WASHINGTON,
D.C. 20549
FORM
S-8
REGISTRATION
STATEMENT UNDER
THE
SECURITIES ACT OF 1933
A.P.
Pharma,
Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
94-2875566
(State
or
Other Jurisdiction
of
(I.R.S. Employer
Incorporation
or
Organization)
Identification No.)
123
Saginaw Drive, Redwood
City, California 94063
(Address
of Principal Executive Offices)
Non-Qualified
Stock
Plan
(Full
Title of the Plan)
Ronald
Prentki
Chief
Executive Officer
A.P.
Pharma, Inc.
123
Saginaw Drive
Redwood
City,
California 94063
(Name
and
Address of Agent for Service)
(650)
366-2626
(Telephone
Number, Including Area Code, of Agent for Service)
Copy
to:
Julian
Stern, Esq.
Heller
Ehrman LLP
275
Middlefield Road
Menlo
Park, California 94025-3506
(650)
324-7000
Indicate
by check mark whether the
Registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See definition of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
Accelerated
Filer ¨ Accelerated
Filer ¨ Non-Accelerated
Filer ¨ Smaller
Reporting Company x
CALCULATION
OF
REGISTRATION FEE
|
Title
of
Securities
to
be
Registered
|
Amount
to be
Registered
(1)
|
Proposed
Maximum
Offering
Price
per
Share
(2)
|
Proposed
Maximum
Aggregate
Offering
Price
|
Amount
of
Registration
Fee
(3)
|
|
Common
Stock, par value $0.01
|
2,000,000
|
$1.43
|
$2,860,000
|
$112.40
|
|
(1)
|
Represents
2,000,000 shares issuable upon exercise of equity awards to be granted
under Registrant's Non-Qualified Stock Plan. Pursuant to Rule 416(a)
under
the Securities Act of 1933, as amended, (the “Securities Act”), this
Registration Statement includes such additional number of shares
as may be
required by reason of any
stock dividend,
stock split, recapitalization or any other similar transaction effected
without the receipt of consideration which results in an increase
in the
number of the Registrant’s outstanding shares of common stock, or any
anti-dilution provisions of such plan.
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(2)
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Estimated
solely for the purpose
of calculating the amount of the registration fee pursuant to Rule
457(h)
promulgated under the Securities Act. Pursuant to Rule 457(c)
under the Securities Act , the price per share and aggregate offering
price are based upon the average of the high and low prices of the
Registrant’s common stockas
reported on
the Nasdaq
Global Market
on August 4, 2008.
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(3)
|
Amount
of registration fee was calculated pursuant to Section 6(b) of the
Securities Act, which provides that the fee shall be $39.30 per $1,000,000
of the proposed maximum aggregate offering price of the securities
proposed to be offered.
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PART
II
INFORMATION
REQUIRED
IN THE REGISTRATION STATEMENT
The
shares being registered
herein are 2,000,000 shares of common stock authorized to be issued under
Registrant's Non-Qualified Stock Plan.
Item
3. Incorporation of Documents by
Reference
The
following documents filed or
to be filed with the Securities and Exchange Commission (the “Commission”) by
the Registrant are incorporated by reference in this Registration
Statement:
(a)
The Registrant’s Annual Report on Form 10-K for the year ended December 31,
2007;
(b)
The Registrant’s Quarterly Reports on Form 10-Q for the quarter ended March 31,
2008;
(c)
The Registrant’s Current Reports on Form 8-K filed with the Commission on
January 15, 2008, January 24, 2008 and July 9, 2008;
(d)
The description of the Registrant’s Common Stock contained in the registration
statement on Form 8-A filed with the Commission on August 7, 1987 pursuant
to
Section 12 of the Exchange Act of 1934, as amended (the “Exchange Act”),
including any amendment or report filed for the purpose of updating such
description; and
(e)
All documents subsequently filed by the Registrant pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated
by
reference into this Registration Statement and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall
be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein, or in any other subsequently
filed document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
Item
4. Description of Securities
Not
applicable.
Item
5. Interests of Named Experts and Counsel
Heller
Ehrman LLP, counsel to the
Company, has rendered an opinion with respect to the legality of the Common
Stock issuable under the Non-Qualified Stock Plan. Julian N. Stern,
the sole shareholder of a professional corporation that is a partner of Heller
Ehrman LLP, is the Secretary of the Company. Mr. Stern owns 42,583
shares of the Company’s Common Stock.
Item
6. Indemnification of Directors and Officers
The
Registrant has the power to
indemnify its officers and directors against liability for certain acts pursuant
to Section 145 of the General Corporation Law of the State of
Delaware. Section B of Article VI of the Registrant’s Certificate of
Incorporation provides:
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"(1)
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Right
to
Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action,
suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a “proceeding”), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a
director
or officer, of the Corporation or is or was serving at the request
of the
Corporation, as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether
the
basis of such proceeding is alleged action in an official capacity
as a
director, officer, employee or agent or in any other capacity while
serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized
by
the General Corporation Law of the State of Delaware, as the same
exists
or may hereafter be amended (but, in the case of any such amendment,
only
to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation
to
provide prior to such amendment), against all expense, liability
and loss
(including attorneys’ fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be
a
director, officer, employee or agent and shall inure to the benefit
of his
or her heirs, executors and administrators; provided, however, that,
the
Corporation shall indemnify any such person seeking indemnification
in
connection with a proceeding (or part thereof) initiated by such
person
only if such proceeding (or part thereof) was authorized by the board
of
directors of the Corporation. The right to indemnification
conferred in this Section B shall be a contract right and shall include
the right to be paid by the Corporation the expenses incurred in
defending
any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware
requires, the payment of such expenses incurred by a director or
officer
in his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while
a
director or officer, including, without limitation, service to an
employee
benefit plan) in advance of the final disposition of a proceeding,
shall
be made only upon delivery to the Corporation of an undertaking,
by or on
behalf of such director or officer, to repay all amounts so advanced
if it
shall ultimately be determined that such director or officer is not
entitled to be indemnified under this Section or otherwise. The
Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the
same
scope and effect as the foregoing indemnification of directors and
officers.
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(2)
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Non-Exclusivity
of
Rights. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section B shall not be exclusive of any
other rights which any person may have or hereafter acquire under
any
statute, provisions of this Certificate of Incorporation, Bylaw,
agreement, vote of stockholders or disinterested directors or otherwise.
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(3)
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Insurance. The
Corporation may maintain insurance, at its expense, to protect itself
and
any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise
against
any such expense, liability or loss, whether or not the Corporation
would
have the power to indemnify such person against such expense, liability
or
loss under Delaware General Corporation Law.”
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Registrant
maintains directors’ and
officers’ liability insurance which covers civil liabilities. Such
insurance helps the Registrant to attract qualified officers and directors,
by
providing a means for the Company to pay the costs and expenses involved in
the
event civil litigation is brought against of one of the Registrant’s officers or
directors.
Item 7. Exemption from Registration Claimed
Not
Applicable.
Item
8. Exhibits
Item
9. Undertakings
A.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement;
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(i)
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To
include any prospectus required by Section 10(a)(3) of the Securities
Act
of 1933, as amended (the “Securities Act”);
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(ii)
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To
reflect in the prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent
a
fundamental change in the information set forth in the Registration
Statement;
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(iii)
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To
include any material information with respect to the plan of distribution
not previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement;
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provided,
however, that
paragraphs A(1)(i) and A(1)(ii) do not apply if the information required to
be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2)
That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3)
To remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
B. The undersigned Registrant hereby
undertakes that, for purposes of determining any liability under the Securities
Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
C.
Insofar as indemnification for liabilities arising under the Securities Act
may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant
to the requirements of the
Securities Act of 1933, the Registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-8 and
has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Redwood City, State
of
California, on this 7th day of August, 2008.
A.P.
PHARMA, INC.
By: /s/Ronald
Prentki
Ronald Prentki
Chief Executive Officer
Each
person whose signature appears
below constitutes and appoints Gregory Turnbull and Ronald Prentki his or her
true and lawful attorneys-in-fact and agents, each acting alone, with full
power
of substitution and resubstitution, for him or her and in his name, place and
stead, in any and all capacities, to sign any or all amendments (including
post
effective amendments) to the Registration Statement, and to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b) under
the
Securities Act of 1933, as amended, and all post effective amendments thereto,
and to file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could
do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, each acting alone, or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant
to the requirements of the
Securities Act of 1933, this Registration Statement on Form S-8 has been signed
by the following persons in the capacities and on the dates
indicated.
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/s/Ronald
Prentki
Ronald
Prentki
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President
and Chief Executive Officer, Director
(Principal
Executive Officer)
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August 7,
2008
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Gregory
Turnbull
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Chief
Financial Officer
(Principal
Financial Officer)
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/s/Paul
Goddard
Paul
Goddard
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Chairman
of the Board of Directors
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August 7,
2008
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/s/Peter
Riepenhausen
Peter
Riepenhausen
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Director
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August 7,
2008
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/s/Toby
Rosenblatt
Toby
Rosenblatt
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Director
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August 7,
2008
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/s/Arthur
Taylor
Arthur
Taylor
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Director
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August
7, 2008
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/s/Robert
Zerbe
Robert
Zerbe
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Director
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August 7,
2008
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Item
No.
Description
of
Item
Exhibit 4.1
A.P.
PHARMA, INC.
NON-QUALIFIED
STOCK
PLAN
(as
amended through July 3, 2008)
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SECTION
1.
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PURPOSE;
DEFINITIONS.
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(a) Purpose. The
purposes of the Plan are:
(i) to
provide to certain persons who are not employees of the Company a material
inducement to become executives of, or consultants to, A.P. Pharma, Inc., a
Delaware corporation, its subsidiaries or affiliates by providing an opportunity
to acquire stock in the Company; and
(ii) to
encourage selected employees, excluding officers and directors, to improve
operations and increase profits of the Company.
(b) Definitions. For
purposes of the Plan, the following terms have the following
meanings:
(i) “Award”
means any award under the Plan, including any Option, Restricted Stock or Stock
Purchase Right Award.
(ii) “Award
Agreement” means, with respect to each Award, the signed written agreement
between the Company and the Plan participant setting forth the terms and
conditions of the Award.
(iii) “Board”
means the Board of Directors of the Company.
(iv) “Change
in Control” has the meaning set forth in Section 8(a).
(v) “Code”
means the Internal Revenue Code of 1986, as amended from time to time, and
any
successor statute.
(vi) “Commission”
means the Securities and Exchange Commission and any successor
agency.
(vii) “Committee”
means the Committee referred to in Section 2, or the Board in its capacity
as
administrator of the Plan in accordance with Section 2.
(viii) “Company”
means A.P. Pharma, Inc., a Delaware corporation.
(ix) “Disability”
means permanent and total disability as determined by the Committee for purposes
of the Plan.
(x) “Non-Employee
Director” has the meaning set forth in Rule 16b-3 under the Exchange Act, and
any successor definition adopted by the Commission.
(xi) “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time,
and any successor statute.
(xii) “Fair
Market Value” means as of any given date (a) if the Stock is listed on any
established stock exchange or a national market system, the closing sales price
for the Stock or the closing bid if no sales were reported, as quoted on such
system or exchange, as reported in the Wall Street Journal; or (b) in the
absence of an established market for the Stock, the fair market value of the
Stock as determined by the Committee in good faith.
(xiii) “Non-Qualified
Stock Option” means an Option that is not an Incentive Stock Option, within the
meaning of Section 422 of the Code.
(xiv) “Option”
means an option granted under Section 5.
(xv) “Plan”
means this A.P. Pharma, Inc. Non-Qualified Stock Plan, as amended from time
to
time.
(xvi) “Restricted
Stock” means an Award of Stock subject to restrictions, as more fully described
in Section 6.
(xvii) “Restriction
Period” means the period determined by the Committee under Section
6(b).
(xviii) “Rule
16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act, as amended from
time to time, and any successor rule.
(xix) “Stock”
means the Common Stock of the Company, and any successor security.
(xx) “Stock
Appreciation Right” means an Award granted under Section 7.
(xxi) “Subsidiary”
has the meaning set forth in Section 424 of the Code.
(xxii) “Tax
Date” means the date defined in Section 9(f).
(xxiii) “Termination”
means, for purposes of the Plan, with respect to a participant, that the
participant has ceased to be, for any reason, employed by, or a consultant
to,
the Company, a subsidiary or an affiliate; provided, that for purposes of this
definition, unless otherwise determined by the President of the Company, in
his
sole discretion, Termination shall not include a change in status from an
employee of, to a consultant to, the Company or any subsidiary or affiliate,
or
vice versa.
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SECTION
2.
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ADMINISTRATION.
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(a) Committee. The
Plan shall be administered by the Board or, upon delegation by the Board, by
a
committee of Non-Employee Directors appointed by the Board. In
connection with the administration of the Plan, the Committee shall have the
powers possessed by the Board. The Committee may act only by a
majority of its members, except that the Committee may from time to time select
another committee or one or more other persons to be responsible for any matters
for which Non-Employee Director are not required pursuant to Rule
16b-3. The Board at any time may abolish the Committee and revest in
the Board the administration of the Plan.
(b) Authority. The
Committee shall grant Awards only to persons who are not at the time of the
Award employees of the Company for the purpose of providing a material
inducement to such persons to become employees of or consultants to the
Company. In particular and without limitation, the Committee, subject
to the terms of the Plan, shall:
(i) select
the persons to whom Awards may be granted;
(ii) determine
whether and to what extent Awards are to be granted under the Plan;
(iii) determine
the number of shares to be covered by each Award granted under the
Plan;
(iv) determine
the terms and conditions of any Award granted under the Plan and any related
loans to be made by the Company, based upon factors determined by the Committee;
and
(v) determine
to what extent and under what circumstances any Award payments may be deferred
by a participant.
(c) Committee
Determinations
Binding. The Committee may adopt, alter and repeal
administrative rules, guidelines and practices governing the Plan as it from
time to time shall deem advisable, may interpret the terms and provisions of
the
Plan, any Award and any Award Agreement and may otherwise supervise the
administration of the Plan. Any determination made by the Committee
pursuant to the provisions of the Plan with respect to any Award shall be made
in its sole discretion at the time of the grant of the Award or, unless in
contravention of any express term of the Plan or Award, at any later
time. All decisions made by the Committee under the Plan shall be
binding on all persons, including the Company and Plan
participants.
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SECTION
3.
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STOCK
SUBJECT TO PLAN.
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(a) Number
of
Shares. The total number of shares of Stock reserved and
available for issuance pursuant to Awards under this Plan shall be 2,062,500
shares. Such shares may consist, in whole or in part, of authorized
and unissued shares or treasury shares or shares reacquired in private
transactions or open market purchases, but all shares issued under the Plan,
regardless of source shall be counted against the 2,062,500 share
limitation. If any Option terminates or expires without being
exercised in full or if any shares of Stock subject to an Award are forfeited,
or if an Award otherwise terminates without issuance in full being made to
the
participant in the form of Stock, the shares not issued under such Option or
Award shall again be available for issuance in connection with
Awards. Any Award under this Plan shall be governed by the terms of
the Plan and any applicable Award Agreement.
(b) Adjustments. In
the event of any merger, reorganization, consolidation, recapitalization, stock
dividend, stock split or other change in corporate structure affecting the
Stock, such substitution or adjustments shall be made in the aggregate number
of
shares of Stock reserved for issuance under the Plan, in the number and exercise
price of shares subject to outstanding Options, and in the number of shares
subject to other outstanding Awards, as may be determined to be appropriate
by
the Committee, in its sole discretion; provided, however, that the number of
shares subject to any Award shall always be a whole number.
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SECTION
4.
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ELIGIBILITY.
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Awards
may be granted only to persons (i) not employed by the Company at the time
of
the Award and who the Company wishes to attract as an officer or other employee
of, or consultant to, the Company, its subsidiaries and affiliates as a material
inducement to accepting employment or consultancy with the Company or (ii)
who
are employees of the Company but are not officers or directors of the Company
at
the time of the Award.
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SECTION
5.
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STOCK
OPTIONS.
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(a) Type. Any
Option granted under the Plan shall be in such form as the Committee may from
time to time approve; provided, that only Non-Qualified Stock Options may be
granted under the Plan.
(b) Terms
and
Conditions. Options granted under the Plan shall be subject to
the following terms and conditions:
(i) Option
Term. The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten (10) years after the date
the
Option is granted.
(ii) Grant
Date. The Company may grant Options under the Plan at any time
and from time to time before the Plan terminates. The Committee shall
specify the date of grant or, if it fails to, the date of grant shall be the
date the intended optionee is first treated as an employee or consultant for
payroll purposes.
(iii) Exercise
Price. The exercise price per share of Stock purchasable under
an Option shall be equal to at least 100% of the Fair Market Value on the date
of grant.
(iv) Exercisability. Subject
to the other provisions of the Plan, an Option shall be exercisable in its
entirety at grant or at such times and in such amounts as are specified in
the
Award Agreement evidencing the Option. Except to the extent otherwise
provided in the Award Agreement, in the event of Termination prior to the Option
being exercisable in full, any such unexercisable portion shall expire as of
such Termination. The Committee, in its absolute discretion, at any
time may waive any limitations respecting the time at which an Option first
becomes exercisable in whole or in part.
(v) Method
of Exercise;
Payment. To the extent the right to purchase shares has
accrued, Options may be exercised, in whole or in part, from time to time,
by
written notice from the optionee to the Company stating the number of shares
being purchased, accompanied by payment of the exercise price for the
shares.
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SECTION
6.
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RESTRICTED
STOCK.
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(a) Price. The
Committee may grant to a participant Restricted Stock. The grantee
shall pay the par value per share as consideration therefor.
(b) Restrictions. Subject
to the provisions of the Plan and the Award Agreement, during the Restriction
Period set by the Committee, commencing with and not exceeding ten (10) years
from the date of such Award, the participant shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber shares of Restricted
Stock. Within these limits, the Committee may provide for the lapse
of such restrictions in installments and may accelerate or waive such
restrictions, in whole or in part, based on service, performance or such other
factors or criteria as the Committee may determine.
(c) Dividends. Unless
otherwise determined by the Committee, with respect to dividends on shares
of
Restricted Stock, dividends payable in cash shall be automatically reinvested
in
additional Restricted Stock, and dividends payable in Stock shall be paid in
the
form of Restricted Stock.
(d) Termination. Except
to the extent otherwise provided in the Award Agreement and pursuant to Section
6(b), in the event of a Termination during the Restriction Period, all shares
still subject to restriction shall be forfeited by the participant.
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SECTION
7.
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STOCK
APPRECIATION RIGHTS.
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(a) General. Stock
Appreciation Rights may be granted either alone, in addition to, or in tandem
with other Awards granted under the Plan. The Administrator may grant
Stock Appreciation Rights to eligible participants subject to terms and
conditions not inconsistent with this Plan and determined by the
Administrator. The specific terms and conditions applicable to the
participant shall be provided for in the Stock Award Agreement. Stock
Appreciation Rights shall be exercisable, in whole or in part, at such times
as
the Administrator shall specify in the Stock Award Agreement.
(b) Exercise
of Stock
Appreciation Right. Upon the exercise of a Stock Appreciation
Right, in whole or in part, the participant shall be entitled to a payment
in an
amount equal to the excess of the Fair Market Value on the date of exercise
of a
fixed number of shares of Stock covered by the exercised portion of the Stock
Appreciation Right, over the Fair Market Value on the Grant Date of the Stock
covered by the exercised portion of the Stock Appreciation Right (or such other
amount calculated with respect to Stock subject to the Award as the
Administrator may determine). The amount due to the participant upon
the exercise of a Stock Appreciation Right shall be paid in such form of
consideration as determined by the Administrator and may be in cash, shares
of
Stock or a combination thereof, over the period or periods specified in the
Stock Award Agreement. A Stock Award Agreement may place limits on
the amount that may be paid over any specified period or periods upon the
exercise of a Stock Appreciation Right, on an aggregate basis or as to any
participant. A Stock Appreciation Right shall be considered exercised
when the Company receives written notice of exercise in accordance with the
terms of the Stock Award Agreement from the person entitled to exercise the
Stock Appreciation Right.
(c) Nonassignability
of Stock
Appreciation Rights. Except as
determined by the Administrator, no Stock Appreciation Right shall be assignable
or otherwise transferable by the participant, except by will or by the laws
of
descent and distribution.
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SECTION
8.
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CHANGE
IN CONTROL.
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(a) Definition
of “Change in
Control”. For purposes of Section 8(b), a “Change in Control”
means the occurrence of any one of the following:
(i) Any
“person”, as such term is used in Sections 13(d) and 14(d) of the Exchange Act
(other than the Company, a subsidiary, an affiliate, or a Company employee
benefit plan, including any trustee of such plan acting as trustee) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 51%
or
more of the combined voting power of the Company’s then outstanding securities;
or
(ii) the
dissolution or liquidation (partial or total) of the Company or a sale of assets
involving 51% or more of the assets of the Company, any merger or reorganization
of the Company, whether or not another entity is the survivor, in a transaction
pursuant to which the holders, as a group, of all of the shares of the Company
outstanding prior to the transaction hold, as a group, less than 51% of the
shares of the Company outstanding after the transaction, or any other event
which the Board determines, in its discretion, would materially alter the
structure of the Company or its ownership.
(b) Impact
of
Event. In the event of a “Change in Control” as defined in
Section 8(a), the Board may, in its discretion, approve of acceleration
provisions no more favorable to participants than the following shall
apply:
(i) Any
Options outstanding as of the date such Change in Control is determined to
have
occurred and not then exercisable and vested shall become fully exercisable
and
vested; and
(ii) The
restrictions and limitations applicable to any Restricted Stock and Stock
Purchase Rights shall lapse, and such Restricted Stock shall become fully
vested.
|
SECTION
9.
|
GENERAL
PROVISIONS.
|
(a) Award
Grants. Any Award may be granted either alone or in addition
to other Awards granted under the Plan. Subject to the terms and
restrictions set forth elsewhere in the Plan, the Committee shall determine
the
consideration, if any, payable by the participant for any Award and, in addition
to those set forth in the Plan, any other terms and conditions of the
Awards. The Committee may condition the grant or payment of any Award
upon the attainment of specified performance goals or such other factors or
criteria, including vesting based on continued employment or consulting, as
the
Committee shall determine. Performance objectives may vary from
participant to participant and among groups of participants and shall be based
upon such Company, subsidiary, group or division factors or criteria as the
Committee may deem appropriate, including, but not limited to, earnings per
share or return on equity. The other provisions of Awards also need
not be the same with respect to each recipient.
(b) Award
Agreement. As soon as practicable after the date of an Award
grant, the Company and the participant shall enter into a written Award
Agreement identifying the date of grant, and specifying the terms and conditions
of the Award. Options are not exercisable until after execution of
the Award agreement by the Company and the Plan participant, but a delay in
execution of the agreement shall not affect the validity of an Option
grant.
(c) Certificates. All
certificates for shares of Stock or other securities delivered under the Plan
shall be subject to such stock transfer orders, legends and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Commission, any market in which the Stock is then traded
and
any applicable federal, state or foreign securities law.
(d) Termination. Unless
otherwise provided in the applicable Award Agreement or by the Committee, in
the
event of Termination for any reason other than death, retirement or Disability,
Awards held at the date of Termination (and only to the extent then exercisable
or payable, as the case may be) may be exercised in whole or in part at any
time
within three (3) months after the date of Termination, or such lesser period
specified in the Award Agreement (but in no event after the expiration date
of
the Award), but not thereafter. If Termination is due to retirement
or to death or Disability, Awards held at the date of Termination (and only
to
the extent then exercisable or payable, as the case may be) may be exercised
in
whole or in part by the participant in the case of retirement or Disability,
by
the participant’s guardian or legal representative or by the person to whom the
Award is transferred by will or the laws of descent and distribution, at any
time within two (2) years from the date of Termination or any lesser period
specified in the Award Agreement (but in no event after the expiration of the
Award).
(e) Delivery
of Purchase
Price. If and only to the extent authorized by the Committee,
participants may make all or any portion of any payment due to the
Company
(i) with
respect to the consideration payable for an Award,
(ii) upon
exercise of an Award, or
(iii) with
respect to federal, state, local or foreign tax payable in connection with
an
Award, by delivery of (x) cash, (y) check, or (z) any property other than cash
(including a promissory note of the participant or shares of Stock or
securities) so long as, if applicable, such property constitutes valid
consideration for the Stock under, and otherwise complies with, applicable
law. No promissory note under the Plan shall have a term (including
extensions) of more than five years or shall be of a principal amount exceeding
90% of the purchase price paid by the borrower.
(f) Tax
Withholding. Any shares or other securities so withheld or
tendered will be valued by the Committee as of the date they are withheld or
tendered; provided, however, that Stock shall be valued at Fair Market Value
on
such date. The value of the shares withheld or tendered may not
exceed the required federal, state, local and foreign withholding tax
obligations as computed by the Company. Unless the Committee permits
otherwise, the participant shall pay to the Company in cash, promptly when
the
amount of such obligations becomes determinable (the “Tax Date”), all applicable
federal, state, local and foreign withholding taxes that the Committee in its
discretion determines to result (i) from the lapse of restrictions imposed
upon
an Award, (ii) upon exercise of an Award, or (iii) from a transfer or other
disposition of shares acquired upon exercise or payment of an Award, or
otherwise related to the Award or the shares acquired in connection with an
Award.
A
participant who has received an Award or payment under an Award may, to the
extent, if any, authorized by the Committee in its discretion, make an election
to (x) deliver to the Company a promissory note of the participant on the terms
set forth in Section 9(e), or (y) tender any such securities to the Company
to
pay the amount of tax that the Committee in its discretion determines to be
required to be withheld by the Company subject to any limitations imposed by
Section 16(b) of the Exchange Act or other applicable law.
(g) No
Transferability. Unless otherwise provided for in the
applicable Award Agreement or by the Committee, no Award shall be assignable
or
otherwise transferable by the participant other than by will or by the laws
of
descent and distribution, and during the life of a participant, an Award shall
be exercisable, and any elections with respect to an Award may be made, only
by
the participant or participant’s guardian or legal representative.
(h) Adjustment
of Awards;
Waivers. The Committee may adjust the performance goals and
measurements applicable to Awards (i) to take into account changes in law and
accounting and tax rules, (ii) to make such adjustments as the Committee deems
necessary or appropriate to reflect the inclusion or exclusion of the impact
of
extraordinary or unusual items, events or circumstances in order to avoid
windfalls or hardships, and (iii) to make such adjustments as the Committee
deems necessary or appropriate to reflect any material changes in business
conditions. In the event of hardship or other special circumstances
of a participant and otherwise in its discretion, the Committee may waive in
whole or in part any or all restrictions, conditions, vesting, or forfeiture
with respect to any Award granted to such participant.
(i) Non
Competition. The Committee may condition its discretionary
waiver of a forfeiture, the acceleration of vesting at the time of Termination
of a participant holding any unexercised or unearned Award, the waiver of
restrictions on any Award, or the extension of the expiration period to a period
not longer than that provided by the Plan upon such participant’s agreement (and
compliance with such agreement) to (i) not engage in any business or activity
competitive with any business or activity conducted by the Company and (ii)
be
available for consultations at the request of the Company’s management, all on
such terms and conditions (including conditions in addition to clauses (i)
and
(ii)) as the Committee may determine.
(j) Dividends. The
reinvestment of dividends in additional Stock or Restricted Stock at the time
of
any dividend payment pursuant to Section 6(c) shall only be permissible if
sufficient shares of Stock are available under Section 3 for such reinvestment
(taking into account then outstanding Awards).
(k) Regulatory
Compliance. Each Award under the Plan shall be subject to the
condition that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Stock upon any
securities exchange or for trading in any securities market or under any state
or federal law, (ii) the consent or approval of any government or regulatory
body or (iii) an agreement by the participant with respect thereto, is necessary
or desirable, then such Award shall not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable
to
the Committee.
(l) Rights
as
Shareholder. Unless the Plan or the Committee expressly
specifies otherwise, an optionee shall have no rights as a shareholder with
respect to any shares covered by an Award until the stock certificates
representing the shares are actually delivered to the
optionee. Subject to Sections 3(b) and 6(c), no adjustment shall be
made for dividends or other rights for which the record date is prior to the
date the certificates are delivered.
(m) Beneficiary
Designation. The Committee, in its discretion, may establish
procedures for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant’s death are to be paid.
(n) Additional
Plans. Nothing contained in the Plan shall prevent the
Company, a subsidiary or an affiliate from adopting other or additional
compensation arrangements for its employees and consultants.
(o) No
Employment
Rights. The adoption of the Plan shall not confer upon any
employee any right to continued employment nor shall it interfere in any way
with the right of the Company, a subsidiary or an affiliate to terminate the
employment of any employee at any time.
(p) Rule
16b-3. Notwithstanding any provision of the Plan, the Plan
shall always be administered, and Awards shall always be granted and exercised,
in such a manner as to conform to the provisions of Rule 16b-3.
(q) Governing
Law. The Plan and all Awards shall be governed by and
construed in accordance with the laws of the State of California.
(r) Use
of
Proceeds. All cash proceeds to the Company under the Plan
shall constitute general funds of the Company.
(s) Unfunded
Status of
Plan. The Plan shall constitute an “unfunded” plan for
incentive and deferred compensation. The Committee may authorize the
creation of trusts or arrangements to meet the obligations created under the
Plan to deliver Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the “unfunded” status of the
Plan.
(t) Assumption
by
Successor. The obligations of the Company under the Plan and
under any outstanding Award may be assumed by any successor corporation, which
for purposes of the Plan shall be included within the meaning of
“Company”.
|
SECTION
10.
|
AMENDMENTS
AND TERMINATION.
|
The
Board
may amend, alter or discontinue the Plan or any Award, but no amendment,
alteration or discontinuance shall be made which would impair the rights of
a
participant under an outstanding Award without the participant’s
consent.
|
SECTION
11.
|
EFFECTIVE
DATE OF PLAN.
|
The
Plan
shall be effective on the date it is adopted by the Board.
|
SECTION
12.
|
TERM
OF PLAN.
|
No
Award
shall be granted on or after October 24, 2010, but Awards granted prior to
October 24, 2010 may extend beyond that date.
Plan
approved by the Board of Directors on October 24, 2000.
A.P.
pharma, inc.
NON-QUALIFIED
STOCK PLAN
NONQUALIFIED
STOCK OPTION AGREEMENT
|
(A)
|
Name
of Optionee:
|
Name
|
|
(B)
|
Grant
Date:
|
Grant
Date
|
|
(C)
|
Number
of Shares:
|
Shares
Granted
|
|
(D)
|
Exercise
Price:
|
Grant
Exercise
Price(FMV)
|
|
(E)
|
Vesting
Base Date:
|
Vest
Start Date
|
|
(F)
|
Effective
Date:
|
Effective
Date
|
THIS
NONQUALIFIED STOCK OPTION AGREEMENT (the “Agreement”),
is made and entered into as of the date set forth in Item F above (the “Effective
Date”) between A.P.
Pharma, Inc., a Delaware corporation (the “Company”)
and Enter Name (“Optionee”).
THE
PARTIES AGREE AS FOLLOWS:
1. Grant
of
Option. The Company hereby grants to Optionee pursuant to the
Company’s Non-Qualified Stock Plan (the “Plan”),
a
copy of which is attached to this Agreement as Exhibit 1, a nonqualified stock
option (the “NQO”)
to
purchase all or any part of an aggregate of the number of shares (the “NQO
Shares”) of the Company’s Common Stock (as defined in the Plan) listed in
Item C above on the terms and conditions set forth herein and in the Plan,
the
terms and conditions of the Plan being hereby incorporated into this Agreement
by reference.
2. Exercise
Price. The exercise price for purchase of each share of Common
Stock covered by this NQO shall be the price set forth in Item D
above.
3. Term. This
NQO shall expire ten (10) years after the Grant
Date
4. Adjustment
of
NQOs. The Company shall adjust the number and kind of shares
and the exercise price thereof in certain circumstances in accordance with
the
provisions of Section 3(b) of the Plan.
5. Exercise
of
Options.
5.1 Vesting;
Time of
Exercise. This NQO shall be exercisable according to the
schedule set forth on Exhibit 5.1 attached hereto. Such schedule
shall commence as of the date set forth in Item (E) above (the “Vesting
Base
Date”).
5.2 Exercise
After
Termination of Status as an Employee, Director or
Consultant. In the event of termination of Optionee’s
continuous status as an employee, director or consultant, this NQO may be
exercised in whole or in part at
any time within 90 days of the date of such termination (but in no event after
the expiration date of this NQO pursuant to Section 3), provided, however,
that
in the event of death or disability, this NQO may be exercised in accordance
with the provisions of Section 9(d) of the Plan.
5.3 Manner
of
Exercise. Optionee may exercise this NQO, or any portion of
this NQO, by giving written notice to the Company at its principal executive
office, to the attention of the officer of the Company designated by the Plan
Administrator, accompanied by payment of the exercise price and payment of
any
applicable withholding or employment taxes. The date the Company
receives written notice of an exercise hereunder accompanied by payment will
be
considered as the date this NQO was exercised.
5.4 Payment. Except
as provided in Exhibit 5.4 attached hereto, if any (the absence of such exhibit
indicating that no exhibit was intended), payment may be made for NQO Shares
purchased at the time written notice of exercise of the NQO is given to the
Company, by delivery of cash, check or, in the exercise of the absolute
discretion of the Administrator, previously owned shares of Common Stock
(including constructive delivery) or a full recourse promissory note equal
to up
to 90% of the exercise price and payable over no more than five
years. Any applicable taxes must be paid in cash. The
proceeds of any payment shall constitute general funds of the
Company.
5.5 Delivery
of
Certificate. Promptly after receipt of payment and written
notice of exercise of the NQO, the Company shall, without stock issue or
transfer taxes to the Optionee or other person entitled to exercise, deliver
to
the Optionee or other person a certificate or certificates for the requisite
number of NQO Shares or shall register the Optionee as a shareholder on the
books of the Company. An Optionee or transferee of an Optionee shall
not have any privileges as a shareholder with respect to any NQO Shares covered
by the option until the date of issuance of a stock certificate or, if
applicable, such registration.
6. Nonassignability
of NQO. This NQO is not assignable or transferable by Optionee
except by will or by the laws of descent and distribution. During the
life of Optionee, the NQO is exercisable only by the Optionee. Any
attempt to assign, pledge, transfer, hypothecate or otherwise dispose of this
NQO in a manner not herein permitted, and any levy of execution, attachment,
or
similar process on this NQO, shall be null and void.
7. Company’s
Right
of Repurchase Upon Termination of Employment. The NQO Shares
arising from exercise of this NQO shall be subject to a right of repurchase
in
favor of the Company (the “Right
of
Repurchase”) to
the extent set forth on Exhibit 7 attached hereto (the absence of such exhibit
indicating that no such exhibit was intended and that the NQO shall be subject
only to the limitations set forth on Exhibit 5.1).
8. Restriction
on
Transfer. Regardless whether the sale of the NQO Shares has
been registered under the Securities Act or has been registered or qualified
under the securities laws of any state, the Company may impose restrictions
upon
the sale, pledge, or other transfer of NQO Shares (including the placement
of
appropriate legends on stock certificates) if, in the judgment of the Company
and the Company’s counsel, such restrictions are necessary or desirable in order
to achieve compliance with the provisions of the Securities Act, the securities
laws of any state, or any other law, or if the Company does not desire to have
a
trading market develop for its securities.
9. Tax
Advice. The Company has made no warranties or representations
to Purchaser with respect to the income tax consequences of the transactions
contemplated by the agreement pursuant to which the NQO Shares will be purchased
and Purchaser is in no manner relying on the Company or its representatives
for
an assessment of such tax consequences.
10. Assignment;
Binding Effect. Subject to the limitations set forth in this
Agreement, this Agreement shall be binding upon and inure to the benefit of
the
executors, administrators, heirs, legal representatives, and successors of
the
parties hereto; provided, however, that Optionee may not assign any of
Optionee’s rights under this Agreement.
11. Damages. Optionee
shall be liable to the Company for all costs and damages, including incidental
and consequential damages, resulting from a disposition of NQO Shares which
is
not in conformity with the provisions of this Agreement.
12. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California excluding those laws that
direct the application of the laws of another jurisdiction.
13. Notices. All
notices and other communications under this Agreement shall be in
writing. Unless and until the Optionee is notified in writing to the
contrary, all notices, communications, and documents directed to the Company
and
related to the Agreement, if not delivered by hand, shall be mailed, addressed
as follows:
A.P.
Pharma, Inc.
123
Saginaw Drive
Redwood
City, CA 94063
Attention: President
Unless
and until the Company is notified in writing to the contrary, all notices,
communications, and documents intended for the Optionee and related to this
Agreement, if not delivered by hand, shall be mailed to Optionee’s last known
address as shown on the Company’s books. Notices and communications
shall be mailed by first class mail, postage prepaid; documents shall be mailed
by registered mail, return receipt requested, postage prepaid. All
mailings and deliveries related to this Agreement shall be deemed received
when
actually received, if by hand delivery, and two business days after mailing,
if
by mail.
14. Arbitration. Any
and all disputes or controversies arising out of this Agreement shall be finally
settled by arbitration conducted in California in accordance with the then
existing rules of the American Arbitration Association, and judgment upon the
award rendered by the arbitrators may be entered in any court having
jurisdiction thereof; provided that nothing in this Section 14 shall prevent
a
party from applying to a court of competent jurisdiction to obtain temporary
relief pending resolution of the dispute through arbitration. The
parties hereby agree that service of any notices in the course of such
arbitration at their respective addresses as provided for in Section 13 shall
be
valid and sufficient.
15. Entire
Agreement. Company and Optionee agree that this Agreement
(including its attached Exhibits) is the complete and exclusive statement
between Company and Optionee regarding its subject matter and supersedes all
prior proposals, communications, and agreements of the parties, whether oral
or
written, regarding the grant of stock options or issuances of shares to
Optionee.
IN
WITNESS WHEREOF, the parties have executed this Nonqualified Stock Option
Agreement as of the Effective Date.
A.P.
Pharma, Inc.
By: Gregory
Turnbull
Title: Chief
Financial Officer
The
Optionee hereby accepts and agrees to be bound by all of the terms and
conditions of this Agreement and the Plan.
Name
Optionee’s
spouse indicates by the execution of this Nonqualified Stock Option Agreement
his or her consent to be bound by the terms thereof as to his or her interests,
whether as community property or otherwise, if any, in the option granted
hereunder, and in any NQO Shares purchased pursuant to this
Agreement.
Optionee’s
Spouse
EXHIBITS
|
Exhibit
1
|
Non-Qualified
Stock Plan
|
|
Exhibit
5.1
|
Time
of Exercise
|
|
Exhibit
5.4
(if
applicable)
|
Payment
(not applicable)
|
|
Exhibit
7
(if
applicable)
|
Right
of Repurchase (not applicable)
|
EXHIBIT
1 OF THE NONQUALIFIED STOCK
OPTION
AGREEMENT
NON-QUALIFIED
STOCK PLAN
EXHIBIT
5.1 OF THE NONQUALIFIED STOCK
OPTION
AGREEMENT
The
NQO
shall be exercisable with respect to 25% of the total number of NQO Shares
one
year after the Vesting Base Date and with respect to an additional 1/48 of
the
total number of NQO Shares on the monthly anniversary of the Vesting Base Date
of each month thereafter, so that the NQO shall be exercisable with respect
to
all of the NQO Shares on and after four years after the Vesting Base
Date.
Executed
by:
A.P.
Pharma, Inc.
______________________
By: Gregory
Turnbull
Title: Chief
Financial Officer
______________________
Name
August
7, 2008
A.P.
Pharma, Inc.
123
Saginaw Drive
Redwood
City, California 94063
|
|
Re:
|
Registration
Statement on Form
S-8
|
Ladies
and
Gentlemen:
This
opinion is furnished to A.P.
Pharma, Inc. (the “Company”) in connection with the filing of a Registration
Statement on Form S-8 (the “Registration Statement”) with the Securities and
Exchange Commission for purpose of registering under the Securities Act of
1933,
as amended, relating to the
proposed sale by the Company of up to an aggregate of 2,000,000
shares of
common stock, par value $0.01 (the “Shares”). All of the Shares are
issuable under the Company’s Non-Qualified Stock Plan (the
“Plan”).
We
have based our opinion upon our
review of the following records, documents, instruments and
certificates:
|
·
|
The
Amended and Restated
Certificate of Incorporation of the Company, as amended to date (the
“Certificate”), certified to us by an officer of the Company as being
complete and in full force and effect as of the date of this
opinion;
|
|
·
|
The
Bylaws of the Company (the
“Bylaws”) certified to us by an officer of the Company as being complete
and in full force and effect as of the date of this
opinion;
|
|
·
|
Records
certified to us by an
officer of the Company as constituting all records of proceedings
and of
actions of the Board of Directors and stockholders relating to the
adoption of the Plan and the reservation of the Shares for issuance
pursuant to the Plan;
|
|
·
|
The
Plan;
and
|
|
·
|
Information
provided by the
Company’s transfer agent as to the number of outstanding shares of Common
Stock of the Company.
|
In
connection with this opinion, we
have, with your consent, assumed the authenticity of all records, documents
and
instruments submitted to us as originals, the genuineness of all signatures,
the
legal capacity of natural persons and the authenticity and conformity to the
originals of all records, documents and instruments submitted to us as
copies.
This
opinion is limited to the federal
laws of the United States of America and the Delaware General Corporation Law,
and we disclaim any opinion as to the laws of any other
jurisdiction. We further disclaim any opinion as to any statute,
rule, regulation, ordinance, order or other promulgation of any regional or
local governmental body or as to any related judicial or administrative
opinion.
Our
opinion is qualified to the extent
that in the event of a stock split, share dividend or other reclassification
of
the Common Stock effected subsequent to the date hereof, the number of shares
of
Common Stock issuable under the Plan may be adjusted automatically, as set
forth
in the terms of the Plan, such that the number of such shares, as so adjusted,
may exceed the number of Company’s remaining authorized, but unissued shares of
Common Stock following such adjustment.
Based
upon the foregoing and our
examination of such questions of law as we have deemed necessary or appropriate
for the purpose of this opinion, and subject to the assumptions and
qualifications expressed herein, it is our opinion that upon payment of the
purchase price for the Shares and issuance and delivery of the Shares pursuant
to the terms of the Plan, the Shares will be validly issued, fully paid and
non-assessable.
We
hereby consent to the filing of this
opinion as an exhibit to, and to the use of this opinion in connection with,
the
Registration Statement.
This
opinion is rendered to you and is
solely for your benefit. This opinion may not be relied upon by any
other person, firm, corporation or other entity without our prior written
consent. We disclaim any obligation to advise you of any change of
law that occurs, or any facts of which we become aware, after the date of this
opinion.
Very
truly yours,
/s/
Heller Ehrman LLP
Heller
Ehrman LLP
CONSENT
OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
We
hereby consent to the incorporation
by reference in this Registration Statement on Form S-8 pertaining to the
Non-Qualified Stock Plan of our report dated March 25, 2008 relating to the
financial statements and financial statement schedule of A.P. Pharma, Inc.,
which appear in A.P. Pharma, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 2007, filed with the Securities and Exchange
Commission.
/s/
ODENBERG,
ULLAKKO, MURANISHI & CO.
LLP
San
Francisco,
California
August
6, 2008
Consent
of Independent Registered Public Accounting Firm
We
consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Non-Qualified Stock Plan of AP Pharma, Inc. of our report
dated February 24, 2006, with respect to the 2005 financial statements and
schedule of A.P. Pharma, Inc. included in its Annual Report (Form 10-K) for
the
year ended December 31, 2007, filed with the Securities and Exchange
Commission.
/s/Ernst
&
Young
LLP
Palo
Alto, California
August
6,
2008