<PAGE> 1
As filed with the Securities and Exchange Commission on July 14, 1997
Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COLLAGENEX PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
52-1758016
(I.R.S. Employer Identification No.)
301 South State Street, Newtown, Pennsylvania 18940
(Address of Principal Executive Offices) (Zip Code)
1992 Stock Option Plan, as amended
1996 Stock Plan
1996 Non-Employee Director Stock Option Plan, as amended
(Full Title of the Plan)
Brian M. Gallagher, Ph.D.
President and Chief Executive Officer
CollaGenex Pharmaceuticals, Inc.
301 South State Street, Newtown, Pennsylvania 18940
(Name and Address of Agent For Service)
(215) 579-7388
(Telephone Number, Including Area Code, of Agent For Service)
Copy to:
David J. Sorin, Esq.
Catherine M. Verna, Esq.
Buchanan Ingersoll
500 College Road East
Princeton, NJ 08540
(609) 987-6800
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed
Maximum
Amount Offering Proposed Maximum
Title Of Securities To Be Price Per Aggregate Amount Of
To Be Registered Registered(1) Share Offering Price Registration Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share
Issuable pursuant to options previously
granted under the 1992 Stock Option
Plan, as amended ......................... 260,704 $1.06(2) $276,346(2) $84
Issuable pursuant to options to be granted
under the 1996 Stock Plan................. 600,000 $11.44(3) $6,864,000(3) $2,080
Issuable pursuant to options previously
granted under the 1996 Stock Plan......... 150,000 $9.65(4) $1,447,500(4) $439
Issuable pursuant to options to be granted
under the 1996 Non-Employee Director
Stock Option Plan, as amended............. 150,000 $11.44(3) $1,716,000(3) $520
Issuable pursuant to options previously
granted under the 1996 Non-Employee
Director Stock Option Plan,
as amended................................ 150,000 $9.71(5) $1,456,500(5) $441
- -------------------------------------------------------------------------------------------------------------------------
TOTAL 1,310,704 $11,760,346 $3,564
=========================================================================================================================
</TABLE>
(1) For the sole purpose of calculating the registration fee, the number of
shares to be registered under this Registration Statement has been divided among
five subtotals.
(2) Pursuant to Rule 457(h), these prices are calculated based on a weighted
average exercise price of $1.06 per share covering 260,704 shares subject to
stock options previously granted under the 1992 Stock Option Plan, as amended.
(3) Pursuant to Rule 457(h) and Rule 457(c), these prices are estimated solely
for the purpose of calculating the registration fee and are based upon the
average of the high and low price per share of the Registrant's Common Stock as
reported on the Nasdaq National Market on July 9, 1997.
(4) Pursuant to Rule 457(h), these prices are calculated based on a weighted
average exercise price of $9.65 per share covering 150,000 shares subject to
stock options previously granted under the 1996 Stock Plan.
(5) Pursuant to Rule 457(h), these prices are calculated based on a weighted
average exercise price of $9.71 per share covering 150,000 shares subject to
stock options granted under the 1996 Non-Employee Director Stock Option Plan, as
amended.
---------------
<PAGE> 3
EXPLANATORY NOTE
This Registration Statement has been filed by CollaGenex
Pharmaceuticals, Inc. (the "Company") in order to register an aggregate of
1,310,704 shares of Common Stock, as follows: (i) 260,704 shares of Common Stock
issuable pursuant to options previously granted under the 1992 Stock Option
Plan, as amended (the "1992 Plan"); (ii) 600,000 shares of Common Stock issuable
pursuant to options to be granted under the 1996 Stock Plan (the "1996 Stock
Plan"); (iii) 150,000 shares of Common Stock issuable pursuant to options
previously granted under the 1996 Stock Plan; (iv) 150,000 shares of Common
Stock issuable pursuant to options to be granted under the 1996 Non-Employee
Director Stock Option Plan, as amended (the "Director Plan"); and (v) 150,000
shares of Common Stock issuable pursuant to options previously granted under the
Director Plan. The 1992 Plan was adopted by the Board of Directors of the
Company on February 20, 1992 and approved by the stockholders of the Company on
March 1, 1992. Each of the 1996 Stock Plan and the Director Plan was adopted by
the Board of Directors of the Company on March 22, 1996 and approved by the
stockholders of the Company on March 29, 1996. The 1992 Plan, the 1996 Stock
Plan and the Director Plan are referred to hereinafter collectively as the
"Plans".
i
<PAGE> 4
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information specified by Part I of this
Form S-8 will be sent or given to participants in the Plans listed on the cover
page of this Registration Statement as specified in Rule 428(b)(1) promulgated
by the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"). Such document(s) are
not being filed with the Commission but constitute (taken together with the
documents incorporated by reference into this Registration Statement pursuant to
Item 3 of Part II hereof) a prospectus that meets the requirements of Section
10(a) (the "Section 10(a) Prospectus") of the Securities Act.
The Company will provide a written statement to each participant of the
Plans advising each such participant of the availability without charge, upon
written or oral request, of the documents referred to under Item 3 --
"Incorporation of Documents by Reference" which have been incorporated in the
Section 10(a) Prospectus by reference, along with any other documents required
to be delivered to employees pursuant to Rule 428(b) promulgated by the
Commission under the Securities Act. Whenever updating information is required,
the Company shall furnish promptly without charge to each participant in any of
the Plans, upon written or oral request, a copy of all documents containing the
applicable information regarding the Plans required by Part I that then
constitute part of the Section 10(a) Prospectus, although documents previously
furnished need not be re-delivered. Requests for such copies should be directed
to the Chief Financial Officer, CollaGenex Pharmaceuticals, Inc., 301 South
State Street, Newtown, Pennsylvania 18940. Telephone requests may be directed to
(215) 579-7388.
1
<PAGE> 5
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been or will be filed with the
Commission are incorporated herein by reference and in the Section 10(a)
Prospectus by reference:
(a) The Company's latest prospectus filed on April 4, 1997 pursuant to
Rule 424(b) under the Securities Act.
(b) All reports filed pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") since December
31, 1996.
(c) The description of the Company's Common Stock, $.01 par value,
which is contained in the Company's Registration Statement on Form 8-A filed
pursuant to Section 12(g) of the Exchange Act in the form declared effective by
the Commission on June 20, 1996, including any subsequent amendments or reports
filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference and to be a part hereof from the date of
the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
II-1
<PAGE> 6
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all of the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 145 further provides that to the extent a director or officer
of a corporation has been successful in the defense of any action, suit or
proceeding referred to in subsection (a) and (b) or in the defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith; that the indemnification provided by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
and that the scope of indemnification extends to directors, officers, employees,
or agents of a constituent corporation absorbed in a consolidation or merger and
persons serving in that capacity at the request of the constituent corporation
for another. Section 145 also empowers the corporation to purchase and maintain
insurance on behalf of a director or officer of the corporation against any
liability asserted against him or incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liabilities under Section 145.
Article IX of the Registrant's By-laws specifies that the Registrant
shall indemnify its directors, officers, employees and agents because he or she
was or is a director, officer, employee or agent of the Corporation or was or is
serving at the request of the Corporation as a director, officer, employee or
agent of another entity to the full extent that such right of indemnity is
permitted by the laws of the State of Delaware. This provision of the By-laws is
deemed to be a contract between the Registrant and each director and officer who
serves in such capacity at any time while such provision and the relevant
provisions of the Delaware General Corporation Law are in effect, and any repeal
or modification thereof shall not offset any action, suit or proceeding
theretofore or thereafter brought or threatened based in whole or in part upon
any such state of facts. The affirmative vote of the holders of at least 80% of
the voting power of all outstanding shares of the capital stock of the Company
is required to adopt, amend or repeal such provision of the By-laws.
The Registrant has executed indemnification agreements with each of its
officers and directors pursuant to which the Registrant has agreed to indemnify
such parties to the full extent
II-2
<PAGE> 7
permitted by law, subject to certain exceptions, if such party becomes subject
to an action because such party is a director, officer, employee, agent or
fiduciary of the Company.
Section 102(b)(7) of the Delaware General Corporation Law enables a
corporation in its certificate of incorporation to limit the personal liability
of members of its board of directors for violation of a director's fiduciary
duty of care. This Section does not, however, limit the liability of a director
for breaching his duty of loyalty, failing to act in good faith, engaging in
intentional misconduct or knowingly violating a law, or from any transaction in
which the director derived an improper personal benefit. This Section also will
have no effect on claims arising under the federal securities laws. The
Registrant's Amended and Restated Certificate of Incorporation limits the
liability of its directors as authorized by Section 102(b)(7). The affirmative
vote of the holders of at least 75% of the voting power of all outstanding
shares of the capital stock of the Company is required to amend such provisions.
The Registrant has obtained liability insurance for the benefit of its
directors and officers which provides coverage for losses of directors and
officers for liabilities arising out of claims against such persons acting as
directors or officers of the Registrant (or any subsidiary thereof) due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
act done by such directors and officers, except as prohibited by law.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any director or officer.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Description
Number -----------
------
<S> <C>
4.1 1992 Stock Option Plan, as amended.
4.2 1996 Stock Plan.
4.3 1996 Non-Employee Director Stock Option Plan, as
amended.
5 Opinion of Buchanan Ingersoll.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Buchanan Ingersoll (contained in the
opinion filed as Exhibit 5).
24 Power of Attorney (see "Power of Attorney" below).
</TABLE>
II-3
<PAGE> 8
ITEM 9. UNDERTAKINGS.
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 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;
(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; and
(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.
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.
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.
II-4
<PAGE> 9
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 Newtown, state of Pennsylvania, on this 11th day of
July, 1997.
COLLAGENEX PHARMACEUTICALS, INC.
By: /s/ Brian M. Gallagher
-------------------------------------
Brian M. Gallagher, Ph.D.,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Brian M. Gallagher, Ph.D. and Nancy C.
Broadbent, and each of them, his true and lawful attorneys-in-fact and agents
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, 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, and each of them, 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 might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
II-5
<PAGE> 10
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/Brian M. Gallagher, Ph.D. President, Chief Executive Officer and July 11, 1997
- -------------------------------------- Director (Principal Executive Officer)
Brian M. Gallagher, Ph.D.
/s/Nancy C. Broadbent Chief Financial Officer, Treasurer and July 11, 1997
- -------------------------------------- Secretary (Principal Financial and
Nancy C. Broadbent Accounting Officer)
/s/Helmer P.K. Agersborg, Ph.D. Chairman of the Board and Director July 11, 1997
- --------------------------------------
Helmer P.K. Agersborg, Ph.D.
/s/James E. Daverman Director July 11, 1997
- --------------------------------------
James E. Daverman
/s/Robert J. Easton Director July 11, 1997
- --------------------------------------
Robert J. Easton
/s/Stephen W. Ritterbush, Ph.D. Director July 11, 1997
- --------------------------------------
Stephen W. Ritterbush, Ph.D.
/s/Pieter J. Schiller Director July 11, 1997
- --------------------------------------
Pieter J. Schiller
Director
- --------------------------------------
Terence E. Winters, Ph.D.
/s/ Peter Barnett Director July 11, 1997
- --------------------------------------
Peter Barnett
</TABLE>
II-6
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page
Number ----------- Number
------ ------
<S> <C> <C>
4.1 1992 Stock Option Plan, as amended.
4.2 1996 Stock Plan.
4.3 1996 Non-Employee Director Stock Option Plan, as amended.
5 Opinion of Buchanan Ingersoll.
23.1 Consent of KPMG Peat Marwick LLP.
23.2 Consent of Buchanan Ingersoll (contained in the opinion filed as Exhibit 5).
24 Power of Attorney (included on signature page).
</TABLE>
<PAGE> 1
Exhibit 4.1
COLLAGENEX, INC.
STOCK OPTION PLAN
ARTICLE I
GENERAL
1.1 Purpose.
Collagenex, Inc. 1992 Stock Option Plan (the "Plan") is established to
create additional incentive for employees, consultants and directors of
Collagenex, Inc. (the "Company") to promote the financial success and progress
of the Company.
1.2 Administration.
(a) The Plan shall be administered by the Company's Board of Directors
(the "Board") and/or by a duly appointed committee of the Board having such
powers as shall be specified by the Board. Any subsequent references to the
Board shall also mean the committee if it has been appointed.
(b) Subject to the limitations of the Plan, the Board shall have the
sole and complete authority (i) to select from the regular full-time employees
of the Company those who shall participate in the Plan ("Employee Participant"
or "Employee Participants"), (ii) to select such additional individuals who are
directors or consultants of the Company and who are determined in the
discretion of the Board to perform valuable services for the Company to
participate in the Plan ("Non-Employee Participant" or "Non-Employee
Participants"), (iii) to make awards in such forms and amounts as it shall
determine, (iv) to impose such limitations, restrictions and conditions upon
such awards as it shall deem appropriate and (v) to interpret the Plan and to
adopt, amend and rescind administrative guidelines and other rules and
regulations relating to the actions necessary or advisable for the
implementation and administration of the Plan. The Board's determinations on
matters within its authority shall be conclusive and binding upon the Company
and all other persons. (Employee Participants and Non-Employee Participants are
hereinafter sometimes collectively referred to as "Participants").
(c) The Board shall act on behalf of the Corporation as sponsor of the
Plan. Except as otherwise provided in section 2.4 hereof, all expenses
associated with the Plan shall be borne by the Company.
1.3 Eligibility.
Participants shall be selected by the Board from (i) employees and (ii)
non-employee directors or consultants who have the capacity to contribute to
the success
<PAGE> 2
of the Company. In making these selections and in determining the form and
amount of awards, the Board may give consideration to the functions and
responsibilities of the individual, his or her past, present and potential
contributions to the Company's profitability and sound growth, the value of his
or her services to the Company and other factors deemed relevant by the Board.
1.4 Types of Awards under the Plan.
Awards under the Plan may be in the form of either of the following;
(i) incentive stock options ("ISOs") or (ii) nonstatutory stock options
("NSOs") (hereinafter sometimes collectively referred to as "Options"). A
Participant may, if otherwise eligible, be granted additional Options from time
to time.
1.5 Shares Subject to the Plan.
Shares of stock issued under the Plan may be in whole or in part
authorized and unissued or treasury shares of the Company's class b common
stock, with par value $0.01 per share (the "Class B Common Stock"). The maximum
number of shares of Class B Common Stock which may be issued for all purposes
under the Plan shall be 291,000 subject to adjustment in accordance with the
provisions of section 3.2 hereof. Any shares of Class B Common Stock subject to
an Option which for any reason is cancelled or terminated without having been
exercised shall again be available for awards under the Plan. No fractional
shares shall be issued, and the Board shall determine the manner in which
fractional share value shall be treated.
ARTICLE II
TERMS OF THE OPTIONS
2.1 Award of Options.
Subject to the provisions of the Plan, the Board shall determine for
each Option (which need not be identical) the number of shares for which the
Option shall be granted, whether the Option is an ISO or a NSO, the option
price of the Option, the exercisability of the Option and all other terms and
conditions of the Option. In no event, however, shall any ISOs be awarded to
Non-Employee Participants. Options granted pursuant to the Plan shall be
evidenced by written agreements specifying the number of shares covered
thereby, in such form as the Board shall from time to time establish, which
agreements may incorporate all or any of the terms of the Plan by reference
("Stock Option Agreements").
2.2 Option Price.
The purchase price of Class B Common Stock purchasable under ISOs shall
be not less than the fair market value as determined by the Board of the shares
of Class B
2
<PAGE> 3
Common Stock of the Company on the date of the granting of the ISO, except
that, as to an employee who at the time the ISO is granted owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company within the meaning of section 422(b)(6) of the Internal
Revenue Code of 1986, as amended (the "Code") (a "Ten Percent Owner Employee"),
the option price shall not be less than 110% of the fair market value of the
shares on the date the ISO is granted. The option price for NSOs shall be
determined by the Board and may be less than fair market value.
2.3 Term of Options.
(a) The Plan shall become effective on the date of its adoption by the
Board subject to the approval of the Plan by the holders of a majority of the
shares of stock of the Company entitled to vote at a meeting of the
stockholders, within 12 months of the effective date. No ISOs shall be awarded
pursuant to the Plan after the expiration of the ten year period beginning on
the date the Plan is adopted by the Board.
(b) The Board shall have the power to set the time or times within
which each Option shall be exercisable or the event or events upon the
occurrence of which all or a portion of each Option shall be exercisable and
the term of each Option; provided, however, that no ISO shall be exercisable
after the expiration of ten years from the date such ISO is granted, and
provided further, that no ISO granted to a Ten Percent Owner Employee shall be
exercisable after the expiration of five years from the date such ISO is
granted. Notwithstanding the foregoing, each Option granted hereunder that is
designated by the Board as a NSO shall expire not later than ten years after
the date of grant. Unless otherwise provided for by the Board in the grant of
the Option, any Option granted hereunder shall be exercisable in full
immediately upon grant.
2.4 Exercise of Options.
(a) Options may be exercised only by written notice to the Company,
stating the number of shares of Class B Common Stock being purchased and
accompanied by payment of the option price for the number of such shares being
purchased (i) in cash, (ii) by tender to the Company of shares of the Company's
common stock owned by the Participant and having a fair market value not less
than the option price, or (iii) by such other consideration as the Board may
approve at the time the Option is granted. As soon as practicable after receipt
of such notice and full payment for the shares of Class B Common Stock being
purchased, the Company shall deliver to the Participant a certificate or
certificates representing the acquired shares of Class B Common Stock. At the
time an Option is exercised, in whole or in part, or at any time thereafter as
requested by the Company, the Participant shall pay, or make adequate provision
for payment of, federal and state income and employment tax withholding
obligations of the Company, if any, which arise upon exercise, in whole or in
part, of the Option or upon disposition of the shares acquired by exercise of
the Option. The applicability of such withholding taxes shall be determined by
the Company in its sole discretion.
3
<PAGE> 4
(b) Unless otherwise agreed in writing by the Board, Options may be
exercised only twice in any calendar year.
2.5 Limitations on ISOs.
(a) Under the terms of the Plan, the aggregate fair market value
(determined at the time an ISO is granted) of the shares of Class B Common
Stock with respect to which ISOs are exercisable for the first time by an
Employee Participant during any calendar year (under all such ISO plans of the
Company) shall not exceed $100,000.
(b) An Employee Participant shall have the following rights upon
death, disability or other termination of his or her employment:
(i) If the Employee Participant's employment is terminated by
death, his or her estate or the person who acquired the right to exercise such
ISO by bequest or inheritance from the Employee Participant shall be entitled,
for a period of one year following the date of his or her death, to exercise
the ISO with respect to all or any part of the shares of Class B Common Stock
subject thereto, to the extent the ISO had become exercisable at the time of
death.
(ii) If the Employee Participant's employment terminates
because of disability within the meaning of section 105(d)(4) of the Code, the
Employee Participant or his or her legal representative shall have the right,
for a period of one year following the date of such termination, to exercise
the ISO with respect to all or any part of the shares of Class B Common Stock
subject thereto, to the extent the ISO had become exercisable at the time of
such termination.
(iii) If the Employee Participant's employment is terminated
for any reason other than death or disability, as provided above, the Employee
Participant holding an ISO under the Plan shall have the right, for a period of
three months following such termination, to exercise any ISO with respect to
all or any part of the shares of Class B Common Stock subject thereto, to the
extent that the ISO had become exercisable at the time of such termination.
2.6 Termination of Relationship.
In the event any Non-Employee Participant terminates his or her
relationship with the Company voluntarily or upon his or her death or
disability, the Non-Employee Participant or his or her estate or the person
who acquired the right to exercise such NSO by bequest or inheritance from the
Non-Employee Participant or the Non-Employee Participant's legal representative
shall be entitled at any time prior to an expiration date established for such
NSO by the Board at the time of the award, but in no event after its respective
expiration date, to exercise any NSO held by such Non-Employee Participant with
respect to all or any part of the shares of Class B
4
<PAGE> 5
Common Stock subject thereto, to the extent that such NSO had become
exercisable at the time of such termination. If any Non-Employee Participant's
relationship with the Company is terminated involuntarily by the Company, all
of the then outstanding NSOs granted to such Non-Employee Participant shall
terminate immediately.
ARTICLE III
MISCELLANEOUS PROVISIONS
3.1 Non-Transferability.
No Option award under the Plan shall be transferable by any Participant
otherwise than by will or, if the Participant dies intestate, by the laws of
descent and distribution. All awards shall be exercisable or received during
the Participant's lifetime only by such Participant or his or her legal
representative. Any transfer contrary to this Section 3.1 will nullify the
Option involved.
3.2 Adjustments of and Changes in Stock.
In the event that the shares of Class B Common Stock of the Company, as
presently constituted, shall be changed into or exchanged for a different
number or kind of shares of stock (as defined in section 421 of the Code and
the regulations promulgated thereunder) of the Company or of another corporation
(whether by reason of corporate merger, consolidation, acquisition of property
or stock separation, reorganization or liquidation) or if the number of such
shares of Class B Common Stock shall be increased through the payment of a
stock dividend, then there shall be substituted for or added to each share of
stock theretofore appropriated or thereafter subject or which may become
subject to an Option under this Plan, the number and kind of such shares of
stock into which each outstanding share of Class B Common Stock of the Company
shall be so changed, or for which each such share shall be exchanged, or to
which each such share shall be entitled, as the case may be. Outstanding
Options shall also be appropriately amended as to price and other terms as may
be necessary to reflect the foregoing events. Upon dissolution or liquidation
of the Company, or upon a reorganization, merger or consolidation in which the
Company is not the surviving corporation, or upon the sale of substantially all
of the property of the Company to another corporation, the Plan and the Options
issued thereunder shall terminate, unless provisions are made in connection
with such transaction for the assumption of Options theretofore granted, or for
the substitution for such Options of new options of the successor corporation
or a parent or subsidiary thereof, with appropriate adjustments as to the number
and kinds of shares and the per share exercise prices.
3.3 Stock Transfer Restrictions.
Shares of Class B Common Stock purchased under the Plan and held by or
through any person who is an officer, director or affiliate of the Company may
not be
5
<PAGE> 6
sold or otherwise disposed of except (i) pursuant to an effective
registration statement under the Securities Act of 1933, as amended, ("the
Act"), or a transaction which, in the opinion of counsel for the Company, is
exempt from registration under the Act and (ii) in compliance with state
securities laws. The Board may waive the foregoing restrictions, in whole or in
part, in any particular case or cases or may terminate such restrictions
whenever the Board determines that such restrictions afford no substantial
benefit to the Company.
3.4 Amendment, Modification and Termination of the Plan.
The Board of Directors may terminate, amend or modify the Plan, at any
time; provided, however, that no such action of the Board of Directors, without
approval of the stockholders, may (i) increase the total number of shares of
Class B Common Stock for which Options may be granted under the Plan, except as
contemplated in Section 3.2 above, (ii) decrease the minimum ISO price or (iii)
increase the maximum ISO term or extend the period after which ISOs may not be
awarded under the Plan. No amendment, modification or termination of the Plan
shall in any manner affect any Option theretofore granted to a Participant under
the Plan without the consent of the Participant or the transferee of such
Option.
3.5 Non-Uniform Determinations.
The Board's determinations under the Plan, including without
limitation, (i) the determination of the Participants to receive awards, (ii)
the form, amount and timing of such awards, (iii) the terms and provisions of
such awards and (iv) the agreements evidencing the same, need not be uniform
and may be made by it selectively among Participants who receive, or who are
eligible to receive, awards under the Plan, whether or not such
Participants are similarly situated.
3.6 Leaves of Absence; Transfers.
The Board shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect of any leave
of absence from the Company granted to a Participant. Without limiting the
generality of the foregoing, the Board shall be entitled to determine (i)
whether or not any such leave of absence shall be treated as if an Employee
Participant ceased to be an employee or a Non-Employee Participant terminated
his or her relationship with the Company and (ii) the impact, if any, of any
such leave of absence on awards under the Plan. In the event an Employee
Participant transfers within the Company, such Participant shall not be deemed
to have ceased to be an employee for purposes of the Plan.
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<PAGE> 7
3.7 Rights as a Stockholder or Employee.
No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by an Option until such time as stock
certificates for the shares of Class B Common Stock for which the Option has
been exercised are issued. No adjustment shall be made for dividends or
distributions or other rights for which the record date is prior to the date
such stock certificate(s) are issued, except as provided in Section 3.2 above.
Nothing in this Plan or in any Stock Option Agreement shall confer upon any
Participant any right to continue in the employ of the Company or interfere in
any way with any right of the Company to terminate the Participant's employment
at any time.
3.8 Termination of the Plan.
Termination of the Plan shall not affect the right of Participants
under Options previously granted to them, and all unexpired Options shall
continue in force and operation after termination of the Plan except as they may
lapse or be terminated by their own terms and conditions.
7
<PAGE> 1
EXHIBIT 4.2
COLLAGENEX PHARMACEUTICALS, INC.
1996 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, non-Employee
members of the Board and Consultants of the Company and its Subsidiaries and to
promote the success of the Company's business. Options granted under the Plan
may be incentive stock options (as defined under Section 422 of the Code) or
non-statutory stock options, as determined by the Administrator at the time of
grant of an option and subject to the applicable provisions of Section 422 of
the Code, as amended, and the regulations promulgated thereunder. Stock purchase
rights may also be granted under the Plan.
2. Certain Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means CollaGenex Pharmaceuticals, Inc., a
Delaware corporation.
(g) "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent or subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not.
(h) "Continuous Status as an Employee" means the absence of
any interruption or termination of the employment relationship by the Company or
any Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other
leave of absence approved by the Board, provided that such leave is for a period
of not more than ninety (90) days, unless reemployment upon the expiration of
such leave is guaranteed by contract or statute, or unless provided otherwise
pursuant to Company policy adopted from time to time; or (iv) transfers between
locations of the Company or between the Company, its Subsidiaries or its
successor.
<PAGE> 2
(i) "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(k) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("Nasdaq") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such system or exchange for the last market trading day prior to the time of
determination as reported in the Wall Street Journal or such other source as the
Administrator deems reliable or;
(ii) If the Common Stock is quoted on Nasdaq (but not on the
National Market System thereof) or regularly quoted by a recognized securities
dealer but selling prices are not reported, its Fair Market Value shall be the
mean between the high and low asked prices for the Common Stock or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(l) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(m) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(n) "Option" means a stock option granted pursuant to the
Plan.
(o) "Optioned Stock" means the Common Stock subject to an
Option.
(p) "Optionee" means an Employee or Consultant who receives an
Option.
(q) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(r) "Plan" means this 1996 Stock Plan.
(s) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of stock purchase rights under Section 11 below.
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<PAGE> 3
(t) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(u) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 750,000 shares of Common Stock, such number of shares
determined on a post-reverse stock split recapitalization basis, such
recapitalization to be completed upon consummation of the Company's proposed
initial public offering of Common Stock. The shares may be authorized, but
unissued, or reacquired Common Stock.
If an option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Administration With Respect to Directors and officers.
With respect to grants of Options or stock purchase rights to Employees who are
also officers or directors of the Company, the Plan shall be administered by (A)
the Board if the Board may administer the Plan in compliance with Rule 16b-3
promulgated under the Exchange Act or any successor thereto ("Rule 16b-3") with
respect to a plan intended to qualify thereunder as a discretionary plan, or (B)
a Committee designated by the Board to administer the Plan, which Committee
shall be constituted in such a manner as to permit the Plan to comply with Rule
16b-3 with respect to a plan intended to qualify thereunder as a discretionary
plan. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by Rule 16b-3 with respect to a plan intended to qualify thereunder as
a discretionary plan.
(ii) Multiple Administrative Bodies. If permitted by Rule
16b-3, the Plan may be administered by different bodies with respect to
directors, non-director officers and Employees who are neither directors nor
officers.
(iii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Options or stock purchase rights to
Employees who are neither directors nor officers of the Company or to
Consultants, the Plan shall be administered by (A) the Board, if the Board may
administer the Plan in compliance with Rule 16b-3, or (B) a Committee designated
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<PAGE> 4
by the Board, which Committee shall be constituted in such a manner as to
satisfy the legal requirements relating to the administration of incentive stock
option plans, if any, of Delaware corporate law and applicable securities laws
and of the Code (the "Applicable Laws"). Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(k) of the Plan;
(ii) to select the officers, Consultants and Employees to whom
Options and stock purchase rights may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options and
stock purchase rights or any combination thereof, are granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation or waiver of
forfeiture restrictions regarding any Option or other award and/or the shares of
Common Stock relating thereto, based in each case on such factors as the
Administrator shall determine, in its sole discretion);
(vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 9(f) instead of Common Stock;
(viii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral period);
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<PAGE> 5
(ix) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted; and
(x) to determine the terms and restrictions applicable to
stock purchase rights and the Restricted Stock purchased by exercising such
stock purchase rights.
(c) Effect of Committee's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. Eligibility.
(a) Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without cause.
6. Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 19 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 15 of the Plan.
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<PAGE> 6
7. Term of Option. The term of each Option shall be the term
stated in the Option Agreement; provided, however, that in the case of an
Incentive Stock Option, the term shall be no more than ten (10) years from the
date of grant thereof or such shorter term as may be provided in the Option
Agreement. However, in the case of an Option granted to an Optionee who, at the
time the Option is granted, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Option Agreement.
8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of the grant.
(B) granted to any person, the per Share exercise price
shall be no less than 85% of the Fair Market Value per Share on the date of
grant.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that
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<PAGE> 7
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the option is
exercised, (6) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price, (7) by
delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement, (8)
any combination of the foregoing methods of payment, or (9) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Administrator, including performance criteria
with respect to the Company and/or the Optionee, and as shall be permissible
under the terms of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator,
consist of any consideration and method of payment allowable under Section 8(b)
of the Plan. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Option. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Employment. In the event of termination of
an Optionee's consulting relationship or Continuous Status as an Employee with
the Company (as the case may be), such Optionee may, but only within ninety (90)
days (or such other period of time as is determined by the Board, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option and not exceeding ninety (90) days) after the date of such
termination (but in no event later than the expiration date of the term of such
Option as set forth
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<PAGE> 8
in the Option Agreement), exercise his Option to the extent that Optionee was
entitled to exercise it at the date of such termination. To the extent that
Optionee was not entitled to exercise the Option at the date of such
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(c) Disability of Optionee. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's consulting
relationship or Continuous Status as an Employee as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may,
but only within twelve (12) months from the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination, or if Optionee does
not exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an
Optionee, the Option may be exercised, at any time within twelve (12) months
following the date of death (but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement), by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent the Optionee was entitled to exercise the
Option at the date of death. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
(e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
(f) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted, based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
10. Non-Transferability of Options. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee. The terms of the
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
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<PAGE> 9
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock purchase rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer stock purchase rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid (which price shall not be less than 50% of the
Fair Market Value of the Shares as of the date of the offer), and the time
within which such person must accept such offer, which shall in no event exceed
thirty (30) days from the date upon which the Administrator made the
determination to grant the stock purchase right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the Committee
may determine.
(c) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
(d) Rights as a Shareholder. Once the stock purchase right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock purchase right is exercised, except as provided in Section 13
of the Plan.
12. Stock Withholding to Satisfy Withholding Tax Obligations. At
the discretion of the Administrator, Optionees may satisfy withholding
obligations as provided in this paragraph. When an Optionee incurs tax liability
in connection with an Option or stock purchase right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing to
have the Company withhold
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from the Shares to be issued upon exercise of the Option, or the Shares to be
issued in connection with the stock purchase right, if any, that number of
Shares having a Fair Market Value equal to the amount required to be withheld.
The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined (the "Tax Date").
All elections by an Optionee to have Shares withheld for
this purpose shall be made in writing in a form acceptable to the Administrator
and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable
Tax Date;
(b) once made, the election shall be irrevocable as to the
particular Shares of the Option or Right as to which the election is made;
(c) all elections shall be subject to the consent or
disapproval of the Administrator;
(d) if the Optionee is subject to Rule 16b-3, the election
must comply with the applicable provisions of Rule 16b-3 and shall be subject to
such additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
In the event the election to have Shares withheld is made by
an Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option or stock purchase
right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.
13. Adjustments Upon Changes in Capitalization or Merger. Subject to
any required action by the shareholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason
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<PAGE> 11
thereof shall be made with respect to, the number or price of shares of Common
Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, the Board shall notify the Optionee at least fifteen (15) days prior to
such proposed action. To the extent it has not been previously exercised, the
Option will terminate immediately prior to the consummation of such proposed
action. In the event of a merger or consolidation of the Company with or into
another corporation or the sale of all or substantially all of the Company's
assets (hereinafter, a "merger"), 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. In the event that such successor
corporation does not agree to assume the Option or to substitute an equivalent
option, the Board shall, in lieu of such assumption or substitution, provide for
the Optionee to have the right to exercise the Option as to all of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger, the Board shall notify the
Optionee that the Option shall be fully exercisable for a period of fifteen (15)
days from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the merger, the Option or right confers the
right to purchase, for each Share of stock subject to the Option immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or property) received in the merger by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares); provided, however, that if such
consideration received in the merger was not solely common stock of the
successor corporation or its Parent, the Board may, with the consent of the
successor corporation and the participant, provide for the consideration to be
received upon the exercise of the Option, for each Share of stock subject to the
Option, to be solely common stock of the successor corporation or its Parent
equal in Fair Market Value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.
14. Time of Granting Options. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law
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<PAGE> 12
or regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
16. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
17. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
18. Agreements. Options and stock purchase rights shall be evidenced by
written agreements in such form as the Board shall approve from time to time.
19. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.
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<PAGE> 13
20. Information to Optionees. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company. The Company shall not be required
to provide such information if the issuance of Options under the Plan is limited
to key employees whose duties in connection with the Company assure their access
to equivalent information.
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<PAGE> 1
EXHIBIT 4.3
COLLAGENEX PHARMACEUTICALS, INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN, AS AMENDED
1. Purpose. This Non-Qualified Stock Option Plan, to be known as the
1996 Non-Employee Director Stock Option Plan, as amended (the "Plan"), is
intended to promote the interests of CollaGenex Pharmaceuticals, Inc. (the
"Company") by providing an inducement to obtain and retain the services of
qualified persons who are not employees or officers of the Company to serve as
members of its Board of Directors (the "Board"), each such person hereinafter
referred to as a "Non-Employee Director."
2. Available Shares. The total number of shares of Common Stock, par
value $.01 per share, of the Company (the "Common Stock") for which options may
be granted under the Plan shall not exceed 300,000 shares, subject to adjustment
in accordance with Section 10 of the Plan. Shares subject to the Plan are
authorized but unissued shares, or shares that were once issued and subsequently
reacquired by the Company. If any options granted under the Plan are surrendered
before exercise or lapse without exercise, in whole or in part, the shares
reserved therefor shall continue to be available under the Plan.
3. Administration. The Plan shall be administered by the Board or by a
committee appointed by the Board (the "Committee"). In the event the Board fails
to appoint or refrains from appointing a Committee, the Board shall have all
power and authority to administer the Plan. In such event, the word "Committee"
wherever used herein shall be deemed to mean the Board. The Committee shall,
subject to the provisions of the Plan, have the power to construe the Plan, to
determine all questions hereunder, and to adopt and amend such rules and
regulations for the administration of the Plan, as it may deem desirable. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.
4. Automatic Grant of Options. Subject to the availability of shares
under the Plan:
(a) each Non-Employee Director who (i) was a member of the
Board on the effective date of the Company's initial public offering (the
"IPO"), and (ii) is serving as a member of the Board of Directors on the date
the Plan is approved by the stockholders of the Company at the annual meeting of
stockholders to be held in 1997 shall be automatically granted, effective as of
November 22, 1996, without further action by the Board, an option to purchase
15,000 shares of the Common Stock, which option shall be in addition to the
initial option to purchase 10,000 shares of the Common Stock, which initial
option was granted to each of such Non-Employee Directors on the effective date
of the IPO; and
(b) each Non-Employee Director who first becomes a member of
the Board after the IPO shall be automatically granted, on the date such person
becomes a member of the Board, an option to purchase 25,000 shares of the Common
Stock.
The term "Grant Date" as used hereinafter shall mean: (i) with respect
to the grant of the initial option to purchase 10,000 shares of the Common Stock
referred to in Section 4(a), the effective date of the IPO; (ii) with respect to
the grant of the option to purchase an additional
<PAGE> 2
15,000 shares of the Common Stock pursuant to Section 4(a), November 22, 1996;
or (iii) in the case of a grant under Section 4(b), the date the optionee
becomes a member of the Board.
The options to be granted under this Section 4 shall be the only
options ever to be granted at any such time to such member under the Plan.
5. Option Price. The purchase price of the stock covered by an option
granted pursuant to the Plan shall be 100% of the fair market value of such
shares on the Grant Date. The "fair market value" of the stock issuable upon
exercise of the initial option to purchase 10,000 shares of the Common Stock
shall be the initial public offering price per share. Other than as provided in
the preceding sentence, for purposes of the Plan, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Common Stock on the principal national securities exchange on which the Common
Stock is traded, if the Common Stock is then traded on a national securities
exchange; or (ii) the last reported sale price (on that date) of the Common
Stock on the Nasdaq National Market, if the Common Stock is not then traded on a
national securities exchange; or (iii) the closing bid price (or average of bid
prices) last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not reported on the Nasdaq
National Market. The option price will be subject to adjustment in accordance
with the provisions of Section 10 of the Plan.
6. Period of Option. Unless sooner terminated in accordance with the
provisions of Section 8 of the Plan, an option granted hereunder shall expire on
the date which is ten (10) years after the Grant Date.
7. Vesting of Shares and Non-Transferability of Options.
(a) Options granted under the Plan shall not be exercisable
until they become vested. Options granted under the Plan shall vest in the
optionee and thus become exercisable in accordance with the following schedule,
provided that the optionee has continuously served as a member of the Board
through such vesting date, and subject also to Subsection (b) of this Section 7:
<TABLE>
<CAPTION>
Percentage of Option Shares for which
Option Will be Exercisable Date of Vesting
-------------------------- ---------------
<S> <C>
20% One year from Grant Date
40% Two years from Grant Date
60% Three years from Grant Date
80% Four years from Grant Date
100% Five years from Grant Date
</TABLE>
-2-
<PAGE> 3
The number of shares as to which options may be exercised shall be
cumulative, so that once the option shall become exercisable as to any shares it
shall continue to be exercisable as to said shares, until expiration or
termination of the option as provided in the Plan.
(b) Notwithstanding Subsection (a) of this Section 7, if an
optionee attends less than 75% of the Board meetings (whether regular or
special) held in any fiscal year (a "Default Year"), then either (i) the
optionee shall forfeit his exercise rights with respect to the option
installment which vested on the preceding annual vesting date, in proportion to
the percentage of Board meetings actually attended by such optionee during the
Default Year; or (ii) in the event that the optionee does not own a sufficient
number of exercisable options to satisfy the forfeiture obligation described
above, the optionee shall forfeit his right to receive the next succeeding
annual installment of the option, in proportion to the percentage of Board
meetings which the optionee actually attended in the Default Year. By way of
illustration, if an optionee attends only 50% of the actual meetings of the
Board of Directors (whether regular or special) held in any fiscal year, then
the optionee shall forfeit the right to exercise 50% of the option installment
which became exercisable on the preceding annual vesting date. If, however, the
optionee had already exercised 75% of the preceding option installment, and did
not own any additional unexercised options available to satisfy the forfeiture
obligation, the optionee would forfeit the remaining 25% of the prior
installment, and would also forfeit the right to receive or exercise 25% of the
next succeeding annual option installment. Attendance at Board meetings may be
in person or via teleconference, or any manner consistent with the Amended and
Restated Bylaws of the Company.
(c) Any option granted pursuant to the Plan shall not be
assignable or transferable other than by will or the laws of descent and
distribution or pursuant to a domestic relations order and shall be exercisable
during the optionee's lifetime only by him or her.
8. Termination of Option Rights.
(a) In the event that an optionee ceases to be a member of the
Board by reason of his or her death or permanent disability, any option granted
to such optionee shall be immediately and automatically accelerated and become
fully vested and all unexercised options shall be exercisable by the optionee
(or by the optionee's personal representative, heir or legatee, in the event of
death) at any time prior to the scheduled expiration date of the option.
(b) In the event any optionee: (i) ceases to be a member of
the Board of Directors at the request of the Company; (ii) is removed without
cause; or (iii) otherwise does not stand for nomination or re-election as a
director of the Company at the request of the Company, then any unexercised
options, to the extent not vested at the date of the applicable event, shall
immediately terminate and become void, and to the extent any such options are
vested at such date, they shall continue to be exercisable for a period of one
year from the date of the applicable event; provided, however, that no portion
of any option, vested or unvested, may be exercised if the optionee is removed
from the Board of Directors for any one of the following reasons: (i)
disloyalty, gross negligence, dishonesty or breach of fiduciary duty to the
Company; (ii) the commission of an act of embezzlement, fraud or deliberate
disregard of the rules or policies of the Company which results in loss, damage
or injury to the Company, whether directly or indirectly; (iii) the unauthorized
disclosure of any trade secret or confidential information of the
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<PAGE> 4
Company; (iv) the commission of an act which constitutes unfair competition with
the Company or which induces any customer of the Company to breach a contract
with the Company; or (v) engages in any conduct or activity on behalf of any
organization or entity which is a competitor of the Company (unless such conduct
or activity is approved by a majority of the members of the Board of Directors).
9. Exercise of Option. Subject to the terms and conditions of the Plan
and the option agreements, an option granted hereunder shall, to the extent then
exercisable, be exercisable in whole or in part by giving written notice to the
company by mail or in person addressed to CollaGenex Pharmaceuticals, Inc., 301
South State Street, Newtown, Pennsylvania 18940, Attention: President, or at its
then principal executive offices, stating the number of shares with respect to
which the option is being exercised, accompanied by payment in full for such
shares. Payment may be (a) in United States dollars in cash or by check, (b) in
whole or in part in shares of Common Stock of the Company already owned by the
person or persons exercising the option or shares subject to the option being
exercised (subject to such restrictions and guidelines as the Board may adopt
from time to time) valued at fair market value determined in accordance with the
provisions of Section 5, or (c) consistent with applicable law, through the
delivery of an assignment to the Company of a sufficient amount of the proceeds
from the sale of the Common Stock acquired upon exercise of the option and an
authorization to the broker or selling agent to pay that amount to the Company,
which sale shall be at the participant's direction at the time of exercise.
There shall be no such exercise at any one time as to fewer than one hundred
(100) shares or all of the remaining shares then purchasable by the person or
persons exercising the option, if fewer than one hundred (100) shares. The
Company's transfer agent shall, on behalf of the Company, prepare a certificate
or certificates representing such shares acquired pursuant to exercise of the
option, shall register the optionee as the owner of such shares on the books of
the Company and shall cause the fully executed certificate(s) representing such
shares to be delivered to the optionee as soon as practicable after payment of
the option price in full. The holder of an option shall not have any rights of a
stockholder with respect to the shares covered by the option, except to the
extent that one or more certificates for such shares shall be delivered to him
or her upon the due exercise of the option.
10. Adjustments Upon Changes in Capitalization and Other Events. Upon
the occurrence of any of the following events, an optionee's rights with respect
to options granted to him or her hereunder shall be adjusted as hereinafter
provided:
(a) Stock Dividends and Stock Splits. If the shares of Common
Stock shall be subdivided or combined into a greater or smaller number of shares
or if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, the number of shares of Common Stock deliverable
upon the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
(b) Recapitalization Adjustments. If the Company is to be
consolidated with or acquired by another entity in a merger, sale of all or
substantially all of the Company's assets or otherwise, each option granted
under the Plan which is outstanding but unvested as of the effective date of
such event shall become exercisable in full twenty (20) days prior to the
effective date of such event. In the event of a reorganization,
recapitalization, merger,
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<PAGE> 5
consolidation, or any other change in the corporate structure or shares of the
Company, to the extent permitted by Rule 16b-3 under the Securities Exchange Act
of 1934, as amended, adjustments shall be made in the number and kind of shares
authorized by the Plan and in the number of and kind of shares covered by, and
the option price of, outstanding options under the Plan, in each case, as
necessary to maintain the proportionate interest of the optionee and preserve,
without exceeding, the value of such option. Notwithstanding the foregoing, no
such adjustments shall be made which would, within the meaning of any applicable
provisions of the Internal Revenue Code of 1986, as amended, constitute a
modification, extension or renewal of any option or a grant of additional
benefits to the holder of an option.
(c) Issuance of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to options. No adjustments shall be made for dividends paid in
cash or in property other than securities of the Company.
(d) Adjustments. Upon the happening of any of the foregoing
events, the class and aggregate number of shares set forth in Section 2 of the
Plan that are subject to options which previously have been or subsequently may
be granted under the Plan shall also be appropriately adjusted to reflect such
events. The Board shall determine the specific adjustments to be made under this
Section 10 and its determination shall be conclusive.
11. Restrictions on Issuances of Shares. Notwithstanding the provisions
of Sections 4 and 9 of the Plan, the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied:
(a) The issuance of shares with respect to which the option
has been exercised is at the time of the issue of such shares registered under
applicable Federal and state securities laws as now in force or hereafter
amended; or
(b) Counsel for the Company shall have given an opinion that
the issuance of such shares is exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and that the Company has
complied with all applicable laws and regulations with respect thereto,
including without limitation, all regulations required by any stock exchange
upon which the Company's outstanding Common Stock is then listed.
12. Legend on Certificates. The certificate representing shares issued
pursuant to the exercise of an option granted hereunder shall carry such
appropriate legend, and such written instructions shall be given to the
Company's transfer agent, as may be deemed necessary or advisable by counsel to
the Company in order to comply with the requirements of the Securities Act of
1933, as amended, or any state securities laws.
13. Representation of Optionee. If requested by the Company, the
optionee shall deliver to the Company written representations and warranties
upon exercise of the option that are necessary to show compliance with Federal
and state securities laws, including representations and warranties to the
effect that a purchase of shares under the option is made for
-5-
<PAGE> 6
investment and not with a view to their distribution (as that term is used in
the Securities Act of 1933, as amended).
14. Option Agreement. Each option granted under the provisions of the
Plan shall be evidenced by an option agreement, which agreement shall be duly
executed and delivered on behalf of the Company and by the optionee to whom such
option is granted. The option agreement shall contain such terms, provisions and
conditions not inconsistent with the Plan as may be determined by the officer
executing it.
15. Termination and Amendment of Plan. The Plan shall terminate on the
earlier to occur of March 28, 2006 or at such time as all shares reserved for
issuance hereunder (including any amendments hereto) shall have been issued. The
Board may at any time terminate the Plan or make such modification or amendment
thereof as it deems advisable; provided, however, that the Board may not,
without approval by the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or by proxy and voting on such matter
at a meeting, (a) increase the maximum number of shares for which options may be
granted under the Plan (except by adjustment pursuant to Section 10), (b)
materially modify the requirements as to eligibility to participate in the Plan,
(c) materially increase benefits accruing to option holders under the Plan, or
(d) amend the Plan in any manner which would cause Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, to become inapplicable to the Plan;
and provided further that the provisions of the Plan specified in Rule
16b-3(c)(2)(ii)(A) (or any successor or amended provision thereto) under the
Securities Act of 1934, as amended (including without limitation, provisions as
to eligibility, amount, price and timing of awards) may not be amended more than
once every six months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder. Termination or any modification or amendment of the Plan shall not,
without consent of a participant, affect his or her rights under an option
previously granted to him or her.
16. Withholding of Income Taxes. Upon the exercise of an option, the
Company, in accordance with Section 3402(a) of the Internal Revenue Code, as
amended, may require the optionee to pay withholding taxes in respect of amounts
considered to be compensation includible in the optionee's gross income.
17. Compliance with Regulations. It is the Company's intent that the
Plan comply in all respects with Rule 16b-3 under the Securities Exchange Act of
1934, as amended, and any applicable Securities and Exchange Commission
interpretations thereof. If any provision of the Plan is deemed not to be in
compliance with Rule 16b-3, such provision of the Plan shall be null and void.
18. Governing Law. The validity and construction of the Plan and the
instruments evidencing options shall be governed by the laws of the State of
Delaware, without giving effect to the principles of conflicts of law thereof.
19. Acceleration and Vesting of Option for Business Combinations. Upon
any merger, consolidation, sale of all (or substantially all) of the assets of
the Company, or a business combination involving the sale or transfer of all (or
substantially all) of the capital stock or assets of the Company in which the
Company is not the surviving entity, or, if it is the surviving entity,
-6-
<PAGE> 7
does not survive as an operating going concern in substantially the same line of
business, then the options granted under the Plan shall, immediately prior to
the consummation of any of the foregoing events, become fully vested and
immediately exercisable by the optionee.
20. Restrictions on Transfer. During the period that a Non-Employee
Director serves as a member of the Board, and for one year thereafter, each
Non-Employee Director agrees, in connection with any underwritten public
offering of the Company's securities, (1) not to sell, make short sale of, loan,
grant any options for the purchase of, or otherwise dispose of any shares of
Common Stock of the Company held by such Non-Employee Director (other than those
shares included as part of such underwritten public offering, if any) without
the prior written consent of the Company or the underwriters managing such
underwritten public offering of the Company's securities for one hundred eighty
(180) days from the effective date of such registration or for such other period
as may be required by the underwriters managing such underwritten public
offering, and (2) further agrees to execute any agreement reflecting (1) above
as may be requested by the underwriters at the time of the applicable
underwritten public offering.
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<PAGE> 1
EXHIBIT 5
BUCHANAN INGERSOLL
Attorneys
500 College Road East
Princeton, New Jersey 08540
July 14, 1997
CollaGenex Pharmaceuticals, Inc.
301 South State Street
Newtown, Pennsylvania 18940
Gentlemen:
We have acted as counsel to CollaGenex Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), in connection with the filing by the
Company of a registration statement on Form S-8 (the "Registration Statement"),
under the Securities Act of 1933, as amended, relating to the registration of an
aggregate of 1,310,704 shares (the "Shares") of the Company's common stock, $.01
par value, of which: (i) 150,000 are issuable pursuant to options to be granted
by the Company to its non-employee directors under the Company's 1996
Non-Employee Director Stock Option Plan, as amended (the "Director Plan"); (ii)
150,000 are issuable pursuant to options previously granted by the Company to
its non-employee directors under the Director Plan; (iii) 600,000 are issuable
pursuant to options to be granted by the Company to its employees, non-employee
directors and consultants under the Company's 1996 Stock Plan (the "Stock
Plan"); (iv) 150,000 are issuable pursuant to options previously granted by the
Company to its employees, non-employee directors and consultants under the 1996
Stock Plan; and (v) 260,704 are issuable pursuant to options previously granted
by the Company to its employees, non-employee directors and consultants under
the Company's 1992 Stock Option Plan, as amended (the "1992 Plan"). The 1992
Plan, the 1996 Stock Plan and the Director Plan are referred to collectively
herein as the "Plans".
In connection with the Registration Statement, we have examined such
corporate records and documents, other documents, and such questions of law as
we have deemed necessary or appropriate for purposes of this opinion. On the
basis of such examination, it is our opinion that:
1. The issuance of the Shares has been duly and validly
authorized; and
2. The Shares underlying the Plans, when issued, delivered and
sold in accordance with the terms of the respective Plans and
the stock options, or other instruments authorized by such
plans, granted or to be granted thereunder, will be legally
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.
Very truly yours,
/s/BUCHANAN INGERSOLL
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
CollaGenex Pharmaceuticals, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-8 of CollaGenex Pharmaceuticals, Inc. of our report dated February 7,
1997, with respect to the consolidated balance sheets of CollaGenex
Pharmaceuticals, Inc. and subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of operations, stockholders' equity (deficit)
and cash flows for each of the years in the three-year period ended December 31,
1996, and for the period from January 10, 1992 (inception) to December 31, 1996,
which report appears in the December 31, 1996 annual report on Form 10-K of
CollaGenex Pharmaceuticals, Inc.
KPMG PEAT MARWICK LLP
Princeton, New Jersey
July 10, 1997
