Exhibit 10.8

 

TORREYPINES THERAPEUTICS, INC.
2000 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)

 

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock
Option Agreement, TorreyPines Therapeutics, Inc. (the “Company”) has granted you
an option under its 2000 Equity Incentive Plan, as amended (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 Stock 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. 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.

 

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, as provided in the Plan.

 

3.                                      EXERCISE PRIOR TO VESTING (“EARLY
EXERCISE”). If permitted in your Grant Notice (i.e., the “Exercise Schedule”
indicates that “Early Exercise” of your option is permitted) and subject to the
provisions of your option, you may elect at any time that is both (i) during the
period of your Continuous Service and (ii) during the term of your option, to
exercise all or part of your option, including the nonvested portion of your
option; provided, however, that:

 

(a)                                  a partial exercise of your option shall be
deemed to cover first vested shares of Common Stock and then the earliest
vesting installment of unvested shares of Common Stock;

 

(b)                                  any shares of Common Stock so purchased
from installments that have not vested as of the date of exercise shall be
subject to the purchase option in favor of the Company as described in the
Company’s form of Early Exercise Stock Purchase Agreement;

 

(c)                                  you shall enter into the Company’s form of
Early Exercise Stock Purchase Agreement with a vesting schedule that will result
in the same vesting as if no early exercise had occurred; and

 

(d)                                  if your option is an incentive stock
option, then, as provided in the Plan, to the extent that the aggregate Fair
Market Value (determined at the time of grant) of the shares of Common Stock
with respect to which your option plus all other incentive stock options you
hold are exercisable for the first time by you during any calendar year (under
all plans of the Company and its Affiliates) exceeds one hundred thousand
dollars ($100,000), your option(s) or

 

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portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as nonstatutory stock options.

 

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)                                  In the Company’s sole discretion at the
time your option is exercised and 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 of already-owned shares of Common Stock either that you have held
for the period required to avoid a charge to the Company’s reported earnings
(generally six months) or that you did not acquire, directly or indirectly from
the Company, 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. “Delivery” for these purposes, in the sole discretion of the Company
at the time you exercise your option, shall include delivery to the Company of
your attestation of ownership of such shares of Common Stock in a form approved
by the Company. 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 must also 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)                                  three (3) months after the termination of
your Continuous Service for any reason other than your Disability or death,
provided that if during any part of such three- (3-) month period your option is
not exercisable solely because of the condition set forth in the

 

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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;

 

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

 

(c)                                  eighteen (18) months after your death if
you die either during your Continuous Service or within three (3) months after
your Continuous Service terminates;

 

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

 

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

 

If your option is an incentive stock option, note that, to obtain the federal
income tax advantages associated with an “incentive stock option,” the Code
requires that at all times beginning on the date of grant of your option and
ending on the day three (3) months before the date of your option’s exercise,
you must be an employee of the Company or an Affiliate, except in the event of
your death or Disability. The Company has provided for extended exercisability
of your option under certain circumstances for your benefit but cannot guarantee
that your option will necessarily be treated as an “incentive stock option” if
you continue to provide services to the Company or an Affiliate as a Consultant
or Director after your employment terminates or if you otherwise exercise your
option more than three (3) months after the date your employment terminates.

 

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, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are subject at the time of exercise, or (3) the
disposition of shares of Common Stock acquired upon such exercise.

 

(c)                                  If your option is an incentive stock
option, by exercising your option you agree that you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of your option that occurs
within two (2) years after the date of your option grant or within one (1) year
after such shares of Common Stock are transferred upon exercise of your option.

 

(d)                                  By exercising your option you agree that
the Company (or a representative of the underwriter(s)) may, in connection with
the first underwritten registration of the offering

 

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of any securities of the Company under the Securities Act, require that you not
sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any shares of Common Stock or other securities of the
Company held by you, for a period of time specified by the underwriter(s) (not
to exceed one hundred eighty (180) days) following the effective date of the
registration statement of the Company filed under the Securities Act. You
further agree to execute and deliver such other agreements as may be reasonably
requested by the Company and/or the underwriter(s) that are consistent with the
foregoing or that are necessary to give further effect thereto. In order to
enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to your shares of Common Stock until the end of such
period. The underwriters of the Company’s stock are intended third party
beneficiaries of this Section 8(d) and shall have the right, power and authority
to enforce the provisions hereof as though they were a party hereto.

 

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.

 

10.                               RIGHT OF FIRST REFUSAL.

 

(a)                                  Shares of Common Stock that you acquire
upon exercise of your option are subject to any right of first refusal that
may be described in the Company’s bylaws in effect at such time the Company
elects to exercise its right.

 

(b)                                  If there is no right of first refusal
described in the Company’s bylaws in effect at such time the Company elects to
exercise its right, then you may not validly transfer (as hereinafter defined)
any shares of Common Stock that you acquire upon exercise of your option, or any
interest in such shares, unless such transfer is solely for cash consideration
and is made in compliance with the following provisions (the Company’s “Right of
First Refusal”):

 

(i)                                    Before there can be a valid transfer of
any shares or any interest therein, the record holder of the shares to be
transferred (the “Offered Shares”) shall give written notice (by registered or
certified mail) to the Company. Such notice shall specify the identity of the
proposed transferee, the cash price offered for the Offered Shares by the
proposed transferee and the other terms and conditions of the proposed transfer.
The date such notice is mailed shall be hereinafter referred to as the “notice
date,” and the record holder of the Offered Shares shall be hereinafter referred
to as the “Offeror.”  If, from time to time, there is any stock dividend, stock
split or other change in the character or amount of any of the outstanding stock
of the corporation the stock of which is subject to the provisions of your
option, then in such event any and all new, substituted or additional securities
to which you are entitled by reason of your ownership of the shares acquired
upon exercise of your option shall be immediately subject to the Company’s Right
of First Refusal with the same force and effect as the shares subject to the
Company’s Right of First Refusal immediately before such event.

 

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(ii)                                For a period of thirty (30) calendar days
after the notice date, the Company shall have the option to purchase all (but
not less than all) of the Offered Shares at the purchase price and on the terms
set forth in subsection 10(b)(iii). The Company may exercise its Right of First
Refusal by mailing (by registered or certified mail) written notice of exercise
of its Right of First Refusal to the Offeror prior to the end of said thirty
(30) days. The Company may assign its rights hereunder.

 

(iii)                            The price at which the Company may purchase the
Offered Shares pursuant to the exercise of its Right of First Refusal shall be
the cash price offered for the Offered Shares by the proposed transferee (as set
forth in the notice required under subsection 10(b)(i). The Company’s notice of
exercise of its Right of First Refusal shall be accompanied by full payment for
the Offered Shares and, upon such payment by the Company, the Company shall
acquire full right, title and interest to all of the Offered Shares.

 

(iv)                               If, and only if, the option given pursuant to
subsection 10(b)(ii) is not exercised, the transfer proposed in the notice given
pursuant to subsection 10(b)(i) may take place; provided, however, that such
transfer must, in all respects, be exactly as proposed in said notice except
that such transfer may not take place either before the tenth (10th) calendar
day after the expiration of said 30-day option exercise period or after the
ninetieth (90th) calendar day after the expiration of said 30-day option
exercise period, and if such transfer has not taken place prior to said
ninetieth (90th) day, such transfer may not take place without once again
complying with subsection 10(b).

 

(v)                                   As used in this subsection 10(b), the term
“transfer” means any sale, encumbrance, pledge, gift or other form of
disposition or transfer of shares of the Company’s stock or any legal or
equitable interest therein; provided, however, that the term “transfer” does not
include a transfer of such shares or interests by will or by the applicable laws
of descent and distribution or a gift of such shares if the donee agrees to be
bound by the provisions of this subsection 10(b).

 

(vi)                               None of the shares of the Company’s stock
purchased on exercise of your option shall be transferred on the Company’s books
nor shall the Company recognize any such transfer of any such shares or any
interest therein unless and until all applicable provisions of this
subsection 10(b) have been complied with in all respects. The certificates of
stock evidencing shares of stock purchased on exercise of your option shall bear
an appropriate legend referring to the transfer restrictions imposed by this
subsection 10(b).

 

(vii)                           The Company’s Right of First Refusal shall
expire on the first date upon which any security of the Company is listed (or
approved for listing) upon notice of issuance on any securities exchange or
designated (or approved for designation) upon notice of issuance as a national
market security on an interdealer quotation system if such securities exchange
or interdealer quotation system has been certified in accordance with the
provisions of Section 25100(o) of the California Corporate Securities Law of
1968.

 

11.                               RIGHT OF REPURCHASE. To the extent provided in
the Company’s bylaws as amended from time to time, the Company shall have the
right to repurchase all or any part of the shares of Common Stock you acquire
pursuant to the exercise of your option.

 

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12.                               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.

 

13.                               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 your option.

 

(b)                                  Upon your request and subject to approval
by the Company, in its sole discretion, and compliance with any applicable
conditions or restrictions of law, 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 be withheld by law. If the date of
determination of any tax withholding obligation is deferred to a date later than
the date of exercise of your option, share withholding pursuant to the preceding
sentence shall not be permitted unless you make a proper and timely election
under Section 83(b) of the Code, covering the aggregate number of shares of
Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of your option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of your option that are otherwise issuable to you upon such exercise. Any
adverse consequences to you arising in connection with such share withholding
procedure shall be your sole responsibility.

 

(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.

 

14.                               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.

 

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15.                               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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