Exhibit 10.1

NEUROCRINE BIOSCIENCES, INC.

INDUCEMENT PLAN

ADOPTED: SEPTEMBER 15, 2014

AMENDED: OCTOBER 7, 2014

AMENDED: APRIL 29, 2015

 

1. GENERAL.

(a)      Eligible Award Recipients. Options under the Plan may only be granted
to Employees who satisfy the standards for inducement grants under
Rule 5635(c)(4) of the NASDAQ Listing Rules. A person who previously served as
an Employee or Director shall not be eligible to receive Options under the Plan,
other than following a bona fide period of non-employment.

(b)      Available Awards. The Plan provides solely for the grant of Options.
All Options shall be Nonstatutory Stock Options.

(c)      Purpose. The Company, by means of the Plan, seeks to secure and retain
the services of the group of persons eligible to receive Options as set forth in
Section 1(b), to provide an inducement material for certain individuals to enter
into employment with the Company within the meaning of Rule 5635(c)(4) of the
NASDAQ Listing Rules, to provide incentives for such persons to exert maximum
efforts for the success of the Company and any Affiliate and to provide a means
by which such eligible recipients may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Options.

 

2. ADMINISTRATION.

(a)      Administration by Board. The Board shall administer the Plan unless and
until the Board delegates administration of the Plan to a Committee or
Committees, as provided in Section 2(d). However, the grant of Options shall be
approved by the Company’s independent compensation committee or a majority of
the Company’s independent directors (as defined in Rule 5605(a)(2) of the NASDAQ
Listing Rules) in order to comply with the exemption from the stockholder
approval requirement for “inducement grants” provided under Rule 5635(c)(4) of
the NASDAQ Listing Rules.

(b)      Powers of Board. The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:

(i)      To determine from time to time (A) which of the persons eligible under
the Plan shall be granted Options; (B) when and how each Option shall be
granted; (C) the provisions of each Option granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to an Option; (D) the number of shares of Common
Stock with respect to which an Option shall be granted to each such person; and
(E) the Fair Market Value applicable to an Option.

(ii)        To construe and interpret the Plan and Options granted under it, and
to establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any

 

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Option Agreement in a manner and to the extent it shall deem necessary or
expedient to make the Plan or Option fully effective.

(iii)      To settle all controversies regarding the Plan and Options granted
under it.

(iv)      To accelerate the time at which an Option may first be exercised or
the time during which an Option or any part thereof will vest in accordance with
the Plan, notwithstanding the provisions in the Option stating the time at which
it may first be exercised or the time during which it will vest.

(v)       To suspend or terminate the Plan at any time. Suspension or
termination of the Plan shall not impair rights and obligations under any Option
granted while the Plan is in effect except with the written consent of the
affected Participant.

(vi)      To amend the Plan in any respect the Board deems necessary or
advisable. However, except as provided in Section 8(a) relating to
Capitalization Adjustments, to the extent required by applicable law or listing
requirements, stockholder approval shall be required for any amendment of the
Plan that either (A) materially increases the number of shares of Common Stock
available for issuance under the Plan, (B) materially expands the class of
individuals eligible to receive Options under the Plan, (C) materially increases
the benefits accruing to Participants under the Plan or materially reduces the
price at which shares of Common Stock may be issued or purchased under the Plan,
(D) materially extends the term of the Plan, or (E) expands the types of awards
available for issuance under the Plan. Except as provided above, rights under
any Option granted before amendment of the Plan shall not be impaired by any
amendment of the Plan unless (1) the Company requests the consent of the
affected Participant, and (2) such Participant consents in writing.

(vii)     To submit any amendment to the Plan for stockholder approval,
including, but not limited to, amendments to the Plan intended to satisfy the
requirements of Rule 16b-3.

(viii)    To approve forms of Option Agreements for use under the Plan and to
amend the terms of any one or more Options, including, but not limited to,
amendments to provide terms more favorable to the Participant than previously
provided in the Option Agreement, subject to any specified limits in the Plan
that are not subject to Board discretion; provided however, that a Participant’s
rights under any Option shall not be impaired by any such amendment unless
(A) the Company requests the consent of the affected Participant, and (B) such
Participant consents in writing. Notwithstanding the foregoing, subject to the
limitations of applicable law, if any, the Board may amend the terms of any one
or more Options without the affected Participant’s consent if necessary to bring
the Option into compliance with Section 409A of the Code or to comply with other
applicable laws or listing requirements.

(ix)     Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company
and that are not in conflict with the provisions of the Plan or Options.

(x)      To adopt such procedures and sub-plans as are necessary or appropriate
to permit participation in the Plan by eligible Employees who are foreign
nationals or employed outside the United States.

 

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(c)    Delegation to Committee.

(i)      General. The Board may delegate some or all of the administration of
the Plan to a Committee or Committees. If administration of the Plan is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board that
have been delegated to the Committee, including the power to delegate to a
subcommittee of the Committee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Committee may, at any time, abolish the
subcommittee and/or revest in the Committee any powers delegated to the
subcommittee. The Board may retain the authority to concurrently administer the
Plan with the Committee and may, at any time, revest in the Board some or all of
the powers previously delegated.

(ii)      Rule 16b-3 Compliance. The Committee may consist solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3.

(d)    Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

(e)    Cancellation and Re-Grant of Awards. Except in connection with a
Corporate Transaction, as provided in Section 8(a) relating to Capitalization
Adjustments, or unless the stockholders of the Company have approved such an
action within twelve (12) months prior to such an event, neither the Board nor
any Committee shall have the authority to: (i) reduce the exercise price of any
outstanding Options under the Plan, or (ii) cancel any outstanding Options that
have an exercise price greater than the current Fair Market Value of the Common
Stock in exchange for other stock awards, cash, or Options with an exercise
price less than the original exercise price of the Options that are cancelled.

 

3. SHARES SUBJECT TO THE PLAN.

(a)    Share Reserve. Subject to Section 8(a) relating to Capitalization
Adjustments, the aggregate number of shares of Common Stock that may be issued
pursuant to Options from and after the Effective Date shall not exceed 330,000
shares. For clarity, the Share Reserve in this Section 3(a) is a limitation on
the number of shares of the Common Stock that may be issued pursuant to the Plan
and does not limit the granting of Options except as provided in Section 8(a).
Shares may be issued in connection with a merger or acquisition as permitted by,
as applicable, NASDAQ Listing Rule 5635(c) or, if applicable, NYSE Listed
Company Manual Section 303A.08, AMEX Company Guide Section 711 or other
applicable rule, and such issuance shall not reduce the number of shares
available for issuance under the Plan. Furthermore, if an Option or any portion
thereof expires or otherwise terminates without all of the shares covered by
such Option having been issued, such expiration or termination shall not reduce
(or otherwise offset) the number of shares of Common Stock that may be available
for issuance under the Plan.

 

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(b)      Reversion of Shares to the Share Reserve. If any shares of common stock
issued pursuant to an Option are forfeited back to the Company because of the
failure to meet a contingency or condition required to vest such shares in the
Participant, then the shares that are forfeited shall revert to and again become
available for issuance under the Plan.

(c)      Shares Not Available For Subsequent Issuance. If any shares subject to
an Option are not delivered to a Participant because the Option is exercised
through a reduction of shares subject to the Option (i.e., “net exercised”), the
number of shares that are not delivered to the Participant shall no longer be
available for issuance under the Plan. Also, any shares used to pay the exercise
price of an Option or that are withheld in satisfaction of applicable tax
withholding obligations shall no longer be available for issuance under the
Plan. Any shares repurchased on the open market with the proceeds of the
exercise price of an Option shall not again be available for issuance under the
Plan.

(d)      Source of Shares. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Company on the open market or otherwise; provided, however that the
Company may not repurchase shares to be used under this Plan to the extent such
repurchased shares would exceed the limitation in Section 3(a).

 

4. ELIGIBILITY.

(a)      Eligibility. Options may only be granted to persons who are Employees
described in Section 1(a) of the Plan, where the Option is an inducement
material to the individual’s entering into employment with the Company or an
Affiliate within the meaning of Rule 5635(c)(4) of the NASDAQ Listing Rules. For
clarity, Options may not be granted to (1) Consultants or Directors, for service
in such capacities, or (2) any individual who was previously an Employee or
Director of the Company, other than following a bona fide period of
non-employment. Notwithstanding the foregoing, Options may not be granted to
Employees who are providing Continuous Service only to any “parent” of the
Company, as such term is defined in Rule 405 promulgated under the Securities
Act, unless the stock underlying such Options is treated as “service recipient
stock” under Section 409A of the Code because the Options are granted pursuant
to a corporate transaction (such as a spin off transaction) or unless such
Options comply with the distribution requirements of Section 409A of the Code.

(b)      Approval Requirements. All Options must be granted either by a majority
of the Company’s independent directors or by the Company’s compensation
committee comprised of independent directors within the meaning of Rule
5605(a)(2) of the NASDAQ Listing Rules.

 

5. PROVISIONS RELATING TO OPTIONS.

Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. All Options shall be Nonstatutory Stock
Options. The provisions of separate Options need not be identical; provided,
however, that each Option Agreement shall conform to (through incorporation of
provisions hereof by reference in the Option Agreement or otherwise) the
substance of each of the following provisions:

 

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(a)     Term. No Option shall be exercisable after the expiration of ten
(10) years from the date of its grant or such shorter period specified in the
Option Agreement.

(b)     Exercise Price. The exercise price of each Option shall be not less than
one hundred percent (100%) of the Fair Market Value of the Common Stock subject
to the Option on the date the Option is granted. Notwithstanding the foregoing,
an Option may be granted with an exercise price lower than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option if
such Option is granted pursuant to an assumption of or substitution for another
option or stock appreciation right pursuant to a Corporate Transaction and in a
manner consistent with the provisions of Sections 409A of the Code.

(c)     Purchase Price for Options. The purchase price of Common Stock acquired
pursuant to the exercise of an Option shall be paid, to the extent permitted by
applicable law and as determined by the Board in its sole discretion, by any
combination of the methods of payment set forth below. The Board shall have the
authority to grant Options that do not permit all of the following methods of
payment (or otherwise restrict the ability to use certain methods) and to grant
Options that require the consent of the Company to utilize a particular method
of payment. The permitted methods of payment are as follows:

(i)      by cash, check, bank draft or money order payable to the Company;

(ii)      pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board that, prior to the issuance of the stock subject to
the Option, results in either the receipt of cash (or check) by the Company or
the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds;

(iii)      by delivery to the Company (either by actual delivery or attestation)
of shares of Common Stock;

(iv)      by a “net exercise” arrangement pursuant to which the Company will
reduce the number of shares of Common Stock issuable upon exercise by the
largest whole number of shares with a Fair Market Value that does not exceed the
aggregate exercise price; provided, however, that the Company shall accept a
cash or other payment from the Participant to the extent of any remaining
balance of the aggregate exercise price not satisfied by such reduction in the
number of whole shares to be issued; provided, further, that shares of Common
Stock will no longer be subject to an Option and will not be exercisable
thereafter to the extent that (A) shares issuable upon exercise are reduced to
pay the exercise price pursuant to the “net exercise,” (B) shares are delivered
to the Participant as a result of such exercise, and (C) shares are withheld to
satisfy tax withholding obligations; or

(v)      in any other form of legal consideration that may be acceptable to the
Board.

(d)     Transferability of Options. The Board may, in its sole discretion,
impose such limitations on the transferability of Options as the Board shall
determine. In the absence of such a determination by the Board to the contrary,
the following restrictions on the transferability of Options shall apply:

 

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(i)      Restrictions on Transfer. An Option shall not be transferable except by
will or by the laws of descent and distribution and shall be exercisable during
the lifetime of the Participant only by the Participant. Except as explicitly
provided herein, an Option may not be transferred.

(ii)      Domestic Relations Orders. Notwithstanding the foregoing, an Option
may be transferred pursuant to a domestic relations order.

(iii)      Beneficiary Designation. Notwithstanding the foregoing, the
Participant may, by delivering written notice to the Company, in a form provided
by or otherwise satisfactory to the Company and any broker designated by the
Company to effect Option exercises, designate a third party who, in the event of
the death of the Participant, shall thereafter be entitled to exercise the
Option and receive the Common Stock or other consideration resulting from such
exercise. In the absence of such a designation, the executor or administrator of
the Participant’s estate shall be entitled to exercise the Option and receive
the Common Stock or other consideration resulting from such exercise.

(e)      Vesting Generally. The total number of shares of Common Stock subject
to an Option may vest and therefore become exercisable in periodic installments
that may or may not be equal. The Option may be subject to such other terms and
conditions on the time or times when it may or may not be exercised (which may
be based on the satisfaction of performance goals or other criteria) as the
Board may deem appropriate. The vesting provisions of individual Options may
vary. The provisions of this Section 5(e) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

(f)      Termination of Continuous Service. Except as otherwise provided in the
applicable Option Agreement or other agreement between the Participant and the
Company, if a Participant’s Continuous Service terminates (other than for Cause
or upon the Participant’s death or Disability), the Participant may exercise his
or her Option (to the extent that the Participant was entitled to exercise such
Option as of the date of termination of Continuous Service) but only within such
period of time ending on the earlier of (i) the date three (3) months following
the termination of the Participant’s Continuous Service (or such longer or
shorter period specified in the applicable Option Agreement), or (ii) the
expiration of the term of the Option as set forth in the Option Agreement. If,
after termination of Continuous Service, the Participant does not exercise his
or her Option within the time specified herein or in the Option Agreement, the
Option shall terminate.

(g)      Extension of Termination Date. If the exercise of an Option following
the termination of the Participant’s Continuous Service (other than for Cause or
upon the Participant’s death or Disability) would be prohibited at any time
solely because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Option shall
terminate on the earlier of (i) the expiration of a total period of three
(3) months (that need not be consecutive) after the termination of the
Participant’s Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements, or (ii) the expiration of
the term of the Option as set forth in the applicable Option Agreement. In
addition, unless otherwise provided in a Participant’s Option Agreement, if the

 

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immediate sale of any Common Stock received upon exercise of an Option following
the termination of the Participant’s Continuous Service (other than for Cause)
would violate the Company’s insider trading policy, then the Option shall
terminate on the earlier of (i) the expiration of a period equal to the
applicable post-termination exercise period after the termination of the
Participant’s Continuous Service during which the sale of the Common Stock
received upon exercise of the Option would not be in violation of the Company’s
insider trading policy, or (ii) the expiration of the term of the Option as set
forth in the applicable Option Agreement.

(h)      Disability of Participant. Except as otherwise provided in the
applicable Option Agreement or other agreement between the Participant and the
Company, if a Participant’s Continuous Service terminates as a result of the
Participant’s Disability, the Participant may exercise his or her Option (to the
extent that the Participant was entitled to exercise such Option as of the date
of termination of Continuous Service), but only within such period of time
ending on the earlier of (i) the date twelve (12) months following such
termination of Continuous Service (or such longer or shorter period specified in
the Option Agreement), or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination of Continuous Service, the
Participant does not exercise his or her Option within the time specified herein
or in the Option Agreement, the Option shall terminate.

(i)      Death of Participant. Except as otherwise provided in the applicable
Option Agreement or other agreement between the Participant and the Company, if
(i) a Participant’s Continuous Service terminates as a result of the
Participant’s death, or (ii) the Participant dies within the period (if any)
specified in the Option Agreement for exercisability after the termination of
the Participant’s Continuous Service (for a reason other than death), then the
Option may be exercised (to the extent the Participant was entitled to exercise
such Option as of the date of death) by the Participant’s estate, by a person
who acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Participant’s death, but only
within the period ending on the earlier of (i) the date eighteen (18) months
following the date of death (or such longer or shorter period specified in the
Option Agreement), or (ii) the expiration of the term of such Option as set
forth in the Option Agreement. If, after the Participant’s death, the Option is
not exercised within the time specified herein or in the Option Agreement, the
Option shall terminate.

(j)      Termination for Cause. Except as explicitly provided otherwise in a
Participant’s Option Agreement or other individual written agreement between the
Company or any Affiliate and the Participant, if a Participant’s Continuous
Service is terminated for Cause, the Option shall terminate immediately upon
such Participant’s termination of Continuous Service , and the Participant shall
be prohibited from exercising his or her Option from and after the time of such
termination of Continuous Service.

(k)      Non-Exempt Employees. No Option, whether or not vested, granted to an
Employee who is a non-exempt employee for purposes of the Fair Labor Standards
Act of 1938, as amended, shall be first exercisable for any shares of Common
Stock until at least six months following the date of grant of the Option.
Notwithstanding the foregoing, consistent with the provisions of the Worker
Economic Opportunity Act, (i) in the event of the Participant’s death or
Disability, (ii) upon a Corporate Transaction in which such Option is not
assumed, continued, or

 

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substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s
retirement (as such term may be defined in the Participant’s Option Agreement or
in another applicable agreement or in accordance with the Company’s then current
employment policies and guidelines), any such vested Options may be exercised
earlier than six months following the date of grant. The foregoing provision is
intended to operate so that any income derived by a non-exempt employee in
connection with the exercise or vesting of an Option will be exempt from his or
her regular rate of pay.

 

6. COVENANTS OF THE COMPANY.

(a)      Availability of Shares. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common Stock
reasonably required to satisfy such Options.

(b)      Securities Law Compliance. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such authority
as may be required to grant Options and to issue and sell shares of Common Stock
upon exercise of the Options; provided, however, that this undertaking shall not
require the Company to register under the Securities Act the Plan, any Option or
any Common Stock issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems necessary
for the lawful issuance and sale of Common Stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell Common Stock
upon exercise of such Options unless and until such authority is obtained. A
Participant shall not be eligible for the grant of an Option or the subsequent
issuance of Common Stock pursuant to the Option if such grant or issuance would
be in violation of any applicable securities law.

(c)      No Obligation to Notify or Minimize Taxes. The Company shall have no
duty or obligation to any Participant to advise such holder as to the time or
manner of exercising such Option. Furthermore, the Company shall have no duty or
obligation to warn or otherwise advise such holder of a pending termination or
expiration of an Option or a possible period in which the Option may not be
exercised. The Company has no duty or obligation to minimize the tax
consequences of an Option to the holder of such Option.

 

7. MISCELLANEOUS.

(a)      Use of Proceeds from Sales of Common Stock. Proceeds from the sale of
shares of Common Stock pursuant to Options shall constitute general funds of the
Company.

(b)      Corporate Action Constituting Grant of Options. Corporate action
constituting a grant by the Company of an Option to any Participant shall be
deemed completed as of the date of such corporate action, unless otherwise
determined by the Board, regardless of when the instrument, certificate, or
letter evidencing the Option is communicated to, or actually received or
accepted by, the Participant.

(c)      Stockholder Rights. No Participant shall be deemed to be the holder of,
or to have any of the rights of a holder with respect to, any shares of Common
Stock subject to such Option unless and until (i) such Participant has satisfied
all requirements for exercise of the

 

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Option pursuant to its terms, if applicable, and (ii) the issuance of the Common
Stock subject to such Option has been entered into the books and records of the
Company.

(d)      No Employment or Other Service Rights. Nothing in the Plan, any Stock
Option Agreement or any other instrument executed thereunder or in connection
with any Option granted pursuant thereto shall confer upon any Participant any
right to continue to serve the Company or an Affiliate in the capacity in effect
at the time the Option was granted or shall affect the right of the Company or
an Affiliate to terminate (i) the employment of an Employee with or without
notice and with or without cause, (ii) the service of a Consultant pursuant to
the terms of such Consultant’s agreement with the Company or an Affiliate, or
(iii) the service of a Director pursuant to the Bylaws of the Company or an
Affiliate, and any applicable provisions of the corporate law of the state in
which the Company or the Affiliate is incorporated, as the case may be.

(e)      Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Option, (i) to give
written assurances satisfactory to the Company as to the Participant’s knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Participant is acquiring Common Stock subject to
the Option for the Participant’s own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (A) the issuance of the shares upon the exercise or acquisition
of Common Stock under the Option has been registered under a then currently
effective registration statement under the Securities Act, or (B) as to any
particular requirement, a determination is made by counsel for the Company that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common
Stock.

(f)      Withholding Obligations. Unless prohibited by the terms of a Stock
Option Agreement, the Company may, in its sole discretion, satisfy any federal,
state or local tax withholding obligation relating to an Option by any of the
following means or by a combination of such means: (i) causing the Participant
to tender a cash payment; (ii) withholding shares of Common Stock from the
shares of Common Stock issued or otherwise issuable to the Participant in
connection with the Option; provided, however, that no shares of Common Stock
are withheld with a value exceeding the minimum amount of tax required to be
withheld by law (or such lesser amount as may be necessary to avoid
classification of the Option as a liability for financial accounting purposes);
(iii) withholding cash from an Option settled in cash; (iv) withholding payment
from any amounts otherwise payable to the Participant; or (v) by such other
method as may be set forth in the Option Agreement.

(g)      Electronic Delivery. Any reference herein to a “written” agreement or
document shall include any agreement or document delivered electronically or
posted on the Company’s

 

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intranet (or other shared electronic medium controlled by the Company to which
the Participant has access).

(h)      Deferrals. To the extent permitted by applicable law, the Board, in its
sole discretion, may determine that the delivery of Common Stock or the payment
of cash, upon the exercise, vesting or settlement of all or a portion of any
Option may be deferred and may establish programs and procedures for deferral
elections to be made by Participants. Deferrals by Participants will be made in
accordance with Section 409A of the Code. Consistent with Section 409A of the
Code, the Board may provide for distributions while a Participant is still an
employee or otherwise providing services to the Company. The Board is authorized
to make deferrals of Options and determine when, and in what annual percentages,
Participants may receive payments, including lump sum payments, following the
Participant’s termination of Continuous Service, and implement such other terms
and conditions consistent with the provisions of the Plan and in accordance with
applicable law.

(i)      Compliance with Section 409A. To the extent that the Board determines
that any Option granted hereunder is subject to Section 409A of the Code, the
Option Agreement evidencing such Option shall incorporate the terms and
conditions necessary to avoid the consequences specified in Section 409A(a)(1)
of the Code. To the extent applicable, the Plan and Option Agreements shall be
interpreted in accordance with Section 409A of the Code. Notwithstanding
anything to the contrary in this Plan (and unless the Option Agreement
specifically provides otherwise), if the shares of Common Stock are publicly
traded and a Participant holding an Option that constitutes “deferred
compensation” under Section 409A of the Code is a “specified employee” for
purposes of Section 409A of the Code, no distribution or payment of any amount
shall be made upon a “separation from service” before a date that is six
(6) months following the date of such Participant’s “separation from service”
(as defined in Section 409A of the Code without regard to alternative
definitions thereunder) or, if earlier, the date of the Participant’s death.

 

8. ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE EVENTS.

(a)      Capitalization Adjustments. In the event of a Capitalization
Adjustment, the Board shall appropriately and proportionately adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to
Section 3(a), and (ii) the class(es) and number of securities and price per
share of stock subject to outstanding Options. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.

(b)      Dissolution or Liquidation. Except as otherwise provided in the Stock
Option Agreement, in the event of a dissolution or liquidation of the Company,
all outstanding Options shall terminate immediately prior to the completion of
such dissolution or liquidation, and the shares of Common Stock subject to the
Company’s repurchase rights or subject to a forfeiture condition may be
repurchased or reacquired by the Company notwithstanding the fact that the
holder of such Option is providing Continuous Service, provided, however, that
the Board may, in its sole discretion, cause some or all Options to become fully
vested, exercisable and/or no longer subject to repurchase or forfeiture (to the
extent such Options have not previously expired or terminated) before the
dissolution or liquidation is completed but contingent on its completion.

 

10.

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(c)      Corporate Transaction. The following provisions shall apply to Options
in the event of a Corporate Transaction unless otherwise provided in the
instrument evidencing the Option or any other written agreement between the
Company or any Affiliate and the Participant or unless otherwise expressly
provided by the Board at the time of grant of an Option.

(i)      Options May Be Assumed. In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation (or the surviving or acquiring
corporation’s parent company) may assume or continue any or all Options
outstanding under the Plan or may substitute similar stock awards for Options
outstanding under the Plan (including but not limited to, awards to acquire the
same consideration paid to the stockholders of the Company pursuant to the
Corporate Transaction), and any reacquisition or repurchase rights held by the
Company in respect of Common Stock issued pursuant to Options may be assigned by
the Company to the successor of the Company (or the successor’s parent company,
if any), in connection with such Corporate Transaction. A surviving corporation
or acquiring corporation (or its parent) may choose to assume or continue only a
portion of an Option or substitute a similar stock award for only a portion of
an Option, or may choose to assume or continue the Options held by some, but not
all Participants. The terms of any assumption, continuation or substitution
shall be set by the Board.

(ii)      Options Held by Current Employee and Director Participants. In the
event of a Corporate Transaction in which the surviving corporation or acquiring
corporation (or its parent company) does not assume or continue such outstanding
Options or substitute similar stock awards for such outstanding Options, then
with respect to Options that have not been assumed, continued or substituted and
that are held by Participants that are Employees or Directors and whose
Continuous Service has not terminated prior to the effective time of the
Corporate Transaction (referred to as the “Current Employee and Director
Participants”), the vesting of such Options (and the time when such Options may
be exercised) shall be accelerated in full to a date prior to the effective time
of such Corporate Transaction (contingent upon the effectiveness of the
Corporate Transaction) as the Board shall determine (or, if the Board shall not
determine such a date, to the date that is fifteen (15) days prior to the
effective time of the Corporate Transaction), and such Options shall terminate
if not exercised at or prior to the effective time of the Corporate Transaction,
and any reacquisition or repurchase rights held by the Company with respect to
such Options shall lapse (contingent upon the effectiveness of the Corporate
Transaction).

(d)      Options Held by Persons other than Current Employee and Director
Participants. In the event of a Corporate Transaction in which the surviving
corporation or acquiring corporation (or its parent company) does not assume or
continue such outstanding Options or substitute similar stock awards for such
outstanding Options, then with respect to Options that have not been assumed,
continued or substituted and that are held by persons other than Current
Employee and Director Participants, such Options shall terminate if not
exercised prior to the effective time of the Corporate Transaction; provided,
however, that any reacquisition or repurchase rights held by the Company with
respect to such Options shall not terminate and may continue to be exercised
notwithstanding the Corporate Transaction.

(e)      Payment for Options in Lieu of Exercise. Notwithstanding the foregoing,
in the event an Option will terminate if not exercised prior to the effective
time of a Corporate

 

11.

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Transaction, the Board may provide, in its sole discretion, that the holder of
such Option may not exercise such Option but will receive a payment, in such
form as may be determined by the Board, equal in value, at the effective time,
to the excess, if any, of (A) the value of the property the Participant would
have received upon the exercise of the Option (including, at the discretion of
the Board, any unvested portion of such Option), over (B) any exercise price
payable by such holder in connection with such exercise.

(f)      Change in Control. An Option may be subject to acceleration of vesting
and exercisability upon or after a Change in Control as may be provided in the
Stock Option Agreement for such Option or as may be provided in any other
written agreement between the Company or any Affiliate and the Participant, but
in the absence of such provision, no such acceleration shall occur.

 

9. TERMINATION OR SUSPENSION OF THE PLAN.

(a)      Plan Term. The Board may suspend or terminate the Plan at any time. No
Options may be granted under the Plan while the Plan is suspended or after it is
terminated.

(b)      No Impairment of Rights. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the Plan is in
effect except with the written consent of the affected Participant.

 

10. EFFECTIVE DATE OF PLAN.

This Plan shall become effective on the Effective Date.

 

11. CHOICE OF LAW.

The laws of the State of California shall govern all questions concerning the
construction, validity and interpretation of this Plan, without regard to that
state’s conflict of laws rules.

 

12. DEFINITIONS. As used in the Plan, the following definitions shall apply to
the capitalized terms indicated below:

(a)      “Affiliate” means, at the time of determination, any “parent” or
“subsidiary” of the Company as such terms are defined in Rule 405 promulgated
under the Securities Act. The Board shall have the authority to determine the
time or times at which “parent” or “subsidiary” status is determined within the
foregoing definition.

(b)      “Board” means the Board of Directors of the Company.

(c)      “Capitalization Adjustment” means any change that is made in, or other
events that occur with respect to, the Common Stock subject to the Plan or
subject to any Option after the Effective Date without the receipt of
consideration by the Company through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, large nonrecurring cash dividend, stock split, liquidating dividend,
combination of shares, exchange of shares, change in corporate structure or any
similar equity restructuring transaction, as that term is used in Statement of
Financial Accounting Standards

 

12.

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No. 123 (revised), or any successor thereto. Notwithstanding the foregoing, the
conversion of any convertible securities of the Company shall not be treated as
a Capitalization Adjustment.

(d)      “Cause” shall mean, with respect to a Participant, the occurrence of
any of the following events: (i) such Participant’s commission of any crime
involving fraud, dishonesty or moral turpitude; (ii) such Participant’s
attempted commission of or participation in a fraud or act of dishonesty against
the Company that results in (or might have reasonably resulted in) material harm
to the business of the Company; (iii) such Participant’s intentional, material
violation of any contract or agreement between Participant and the Company or
any statutory duty Participant owes to the Company; or (iv) such Participant’s
conduct that constitutes gross insubordination, incompetence or habitual neglect
of duties and that results in (or might have reasonably resulted in) material
harm to the business of the Company; provided, however, that the action or
conduct described in clauses (iii) and (iv) above will constitute “Cause” only
if such action or conduct continues after the Company has provided such
Participant with written notice thereof and not less than five business days to
cure the same.

(e)      “Change in Control” means the occurrence, in a single transaction or in
a series of related transactions, of any one or more of the following events:

(i)      any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of the
combined voting power of the Company’s then outstanding securities other than by
virtue of a merger, consolidation or similar transaction. Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur (A) on account of
the acquisition of securities of the Company directly from the Company, (B) on
account of the acquisition of securities of the Company by an investor, any
affiliate thereof or any other Exchange Act Person that acquires the Company’s
securities in a transaction or series of related transactions the primary
purpose of which is to obtain financing for the Company through the issuance of
equity securities, or (C) solely because the level of Ownership held by any
Exchange Act Person (the “Subject Person”) exceeds the designated percentage
threshold of the outstanding voting securities as a result of a repurchase or
other acquisition of voting securities by the Company reducing the number of
shares outstanding, provided that if a Change in Control would occur (but for
the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person
becomes the Owner of any additional voting securities that, assuming the
repurchase or other acquisition had not occurred, increases the percentage of
the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to
occur;

(ii)      there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the
consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, either (A) outstanding voting securities representing more than
fifty percent (50%) of the combined outstanding voting power of the surviving
Entity in such merger, consolidation or similar transaction or (B) more than
fifty percent (50%) of the combined outstanding voting power of the parent of
the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their

 

13.

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Ownership of the outstanding voting securities of the Company immediately prior
to such transaction;

(iii)      the stockholders of the Company approve or the Board approves a plan
of complete dissolution or liquidation of the Company, or a complete dissolution
or liquidation of the Company shall otherwise occur, except for a liquidation
into a parent corporation;

(iv)      there is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions as their
Ownership of the outstanding voting securities of the Company immediately prior
to such sale, lease, license or other disposition; or

(v)      individuals who, on the date the Plan is adopted by the Board, are
members of the Board (the “Incumbent Board”) cease for any reason to constitute
at least a majority of the members of the Board; provided, however, that if the
appointment or election (or nomination for election) of any new Board member was
approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member shall, for purposes of this Plan, be
considered as a member of the Incumbent Board.

Notwithstanding the foregoing or any other provision of this Plan, the term
Change in Control shall not include a sale of assets, merger or other
transaction effected exclusively for the purpose of changing the domicile of the
Company.

(f)      “Code” means the Internal Revenue Code of 1986, as amended, including
any applicable regulations and guidance thereunder.

(g)      “Committee” means a committee of one or more Directors to whom
authority has been delegated by the Board in accordance with Section 2(d) and
which is comprised of a majority of independent directors within the meaning of
Rule 5606(a)(2) of the NASDAQ Listing Rules.

(h)      “Common Stock” means the common stock of the Company.

(i)      “Company” means Neurocrine Biosciences, Inc., a Delaware corporation.

(j)      “Consultant” means any person, including an advisor, who is (i) engaged
by the Company or an Affiliate to render consulting or advisory services and is
compensated for such services, or (ii) serving as a member of the board of
directors of an Affiliate and is compensated for such services. However, service
solely as a Director, or payment of a fee for such service, shall not cause a
Director to be considered a “Consultant” for purposes of the Plan.
Notwithstanding the foregoing, a person is treated as a Consultant under this
Plan only if a Form S-8 Registration Statement under the Securities Act is
available to register either the offer or the sale of the Company’s securities
to such person. Consultants are not eligible to receive Options under the Plan
with respect to their service in such capacity.

 

14.

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(k)      “Continuous Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. A change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee, Consultant or
Director or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, shall not terminate a
Participant’s Continuous Service; provided, however, if the Entity for which a
Participant is rendering services ceases to qualify as an Affiliate, as
determined by the Board, in its sole discretion, such Participant’s Continuous
Service shall be considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. To the extent permitted by law, the Board or the chief
executive officer of the Company, in that party’s sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of
(i) any leave of absence approved by the Board or Chief Executive Officer,
including sick leave, military leave or any other personal leave, or
(ii) transfers between the Company, an Affiliate, or their successors.
Notwithstanding the foregoing, a leave of absence shall be treated as Continuous
Service for purposes of vesting in an Option only to such extent as may be
provided in the Company’s leave of absence policy, in the written terms of any
leave of absence agreement or policy applicable to the Participant, or as
otherwise required by law.

(l)      “Corporate Transaction” means the consummation, in a single transaction
or in a series of related transactions, of any one or more of the following
events:

(i)      a sale or other disposition of all or substantially all, as determined
by the Board, in its sole discretion, of the consolidated assets of the Company
and its Subsidiaries;

(ii)      a sale or other disposition of at least ninety percent (90%) of the
outstanding securities of the Company;

(iii)      a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or

(iv)      a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or similar
transaction into other property, whether in the form of securities, cash or
otherwise.

(m)      “Director” means a member of the Board. Directors are not eligible to
receive Options under the Plan with respect to their service in such capacity.

(n)      “Disability” means, with respect to a Participant, the inability of
such Participant to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months, as provided in Sections 22(e)(3) and
409A(a)(2)(c)(i) of the Code, and shall be determined by the Board on the basis
of such medical evidence as the Board deems warranted under the circumstances.

(o)      “Effective Date” means the date this Plan is approved by the Board.

 

15.

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(p)      “Employee” means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services,
shall not cause a Director to be considered an “Employee” for purposes of the
Plan.

(q)      “Entity” means a corporation, partnership, limited liability company or
other entity.

(r)      “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

(s)      “Exchange Act Person” means any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
“Exchange Act Person” shall not include (i) the Company or any Subsidiary of the
Company, (ii) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (iii) an
underwriter temporarily holding securities pursuant to a registered public
offering of such securities, (iv) an Entity Owned, directly or indirectly, by
the stockholders of the Company in substantially the same proportions as their
Ownership of stock of the Company; or (v) any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act) that, as of
the Effective Date, is the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the Company’s then outstanding securities.

(t)      “Fair Market Value” means, as of any date, the value of the Common
Stock determined as follows:

(i)      If the Common Stock is listed on any established stock exchange or
traded on any established market, the Fair Market Value of a share of Common
Stock shall be the closing sales price for such stock as quoted on such exchange
or market (or the exchange or market with the greatest volume of trading in the
Common Stock) on the date of determination, as reported in a source the Board
deems reliable.

(ii)      Unless otherwise provided by the Board, if there is no closing sales
price for the Common Stock on the date of determination, then the Fair Market
Value shall be the closing selling price on the last preceding date for which
such quotation exists.

(iii)      In the absence of such markets for the Common Stock, the Fair Market
Value shall be determined by the Board in good faith and in a manner that
complies with Sections 409A and 422 of the Code.

(u)      “Non-Employee Director” means a Director who either (i) is not a
current employee or officer of the Company or an Affiliate, does not receive
compensation, either directly or indirectly, from the Company or an Affiliate
for services rendered as a consultant or in any capacity other than as a
Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction for
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business

 

16.

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relationship for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K; or (ii) is otherwise considered a “non-employee director” for
purposes of Rule 16b-3.

(v)      “Nonstatutory Stock Option” means any option granted pursuant to
Section 5 of the Plan that does not qualify as an “incentive stock option”
within the meaning of Section 422 of the Code.

(w)      “Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act.

(x)      “Option” means a Nonstatutory Stock Option to purchase shares of Common
Stock granted pursuant to the Plan.

(y)      “Option Agreement” means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an Option grant. Each Option
Agreement shall be subject to the terms and conditions of the Plan.

(z)      “Optionholder” means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.

(aa)      “Own,” “Owned,” “Owner,” “Ownership” A person or Entity shall be
deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired
“Ownership” of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

(bb)      “Participant” means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding Option.

(cc)      “Plan” means this Neurocrine Biosciences, Inc. Inducement Plan.

(dd)      “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

(ee)      “Securities Act” means the Securities Act of 1933, as amended.

(ff)      “Stock Option Agreement” means a written agreement between the Company
and a Participant evidencing the terms and conditions of an Option grant. Each
Stock Option Agreement shall be subject to the terms and conditions of the Plan.

(gg)      “Subsidiary” means, with respect to the Company, (i) any corporation
of which more than fifty percent (50%) of the outstanding capital stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned
by the Company, and (ii) any partnership, limited liability company or other
entity in which the Company has a direct or indirect interest (whether in the
form of voting or participation in profits or capital contribution) of more than
fifty percent (50%).

 

17.

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NEUROCRINE BIOSCIENCES, INC.

STOCK OPTION GRANT NOTICE

(INDUCEMENT PLAN)

NEUROCRINE BIOSCIENCES, INC. (the “Company”), pursuant to its Inducement Plan
(the “Plan”), hereby grants to Optionholder an option to purchase the number of
shares of the Company’s Common Stock set forth below. This option is subject to
all of the terms and conditions as set forth herein and in the Option Agreement,
the Plan, and the Notice of Exercise, all of which are attached hereto and
incorporated herein in their entirety.

 

Optionholder:  

 

Date of Grant:  

 

Vesting Commencement Date:  

 

Number of Shares Subject to Option:  

 

Exercise Price (Per Share):  

 

Total Exercise Price:  

 

Expiration Date:  

 

Type of Grant: Nonstatutory Stock Option   Exercise Schedule:   Vesting
Schedule:  

 

Payment:   By one or a combination of the following items (described in the
Option Agreement):   x   By cash or check   x   Pursuant to a Regulation T
Program if the Shares are publicly traded   x   By delivery of already-owned
shares if the Shares are publicly traded   x   By net exercise

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges
receipt of, and understands and agrees to, this Stock Option Grant Notice, the
Option Agreement and the Plan. Optionholder acknowledges and agrees that this
Stock Option Grant Notice and the Option Agreement may not be modified, amended
or revised except in a writing signed by Optionholder and a duly authorized
officer of the Company. Optionholder further acknowledges that as of the Date of
Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan

--------------------------------------------------------------------------------

set forth the entire understanding between Optionholder and the Company
regarding the acquisition of stock in the Company and supersede all prior oral
and written agreements, promises and/or representations on that subject with the
exception of (i) options previously granted and delivered to Optionholder under
the Plan, and (ii) the following agreements only:

 

OTHER AGREEMENTS:  

 

 

NEUROCRINE BIOSCIENCES, INC.     OPTIONHOLDER: By:  

 

   

 

  Signature             Date:   Title:  

 

      Date:        

ATTACHMENTS: Option Agreement, Inducement Plan and Notice of Exercise

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NEUROCRINE BIOSCIENCES, INC.

INDUCEMENT PLAN

OPTION AGREEMENT

(NONSTATUTORY STOCK OPTION)

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Option
Agreement, NEUROCRINE BIOSCIENCES, INC. (the “Company”) has granted you an
option under its Inducement Plan (the “Plan”) to purchase the number of shares
of the Company’s Common Stock indicated in your Grant Notice at the exercise
price indicated in your Grant Notice. Defined terms not explicitly defined in
this Option Agreement but defined in the Plan shall have the same definitions as
in the Plan.

The details of your option are as follows:

 

1. VESTING.

(a)      Subject to the limitations contained herein, your option will vest as
provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service, except as otherwise explicitly otherwise
provided herein.

(b)      In the event of your termination of Continuous Service due to your
death or Disability, as of such date your option will vest in accordance with
the vesting schedule set forth in your Grant Notice as if you had provided an
additional six (6) months of Continuous Service as of the date of your
termination.

(c)      In the event of the Company’s involuntary termination of your
Continuous Service without Cause upon or within the twelve (12) month period
following a Corporate Transaction, your option will immediately fully vest.

2.          NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments.

3.          EXERCISE RESTRICTION FOR NON-EXEMPT EMPLOYEES. In the event that you
are an Employee eligible for overtime compensation under the Fair Labor
Standards Act of 1938, as amended (i.e., a “Non-Exempt Employee”), you may not
exercise your option until you have completed at least six (6) months of
Continuous Service measured from the Date of Grant specified in your Grant
Notice, notwithstanding any other provision of your option.

4.          METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the
exercise price in cash or by check or in any other manner permitted by your
Grant Notice, which may include one or more of the following:

(a)      Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board that,
prior to the issuance of Common Stock,

--------------------------------------------------------------------------------

results in either the receipt of cash (or check) by the Company or the receipt
of irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds.

(b)      Provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in The Wall Street Journal, by delivery to the
Company (either by actual delivery or attestation) of already-owned shares of
Common Stock that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the date of
exercise. Notwithstanding the foregoing, you may not exercise your option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company’s stock.

5.         WHOLE SHARES. You may exercise your option only for whole shares of
Common Stock.

6.         SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may
not exercise your option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

7.         TERM. You may not exercise your option before the commencement of its
term or after its term expires. The term of your option commences on the Date of
Grant and expires upon the earliest of the following:

(a)      immediately upon the termination of your Continuous Service for Cause;

(b)      three (3) months after the termination of your Continuous Service for
any reason other than Cause, Disability or death, provided that if during any
part of such three (3)-month period you may not exercise your option solely
because of the condition set forth in the preceding paragraph relating to
“Securities Law Compliance,” your option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;

(c)      twelve (12) months after the termination of your Continuous Service due
to your Disability;

(d)      eighteen (18) months after your death if you die during your Continuous
Service;

(e)      the Expiration Date indicated in your Grant Notice; or

(f)      the day before the tenth (10th) anniversary of the Date of Grant.

Notwithstanding the foregoing, if you die during the period provided in
Section 8(b) above, the term of your option shall not expire until the earlier
of eighteen (18) months after your termination of your Continuous Service, the
Expiration Date indicated in your Grant Notice, or

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the day before the tenth (10th) anniversary of the Date of Grant.

 

8. EXERCISE.

(a)      You may exercise the vested portion of your option (and the unvested
portion of your option if your Grant Notice so permits) during its term by
delivering a Notice of Exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require.

(b)      By exercising your option you agree that, as a condition to any
exercise of your option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your option, or (2) the disposition of shares of Common Stock acquired upon such
exercise.

9.         TRANSFERABILITY. Your option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option. In addition, if permitted by the Company you may transfer your option to
a trust if you are considered to be the sole beneficial owner (determined under
Section 671 of the Code and applicable state law) while the option is held in
the trust, provided that you and the trustee enter into a transfer and other
agreements required by the Company.

10.         OPTION NOT A SERVICE CONTRACT. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your option shall obligate the Company or an
Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.

 

11. WITHHOLDING OBLIGATIONS.

(a)      At the time you exercise your option, in whole or in part, or at any
time thereafter as requested by the Company, you hereby authorize withholding
from payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a “cashless exercise” pursuant to
a program developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with the exercise of your
option.

(b)      Upon your request and subject to approval by the Company, in its sole
discretion, and compliance with any applicable legal conditions or restrictions,
the Company may withhold from fully vested shares of Common Stock otherwise
issuable to you upon the exercise of your option a number of whole shares of
Common Stock having a Fair Market Value, determined by the Company as of the
date of exercise, not in excess of the minimum amount of tax required to

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be withheld by law (or such lower amount as may be necessary to avoid
classification of your option as a liability for financial accounting purposes).

(c)      You may not exercise your option unless the tax withholding obligations
of the Company and/or any Affiliate are satisfied. Accordingly, you may not be
able to exercise your option when desired even though your option is vested, and
the Company shall have no obligation to issue a certificate for such shares of
Common Stock or release such shares of Common Stock from any escrow provided for
herein unless such obligations are satisfied.

12.         NOTICES. Any notices provided for in your option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.

13.         GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
option, and is further subject to all interpretations, amendments, rules and
regulations, which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your option and
those of the Plan, the provisions of the Plan shall control.

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NEUROCRINE BIOSCIENCES, INC.

RESTRICTED STOCK UNIT GRANT NOTICE

(INDUCEMENT PLAN)

Neurocrine Bioscience, Inc. (the “Company”), pursuant to its Inducement Plan
(the “Plan”), hereby awards to Participant a Restricted Stock Unit Award for the
number of stock units set forth below (the “Award”). The Award is subject to all
of the terms and conditions as set forth herein and in the Plan and the
Restricted Stock Unit Agreement, both of which are attached hereto and
incorporated herein in their entirety. Capitalized terms not otherwise defined
herein shall have the meanings set forth in the Plan or the Restricted Stock
Unit Agreement. Except as otherwise explicitly provided herein, in the event of
any conflict between the terms in the Award and the Plan, the terms of the Plan
shall control.

 

Participant:   

 

   Date of Grant:   

 

   Vesting Commencement Date:   

 

   Number of Stock Units Subject to Award:   

 

   Consideration:   

 

      Participant’s Services   

 

Vesting Schedule:   

1/3rd of the Stock Units shall vest on each of the first, second and third
anniversary of the Vesting Commencement Date, subject to the Participant’s
Continuous Service through such applicable vesting dates. Vesting shall
terminate upon the Participant’s termination of Continuous Service.

Issuance Schedule:   

The shares of Common Stock to be issued in respect of the Award will be issued
in accordance with the issuance schedule set forth in Section 6 of the
Restricted Stock Unit Agreement.

Additional Terms/Acknowledgements: The undersigned Participant acknowledges
receipt of, and understands and agrees to, this Restricted Stock Unit Grant
Notice, the Restricted Stock Unit Agreement and the Plan. Participant further
acknowledges that as of the Date of Grant, this Restricted Stock Unit Grant
Notice, the Restricted Stock Unit Agreement and the Plan set forth the entire
understanding between Participant and the Company regarding the Award and
supersedes all prior oral and written agreements on that subject, with the
exception of any employment or severance arrangement that would provide for
vesting acceleration of the Award upon the terms and conditions set forth
therein.

 

NEUROCRINE BIOSCIENCES, INC.     PARTICIPANT: By:  

 

    By:  

 

Title:  

 

    Date:   Date:        

ATTACHMENTS: Restricted Stock Unit Agreement, Inducement Plan

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NEUROCRINE BIOSCIENCES, INC.

INDUCEMENT PLAN

RESTRICTED STOCK UNIT AGREEMENT

Pursuant to the Restricted Stock Unit Grant Notice (“Grant Notice”) and this
Restricted Stock Unit Agreement and in consideration of your services,
Neurocrine Biosciences, Inc. (the “Company”) has awarded you a Restricted Stock
Unit Award (the “Award”) under its Inducement Plan (the “Plan”). Your Award is
granted to you effective as of the Date of Grant set forth in the Grant Notice
for this Award. This Restricted Stock Unit Award Agreement shall be deemed to be
agreed to by the Company and you upon the signing by you of the Restricted Stock
Unit Grant Notice to which it is attached. Capitalized terms not explicitly
defined in this Restricted Stock Unit Agreement shall have the same meanings
given to them in the Plan or the Grant Notice, as applicable. Except as
otherwise explicitly provided herein, in the event of any conflict between the
terms in this Restricted Stock Unit Agreement and the Plan, the terms of the
Plan shall control. The details of your Award, in addition to those set forth in
the Grant Notice and the Plan, are as follows.

1.     GRANT OF THE AWARD. This Award represents the right to be issued on a
future date the number of shares of the Company’s Common Stock that is equal to
the number of stock units indicated in the Grant Notice (the “Stock Units”). As
of the Date of Grant, the Company will credit to a bookkeeping account
maintained by the Company for your benefit (the “Account”) the number of Stock
Units subject to the Award. This Award was granted in consideration of your
services to the Company. Except as otherwise provided herein, you will not be
required to make any payment to the Company (other than past and future services
to the Company) with respect to your receipt of the Award, the vesting of the
Stock Units or the delivery of the Common Stock to be issued in respect of the
Award.

2.     VESTING.

(a)      Subject to the limitations contained herein, your Award will vest, if
at all, in accordance with the vesting schedule provided in the Grant Notice,
provided that vesting will cease upon the termination of your Continuous
Service. Upon such termination of your Continuous Service, the Stock Units
credited to the Account that were not vested on the date of such termination
will be forfeited at no cost to the Company and you will have no further right,
title or interest in the Stock Units or the shares of Common Stock to be issued
in respect of the Award.

(b)      The Award may immediately fully accelerate vesting in connection with a
Corporate Transaction, as provided under, and subject to the terms of, the Plan.

(c)      In the event of the Company’s involuntary termination of your
Continuous Service without Cause upon or within the twelve (12) month period
following a Corporate Transaction, your Award will immediately fully vest.

3.     NUMBER OF SHARES.

(a)      The number of Stock Units subject to your Award may be adjusted from
time to time for Capitalization Adjustments, as provided in the Plan.

(b)      Any additional Stock Units that become subject to the Award pursuant to
this Section 3 and Section 7, if any, shall be subject, in a manner determined
by the Board, to the same forfeiture restrictions, restrictions on
transferability, and time and manner of delivery as applicable to the other
Stock Units covered by your Award.

(c)      Notwithstanding the provisions of this Section 3, no fractional shares
or rights for fractional shares of Common Stock shall be created pursuant to
this Section 3. The Board shall, in its discretion, determine an equivalent
benefit for any fractional shares or fractional shares that might be created by
the adjustments referred to in this Section 3.

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4.      SECURITIES LAW COMPLIANCE. You may not be issued any shares in respect
of your Award unless either (i) the shares are registered under the Securities
Act; or (ii) the Company has determined that such issuance would be exempt from
the registration requirements of the Securities Act. Your Award also must comply
with other applicable laws and regulations governing the Award, and you will not
receive such shares if the Company determines that such receipt would not be in
material compliance with such laws and regulations.

5.      TRANSFER RESTRICTIONS. Your Award is not transferable, except by will or
by the laws of descent and distribution. In addition to any other limitation on
transfer created by applicable securities laws, you agree not to assign,
hypothecate, donate, encumber or otherwise dispose of any interest in any of the
shares of Common Stock subject to the Award until the shares are issued to you
in accordance with Section 6 of this Agreement. After the shares have been
issued to you, you are free to assign, hypothecate, donate, encumber or
otherwise dispose of any interest in such shares provided that any such actions
are in compliance with the provisions herein and applicable securities laws.
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to receive any distribution of
Common Stock to which you were entitled at the time of your death pursuant to
this Agreement.

6.     DATE OF ISSUANCE.

(a)      If the Award is exempt from application of Section 409A of the Code and
any state law of similar effect (collectively “Section 409A”), the Company will
deliver to you a number of shares of the Company’s Common Stock equal to the
number of vested Stock Units subject to your Award, including any additional
Stock Units received pursuant to Section 3 above that relate to those vested
Stock Units on the applicable vesting date(s). However, if a scheduled delivery
date falls on a date that is not a business day, such delivery date shall
instead fall on the next following business day. Notwithstanding the foregoing,
in the event that (i) you are subject to the Company’s policy permitting
officers and directors to sell shares only during certain “window” periods, in
effect from time to time (the “Policy”) or you are otherwise prohibited from
selling shares of the Company’s Common Stock in the public market and any shares
covered by your Award are scheduled to be delivered on a day (the “Original
Distribution Date”) that does not occur during an open “window period”
applicable to you or a day on which you are permitted to sell shares of the
Company’s common stock pursuant to a written plan that meets the requirements of
Rule 10b5-1 under the Exchange Act, as determined by the Company in accordance
with the Policy, or does not occur on a date when you are otherwise permitted to
sell shares of the Company’s common stock on the open market, and (ii) the
Company elects not to satisfy its tax withholding obligations by withholding
shares from your distribution, then such shares shall not be delivered on such
Original Distribution Date and shall instead be delivered on the first business
day of the next occurring open “window period” applicable to you pursuant to
such policy (regardless of whether you are still providing continuous services
at such time) or the next business day when you are not prohibited from selling
shares of the Company’s Common Stock in the open market, but in no event later
than the fifteenth (15th) day of the third calendar month of the calendar year
following the calendar year in which the shares covered by the Award vest.
Delivery of the shares pursuant to the provisions of this Section 6(a) is
intended to comply with the requirements for the short-term deferral exemption
available under Treasury Regulations Section 1.409A-1(b)(4) and shall be
construed and administered in such manner. The form of such delivery of the
shares (e.g., a stock certificate or electronic entry evidencing such shares)
shall be determined by the Company.

(b)      The provisions of this Section 6(b) are intended to apply if the Award
is subject to Section 409A because of the terms of a severance arrangement or
other agreement between you and the Company, if any, that provide for
acceleration of vesting of the Award upon your separation from service (as such
term is defined in Section 409A(a)(2)(A)(i) of the Code (“Separation from
Service”) and such severance benefit does not satisfy the requirements for an
exemption from application of Section 409A provided under Treasury Regulations
Section 1.409A-1(b)(4) or 1.409A-1(b)(9) (“Non-Exempt Severance Arrangement”).
If the Award is subject to and not exempt from application of Section 409A due
to application of a Non-Exempt Severance Arrangement, the following provisions
in this Section 6(b) shall supersede anything to the contrary in Section 6(a).

(i)      If the Award vests in the ordinary course during your Continuous
Service in accordance with the vesting schedule set forth in the Grant Notice,
without accelerating vesting under the terms of a Non-Exempt Severance
Arrangement, in no event will the shares to be issued in respect of your Award
be issued

--------------------------------------------------------------------------------

any later than the later of: (i) December 31st of the calendar year that
includes the applicable vesting date and (ii) the 60th day that follows the
applicable vesting date.

(ii)      If vesting of the Award accelerates under the terms of a Non-Exempt
Severance Arrangement in connection with your Separation from Service, and such
vesting acceleration provisions were in effect as of the date of grant of the
Award and, therefore, are part of the terms of the Award as of the date of
grant, then the shares will be earlier issued in respect of your Award upon your
Separation from Service in accordance with the terms of the Non-Exempt Severance
Arrangement, but in no event later than the 60th day that follows the date of
your Separation from Service. However, if at the time the shares would otherwise
be issued you are subject to the distribution limitations contained in
Section 409A applicable to “specified employees,” as defined in
Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the
date that is six (6) months following the date of your Separation from Service,
or, if earlier, the date of your death that occurs within such six month period.

(iii)      If vesting of the Award accelerates under the terms of a Non-Exempt
Severance Arrangement in connection with your Separation from Service, and such
vesting acceleration provisions were not in effect as of the date of grant of
the Award and, therefore, are not a part of the terms of the Award on the date
of grant, then such acceleration of vesting of the Award shall not accelerate
the issuance date of the shares, but the shares shall instead be issued on the
same schedule as set forth in the Grant Notice as if they had vested in the
ordinary course during your Continuous Service, notwithstanding the vesting
acceleration of the Award. Such issuance schedule is intended to satisfy the
requirements of payment on a specified date or pursuant to a fixed schedule, as
provided under Treasury Regulations Section 1.409A-3(a)(4).

(c)      If the Award is subject to Section 409A because of application of a
Non-Exempt Severance Arrangement or a provision for deferral of the delivery of
shares in respect of the Award (a “Non-Exempt Award”), then the following
provisions in this Section shall apply and shall supersede anything to the
contrary that may be set forth in the Plan or this Agreement that would provide
for accelerated issuance of the shares in respect of your Award in connection
with a Corporate Transaction that is not also a 409A Change of Control
(a “Non-Qualifying Transaction”). For such purposes, a “409A Change in
Control” is a change in the ownership or effective control of the Company, or in
the ownership of a substantial portion of the Company’s assets, as provided in
Section 409A(a)(2)(A)(v) of the Code. In the event of a Non-Qualifying
Transaction, then with respect to a Non-Exempt Award, the surviving or acquiring
corporation (or its parent company) (the “Acquiring Entity”) must either assume,
continue or substitute your Non-Exempt Award, and shares to be issued in respect
of your Non-Exempt Award, to the extent vested, shall be issued to you by the
Acquiring Entity on the same schedule that the shares would have been issued to
you if the Non-Qualifying Transaction had not occurred.

(d)      Notwithstanding anything to the contrary set forth herein, the Company
explicitly reserves the right to earlier issue the shares in respect of any
Non-Exempt Award to the extent permitted and in compliance with the requirements
of Section 409A, including pursuant to any of the exemptions available in
Treasury Regulations Section 1.409A-3(j)(4)(ix).

(e)      The provisions in this Agreement for delivery of the shares in respect
of the Award are intended either to comply with the requirements of Section 409A
or to provide a basis for exemption from such requirements so that the delivery
of the shares will not trigger the additional tax imposed under Section 409A,
and any ambiguities herein will be so interpreted.

7.      DIVIDENDS. You shall receive no benefit or adjustment to your Award with
respect to any cash dividend, stock dividend or other distribution that does not
result from a Capitalization Adjustment as provided in the Plan; provided,
however, that this sentence shall not apply with respect to any shares of Common
Stock that are delivered to you in connection with your Award after such shares
have been delivered to you.

8.      RESTRICTIVE LEGENDS. The shares issued in respect of your Award shall be
endorsed with appropriate legends determined by the Company.

9.      AWARD NOT A SERVICE CONTRACT.

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(a)      Your Continuous Service with the Company or an Affiliate is not for any
specified term and may be terminated by you or by the Company or an Affiliate at
any time, for any reason, with or without cause and with or without
notice. Nothing in this Restricted Stock Unit Agreement (including, but not
limited to, the vesting of your Award pursuant to the schedule set forth in
Section 2 herein or the issuance of the shares in respect of your Award), the
Plan or any covenant of good faith and fair dealing that may be found implicit
in this Restricted Stock Unit Agreement or the Plan shall: (i) confer upon you
any right to continue in the employ of, or affiliation with, the Company or an
Affiliate; (ii) constitute any promise or commitment by the Company or an
Affiliate regarding the fact or nature of future positions, future work
assignments, future compensation or any other term or condition of employment or
affiliation; (iii) confer any right or benefit under this Restricted Stock Unit
Agreement or the Plan unless such right or benefit has specifically accrued
under the terms of this Agreement or Plan; or (iv) deprive the Company of the
right to terminate you at will and without regard to any future vesting
opportunity that you may have.

(b)      By accepting this Award, you acknowledge and agree that the right to
continue vesting in the Award pursuant to the schedule set forth in Section 2 is
earned only by continuing as an employee, director or consultant at the will of
the Company (not through the act of being hired, being granted this Award or any
other award or benefit) and that the Company has the right to reorganize, sell,
spin-out or otherwise restructure one or more of its businesses or Affiliates at
any time or from time to time, as it deems appropriate (a “reorganization”). You
further acknowledge and agree that such a reorganization could result in the
termination of your Continuous Service, or the termination of Affiliate status
of your employer and the loss of benefits available to you under this Restricted
Stock Unit Agreement, including but not limited to, the termination of the right
to continue vesting in the Award. You further acknowledge and agree that this
Restricted Stock Unit Agreement, the Plan, the transactions contemplated
hereunder and the vesting schedule set forth herein or any covenant of good
faith and fair dealing that may be found implicit in any of them do not
constitute an express or implied promise of continued engagement as an employee
or consultant for the term of this Agreement, for any period, or at all, and
shall not interfere in any way with your right or the Company’s right to
terminate your Continuous Service at any time, with or without cause and with or
without notice.

10.   WITHHOLDING OBLIGATIONS.

(a)      On or before the time you receive a distribution of the shares subject
to your Award, or at any time thereafter as requested by the Company, you hereby
agree to make adequate provision in cash for any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
any Affiliate which arise in connection with your Award (the “Withholding
Taxes”). Additionally, the Company may, in its sole discretion, satisfy all or
any portion of the Withholding Taxes obligation relating to your Award by any of
the following means or by a combination of such means: (i) withholding from any
compensation otherwise payable to you by the Company; or (ii) causing you to
tender a cash payment.

(b)      Unless the tax withholding obligations of the Company and/or any
Affiliate are satisfied, the Company shall have no obligation to deliver to you
any Common Stock.

(c)      In the event the Company’s obligation to withhold arises prior to the
delivery to you of Common Stock or it is determined after the delivery of Common
Stock to you that the amount of the Company’s withholding obligation was greater
than the amount withheld by the Company, you agree to indemnify and hold the
Company harmless from any failure by the Company to withhold the proper amount.

11.   UNSECURED OBLIGATION. Your Award is unfunded, and as a holder of a vested
Award, you shall be considered an unsecured creditor of the Company with respect
to the Company’s obligation, if any, to issue shares pursuant to this Agreement.
You shall not have voting or any other rights as a stockholder of the Company
with respect to the shares to be issued pursuant to this Agreement until such
shares are issued to you pursuant to Section 6 of this Agreement. Upon such
issuance, you will obtain full voting and other rights as a stockholder of the
Company. Nothing contained in this Agreement, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind or a
fiduciary relationship between you and the Company or any other person.

12.   OTHER DOCUMENTS. You hereby acknowledge receipt or the right to receive a
document providing the information required by Rule 428(b)(1) promulgated under
the Securities Act, which includes the Plan

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prospectus. In addition, you acknowledge receipt of the Company’s policy
permitting officers and directors to sell shares only during certain “window”
periods and the Company’s insider trading policy, in effect from time to time.

13.   NOTICES. Any notices provided for in your Award or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the last address you
provided to the Company. Notwithstanding the foregoing, the Company may, in its
sole discretion, decide to deliver any documents related to participation in the
Plan and this Award by electronic means or to request your consent to
participate in the Plan by electronic means. You hereby consent to receive such
documents by electronic delivery and, if requested, to agree to participate in
the Plan through an on-line or electronic system established and maintained by
the Company or another third party designated by the Company.

14.   MISCELLANEOUS.

(a)      The rights and obligations of the Company under your Award shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company’s successors and assigns. Your rights and obligations under your Award
may only be assigned with the prior written consent of the Company.

(b)      You agree upon request to execute any further documents or instruments
necessary or desirable in the sole determination of the Company to carry out the
purposes or intent of your Award.

(c)      You acknowledge and agree that you have reviewed your Award in its
entirety, have had an opportunity to obtain the advice of counsel prior to
executing and accepting your Award, and fully understand all provisions of your
Award.

(d)      This Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

(e)      All obligations of the Company under the Plan and this Agreement shall
be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the
Company.

15.   GOVERNING PLAN DOCUMENT. Your Award is subject to all the provisions of
the Plan, the provisions of which are hereby made a part of your Award, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. Except as
expressly provided herein, in the event of any conflict between the provisions
of your Award and those of the Plan, the provisions of the Plan shall control.

16.   SEVERABILITY. If all or any part of this Agreement or the Plan is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.

17.   EFFECT ON OTHER EMPLOYEE BENEFIT PLANS. The value of the Award subject to
this Agreement shall not be included as compensation, earnings, salaries, or
other similar terms used when calculating the Employee’s benefits under any
employee benefit plan sponsored by the Company or any Affiliate, except as such
plan otherwise expressly provides. The Company expressly reserves its rights to
amend, modify, or terminate any of the Company’s or any Affiliate’s employee
benefit plans.

18.   AMENDMENT. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by you and by a duly authorized
representative of the Company. Notwithstanding the foregoing, this Agreement may
be amended solely by the Board by a writing which specifically states that it is
amending this Agreement, so long as a copy of such amendment is delivered to
you, and provided that no such

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amendment adversely affecting your rights hereunder may be made without your
written consent. Without limiting the foregoing, the Board reserves the right to
change, by written notice to you, the provisions of this Agreement in any way it
may deem necessary or advisable to carry out the purpose of the grant as a
result of any change in applicable laws or regulations or any future law,
regulation, ruling, or judicial decision, provided that any such change shall be
applicable only to rights relating to that portion of the Award which is then
subject to restrictions as provided herein.