initially was established as the Lexicon Genetics Incorporated 1995 Stock Option
Plan (the “1995 Stock Option Plan”), which was adopted by the Board and approved
by the Company’s stockholders on September 13, 1995. The 1995 Stock
Option Plan was subsequently amended and restated in its entirety and renamed
the Lexicon Genetics Incorporated 2000 Equity Incentive Plan (the “2000 Equity
Incentive Plan”), which was adopted by the Board on February 3, 2000 and
approved by the Company’s stockholders on March 15, 2000 and May 19, 2004. The
2000 Equity Incentive Plan is hereby amended and restated in its entirety and
renamed the Equity Incentive Plan, effective as of its adoption by the Board
subject to approval by the Company’s stockholders. The terms of this Plan shall
supersede the terms of the 1995 Stock Option Plan and the 2000 Equity Incentive
Plan in their entirety; provided, however, that
nothing herein shall operate or be construed as modifying the terms of an
Incentive Stock Option granted under the 1995 Stock Option Plan or the 2000
Equity Incentive Plan in a manner that would treat the option as being a new
grant for purpose of Section 424(h) of the Code.
STOCK AWARD RECIPIENTS. The persons eligible to receive Stock Awards are the
Employees, Directors and Consultants of the Company and its
STOCK AWARDS. The purpose of the Plan is to provide a means by which eligible
recipients of Stock Awards may be given an opportunity to benefit from increases
in value of the Common Stock through the granting of the following Stock Awards:
(i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Bonus
Awards, (iv) Restricted Stock Awards, (v) Phantom Stock Awards and (vi) Stock
PURPOSE. The Company, by means of the Plan, seeks to retain the services of the
group of persons eligible to receive Stock Awards, to secure and retain the
services of new members of this group and to provide incentives for such persons
to exert maximum efforts for the success of the Company and its
means any parent corporation or subsidiary corporation of the Company, whether
now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.
means the Board of Directors of the Company.
means a committee of one or more members of the Board appointed by the Board in
accordance with subsection 3(c).
STOCK” means the common stock, par value $.001 per share, of the
means Lexicon Pharmaceuticals, Inc. a Delaware corporation.
means any person other than a Director or Employee who is engaged by the Company
or an Affiliate to render consulting or advisory services and who is compensated
for such services.
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. The Participant’s Continuous Service shall not be deemed to have
terminated merely because of 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 Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. 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 any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.
EMPLOYEE” means the chief executive officer and the four (4) other highest
compensated officers of the Company for whom total compensation is required to
be reported to stockholders under the Exchange Act, as determined for purposes
of Section 162(m) of the Code.
means a member of the Board of Directors of the Company.
means the permanent and total disability of a person within the meaning of
Section 22(e)(3) of the Code.
means any person (which may include a Director) who is employed by the Company
or an Affiliate.
ACT” means the Securities Exchange Act of 1934, as amended.
MARKET VALUE” means, as of any date, the value of the Common Stock determined as
the Common Stock is listed on any established stock exchange or traded on the
Nasdaq Stock Market, the Fair Market Value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable.
the absence of such markets for the Common Stock, the Fair Market Value shall be
determined in good faith by the Board in such manner as it deems appropriate and
as is consistent with the requirements of section 409A of the Code.
STOCK OPTION” means an option to purchase Common Stock that is intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
STOCK OPTION” means an option to purchase Common Stock other than an Incentive
means a person who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated
means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to Section 6 of the Plan.
AGREEMENT” means a written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant. Each Option
Agreement shall be subject to the terms and conditions of the Plan.
means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.
DIRECTOR” means a Director who either (i) is not a current employee of the
Company or an “affiliated corporation” (within the meaning of Treasury
Regulations promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an “affiliated corporation” receiving compensation
for prior services (other than benefits under a tax qualified pension plan), was
not an officer of the Company or an “affiliated corporation” at any time and is
not currently receiving direct or indirect remuneration from the Company or an
“affiliated corporation” for services in any capacity other than as a Director
or (ii) is otherwise considered an “outside director” for purposes of Section
162(m) of the Code.
means a person to whom a Stock Award is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Stock Award.
STOCK AWARD” means a right to purchase restricted Common Stock granted pursuant
to Section 7(b) of the Plan.
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.
ACT” means the Securities Act of 1933, as amended.
APPRECIATION RIGHT” means a right to receive an amount equal to any appreciation
or increase in the Fair Market Value of Common Stock over a specified period of
time granted pursuant to Section 7(d) of the Plan.
AWARD” means any right granted under the Plan, including an Option, a Stock
Bonus Award, a Restricted Stock Award, a Phantom Stock Award, or a Stock
AWARD AGREEMENT” means a written agreement between the Company and a holder of a
Stock Award evidencing the terms and conditions of an individual Stock Award
grant. Each Stock Award Agreement shall be subject to the terms and conditions
of the Plan.
BONUS AWARD” means an award of Common Stock granted pursuant to
Section 7(a) of the Plan.
PERCENT STOCKHOLDER” means a person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or of any of
BY BOARD. The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in subsection
OF BOARD. The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
determine from time to time which of the persons eligible under the Plan shall
be granted Stock Awards; when and how each Stock Award shall be granted; what
type or combination of types of Stock Award shall be granted; the provisions of
each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive Common Stock pursuant to a
Stock Award; and the number of shares of Common Stock with respect to which a
Stock Award shall be granted to each such person.
construe and interpret the Plan and Stock Awards 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 Stock Award Agreement, in a manner and to
the extent it shall deem necessary or expedient to make the Plan fully
amend the Plan or a Stock Award as provided in Section 12.
terminate or suspend the Plan as provided in Section 13.
to exercise such powers and to perform such acts as the Board deems necessary or
expedient to promote the best interests of the Company that are not in conflict
with the provisions of the Plan.
The Board may delegate administration of the Plan to a Committee or Committees
of one (1) or more members of the Board, and the term “Committee” shall apply to
any person or persons to whom such authority has been delegated. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, including the power to delegate to a subcommittee 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 Board may
abolish the Committee at any time and revest in the Board the administration of
COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At such time as the
Common Stock is publicly traded, in the discretion of the Board, a Committee may
consist solely of two or more Outside Directors, in accordance with Section
162(m) of the Code, and/or solely of two or more Non-Employee Directors, in
accordance with Rule 16b-3. Within the scope of such authority, the Board or the
Committee may (A) delegate to a committee of one or more members of the Board
who are not Outside Directors the authority to grant Stock Awards to eligible
persons who are either (1) not then Covered Employees and are not expected to be
Covered Employees at the time of recognition of income resulting from such Stock
Award or (2) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code, and/or (B) delegate to a committee of one or more
members of the Board who are not Non-Employee Directors the authority to grant
Stock Awards to eligible persons who are not then subject to Section 16 of the
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.
SUBJECT TO THE PLAN.
RESERVE. Subject to the provisions of Section 11 relating to adjustments upon
changes in Common Stock, the Common Stock that may be issued pursuant to Stock
Awards shall not exceed in the aggregate thirty-five million (35,000,000)
OF SHARES TO THE SHARE RESERVE. If any Stock Award shall for any reason expire
or otherwise terminate, in whole or in part, without having been exercised in
full or shares of Common Stock issued to a Participant pursuant to a Stock Award
are forfeited to or repurchased by the Company, including any repurchase or
forfeiture caused by the failure to meet a contingency or condition required for
the vesting of such shares, the shares of Common Stock not issued under such
Stock Award or forfeited to or repurchased by the Company shall revert to and
again become available for issuance under the Plan; provided, however, that
shares subject to a Stock Award that are not delivered to a Participant because
(i) such Participant’s right to purchase such shares subject to an Option are
surrendered in payment of the exercise price for other shares subject to such
Option in a “net exercise,” or (ii) such shares are withheld in satisfaction of
the withholding of taxes incurred in connection with the exercise of an Option
or Stock Appreciation Right, or the issuance of shares under a Stock Bonus
Award, Restricted Stock Award or Phantom Stock Award, the shares so surrendered
or withheld shall not remain available for subsequent issuance under the
OF SHARES. The shares of Common Stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.
AVAILABLE FOR SPECIFIC STOCK AWARDS. Subject to the provisions of Section 11
relating to adjustments upon changes in the shares of Common Stock, the Common
Stock that may be issued pursuant to Stock Awards other than Options and Stock
Appreciation Rights shall not exceed in the aggregate three million, five
hundred thousand (3,500,000) shares.
FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may be granted only to
Employees. Stock Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants.
PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be granted
an Incentive Stock Option unless the exercise price of such Option is at least
one hundred ten percent (110%) of the Fair Market Value of the Common Stock at
the date of grant and the Option is not exercisable after the expiration of five
(5) years from the date of grant.
162(m) LIMITATION. Subject to the provisions of Section 11 relating to
adjustments upon changes in the shares of Common Stock, no Employee shall be
eligible to be granted Options covering more than three million (3,000,000)
shares during any calendar year.
Option shall be in such form and shall contain such terms and conditions as the
Board shall deem appropriate. All Options shall be separately designated
Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and,
if certificates are issued, a separate certificate or certificates will be
issued for shares of Common Stock purchased on exercise of each type of Option.
The provisions of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in the Option
or otherwise) the substance of each of the following provisions:
Subject to the provisions of subsection 5(b) regarding Ten Percent Stockholders,
no Option shall be exercisable after the expiration of ten (10) years from the
date it was granted.
PRICE. Subject to the provisions of subsection 5(b) regarding Ten Percent
Stockholders, 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 that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.
The purchase price of Common Stock acquired pursuant to an Option shall be paid,
to the extent permitted by applicable statutes and regulations, either (i) in
cash at the time the Option is exercised or (ii) at the discretion of the Board
(1) by delivery to the Company of other Common Stock, (2) according to a
deferred payment or other similar arrangement with the Optionholder, (3) by
surrender of Optionholder’s right to purchase shares subject to an Option
(valued, for such purposes, as the Fair Market Value of such surrendered shares
on the date of exercise less the exercise price for such surrendered shares) in
payment of the exercise price for other shares subject to such Option in a “net
exercise” of such Option, or (4) in any other form of legal consideration
that may be acceptable to the Board. At any time that the Company is
incorporated in Delaware, payment of the Common Stock’s “par value,” as defined
in the Delaware General Corporation Law, shall not be made by deferred
payment. In the case of any deferred payment arrangement, interest
shall be compounded at least annually and shall be charged at the minimum rate
of interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred
An Incentive Stock 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 Optionholder only by the Optionholder. A Nonstatutory Stock Option shall be
transferable to the extent provided in the Option Agreement; provided that, if the
Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock 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 Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the
GENERALLY. The total number of shares of Common Stock subject to an Option may,
but need not, vest and therefore become exercisable in periodic installments
that may, but need not, be equal. The Option may be subject to such other terms
and conditions on the time or times when it may be exercised (which may be based
on performance or other criteria) as the Board may deem appropriate. The vesting
provisions of individual Options may vary.
OF CONTINUOUS SERVICE. In the event an Optionholder’s Continuous Service
terminates (other than upon the Optionholder’s death or Disability), the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination) but only
within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder’s 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, the Optionholder does not exercise
his or her Option within the time specified in the Option Agreement, the Option
OF TERMINATION DATE. An Optionholder’s Option Agreement may also provide that if
the exercise of the Option following the termination of the Optionholder’s
Continuous Service (other than upon the Optionholder’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 the term of
the Option set forth in subsection 6(a) or (ii) the expiration of a period of
three (3) months after the termination of the Optionholder’s Continuous Service
during which the exercise of the Option would not be in violation of such
OF OPTIONHOLDER. In the event that an Optionholder’s Continuous Service
terminates as a result of the Optionholder’s Disability, the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination), but only within such period
of time ending on the earlier of (i) the date twelve (12) months following such
termination (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, the Optionholder does not exercise his
or her Option within the time specified herein, the Option shall terminate.
Rights under the Stock Appreciation Right agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in the Stock
Appreciation Right agreement, as the Board shall determine in its
OF THE COMPANY.
OF SHARES. During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of Common Stock required to satisfy
such Stock Awards.
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 Stock Awards and to issue and sell shares of Common Stock upon exercise of
the Stock Awards; provided, however, that this undertaking shall not require the
Company to register under the Securities Act the Plan, any Stock Award or any
Common Stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which 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 Stock Awards unless and until such authority is
OF PROCEEDS FROM STOCK.
from the sale of Common Stock pursuant to Stock Awards shall constitute general
funds of the Company.
OF EXERCISABILITY AND VESTING. The Board shall have the power to accelerate the
time at which a Stock Award may first be exercised or the time during which a
Stock Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Stock Award stating the time at which it
may first be exercised or the time during which it will vest.
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 Stock Award unless and until such Participant has satisfied all
requirements for exercise of the Stock Award pursuant to its terms.
EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any instrument
executed or Stock Award 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 Stock Award 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
STOCK OPTION $100,000 LIMITATION. To the extent that the aggregate Fair Market
Value (determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder
during any calendar year (under all plans of the Company and its Affiliates)
exceeds one hundred thousand dollars ($100,000), the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.
OR LIQUIDATION. In the event of a dissolution or liquidation of the
Company, then all outstanding Stock Awards shall terminate immediately prior to
SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the event of (i) a
sale, lease or other disposition of all or substantially all of the assets of
the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or acquiring corporation shall assume any Stock Awards outstanding
under the Plan or shall substitute similar stock awards (including an award to
acquire the same consideration paid to the stockholders in the transaction
described in this subsection 11(c) for those outstanding under the Plan). In the
event any surviving corporation or acquiring corporation fails to assume such
Stock Awards or to substitute similar stock awards for those outstanding under
the Plan, then with respect to Stock Awards held by Participants whose
Continuous Service has not terminated, the vesting of such Stock Awards (and, if
applicable, the time during which such Stock Awards may be exercised) shall be
accelerated in full, and the Stock Awards shall terminate if not exercised (if
applicable) at or prior to such event. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised
(if applicable) prior to such event.
OF THE PLAN AND STOCK AWARDS.
OF PLAN. The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon changes
in Common Stock, no amendment shall be effective unless approved by the
stockholders of the Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
APPROVAL. The Board may, in its sole discretion, submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
AMENDMENTS. It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible Employees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.
IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.
OF STOCK AWARDS. The Board at any time, and from time to time, may amend the
terms of any one or more Stock Awards; provided, however, that the rights under
any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the Participant and (ii) the Participant
consents in writing.