Document:

Exhibit

Exhibit 10.7

Performance-Based RSU Form

LIGAND PHARMACEUTICALS INCORPORATED
 
2002 STOCK INCENTIVE PLAN
RESTRICTED STOCK UNIT GRANT NOTICE AND 
RESTRICTED STOCK UNIT AGREEMENT

Ligand Pharmaceuticals Incorporated, a Delaware corporation (the “Company”), pursuant to its 2002 Stock Incentive Plan (the “Plan”), hereby grants to the holder listed below (“Participant”), an award of restricted stock units (“Restricted Stock Units” or “RSUs”) with respect to the number of shares of the Company’s common stock (the “Shares”).  This award for Restricted Stock Units (this “RSU Award”) is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Unit Award Agreement attached hereto as Exhibit A (the “Restricted Stock Unit Agreement”) and the Plan, each of which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Restricted Stock Unit Agreement.

	
			
	Participant:
	 

	 
	Exhibit B 1.(a)
	Exhibit B 1.(b)

	Grant Date:
	 
	 

	Grant Number:
	 
	 

	Target Number of RSUs Subject to Award (“Target RSUs”):
	 
	 

	Maximum Number of RSUs Subject to Award (“Maximum RSUs”):
	 
	 

	Vesting Schedule:
	The RSUs shall vest as set forth in Exhibit B attached hereto.

	Distribution Schedule:
	The RSUs shall be distributable as they vest pursuant to the Vesting Schedule.

By his or her acceptance of this Restricted Stock Unit Grant, Participant agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Unit Agreement and this Grant Notice. Participant has reviewed the Restricted Stock Unit Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Restricted Stock Unit Agreement and the Plan.  Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Plan Administrator upon any questions arising under the Plan, this Grant Notice or the Restricted Stock Unit Agreement. 
	
			
	LIGAND PHARMACEUTICALS INC.
	 
	PARTICIPANT

By:            By:    

Print Name:            Print Name:    

Title:    

Address            Address:    

Exhibit 10.7

EXHIBIT A 
TO RESTRICTED STOCK UNIT AWARD GRANT NOTICE 
 
LIGAND PHARMACEUTICALS, INCORPORATED 
RESTRICTED STOCK UNIT AWARD AGREEMENT
Pursuant to the Restricted Stock Unit Award Grant Notice (the “Grant Notice”) to which this Restricted Stock Unit Award Agreement (this “Agreement”) is attached, Ligand Pharmaceuticals Incorporated, a Delaware corporation (the “Company”), has granted to Participant the right to receive the number of RSUs under the Company’s 2002 Stock Incentive Plan (the “Plan”) indicated in the Grant Notice, with respect to the number of shares of the Company’s common stock (the “Stock”).  The RSU Award and this Agreement are subject to the Plan, the terms and conditions of which are incorporated herein by reference.  In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
ARTICLE I. 
AWARD OF RESTRICTED STOCK UNITS

1.1    Award of Restricted Stock Units.  
(a)    Award.  In consideration of Participant’s agreement to remain in the Service of the Company or one of its affiliates, and for other good and valuable consideration, the Company hereby grants to Participant the right to receive the number of RSUs set forth in the Grant Notice, subject to all of the terms and conditions set forth in this Agreement, the Grant Notice and the Plan (the “RSU Award”).  Each RSU represents the right to receive one Share.  Prior to actual issuance of any Shares, the RSUs and the RSU Award represent an unsecured obligation of the Company, payable only from the general assets of the Company.
(b)    Vesting.  The RSUs subject to the RSU Award shall vest in accordance with the Vesting Schedule set forth in the Grant Notice.  Unless and until the RSUs have vested in accordance with the vesting schedule set forth in the Grant Notice, Participant will have no right to any distribution with respect to such RSUs.  In the event of Participant’s cessation of Service for any reason, including as a result of Participant’s death or Permanent Disability, prior to the vesting of all of the RSUs, any unvested RSUs will terminate automatically without any further action by the Company and be forfeited without further notice and at no cost to the Company.
(c)    Distribution of Stock. 
(i)    Stock shall be distributed to Participant (or in the event of Participant’s death, to his or her estate) with respect to such Participant’s vested RSUs granted to Participant pursuant to this Restricted Stock Unit Agreement, subject to the terms and provisions of the Plan and this Restricted Stock Unit Agreement, within ten (10) days following each vesting date as the RSU vests pursuant to the Vesting Schedule set forth in the Grant Notice.  
(ii)    All distributions shall be made by the Company in the form of whole shares of Stock.  In no event will fractional shares be issued upon settlement of the RSU Award.  No fractional 

Shares shall be issued and any such fractional Shares shall be cancelled automatically and without any further action by Participant or the Company.
(iii)    Notwithstanding the foregoing, shares of Stock shall be issuable pursuant to an RSU at such times and upon such events as are specified in this Agreement only to the extent issuance under such terms will not cause the RSUs or the shares of Stock issuable pursuant to the RSUs to be includible in the gross income of Participant under Section 409A of the Code prior to such times or the occurrence of such events, as permitted by the Code and the regulations and other guidance thereunder.
(d)    Generally. Stock issued under the RSU Award shall be issued to Participant or Participant’s beneficiaries, as the case may be, at the sole discretion of the Plan Administrator, in either (i) uncertificated form, with the Shares recorded in the name of Participant in the books and records of the Company’s transfer agent with appropriate notations regarding the restrictions on transfer imposed pursuant to this Agreement; or (ii) certificate form.
1.2    Taxation Representations; Tax Withholding.  Notwithstanding any other provision of this Agreement (including, without limitation, Section 1.1(b) hereof): 
(a)    Taxation Representations. Participant has reviewed with his or her own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.  Participant understands that Participant (and not the Company) shall be responsible for his or her own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.  
(b)    Tax Withholding.  The Company and its Subsidiaries have the authority to deduct or withhold, or require Participant to remit to the Company or the applicable Subsidiary, an amount sufficient to satisfy applicable federal, state, local and foreign taxes (including the employee portion of any FICA obligation) required by law to be withheld with respect to any taxable event arising pursuant to this Agreement.  The Company and its Subsidiaries may withhold or Participant may make such payment in one or more of the forms specified below:
(i)     by cash or check made payable to the Company or the Subsidiary with respect to which the withholding obligation arises;
 
(ii)     by the deduction of such amount from other compensation payable to Participant; 

(iii)    with respect to any tax withholding obligation arising in connection with the distribution of the RSUs, by requesting that the Company and its Subsidiaries withhold a net number of vested Shares otherwise issuable pursuant to the RSUs having a then current Fair Market Value not exceeding the amount necessary to satisfy the tax withholding obligation of the Company and its Subsidiaries based on the minimum applicable statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes;
(iv)     with respect to any tax withholding obligation arising in connection with the distribution of the RSUs, with the consent of the Plan Administrator, by tendering to the Company vested Shares having a then current Fair Market Value not exceeding the amount necessary to satisfy the tax withholding obligation of the Company and its Subsidiaries based on the minimum applicable statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes; 

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(v)    with respect to any withholding taxes arising in connection with the distribution of the RSUs, through the delivery of a notice that Participant has placed a market sell order with a broker acceptable to the Company with respect to Shares then issuable to Participant pursuant to the RSUs, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company or the Subsidiary with respect to which the tax withholding obligation arises in satisfaction of such withholding taxes; provided that payment of such proceeds is then made to the Company or the applicable Subsidiary at such time as may be required by the Plan Administrator, but in any event not later than the settlement of such sale; or 

(vi)     in any combination of the foregoing. 
(c)    Failure by Participant to Provide Timely Payment.  With respect to any withholding taxes arising in connection with the RSUs, in the event Participant does not provide timely payment of all sums required pursuant to Section 1.2(b), the Plan Administrator shall have the right, but not the obligation, to treat such failure as an election by Participant to satisfy all or any portion of Participant’s required payment obligation pursuant to Section 1.2(b)(iii) above. The Company shall not be obligated to deliver any certificate representing Shares issuable with respect to the RSUs to Participant or his or her legal representative unless and until Participant or his or her legal representative shall have paid or otherwise satisfied in full the amount of all federal, state, local and foreign taxes applicable with respect to the taxable income of Participant resulting from the vesting of the RSUs, the distribution of the Shares issuable with respect thereto, or any other taxable event related to the RSUs, provided that no payment shall be delayed under this Section 1.2(b) if such delay will result in a violation of Section 409A of the Code.  
(d)    Broker Sale.  In the event any tax withholding obligation arising in connection with the RSUs will be satisfied under Section 1.2(b)(iii), then the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on Participant’s behalf a whole number of shares from those Shares then issuable to Participant pursuant to the RSUs as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the tax withholding obligation and to remit the proceeds of such sale to the Company or the Subsidiary with respect to which the withholding obligation arises.  Participant’s acceptance of this Award constitutes Participant’s instruction and authorization to the Company and such brokerage firm to complete the transactions described in this Section 1.2(d), including the transactions described in the previous sentence, as applicable.  
(e)    Participant Liable for Taxes.  Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the RSUs.  Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding obligation in connection with the awarding, vesting or payment of the RSUs or the subsequent sale of Shares.  The Company and the Subsidiaries do not commit and are under no obligation to structure the RSUs to reduce or eliminate Participant’s tax liability.
1.3    Conditions to Issuance of Certificates The Company shall not be required to issue or deliver any certificate or certificates for any Shares prior to the fulfillment of all of the following conditions:  (a) the admission of the Shares to listing on all stock exchanges on which such Shares are then listed; (b) the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the U.S. Securities and Exchange Commission or other governmental regulatory body, which the Plan Administrator shall, in its sole and absolute discretion, deem necessary and advisable; (c) the obtaining of any approval or other clearance from any state or federal governmental agency that the Plan Administrator shall, in its absolute discretion, determine to be necessary or advisable; and (d) the lapse of any such reasonable period of time following the date the RSUs vest as the Plan Administrator may from time to time establish for reasons of administrative convenience.

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ARTICLE II.     
OTHER PROVISIONS
2.1    RSU Award and Interests Not Transferable.  This RSU Award and the rights and privileges conferred hereby, including the RSUs awarded hereunder, shall not be liable for the debts, contracts or engagements of Participant or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect.
2.2    Rights as Shareholder.  Neither the Participant nor any person claiming under or through the Participant shall have any of the rights or privileges of a shareholder of the Company in respect of any Shares issuable hereunder unless and until certificates representing such Shares (which may be in uncertificated form) will have been issued and recorded on the books and records of the Company or its transfer agents or registrars, and delivered to the Participant (including through electronic delivery to a brokerage account).  After such issuance, recordation and delivery, the Participant shall have all the rights of a shareholder of the Company, including with respect to the right to vote the Shares and the right to receive any cash or share dividends or other distributions paid to or made with respect to the Shares; provided, however, that at the discretion of the Company, and prior to the delivery of Shares, Participant may be required to execute a shareholders agreement in such form as shall be determined by the Company.  
2.3    No Right to Continued Service.  Nothing in the Plan or in this Agreement shall be interpreted to interfere with or limit in any way the right of the Company or any Parent or Subsidiary to terminate Participant’s employment or services at any time, nor confer upon Participant the right to continue in the employ or service of the Company or any Parent or Subsidiary.
2.4    Governing Law.   This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law.
2.5    Conformity to Securities Laws.  Participant acknowledges that the Plan is intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder, and state securities laws and regulations.  Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Shares are to be issued, only in such a manner as to conform to such laws, rules and regulations.  To the extent permitted by applicable law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
2.6    Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient when delivered personally or sent by electronic mail (with return receipt requested and received) or fax or forty-eight (48) hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified, if to the Company, at its principal offices, and if to Participant, at Participant’s address, electronic mail address or fax number in the Company’s employee records or as subsequently modified by written notice.
2.7    Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
2.8    Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith.  In the event that the parties 

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cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms.
2.9    Entire Agreement; Enforcement of Rights.   This Agreement and the Plan set forth the entire agreement and understanding of the parties relating to the subject matter herein and merge all prior discussions between them.  No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement.  
2.10    Successors and Assigns.  The rights and benefits of this Agreement shall inure to the benefit of, and be enforceable by the Company’s successors and assigns.  The Company may assign its rights under this Agreement to any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company without the prior written consent of Participant. The rights and obligations of Participant under this Agreement may only be assigned with the prior written consent of the Company.
2.11    Section 409A.  This RSU Award is not intended to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof, “Section 409A”), and, accordingly, the Shares issuable pursuant to the RSUs hereunder shall be distributed to Participant no later than the later of: (i) the fifteenth (15th) day of the third month following Participant’s first taxable year in which such RSUs are no longer subject to a substantial risk of forfeiture, and (ii) the fifteenth (15th) day of the third month following first taxable year of the Company in which such RSUs are no longer subject to substantial risk of forfeiture, as determined in accordance with Section 409A and any Treasury Regulations and other guidance issued thereunder.  For purposes of Section 409A (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), each payment that Participant may be eligible to receive under this Agreement shall be treated as a separate and distinct payment.
2.12    Broker-Assisted Sales.  In the event of any broker-assisted sale of Shares in connection with the payment of withholding taxes as provided in Section 1.2(b)(iii) or (v): (a) any Shares to be sold through a broker-assisted sale will be sold on the day the tax withholding obligation arises or as soon thereafter as practicable; (b) such Shares may be sold as part of a block trade with other participants in the Plan in which all participants receive an average price; (c) Participant will be responsible for all broker’s fees and other costs of sale, and Participant agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses relating to any such sale; (d) to the extent the proceeds of such sale exceed the applicable tax withholding obligation, the Company agrees to pay such excess in cash to Participant as soon as reasonably practicable; (e) Participant acknowledges that the Company or its designee is under no obligation to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy the applicable tax withholding obligation; and (f) in the event the proceeds of such sale are insufficient to satisfy the applicable tax withholding obligation, Participant agrees to pay immediately upon demand to the Company or its Subsidiary with respect to which the tax withholding obligation arises an amount in cash sufficient to satisfy any remaining portion of the Company’s or the applicable Subsidiary’s tax withholding obligation.
2.13    Paperless Administration.  By accepting this RSU Award, Participant hereby agrees to receive documentation related to the RSU Award by electronic delivery, such as a system using an internet website or interactive voice response, maintained by the Company or a third party designated by the Company. 

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EXHIBIT B 
TO RESTRICTED STOCK UNIT AWARD GRANT NOTICE 
 
PERFORMANCE-BASED VESTING  

Capitalized terms used in this Exhibit B and not defined in Section 3 below shall have the meanings given them in the Agreement to which this Exhibit B is attached.
[Vesting to be specified in individual award agreement: Insert vesting.] 

B-1Exhibit

 
Exhibit 10.1

INDEMNIFICATION AGREEMENT

THIS AGREEMENT is made and entered into this ___ day of __________, _____ between Ligand Pharmaceuticals Incorporated, a Delaware corporation ("Corporation"), whose address is 3911 Sorrento Valley Boulevard, Suite 110, San Diego, CA 92121 and ______________ ("Director”).

RECITALS:

A.     WHEREAS, Director, a member of the Board of Directors of Corporation (the “Board”), performs a valuable service in such capacity for Corporation; and

B.     WHEREAS, the stockholders of Corporation have adopted Bylaws (the "Bylaws") providing for the indemnification of the officers, directors, agents and employees of Corporation to the maximum extent authorized by Section 145 of the Delaware General Corporation Law, as amended (the "Law"); and

C.     WHEREAS, the Bylaws and the Law, as amended and in effect from time to time or any successor or other statutes of Delaware having similar import and effect, currently purport to be the controlling law governing Corporation with respect to certain aspects of corporate law, including indemnification of directors and officers; and

D.    WHEREAS, in accordance with the authorization provided by the Law, Corporation may from time to time purchase and maintain a policy or policies of Directors and Officers Liability Insurance ("D & O Insurance"), covering certain liabilities which may be incurred by its directors and officers in the performance of services as directors and officers of Corporation; and

E.    WHEREAS, as a result of developments affecting the terms, scope and availability of D & O Insurance there exists general uncertainty as to the extent and overall desirability of protection afforded members of the Board of Directors by such D & O Insurance, if any, and by statutory and bylaw indemnification provisions; and

F.    WHEREAS, in order to induce Director to continue to serve as a member of the Board, Corporation has determined and agreed to enter into this contract with Director.

NOW, THEREFORE, in consideration of Director's continued service as a director after the date hereof, the parties hereto agree as follows:

1.    Certain Definitions.  The following terms used in this Agreement shall have the meanings set forth below.  Other terms are defined where appropriate in this Agreement.  

(a)    "Disinterested Director" shall mean a director of Corporation who is not or was not a party to the Proceeding in respect of which indemnification is being sought by Director.

(b)    "Expenses" shall include all direct and indirect costs (including, without limitation, attorneys' fees, retainers, court costs, transcripts, fees of experts, witness fees, travel expenses, duplicating 

costs, printing and binding costs, telephone charges, postage, delivery service fees, all other disbursements or out-of-pocket expenses and reasonable compensation for time spent by Director for which he or she is otherwise not compensated by Corporation) actually and reasonably incurred in connection with a Proceeding or establishing or enforcing a right to indemnification under this Agreement, applicable law or otherwise; provided, however, that "Expenses" shall not include any Liabilities.

(c)    "Final Adverse Determination" shall mean that a determination that Director is not entitled to indemnification shall have been made pursuant to Section 5 hereof and either (i) a final adjudication in a Delaware court or decision of an arbitrator pursuant to Section 13(a) hereof shall have denied Director's right to indemnification hereunder, or (ii) Director shall have failed to file a complaint in a Delaware court or seek an arbitrator's award pursuant to Section 13(a) for a period of one hundred twenty (120) days after the determination made pursuant to Section 5 hereof.

(d)    "Independent Legal Counsel" shall mean a law firm or member of a law firm selected by Corporation and approved by Director (which approval shall not be unreasonably withheld) and that neither is presently nor in the past five years has been retained to represent:  (i) Corporation, in any material matter, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term "Independent Legal Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either Corporation or Director in a Proceeding to determine Director's right to indemnification under this Agreement.

(e)    "Liabilities" shall mean liabilities of any type whatsoever including, but not limited to, any judgments, fines, ERISA excise taxes and penalties, and penalties and amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid in settlement) of any proceeding.

(f)    "Proceeding" shall mean any threatened, pending or completed action, claim, suit, arbitration, alternative dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative, including any appeal therefrom.

(g)    "Change of Control" shall mean the occurrence of any of the following events after the date of this Agreement:

(i)    A change in the composition of the Board, as a result of which fewer than two-thirds (2/3) of the incumbent directors are directors who either (1) had been directors of Corporation twenty-four (24) months prior to such change or (2) were elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the directors who had been directors of Corporation 24 months prior to such change and who were still in office at the time of the election or nomination; or

(ii)    Any "person" (as such term is used in section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) through the acquisition or aggregation of securities is or becomes the beneficial owner, directly or indirectly, of securities of Corporation representing twenty percent (20%) or more of the combined voting power of Corporation's then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the "Capital Stock"), except that any change in ownership of Corporation's securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Capital Stock, and any decrease thereafter in such person's ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person's beneficial ownership of any securities of Corporation.

2.    Indemnity of Director.  Corporation hereby agrees to hold harmless and indemnify Director to the fullest extent authorized or permitted by the provisions of the Law, as may be amended from time to time.

3.    Additional Indemnity.  Subject only to the exclusions set forth in Section 4 hereof, Corporation hereby further agrees to hold harmless and indemnify Director:

(a)    against any and all Expenses in connection with any Proceeding (including an action by or in the right of Corporation) to which Director is, was or at any time becomes a party, or is threatened to be made a party, by reason of the fact that Director is, was or at any time becomes a director, officer, employee or agent of Corporation, or is or was serving or at any time serves at the request of Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise; and

(b)    otherwise to the fullest extent as may be provided to Director by Corporation under the non-exclusivity provisions of the Bylaws of Corporation and the Law.

4.    Limitations on Additional Indemnity.  No indemnity pursuant to Section 3 hereof shall be paid by Corporation:

(a)    except to the extent the aggregate of losses to be indemnified thereunder exceeds the sum of such losses for which the Director is indemnified pursuant to Section 2 hereof or reimbursed pursuant to any D & O Insurance purchased and maintained by Corporation;

(b)    in respect of remuneration paid to Director if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;

(c)    on account of any Proceeding in which judgment is rendered against Director for an accounting of profits made from the purchase or sale by Director of securities of Corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law;

(d)    on account of a Final Adverse Determination that Director's conduct was knowingly fraudulent or deliberately dishonest or constituted willful misconduct;

(e)    provided there has been no Change of Control, on account of or arising in response to any Proceeding (other than a Proceeding referred to in Section 10(b) hereof) initiated by Director or any of Director's affiliates against Corporation or any officer, director or stockholder of Corporation unless such Proceeding was authorized in the specific case by action of the Board of Directors of Corporation;

(f)    if a final decision by a Court having jurisdiction in the matter shall determine that such indemnification is not lawful; or

(g)    on account of any Proceeding to the extent that Director is a plaintiff, a counter-complainant or a cross-complainant therein (other than a Proceeding permitted by Section 4(e) hereof).

5.    Procedure for Determination of Entitlement to Indemnification.

(a)    Whenever Director believes that he or she is entitled to indemnification pursuant to this Agreement, Director shall submit a written request for indemnification to Corporation.  Any request for indemnification shall include sufficient documentation or information reasonably available to Director to support his or her claim for indemnification.  Director shall submit his or her claim for indemnification within a reasonable time not to exceed five years after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, final termination or other disposition or partial disposition of any Proceeding, whichever is the later date for which Director requests indemnification.  The President, Secretary or other appropriate officer shall, promptly upon receipt of Director's request for indemnification, advise the Board in writing that Director has made such a request.  Determination of Director's entitlement to indemnification shall be made not later than ninety (90) days after Corporation's receipt of his or her written request for such indemnification.

(b)    The Director shall be entitled to select the forum in which Director's request for indemnification will be heard, which selection shall be included in the written request for indemnification required in Section 5(a).  This forum shall be any one of the following:

(i)    The stockholders of Corporation;

(ii)    A quorum of the Board consisting of Disinterested Directors;

(iii)    Independent Legal Counsel, who shall make the determination in a written opinion; or

(iv)    A panel of three arbitrators, one selected by Corporation, another by Director and the third by the first two arbitrators selected.  If for any reason three arbitrators are not selected within thirty (30) days after the appointment of the first arbitrator, then selection of additional arbitrators shall be made by the American Arbitration Association.  If any arbitrator resigns or is unable to serve in such capacity for any reason, the American Arbitration Association shall select his or her replacement.  The arbitration shall be conducted pursuant to the commercial arbitration rules of the American Arbitration Association now in effect.

If Director fails to make such designation, his or her claim shall be determined by the forum selected by Corporation.

6.    Presumption and Effect of Certain Proceedings.  Upon making a request for indemnification, Director shall be presumed to be entitled to indemnification under this Agreement and Corporation shall have the burden of proof to overcome that presumption in reaching any contrary determination.  The termination of any Proceeding by judgment, order, settlement, arbitration award or conviction, or upon a plea of nolo contendere or its equivalent shall not affect this presumption or, except as may be provided in Section 4 hereof, establish a presumption with regard to any factual matter relevant to determining Director's rights to indemnification hereunder.  If the person or persons so empowered to make a determination pursuant to Section 5(b) hereof shall have failed to make the requested determination within thirty (30) days after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or other disposition or partial disposition of any Proceeding or any other event which could enable Corporation to determine Director's entitlement to indemnification, the requisite determination that Director is entitled to indemnification shall be deemed to have been made.

7.    Contribution.  If the indemnification provided in Sections 2 and 3 is unavailable and may not be paid to Director for any reason other than those set forth in Section 4, then in respect of any 

Proceeding in which Corporation is or is alleged to be jointly liable with Director (or would be if joined in such Proceeding), Corporation shall contribute to the amount of Expenses and Liabilities paid or payable by Director in such proportion as is appropriate to reflect (i) the relative benefits received by Corporation on the one hand and Director on the other hand from the transaction from which such Proceeding arose, and (ii) the relative fault of Corporation on the one hand and of Director on the other hand in connection with the events which resulted in such Expenses and Liabilities, as well as any other relevant equitable considerations. The relative fault of Corporation on the one hand and of Director on the other shall be determined by reference to, among other things, the parties' relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Expenses and Liabilities.  Corporation agrees that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or any other method of allocation which does not take account of the foregoing equitable considerations.

8.    Insurance and Funding.  Corporation hereby represents and warrants that it shall purchase and maintain insurance in commercially reasonable amounts to protect itself and/or Director against any Expenses and Liabilities in connection with any Proceeding.

9.    Continuation of Obligations.  All agreements and obligations of Corporation contained herein shall continue during the period Director is a director, officer, employee or agent of Corporation (or is or was serving at the request of Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise) and shall continue thereafter so long as Director shall be subject to any possible Proceeding, by reason of the fact that Director was serving Corporation or such other entity in any capacity referred to herein.

10.    Notification and Defense of Claim.  Promptly after receipt by Director of notice of the commencement of any Proceeding, Director will, if a claim in respect thereof is to be made against Corporation under this Agreement, notify Corporation of the commencement thereof; but the omission so to notify Corporation will not relieve it from any liability which it may have to Director otherwise than under this Agreement. With respect to any Proceeding as to which Director notifies Corporation of the commencement thereof:

(a)    Corporation will be entitled to participate therein at its own expense;

(b)    Except as otherwise provided below, to the extent that it may wish, Corporation jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Director.  After notice from Corporation to Director of its election to assume the defense thereof, Corporation will not be liable to Director under this Agreement for any Expenses subsequently incurred by Director in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below.  Director shall have the right to employ his or her own counsel in such Proceeding but the Expenses associated with the employment of such counsel incurred after notice from Corporation of its assumption of the defense thereof shall be at the expense of Director unless (i) the employment of counsel by Director has been authorized by Corporation, (ii) Director shall have reasonably concluded that there may be a conflict of interest between Corporation and Director in the conduct of the defense of such Proceeding or (iii) Corporation shall not in fact have employed counsel to assume the defense of such Proceeding, in each of which cases the Expenses of Director's separate counsel shall be at the expense of Corporation.  Corporation shall not be entitled to assume the defense of any Proceeding brought by or on behalf of Corporation or as to which Director shall have made the conclusion provided for in (ii) above; and

(c)    Provided there has been no Change of Control, Corporation shall not be liable to indemnify Director under this Agreement for any amounts paid in settlement of any Proceeding effected without its written consent, which consent shall not be unreasonably withheld.  Corporation shall be permitted to settle any Proceeding except that it shall not settle any Proceeding in any manner which would impose any penalty, out-of-pocket liability, or limitation on Director without Director's written consent.

11.    Advancement and Repayment of Expenses.

(a)    In the event that Director employs his or her own counsel pursuant to Section 10(b)(i) through (iii) above, Corporation shall advance to Director, prior to any final disposition of any Proceeding any and all Expenses incurred in investigating or defending any such Proceeding within ten (10) days after receiving copies of invoices presented to Director for such Expenses.

(b)    Director agrees that Director will reimburse Corporation for all Expenses paid by Corporation in defending any Proceeding against Director in the event and only to the extent that there has been a Final Adverse Determination that Director is not entitled, under the provisions of the Law, the Bylaws, this Agreement or otherwise, to be indemnified by Corporation for such Expenses.

12.    Remedies of Director.

(a)    In the event that (i) a determination pursuant to Section 5 hereof is made that Director is not entitled to indemnification, (ii) advances of Expenses are not made pursuant to this Agreement, (iii) payment has not been timely made following a determination of entitlement to indemnification pursuant to this Agreement, or (iv) Director otherwise seeks enforcement of this Agreement, Director shall be entitled to a final adjudication in an appropriate court of his or her rights.  Alternatively, Director at his or her option may seek an award in arbitration to be conducted by a single arbitrator pursuant to the commercial arbitration rules of the American Arbitration Association now in effect, whose decision is to be made within ninety (90) days following the filing of the demand for arbitration.  The Corporation shall not oppose Director's right to seek any such adjudication or arbitration award.

(b)    In the event that a determination that Director is not entitled to indemnification, in whole or in part, has been made pursuant to Section 5 hereof, the decision in the judicial proceeding or arbitration provided in paragraph (a) of this Section 12 shall be made de novo and Director shall not be prejudiced by reason of a determination that he or she is not entitled to indemnification.

(c)    If a determination that Director is entitled to indemnification has been made pursuant to Section 5 hereof or otherwise pursuant to the terms of this Agreement, Corporation shall be bound by such determination in the absence of (i) a misrepresentation of a material fact by Director or (ii) a specific finding (which has become final) by an appropriate court that all or any part of such indemnification is expressly prohibited by law.

(d)    In any court proceeding pursuant to this Section 12, Corporation shall be precluded from asserting that the procedures and presumptions of this Agreement are not valid, binding and enforceable.  The Corporation shall stipulate in any such court or before any such arbitrator that Corporation is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

(e)    Expenses reasonably incurred by Director in connection with his or her request for indemnification under this Agreement, meeting enforcement of this Agreement or to recover damages for breach of this Agreement shall be borne by Corporation.

(f)    Corporation and Director agree herein that a monetary remedy for breach of this Agreement, at some later date, will be inadequate, impracticable and difficult to prove, and further agree that such breach would cause Director irreparable harm.  Accordingly, Corporation and Director agree that Director shall be entitled to temporary and permanent injunctive relief to enforce this Agreement without the necessity of proving actual damages or irreparable harm.  The Corporation and Director further agree that Director shall be entitled to such injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bond or other undertaking in connection therewith.  Any such requirement of bond or undertaking is hereby waived by Corporation, and Corporation acknowledges that in the absence of such a waiver, a bond or undertaking may be required by the court.

13.    Enforcement.  Corporation expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on Corporation hereby in order to induce Director to continue as a director of Corporation, and acknowledges that Director is relying upon this Agreement in continuing in such capacity.

14.    Separability.  Each of the provisions of this Agreement is a separate and distinct agreement and independent of the others, so that if any or all of the provisions hereof shall be held to be invalid or unenforceable to any extent for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions hereof, or the obligation of the Corporation to indemnify the Director to the full extent provided by the Bylaws or the Law, and the affected provision shall be construed and enforced so as to effectuate the parties' intent to the maximum extent possible.

15.    Governing Law.  This Agreement shall be governed by and interpreted and enforced in accordance with the internal laws of the State of Delaware.

16.    Consent to Jurisdiction.  The Corporation and Director each irrevocably consent to jurisdiction of the courts of the State of Delaware for all purposes in connection with any Proceeding which arises out of or relates to this Agreement and agree that any Proceeding instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

17.    Binding Effect.  This Agreement shall be binding upon Director and upon Corporation, its successors and assigns, and shall inure to the benefit of Director, his or her heirs, executors, administrators, personal representatives and assigns and to the benefit of Corporation, its successors and assigns.

18.    Entire Agreement.  This Agreement represents the entire agreement between the parties hereto and there are no other agreements, contracts or understandings between the parties hereto with respect to the subject matter of this Agreement, except as specifically referred to herein.  This Agreement supersedes any and all agreements regarding indemnification heretofore entered into by the parties.

19.    Amendment and Termination.  No amendment, modification, waiver, termination or cancellation of this Agreement shall be effective for any purpose unless set forth in writing signed by both parties hereto.

20.    Subrogation.  In the event of payment under this agreement, Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of Director, who shall execute all documents required and shall do all acts that may be necessary to secure such rights and to enable Corporation effectively to bring suit to enforce such rights.

21.    Non-Exclusivity of Rights.  The rights conferred on Director by this Agreement shall not be exclusive of any  other right which Director may have or hereafter acquire under any statute, provision of Corporation's Certificate of Incorporation or Bylaws, agreement, vote of stockholders or directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding office.

22.    Survival of Rights.  The rights conferred on Director by this Agreement shall continue after Director has ceased to be a director, officer, employee or other agent of Corporation or such other entity.

23.    Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be addressed to Director or to Corporation, as the case may be, at the address shown on page 1 of this Agreement, or to such other address as may have been furnished by either party to the other, and shall be deemed to have been duly given if (a) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (b) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

DIRECTOR:                    LIGAND PHARMACEUTICALS                                             INCORPORATED, a Delaware corporation

______________________________    By: _______________________________
                            
Its:

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