Hipótesis

In May 2005, the Company privately placed 3,600,000 ordinary shares at €14.50 per share, resulting in net proceeds for the Company of €50,112.

As of December 31, 2004 the Company had 10 issued and outstanding priority shares, all of which were held by Stichting Prioriteit Crucell (Priority Foundation). The Priority Foundation, which was able to make binding nominations for the supervisory board members, transferred the priority shares to the Company in exchange for €0.24 per priority share. The nomination right has been transferred to the Nomination Committee of the supervisory board. The outstanding priority shares have been revoked and swapped for ten ordinary shares per November 21, 2005.

All of the preference shares are held by a foundation called Stichting Preferente Aandelen Crucell (Preferred Foundation). The board of governors comprises of the Company’s chairman of the supervisory board and four other independent members. The preference shares are held by the Preferred Foundation in which the Company has entered into an agreement that allows it to acquire preference shares up to 100% of the number of outstanding shares. The Preferred Foundation must pay at least 25% of the nominal value of the preference shares it acquires from the Company. If any preference shares are acquired by the Company, they must be cancelled. The Preferred Foundation’s objective is to safeguard the Company’s interests and those of its affiliates, through acquiring or managing the preference shares and by exercising the rights attached to the shares, in particular the voting rights.

Repurchase of Shares

Pursuant to a resolution of the shareholders, the Company may repurchase up to 10 percent of its outstanding share capital through December 2, 2006. No repurchases have occurred through December 31, 2005.

Stock–Based Compensation Stock Option Plans

The Company maintains stock option plans whereby the remuneration committee of the supervisory board may grant options to employees, directors and members of the supervisory board, which are described further below. The compensation cost that has been included in operating expenses for those plans was €2,700, €2,566 and €2,696 in 2005, 2004 and 2003 respectively.

In December 2004, the supervisory board approved a new option plan for 2005 providing for the grant of stock options to non-management committee members for a maximum of 1% of issued ordinary shares. Options granted under this stock option plan are exercisable when the options have vested. Granted options vest straight line over a period of 4 years. Compensation costs are recognized in accordance with the accelerated method. The options expire 5 years after date of grant. Upon termination of

employment with the Company, options must be exercised within 90 days. Options granted under the stock option plan are granted at exercise prices, which equal the fair value of the Company’s ordinary shares at the date of grant.

All options granted under previous stock option plans (the “Prior Plans”) are exercisable immediately upon grant. Upon exercise of the options, employees are subject to profit-retribution provisions. Such provisions entitle the Company to receive a portion of the profits upon the sale of the shares, calculated as

F-16

Doc 1 Page 128 EDGAR :Redline:OFF

20-F/A Crucell N.V.

gnewbur c:\fc\177224223194_l10623_1190894\13719-1-FK.pdf

CRUCELL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (amounts in thousands of euro, except share data)

Note 8. Shareholders’ Equity (Continued)

the difference between the total proceeds from the sale of shares and the aggregate exercise price. The portion of the profits payable to the Company decreases ratably over three to four years. The relevant portion of any profits derived by the employee from the sale of shares received on exercise of options must be remitted to the Company if the employee terminates employment prior to the end of the relevant period. The options expire four to eight years from the date of grant, or earlier upon termination of employment with the Company. Upon termination of employment with the Company, options must be exercised within 90 days. Compensation costs for Prior Plans are recognized in accordance with the straight-line method. Generally, options granted under the Prior Plans are granted at exercise prices which exceed the fair value of the Company’s ordinary shares at the date of grant. No further grants are to be made from the Prior Plans.

In connection with the award of certain options in the past, a cash bonus plan is applicable. In accordance with the terms of a cash bonus plan, if an employee maintains continuous employment with the Company for a period of four years, and defers exercising awarded options until the last month of the option term, the employee receives a cash bonus. The Company recognizes compensation expense ratably during the employment period required under the cash bonus plan. In 2003, the cash bonus plan was eliminated for certain employees resulting in a reduction to compensation expense of approximately €2,300.

In January 2003, the supervisory board approved an option plan (the “2003 Plan”) whereby previously awarded options to employees and members of the supervisory board with an exercise price of €21.00 per share could be exchanged for an equal number of new options (the “replacement options”). The replacement options have an exercise price of €3.49, which was 161% of the average closing stock price of the Company on the three days preceding the option grant date, and have an eight year life. The replacement options are exercisable immediately, but are subject to profit retribution provisions. Such provisions entitle the Company to receive a portion of the profits upon the sale of the shares, calculated as the difference between the total proceeds from the sale of shares, and the aggregate selling price. The portion of the profits payable to the Company decreases ratably over three years. The relevant portion of any profits derived by the employee from the sale of shares received on exercise of options must be remitted to the Company if the employee terminates employment prior to the end of the three year period. A total of 1,295,650 options with an exercise price of

€21.00 per share were replaced under the new option plan, resulting in incremental deferred compensation of €1,516 or €1.17 per option. Compensation expense is recognized ratably over a period of three years. Options issued subsequent to January 2003 are subject to the terms of the 2003 Plan. Options issued under this option plan have an eight year life and will be issued at exercise prices equal to 161% of the average closing stock price of the Company on the three days preceding the option grant date. The options are immediately exercisable, and are subject to profit retribution provisions which lapse over a period of three years. No further grants are available to be made from the 2003 Plan.

In May 2003, the supervisory board approved amendments to the terms of outstanding and future options held by members of the management board, which include the Company’s chief executive officer, chief financial officer, chief operating officer and chief scientific officer, whereby, following a change of control resulting in termination of employment, members of the management board may exercise options over the shorter of a three year period or the remaining term of the options.

F-17

Doc 1 Page 129 EDGAR :Redline:OFF

20-F/A Crucell N.V.

gnewbur c:\fc\177224223194_l10623_1190894\13719-1-FK.pdf

CRUCELL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (amounts in thousands of euro, except share data)

Note 8. Shareholders’ Equity (Continued)

In December 2003, the terms of all outstanding stock options to the supervisory board were modified such that options vest immediately and are no longer subject to profit retribution provisions. The Company recognized compensation expense of €495 representing the total amount of deferred compensation associated with options held by members of the supervisory board.

In April 2004, the supervisory board approved a new option plan (the “2004 Plan”) whereby employees and members of the supervisory board are granted options with an exercise price 126% greater than the average closing stock price of the Company on the three days preceding the option grant date and have a five year life. The options are subject to profit retribution provisions. Such provisions entitle the Company to receive a portion of the profits upon the sale of the shares, calculated as the difference between the total proceeds from the sale of shares, and the aggregate selling price. The portion of the profits payable to the Company decreases ratably over three years. The relevant portion of any profits derived by the employee from the sale of shares received on exercise of options must be remitted to the Company if the employee terminates employment prior to the end of the three-year period.

Compensation expense is recognized ratably over a period of three years. No further grants are available to be made from the 2004 Plan.

The Company accounts for its employee stock options under the fair value method. The fair value of options was estimated at the date of grant using the Black-Scholes option pricing model, with the following weighted average assumptions:

The risk free interest rate is based on U.S. Treasury securities in effect at the time of grant. Expected volatility is based on the historical volatility of the Company’s stock. The expected life of the options granted is an estimate based on the contractual term of the options and historical behavior. The weighted average fair value of options granted during the years ended December 31, 2005, 2004 and 2003 was €10.80, €3.28 and €1.41, respectively.

F-18

Year ended December 31,

2005 2004 2003

Risk-free interest rate 4.42% 2.9% 2.5%

Expected dividend yield — — —

Expected volatility 52.4% 62.3% 87.0%

Expected life (years) 4.25 4.0 4.0

Doc 1 Page 130 EDGAR :Redline:OFF

20-F/A Crucell N.V.

gnewbur c:\fc\17854456561_l10623_1191692\13719-1-FM.pdf

CRUCELL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (amounts in thousands of euro, except share data)

Note 8. Shareholders’ Equity (Continued)

A summary of the stock option activity for the plan is as follows:

Included in the options outstanding as of December 31, 2005 are options to acquire 600,604 ordinary shares that are held by former employees and consultants. These individuals have been permitted to continue vesting in these options for services rendered.

The following table summarizes information about the Company’s stock options outstanding at December 31, 2005:

As of December 31, 2005, a total of 6,216,092 ordinary shares, representing 15% of the issued share capital, have been reserved for issuance under the option plan, of which 4,029,504 are subject to outstanding options (including non-employee stock options).

Share-Based Incentive Plans

Under its 2005 Short-term Incentive Plan (the “STI Plan”), which allows for the issuance for up to 75,015 shares of common stock, the Company granted select executives share awards whose vesting is contingent upon meeting various Company-wide, departmental and individual performance goals in fiscal

F-19

gnewbur c:\fc\17854456561_l10623_1191692\13719-1-FM.pdf

CRUCELL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (amounts in thousands of euro, except share data)

Note 8. Shareholders’ Equity (Continued)

2005, including a requirement not to exceed budgeted cash outflows as a significant item which if met allows a determination of the amounts earned under the plan based on achievement of the departmental and individual performance goals. The employees granted shares under the STI Plan can elect to receive either cash (at a 25% discount from the total award) or shares if the performance criteria are met. As such, grants under the STI Plan are accounted for as liabilities and included in accrued compensation and related benefits in the accompanying balance sheets. Shares granted in 2005 under the STI Plan were at the share price at the beginning of the year at

€10.10, which is lower than the fair value of the shares on the date of grant of €21.10. In December 2005, 68,108 STI Plan shares were granted to select executives, of which the Company expects to issue 34,054 shares of common stock related thereto in fiscal 2006 as the remaining amounts due under the STI Plan to the employees will be received in the form of payments made on behalf of the employees to tax authorities for the minimum statutory wage taxes due on such share grants. There were no forfeitures of the STI Plan grants through December 31, 2005 and all shares granted were vested at year end as all performance related measures were achieved.

The fair value of grants under the STI Plan was estimated on the date of grant assuming the performance goals will be achieved by multiplying the number of shares available to be granted by the grant date fair value of the Company’s shares of €21.10. As of December 31, 2005, there was €1,534 of total recognized compensation cost related to these share-based compensation arrangements granted under the STI Plan included in accrued compensation and related benefits in the accompanying consolidated balance sheets.

The Company also has a 2005 Long-term Incentive Plan (the “LTI Plan”), which allows for the issuance for up to 36,842 shares of common stock to be granted to select executives with vesting contingent upon meeting various market-based goals, including a requirement of a certain share price increase over a three year period and then total shares to be granted after achieving the increase would be based on the Company’s ranking in various European and U.S. sector indexes at the end of the measurement period.

Depending on the level of achievement of these market measures, at the end of three years the number of shares vesting could be 0%-200%. Shares granted in 2005 under the LTI Plan were at the share price at the beginning of the year at €10.10, which is lower than the fair value of the shares on the date of grant of €21.10, which is the measurement date for the awards. In December 2005, 36,842 LTI Plan shares were granted to select executives. There were no forfeitures of the LTI Plan grants through December 31, 2005 and all shares granted were unvested as of year end.

The fair value of grants under the LTI Plan was estimated on the date of grant using a lattice-based option valuation model that uses assumptions for the Company in addition to similar assumptions for companies (Peer Group) included in the sector indexes in order to model out rankings in various scenarios. The model calculates the likelihood of achievement of the market-based measures at various levels and once a value is determined for the shares, compensation cost is recognized over the measurement period of three years regardless of whether such market-based targets are achieved. Key input assumptions for the lattice-based option valuation model include expected volatilities, expected term, dividend yield and risk free interest rates. Expected volatilities are based in historical volatilities of the Company’s stock and Peer Group’s stock measured over a period commensurate with the expected term of the grants. The expected term used is the three-year measurement period. Dividend yields used were based on historical information as to dividends for the Company and its Peer Group. Risk free interest rates used were equal

F-20

Doc 1 Page 132 EDGAR :Redline:OFF

20-F/A Crucell N.V.

gnewbur c:\fc\17854456561_l10623_1191692\13719-1-FM.pdf

CRUCELL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (amounts in thousands of euro, except share data)

Note 8. Shareholders’ Equity (Continued)

to the implied yield currently available on zero-coupon government issues in countries whose currency the share price is expressed for Crucell and the Peer Group with a remaining term equal to the expected term of the share-based instrument being valued.

The weighted-average grant-date fair value of LTI Plan shares granted was €30.04. As of December 31, 2005, there was €1,063 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the LTI Plan; that cost is expected to be recognized over a period of 2.0 years. Compensation cost recognized during the year ended December 31, 2005 related to the LTI Plan amounted to €44.

Stock Option Grants to Non-Employees

The Company has issued stock options to various non-employee consultants in connection with consulting agreements over the years. These non-employee stock options included exercise prices greater than or equal to the fair market value of the underlying common stock on the date of grant and the exercise prices range from €3.49 to €21.38 per share with expiration dates ranging from May 2010 through December 2011. During 2005, the Company issued stock options to purchase 58,000 shares of common stock to a few consultants with exercise prices ranging from €15.40 to €21.38 and expiration dates ranging from May 2010 through

November 2010.

The consulting agreements can be terminated by the Company at any time and only those stock options vested as of the date of termination are exercisable. As of December 31, 2005, total options to purchase 600,604 shares of common stock related to consulting agreements were outstanding with an average exercise price of €4.77 expiration dates ranging from May 2010 through

December 2011.

In connection with these stock option grants to non-employees, the Company is required to record compensation expense based on a Black-Scholes valuation model and amortized over the consulting or vesting period of the grant. The assumptions used in the Black-Scholes valuation model for these non-employee grants are based on the same criteria as used for employee grants except that the expected term is equal to the contractual life of the grant as required by EITF No. 96-18. The Company re-values the unvested portion of these stock options at each reporting period as a result of the requirement for variable accounting for non-employee grants.

As of December 31, 2005, assuming the valuation at December 31, 2005 would remain consistent over the future service periods, the Company would recognize compensation expense related to these non-employee grants amounting to €592 over the next 46 months.

The Company recorded compensation expense associated with these stock options of €3,043, €3,542 and €182, for the years ended December 31, 2005, 2004 and 2003, respectively.

Stock option grants to non-employees are made pursuant to approved stock option plans and activity related thereto is included in the tables above with the employee grants of the approved plans.

Warrants

In 2003, the Company granted warrants to acquire 250,000 ordinary shares with an exercise price of €3.00 per share to a consultant in exchange for services. The warrants were earned by the consultant over the service period which ended in 2004, and expire in July 2008. Per December 31, 2005 169,991 warrants are outstanding.

F-21

Doc 1 Page 133 EDGAR :Redline:OFF

20-F/A Crucell N.V.

gnewbur c:\fc\17854456561_l10623_1191692\13719-1-FM.pdf

CRUCELL N.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued) (amounts in thousands of euro, except share data)