Sample Business Contracts


Employment Agreement - Ligand Pharmaceuticals Inc. and Russell L. Allen

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        [LIGAND PHARMACEUTICALS Letterhead]          David E. Robinson
                                                     Chairman, President
                                                     and Chief Executive Officer


6 February 1997

Mr. Russell L. Allen
23 Westminster Drive
Princeton Junction, NJ 08550
Dear Russ:
         I am pleased to extend to you an offer to become Vice President,
Corporate Development and Strategic Planning and a corporate officer of Ligand
Pharmaceuticals, Inc. reporting to me, commencing 6 February 1997. The
particulars of our offer are as follows:

COMPENSATION

1.        Your initial base salary will be $175,000 per year.

2.        You will participate in the 1997 Impact Goal Incentive Plan of
corporate officers based upon achievement of pre-agreed goals (a target maximum
currently of $30,000.)

3.        You will be granted an option to purchase, at your election 75,000
shares of the Company's common stock at its "fair market price" under our
current Employee Stock Option Plan. The grant will be subject to your execution
of the Company's Incentive Stock Option Agreement and to final approval by the
Compensation Committee of the Board of Directors and any regulatory authority.
(See attached.)

RELOCATION PACKAGE

1.        The costs associated with relocating your family and household goods
to the San Diego area will be paid by the Company as outlined in Ligand's
Employee Relocation Policy, (Copy enclosed.)

2.        The Company will also loan you $75,000 towards the purchase of a
primary residence in the San Diego area. The loan will be secured by a five year
promissory note secured by a Deed of Trust and will bear interest at the market
rate then prevailing. The loan and accrued interest will be forgiven in five (5)
annual increments if you continue to be employed by the Company. You will be
responsible for all taxes related to this loan forgiveness.



<PAGE>   2



Mr. Russell L. Allen
6 February 1996
Page Two

3.        The Company will provide further housing assistance to you as follows:
During the first year of employment, the Company will pay you $9,000 in twelve
(12) equal monthly installments. During the second and third years, the Company
will pay you $6,000 per year in twelve (12) equal monthly installments.

4.        The company will pay the airfare expense of a 1 monthly trip back to
Princeton Junction for a period of six (6) months, through July 1997.

SEVERANCE

         If you are terminated without cause by the Company during your first
year of employment, you will be paid an amount equal to one (1) year of your
base salary. If terminated without cause after the first year, you will be paid
an amount equal to six (6) months of your base salary.

         As used in this letter, "termination for cause" means termination for
malfeasance, misfeasance, or negligence. Termination because of adverse
financial circumstances affecting the Company not due to your performance is not
termination for cause. If you voluntarily leave the Company's employment, this
specifically does not constitute termination without cause.

         As a regular employee and officer of Ligand, you will become eligible
to participate in Company sponsored benefits which are described in the
Company's Employee Handbook, a copy of which will be sent under separate cover.
If you have any questions related to these, please feel free to contact me.

         Employment at Ligand is not for a specific term and can be terminated
by you or by the Company at any time for any reason, with or without cause. If
you are terminated for cause, any loan made to you by the Company will become
due and payable immediately.

         If you accept this offer, the terms and conditions in this letter shall
be the terms of your employment. Any modifications or additions to these terms
would have to be in writing and signed by you and me.

         Your employment pursuant to this offer is contingent on your executing
the Consent Form, Proprietary Information and Inventions Agreement and upon your
providing the Company with the legally required proof of your identity and
authorization to work in the United States. (To follow.)



<PAGE>   3



Mr. Russell L. Allen
6 February 1997
Page Three

         Russ, all of us are excited about having you join the growing team at
Ligand and we believe our professional association with you will be mutually
rewarding. We are truly looking forward to working with you in building an
exciting new pharmaceutical company.

Sincerely,

/s/ DAVID E. ROBINSON
----------------------------------------
David E. Robinson
Chairman, President and CEO

DER/jdb

Attachments

Agreed and Accepted:

/S/RUSSELL ALLEN                                           FEB 6, 1997
----------------------------------------               ----------------------
YOUR NAME                                                       DATE

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