ for any reason or
            interfere in any other manner with the employment relationships at
            the time existing between the Company and its current or prospective
            employees.

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Mr. Taylor J. Crouch
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                  (iii) You will not induce or attempt to induce any customer,
            supplier, distributor, licensee or other business relation of the
            Company to cease doing business with the Company or in any way
            interfere with the existing business relationship between any such
            customer, supplier, distributor, licensee or other business relation
            and the Company.

            You acknowledge that monetary damages may not be sufficient to
            compensate the Company for any economic loss which may be incurred
            by reason of your breach of the foregoing restrictive covenants.
            Accordingly, in the event of any such breach, the Company shall, in
            addition to the cessation of the severance benefits provided you
            under this letter agreement and any remedies available to the
            Company at law, be entitled to obtain equitable relief in the form
            of an injunction precluding you from continuing to engage in such
            breach.

            None of the foregoing restrictive covenants in this section 5 shall
            be applicable in the event your Involuntary Termination occurs in
            connection with a Hostile Take-Over.

      6.    Benefit Reduction.

                  (i) Benefit Reduction. If the Change in Control does not
            constitute a Hostile Take-Over, first the dollar amount of your
            severance payment under Paragraph 1 will be reduced to the extent
            necessary to assure that the present value of those benefits will
            not, when added to the present value of your Equity Parachute
            Payment and your Other Parachute Payments, exceed 2.99 times your
            Average Compensation. In the event of a Hostile Take-Over, no
            reduction will be made to your severance payment (or any other
            benefit to which you become entitled hereunder), unless necessary to
            provide you with the maximum after-tax benefit available, after
            taking into account any parachute excise tax which might otherwise
            be payable by you under Code Section 4999 and any analogous State
            income tax provision.

                  (ii) Resolution of Disputes. In the event there is any
            disagreement between you and the Company as to whether one or more
            benefits to which you become entitled (whether under this letter
            agreement or otherwise) in connection with a Change in Control
            constitute Equity Parachute Payments or Other Parachute Payments,
            such dispute is to be resolved as follows:

                        A. The matter shall be submitted for resolution to
            independent counsel mutually acceptable to you and the Company
            ("Independent Counsel").

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Mr. Taylor J. Crouch
July 28, 2005
Page 9

            The resolution reached by Independent Counsel shall be final and
            controlling. However, should the Independent Counsel determine that
            the status of the benefits in dispute can be resolved by obtaining a
            private letter ruling from the Internal Revenue Service, a formal
            and proper request for such ruling shall be prepared and submitted
            by Independent Counsel, and the determination made by the Internal
            Revenue Service in the issued ruling shall be controlling. All
            expenses incurred in connection with the retention of Independent
            Counsel and (if applicable) the preparation and submission of the
            ruling request shall be paid by the Company.

                        B. The present value of each Equity Parachute Payment
            and each of the Other Parachute Payments (including your severance
            payment and Health Care Coverage) shall be determined in accordance
            with the provisions of Code Section 280G(d)(4) and the Treasury
            Regulations issued thereunder.

            The full amount of your severance benefit under Paragraph 1 shall
            not be paid to you until any amounts in dispute under this Paragraph
            6(ii) have been resolved in accordance herewith. However, any
            portion of such severance payment which would not otherwise exceed
            the benefit limitation of Paragraph 6(i) even if all amounts in
            dispute under this Paragraph 6(ii) were to be resolved against you
            will be paid to you in accordance with the applicable provisions of
            this letter agreement.

                  (iii) Overriding Limitation. You will in all events be
            entitled to receive the full amount of your severance payment under
            Paragraph 1, to the extent those benefits, when added to the present
            value of your Equity Parachute Payment and your Other Parachute
            Payments (excluding such severance payment), will nevertheless
            qualify as reasonable compensation within the standards established
            under Code Section 280G(b)(4).

                  (iv) Interpretation. The provisions of this Section 6 shall in
            all events be interpreted in such manner as will avoid the
            imposition of excise taxes under Code Section 4999, and the
            disallowance of deductions under Code Section 280G(a), with respect
            to your severance benefits under this letter agreement.

                     PART THREE -- MISCELLANEOUS PROVISIONS

      1.    Termination for Cause. Should your termination constitute a
            Termination for Cause, then the Company shall only be required to
            pay you (i) any unpaid compensation earned for services previously
            rendered through the date of such termination and (ii) any accrued
            but unpaid vacation benefits or sick days, (iii)

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Mr. Taylor J. Crouch
July 28, 2005
Page 10

            any reimbursements then owed to you by the Company and no benefits
            will be payable to you under this letter agreement.

      2.    Term of Agreement. The provisions of this letter agreement will
            continue in effect for a period of five (5) years from the date
            hereof.

      3.    General Creditor Status. The benefits to which you may become
            entitled under this letter agreement (except those attributable to
            your Options or Stock Issuances) will be paid, when due, from the
            general assets of the Company. Your right (or the right of the
            executors or administrators of your estate) to receive any such
            payments will at all times be that of a general creditor of the
            Company and will have no priority over the claims of other general
            creditors of the Company.

      4.    Death. Should you die before receipt of all benefits to which you
            become entitled under this letter agreement, then the payment of
            such benefits will be made, on the due date or dates hereunder had
            you survived, to the executors or administrators of your estate.
            Should you die before you exercise your Severance-Accelerated
            Options (if any) or any other of your outstanding vested Options,
            then each such Option may be exercised, during the applicable
            exercise period in effect hereunder for those options at the time of
            your death, by the executors or administrators of your estate or by
            person to whom the Option is transferred pursuant to your will or in
            accordance with the laws of inheritance.

      5.    Miscellaneous. The provisions of this letter agreement will be
            construed and interpreted under ERISA. To the extent ERISA is
            inapplicable, then the laws of the State of California shall
            control, without regard to that state's choice of law provisions.
            This letter agreement incorporates the entire agreement between you
            and the Company relating to the subject of severance benefits and
            supersedes all prior agreements and understandings with respect to
            such subject matter. This letter agreement may only be amended by
            written instrument signed by you and another duly-authorized officer
            of the Company. If any provision of this letter agreement as applied
            to any party or to any circumstance should be adjudged by an
            arbitrator or court of competent jurisdiction to be void or
            unenforceable for any reason, the invalidity of that provision shall
            in no way affect (to the maximum extent permissible by law) the
            application of such provision under circumstances different from
            those so adjudicated, the application of any other provision of this
            letter agreement, or the enforceability or invalidity of this letter
            agreement as a whole. Should any provision of this letter agreement
            become or be determined to be invalid, illegal or unenforceable in
            any jurisdiction by reason of the scope, extent or duration of

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Mr. Taylor J. Crouch
July 28, 2005
Page 11

            its coverage, then such provision shall be deemed amended to the
            extent necessary to conform to applicable law so as to be valid and
            enforceable or, if such provision cannot be so amended without
            materially altering the intention of the parties, then such
            provision shall be stricken and the remainder of this letter
            agreement shall continue in full force and effect.

      6.    Remedies. All rights and remedies provided pursuant to this letter
            agreement or by law will be cumulative, and no such right or remedy
            will be exclusive of any other. A party may pursue any one or more
            rights or remedies hereunder or may seek damages or specific
            performance in the event of another party's breach hereunder or may
            pursue any other remedy by law or equity, whether or not stated in
            this letter agreement.

      7.    Arbitration. Any controversy which may arise between you and the
            Company with respect to the construction, interpretation or
            application of any of the terms, provisions or conditions of this
            letter agreement or any monetary claim arising from or relating to
            this letter agreement will be submitted to and exclusively decided
            by final and binding arbitration in San Diego, California in
            accordance with the rules of the American Arbitration Association
            then in effect.

      8.    No Employment or Service Contract. Nothing in this letter agreement
            shall confer upon you any right to continue in the employment of the
            Company for any period of specific duration or interfere with or
            otherwise restrict in any way the rights of the Company or you,
            which rights are hereby expressly reserved by each, to terminate
            your employment at any time for any reason whatsoever, with or
            without cause.

      9.    Proprietary Information. You hereby acknowledge that the Company
            may, from time to time during your employment with the Company,
            disclose to you confidential information pertaining to the Company's
            business and affairs. All information and data, whether or not in
            writing, of a private or confidential nature concerning the business
            or financial affairs of the Company is and will remain subject to a
            separate Proprietary Information and Inventions Agreement (or the
            like) between you and the Company.

                  Please indicate your acceptance of the foregoing provisions of
this severance agreement by signing the enclosed copy of this letter agreement
and returning it to the Company.

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Mr. Taylor J. Crouch
July 28, 2005
Page 12

Very truly yours,

LIGAND PHARMACEUTICALS INCORPORATED

/s/ David E. Robinson

David E. Robinson
Chairman, President and CEO

DER:bjo
agree\Severance Crouch 07.28.05

ACCEPTED BY AND AGREED TO

Signature:  /s/ Taylor J. Crouch
            Taylor J. Crouch

Dated: 8/18/05EX-10.1

 

Exhibit 10.1

THE GOLDMAN SACHS AMENDED AND RESTATED

STOCK INCENTIVE PLAN

[20__] YEAR-END OPTION AWARD

This Award Agreement sets forth the terms and conditions of the [20   ] year-end award (this
“Award”) of Nonqualified Stock Options (“[20   ] Year-End Options”) granted to you under The Goldman
Sachs Amended and Restated Stock Incentive Plan (the “Plan”).

1. The Plan. This Award is made pursuant to the Plan, the terms of which are
incorporated in this Award Agreement. Capitalized terms used in this Award Agreement that
are not defined in this Award Agreement have the meanings as used or defined in the Plan.
References in this Award Agreement to any specific Plan provision shall not be construed as
limiting the applicability of any other Plan provision.

2. Award. The Award Statement delivered to you sets forth (i) the Date of Grant of
the [20   ] Year-End Options, (ii) the number of [20   ] Year-End Options and (iii) the Exercise
Price of each [20   ] Year-End Option. Until shares of Common Stock (“Shares”) are delivered to you
pursuant to Paragraph 7 after you exercise your [20   ] Year-End Options, you have no rights as a
shareholder of GS Inc. This Award is conditioned on your executing the related signature card
and returning it to the address designated and/or by the method specified by the date specified,
and is subject to all terms, conditions and provisions of the Plan and this Award Agreement,
including, without limitation, the arbitration and choice of forum provisions set forth in
Paragraph 13. By executing the related signature card (which, among other things, opens
the custody account referred to in paragraph 7 if you have not done so
already), you will have confirmed your acceptance of all of the terms and conditions of this Award
Agreement.

3. Expiration Date. The Expiration Date for your [20   ] Year-End Options is [•] (in
New York). Notwithstanding anything to the contrary in this Award Agreement, but subject to
earlier termination as provided in this Award Agreement or otherwise in accordance with the Plan,
on the Expiration Date all of your then Outstanding [20   ] Year-End Options shall terminate.

4. Vesting.

(a) In General. Except as provided below in Paragraphs 4(b), 4(c), 4(d), 5(a), 5(b),
10(g), and 11, on each Vesting Date you shall become Vested in the number or percentage of your
[20   ] Year-End Options specified next to such Vesting Date on the Award Statement (which may be
rounded to avoid fractional Shares). While continued active Employment is not required in order
for your Outstanding Vested [20   ] Year-End Options to become exercisable, all other terms
and conditions of this Award Agreement shall continue to apply to such Vested [20   ] Year-End
Options, and failure to meet such terms and conditions may result in the termination of this Award
(as a result of which no Shares subject to any such Vested [20   ] Year-End Options would be
delivered).

(b) Death. Notwithstanding any other provision of this Award Agreement, if you die
prior to an applicable Vesting Date, as soon as practicable after the date of death and after such
documentation as may be requested by the Committee is provided to the Committee, any such
[20   ]Year-End Options that were Outstanding but that had not yet become Vested immediately prior
to your death shall become Vested, but all other conditions of this Award Agreement thereafter
shall apply to the representative of your estate.

(c) Extended Absence, Retirement and Downsizing.

(i) Notwithstanding any other provision of this Award Agreement, but subject to Paragraph
5(c), in the event of the termination of your Employment (determined as described in Section 1.2.19
of the Plan) by reason of Extended Absence or Retirement, the condition set forth in Paragraph 5(a)
shall be waived with respect to any [20   ] Year-End Options that were Outstanding but that had not
yet become Vested immediately prior to such termination of Employment (as a result of which such
[20   ] Year-End Options shall become Vested), but all other conditions of this Award Agreement
shall continue to apply.

 

 

(ii) Notwithstanding any other provision of this Award Agreement and subject to your executing
such general waiver and release of claims and an agreement to pay any associated tax liability,
both as may be prescribed by the Firm or its designee, if your Employment is terminated without
Cause solely by reason of a “downsizing,” the condition set forth in Paragraph 5(a) shall be waived
with respect to your [20   ] Year-End Options that were Outstanding but that had not yet become
Vested immediately prior to such termination of Employment (as a result of which such [20   ]
Year-End Options shall become Vested), but all other conditions of this Award Agreement shall
continue to apply. Whether or not your Employment is terminated solely by reason of a “downsizing”
shall be determined by the Firm in its sole discretion. No termination of Employment initiated by
you, including any termination claimed to be a “constructive termination” or the like or a
termination for good reason, will be solely by reason of a “downsizing.”

(d) Change in Control. Notwithstanding any other provision of this Award Agreement,
if there is a Change in Control and your Employment terminates as described in Paragraph 6(d), the
condition set forth in Paragraph 5(a) shall be waived with respect to any [20   ] Year-End Options
that were Outstanding but that had not yet become Vested immediately prior to such termination of
Employment (as a result of which such [20   ] Year-End Options shall become Vested), but all other
terms and conditions of this Award Agreement shall continue to apply.

5. Termination of [20   ] Year-End Options Upon Certain Events.

(a) Unless the Committee determines otherwise, and except as provided in Paragraphs 4(b),
4(c), 4(d) and 10(g), if your Employment terminates for any reason or you otherwise are no
longer actively employed with the Firm, your rights in respect of your [20   ] Year-End Options
that were Outstanding but had not yet become Vested immediately prior to your termination of
Employment immediately shall terminate.

(b) Unless the Committee determines otherwise, your rights in respect of all of your
Outstanding [20   ] Year-End Options (whether or not Vested) shall immediately terminate, such
[20   ] Year-End Options shall cease to be Outstanding, and no Shares shall be delivered in respect
thereof, if at any time prior to the date you exercise such [20   ] Year-End Options:

(i) you attempt to have any dispute under the Plan or this Award Agreement resolved in any
manner that is not provided for by Paragraph 13 or Section 3.17 of the Plan;

(ii) any event that constitutes Cause has occurred;

(iii) you in any manner, directly or indirectly, (A) Solicit any Client to transact business
with a Competitive Enterprise or to reduce or refrain from doing any business with the Firm, (B)
interfere with or damage (or attempt to interfere with or damage) any relationship between the Firm
and any such Client, (C) Solicit any person who is an employee of the Firm to resign from the Firm
or to apply for or accept employment with any Competitive Enterprise or (D) on behalf of yourself
or any person or Competitive Enterprise hire, or participate in the hiring, of
any Selected Firm Personnel or identify, or participate in the identification of, Selected
Firm Personnel for potential hiring whether as an employee or consultant or otherwise;

(iv) you fail to certify to GS Inc., in accordance with procedures established by the
Committee, that you have complied, or the Committee determines that you in fact have failed to
comply, with all the terms and

2

 

conditions of the Plan and this Award Agreement. By exercising any
[20   ] Year-End Option under this Award Agreement, or by accepting the delivery of Shares under
this Award Agreement, you shall be deemed to have represented and certified at such time that you
have complied with all of the terms and conditions of the Plan and this Award Agreement;

(v) the Committee determines that you failed to meet, in any respect, any obligation you may
have under any agreement between you and the Firm, or any agreement entered into in connection with
your Employment with the Firm, including, without limitation, any offer letter, employment
agreement or any shareholders’ agreement to which other similarly situated employees of the Firm
are a party; or

(vi) as a result of any action brought by you, it is determined that any of the terms or
conditions for exercise of your [20   ] Year-End Options or delivery of Shares in respect thereto
are invalid.

For purposes of the foregoing, the term “Selected Firm Personnel” means: (i) any Firm employee or
consultant (A) with whom you personally worked while employed by the Firm, or (B) who at any time
during the year immediately preceding your termination of Employment with the Firm, worked in the
same division in which you worked; and (ii) any Managing Director of the Firm.

(c) Without limiting the application of Paragraph 5(b), your Outstanding [20   ]
Year-End Options that become Vested in accordance with Paragraph 4(c)(i) immediately shall
terminate, and such Outstanding [20   ] Year-End Options shall cease to be Outstanding if, prior to the
original Vesting Date with respect to such [20   ] Year-End Options, you (i) form, or acquire a 5%
or greater equity ownership, voting or profit participation interest in, any Competitive
Enterprise, or (ii) associate in any capacity (including, but not limited to, association as an
officer, employee, partner, director, consultant, agent or advisor) with any Competitive
Enterprise. Notwithstanding the foregoing, unless otherwise determined by the Committee in its
discretion, this Paragraph 5(c) will not apply if your termination of Employment by reason of
Extended Absence or Retirement is characterized by the Firm as “involuntary” or by “mutual
agreement” other than for Cause and if you execute such a general waiver and release of claims and
an agreement to pay any associated tax liability, both as may be prescribed by the Firm or its
designee. No termination of Employment initiated by you, including any termination claimed to be a
“constructive termination” or the like or a termination for good reason, will constitute an
“involuntary” termination of Employment or a termination of Employment by “mutual agreement.”

6. Exercisability of Vested [20   ] Year-End Options.

(a) In General. Only [20   ] Year-End Options that are Outstanding and Vested can be
exercised. Outstanding Vested [20   ] Year-End Options must be exercised subject to Paragraph 6(e)
and in accordance with procedures established by the Committee from time to time but, subject to
Paragraphs 6(d) and 10(g), not earlier than the Initial Exercise Date. The Initial Exercise Date
for your [20   ] Year-End Options shall be a date specified by the Committee that is not more than
thirty (30) Business Days after the date listed on the Award Statement as the Initial Exercise
Date if that date is during a Window
Period or, if the date listed on the Award Statement is not during a Window Period, on a date
specified by the Committee that is not more than 30 Business Days after the first Trading Day of
the first Window Period that begins thereafter. For this purpose, a “Trading Day” is a day on
which Shares trade regular way on the New York Stock Exchange. The Committee may from time to time
prescribe periods during which the Vested [20   ] Year-End Options shall not be exercisable. In
addition, the exercise procedures established by the Committee may require you
to take specific steps in order to exercise your [20   ] Year-End Options within a minimum time
prior to the effective date of exercise.

(b) Death. Notwithstanding any other provision of this Award Agreement, if you die
and, at the time of your death, you have any Outstanding [20   ] Year-End Options, the Transfer
Restrictions described in Paragraph 6(e) with respect to any [20   ] Year-End Options and any Shares
delivered in respect thereto shall be removed, and such Outstanding [20   ] Year-End Options (i)
shall be exercisable by the representative of your estate in accordance with Paragraph 6(a)
beginning on the later of (x) the Initial Exercise Date and (y) a date that is as soon as
practicable after the date of death and after such documentation as may be requested by the
Committee is provided to the Committee and (ii) unless earlier terminated in accordance with the
terms of this Award Agreement, shall remain exercisable until the Expiration Date.

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(c) Other Terminations of Employment. Subject to Paragraphs 5(b) and 5(c), upon the
termination of your Employment for any reason (other than death or Cause), but subject to Paragraph
10(g), your then Outstanding Vested [20   ] Year-End Options shall be exercisable in accordance with
Paragraph 6(a) beginning on the Initial Exercise Date and, unless earlier terminated in accordance
with the terms of this Award Agreement, shall remain exercisable until the Expiration Date.

(d) Change in Control. Notwithstanding anything to the contrary in this Award
Agreement, if a Change in Control shall occur, and within 18 months thereafter the Firm terminates
your Employment without Cause or you terminate your Employment for Good Reason, as provided in
Paragraph 4(d), all of your [20   ] Year-End Options that were Outstanding but that had not yet
become Vested immediately prior to your termination of Employment, shall become Vested, and all of
your Outstanding Vested [20   ] Year-End Options shall become exercisable and, unless earlier
terminated in accordance with the terms of this Award Agreement, shall remain exercisable until the
Expiration Date and the Transfer Restrictions described in Paragraph 6(e) with respect to any
[20   ] Year-End Options and any Shares delivered in respect thereto shall be removed.

(e) Transfer Restrictions. Subject to Paragraphs 6(b), 6(d) and 10(g),
notwithstanding any other provision of this Award Agreement, (i) (A) no sale, exchange, transfer,
assignment, pledge, hypothecation, fractionalization, hedge or other disposition of (including
through the use of any cash-settled instrument) any Shares acquired in connection with the exercise
of your [20   ] Year-End Options, whether voluntarily or involuntarily by you; and (B) no exercise
of any [20   ] Year-End Options involving the sale of Shares acquired in respect of such exercise
(the restrictions in clauses (i)(A) and (i)(B) of this Paragraph 6(e) being referred to
collectively as the “Transfer Restrictions”) may be effected before the first anniversary of the
Initial Exercise Date (the “Transferability Date”), and any purported sale, exchange, transfer,
assignment, pledge, hypothecation, fractionalization, hedge, other disposition or exercise in
violation of the Transfer Restrictions shall be void; and (ii) if and to the extent Shares subject
to your [20   ] Year-End Options are certificated, the certificates representing such Shares, shall
bear a legend specifying that such Shares are subject to the restrictions described in this
Paragraph 6(e) and GS Inc. shall advise its transfer agent to place a stop order against the
transfer of such Shares in violation of such Transfer Restrictions. Any Shares acquired in
connection with any exercise of your [20   ] Year-End Options prior to the Transferability Date
shall be held in a custody or other account designated by the Firm. Within 30 Business Days after
the Transferability Date (or any other date for which removal of the Transfer Restrictions is
called for), GS Inc. shall take, or shall cause to be taken, such steps as may be necessary to
remove the Transfer Restrictions.

[(f) Escrow. Pending receipt of any consents deemed necessary or appropriate by the
Firm, Shares acquired in connection with the exercise of of your [20   ] Year-End Options initially
may be delivered into an escrow account meeting such terms and conditions as may be determined by
the Firm. Any such escrow arrangement shall, unless otherwise determined by the Firm, provide that
(i) the escrow agent shall have the exclusive authority to vote such Shares while held in escrow
and (ii) dividends paid on Shares held in escrow may be accumulated and shall be paid as determined
by GS Inc. in its discretion. By accepting your [20   ] Year-End Option Award, you have
agreed to execute such documents and take such steps as may be deemed necessary or appropriate
by the Firm to establish and maintain any such escrow account.]

7. Delivery. Subject to Section 6(e), unless otherwise determined by the Committee,
or as otherwise provided in this Award Agreement, including, without limitation, Paragraphs 10 and
11, after receipt of payment of the Exercise Price in respect of a [20   ] Year-End Option, a Share
shall be delivered by book-entry credit to the Custody Account maintained by you, and until the
Transferability Date, shall be subject to the Transfer Restrictions. Notwithstanding the
foregoing, if you are or become considered by GS Inc. to be one of its “covered employees” within
the meaning of Section 162(m) of the Code, then you shall be subject to the provisions of Section
3.21.1 of the Plan, as a result of which delivery of your Shares may be delayed. In accordance
with Section 1.3.2(h) of the Plan, in the discretion of the Committee, in lieu of all or any
portion of the Shares otherwise deliverable upon the exercise of all or any portion of your [20   ]
Year-End Options, the Firm may deliver cash, other securities, other Awards or other property, and
all references in this Award Agreement to deliveries of Shares shall include such deliveries of
cash, other securities, other Awards or other property.

4

 

8. Repayment. The provisions of Section 2.3.5 of the Plan (which requires Award
recipients to repay to the Firm amounts delivered to them if the Committee determines that all
terms and conditions of this Award Agreement in respect of such exercise were not satisfied) shall
apply to this Award.

9. Non-transferability. Except as may otherwise be provided by the Committee, the
limitations on transferability set forth in Section 3.5 of the Plan shall apply to this Award. Any
purported transfer or assignment in violation of the provisions of this Paragraph 9 or Section 3.5
of the Plan shall be void.

10.  Certain Additional Terms, Conditions and Agreements.

(a) The delivery of Shares upon exercise of your [20   ] Year-End Options is conditioned on
your satisfaction of any applicable withholding taxes in accordance with Section 3.2 of the Plan.

(b) If you are or become a Managing Director, your rights in respect of your [20   ] Year-End
Options are conditioned on your becoming a party to any shareholders’ agreement to which other
similarly situated employees of the Firm are a party.

(c) Your rights in respect of your [20   ] Year-End Options are conditioned on the receipt to
the full satisfaction of the Committee of any required consents (as described in Section 3.3 of the
Plan) that the Committee may determine to be necessary or advisable.

(d) You understand and agree, in accordance with Section 3.3 of the Plan, by accepting this
Award, you have expressly consented to all of the items listed in Section 3.3.3(d) of the Plan,
which are incorporated herein by reference.

(e) You understand and agree, in accordance with Section 3.22 of the Plan, by accepting this
Award you have agreed to be subject to the Firm’s policies in effect from time to time concerning
trading in Shares, hedging or pledging Shares and equity-based compensation or other awards
(including, without limitation, the Firm’s “Policies With Respect to Transactions Involving GS
Shares, Equity Awards and GS Options by Persons Affiliated with GS Inc.”), and confidential or
proprietary information, and to effect sales of Shares delivered to you in respect of your [20   ]
Year-End Options in accordance with such rules and procedures as may be adopted from time to time
with respect to sales of such Shares (which may include, without limitation, restrictions relating
to the timing of sale requests, the manner in which sales are executed, pricing method,
consolidation or aggregation of orders and volume limits determined by the Firm). In addition, you
understand and agree that you shall be responsible for all brokerage costs and other fees or
expenses associated with your Award, including without limitation, such brokerage costs or
other fees or expenses in connection with the exercise of your [20   ] Year-End Options or the
sale of Shares delivered to you hereunder.

(f) Without limiting the application of Paragraph 6(e), GS Inc. may affix to Certificates
representing Shares issued pursuant to this Award Agreement upon exercise of your [20   ] Year-End
Options any legend that the Committee determines to be necessary or advisable (including to reflect
any restrictions to which you may be subject under a separate agreement with GS Inc.). GS Inc. may
advise the transfer agent to place a stop order against any legended Shares.

5

 

(g) Without limiting the application of Paragraph 5(b), if:

(i) your Employment with the Firm terminates solely because you resigned to accept
employment at a governmental agency, self-regulatory organization, or other employer and as
a result of such new employment the Firm determines that your continued holding of your
[20   ] Year-End Options would violate standards of ethical conduct applicable to you
(“Conflicted Employment”); or

(ii) following your termination of Employment other than described in Paragraph
10(g)(i), you notify the Firm that you have accepted or intend to accept Conflicted
Employment at a time when you continue to hold Outstanding [20   ] Year-End Options that are
Vested;

then, in the case of Paragraph 10(g)(i) above, the condition set forth in Paragraph 5(a) shall be
waived with respect to any [20   ] Year-End Options you then hold that had not yet become Vested
(as a result of which such [20   ] Year-End Options shall become Vested) and, in the cases of
Paragraph 10(g)(i) and 10(g)(ii) above, (a) such Outstanding Vested [20   ] Year-End Options shall
be cancelled and as soon as practicable after the Committee has received satisfactory
documentation relating to your Conflicted Employment (the “Release Date”) you shall receive a
payment equal to the excess (if any) of (x) the Fair Market Value of a Share on the Business Day
immediately prior to the Release Date multiplied by the number of your [20   ] Year-End Options
that were Outstanding and Vested immediately prior to such cancellation over (y) the Exercise
Price multiplied by the number of such Outstanding Vested [20   ] Year-End Options; or (b) both the
Initial Exercise Date and Transferability Date shall become the Release Date. Notwithstanding
anything else herein, any such actions described in this Paragraph 10(g) shall be permitted only
at such time and if and to the extent as would not result in the imposition of any additional tax
under Section 409A of the Code.

11. Right of Offset. The obligation to deliver Shares under this Award Agreement upon
exercise of your [20   ] Year-End Options is subject to Section 3.4 of the Plan, which provides for
the Firm’s right to offset against such obligation any outstanding amounts you owe to the Firm and
any amounts the Committee deems appropriate pursuant to any tax equalization policy or agreement.

12. Amendment. The Committee reserves the right at any time to amend the terms and
conditions set forth in this Award Agreement, and the Board may amend the Plan in any respect;
provided that, notwithstanding the foregoing and Sections 1.3.2(f), 1.3.2(g) and 3.1 of the Plan,
no such amendment shall materially adversely affect your rights and obligations under this Award
Agreement without your consent; and provided further that the Committee expressly reserves its
rights to amend the Award Agreement and the Plan as described in Sections 1.3.2(h)(1), (2) and (4)
of the Plan. Any amendment of this Award Agreement shall be in writing signed by an authorized
member of the Committee or a person or persons designated by the Committee.

13. Arbitration; Choice of Forum. BY ACCEPTING THIS AWARD, YOU UNDERSTAND AND AGREE
THAT THE ARBITRATION AND CHOICE OF FORUM PROVISIONS SET FORTH IN SECTION 3.17 OF THE PLAN, WHICH
ARE EXPRESSLY INCORPORATED HEREIN BY
REFERENCE AND WHICH, AMONG OTHER THINGS, PROVIDE THAT ANY DISPUTE, CONTROVERSY OR CLAIM
BETWEEN THE FIRM AND YOU ARISING OUT OF OR RELATING TO OR CONCERNING THE PLAN OR THIS AWARD
AGREEMENT SHALL BE FINALLY SETTLED BY ARBITRATION IN NEW YORK CITY, PURSUANT TO THE TERMS MORE
FULLY SET FORTH IN SECTION 3.17 OF THE PLAN, SHALL APPLY.

6

 

14. Governing Law. THIS AWARD SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

15. Headings. The headings in this Award Agreement are for the purpose of convenience
only and are not intended to define or limit the construction of the provisions hereof.

IN WITNESS WHEREOF, GS Inc. has caused this Award Agreement to be duly executed and delivered
as of the Date of Grant.

	 	 	 	 	 
	 	 	THE GOLDMAN SACHS GROUP, INC.
	 
	 	 	 	 
	 

	 	 
	 	By:
	 

	 	 	 	Name: [Name]
	 

	 	 	 	Title: [Title]

7

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