-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VRnDYtA8O76ege5nM+7DQkDzznRd4ExcdyWksaZccyDGgOgk/K7nq7TovkAUcXST A+b+itGE8cH8ThIMpQ2Mtg== 0000950124-05-005673.txt : 20051007 0000950124-05-005673.hdr.sgml : 20051007 20051007151722 ACCESSION NUMBER: 0000950124-05-005673 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20051005 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051007 DATE AS OF CHANGE: 20051007 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NASTECH PHARMACEUTICAL CO INC CENTRAL INDEX KEY: 0000737207 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 112658569 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13789 FILM NUMBER: 051129521 BUSINESS ADDRESS: STREET 1: 3450 MONTE VILLA PARKWAY CITY: BOTHELL STATE: WA ZIP: 98021 BUSINESS PHONE: 4259083600 MAIL ADDRESS: STREET 1: 3450 MONTE VILLA PARKWAY CITY: BOTHELL STATE: WA ZIP: 98021 8-K 1 v13299e8vk.htm FORM 8-K e8vk
 

 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 5, 2005
NASTECH PHARMACEUTICAL COMPANY INC.
(Exact name of registrant as specified in charter)
         
DELAWARE   0-13789   11-2658569
(State or other jurisdiction   (Commission   (IRS Employer
of incorporation)   File Number)   Identification No.)
     
3450 Monte Villa Parkway    
Bothell, Washington   98021
(Address of principal executive offices)   (Zip Code)
425-908-3600
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 

 

Item 1.01 Entry into a Material Definitive Agreement
     On October 5, 2005, pursuant to the authority delegated by the board of directors (the “Board of Directors”) of Nastech Pharmaceutical Company Inc. (the “Company”), the Compensation Committee of the Board of Directors authorized the Company to:
     (a) enter into a restricted stock grant agreement, effective October 5, 2005, with Dr. Paul H. Johnson, Ph.D., pursuant to which Dr. Johnson was issued 7,500 shares of restricted common stock of the Company, par value $0.006 per share (the “Common Stock”), pursuant to the Company’s 2004 Stock Incentive Plan originally effective as of April 14, 2004 and amended on July 20, 2005. The restricted Common Stock will vest in three equal annual installments beginning on October 5, 2006. A copy of the restricted stock grant agreement is filed as exhibit 10.1 herewith; and
     (b) enter into an incentive stock option agreement, dated as of October 5, 2005, with Dr. Johnson, pursuant to which Dr. Johnson was issued options to purchase 7,500 shares of Common Stock, pursuant to the Company’s 2002 Stock Option Plan originally effective as of May 2, 2002. The options have an exercise price of $14.79 per share and will vest in three equal annual installments beginning on October 5, 2006. A copy of the stock option agreement is filed as exhibit 10.2 herewith.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
     
Exhibit No.   Description
10.1
  Restricted Stock Grant Agreement effective October 5, 2005 by and between Nastech Pharmaceutical Company Inc. and Dr. Paul H. Johnson, Ph.D.
 
    
10.2
  Stock Option Agreement dated as of October 5, 2005 between Nastech Pharmaceutical Company Inc. and Dr. Paul H. Johnson, Ph.D.

 

 

SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
     
 
  Nastech Pharmaceutical Company Inc.
 
   
 
  (Registrant)
         
 
  By:   /s/ Philip C. Ranker
 
       
 
  Name:   Philip C. Ranker
 
  Title:   Chief Financial Officer
Dated:
October 7, 2005

 

 

Exhibit Index
     
Exhibit No.   Description
10.1
  Restricted Stock Grant Agreement effective October 5, 2005 by and between Nastech Pharmaceutical Company Inc. and Dr. Paul H. Johnson, Ph.D.
 
    
10.2
  Stock Option Agreement dated as of October 5, 2005 between Nastech Pharmaceutical Company Inc. and Dr. Paul H. Johnson, Ph.D.

 

EX-10.1 2 v13299exv10w1.txt EXHIBIT 10.1 EXHIBIT 10.1 NASTECH PHARMACEUTICAL COMPANY INC. 2004 STOCK INCENTIVE PLAN RESTRICTED STOCK GRANT AGREEMENT This Restricted Stock Grant Agreement (the "Agreement") is entered into this 5th day of October, 2005, by and between Nastech Pharmaceutical Company Inc. (the "Company"), a Delaware Corporation, and Paul H. Johnson, Ph.D. ("Grantee"). ARTICLE I GRANT OF RESTRICTED STOCK 1.1 Grant of Restricted Stock. Pursuant to, and subject to, the terms and conditions set forth herein and in the Nastech Pharmaceutical Company Inc. 2004 Stock Incentive Plan (the "Plan"), the Company hereby grants to the Grantee 7,500 restricted shares (the "Restricted Stock") of common stock of the Company ("Common Stock"). 1.2 Grant Date. The Grant Date of the Restricted Stock is October 5, 2005. 1.3 Incorporation of Plan. All terms, conditions and restrictions of the Plan are incorporated herein and made part hereof as if stated herein. If there is any conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan, as interpreted by the Compensation Committee of the Board of Directors of the Company (the "Committee"), shall govern. Except as otherwise provided herein, all capitalized terms used herein shall have the meaning given to such terms in the Plan. ARTICLE II VESTING 2.1 Vesting. Subject to the further provision of this Agreement, the Restricted Stock shall vest with respect to a number of whole shares as close as possible to the following percentage of the total number of shares of Restricted Stock granted hereunder on the following dates (each, a "Vesting Date"):
PERCENTAGE OF TOTAL SHARES VESTING DATE - -------------------------- ------------------------------ 33.3% 1st anniversary of Grant Date 33.3% 2nd anniversary of Grant Date 33.3% 3rd anniversary of Grant Date
ARTICLE III TERMINATION OF EMPLOYMENT 3.1 Termination of Employment. In the event that the Grantee's employment (which for purposes of this Agreement shall include service as a director or consultant) with the Company or one of the Company's subsidiaries terminates for any reason, all unvested shares of Restricted Stock, together with any property in respect of such shares held by the custodian pursuant to Section 4.3 hereof, shall be forfeited as of the date of such termination of employment and the Grantee promptly shall return to the Company any certificates evidencing such shares. For purposes of this Agreement, the Grantee shall be deemed to have terminated employment or incurred a termination of employment upon (i) the date the Grantee ceases to be employed by, or to provide consulting services for, the Company or any Company subsidiary; or (ii) the date the Grantee ceases to be a Board member, provided, however, that if the Grantee (x) at the time of reference is both an employee or consultant and a Board member, or (y) ceases to be engaged as an employee, consultant or Board member and immediately is engaged in another of such relationships with the Company or any Company subsidiary, the Grantee shall not be deemed to have a "termination of employment" until the last of the dates determined pursuant to subparagraphs (i) and (ii) above. The Committee, in its discretion, may determine whether any leave of absence constitutes a termination of employment for purposes of this Agreement. ARTICLE IV RESTRICTIONS 4.1 Restrictions on Transferability. Until a share of Restricted Stock vests, such share may not be sold, assigned, transferred, alienated, commuted, anticipated, or otherwise disposed of (except by will or the laws of descent and distribution), or pledged or hypothecated as collateral for a loan or as security for the performance of any obligation, or be otherwise encumbered, and are not subject to attachment, garnishment, execution or other legal or equitable process, and any attempt to do so shall be null and void. If the Grantee attempts to dispose of or encumber the Grantee's unvested shares of Restricted Stock, such shares of Restricted Stock, together with any property in respect of such shares held by the custodian pursuant to Section 4.3 hereof, shall be forfeited as of the date of such attempted transfer and the Grantee promptly shall return to the Company any certificates evidencing such shares. 4.2 Issuance of Certificates. (a) Reasonably promptly after the Grant Date, the Company shall issue and deliver to the Grantee stock certificates, registered in the name of the Grantee, evidencing the shares of Restricted Stock. Each such certificate may bear the following legend: "THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION ENCUMBRANCE OR OTHER DISPOSAL OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE NASTECH PHARMACEUTICAL COMPANY INC. 2004 STOCK INCENTIVE PLAN AND A RESTRICTED STOCK GRANT AGREEMENT BETWEEN NASTECH PHARMACEUTICAL COMPANY INC. AND THE HOLDER OF RECORD OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IN CONTRAVENTION OF SUCH PLAN AND RESTRICTED STOCK GRANT AGREEMENT SHALL BE VALID OR EFFECTIVE. COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THE CERTIFICATE TO THE SECRETARY OF NASTECH PHARMACEUTICAL COMPANY INC." Such legend shall not be removed from such certificates until such shares of Restricted Stock vest. (b) Reasonably promptly after any such shares of Restricted Stock vest pursuant to Section 2.1 hereof, in exchange for the surrender to the Company of the certificates evidencing such shares of Restricted Stock delivered to the Grantee under Section 4.2(a) hereof, the Company shall issue and deliver to the Grantee (or the Grantee's legal representative, beneficiary or heir) certificates evidencing such shares of Restricted Stock, free of the legend provided in Section 4.2(a) hereof, together with any property in respect of such shares held by the custodian pursuant to Section 4.3 hereof. (c) The Company may require as a condition of the delivery of stock certificates pursuant to Section 4.2(b) hereof that the Grantee remit to the Company an amount sufficient in the opinion of the Company to satisfy any federal, state and other governmental tax withholding requirements related to the vesting of the shares represented by such certificate. (d) The Grantee shall not be deemed for any purpose to be, or have rights as, a shareholder of the Company by virtue of the grant of Restricted Stock, except to the extent a stock certificate is issued therefore pursuant to Section 4.2(a) hereof, and then only from the date such certificate is issued. Upon the issuance of a stock certificate, the Grantee shall have the rights of a shareholder with respect to the Restricted Stock, including the right to vote the shares, subject to the restrictions on transferability, the forfeiture provisions and the requirement that dividends be held in escrow until the shares vest, as set forth in this Agreement. 4.3 Dividends, etc. Unless the Committee otherwise determines, any property, including cash dividends, received by a Grantee with respect to a share of Restricted Stock as a result of any dividend, recapitalization, merger, consolidation, combination, exchange of shares or otherwise and for which the Grant Date occurs prior to such event but which has not vested as of the date of such event, will not vest until such share of Restricted Stock vests, and shall be promptly deposited with the Company or a custodian designated by the Company. The Company shall or shall cause such custodian to issue to the Grantee a receipt evidencing the property held by it in respect of the Restricted Stock. ARTICLE V MISCELLANEOUS 5.1 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party hereto upon any breach or default of any party under this Agreement, shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party or any provisions or conditions of this Agreement, must be in a writing signed by such party and shall be effective only to the extent specifically set forth in such writing. 5.2 Right of Discharge Preserved. Nothing in this Agreement shall confer upon the Grantee the right to continue in the employ or other service of the Company or one of the Company's subsidiaries, or affect any right which the Company may have to terminate such employment or service. 5.3 Integration. This Agreement contains the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants or undertakings with respect to the subject matter hereof other than those expressly set forth herein. This Agreement, including, without limitation, the Plan, supersedes all prior agreements and understandings between the parties with respect to its subject matter. 5.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. 5.5 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to the provisions governing conflict of laws. 5.6 Grantee Acknowledgment. The Grantee hereby acknowledges receipt of a copy of the Plan. The Grantee hereby acknowledges that all decisions, determinations and interpretations of the Committee in respect of the Plan, this Agreement and the Restricted Stock shall be final and conclusive. IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by its duly authorized officer, and the Grantee has hereunto signed this Agreement on his own behalf, thereby representing that he has carefully read and understands this Agreement and the Plan as of the day and year first written above. NASTECH PHARMACEUTICAL COMPANY INC. By: /s/ Steven C. Quay, M.D., Ph.D. ----------------------------------- Name: Steven C. Quay, M.D., Ph.D. Title: Chairman, President and CEO /s/ Paul H. Johnson, Ph.D. ------------------------------- Dr. Paul H. Johnson, Ph.D. -2- EX-10.2 3 v13299exv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 STOCK OPTION AGREEMENT (this "Agreement") dated as of October 5th, 2005 (the "Grant Date"), between Nastech Pharmaceutical Company Inc., a Delaware corporation (the "Company"), and Mr. Paul H. Johnson, Ph.D. (Grantee"), an employee of the Company. SECTION 1. Grant of Option. Pursuant to the Nastech Pharmaceutical Company Inc. 2002 Stock Option Plan (the "Plan"), the Company hereby grants to Grantee, as of the Grant Date, an Incentive Stock Option, to purchase an aggregate of 7,500 shares (the "Option Shares") of common stock of the Company, par value $0.006 per share (the "Common Stock"), at an exercise price of $14.79 per share (the "Option") subject to adjustment and the other terms and conditions set forth herein, in the Plan. SECTION 2. Grantee Bound by Plan. The Plan is incorporated herein by reference and made a part hereof. The Plan shall govern all aspects of this Agreement except as otherwise specifically stated herein. Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof. Unless otherwise defined herein, capitalized terms used but not defined herein shall have the meanings ascribed to them in the Plan. The Plan should be carefully examined before any decision is made to exercise this Option. SECTION 3. Exercise of Option. (a) General. Subject to the earlier termination of the Option as provided herein and in the Plan, the Option may be exercised by written notice to the Company at any time and from time to time after the Grant Date; provided, however, that the Option shall not be exercisable for more than the number of shares which are vested in accordance herewith at the time of exercise. The exercise of this Option and the issuance of Option Shares upon such exercise shall be subject to compliance by the Company and Grantee with all applicable requirements of law as set forth in the Plan. The inability of the Company to obtain approval from any regulatory body having authority deemed by the Company to be necessary to the lawful issuance and sale of any Common Stock pursuant to this Option shall relieve the Company of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. (b) Vesting. Subject to the earlier termination of the Option as provided herein and in the Plan, the Option shall vest as follows: 2,500 Of the shares subject to the Option shall be vested on the first anniversary of the Grant Date. 2,500 Of the shares subject to the Option shall be vested on each succeeding anniversary of the Grant Date.
(c) Early Expiration of Option. (i) Upon the termination of Grantee's employment or consulting relationship with the Company (including any subsidiary thereof) for any reason, including death, any portion of the Option granted hereunder that has not been exercised on the date of such termination shall expire in accordance with subsection (ii) or (iii)of this Section 3(c) as applicable. (ii) In the event that Grantee's employment or consulting relationship with the Company (including any subsidiary thereof) is terminated by the Company for Cause, Grantee shall automatically forfeit his right to exercise any portion of the Option granted hereunder that has not been exercised as of the date of such termination without regard to whether such portion of the Option had previously vested and such unexercised portion of the Option shall automatically be cancelled effective at the commencement of business on the date of such termination. (iii) In the event that Grantee's employment or consulting relationship with the Company (including any subsidiary thereof) is terminated for any reason other than for Cause, death, or Disability, any unvested portion of the Option granted hereunder shall immediately expire and any vested portion of the Option granted hereunder that has not been exercised as of the date of such termination shall automatically expire, if not exercised beforehand, three months after such termination. (iv) In the event that Grantee's employment or consulting relationship with the Company (including any subsidiary thereof) is terminated due to Grantee's death or Disability, any unvested portion of the Option granted hereunder shall immediately expire and any vested portion of the Option granted hereunder that has not been exercised as of the date of such termination shall automatically expire, if not exercised beforehand, three months after such termination. (d) Normal Expiration of Option. This Option shall not be exercisable after the tenth anniversary of the Grant Date (the "Expiration Date"). SECTION 4. Exercise of Option and Conditions to Exercise. This Option may not be exercised by Grantee unless the following conditions are met: (a) Notice. This Option shall be exercised by delivering written notice, substantially in the form attached hereto as Exhibit I, to the Company at its principal office addressed to the attention of its Secretary. Such notice shall specify the number of Option Shares with respect to which the Option is being exercised and shall be signed by Grantee. This Option may not be exercised for a fraction of a share of Common Stock; (b) Securities Requirements. Legal counsel for the Company must be satisfied at the time of exercise that the issuance of Option Shares upon exercise will be in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and applicable United States federal, state, local and foreign laws; and (c) Payment of Exercise Price. Grantee must pay at the time of exercise the full purchase price for the shares of Common Stock being acquired hereunder (i) in cash or its equivalent or (ii) pursuant to such other method as the Committee may approve from time to time. Please refer to the Plan for a complete description of the methods for exercise, payment and delivery of Option Shares, including requirements for the payment of withholding taxes applicable thereto. SECTION 5. Transferability. This Option may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of by Grantee, except by will or the laws of descent and distribution (in which case, the transferee shall succeed to the rights and obligations of Grantee hereunder) and is exercisable during Grantee's lifetime only by Grantee or his guardian or legal representative. If Grantee or anyone claiming under or through Grantee attempts to violate this Section 5, such attempted violation shall be null and void and without effect, and the Company's obligation hereunder shall terminate. If at the time of Grantee's death this Option has not been fully exercised, Grantee's estate or any person who acquires the right to exercise this Option by bequest or inheritance or by reason of Grantee's death may exercise this Option in accordance with and with respect to the number of shares set forth in Section 3 above. The applicable requirements of Section 4 above must be satisfied in full at the time of any exercise. SECTION 6. Administration. Any action taken or decision made by the Company, the Board or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Plan or this Agreement shall lie within its sole 2 and absolute discretion, as the case may be, and shall be final, conclusive and binding on Grantee and all persons claiming under or through Grantee. By accepting this grant or other benefit under the Plan, Grantee and each person claiming under or through Grantee shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken under the Plan by the Company, the Board or the Committee or its delegates. SECTION 7. No Rights as Stockholder. Unless and until a certificate or certificates representing shares of Common Stock shall have been issued to Grantee (or any person acting under Section 5 above) pursuant to an exercise hereunder, Grantee shall not be or have any of the rights or privileges of a stockholder of the Company with respect to shares of Common Stock acquirable upon exercise of the Option. No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date of such due exercise and full payment. SECTION 8. Investment Representation. Grantee hereby acknowledges that the Option Shares shall be acquired for investment without a view to distribution, within the meaning of the Securities Act, and shall not be sold, transferred, assigned, pledged or hypothecated in the absence of an effective registration statement for the shares of Common Stock under the Securities Act and applicable states securities laws or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. Grantee also agrees that the Option Shares will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable securities laws, whether federal or state and that the certificate representing the shares of Common Stock shall contain a legend to such effect. SECTION 9. Listing and Registration of Common Stock. The Company, in its discretion, may postpone the issuance and/or delivery of shares of Common Stock upon any exercise of this Option until completion of such stock exchange listing, or registration, or other qualification of such shares under any state and/or federal law, rule or regulation as the Company may reasonably in good faith consider appropriate. SECTION 10. Adjustments. (a) Anti-Dilution. In the event of any change in the number of shares of Common Stock outstanding by reason of any stock dividend or split, reverse stock split, capitalization, merger, consolidation or otherwise, the Committee shall make appropriate adjustment to the number of Option Shares granted hereunder and the exercise price thereof in order to preserve the position of Grantee and prevent any enlargement or dilution of such position. (b) Certain Transactions. In the event of the proposed dissolution or liquidation of the Company, all Options will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Committee. The Committee may, in the exercise of its sole discretion in such instances, declare that any Option shall terminate as of a date fixed by the Committee and give each Grantee the right to exercise his or her Option as to all or any of the Shares issuable pursuant to the exercise of the Option, including Shares which would not otherwise be then issuable pursuant to the exercise of the Option. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, the Option shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, that the Grantee shall have the right to exercise the Option in whole or in part, including Shares which would not otherwise be then issuable pursuant to the exercise of the Option. If the Board makes an Option exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Board shall notify the Grantee that the Option shall be exercisable for a period of not less than 15 days from the date of such notice, and the Option will terminate upon the expiration of such period.. 3 SECTION 11. Notices. Any notice hereunder to the Company shall be addressed to the Company at 3450 Monte Villa Parkway, Bothell, WA 98021, Attention: Secretary, and any notice hereunder to Grantee shall be addressed to Grantee at Grantee's last address on the records of the Company, subject to the right of either party to designate at any time hereafter in writing some other address. Any notice shall be deemed to have been duly given when delivered personally, one day following dispatch if sent by reputable overnight courier, fees prepaid, or three days following mailing if sent by registered mail, return receipt requested, postage prepaid and addressed as set forth above. SECTION 12. Binding Effect. This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under Grantee. SECTION 13. Governing Law. The validity, construction, interpretation, administration and effect of the Plan, and of its rules and regulations, and rights relating to the Plan and to this Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State of Delaware. 4 IN WITNESS WHEREOF, the Company and Grantee have executed this Agreement as of the date first above written. NASTECH PHARMACEUTICAL COMPANY INC. /s/ Steven C. Quay, M.D., Ph.D. ------------------------------- Steven C. Quay, M.D., Ph.D. Chairman, President and CEO GRANTEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION IS EARNED ONLY THROUGH HIS CONTINUED AND SATISFACTORY EMPLOYMENT WITH THE COMPANY OR ITS SUBSIDIARIES AND NOT THROUGH THE GRANT OF THIS OPTION OR THE ACQUISITION OF SHARES HEREUNDER. GRANTEE ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S 2002 STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS RIGHT OR THE COMPANY'S RIGHT TO TERMINATE HIS EMPLOYMENT AT ANY TIME, WITH OR WITHOUT CAUSE. Grantee acknowledges receipt of a copy of the Plan and represents that he is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof except as otherwise specifically stated in this Option Agreement. Grantee has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement. Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Board or Committee upon any questions arising under the Plan. GRANTEE /s/ Paul H. Johnson, Ph.D. -------------------------------- Name: Dr. Paul H. Johnson, Ph.D. 5 EXHIBIT I NOTICE OF EXERCISE OF STOCK OPTION Reference is hereby made to the [Stock Option Award Agreement] (the "Award Agreement") dated as of January 21st , 2005, between Mr. Paul H. Johnson, Ph.D., and Nastech Pharmaceutical Company Inc., a Delaware corporation (the "Company"). The undersigned hereby notifies the Company that its elect to purchase _____________ shares of the Company's Common Stock (the "Purchased Shares") at the option exercise price of $10.39 per share (the "Exercise Price") pursuant to that certain option (the "Option") granted to the undersigned on January 21st, 2005, to purchase up to 4,000 shares of the Company's Common Stock. Concurrently with the delivery of this Exercise Notice to the Secretary of the Company, the undersigned shall hereby pay to the Company the Exercise Price for the Purchased Shares in accordance with the provisions of the Award Agreement and shall deliver whatever additional documents may be required by the Award Agreement as a condition for exercise. Date: ____________________ ___________________________________ Name: Address: __________________________ ___________________________________ ___________________________________ Print name in exact manner it is to appear on the stock certificate: ________________________ Address to which certificate is to be sent, if different from address above: ________________________ ________________________ ________________________ Social Security Number _____________________ 6 -----END PRIVACY-ENHANCED MESSAGE-----