STOCK OPTION AGREEMENT
EXHIBIT 99.(d)(5)
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the 2001 Stock Option Plan, (the “Plan”)
shall have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
NAME
ADDRESS
CITY, STATE ZIP
ADDRESS
CITY, STATE ZIP
As part of the Company’s Performance Options Policy you have been granted an option to
purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
Date of Grant:
Vesting Commencement Date
Exercise Price per Share:
Total Number of Shares Granted:
Total Exercise Price:
Type of Option:
NQ Nonstatutory Stock Option
Term/Expiration Date:
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with the following schedule:
One forty-eighth (1/48) of the Shares subject to the Option shall vest each month beginning
one month after the Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall vest
each month thereafter, subject to the Optionee continuing to be an Employee or Consultant on such
dates.
Termination Period:
This Option may be exercised for ninety (90) days (or such other period of time not exceeding
six (6) months, as is determined by the Board) after Optionee’s Continuous Status as an Employee or
Consultant terminates. Upon the death or Disability of the Optionee, this Option may be
exercised for six (6) months after Optionee’s Continuous Status as an Employee or Consultant. In no
event shall this Option be exercised later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby grants to the Optionee named
in the Notice of Grant attached as Part I of this Agreement (the “Optionee”) an option (the
“Option”) to purchase the number of Shares, as set forth in the Notice of Grant, at the exercise
price per share set forth in the Notice of Grant (the “Exercise Price”), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to Section 13(b) of the
Plan, in the event of a conflict between the terms and conditions of the Plan and the terms and
conditions of this Option Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option under Section 422 of the Code. However, if this
Option is intended to be an Incentive Stock Option, to the extent that it exceeds the $100,000 rule
of Code Section 422(d) it shall be treated as a Nonstatutory Stock Option (“NSO”).
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term in accordance with the
Vesting Schedule set out in the Notice of Grant and the applicable provisions of the Plan and this
Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice, in the
form attached as Exhibit A (the “Exercise Notice”), which shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being exercised (the “Exercised
Shares”), and such other representations and agreements as may be required by the Company pursuant
to the provisions of the Plan. The Exercise Notice shall be completed by the Optionee and
delivered to the President, the Chief Financial Officer or Secretary of the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares.
This Option shall be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option unless such issuance and
exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check; or
(c) consideration received by the Company under a cashless exercise program implemented by
the Company in connection with the Plan; or
(d) surrender of other Shares which (i) in the case of Shares acquired upon exercise of an
option, have been owned by the Optionee for more than six (6) months on the date of surrender, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares; or
(e) with the Administrator’s consent, delivery of Optionee’s promissory note (the “Note”) in
the form attached hereto as Exhibit C, in the amount of the aggregate Exercise Price of the
Exercised Shares together with the execution and delivery by the Optionee of the Security Agreement
attached hereto as Exhibit B. The Note shall bear interest at the “applicable federal rate”
prescribed under the Code and its regulations at time of purchase, and shall be secured by a pledge
of the Shares purchased by the Note pursuant to the Security Agreement.
4. Non-Transferability of Option. This Option may not be transferred in any manner otherwise
than by will or by the laws of descent or distribution and may be exercised during the lifetime of
Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set out in the Notice
of Grant, and may be exercised during such term only in accordance with the Plan and the terms of
this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to this Option, as of the
date of this Option, are set forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS
AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur regular federal income tax liability
upon exercise of a NSO. The Optionee will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If the Optionee is
an Employee or a former Employee, the Company will be required to withhold from his or her
compensation or collect from Optionee and pay to the applicable taxing authorities an amount in
cash equal to a percentage of this compensation income at the time of exercise, and may refuse to
honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at
the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as an ISO, the Optionee will have no
regular federal income tax liability upon its exercise, although the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their aggregate Exercise Price
will be treated as an adjustment to alternative minimum taxable income for federal tax purposes and
may subject the Optionee to alternative minimum tax in the year of exercise. In the event that the
Optionee ceases to be an Employee but continues to provide services to the Company, any Incentive
Stock Option of the Optionee that remains unexercised shall cease to qualify as an Incentive Stock
Option and will be treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal income tax purposes
(holding the Shares for more than eighteen (18) months may lower the long-term capital gains rate).
(ii) ISO. If the Optionee holds ISO Shares for at least one year after exercise and two years
after the grant date, any gain realized on disposition of the Shares will be treated as long-term
capital gain for federal income tax purposes. If the Optionee disposes of ISO Shares within one
year after exercise or two years after the grant date, any gain realized on such disposition will
be treated as compensation income (taxable at ordinary income rates) to the extent of the excess,
if any, of the lesser of (A) the difference between the Fair Market Value of the Shares acquired on
the date of exercise and the aggregate Exercise Price, or (B) the difference between the sale price
of such Shares and the aggregate Exercise Price. Any additional gain will be taxed as capital
gain, short-term or long-term depending on the period that the ISO Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to an ISO on or before the later of (i) two years
after the grant date, or (ii) one year after the exercise date, the Optionee shall immediately
notify the Company in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation
income recognized from such early disposition of ISO Shares by payment in cash or out of the
current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan
and this Option Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be modified adversely
to the Optionee’s interest except by means of a writing signed by the Company and Optionee. This
agreement is governed by the internal substantive laws, but not the choice of law rules, of
California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE OR
CONSULTANT AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN
OPTION OR PURCHASING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED
HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE
OF CONTINUED ENGAGEMENT AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S
RELATIONSHIP AS AN EMPLOYEE OR CONSULTANT AT ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company’s representative below, you and the Company
agree that this Option is granted under and governed by the terms and conditions of the Plan and
this Option Agreement. Optionee has reviewed the Plan and this Option Agreement in their entirety,
has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and
fully understands all provisions of the Plan and Option Agreement. Optionee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the Administrator upon
any questions relating to the Plan and Option Agreement. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.
OPTIONEE:
|
NEUROCRINE BIOSCIENCES, INC. | |
Signature
|
Signature | |
Date
|
Date |
Name:
NAME
ADDRESS
CITY, STATE ZIP
NAME
ADDRESS
CITY, STATE ZIP
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the terms and conditions of
the Plan and this Option Agreement. In consideration of the Company’s granting his or her spouse
the right to purchase Shares as set forth in the Plan and this Option Agreement, the undersigned
hereby agrees to be irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be similarly bound. The
undersigned hereby appoints the undersigned’s spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under the Plan or this Option Agreement.
| Spouse of Optionee |
EXHIBIT A
NEUROCRINE BIOSCIENCES, INC.
2001 Stock Option Plan
EXERCISE NOTICE
Neurocrine Biosciences, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attention: Secretary
1. Exercise of Option. Effective as of today, , 20___, the undersigned
(“Purchaser”) hereby elects to purchase shares (the “Shares”) of the Common Stock of
Neurocrine Biosciences, Inc. (the “Company”) under and pursuant to the Amended 1992 Incentive Stock
Plan (the “Plan”) and the Stock Option Agreement dated , 20___(the “Option Agreement”).
The purchase price for the Shares shall be $ , as required by the Option
Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the full purchase price
for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser has received, read and
understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and
conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of the Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Shares so acquired shall be issued
to the Optionee as soon as practicable after exercise of the Option. No adjustment will be made
for a dividend or other right for which the record date is prior to the date of issuance, except as
provided in Section 11 of the Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax consequences
as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that
Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the
purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax
advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are incorporated herein by
reference. This Agreement, the Plan and the Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof,
and may not be modified adversely to the Purchaser’s interest except by means of a writing signed
by the Company and Purchaser. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.
| Submitted by: | Accepted by: | |
| PURCHASER: | ||
| NEUROCRINE BIOSCIENCES, INC. |
Signature |
|||
Print Name
|
Its |
Neurocrine Biosciences, Inc.
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
00000 Xxxxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Date Received
EXHIBIT B
This Security Agreement is made as of , 19___between Neurocrine Biosciences, Inc.,
a Delaware corporation, a (“Pledgee”), and (“Pledgor”).
Recitals
Pursuant to Pledgor’s election to purchase Shares under the Option Agreement dated
(the “Option”), between Pledgor and Pledgee under Pledgee’s Amended 1992 Incentive Stock Plan, and
Pledgor’s election under the terms of the Option to pay for such shares with his promissory note
(the “Note”), Pledgor has purchased shares of Pledgee’s Common Stock (the “Shares”) at a
price of $ per share, for a total purchase price of $ . The Note and the
obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of the transfer of the
Shares to Pledgor under the Option Agreement, Pledgor, pursuant to the California Commercial Code,
hereby pledges all of such Shares (herein sometimes referred to as the “Collateral”) represented by
certificate number , duly endorsed in blank or with executed stock powers, and herewith
delivers said certificate to the Secretary of Pledgee (“Pledgeholder”), who shall hold said
certificate subject to the terms and conditions of this Security Agreement.
The pledged stock (together with an executed blank stock assignment for use in transferring
all or a portion of the Shares to Pledgee if, as and when required pursuant to this Security
Agreement) shall be held by the Pledgeholder as security for the repayment of the Note, and any
extensions or renewals thereof, to be executed by Pledgor pursuant to the terms of the Option, and
the Pledge-holder shall not encumber or dispose of such Shares except in accordance with the
provisions of this Security Agreement.
2. Pledgor’s Representations and Covenants. To induce Pledgee to enter into this Security
Agreement, Pledgor represents and covenants to Pledgee, its successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the principal sum of the Note secured hereby,
together with interest thereon, at the time and in the manner provided in the Note.
b. Encumbrances. The Shares are free of all other encumbrances, defenses and liens, and
Pledgor will not further encumber the Shares without the prior written consent of Pledgee.
c. Margin Regulations. In the event that Pledgee’s Common Stock is now or later becomes
margin-listed by the Federal Reserve Board and Pledgee is classified as a “lender” within the
meaning of the regulations under Part 207 of Title 12 of the Code of Federal Regulations
(“Regulation G”), Pledgor agrees to cooperate with Pledgee in making any amendments to the Note or
providing any additional collateral as may be necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as all payments of principal and
interest are made as they become due under the terms of the Note, Pledgor shall have the right to
vote all of the Shares pledged hereunder.
4. Stock Adjustments. In the event that during the term of the pledge any stock dividend,
reclassification, readjustment or other changes are declared or made in the capital structure of
Pledgee, all new, substituted and additional shares or other securities issued by reason of any
such change shall be delivered to and held by the Pledgee under the terms of this Security
Agreement in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall cooperate and execute such
documents as are reasonable so as to provide for the substitution of such Collateral and, upon such
substitution, references to “Shares” in this Security Agreement shall include the substituted
shares of capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this pledge, subscription
Options or other rights or options shall be issued in connection with the pledged Shares, such
rights, Options and options shall be the property of Pledgor and, if exercised by Pledgor, all new
stock or other securities so acquired by Pledgor as it relates to the pledged Shares then held by
Pledge-holder shall be immediately delivered to Pledgeholder, to be held under the terms of this
Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of this Security
Agreement in the event:
a. Payment of principal or interest on the Note shall be delinquent for a period of 10 days or
more; or
b. Pledgor fails to perform any of the covenants set forth in the Option or contained in this
Security Agreement for a period of 10 days after written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall have the right to
accelerate payment of the Note upon notice to Pledgor, and Pledgee shall thereafter be entitled to
pursue its remedies under the California Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules under Regulation G, there
shall be released from this pledge a portion of the Shares held by Pledgeholder here-under upon
payments of the principal of the Note. The number of the pledged Shares which shall be released
shall be that number of full Shares which bears the same proportion to the initial number of Shares
pledged hereunder as the payment of principal bears to the initial full principal amount of Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell, withdraw, pledge,
substitute or otherwise dispose of all or any part of the Collateral without the prior written
consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment of all indebtedness
secured hereby, at which time the remaining pledged stock shall be promptly delivered to Pledgor,
subject to the provisions for prior release of a portion of the Collateral as provided in paragraph
7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency proceeding is instituted by
or against it, or if a receiver is appointed for the property of Pledgor, or if Pledgor makes an
assignment for the benefit of creditors, the entire amount unpaid on the Note shall become
immediately due and payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross negligence, Pledgeholder shall
not be liable to any party for any of his acts, or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that the enforceability or
invalidity of any provision or provisions of this Security Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the terms of this Security
Agreement shall be binding on their respective successors and assigns, and that the term “Pledgor”
and the term “Pledgee” as used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and governed under the
internal substantive laws, but not the choice of law rules, of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first
above written.
| “PLEDGOR” | ||||
| Signature | ||||
| Print Name | ||||
| “PLEDGEE” | ||||
| NeurocrineBiosciences, Inc., | ||||
| a Delaware corporation | ||||
| Signature | ||||
| Print Name | ||||
| Title | ||||
| “PLEDGEHOLDER” | ||||
| Secretary of | ||||
| Neurocrine Biosciences, Inc. | ||||
EXHIBIT C
NOTE
$
SanDiego,California
-___, 19___
FOR VALUE RECEIVED, promises to pay to Neurocrine Biosciences, Inc., a
Delaware corporation (the “Company”), or order, the principal sum of
($ ), together with interest on the unpaid principal hereof from the date hereof at the
rate of percent (___%) per annum, compounded semiannually.
Principal and interest shall be due and payable on , 19___. Payment of principal
and interest shall be made in lawful money of the United States of America.
The undersigned may at any time prepay all or any portion of the principal or interest owing
hereunder.
This Note is subject to the terms of the Option, dated as of . This Note is
secured in part by a pledge of the Company’s Common Stock under the terms of a Security Agreement
of even date herewith and is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the undersigned, and shall not be
required to proceed against the collateral securing this Note in the event of default.
In the event the undersigned shall cease to be an employee, director or consultant of the
Company for any reason, this Note shall, at the option of the Company, be accelerated, and the
whole unpaid balance on this Note of principal and accrued interest shall be immediately due and
payable.
Should any action be instituted for the collection of this Note, the reasonable costs and
attorneys’ fees therein of the holder shall be paid by the undersigned.
