As filed with the Securities and Exchange Commission on July 29, 1997
Registration No. 33-96384
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CELLEGY PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
California 82-0429727
(State or Other Jurisdiction of Incorporation or (I.R.S. employer
Organization) identification no.)
1065 E. Hillsdale Boulevard
Suite 418
Foster City, California 94404
(Address of principal executive offices)
1995 Directors Stock Option Plan
1995 Equity Incentive Plan
(Full Title of the Plans)
K. Michael Forrest
Cellegy Pharmaceuticals, Inc.
1065 E. Hillsdale Boulevard, Suite 418
Foster City, California 94404
(415) 524-1600
(Name, address and telephone number of agent for service)
Copies to:
C. Kevin Kelso, Esq.
Fenwick & West
Two Palo Alto Square
Palo Alto, California 94306
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- -------------------------------------------- ---------------- ---------------------- --------------------- ------------------
Proposed
Amount Proposed Maximum Maximum Amount of
Title of Securities to be Offering Price Per Aggregate Registration
to be Registered Registered Share Offering Price Fee
- -------------------------------------------- ---------------- ---------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 58,170 $4.50 (1) $ 261,765.00 $ 79.32
- -------------------------------------------- ---------------- ---------------------- --------------------- ------------------
Common Stock, no par value 391,830 (2) $3.75 (3) $1,469,362.50 (3) $445.26
- -------------------------------------------- ---------------- ---------------------- --------------------- ------------------
Common Stock, no par value 50,000 (2) $3.75 (3) $ 187,500 (3) $ 56.82
- -------------------------------------------- ---------------- ---------------------- --------------------- ------------------
<FN>
(1) Average exercise price of options previously granted to acquire shares
covered by this registration statement.
(2) Includes shares issuable upon the exercise of outstanding options and
awards not yet granted.
(3) Estimated as of July 25, 1997 pursuant to Rules 457(c) and 457(h)(1) solely
for the purpose of calculating the registration fee. Fee calculated
pursuant to Section 6(b) of the Securities Act of 1933, as amended. This
amount equals 1/33 of 1% of the proposed maximum aggregate offering price.
</FN>
</TABLE>
<PAGE>
CELLEGY PHARMACEUTICALS, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Pursuant to General Instruction E of Form S-8, this Registration
Statement is being filed with the Securities and Exchange Commission (the
"Commission") to include an additional 450,000 shares of the Registrant's Common
Stock covered by the Registrant's 1995 Equity Incentive Plan, as amended through
June 30, 1997 (the "Incentive Plan") and an additional 50,000 shares of the
Registrant's Common Stock covered by the Registrant's 1995 Directors' Stock
Option Plan (the "Directors Plan"). The contents of the Registrant's
Registration Statement on Form S-8 (Commission File No. 333-06065), previously
filed with the Commission on June 14, 1996, with respect to the Incentive Plan,
and the contents of the Registrant's registration statement on Form S-8
previously filed with the Commission on August 30, 1995, with respect to the
Incentive Plan and the Directors' Plan, are incorporated herein by reference.
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<PAGE>
Item 8. Exhibits.
Exhibit Index
Exhibit No. Description
- ----------- -----------
4.01 Registrant's Amended and Restated Articles of Incorporation
(incorporated herein by reference to Exhibit 4.01 to
Registrant's Form S-8, filed with the Commission on August 30,
1995 (the "1995 Form S-8")).
4.02 Certificate of Determination, as amended, relating to the
Series A Preferred Stock (incorporated herein by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB
for the three months ended March 31, 1996).
4.03 Registrant's Bylaws, as amended (incorporated herein by
reference to Exhibit 4.02 to the 1995 Form S-8 ).
4.04 Registrant's 1995 Equity Incentive Plan, as amended.
4.05 Registrant's 1995 Directors' Stock Option Plan, as amended.
5.01 Opinion of Fenwick & West.
23.01 Consent of Fenwick & West (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP, Independent Auditors.
24.01 Power of Attorney (see signature page).
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 Foster City, State of California, on July 21,
1997.
CELLEGY PHARMACEUTICALS, INC.
By: /s/ K. Michael Forrest
--------------------------------------
K. Michael Forrest,
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints K. Michael Forrest, Carl R. Thornfeldt
and C. Kevin Kelso, jointly and severally, his or her true and lawful
attorneys-in-fact and agents, each with full power of substitution, for him or
her and in his or her name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments) to this
Registration Statement on Form S-8, 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 or she or it might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
<TABLE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons on the capacities and on the
dates indicated.
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ K. Michael Forrest President and Chief Executive Officer, July 21, 1997
- ------------------------------------ and Director (Principal Executive Officer)
K. Michael Forrest
/s/ A. Richard Juelis Vice President, Finance and Chief Financial Office r July 21, 1997
- ------------------------------------ (Principal Financial and Accounting Officer)
A. Richard Juelis
/s/ Carl. R. Thornfeldt Director July 21, 1997
- ------------------------------------
Carl R. Thornfeldt, M.D.
/s/ Peter M. Elias Director July 21, 1997
- ------------------------------------
Peter M. Elias, M.D.
/s/ Larry J. Wells Director July 21, 1997
- ------------------------------------
Larry J. Wells
/s/ Denis R. Burger Director July 21, 1997
- ------------------------------------
Denis R. Burger, Ph.D.
/s/ Tobi B. Klar Director July 21, 1997
- ------------------------------------
Tobi B. Klar, M.D.
/s/ Alan A. Steigrod Director July 21, 1997
- ------------------------------------
Alan A. Steigrod
/s/ Jack L. Bowman Director July 21, 1997
- ------------------------------------
Jack L. Bowman
</TABLE>
<PAGE>
Exhibit Index
Exhibit No. Description
- ----------- -----------
4.01 Registrant's Amended and Restated Articles of Incorporation
(incorporated herein by reference to Exhibit 4.01 to
Registrant's Form S-8, filed with the Commission on August 30,
1995 (the "1995 Form S-8")).
4.02 Certificate of Determination, as amended, relating to the
Series A Preferred Stock (incorporated herein by reference to
Exhibit 4.1 to the Company's Quarterly Report on Form 10-QSB
for the three months ended March 31, 1996).
4.03 Registrant's Bylaws, as amended (incorporated herein by
reference to Exhibit 4.02 to the 1995 Form S-8 ).
4.04 Registrant's 1995 Equity Incentive Plan, as amended.
4.05 Registrant's 1995 Directors' Stock Option Plan, as amended.
5.01 Opinion of Fenwick & West.
23.01 Consent of Fenwick & West (included in Exhibit 5.01).
23.02 Consent of Ernst & Young LLP, Independent Auditors.
24.01 Power of Attorney (see signature page).
Exhibit 4.04
CELLEGY PHARMACEUTICALS, INC.
1995 EQUITY INCENTIVE PLAN
As Adopted June 26, 1995
and Amended April 11, 1997
1. PURPOSE. The purpose of this Plan is to provide incentives to
attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate in
the Company's future performance through awards of Options, Restricted Stock and
Stock Bonuses. Capitalized terms not defined in the text are defined in Section
23.
2. SHARES SUBJECT TO THE PLAN.
2.1 Number of Shares Available. Subject to Sections 2.2 and
18, the total number of Shares reserved and available for grant and issuance
pursuant to this Plan will be 1,450,000 (giving effect to a reverse split of the
Company's Common Stock effective at or before the closing of the Company's
registered initial public offering of securities), less any shares which are
issued, or are issuable upon exercise of options granted pursuant to the 1992
Stock Incentive Plan adopted by the Company (the "Prior Plan"). The pool of
Shares issuable hereunder is comprised of any Shares not subject to an option
granted pursuant to the Prior Plan plus any Shares issuable upon exercise of
options granted pursuant to the Prior Plan that expire or become unexercisable
for any reason without having been exercised in full. Upon the Effective Date
(as defined below) of this Plan, no further stock options shall be granted
pursuant to the Prior Plan. Options granted pursuant to the Prior Plan shall
continue to be governed by the terms of the Prior Plan. Subject to Sections 2.2
and 18, Shares that: (a) are subject to issuance upon exercise of an Option but
cease to be subject to such Option for any reason other than exercise of such
Option; (b) are subject to an Award granted hereunder but are forfeited or are
repurchased by the Company at the original issue price; or (c) are subject to an
Award that otherwise terminates without Shares being issued; will again be
available for grant and issuance in connection with future Awards under this
Plan. At all times the Company shall reserve and keep available a sufficient
number of Shares as shall be required to satisfy the requirements of all
outstanding Options granted under this Plan and all other outstanding but
unvested Awards granted under this Plan.
2.2 Adjustment of Shares. In the event that the number of
outstanding Shares is changed by a stock dividend, recapitalization, stock
split, reverse stock split, subdivision, combination, reclassification or
similar change in the capital structure of the Company without consideration,
then (a) the number of Shares reserved for issuance under this Plan, (b) the
Exercise Prices of and number of Shares subject to outstanding Options, and (c)
the number of Shares subject to other outstanding Awards will be proportionately
adjusted, subject to any required action by the Board or the shareholders of the
Company and compliance with applicable securities laws; provided, however, that
fractions of a Share will not be issued but will either be replaced by a cash
payment equal to the Fair Market Value of such fraction of a Share or will be
rounded up to the nearest whole Share, as determined by the Committee.
3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted
only to employees (including officers and directors who are also employees) of
the Company or of a Parent or Subsidiary of the Company. All other Awards may be
granted to employees, officers, directors, consultants and advisors of the
Company or any Parent, Subsidiary or Affiliate of the Company; provided such
consultants and advisors render bona fide services not in connection with the
offer and
<PAGE>
sale of securities in a capital-raising transaction. No person will be eligible
to receive more than 350,000 Shares in any calendar year under this Plan
pursuant to the grant of Awards hereunder. A person may be granted more than one
Award under this Plan.
4. ADMINISTRATION.
4.1 Committee Authority. This Plan will be administered by the
Committee or by the Board acting as the Committee. Subject to the general
purposes, terms and conditions of this Plan, and to the direction of the Board,
the Committee will have full power to implement and carry out this Plan. Without
limitation, the Committee will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating to
this Plan;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards (which need not be
identical), including but not limited to, the time or times at
which Options shall be exercisable and the extension or
acceleration of any such provisions or limitations, based in
each case on such factors as the Committee shall determine, in
its sole discretion;
(e) determine the number of Shares or other consideration subject
to Awards;
(f) determine whether Awards will be granted singly, in
combination with, in tandem with, in replacement of, or as
alternatives to, other Awards under this Plan or any other
incentive or compensation plan of the Company or any Parent,
Subsidiary or Affiliate of the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, exercisability and payment of Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned;
(k) make all other determinations necessary or advisable for the
administration of this Plan.
4.2 Committee Discretion. Any determination made by the
Committee with respect to any Award will be made in its sole discretion at the
time of grant of the Award or, unless in contravention of any express term of
this Plan or Award, at any later time, and such determination will be final and
binding on the Company and on all persons having an interest in any Award under
this Plan. The Committee may delegate to one or more officers of the Company the
authority to grant an Award under this Plan to Participants who are not Insiders
of the Company.
2
<PAGE>
4.3 Compliance with Code Section 162(m). If two or more
members of the Board are Outside Directors, the Committee shall be comprised of
at least two members of the Board, all of whom are Outside Directors.
4.4 Liability and Indemnification of the Committee. No member
of the group constituting the Committee, or any employee of the Company to whom
the Committee delegates certain administrative responsibilities, shall be liable
for any act or omission on such member's or employee's own part, including but
not limited to the exercise of any power or discretion given to such member, or
employee as delegatee, under this Plan, except for those acts or omissions
resulting from such member's or employee's own gross negligence or willful
misconduct. The Company shall indemnify each present and future member of the
group constituting the Committee and each present and future employee delegated
administrative responsibilities by such Committee against, and each member of
the group constituting the Committee or employee delegated administrative
responsibilities by such Committee shall be entitled without further act on his
or her part to indemnity from the Company for, all expenses (including the
amount of judgments or settlements approved by the Company and made with a view
to the curtailment of costs of litigation, other than amounts paid to the
Company itself) reasonably incurred by such person in connection with or arising
out of any action, suit or proceeding to the full extent permitted by law and by
the Articles of Incorporation and Bylaws of the Company.
5. OPTIONS. The Committee may grant Options to eligible persons and
will determine whether such Options will be Incentive Stock Options within the
meaning of the Code ("ISOs") or Nonqualified Stock Options ("NQSOs"), the number
of Shares subject to the Option, the Exercise Price of the Option, the period
during which the Option may be exercised, and all other terms and conditions of
the Option, subject to the following:
5.1 Form of Option Grant. Each Option granted under this Plan
will be evidenced by an Award Agreement which will expressly identify the Option
as an ISO or an NQSO ("Stock Option Agreement"), and will be in such form and
contain such provisions (which need not be the same for each Participant) as the
Committee may from time to time approve, and which will comply with and be
subject to the terms and conditions of this Plan.
5.2 Date of Grant. The date of grant of an Option will be the
date on which the Committee makes the determination to grant such Option, unless
otherwise specified by the Committee. The Stock Option Agreement and a copy of
this Plan will be delivered to the Participant within a reasonable time after
the granting of the Option.
5.3 Exercise Period. Unless otherwise established by the
Committee with respect to any individual or group of individuals, an Option will
become exercisable with respect to 25% of the Shares on the first anniversary of
the Vesting Start Date (as defined below), with respect to an additional 25% of
the Shares on the second anniversary of the Vesting Start Date, with respect to
an additional 25% of the Shares on the third anniversary of the Vesting Start
Date, with respect to an additional 25% of the Shares on the fourth anniversary
of the Vesting Start Date. The Vesting Start Date is the date of grant, or such
other date as the Committee determines in its discretion. The Committee may use
its discretion to establish different vesting schedules with respect to any
individual or group of individuals. No Option will be exercisable after the
expiration of ten (10) years from the date the Option is granted; and provided
further that no ISO granted to a person who directly or by attribution owns more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary of the Company ("Ten Percent
Shareholder") will be exercisable after the expiration of five (5) years from
the date the ISO is granted. The Committee also may provide for the exercise of
Options to become exercisable at one time or from time to time, periodically or
3
<PAGE>
otherwise, in such number of Shares or percentage of Shares as the Committee
determines. Options granted to Insiders, however, may not be exercisable, in
whole or in part, at any time prior to the six-month anniversary of the date of
grant, unless the Committee determines that the foregoing provision is not
necessary to comply with the provisions of Rule 16b-3 as promulgated under
Section 16 of the Exchange Act or that such Rule is not applicable to the Plan
or the Participant.
5.4 Exercise Price. The Exercise Price of an NQSO will be
determined by the Committee when the Option is granted; provided, however, that
if expressly required by one or more state securities authorities or laws as a
condition of issuing Awards and Shares in compliance with the securities laws of
such state, the exercise price of an NQSO shall not be less than 85% of the Fair
Market Value of the Shares on the date of grant and the Exercise Price of any
NQSO granted to a Ten Percent Shareholder shall not be less than 110% of the
Fair Market Value of the Shares on the date of grant. The Exercise Price of an
ISO will be not less than 100% of the Fair Market Value of the Shares on the
date of grant and the Exercise Price of any ISO granted to a Ten Percent
Shareholder will not be less than 110% of the Fair Market Value of the Shares on
the date of grant. Payment for the Shares purchased may be made in accordance
with Section 8 of this Plan.
5.5 Method of Exercise. Options may be exercised only by
delivery to the Company of a written stock option exercise agreement (the
"Exercise Agreement") in a form approved by the Committee (which need not be the
same for each Participant), stating the number of Shares being purchased, the
restrictions imposed on the Shares purchased under such Exercise Agreement, if
any, and such representations and agreements regarding Participant's investment
intent and access to information and other matters, if any, as may be required
or desirable by the Company to comply with applicable securities laws, together
with payment in full of the Exercise Price for the number of Shares being
purchased.
5.6 Termination. Notwithstanding the exercise periods set
forth in the Stock Option Agreement, exercise of an Option will always be
subject to the following:
(a) If the Participant is Terminated for any reason except death
or Disability, then the Participant may exercise such
Participant's Options only to the extent that such Options
would have been exercisable upon the Termination Date no later
than three (3) months after the Termination Date (or such
shorter or longer time period not exceeding five (5) years as
may be determined by the Committee, with any exercise beyond
three (3) months after the Termination Date deemed to be an
NQSO), but in any event, no later than the expiration date of
the Options.
(b) If the Participant is Terminated because of Participant's
death or Disability (or the Participant dies within three (3)
months after a Termination other than because of Participant's
death or Disability), then Participant's Options may be
exercised only to the extent that such Options would have been
exercisable by Participant on the Termination Date and must be
exercised by Participant (or Participant's legal
representative or authorized assignee) no later than twelve
(12) months after the Termination Date (or such shorter (but
not less than six months) or longer time period not exceeding
five (5) years as may be determined by the Committee, with any
such exercise beyond (a) three (3) months after the
Termination Date when the Termination is for any reason other
than the Participant's death or disability other than defined
in Section 22(e)(3) of the Code, or (b) twelve (12) months
after the Termination Date when the Termination is for
Participant's death or Disability,
4
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deemed to be an NQSO), but in any event no later than the
expiration date of the Options.
5.7 Limitations on Exercise. The Committee may specify a
reasonable minimum number of Shares that may be purchased on any exercise of an
Option, provided that such minimum number will not prevent Participant from
exercising the Option for the full number of Shares for which it is then
exercisable.
5.8 Limitations on ISOs. The aggregate Fair Market Value
(determined as of the date of grant) of Shares with respect to which ISOs are
exercisable for the first time by a Participant during any calendar year (under
this Plan or under any other incentive stock Incentive Plan of the Company or
any Affiliate, Parent or Subsidiary of the Company) will not exceed $100,000. If
the Fair Market Value of Shares on the date of grant with respect to which ISOs
are exercisable for the first time by a Participant during any calendar year
exceeds $100,000, then the Options for the first $100,000 worth of Shares to
become exercisable in such calendar year will be ISOs and the Options for the
amount in excess of $100,000 that become exercisable in that calendar year will
be NQSOs. In the event that the Code or the regulations promulgated thereunder
are amended after the Effective Date of this Plan to provide for a different
limit on the Fair Market Value of Shares permitted to be subject to ISOs, such
different limit will be automatically incorporated herein and will apply to any
Options granted after the effective date of such amendment.
5.9 Modification, Extension or Renewal. The Committee may
modify, extend or renew outstanding Options and authorize the grant of new
Options in substitution therefor, provided that any such action may not, without
the written consent of a Participant, impair any of such Participant's rights
under any Option previously granted. Any outstanding ISO that is modified,
extended, renewed or otherwise altered will be treated in accordance with
Section 424(h) of the Code. The Committee may reduce the Exercise Price of
outstanding Options without the consent of Participants effected by a written
notice to them; provided, however, that the Exercise Price may not be reduced
below the minimum Exercise Price that would be permitted under Section 5.4 of
this Plan for Options granted on the date the action is taken to reduce the
Exercise Price.
5.10 No Disqualification. Notwithstanding any other provision
in this Plan, no term of this Plan relating to ISOs will be interpreted, amended
or altered, nor will any discretion or authority granted under this Plan be
exercised, so as to disqualify this Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any ISO under
Section 422 of the Code.
6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the
Company to sell to an eligible person Shares that are subject to restrictions.
The Committee will determine to whom an offer will be made, the number of Shares
the person may purchase, the price to be paid (the "Purchase Price"), the
restrictions to which the Shares will be subject, if any, and all other terms
and conditions of the Restricted Stock Award, subject to the following:
6.1 Form of Restricted Stock Award. All purchases under a
Restricted Stock Award made pursuant to this Plan will be evidenced by an Award
Agreement ("Restricted Stock Purchase Agreement") that will be in such form
(which need not be the same for each Participant) as the Committee will from
time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. The offer of Restricted Stock will be accepted by the
Participant's execution and delivery of the Restricted Stock Purchase Agreement
and full payment for the Shares to the Company within thirty (30) days from the
date the Restricted Stock Purchase Agreement is delivered
5
<PAGE>
to the person. If such person does not execute and deliver the Restricted Stock
Purchase Agreement along with full payment for the Shares to the Company within
thirty (30) days, then the offer will terminate, unless otherwise determined by
the Committee. The Committee, however, may provide that, if required under Rule
16b-3 promulgated under Section 16 of the Exchange Act, Restricted Stock Awards
granted to Insiders shall not become exercisable until six months and one day
after the grant date and shall then be exercisable for 10 trading days at the
Purchase Price specified by the Committee in accordance with Section 6.2.
6.2 Purchase Price. The Purchase Price of Shares sold pursuant
to a Restricted Stock Award will be determined by the Committee; provided, that
if expressly required by any state securities authorities as a condition of the
offer and sale of Shares subject to Restricted Stock Awards in compliance with
the securities laws of such state, the Purchase Price will be at least 85% of
the Fair Market Value of the Shares on the date the Restricted Stock Award is
granted, except in the case of a sale to a Ten Percent Shareholder, in which
case the Purchase Price will be 100% of the Fair Market Value. Payment of the
Purchase Price may be made in accordance with Section 8 of this Plan.
6.3 Restrictions. Restricted Stock Awards will be subject to
such restrictions (if any) as the Committee may impose. The Committee may
provide for the lapse of such restrictions in installments and may accelerate or
waive such restrictions, in whole or part, based on length of service,
performance or such other factors or criteria as the Committee may determine.
7. STOCK BONUSES.
7.1 Awards of Stock Bonuses. A Stock Bonus is an award of
Shares (which may consist of Restricted Stock) for services rendered to the
Company or any Parent, Subsidiary or Affiliate of the Company. A Stock Bonus may
be awarded for past services already rendered to the Company, or any Parent,
Subsidiary or Affiliate of the Company (provided that the Participant pays the
Company the par value, if any, of the Shares awarded by such Stock Bonus in
cash) pursuant to an Award Agreement (the "Stock Bonus Agreement") that will be
in such form (which need not be the same for each Participant) as the Committee
will from time to time approve, and will comply with and be subject to the terms
and conditions of this Plan. A Stock Bonus may be awarded upon satisfaction of
such performance goals as are set out in advance in the Participant's individual
Award Agreement (the "Performance Stock Bonus Agreement") that will be in such
form (which need not be the same for each Participant) as the Committee will
from time to time approve, and will comply with and be subject to the terms and
conditions of this Plan. Stock Bonuses may vary from Participant to Participant
and between groups of Participants, and may be based upon the achievement of the
Company, Parent, Subsidiary or Affiliate and/or individual performance factors
or upon such other criteria as the Committee may determine.
7.2 Terms of Stock Bonuses. The Committee will determine the
number of Shares to be awarded to the Participant and whether such Shares will
be Restricted Stock. If the Stock Bonus is being earned upon the satisfaction of
performance goals pursuant to a Performance Stock Bonus Agreement, then the
Committee will determine: (a) the nature, length and starting date of any period
during which performance is to be measured (the "Performance Period") for each
Stock Bonus; (b) the performance goals and criteria to be used to measure the
performance, if any; (c) the number of Shares that may be awarded to the
Participant; and (d) the extent to which such Stock Bonuses have been earned.
Performance Periods may overlap and Participants may participate simultaneously
with respect to Stock Bonuses that are subject to different Performance Periods
and different performance goals and other criteria. The number of Shares may be
fixed or may vary in accordance with such performance goals and criteria as may
be determined by the Committee. The Committee may adjust the
6
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performance goals applicable to the Stock Bonuses to take into account changes
in law and accounting or tax rules and to make such adjustments as the Committee
deems necessary or appropriate to reflect the impact of extraordinary or unusual
items, events or circumstances to avoid windfalls or hardships.
7.3 Form of Payment. The earned portion of a Stock Bonus may
be paid currently or on a deferred basis with such interest or dividend
equivalent, if any, as the Committee may determine. Payment may be made in the
form of cash, whole Shares, including Restricted Stock, or a combination
thereof, either in a lump sum payment or in installments, all as the Committee
will determine.
7.4 Termination During Performance Period. If a Participant is
Terminated during a Performance Period for any reason, then such Participant
will be entitled to payment (whether in Shares, cash or otherwise) with respect
to the Stock Bonus only to the extent earned as of the date of Termination in
accordance with the Performance Stock Bonus Agreement, unless the Committee
determines otherwise.
8. PAYMENT FOR SHARE PURCHASES.
8.1 Payment. Payment for Shares purchased pursuant to this
Plan may be made in cash (by check) or, where expressly approved for the
Participant by the Committee and where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares that either: (1) have been owned by
Participant for more than six (6) months and have been paid
for within the meaning of SEC Rule 144 (and, if such shares
were purchased from the Company by use of a promissory note,
such note has been fully paid with respect to such shares); or
(2) were obtained by Participant in the public market;
(c) by tender of a full recourse promissory note having such terms
as may be approved by the Committee and bearing interest at a
rate sufficient to avoid imputation of income under Sections
483 and 1274 of the Code; provided, however, that Participants
who are not employees or directors of the Company will not be
entitled to purchase Shares with a promissory note unless the
note is adequately secured by collateral other than the
Shares; provided, further, that the portion of the Purchase
Price equal to the par value of the Shares, if any, must be
paid in cash;
(d) by waiver of compensation due or accrued to the Participant
for services rendered; provided, further, that the portion of
the Purchase Price equal to the par value of the Shares, if
any, must be paid in cash;
(e) with respect only to purchases upon exercise of an Option, and
provided that a public market for the Company's stock exists:
(1) through a "same day sale" commitment from the
Participant and a broker-dealer that is a member of
the National Association of Securities Dealers (an
"NASD Dealer") whereby the Participant irrevocably
elects to exercise the Option and to sell a portion
of the Shares so purchased to pay for the Exercise
Price, and whereby the NASD Dealer irrevocably
commits upon
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receipt of such Shares to forward the Exercise Price
directly to the Company; or
(2) through a "margin" commitment from the Participant
and a NASD Dealer whereby the Participant irrevocably
elects to exercise the Option and to pledge the
Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer
in the amount of the Exercise Price, and whereby the
NASD Dealer irrevocably commits upon receipt of such
Shares to forward the Exercise Price directly to the
Company; or
(f) by any combination of the foregoing.
8.2 Loan Guarantees. The Committee may help the Participant
pay for Shares purchased under this Plan by authorizing a guarantee by the
Company of a third-party loan to the Participant.
9. WITHHOLDING TAXES.
9.1 Withholding Generally. Whenever Shares are to be issued in
satisfaction of Awards granted under this Plan, the Company may require the
Participant to remit to the Company an amount sufficient to satisfy federal,
state and local withholding tax requirements prior to the delivery of any
certificate or certificates for such Shares. Whenever, under this Plan, payments
in satisfaction of Awards are to be made in cash, such payment will be net of an
amount sufficient to satisfy federal, state, and local withholding tax
requirements.
9.2 Stock Withholding. When, under applicable tax laws, a
Participant incurs tax liability in connection with the exercise or vesting of
any Award that is subject to tax withholding and the Participant is obligated to
pay the Company the amount required to be withheld, the Committee may allow the
Participant to satisfy the minimum withholding tax obligation by electing to
have the Company withhold from the Shares to be issued that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld,
determined on the date that the amount of tax to be withheld is to be determined
(the "Tax Date"). All elections by a Participant to have Shares withheld for
this purpose will be made in writing in a form acceptable to the Committee and
will be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax
Date;
(b) once made, then except as provided below, the election will be
irrevocable as to the particular Shares as to which the
election is made;
(c) all elections will be subject to the consent or disapproval of
the Committee;
(d) if the Participant is an Insider and if the Company is subject
to Section 16(b) of the Exchange Act: (1) the election may not
be made within six (6) months of the date of grant of the
Award, except as otherwise permitted by SEC Rule 16b-3(e)
under the Exchange Act, and (2) either (A) the election to use
stock withholding must be irrevocably made at least six (6)
months prior to the Tax Date (although such election may be
revoked at any time at least six (6) months prior to the Tax
Date) or (B) the exercise of the Option or election to use
stock withholding must be made
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<PAGE>
in the ten (10) day period beginning on the third day
following the release of the Company's quarterly or annual
summary statement of sales or earnings; and
(e) in the event that the Tax Date is deferred until six (6)
months after the delivery of Shares under Section 83(b) of the
Code, the Participant will receive the full number of Shares
with respect to which the exercise occurs, but such
Participant will be unconditionally obligated to tender back
to the Company the proper number of Shares on the Tax Date.
10. PRIVILEGES OF STOCK OWNERSHIP.
10.1 Voting and Dividends. No Participant will have any of the
rights of a shareholder with respect to any Shares until the Shares are issued
to the Participant. After Shares are issued to the Participant, the Participant
will be a shareholder and have all the rights of a shareholder with respect to
such Shares, including the right to vote and receive all dividends or other
distributions made or paid with respect to such Shares; provided, that if such
Shares are Restricted Stock, then any new, additional or different securities
the Participant may become entitled to receive with respect to such Shares by
virtue of a stock dividend, stock split or any other change in the corporate or
capital structure of the Company will be subject to the same restrictions as the
Restricted Stock; provided, further, that the Participant will have no right to
retain such stock dividends or stock distributions with respect to Shares that
are repurchased at the Participant's original Purchase Price pursuant to Section
12.
10.2 Financial Statements. If expressly required by any state
securities authorities as a condition of the offer and issuance of Awards in
compliance with the securities laws of such state, the Company shall provide to
each Participant during the period such Participant holds an outstanding Award a
copy of the financial statements of the Company as prepared either by the
Company or independent certified public accountants of the Company. Such
financial statements shall be delivered as soon as practicable following the end
of the Company's fiscal year during the period Awards are outstanding; provided,
however, the Company will not be required to provide such financial statements
to Participants whose services in connection with the Company assure them access
to equivalent information.
11. TRANSFERABILITY. Awards granted under this Plan, and any interest
therein, will not be transferable or assignable by Participant, and may not be
made subject to execution, attachment or similar process, otherwise than by will
or by the laws of descent and distribution or as consistent with the specific
Plan and Award Agreement provisions relating thereto. During the lifetime of the
Participant an Award will be exercisable only by the Participant, and any
elections with respect to an Award, may be made only by the Participant.
12. RESTRICTIONS ON SHARES. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Award Agreement a
right to repurchase a portion of or all Shares that are not "Vested" (as defined
in the Stock Option Agreement) held by a Participant following such
Participant's Termination at any time within ninety (90) days after the later of
Participant's Termination Date and the date Participant purchases Shares under
this Plan, for cash and/or cancellation of purchase money indebtedness, at the
Participant's original Purchase Price, provided, that the right to repurchase
lapses at the rate of at least 20% per year over five (5) years from the date
the Shares were purchased (or from the date of grant of options in the case of
Shares obtained pursuant to a Stock Option Agreement and Stock Option Exercise
Agreement), and if the right to repurchase is assignable, the assignee must pay
the Company, upon assignment of the right to repurchase, cash equal to the
excess of the Fair Market Value of the Shares over the original Purchase Price.
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<PAGE>
13. CERTIFICATES. All certificates for Shares or other securities
delivered under this Plan will be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem necessary or advisable,
including restrictions under any applicable federal, state or foreign securities
law, or any rules, regulations and other requirements of the SEC or any stock
exchange or automated quotation system upon which the Shares may be listed or
quoted.
14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a
Participant's Shares, the Committee may require the Participant to deposit all
certificates representing Shares (other than Shares with respect to which
consideration has been fully paid by the Participant (in forms other than by
promissory notes) and received by the Company), together with stock powers or
other instruments of transfer approved by the Committee, appropriately endorsed
in blank, with the Company or an agent designated by the Company to hold in
escrow until such restrictions have lapsed or terminated, and the Committee may
cause a legend or legends referencing such restrictions to be placed on the
certificates. Any Participant who is permitted to execute a promissory note as
partial or full consideration for the purchase of Shares under this Plan will be
required to pledge and deposit with the Company all or part of the Shares so
purchased as collateral to secure the payment of Participant's obligation to the
Company under the promissory note; provided, however, that the Committee may
require or accept other or additional forms of collateral to secure the payment
of such obligation and, in any event, the Company will have full recourse
against the Participant under the promissory note notwithstanding any pledge of
the Participant's Shares or other collateral or the Company's resort to any or
all of such collateral. In connection with any pledge of the Shares, Participant
will be required to execute and deliver a written pledge agreement in such form
as the Committee will from time to time approve. The Shares purchased with the
promissory note may be released from the pledge on a pro rata basis as the
promissory note is paid. Notwithstanding any other provision in this Plan, the
Committee may not require deposit in escrow or retain in escrow evidence of
unencumbered Shares for which consideration has been fully paid by the
Participant (in a form other than by promissory notes) and received by the
Company.
15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or
from time to time, authorize the Company, with the consent of the respective
Participants, to issue new Awards in exchange for the surrender and cancellation
of any or all outstanding Awards. Notwithstanding the foregoing, the Committee
may at any time buy from a Participant an Award previously granted with payment
in cash, Shares (including Restricted Stock) or other consideration, based on
such terms and conditions as the Committee and the Participant may agree. The
Committee may at any time cancel Options upon payment to each Participant in
cash, with respect to each Option to the extent then exercisable, of any amount
which, in the absolute discretion of the Committee, is determined to be
equivalent to any excess of the market value (at the effective time of such
event) of the consideration that such Participant would have received if the
Option had been exercised before the effective time over the Exercise Price of
the Option.
16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award will not
be effective unless such Award is in compliance with all applicable federal and
state securities laws, rules and regulations of any governmental body, and the
requirements of any stock exchange or automated quotation system upon which the
Shares may then be listed or quoted, as they are in effect on the date of grant
of the Award and also on the date of exercise or other issuance. Notwithstanding
any other provision in this Plan, the Company will have no obligation to issue
or deliver certificates for Shares under this Plan prior to: (a) obtaining any
approvals from governmental agencies that the Company determines are necessary
or advisable; and/or (b) completion of any registration or other qualification
of such Shares under any state or federal law or ruling of any
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<PAGE>
governmental body that the Company determines to be necessary or advisable. The
Company will be under no obligation to register the Shares with the SEC or to
effect compliance with the registration, qualification or listing requirements
of any state securities laws, stock exchange or automated quotation system, and
the Company will have no liability for any inability or failure to do so.
17. NO OBLIGATION TO EMPLOY. Nothing in this Plan or any Award granted
under this Plan will confer or be deemed to confer on any Participant any right
to continue in the employ of, or to continue any other relationship with, the
Company or any Parent, Subsidiary or Affiliate of the Company or limit in any
way the right of the Company or any Parent, Subsidiary or Affiliate of the
Company to terminate Participant's employment or other relationship at any time,
with or without cause.
18. CORPORATE TRANSACTIONS.
18.1 Assumption or Replacement of Awards by Successor. In the
event of (a) a dissolution or liquidation of the Company, (b) a merger or
consolidation in which the Company is not the surviving corporation (other than
a merger or consolidation with a wholly-owned subsidiary, a reincorporation of
the Company in a different jurisdiction, or other transaction in which there is
no substantial change in the shareholders of the Company or their relative stock
holdings and the Awards granted under this Plan are assumed, converted or
replaced by the successor corporation, which assumption will be binding on all
Participants), (c) a merger in which the Company is the surviving corporation
but after which the shareholders of the Company (other than any shareholder
which merges (or which owns or controls another corporation which merges) with
the Company in such merger) cease to own their shares or other equity interests
in the Company, (d) the sale of substantially all of the assets of the Company,
or (e) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the shareholders of the Company give up all
of their equity interest in the Company (except for the acquisition, sale or
transfer of all or substantially all of the outstanding shares of the Company
from or by the shareholders of the Company), any or all outstanding Awards may
be assumed, converted or replaced by the successor corporation (if any), which
assumption, conversion or replacement will be binding on all Participants. In
the alternative, the successor corporation may substitute equivalent Awards or
provide substantially similar consideration to Participants as was provided to
shareholders (after taking into account the existing provisions of the Awards).
The successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other property
subject to repurchase restrictions no less favorable to the Participant. In the
event such successor corporation (if any) refuses to assume or substitute
Options, as provided above, pursuant to a transaction described in this
Subsection 18.1, such Options shall expire on such transaction at such time and
on such conditions as the Board will determine.
18.2 Other Treatment of Awards. Subject to any greater rights
granted to Participants under the foregoing provisions of this Section 18, in
the event of the occurrence of any transaction described in Section 18.1, any
outstanding Awards will be treated as provided in the applicable agreement or
plan of merger, consolidation, dissolution, liquidation, sale of assets or other
"corporate transaction."
18.3 Assumption of Awards by the Company. The Company, from
time to time, also may substitute or assume outstanding awards granted by
another company, whether in connection with an acquisition of such other company
or otherwise, by either; (a) granting an Award under this Plan in substitution
of such other company's award; or (b) assuming such award as if it had been
granted under this Plan if the terms of such assumed award could be applied to
an Award granted under this Plan. Such substitution or assumption will be
permissible if the holder of the substituted or
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<PAGE>
assumed award would have been eligible to be granted an Award under this Plan if
the other company had applied the rules of this Plan to such grant. In the event
the Company assumes an award granted by another company, the terms and
conditions of such award will remain unchanged (except that the exercise price
and the number and nature of Shares issuable upon exercise of any such option
will be adjusted appropriately pursuant to Section 424(a) of the Code). In the
event the Company elects to grant a new Option rather than assuming an existing
option, such new Option may be granted with a similarly adjusted Exercise Price.
19. ADOPTION AND SHAREHOLDER APPROVAL. This Plan will become effective
on the closing of the Company's registered initial public offering of securities
(the "Effective Date"); provided, however, that if the Effective Date does not
occur on or before December 31, 1995, this Plan and any Options granted
hereunder will terminate as of December 31, 1995 having never become effective.
This Plan shall be approved by the shareholders of the Company (excluding Shares
issued pursuant to this Plan), consistent with applicable laws, within twelve
(12) months before or after the date this Plan is adopted by the Board. Upon the
Effective Date, the Board may grant Awards pursuant to this Plan; provided,
however, that: (a) no Option may be exercised prior to initial shareholder
approval of this Plan; (b) no Option granted pursuant to an increase in the
number of Shares subject to this Plan approved by the Board will be exercised
prior to the time such increase has been approved by the shareholders of the
Company; and (c) in the event that shareholder approval of such increase is not
obtained within the time period provided herein, all Awards granted hereunder
will be canceled, any Shares issued pursuant to any Award will be canceled, and
any purchase of Shares hereunder will be rescinded. So long as the Company is
subject to Section 16(b) of the Exchange Act, the Company will comply with the
requirements of SEC Rule 16b-3 promulgated thereunder (or its successor), as
amended, with respect to shareholder approval.
20. TERM OF PLAN. Unless earlier terminated as provided herein, this
Plan will terminate ten (10) years from the date this Plan is adopted by the
Board or, if earlier, the date of shareholder approval.
21. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time
terminate or amend this Plan in any respect, including without limitation
amendment of any form of Award Agreement or instrument to be executed pursuant
to this Plan; provided, however, that the Board will not, without the approval
of the shareholders of the Company, amend this Plan in any manner that requires
such shareholder approval pursuant to the Code or the regulations promulgated
thereunder as such provisions apply to ISO plans or (if the Company is subject
to the Exchange Act or Section 16(b) of the Exchange Act) pursuant to the
Exchange Act or SEC Rule 16b-3 promulgated thereunder (or its successor), as
amended, respectively.
22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by
the Board, the submission of this Plan to the shareholders of the Company for
approval, nor any provision of this Plan will be construed as creating any
limitations on the power of the Board to adopt such additional compensation
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and bonuses otherwise than under this Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
Exhibit 1
23. DEFINITIONS. As used in this Plan, the following terms will have
the following meanings:
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"Affiliate" means any corporation that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under
common control with, another corporation, where "control" (including the terms
"controlled by" and "under common control with") means the possession, direct or
indirect, of the power to cause the direction of the management and policies of
the corporation, whether through the ownership of voting securities, by contract
or otherwise.
"Award" means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
"Award Agreement" means, with respect to each Award, the
signed written agreement between the Company and the Participant setting forth
the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the committee appointed by the Board to
administer this Plan, or if no such committee is appointed, the Board.
"Company" means Cellegy Pharmaceuticals, Inc. a corporation
organized under the laws of the State of California, or any successor
corporation.
"Disability" means a disability, whether temporary or
permanent, partial or total, as determined by the Committee.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exercise Price" means the price at which a holder of an
Option may purchase the Shares issuable upon exercise of the Option.
"Fair Market Value" means, as of any date, the value of a
share of the Company's Common Stock determined by the Board in its sole
discretion, exercised in good faith; provided, however, that if the Common Stock
of the Company is quoted on the Small Cap Market of the National Association of
Securities Dealers Automated Quotation System or is regularly quoted by a
recognized securities dealer, and selling prices are reported, the Fair Market
Value per share shall be the closing sales price for such stock or the closing
bid if no sales were reported, as quoted on such system or by such dealer, for
the date the value is to be determined (or if there are not sales for such date,
then for the last preceding business day on which there were sales); provided,
however, that if the Common Stock of the Company 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
Automated Quotation System, the Fair Market Value per share 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 (or the largest such exchange) for the date
the value is to be determined (or if there are not sales for such date, then for
the last preceding business day on which there were sales), as reported in the
Wall Street Journal or similar publication.
"Insider" means an officer or director of the Company or any
other person whose transactions in the Company's Common Stock are subject to
Section 16 of the Exchange Act.
"Option" means an award of an option to purchase Shares
pursuant to Section 5.
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"Outside Directors" shall mean any director who is not (i) a
current employee of the Company or any Parent, Subsidiary or Affiliate of the
Company, (ii) a former employee of the Company or any Parent, Subsidiary or
Affiliate of the Company who is receiving compensation for prior service (other
than benefits under a tax-qualified pension plan), (iii) a current or former
officer of the Company or any Parent, Subsidiary or Affiliate of the Company or
(iv) currently receiving compensation for personal services in any capacity,
other than as a director, from the Company or any Parent, Subsidiary or
Affiliate of the Company; provided, however, that at such time as the term
"Outside Director", as used in Section 162(m) is defined in regulations
promulgated under Section 162(m) of the Code, "Outside Director" shall have the
meaning set forth in such regulations, as amended from time to time and as
interpreted by the Internal Revenue Service.
"Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if at the time of the
granting of an Award under this Plan, each of such corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
"Participant" means a person who receives an Award under this
Plan.
"Plan" means this Cellegy Pharmaceutical, Inc. 1995 Equity
Incentive Plan, as amended from time to time.
"Restricted Stock Award" means an award of Shares pursuant to
Section 6.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Company's Common Stock reserved
for issuance under this Plan, as adjusted pursuant to Sections 2 and 18, and any
successor security.
"Stock Bonus" means an award of Shares, or cash in lieu of
Shares, pursuant to Section 7.
"Subsidiary" means any corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company if, at the time of
granting of the Award, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
"Termination" or "Terminated" means, for purposes of this Plan
with respect to a Participant, that the Participant has for any reason ceased to
provide services as an employee, director, consultant or advisor to the Company
or a Parent, Subsidiary or Affiliate of the Company, except in the case of sick
leave, military leave, or any other leave of absence approved by the Committee,
provided that such leave is for a period of not more than ninety (90) days, or
reinstatement upon the expiration of such leave is guaranteed by contract or
statute. The Committee will have sole discretion to determine whether a
Participant has ceased to provide services and the effective date on which the
Participant ceased to provide services (the "Termination Date").
14
EXHIBIT 4.05
CELLEGY PHARMACEUTICALS, INC.
1995 DIRECTORS STOCK OPTION PLAN
Amended as of April 11, 1997
1. Purpose. This 1995 Directors Stock Option Plan (this "Plan") is
established to provide equity incentives for nonemployee members of the Board of
Directors of Cellegy Pharmaceuticals, Inc. (the "Company"), who are described in
Section 6.1 below, by granting such persons options to purchase shares of stock
of the Company.
2. Adoption and Shareholder Approval. After this Plan is adopted by the
Board of Directors of the Company (the "Board"), this Plan will become effective
on the closing of the Company's registered initial public offering of securities
(the "Effective Date"); provided, however, that if the Effective Date does not
occur on or before December 31, 1995, this Plan and any Options granted
hereunder will terminate as of December 31, 1995 having never become effective.
Upon the Effective Date of this Plan, no further stock options shall be granted
pursuant to the 1992 Stock Option Plan of the Company (the "Prior Plan").
Options granted pursuant to the Prior Plan shall continue to be governed by the
terms of the Prior Plan. This Plan shall be approved by the shareholders of the
Company, consistent with applicable laws, within twelve (12) months after the
date this Plan is adopted by the Board. Options ("Options") may be granted under
this Plan after the Effective Date provided that, in the event that shareholder
approval is not obtained within the time period provided herein, this Plan, and
all Options granted hereunder, shall terminate. No Option that is issued as a
result of any increase in the number of shares authorized to be issued under
this Plan shall be exercised prior to the time such increase has been approved
by the shareholders of the Company and all such Options granted pursuant to such
increase shall similarly terminate if such shareholder approval is not obtained.
So long as the Company is subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended, (the "Exchange Act") the Company will comply with the
requirements of Rule 16b-3 with respect to shareholder approval.
3. Types of Options and Shares. Options granted under this Plan shall
be nonqualified stock options ("NQSOs"). The shares of stock that may be
purchased upon exercise of Options granted under this Plan (the "Shares") are
shares of the Common Stock of the Company.
4. Number of Shares. The maximum number of Shares that may be issued
pursuant to Options granted under this Plan (the "Maximum Number") is 150,000
Shares (giving effect to a reverse split of the Company's Common Stock effective
at or before the closing of the Company's registered initial public offering of
securities), subject to adjustment as provided in this Plan. If any Option is
terminated for any reason without being exercised in whole or in part, the
Shares thereby released from such Option shall be available for purchase under
other Options subsequently granted under this Plan. At all times during the term
of this Plan, the Company shall reserve and keep available such number of Shares
as shall be required to satisfy the requirements of outstanding Options granted
under this Plan; provided, however that if the aggregate number of Shares
subject to outstanding Options granted under this Plan plus the aggregate number
of Shares previously issued by the Company pursuant to the exercise of Options
granted under this Plan equals or exceeds the Maximum Number of Shares, then
notwithstanding anything herein to the contrary, no further Options may be
granted under this Plan until the Maximum Number is increased or the aggregate
number of Shares subject to outstanding Options granted under this Plan plus the
aggregate number of Shares previously issued by the Company pursuant to the
exercise of Options granted under this Plan is less than the Maximum Number.
5. Administration. This Plan shall be administered by the Board or by a
committee of not less than two members of the Board appointed to administer this
Plan (the "Committee"). As used in this Plan, references to the Committee shall
mean either such Committee or the Board if no Committee has been established.
The interpretation by the Committee of any of the provisions of this Plan or any
Option granted under this Plan shall be final and binding upon the Company and
all persons having an interest in any Option or any Shares purchased pursuant to
an Option.
6. Eligibility and Award Formula.
6.1 Eligibility. Options may be granted only to directors of
the Company who are not employees of the Company or any Parent, Subsidiary or
Affiliate of the Company, as those terms are defined in Section 17 below.
6.2 Initial Grant. Each Optionee who after the Effective Date
becomes a member of the Board will automatically be granted an Option for 20,000
Shares (the "Initial Grant"). Initial Grants shall be made on the first business
day after the date such Optionee is first elected to the Board.
<PAGE>
6.3 Succeeding Grants. On the first business day after each of
the Company's annual meeting of shareholders, if the Optionee is still a member
of the Board and has served continuously as a member of the Board for at least
one year, the Optionee will automatically be granted an Option for 1,000 Shares
(a "Succeeding Grant").
7. Terms and Conditions of Options. Subject to the following and to
Section 6 above:
7.1 Form of Option Grant. Each Option granted under this Plan
shall be evidenced by a written Stock Option Grant ("Grant") in such form (which
need not be the same for each Optionee) as the Committee shall from time to time
approve, which Grant shall comply with and be subject to the terms and
conditions of this Plan.
7.2 Vesting. Options granted under this Plan shall be
exercisable as they vest. The date an Optionee receives an Initial Grant or a
Succeeding Grant is referred to in this Plan as the "Start Date" for such
Option.
(a) Initial Grants. Each Initial Grant will vest as
follows, so long as the Optionee continuously remains a director of the Company:
(i) on the Start Date of the Initial Grant the Initial Grant will vest as to
twenty-five percent (25%) of the Shares; (ii) with respect to the remaining
15,000 Shares: (a) on the first (1st) anniversary of the Initial Grant, the
Initial Grant will vest as to an additional twenty-five percent (25%) of the
remaining Shares; (b) on the second (2nd) anniversary of the Initial Grant, the
Initial Grant will vest as to an additional twenty-five percent (25%) of the
remaining Shares; (c) on the third (3rd) anniversary of the Initial Grant, the
Initial Grant will vest as to an additional twenty-five percent (25%) of the
remaining Shares; and (d) on the fourth (4th) anniversary of the Initial Grant,
the Initial Grant will vest as to an additional twenty-five percent (25%) of the
remaining Shares.
(b) Succeeding Grants. Each Succeeding Grant will
vest as to twenty-five percent (25%) of the Shares upon each of the first four
(4) successive anniversaries of the Start Date for such Succeeding Grant, so
long as the Optionee continuously remains a director of the Company.
7.3 Exercise Price. The exercise price of an Option shall be
the Fair Market Value (as defined in Section 17.4) of the Shares, at the time
that the Option is granted.
7.4 Termination of Option. Except as provided below in this
Section, each Option shall expire ten (10) years after its Start Date (the
"Expiration Date"). The Option shall cease to vest if the Optionee ceases to be
a member of the Board. The date on which the Optionee ceases to be a member of
the Board shall be referred to as the "Termination Date". An Option may be
exercised after the Termination Date only as set forth below:
(a) Termination Generally. If the Optionee ceases to
be a member of the Board for any reason except death or disability (as described
in 7.4(b) below), then each Option then held by such Optionee, to the extent
(and only to the extent) that it would have been exercisable by the Optionee on
the Termination Date, may be exercised by the Optionee within three (3) months
after the Termination Date, but in no event later than the Expiration Date.
(b) Death or Disability. If the Optionee ceases to be
a member of the Board because of the death of the Optionee or the temporary or
permanent, partial or total disability of the Optionee as determined by the
Board, then each Option then held by such Optionee, to the extent (and only to
the extent) that it would have been exercisable by the Optionee on the
Termination Date, may be exercised by the Optionee (or the Optionee's legal
representative) within twelve (12) months after the Termination Date, but in no
event later than the Expiration Date.
8. Exercise of Options.
8.1 Notice. Options may be exercised only by delivery to the
Company of an exercise agreement in a form approved by the Committee stating the
number of Shares being purchased, the restrictions imposed on the Shares and
such representations and agreements regarding the Optionee's investment intent
and access to information as may be required by the Company to comply with
applicable securities laws, together with payment in full of the exercise price
for the number of Shares being purchased.
8.2 Payment. Payment for the Shares purchased upon exercise of
an Option may be made (a) in cash or by check; (b) by surrender of shares of
Common Stock of the Company that have been owned by the Optionee for more than
six (6) months (and which have been paid for within the meaning of Securities
and Exchange Commission ("SEC") Rule 144 and, if such shares were purchased from
the Company by use of a promissory note, such note has been fully paid with
respect to such shares) or were obtained by the Optionee in the open public
market, having a Fair Market Value equal to the exercise price of the Option;
(c) by waiver of compensation due or accrued to the Optionee for services
rendered; (d) provided that a public market for the Company's stock exists,
through a "same day sale" commitment from the Optionee and
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a broker-dealer that is a member of the National Association of Securities
Dealers (an "NASD Dealer") whereby the Optionee irrevocably elects to exercise
the Option and to sell a portion of the Shares so purchased to pay for the
exercise price and whereby the NASD Dealer irrevocably commits upon receipt of
such Shares to forward the exercise price directly to the Company; (e) provided
that a public market for the Company's stock exists, through a "margin"
commitment from the Optionee and a NASD Dealer whereby the Optionee irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from the NASD Dealer in the
amount of the exercise price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the exercise price directly to the
Company; or (f) by any combination of the foregoing.
8.3 Withholding Taxes. Prior to issuance of the Shares upon
exercise of an Option, the Optionee shall pay or make adequate provision for any
federal or state withholding obligations of the Company, if applicable.
8.4 Limitations on Exercise. Notwithstanding the exercise
periods set forth in the Grant, exercise of an Option shall always be subject to
the following limitations:
(a) An Option shall not be exercisable until such
time as this Plan (or, in the case of Options granted pursuant to an amendment
increasing the number of shares that may be issued pursuant to this Plan, such
amendment) has been approved by the shareholders of the Company in accordance
with Section 15 hereof.
(b) An Option shall not be exercisable unless such
exercise is in compliance with the Securities Act of 1933, as amended (the
"Securities Act") and all applicable state securities laws, as they are in
effect on the date of exercise.
(c) The Committee may specify a reasonable minimum
number of Shares that may be purchased upon any exercise of an Option, provided
that such minimum number will not prevent the Optionee from exercising the full
number of Shares as to which the Option is then exercisable.
9. Nontransferability of Options. During the lifetime of the Optionee,
an Option shall be exercisable only by the Optionee or by the Optionee's
guardian or legal representative, unless otherwise permitted by the Committee.
No Option may be sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent and distribution.
10. Privileges of Stock Ownership. No Optionee shall have any of the
rights of a shareholder with respect to any Shares subject to an Option until
the Option has been validly exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
of exercise, except as provided in this Plan. The Company shall provide to each
Optionee a copy of the annual financial statements of the Company, at such time
after the close of each fiscal year of the Company as they are released by the
Company to its shareholders.
11. Adjustment of Option Shares. In the event that the number of
outstanding shares of Common Stock of the Company is changed by a stock
dividend, stock split, reverse stock split, combination, reclassification or
similar change in the capital structure of the Company without consideration,
the number of Shares available under this Plan and the number of Shares subject
to outstanding Options and the exercise price per share of such outstanding
Options shall be proportionately adjusted, subject to any required action by the
Board or shareholders of the Company and compliance with applicable securities
laws; provided, however, that no fractional shares shall be issued upon exercise
of any Option and any resulting fractions of a Share shall be rounded up to the
nearest whole Share.
12. No Obligation to Continue as Director. Nothing in this Plan or any
Option granted under this Plan shall confer on any Optionee any right to
continue as a director of the Company.
13. Compliance With Laws. The grant of Options and the issuance of
Shares upon exercise of any Options shall be subject to and conditioned upon
compliance with all applicable requirements of law, including without limitation
compliance with the Securities Act, compliance with all other applicable state
securities laws and compliance with the requirements of any stock exchange or
national market system on which the Shares may be listed. The Company shall be
under no obligation to register the Shares with the SEC or to effect compliance
with the registration or qualification requirement of any state securities laws,
stock exchange or national market system.
14. Acceleration of Options. In the event of (a) a dissolution or
liquidation of the Company, (b) a merger or consolidation in which the Company
is not the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary, a reincorporation of the Company in a different
jurisdiction, or other transaction in which there is no substantial change in
the shareholders of the Company or their relative stock holdings), (c) a merger
in which the Company
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is the surviving corporation but after which the shareholders of the Company
(other than any shareholder which merges (or which owns or controls another
corporation which merges) with the Company in such merger) cease to own their
shares or other equity interests in the Company, (d) the sale of substantially
all of the assets of the Company, or (e) any other transaction which qualifies
as a "corporate transaction" under Section 424 of the Internal Revenue Code of
1986, as amended (the "Code") wherein the shareholders of the Company give up
all of their equity interests in the Company (except for the acquisition, sale
or transfer of all or substantially all of the outstanding shares of the Company
from or by the shareholders of the Company), the vesting of all options granted
pursuant to this Plan will accelerate and the options will become exercisable in
full prior to the consummation of such event at such times and on such
conditions as the Committee determines, and if such options are not exercised
prior to the consummation of the corporate transaction, they shall terminate in
accordance with the provisions of this Plan.
15. Amendment or Termination of Plan. The Committee may at any time
terminate or amend this Plan (but may not terminate or amend the terms of any
outstanding option without the consent of the Optionee); provided, however, that
the Committee shall not, without the approval of the shareholders of the
Company, increase the total number of Shares available under this Plan (except
by operation of the provisions of Sections 4 and 11 above) or change the class
of persons eligible to receive Options. Further, the provisions in Sections 6
and 7 of this Plan shall not be amended more than once every six (6) months,
other than to comport with changes in the Code, the Employee Retirement Income
Security Act or the rules thereunder. In any case, no amendment of this Plan may
adversely affect any then outstanding Options or any unexercised portions
thereof without the written consent of the Optionee.
16. Term of Plan. Options may be granted pursuant to this Plan from
time to time within a period of ten (10) years from the date this Plan is
adopted by the Board.
17. Certain Definitions. As used in this Plan, the following terms
shall have the following meanings:
17.1 "Parent" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company if, at the time of
the granting of the Option, each of such corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
17.2 "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
17.3 "Affiliate" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, another corporation, where "control" (including
the terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting securities,
by contract or otherwise.
17.4 "Fair Market Value" shall mean, as of any date, the value
of a share of the Company's Common Stock determined by the Board in its sole
discretion, exercised in good faith; provided, however, that if the Common Stock
of the Company is quoted on the Small Cap Market of the National Association of
Securities Dealers Automated Quotation System or is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value per share shall be the closing sales price for such stock or the
closing bid if no sales were reported, as quoted on such system or by such
dealer for the date the value is to be determined (or if there are no quoted
prices for the date of grant, then for the last preceding business day on which
there were quoted prices); provided, however, that if the Common Stock of the
Company 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 Automated Quotation System, the Fair Market
Value per share 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 (or the
largest such exchange) for the date the value is to be determined (or if there
are not sales for such date, then for the last preceding business day on which
there were sales), as reported in the Wall Street Journal or similar
publication.
4
EXHIBIT 5.01
July 28, 1997
Cellegy Pharmaceuticals, Inc.
1065 E. Hillsdale Boulevard
Suite 418
Foster City, CA 94404
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by you with the Securities and Exchange
Commission (the "Commission") on or about July 29, 1997 in connection with the
registration under the Securities Act of 1933, as amended, of an aggregate of
500,000 additional shares of your Common Stock (the "Stock"), subject to
issuance by you upon the exercise of (a) stock options granted or to be granted
by you under your 1995 Equity Incentive Plan, as amended (the "Incentive Plan"),
and (b) stock options granted or to be granted by you under your Directors Plan
(the "Directors Plan"). The plans referred to in clauses (a) and (b) above are
collectively referred to in this letter as the "Plans." In rendering this
opinion, we have examined the following:
(1) the Registration Statement, together with the Exhibits filed
as a part thereof;
(2) the Prospectuses prepared in connection with the Registration
Statement;
(3) the minutes of meetings and actions by written consent of the
shareholders and Board of Directors relating to the Plans and
the increase, by 500,000 shares, of the number of shares of
stock covered thereby;
(4) a Management Certificate addressed to us and dated of even
date herewith containing certain factual and other
representations.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies, the legal capacity of all natural persons executing the same, the lack
of any undisclosed terminations, modifications, waivers or amendments to any
documents reviewed by us and the due execution and delivery of all documents
where due execution and delivery are prerequisites to the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information obtained from records
included in the documents referred to above. We have made no independent
investigation or other attempt to verify the accuracy of any of such information
or to determine the existence or non-existence of any other factual matters;
however,
<PAGE>
we are not aware of any facts that would lead us to believe that the opinion
expressed herein is not accurate.
Based upon the foregoing, it is our opinion that the 500,000 additional
shares of Stock that may be issued and sold by you upon the exercise of stock
options granted or to be granted under the Incentive Plan or the Directors Plan,
when issued and sold in accordance with the applicable plan and stock option or
purchase agreements to be entered into thereunder, and in the manner referred to
in the relevant Prospectus associated with the Registration Statement, will be
legally issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
This opinion speaks only as of its date and is intended solely for the
your use as an exhibit to the Registration Statement for the purpose of the
above sale of the Stock and is not to be relied upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
By: /s/ C. Kevin Kelso
-------------------
Exhibit 23.02
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 pertaining to the 1995 Directors Stock Option Plan and 1995 Equity
Incentive Plan of Cellegy Pharmaceuticals, Inc. of our report dated February 5,
1997 with respect to the financial statements of Cellegy Pharmaceuticals, Inc.
included in the Annual Report on Form 10-KSB for the year ended December 31,
1996, filed with the Securities and Exchange Commission.
San Jose, California /s/ Ernst & Young LLP
July 25, 1997.
