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As filed with the Securities and Exchange Commission on September 15, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
NEUROCRINE BIOSCIENCES, INC.
(Exact name of Company as specified in its charter)
Delaware 33-0525145
(State of incorporation) (I.R.S. Employer Identification No.)
10555 Science Center Drive
San Diego, California 92121
(Address, including zip code, of Company's principal executive offices)
AMENDED 1992 INCENTIVE STOCK PLAN
(Full title of the plan)
GARY A. LYONS
President, Chief Executive Officer
and Director
10555 Science Center Drive
San Diego, California 92121
(619) 658-7600
(Name, address, and telephone number, including area code, of agent for service)
Copies to:
Michael W. Sturrock, Esq.
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
(213) 485-1234
CALCULATION OF REGISTRATION FEE
________________________________________________________________________________
Proposed Proposed
Maximum Maximum
Title of Each Class Amount of Shares Offering Aggregate Amount of
of Securities to to be Price Offering Registration
be Registered Registered(1) Per Share(2) Price(2) Fee(3)
________________________________________________________________________________
Common Stock
$0.001 par value 600,000 $ 4.78125 $ 2,868,750 $ 797.51
____________________
(1) The Amended 1992 Incentive Plan (the "Plan") authorizes the issuance of a
maximum of 5,300,000 shares of common stock of Neurocrine Biosciences,
Inc. (the "Company") plus substitutions or adjustments to shares to
account for any change in corporate capitalization, such as a stock
split, any merger, consolidation, recapitalization or other distribution
of stock or property. The Company previously registered 3,300,000,
800,000 and 600,000 shares of common stock under the Plan on October 21,
1996, July 22, 1997 and June 26, 1998, respectively.
(2) Estimated solely for purposes of computing the registration fee for the
600,000 additional shares registered herewith. Pursuant to Rule 457(c),
the proposed Maximum Offering Price Per Share is based on the high and
low trading prices of the Company's common stock as reported on the
Nasdaq National Market System on September 10, 1999.
(3) Relates solely to the 600,000 additional shares registered herewith.
================================================================================
On May 21, 1999, the stockholders of Neurocrine Biosciences, Inc., a
Delaware corporation (the "Company"), approved an amendment to the Company's
Amended 1992 Incentive Stock Plan (the "Plan") to increase the number of shares
of common stock, par value $0.001 per share, of the Company (the "Common Stock")
reserved for issuance thereunder from 4,700,000 to 5,300,000. This Registration
Statement on Form S-8 (this "Registration Statement") is being filed by the
Company to increase the number of shares of Common Stock registered under the
Plan to 5,300,000 shares. The Company previously filed Registration Statements
on Form S-8 on October 21, 1996 (File No. 333-14589), July 22, 1997 (File no.
333-31791) and June 26, 1998 (File No. 333-57875) to register 3,300,000, 800,000
and 600,000 shares under the Plan, respectively. The contents of such
Registration Statements are incorporated herein by reference.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange
Commission (the "Commission") by the Company, are incorporated by reference in
this Registration Statement.
(a) The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998; (b) The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1999; and (c) The Company's Quarterly Report on Form 10-Q
for the quarterly period ended June 30, 1999.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date of this Registration Statement and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, are
incorporated by reference in this Registration Statement and are a part hereof
from the date of filing such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item 4. Description of Securities.
Not required to be filed with this Registration Statement.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Page II-1
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law generally
allows the Company to indemnify directors and officers for all expenses,
judgments, fines and amounts in settlement actually paid and reasonably incurred
in connection with any proceedings so long as such party acted in good faith and
in a manner reasonably believed to be in or not opposed to the Company's best
interests and, with respect to any criminal proceedings, if such party had no
reasonable cause to believe his or her conduct to be unlawful. Indemnification
may only be made by the Company if the applicable standard of conduct set forth
in Section 145 has been met by the indemnified party upon a determination made
(i) by the Board of Directors by a majority vote of the directors who are not
parties to such proceedings, even though less than a quorum, or (ii) if there
are no such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (iii) by the stockholders.
Article VII of the Company's Restated Articles of Incorporation
and Article VI, Sections 6.1, 6.2 and 6.3 of the Company's Bylaws provide for
indemnification of its directors and officers, and permit indemnification of
employees and other agents to the maximum extent permitted by the Delaware
General Corporation Law. In addition, the Company has entered into
indemnification agreements with its officers and directors.
Item 7. Exemption From Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following is a list of exhibits filed as part of this
Registration Statement, which are incorporated herein:
Exhibit
Number Document
- ------- ----------------------------------------------------------------
4.1 Form of Lock-Up Agreement(1).
4.2 Form of Common Stock Certificate(1).
4.3 Form of warrant issued to existing warrant holders(1).
4.4 Form of Series A warrant issued in connection with the execution
by the Company of the Unit Purchase Agreement, dated January 19,
1996, by and between the Company, Neuroscience Pharma, Inc. and
the investors signatory thereto(1).
4.5 New Registration Rights Agreement, dated March 29, 1996 by and
among the Company and the investors signatory thereto(1).
4.6 Letter of Intent between Northwest Neurologic, Inc. and the
Company dated February 27, 1998(2).
5.1 Opinion of Latham & Watkins.
10.1 Amended 1992 Incentive Stock Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Latham & Watkins (contained in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
- ---------------------
(1) Incorporated by reference to the Company's Registration
Statement filed on April 3, 1996 on Form S-1, as amended
(File No. 333-03172).
(2) Incorporated by reference to the Company's Report on
Form 8-K filed on March 13, 1998.
Page II-2
Item 9. Undertakings.
(a) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement to
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That, for purposes of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Company hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Company's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the Delaware General Corporation Law, the Restated
Articles of Incorporation or the Bylaws of the Company, Indemnification
Agreements entered into between the Company and its officers and directors, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
Page II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Diego, State of California, on this 15th day
of September, 1999.
NEUROCRINE BIOSCIENCES, INC.
By: /s/ Gary A. Lyons
Gary A. Lyons
President and Chief Executive Officer
Page II-4
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose
signature appears below constitutes and appoints, jointly and severally, Gary A.
Lyons and Paul W. Hawran his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendments to this
Registration Statement on Form S-8 (including post-effective amendments), and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------------------- ------------------------------ -----------------
/s/ Gary A. Lyons President, Chief Executive September 14, 1999
- ------------------------ Officer and Director
Gary A. Lyons (Principal Executive Officer)
/s/ Paul W. Hawran Chief Financial Officer September 14, 1999
- ------------------------ (Principal Financing and
Paul W. Hawran Accounting Officer)
/s/ Joseph A. Mollica Chairman of the September 14, 1999
- ------------------------ Board of Directors
Joseph A. Mollica
/s/ Harry F. Hixson, Jr. Director September 14, 1999
- ------------------------
Harry F. Hixson, Jr.
/s/ Richard F. Pops Director September 14, 1999
- ------------------------
Richard F. Pops
/s/ Wylie W. Vale Director September 14, 1999
- ------------------------
Wylie W. Vale
/s/ Stephen A. Sherwin Director September 14, 1999
- ------------------------
Stephen A. Sherwin
Page II-5
INDEX TO EXHIBITS
Exhibit
Number Document
- --------- ----------------------------------------------------------------
4.1 Form of Lock-Up Agreement(1).
4.2 Form of Common Stock Certificate(1).
4.3 Form of warrant issued to existing warrant holders(1).
4.4 Form of Series A warrant issued in connection with the execution
by the Company of the Unit Purchase Agreement, dated January 19,
1996, by and between the Company, Neuroscience Pharma, Inc. and
the investors signatory thereto(1)
4.5 New Registration Rights Agreement, dated March 29, 1996 by and
among the Company and the investors signatory thereto(1).
4.6 Letter of Intent between Northwest NeuroLogic, Inc. and the
Company dated February 27, 1998(2).
5.1 Opinion of Latham & Watkins.
10.1 Amended 1992 Incentive Stock Plan.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Latham & Watkins (contained in Exhibit 5.1).
24.1 Power of Attorney (see page II-5).
- ----------------------
(1) Incorporated by reference to the Company's Registration
Statement filed on April 3, 1996 on Form S-1, as amended
(File No. 333-03172).
(2) Incorporated by reference to the Company's Report on Form 8-K
filed on March 13, 1998.
Page II-6
September 14, 1999
Neurocrine Biosciences, Inc.
10555 Science Center Drive
San Diego, California 92121
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 to be filed by
you with the Securities and Exchange Commission on or about September 14, 1999
(the "Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of an aggregate of 600,000 shares of your
Common Stock, par value $0.001 par value, under the Amended 1992 Incentive Stock
Plan. Such shares of Common Stock are referred to herein as the "Shares", and
such plan is referred to herein as the "Plan". As your counsel in connection
with this transaction, we have examined the proceedings taken and are familiar
with the proceedings proposed to be taken by you in connection with the issuance
and sale of the Shares pursuant to the Plan.
It is our opinion that, upon issuance and sale of the Shares in the
manner described in the Plan and pursuant to the agreements which accompany each
grant under the Plan, and delivery of and payment for the Shares in accordance
with the Plan and such grant agreements, for a purchase price not less than the
par value of the Shares, such Shares will be validly issued, fully-paid and
non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, and further consent to the use of our name wherever appearing in the
Registration Statement and any amendments thereto.
Very truly yours,
Latham & Watkins
NEUROCRINE BIOSCIENCES, INC.
AMENDED 1992 INCENTIVE STOCK PLAN
(as amended May 27, 1997, May 27, 1998
and May 21, 1999)
1. Purpose of the Plan. The purposes of this Incentive Stock 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.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement. The Board also has the discretion to
grant Stock Purchase Rights.
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, and any director of the Company whether
compensated for such services or not.
(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 90 days or reemployment upon the expiration
of such leave is guaranteed by contract or statute.
(h) "Employee" shall mean any persons, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The
payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(i) "Incentive Stock Option" shall mean an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
(j) "Nonstatutory Stock Option" shall mean an Option not intended to qualify as
an Incentive Stock Option.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an Option or Stock
Purchase Right.
(m) "Optionee" shall mean an Employee or Consultant who receives an Option.
(n) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
(o) "Plan" shall mean this 1992 Incentive Stock Plan.
(p) "Purchaser" shall mean an Employee or Consultant who exercises a Stock
Purchase Right.
(q) "Share" shall mean a share of the Common Stock, as adjusted in accordance
with Section 11 of the Plan.
(r) "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.
(s) "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 11 of the
Plan, the maximum aggregate number of shares under the Plan is 5,300,000 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) Section 162(m). To the extent that the
Administrator determines it to be desirable to qualify Options granted
hereunder as "performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a Committee of two or
more "outside directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder
as exempt under Rule 16b-3, the transactions contemplated hereunder shall
be structured to satisfy the requirements for exemption under Rule 16b-3.
(iv) 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 Incentive Stock
Options, 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, provided that Incentive Stock Options may only be granted to
Employees. 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
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate fair
market value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company) exceeds $100,000,
such Options shall be treated as Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Options shall be taken into account in
the order in which they were granted, and the fair market value of the
Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(d) 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.
(e) The following limitations shall apply to grants of Options to
Employees: (i) No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 250,000 Shares. (ii) In connection
with his or her initial employment, an Employee may be granted Options to
purchase up to an additional 250,000 Shares which shall not count against
the limit set forth in subsection (i) above. (iii) The foregoing
limitations shall be adjusted proportionately in connection with any change
in the Company's capitalization as described in Section 11. (iv) If an
Option is canceled in the same fiscal year of the Company in which it was
granted (other than in connection with a transaction described in Section
12), the canceled Option shall be counted against the limit set forth in
subsection (i) above. For this purpose, if the exercise price of an Option
is reduced, such reduction will be treated as a cancellation of the Option
and the grant of a new Option.
6. Term of Plan. The Plan shall become effective upon the earlier to occur of
its adoption by the Board of Directors or its approval by vote of holders of a
majority of the outstanding shares of the Company entitled to vote on the
adoption of the Plan. 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, but shall be subject to the following: (i) In the
case of an Incentive Stock Option; (A) granted to an Employee who, at the
time of grant of such Incentive Stock Option, owns stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price shall be
no less than 110% of the fair market value per Share on the date of grant.
(B) granted to any other Employee, the per Share exercise price shall be no
less than 100% of the fair market value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option or a Stock Purchase Right,
the per Share exercise price shall be no less than 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 100% of the Fair Market Value per Share on the date of
grant. (iii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price of less than 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(a), 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.
(b) 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.
(c) 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 in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely
of cash, check, promissory note, other Shares of Common Stock which (i)
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 (ii) 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. In the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted,
owns stock representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term
of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
(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 20% per year over five (5) years from the date the Option
is granted. An Option may not be exercised for a fraction of a Share. 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. In the event that the exercise of a Nonstatutory
Stock Option pursuant to Section 5(b), the Company shall issue a separate
stock certificate evidencing the Shares treated as acquired upon exercise
of an Incentive Stock Option and a separate stock certificate evidencing
the Shares treated as acquired upon exercise of a Nonstatutory Stock Option
and shall identify each such certificate accordingly in its stock transfer
records. 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. 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. (ii)
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 such period of
time as is determined by the Board, with such determination in the case of
an Incentive Stock Option not exceeding three (3) months and in the case of
Nonstatutory Stock Option not exceeding six (6) months after the date of
termination, with such determination in the case of an Incentive Stock
Option being made at the time of grant of the Option, 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. (iii) Disability of Optionee. Notwithstanding the
provisions of Section 8(b)(ii) 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, with such determination in the
case of an Incentive Stock Option being made at the time of gant of the
Option) 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 such Employee or Consultant
was entitled to exercise it at the date of such termination. To the extent
that such Employee or Consultant was not entitled to exercise the Option at
the date of 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.
(iv) 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 (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 at the time of grant of the Option) 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, with such determination in
the case of an Incentive Stock Option being made at the time of grant of
the Option) 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 of the right to exercise that had accrued at the date of
termination.
9. Stock Purchase Rights.
(a) 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.
(b) 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.
(c) 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.
(d) 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.
10. 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.
11. Adjustments upon Changes in Capitalization or Merger.
(a) 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.
(b) 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.
(c) 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 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: (a) 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; (b) employee willfully and
habitually neglects the duties of employment; or (c) 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.
12. 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.
13. Amendment and Termination of the Plan.
(a) 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
Section 422 of the Code (or any other 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.
(b) 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.
14. 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.
15. 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.
16. 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.
17. Shareholder Approval. Continuance of the Plan shall be subject to approval
by the shareholders of the Company within twelve (12) months before or after the
date the Plan is adopted. Such shareholder approval shall be obtained in the
degree and manner required under Applicable Laws and the rules of any stock
exchange upon which the Common Stock is listed.
18. 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.
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement on
Form S-8 pertaining to the Amended 1992 Incentive Stock Plan of Neurocrine
Biosciences, Inc. of our report dated January 26, 1999, except for Note 13, as
to which the date March 2, 1999, with respect to the consolidated financial
statements of Neurocrine Biosciences, Inc. included in its Annual Report on Form
10-K for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
San Diego, California
September 13, 1999