-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SQY1CMZ4P8Z8CuF2Tdod5Gm4Zd6afyOMsS39vOSsCl/RdMH9/mKeYuo8mBB39WpE cd1ZjB+1VZ5lv7uMkkUB6g== 0001193805-05-002218.txt : 20051107 0001193805-05-002218.hdr.sgml : 20051107 20051104193054 ACCESSION NUMBER: 0001193805-05-002218 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20051107 DATE AS OF CHANGE: 20051104 GROUP MEMBERS: DANIEL S. LOEB GROUP MEMBERS: THIRD POINT OFFSHORE FUND, LTD. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LIGAND PHARMACEUTICALS INC CENTRAL INDEX KEY: 0000886163 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 770160744 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-43329 FILM NUMBER: 051181796 BUSINESS ADDRESS: STREET 1: 10275 SCIENCE CENTER DRIVE CITY: SAN DIEGO STATE: CA ZIP: 92121-1117 BUSINESS PHONE: 8585507500 MAIL ADDRESS: STREET 1: 10275 SCIENCE CENTER DRIVE CITY: SAN DIEGO STATE: CA ZIP: 92121-1117 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Third Point LLC CENTRAL INDEX KEY: 0001040273 IRS NUMBER: 133922602 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 12 EAST 49TH ST STREET 2: 28TH FL CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122247400 MAIL ADDRESS: STREET 1: 12 EAST 49TH ST STREET 2: 28TH FL CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: THIRD POINT MANAGEMENT CO LLC DATE OF NAME CHANGE: 19970602 SC 13D/A 1 e501118_sc13da-ligand.txt AMENDMENT NO. 4 TO SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Amendment No. 4) Under the Securities Exchange Act of 1934* Ligand Pharmaceuticals Incorporated - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, par value $0.001 per share - -------------------------------------------------------------------------------- (Title of Class of Securities) 53220K207 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Daniel S. Loeb Third Point LLC 390 Park Avenue New York, NY 10022 (212) 224-7400 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Jack H. Nusbaum, Esq. Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, NY 10019-6099 (212) 728-8000 November 4, 2005 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Schedule) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: |_| NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 53220K207 13D Page 2 of 6 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Daniel S. Loeb - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ----------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 7,375,000 OWNED BY ----------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 7,375,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,375,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.98% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 53220K207 13D Page 3 of 6 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Third Point LLC I.D. #13-3922602 - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ----------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 7,375,000 OWNED BY ----------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 7,375,000 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,375,000 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.98% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 53220K207 13D Page 4 of 6 Pages - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Third Point Offshore Fund, Ltd. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |X| - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 0 ----------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 4,744,300 OWNED BY ----------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 0 WITH ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 4,744,300 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,744,300 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.42% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! This Amendment No. 4 (the "Amendment") amends the Schedule 13D filed on September 23, 2005 (together with amendments filed prior to the date hereof, the "Schedule 13D"), and is being filed on behalf of Third Point LLC, a Delaware limited liability company (the "Management Company"), Third Point Offshore Fund, Ltd., a Cayman Island limited liability exempted company (the "Offshore Fund"), and Daniel S. Loeb, an individual ("Mr. Loeb" and, together with the Management Company and the Offshore Fund, the "Reporting Persons"). This Schedule 13D relates to the common stock, par value $0.001 per share, of Ligand Pharmaceuticals Incorporated, a Delaware corporation (the "Company"). Unless the context otherwise requires, references herein to the "Common Stock" are to such common stock of the Company. The Management Company is the investment manager or adviser to a variety of hedge funds and managed accounts (such funds and accounts, collectively, including but not limited to the Offshore Fund, the "Funds"). The Funds directly own the Common Stock to which this Schedule 13D relates, and the Reporting Persons may be deemed to have beneficial ownership over such Common Stock by virtue of their ownership or the authority granted to them by the Funds to vote and to dispose of the securities held by the Funds, including the Common Stock. Item 3. Source and Amount of Funds or Other Consideration. Item 3 of the Schedule 13D is hereby amended by adding thereto the following: The Funds expended a net aggregate of approximately $3,087,625.50 of their own investment capital to acquire the 375,000 shares of Common Stock purchased since the filing of Amendment No. 2 to the Schedule 13D on October 12, 2005, and the Offshore Fund expended a net aggregate of approximately $1,385,155.77 of its own investment capital to acquire the 170,900 shares of Common Stock purchased since that date. Item 4. Purpose of Transaction. Item 4 of the Schedule 13D is hereby amended by adding thereto the following: On November 4, 2005, the Reporting Persons delivered to the Company a letter with an accompanying settlement agreement. The letter noted that the Company had missed the deadline for "fast track" re-listing on NASDAQ and that a hearing was scheduled for November 14, 2005 on the Reporting Persons' lawsuit in Delaware to require the Company to hold a meeting of stockholders at which directors can be elected. The letter advised that the accompanying settlement agreement, which contains terms substantially similar to those described in Amendment No. 2 to the Schedule 13D (filed October 12, 2005), was the basis on which the Reporting Persons would be willing to withdraw their Delaware lawsuit and refrain from seeking all eight seats on the Company's Board of Directors. The Reporting Persons also stated in the letter that if the Company does not sign the settlement agreement by 5:00 p.m. on November 11, 2005, the Reporting Persons will run a full slate of eight directors at the next stockholder meeting. Copies of the letter and the settlement agreement are filed herewith and incorporated herein by reference. 5 Item 5. Interest in Securities of the Issuer. Item 5(a) and (b) of the Schedule 13D is hereby amended by deleting the entirety of the text thereof and replacing it with the following: (a) As of the date of this Schedule 13D, the Management Company beneficially owns 7,375,000 shares of Common Stock. The Management Company shares voting and dispositive power over such holdings with Mr. Loeb and with the Funds. The Shares represent 9.98% of the 73,932,315 shares of Common Stock outstanding at October 29, 2004, as reported in the Company's last Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004. As of the date of this Schedule 13D, the Offshore Fund directly beneficially owns 4,744,300 shares of Common Stock, which represents 6.42% of the outstanding shares of Common Stock. None of the other individual Funds owns a number of shares of Common Stock equal to or greater than 5% of such total Common Stock outstanding. (b) The Management Company and Mr. Loeb share voting and dispositive power over the 7,375,000 shares of Common Stock held directly by the Funds. The Management Company, Mr. Loeb and the Offshore Fund share voting power and dispositive power over the 4,744,300 shares of Common Stock held by the Offshore Fund. Item 5(c) is hereby amended by adding thereto the following: Schedule A hereto sets forth certain information with respect to transactions by the Funds, at the direction of the Reporting Persons, in the Common Stock since filing of the Amendment No. 2 to the Schedule 13D on October 12, 2005. Schedule B hereto sets forth certain information with respect to transactions by the Offshore Fund at the direction of the Management Company and Mr. Loeb since the filing of the Amendment No. 2 to the Schedule 13D on October 12, 2005. Item 7. Material to be Filed as Exhibits. 1. Letter, dated November 4, 2005, from the Management Company to the Company. 2. Draft settlement agreement proposed by the Reporting Persons to be entered into between the Offshore Fund and the Company. 6 Schedule A (Transactions by the Funds in Common Stock during the past sixty days) Date Transaction Shares Price Per Share ---- ----------- ------ --------------- 10/31/05 Buy 69,000 8.6500 10/31/05 Sell 69,000 8.6500 11/4/05 Buy 100,000 8.0000 11/4/05 Buy 235,000 8.3133 11/4/05 Buy 40,000 8.3500 Schedule B (Transactions by the Offshore Fund in Common Stock during the past sixty days) Date Transaction Shares Price Per Share ---- ----------- ------ --------------- 10/31/05 Sell 59,900 8.6500 11/4/05 Buy 53,900 8.0000 11/4/05 Buy 136,900 8.3133 11/4/05 Buy 40,000 8.3500 SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: November 4, 2005 THIRD POINT LLC By: /s/ Daniel S. Loeb --------------------------------- Name: Daniel S. Loeb Title: Chief Executive Officer THIRD POINT OFFSHORE FUND, LTD. By: /s/ Daniel S. Loeb --------------------------------- Name: Daniel S. Loeb Title: Director /s/ Daniel S. Loeb ------------------------------------- Daniel S. Loeb [SIGNATURE PAGE TO AMENDMENT NO. 4 TO SCHEDULE 13D WITH RESPECT TO LIGAND PHARMACEUTICALS INCORPORATED] EX-99.1 2 e501118_ex99-1.txt LETTER, DATED NOVEMBER 4, 2005 [Third Point Letterhead] Via fax and U.S. Mail - --------------------- November 4, 2005 Mr. David E. Robinson, Chairman, President & CEO Ligand Pharmaceuticals Incorporated 10275 Science Drive Center San Diego, CA 92121-1117 Dear Mr. Robinson: We were dismayed to learn on Tuesday that Ligand Pharmaceuticals Incorporated ("Ligand" or the "Company") had missed yet another deadline for producing its revised financial statements for 2002 through 2005 and had thereby lost the opportunity for "fast track" re-listing on NASDAQ. This setback for Ligand's shareholders has been compounded by the Company's unwillingness to communicate as to the status of the audit, or anything else transpiring at Ligand, at exactly the time when shareholder communication is most important. It is now more essential than ever that changes be made on the Board of Directors and that the Board immediately focus on a process of enhancing shareholder value. We have brought suit in Delaware to require that Ligand's long-delayed annual meeting be held promptly, and a hearing on that suit is scheduled for November 14. Regardless of when a meeting for the election of directors is held, or when the Company's audited financials are finally released, we intend to propose, as we've previously explained, either a slate of three nominees or a full slate of eight at the next stockholders meeting. Although we believe that our running a full slate of nominees and taking control of the Board would be a far better outcome than the status quo, we believe that we will have a fair opportunity to achieve our goals with a negotiated settlement. A settlement will be less costly and disruptive to management, the Board of Directors and shareholders than a proxy contest, and most importantly it will accelerate the pro-shareholder program we believe has become necessary. However, if a settlement is not reached, we will commence a proxy contest and are prepared to see it through. The accompanying settlement agreement sets forth the terms on which we are willing to forgo a proxy contest. If the company is prepared to sign the agreement by 5:00 p.m. on November 11, 2005, we will immediately be in a position to work together with you to achieve the best possible results for Ligand's stockholders and the Company. If the agreement cannot be signed by that time, we will move forward with a proxy contest for control of the Board and, if successful, will initiate a value enhancement program as soon as practicable. Mr. David E. Robinson November 4, 2005 Page 2 Previously, you have indicated that you would require biographical information about our nominees before being in a position to evaluate them as Board candidates. Attached to this letter you will find relevant biographical and other information, which will be supplemented by the information in the preliminary proxy materials that we intend to file early next week. Should you have any questions about the attached settlement agreement, please direct them to our counsel, Michael A. Schwartz, of Willkie Farr & Gallagher LLP, at (212) 728-8267. Sincerely, Daniel S. Loeb cc: Paul V. Maier Henry F. Blissenbach Alexander D. Cross, Ph.D. John Groom Irving S. Johnson, Ph.D. John W. Kozarich, Ph.D. Carl C. Peck, M.D. Michael A. Rocca -2- Mr. David E. Robinson November 4, 2005 Page 3 Biographical and Certain Other Information for the Third Point Nominees to the Board of Directors of Ligand Pharmaceuticals Incorporated Daniel S. Loeb, age 43, is Founder and CEO of Third Point LLC, an investment management firm founded in 1995. Third Point invests both long and short in securities involved in event driven and special situations. The firm is based in New York, with offices in Los Angeles, Sunnyvale, Hong Kong, and Bangalore and expects to open shortly its London office. In 1994, prior to founding Third Point, Mr. Loeb was Vice President of High Yield sales at Citigroup, and from 1991 to 1993, he was Senior Vice President in the distressed debt department at Jefferies & Co. Mr. Loeb began his career as an Associate in private equity at Warburg Pincus in 1984. Mr. Loeb is also Chairman of the Board of American Restaurant Group, Director of Fulcrum Pharmaceuticals and former Director of Radia Communications, prior to its sale to Texas Instruments in July 2003. He is a Trustee of Prep for Prep, an organization dedicated to facilitating education and career opportunities for underprivileged youth. Mr. Loeb graduated with an A.B. in Economics from Columbia University in 1984. Jeffrey R. Perry, age 45, is Senior Advisor of Third Point LLC. From 2003 to earlier this year Mr. Perry was a partner at Kynikos Associates, Ltd. From 2001 to 2003 Mr. Perry was a senior portfolio manager at SAC Capital Advisors. From 1993 to 2001 Mr. Perry was a general partner and co-Director of Research at Zweig-DiMenna Associates, a large New York-based hedge fund. In all, Mr. Perry has been employed in the money management business for 23 years, the last 17 at senior levels at major hedge funds. Mr. Perry is a Director of the Belin-Blank Center for gifted education at the University of Iowa. He graduated Magna Cum Laude from Georgetown University with a B.A. in American Studies. Brigette Roberts, MD, age 30, graduated from Harvard University in 1995 with a B.A. in Physics and Chemistry. She then attended NYU Medical School, where she graduated with an MD in 1999 and completed one year of general surgical residency in 2000. Subsequent to this, she worked as an associate healthcare analyst at Thomas Weisel Partners and Sturza's Medical Research. Prior to joining Third Point in January 2005, she ran a healthcare portfolio for two years at DKR Capital. She currently covers healthcare investments for Third Point LLC. The business address of each of the Third Point Nominees is: Third Point LLC 390 Park Avenue New York, NY 10022 Mr. Loeb and Dr. Roberts reside in New York County, New York, and Mr. Perry resides in Westchester County, New York. Except as set forth in the Schedule 13D and amendments thereto filed by Third Point LLC, Third Point Offshore Fund, Ltd. and Daniel S. Loeb with respect to the Ligand's common stock, none of the Third Point Nominees beneficially owns any shares of any class of Ligand's capital stock. -3- EX-99.2 3 e501118_ex99-2.txt DRAFT SETTLEMENT AGREEMENT WF&G Draft 11-4-05 SETTLEMENT AGREEMENT This SETTLEMENT AGREEMENT (the "Agreement") is made and entered into as of November __, 2005, by and between Ligand Pharmaceuticals Incorporated ("Ligand") and Third Point Offshore Fund, Ltd. ("Offshore Fund"), an affiliate of Third Point LLC ("Third Point"). RECITALS WHEREAS, Offshore Fund is a stockholder of Ligand and has sought, among other things, to (i) cause Ligand to hold an annual meeting of stockholders, (ii) gain representation on Ligand's board of directors (the "Board"), and (iii) cause Ligand to take measures to explore strategic alternatives; WHEREAS, Ligand and Third Point had discussions with respect to the scheduling of the annual meeting and Third Point's representation on the Board but were unable to resolve their differences; WHEREAS, on October 11, 2005, Offshore Fund filed a complaint against Ligand in the Court of Chancery of the State of Delaware in and for New Castle County (the "Court"), which action is titled Third Point Offshore Fund, Ltd. v. Ligand Pharmaceuticals Incorporated seeking, inter alia, an order that the Company schedule its annual meeting of stockholders (the "Action"); WHEREAS, the Court has scheduled a hearing in the Action for November 14, 2005; WHEREAS, the parties hereto desire to resolve fully, and settle, the Action and have agreed to do so on the terms and conditions hereinafter set forth in this Agreement; NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I. FURTHER AGREEMENTS Section 1.1. Board Matters. (a) Ligand shall as promptly as practicable, and in any event within three business days after the date hereof, take all action necessary (including the calling of a special meeting of the Board to approve such actions) to: (i) expand the size of the Board so as to create three new directorships on the Board in accordance with Article III of its amended and restated bylaws, (ii) appoint Daniel S. Loeb, Jeffrey R. Perry and Brigette Roberts, MD (collectively, the "Third Point Nominees") to fill such newly-created directorships, and (iii) create a special committee of the Board (the "Special Committee"), consisting of Mr. Loeb, Dr. Roberts and one current member of the Board, to explore and act with respect to Ligand's strategic alternatives. (b) The Special Committee shall be empowered to retain its own investment bankers, attorneys and other advisers on such terms as the Special Committee shall approve, to consider and take action with respect to any strategic alternatives (subject only to the requirements of Section 141(c) of the Delaware General Corporation Law), to negotiate with any third parties and their representatives on behalf of Ligand with respect to any proposed strategic alternatives, to obtain such information regarding Ligand and assistance from the officers, employees and agents of Ligand and to take such other actions to carry out its responsibilities as the Special Committee shall deem appropriate. Ligand shall pay all expenses incurred by the Special Committee, including the fees and expenses of its investment bankers, attorneys and other advisers. (c) Ligand shall as promptly as practicable after the date hereof take all actions necessary to call a meeting of its stockholders (the "Stockholder Meeting") to elect eight directors to the Board and to cause the record date for such Stockholder Meeting to be December 5, 2005 and the date of the Stockholder Meeting to be January 15, 2006. At the Stockholder Meeting, Offshore Fund and its affiliates shall nominate eight persons for election to the Board, and such slate shall include the Third Point Nominees and five other current members of the Board designated by Ligand (the "Slate"). Ligand shall take all action necessary to reduce the size of the Board to eight effective upon the election of the Slate. Ligand shall cooperate on a timely basis with the Offshore Fund and its affiliates in the solicitation of proxies to elect the Slate (but shall not solicit proxies if prohibited from doing so by applicable law or the rules of the Securities and Exchange Commission (the "SEC")), including providing Offshore Fund with all necessary information on its designees and any other matters necessary to from time to time supplement or amend the proxy materials filed by Offshore Fund and its affiliates with the SEC (the "Third Point Proxy Materials"). To the extent Ligand prepares and distributes proxy materials (the "Ligand Proxy Materials") with respect to the matters to be voted on at the Stockholder Meeting or otherwise makes a solicitation or recommendation with respect to the matters to be voted on at the Stockholders Meeting, such Ligand Proxy Materials, solicitation or recommendation shall support the election of the Slate to the Board. In addition, to the extent Ligand desires to add any other proposals to the Ligand Proxy Materials, it shall first discuss such proposals with Offshore Fund and its affiliates and shall not include such proposals unless Offshore Fund consents to their inclusion in the Ligand Proxy Materials, which consent shall not be unreasonably withheld or delayed. (d) Should any of the Third Point Nominees decide not to seek a position on the Board, or after being elected to the Board decide to resign therefrom, Offshore Fund shall be entitled to designate the replacement for such Third Point Nominee or to fill the resulting vacancy on the Board, as applicable, and Ligand shall take all necessary action to implement the foregoing as promptly as practicable. 2 Section 1.2. Rights Agreement. Ligand shall as promptly as practicable, and in any event within five business days after the date hereof, take all action necessary to amend the definition of "Acquiring Person" in Section 1 of the Amended and Restated Preferred Shares Rights Agreement, dated as of September 13, 1996, as amended through March 22, 2004, by and between Ligand and Mellon Investor Services LLC to change the references therein from "10%" to "20%". Section 1.3. Expenses. Ligand shall pay for all costs and expenses incurred by Offshore Fund and its affiliates in connection with the Action, the preparation and filing of the Third Point Proxy Materials and the solicitation of proxies, whether incurred before or after the date hereof, including without limitation legal and accounting fees and the fees of any proxy solicitor retained by Offshore Fund and its affiliates. To the extent Offshore Fund or its affiliates have already paid any such expenses, Ligand shall promptly reimburse them for such payments. Section 1.4. Dismissal of Litigation. Within 3 business days of the Company completing all of the steps outlined in paragraph 1.1(a) through (c), and paragraph 1.2, the parties will execute a stipulation of dismissal of the Action without prejudice in the form annexed hereto as Exhibit A. ARTICLE II. MISCELLANEOUS PROVISIONS Section 2.1. Representations and Warranties. (a) Each of the parties hereto represents and warrants to the other party that: (i) such party has all requisite company authority and power to execute and deliver this Agreement and to consummate the transactions contemplated hereby, (ii) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by all required company action on the part of such party and no other proceedings on the part of such party are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby, (iii) the Agreement has been duly and validly executed and delivered by such party and constitutes the valid and binding obligation of such party enforceable against such party in accordance with their respective terms, and (iv) this Agreement will not result in a violation of any terms or provisions of any agreements to which such person is a party or by which such party may otherwise be bound or of any law, rule, license, regulation, judgment, order or decree governing or affecting such party. (b) The parties hereto acknowledge, warrant and represent that they have carefully read this Agreement, understand it, have consulted with and received the advice of counsel regarding this Agreement, agree with its terms, are duly authorized to execute it and freely, voluntarily and knowingly execute it. 3 (c) By entering into this Agreement, none of the parties hereto admits any of the allegations, if any, made by any other party, or any liability of wrongdoing of any kind to each other, all of which each party expressly denies. The parties enter into this Agreement resolving the controversies raised without conceding liability of any kind, solely to avoid the expense, uncertainty, inconvenience and distraction of litigation. This Agreement shall not constitute, nor be introduced, treated, deemed or otherwise interpreted or construed as (i) an admission, waiver, evidence or concession by any party of any liability to any other party or (ii) evidence in any judicial or arbitration proceeding except to enforce or defend the terms hereof. Section 2.2. General. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and the respective successors, personal representatives and assigns of the parties hereto. (b) This Agreement contains the entire agreement between the parties with respect to the subject matter hereof and thereof and supersedes all prior and contemplated arrangements and understandings with respect thereto. (c) This Agreement may be signed in counterparts, each of which shall constitute an original and all of which together shall constitute one and the same Agreement. (d) This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed therein, without giving effect to the principles of conflicts of law thereof. (e) Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid, but if any provision of this Agreement is held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not render invalid or unenforceable any other provision of this Agreement. (f) It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at law. Any such person, therefore, shall be entitled to injunctive relief, including specific performance, to enforce such obligations, without the posting of any bond, and, if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. (g) Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 4 (h) Each of the parties hereto hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of the courts of the State of Delaware and of the United States of America, in each case located in the County of New Castle, for any action, proceeding or investigation in any court or before any governmental authority arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any action, proceeding or investigation relating thereto except in such courts), and further agrees that service of any process, summons, notice or document by registered mail to its respective address set forth in this Agreement shall be effective service of process for any action, proceeding or investigation brought against it in any such court. Each of the parties hereto hereby irrevocably and unconditionally waives any objection to the laying of venue of any action, proceeding or investigation arising out of this Agreement or the transactions contemplated hereby in the courts of the State of Delaware or the United States of America, in each case located in the County of New Castle, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, proceeding or investigation brought in any such court has been brought in an inconvenient forum. [Remainder of page intentionally left blank.] 5 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day and year first written above. LIGAND PHARMACEUTICALS INCORPORATED By: --------------------------------- Name: Title: THIRD POINT OFFSHORE FUND, LTD. By: --------------------------------- Name: Title: 6 Exhibit A to Settlement Agreement IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY THIRD POINT OFFSHORE FUND, LTD., ) ) Plaintiff, ) ) v. ) C.A. No. 1707-NC ) LIGAND PHARMACEUTICALS ) INCORPORATED, ) ) Defendant. ) STIPULATION AND ORDER OF DISMISSAL WHEREAS, plaintiff Third Point Offshore Fund, Ltd filed this action on October 11, 2005 seeking an Order pursuant to 8 Del. C. ss. 211(c) scheduling an annual meeting of the stockholders of defendant Ligand Pharmaceuticals, Incorporated ("Ligand") for the election of directors (the "Annual Meeting"); and WHEREAS, the parties have agreed to resolve these actions on the terms set forth below: IT IS HEREBY STIPULATED AND AGREED this ___ day of November, 2005, by and among the parties, subject to the approval of the Court, as follows: 1. The Annual Meeting shall be held on January 17, 2006 without adjournment or postponement (the "Annual Meeting"), except with prior Court approval. The shares of stock represented at such meeting, either in person or by proxy, and entitled to vote thereat, shall constitute a quorum for the purpose of such meeting, notwithstanding any provision of the Certificate of Incorporation or Bylaws of Ligand to the contrary. 7 2. The record date for determining those stockholders of Ligand entitled to vote at the Annual Meeting shall be December 5, 2005 (the "Record Date"). 3. In the event that Ligand seeks to postpone the Annual Meeting to a date later than January 17, 2006 as ordered herein, Ligand agrees that it shall not assert as a basis for such request its inability to solicit proxies because of its failure to publicly file audited financial statements, and Ligand hereby waives the affirmative defenses set forth in Ligand's Answer to the Complaint in this Action dated October 19, 2005. 4. This action is hereby dismissed without prejudice, but this Court shall retain jurisdiction pending the holding and completion of the Annual Meeting and to ensure compliance with the provisions of this Stipulation and Order, and to hear and determine any other matters relating to the Annual Meeting. MORRIS, NICHOLS, ARSHT & TUNNELL ------------------------------------- William M. Lafferty (#2755) Jerry C. Harris, Jr. (#4262) 1201 N. Market Street Wilmington, Delaware 19801 (302) 658-9200 Attorneys for Plaintiff Third Point Offshore Fund, Ltd. 8 OF COUNSEL: WILLKIE FARR & GALLAGHER LLP Tariq Mundiya The Equitable Center 787 Seventh Avenue New York, New York 10019-6099 (212) 728-8000 RICHARDS, LAYTON & FINGER, P.A. ------------------------------------- Raymond J. DiCamillo (#3188) One Rodney Square Wilmington, Delaware 19801 (302) 651-7700 Attorneys for Defendant Ligand Corporation SO ORDERED this __ day of November __, 2005. - --------------------------------- Vice Chancellor 9 -----END PRIVACY-ENHANCED MESSAGE-----