Exhibit 4.2
NEUROCRINE BIOSCIENCES, INC.
2001 STOCK OPTION PLAN
1. Purpose of the Plan. The purposes of this Stock Option Plan are to attract
and retain the best available personnel, to provide additional incentive to
the employees of Neurocrine Biosciences, Inc. (the "Company") and to
promote the success of the Company's business.
2. Definitions.
(a) "Board" shall mean the Committee, if one has been appointed, or the
Board of Directors of the Company, if no Committee is appointed.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan, if
one is appointed.
(d) "Common Stock" shall mean the Common Stock of the Company.
(e) "Company" shall mean Neurocrine Biosciences, Inc.
(f) "Consultant" shall mean any person who is engaged by the Company or
any Parent or Subsidiary to render consulting services and is
compensated for such consulting services.
(g) "Continuous Status as an Employee or Consultant" shall mean the
absence of any interruption or termination of service as an Employee
or Consultant, as applicable. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the
Board; provided that such leave is for a period of not more than
ninety (90) days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(i) "Employee" shall mean any employee who is not a "covered
employee" within the meaning of Section 162(m) of the Code, who
is not subject to Section 16 of the Act and who is designated by
the Committee as eligible to participate in the Plan.
(h) "Nonstatutory Stock Option" shall mean an Option not intended to
qualify as an incentive stock option within the meaning of section 422
of the Code.
(i) "Option" shall mean a stock option granted pursuant to the Plan.
(j) "Optioned Stock" shall mean the Common Stock subject to an Option or
Stock Purchase Right.
(k) "Optionee" shall mean an Employee or Consultant who receives an
Option.
(l) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(m) "Plan" shall mean this 2001 Stock Option Plan.
(n) "Purchaser" shall mean an Employee or Consultant who exercises a Stock
Purchase Right.
(o) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 9 of the Plan.
(p) "Stock Purchase Right" shall mean a right to purchase Common Stock
pursuant to the Plan or the right to receive a bonus of Common Stock
for past services.
(q) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 9 of the
Plan, the maximum aggregate number of shares under the Plan is seven
hundred and fifty thousand (750,000) shares of Common Stock. The Shares may
be authorized but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right should expire or become unexercisable
for any reason without having been exercised in full, then the unpurchased
Shares which were subject thereto shall, unless the Plan shall have been
terminated, become available for future grant or sale under the Plan.
Notwithstanding any other provision of the Plan, shares issued under the
Plan and later repurchased by the Company shall not become available for
future grant or sale under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be administered by
different Committees with respect to different groups of
Employees and Consultants.
(ii) Other Administration. Other than as provided above, the Plan
shall be administered by
(A) the Board or
(B) a Committee, which committee shall be constituted to satisfy
applicable laws.
(b) Powers of the Board. Subject to the provisions of the Plan, the Board
shall have the authority, in its discretion:
(i) to grant Nonstatutory Stock Options or Stock Purchase Rights;
(ii) to determine, upon review of relevant information and in
accordance with Section 7 of the Plan, the fair market value of
the Common Stock;
(iii)to determine the exercise price per share of Options or Stock
Purchase Rights, to be granted, which exercise price shall be
determined in accordance with Section 7 of the Plan;
(iv) to determine the Employees or Consultants to whom, and the time
or times at which, Options or Stock Purchase Rights shall be
granted and the number of shares to be represented by each Option
or Stock Purchase Right;
(v) to interpret the Plan;
(vi) to prescribe, amend and rescind rules and regulations relating to
the Plan;
(vii)to determine the terms and provisions of each Option and Stock
Purchase Right granted (which need not be identical) and, with
the consent of the holder thereof, modify or amend any provisions
(including provisions relating to exercise price) of any Option
or Stock Purchase Right;
(viii) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option, consistent with the provisions of
Section 5 of the Plan;
(ix) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option or Stock
Purchase Right previously granted by the Board;
(x) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that
number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to
be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made
in such form and under such conditions as the Administrator may
deem necessary or advisable; and
(xi) to make all other determinations deemed necessary or advisable
for the administration of the Plan.
(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all
Optionees, Purchasers and any other holders of any Options or Stock
Purchase Rights granted under the Plan.
5. Eligibility.
(a) Options and Stock Purchase Rights may be granted to Employees and
Consultants. An Employee or Consultant who has been granted an Option
or Stock Purchase Right may, if such Employee or Consultant is
otherwise eligible, be granted additional Option(s) or Stock Purchase
Right(s).
(b) Each Option shall be designated in the written option agreement as a
Nonstatutory Stock Option.
(c) The Plan shall not confer upon any Optionee or holder of a Stock
Purchase Right any right with respect to continuation of employment by
or the rendition of consulting services to the Company, nor shall it
interfere in any way with his or her right or the Company's right to
terminate his or her employment or services at any time, with or
without cause.
6. Term of Plan. The Plan shall become effective upon its adoption by the
Board of Directors. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 13 of the Plan.
7. Exercise Price and Consideration.
(a) The per Share exercise price for the Shares to be issued pursuant to
exercise of an Option or Stock Purchase Right shall be such price as
is determined by the Board. The per Share exercise price shall be no
less than eighty-five percent (85%) of the fair market value per Share
on the date of grant. In the case of a Nonstatutory Stock Option
intended to qualify as "performance-based compensation" within the
meaning of Section 162(m) of the Code, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market
Value per Share on the date of grant.
(b) Notwithstanding the foregoing, Options may be granted with a per Share
exercise price of less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant pursuant to a merger or
other corporate transaction.
For purposes of this Section 7, in the event that an Option or Stock
Purchase Right is amended to reduce the exercise price, the date of
grant of such Option or Stock Purchase Right shall thereafter be
considered to be the date of such amendment.
(i) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public
market for the Common Stock, the fair market value per Share
shall be the mean of the bid and asked prices (or the closing
price per share if the Common Stock is listed on the National
Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System) of the Common Stock for the date of
grant, as reported in the Wall Street Journal (or, if not so
reported, as otherwise reported by the NASDAQ System) or, in the
event the Common Stock is listed on a stock exchange, the fair
market value per Share shall be the closing price on such
exchange on the date of grant of the Option or Stock Purchase
Right, as reported in the Wall Street Journal.
(ii) The consideration to be paid for the Shares to be issued upon
exercise of an Option or Stock Purchase Right, including the
method of payment, shall be determined by the Board and may
consist entirely of cash, check, promissory note, other Shares of
Common Stock which
(A) either have been owned by the Optionee for more than six (6)
months on the date of surrender or were not acquired
directly or indirectly, from the Company, and
(B) have a fair market value on the date of surrender equal to
the aggregate exercise price of the Shares as to which said
Option shall be exercised, or any combination of such
methods of payment, or such other consideration and method
of payment for the issuance of Shares to the extent
permitted under Sections 408 and 409 of the California
General Corporation Law. In making its determination as to
the type of consideration to accept, the Board shall
consider if acceptance of such consideration may be
reasonably expected to benefit the Company (Section 315(b)
of the California General Corporation Law).
8. Options.
(a) Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the date of grant thereof.
(b) Exercise of Option.
(i) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable at such times and under
such conditions as determined by the Board, including performance
criteria with respect to the Company and/or the Optionee, and as
shall be permissible under the terms of the Plan, but in no case
at a rate of less than twenty percent (20%) per year over five
(5) years from the date the Option is granted.
(ii) An Option may not be exercised for a fraction of a Share.
(iii)An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Full
payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 7 of,
the Plan. 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 stock certificate
evidencing such Shares no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the
Optioned Sock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock
certificate promptly upon 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 the stock certificate is issued, except
as provided in Section 11 of the Plan.
(iv) Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number
of Shares as to which the Option is exercised.
(v) Termination of Status as an Employee or Consultant. In the event
of termination of an Optionee's Continuous Status as an Employee
or Consultant (as the case may be), such Optionee may, but only
within ninety (90) days after the date of termination, exercise
the Option to the extent that such Employee or Consultant was
entitled to exercise it at the date of such termination (but in
no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement). To the extent that
such Employee or Consultant was not entitled to exercise the
Option at the date of such termination, or if such Employee or
Consultant does not exercise such Option (which such Employee or
Consultant was entitled to exercise) within the time specified
herein, the Option shall terminate.
(vi) Disability of Optionee. Notwithstanding the provisions of Section
8(b)(v) above, in the event of termination of an Optionee's
Continuous Status as an Employee or Consultant as a result of
such Employee's or Consultant's total and permanent disability
(as defined in Section 22(e)(3) of the Code), such Employee or
Consultant may, but only within six (6) months (or such other
period of time not exceeding twelve (12) months as in determined
by the Board) from the date of such termination (but in no event
later than the date of expiration of the term of such Option as
set forth in the Option Agreement), exercise the Option to the
extent the right to exercise would have accrued had the Optionee
continued Continuous Status as an Employee or Consultant for a
period of six (6) months following termination of Continuous
Status by reason of disability. To the extent that such Employee
or Consultant was not entitled to exercise an Option in this
period, or if such Employee or Consultant does not exercise such
Option (which such Employee or Consultant was entitled to
exercise) within the time specified herein, the Option shall
terminate.
(vii) Death of Optionee. In the event of the death of an Optionee:
A. during the term of the Option who is at the time of his or
her death an Employee or Consultant of the Company and who
shall have been in Continuous Status as an Employee or
Consultant since the date of grant of the Option, the Option
may be exercised, at any time within six (6) months (or at
such later time as may be determined by the Board but in no
event later than the date of expiration of the term of such
Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to
the extent that the right to exercise would have accrued had
the Optionee continued living and remained in Continuous
Status as an Employee or Consultant six (6) months (or such
other period of time as in determined by the Board) after
the date of death; or
B. within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Board)
after the termination of Continuous Status as an Employee or
Consultant, the Option may be exercised, at any time within
six (6) months (or such other period of time as is
determined by the Board at the time of grant of the Option)
following the date of death (but in no event later than the
date of expiration of the term of such Option as set forth
in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent that the
right to exercise that had accrued at the date of
termination.
(c) Stock Purchase Rights.
(i) Rights to Purchase. After the Board of Directors determines that
it will offer an Employee or Consultant a Stock Purchase Right,
it shall deliver to the offeree a stock purchase agreement or
stock bonus agreement, as the case may be, setting forth the
terms, conditions and restrictions relating to the offer,
including the number of Shares which such person shall be
entitled to purchase, and the time within which such person must
accept such offer, which shall in no event exceed six (6) months
from the date upon which the Board of Directors or its Committee
made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a stock purchase
agreement or stock bonus agreement in the from determined by the
Board of Directors.
(ii) Issuance of Shares. Forthwith after payment therefor, the Shares
purchased shall be duly issued; provided, however, that the Board
may require that the Purchaser make adequate provision for any
Federal and State withholding obligations of the Company as a
condition to the Purchaser purchasing such Shares.
(iii)Repurchase Option. Unless the Board determines otherwise, the
stock purchase agreement or stock bonus agreement shall grant the
Company a repurchase option exercisable upon the voluntary or
involuntary termination of the Purchaser's employment with the
Company for any reason (including death or disability). If the
Board so determines, the purchase price for shares repurchased
may be paid by cancellation of any indebtedness of the Purchaser
to the Company. The repurchase option shall lapse at such rate as
the Board may determine.
9. Other Provisions. The stock purchase agreement or stock bonus agreement
shall contain such other terms, provisions and conditions not inconsistent
with the Plan as may be determined by the Board of Directors.
(a) Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase
Right may not be sold, pledged, assigned, hypothecated, transferred,
or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. If the Administrator makes an
Option or Stock Purchase Right transferable, such Option or Stock
Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
(b) Adjustments upon Changes in Capitalization or Merger.
(i) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock
covered by each outstanding Option or Stock Purchase Right, and
the number of shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Options or Stock
Purchase Rights have yet been granted or which have been returned
to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock
covered by each such outstanding Option or Stock Purchase Right,
shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company. The conversion
of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of
shares of Common Stock subject to an Option or Stock Purchase
Right.
(c) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, the Administrator shall notify the
Optionee or Purchaser at least fifteen (15) days prior to such
proposed action. To the extent it has not been previously exercised,
the Option or Stock Purchase Right shall terminate immediately prior
to the consummation of such proposed action.
(d) Merger or Asset Sale. In the event of a merger, sale of all or
substantially all of the assets of the Company, tender offer or other
transaction or series of related transactions resulting in a change of
ownership of more than fifty percent (50%) of the voting securities of
the Company ("Change in Control"), approved by the majority of the
members of the Board on the Board prior to the commencement of such
Change in Control, each outstanding Option shall be assumed or an
equivalent option or right substituted by the successor corporation or
a Parent or Subsidiary of the successor corporation; provided however,
in the event that within one year of the date of the completion of the
Change in Control, the successor corporation or a Parent or Subsidiary
of the successor corporation terminates the employment of an Optionee
without Cause (as defined below), such Optionee shall fully vest in
and have the right to exercise the options assumed or substituted for
the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable. In the event that the
successor corporation refuses to assume or substitute for the Option,
the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Optioned Stock, including Shares as to which
it would not otherwise be exercisable. If an Option becomes fully
vested and exercisable in lieu of assumption or substitution in the
event of a Change of Control, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully
vested and exercisable for a period of fifteen (15) days from the date
of such notice, and the Option shall terminate upon the expiration of
such period. For the purposes of this paragraph, the Option shall be
considered assumed if, following the Change of Control, the option
confers the right to purchase, for each Share of Optioned Stock
subject to the Option immediately prior to the Change in Control, the
consideration (whether stock, cash, or other securities or property)
received in the Change of Control by holders of Common Stock for each
Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change
of Control is not solely common stock of the successor corporation or
its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Optioned Stock subject to
the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per share consideration
received by holders of Common Stock in the Change of Control. For
purposes of this paragraph, termination shall be for "Cause" in the
event of the occurrence of any of the following:
(i) any intentional action or intentional failure to act by employee
which was performed in bad faith and to the material detriment of
the successor corporation or its Parent or Subsidiary;
(ii) employee willfully and habitually neglects the duties of
employment; or
(iii)employee is convicted of a felony crime involving moral
turpitude, provided that in the event that any of the foregoing
events is capable of being cured, the successor corporation or
its Parent or Subsidiary shall provide written notice to the
employee describing the nature of such event and the employee
shall thereafter have five (5) business days to cure such event.
In the event of a Change in Control which is not approved by the
majority of the members of the Board on the Board prior to the
commencement of a Change in Control, each Optionee shall fully vest in
and have the right to exercise all outstanding Options as to all of
the Optioned Stock, including Shares as to which it would not
otherwise be exercisable.
(e) Date of Granting Options. The date of grant of an Option or Stock
Purchase Right shall, for all purposes, be the date on which the Board
makes the determination granting such Option or stock Purchase Right.
Notice of the determination shall be given to each Employee or
Consultant to whom an Option or Stock Purchase Right is so granted
within a reasonable time after the date of such grant.
(f) Amendment and Termination of the Plan.
(i) Amendment and Termination. The Administrator may at any time
amend, alter, suspend or discontinue the Plan, but no amendment,
alteration, suspension or discontinuation shall be made which
would impair the rights of any Optionee under any grant
theretofore made, without his or her consent. In addition, to the
extent necessary and desirable to comply with Applicable Laws or
regulation, the requirements of the NASD or an established stock
exchange, the Company shall obtain shareholder approval of any
Plan amendment in such a manner and to such a degree as required.
(ii) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Stock
Purchase Rights already granted, and such Options and Stock
Purchase Rights shall remain in full force and effect as if this
Plan had not been amended or terminated, unless mutually agreed
otherwise between the Optionee and the Administrator, which
agreement must be in writing and signed by the Optionee and the
Company.
A. Conditions Upon Issuance of Shares. Shares shall not be
issued pursuant to the exercise of an Option or Stock
Purchase Rights unless the exercise of such Option or Stock
Purchase Rights and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions
of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of
any stock exchange upon which the Shares may then be listed,
and shall be further subject to the approval of counsel for
the Company with respect to such compliance.
As a condition to the exercise of an Option or Stock
Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent
and warrant at the time of any such exercise that the Shares
are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in
the opinion of counsel for the Company, such a
representation is required by any of the aforementioned
relevant provisions of law.
B. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the
failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained.
C. Option, Stock Purchase and Stock Bonus Agreements. Options
shall be evidenced by written option agreements in such form
as the Board shall approve. Upon the exercise of Stock
Purchase Rights, the Purchaser shall sign a stock purchase
agreement or stock bonus agreement in such form as the Board
shall approve.
D. Information to Optionees and Purchasers. The Company shall
provide to each Optionee and Purchaser, during the period
for which such Optionee or Purchaser has one or more Options
to Stock Purchase Rights outstanding, a balance sheet and an
income statement at least annually. The Company shall not be
required to provide such information to key employees whose
duties in connection with the Company assure there access to
equivalent information.