<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 16, 2000
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
QUESTCOR PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
California 33-0476164
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
26118 Research Road
Hayward, California 94545
(510) 732-5551
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
--------------
1992 STOCK OPTION PLAN
1993 NON-EMPLOYEE DIRECTORS'
EQUITY INCENTIVE PLAN
(Full title of the plans)
--------------
Charles J. Casamento
Chairman, President and
Chief Executive Officer
QUESTCOR PHARMACEUTICALS, INC.
26118 Research Road
Hayward, California 94545
(510) 732-5551
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------
Copies to:
Alan C. Mendelson, Esq.
COOLEY GODWARD LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
(650) 843-5000
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<PAGE> 2
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=========================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Options and Common Stock 5,133,712 $1.24 - $2.50 $10,204,659 $2,695
=========================================================================================================
</TABLE>
(1) Consists of shares of Common Stock which are issuable pursuant to awards
under the Registrant's 1992 Stock Option Plan (the "1992 Plan") and 1993
Non-Employee Directors' Equity Incentive Plan (the "1993 Plan").
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) and (h) of the Securities Act of
1933, as amended (the "Securities Act"). The price per share and aggregate
offering price are based upon (a) the weighted average exercise price for
shares subject to outstanding stock options previously granted under the
1992 Plan and 1993 Plan upon the assumption of outstanding stock options in
connection with the Registrant's acquisition of RiboGene, Inc. and (b)
shares issuable under the 1992 Plan and 1993 Plan, calculated on the basis
of the average of the high and low prices of Registrant's Common Stock on
February 9, 2000 as reported on the American Stock Exchange. The following
chart shows the calculation of the registration fee:
<TABLE>
<CAPTION>
=====================================================================================
Number of Offering Price Aggregate
Type of Shares Shares Per Share Offering Price
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock issuable
pursuant to outstanding
options under the 1992 Plan 3,390,400 $ 1.73 $ 5,865,392
- -------------------------------------------------------------------------------------
Common Stock issuable
under the 1992 Plan 1,343,312 $ 2.50 $ 3,358,280
- -------------------------------------------------------------------------------------
Common Stock Issuable
pursuant to outstanding
options under the 1993 Plan 15,090 $ 1.24 $ 18,712
- -------------------------------------------------------------------------------------
Common Stock issuable
under the 1993 Plan 384,910 $ 2.50 $ 962,275
- -------------------------------------------------------------------------------------
Total 5,133,712 $10,204,659
=====================================================================================
</TABLE>
2
<PAGE> 3
INCORPORATION BY REFERENCE OF CONTENTS OF
REGISTRATION STATEMENTS ON FORM S-8
The contents of the Registration Statements on Form S-8 Nos. 33-60194,
33-72622, 33-91254 and 333-81243 filed by the Registrant with the Securities and
Exchange Commission on March 29, 1993, December 8, 1993, April 17, 1995 and June
21, 1999, respectively, are incorporated herein by reference.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<S> <C>
4.1 Amended and Restated Articles of Incorporation of the Registrant.
4.2 Bylaws of the Registrant.(1)
4.3 Certificate of Adoption of Bylaw Amendment of the Registrant.(2)
4.4 Specimen stock certificate.(1)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 1992 Stock Option Plan, as amended.
99.2 1993 Non-Employee Directors' Equity Incentive Plan, as amended.
</TABLE>
- ----------------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(No. 33-51682) on September 4, 1992, and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
July 31, 1998, and incorporated herein by reference.
3
<PAGE> 4
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 Hayward, State of California, on February 16,
2000.
QUESTCOR PHARMACEUTICALS, INC.
By /s/ Charles J. Casamento
---------------------------------
Charles J. Casamento
Chairman, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Charles J. Casamento and Hans Schmid, his
or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, 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, and to file the same,
with all exhibits thereto, and other 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 connection therewith,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their or his substitutes or substitute, may lawfully do or cause
to be done by virtue hereof.
4
<PAGE> 5
Pursuant to the requirements of the Securities Act, 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/ Charles J. Casamento Chairman of the Board, Chief Executive February 16, 2000
- ----------------------------- Officer, President and Secretary
CHARLES J. CASAMENTO (Principal Executive Officer)
/s/ Hans Schmid Vice President, Finance and February 16, 2000
- ----------------------------- Administration and Chief Financial
HANS SCHMID Officer (Principal Financial and
Accounting Officer)
/s/ Robert F. Allnutt Director February 16, 2000
- -----------------------------
ROBERT F. ALLNUTT
/s/ Digby W. Barrios Director February 16, 2000
- -----------------------------
DIGBY W. BARRIOS
/s/ Frank J. Sasinowski Director February 16, 2000
- -----------------------------
FRANK J. SASINOWSKI
/s/ Jon S. Saxe Director February 16, 2000
- -----------------------------
JON S. SAXE
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<S> <C>
4.1 Amended and Restated Articles of Incorporation of the Registrant.
4.2 Bylaws of the Registrant.(1)
4.3 Certificate of Adoption of Bylaw Amendment of the Registrant.(2)
4.4 Specimen stock certificate.(1)
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cooley Godward LLP is contained in Exhibit 5.1 to this
Registration Statement.
24.1 Power of Attorney is contained on the signature pages.
99.1 1992 Stock Option Plan, as amended.
99.2 1993 Non-Employee Directors' Equity Incentive Plan, as amended.
</TABLE>
- ----------------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form S-1
(No. 33-51682) on September 4, 1992, and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's Form 10-K for the fiscal year ended
July 31, 1998, and incorporated herein by reference.
<PAGE> 1
EXHIBIT 4.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CYPROS PHARMACEUTICAL CORPORATION
Paul J. Marangos and David W. Nassif hereby certify that:
ONE: They are the duly elected and acting President and Secretary,
respectively, of Cypros Pharmaceutical Corporation, a California corporation
(the "Corporation").
TWO: The Articles of Incorporation of this corporation are hereby
amended and restated to read as follows:
I.
The name of the Corporation is QUESTCOR PHARMACEUTICALS, INC. (the
"Corporation").
II.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
A. This Corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the Corporation is authorized to issue is eighty-two million
five hundred thousand (82,500,000) shares, seventy-five million (75,000,000)
shares of which shall be Common Stock (the "Common Stock") and seven million
five hundred thousand (7,500,000) shares of which shall be Preferred Stock (the
"Preferred Stock").
B. The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the limitations and
restrictions stated in these Restated Articles of Incorporation, to fix or alter
the rights, preferences, privileges and restrictions granted to or imposed upon
any wholly unissued series of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or any of them; and to
increase or decrease the number of shares of any series prior or subsequent to
the issue of shares of that series, but not below the number of shares of such
series then outstanding. In case the number of shares of any series shall be so
decreased, the shares constituting such decrease shall resume the status which
they had prior to the adoption of the resolution originally fixing the number of
shares of such series.
1.
<PAGE> 2
C. Two million one hundred fifty-five thousand seven hundred fifteen
(2,155,715) of the authorized shares of Preferred Stock are hereby designated
"Series A Preferred Stock" (the "Series A Preferred").
D. The rights, preferences, privileges, restrictions and other matters
relating to Common Stock and the Series A Preferred are as follows:
1. DIVIDENDS. Holders of Series A Preferred shall be entitled to
receive dividends concurrently with dividends on the Common Stock, if any, on an
as-converted basis, when and as declared by the Board of Directors out of funds
legally available therefor. Such dividends shall be payable only when, as and if
declared by the Board of Directors and shall be non-cumulative.
2. VOTING RIGHTS. The holder of each share of Series A Preferred
shall be entitled to the number of votes equal to the number of shares of Common
Stock into which each share of Series A Preferred could be converted on the
record date for the vote or written consent of shareholders and, except as
otherwise required by law or provided herein, shall have voting rights and
powers equal to the voting rights and powers of Common Stock. The holder of each
share of Series A Preferred shall be entitled to notice of any shareholders'
meeting in accordance with the bylaws of the Corporation and shall vote with
holders of Common Stock upon the election of directors and upon any other matter
submitted to a vote of shareholders, except those matters required by law to be
submitted to a class vote. Fractional votes shall not, however, be permitted and
any fractional voting rights resulting from the above formula (after aggregating
all shares of Common Stock into which shares of Series A Preferred held by each
holder could be converted) shall be rounded to the nearest whole number (with
one-half rounded upward to one). Each holder of Common Stock shall be entitled
to one (1) vote for each share of Common Stock held.
3. LIQUIDATION RIGHTS.
(a) Upon any liquidation, dissolution, or winding up of the
Corporation, whether voluntary or involuntary, before any distribution or
payment shall be made to the holders of the Common Stock, the holders of Series
A Preferred shall be entitled to be paid out of the assets of the Corporation an
amount per share of Series A Preferred equal to the "Original Issue Price" plus
all declared and unpaid dividends on the Series A Preferred (as adjusted for any
stock dividends, combinations, splits, recapitalizations and the like with
respect to such shares) for each share of Series A Preferred held by them. The
Original Issue Price of the Series A Preferred shall be $4.639 per share. If,
upon any liquidation, distribution, or winding up, the assets of the Corporation
available for distribution to the Series A Preferred shall be insufficient to
make payment in full to all holders of Series A Preferred of the liquidation
preference set forth in this Section 3(a), then such assets shall be distributed
among the holders of Series A Preferred at the time outstanding, ratably in
proportion to the full amounts to which they would otherwise be respectively
entitled. After payment of the full liquidation preference of the Series A
Preferred as set forth in this Section 3(a), the entire assets of the
2.
<PAGE> 3
Corporation legally available for distribution, if any, shall be distributed
ratably to the holders of the Common Stock.
(b) The following events shall be considered a liquidation under
this Section:
(i) any consolidation or merger of the Corporation with or
into any other corporation or other entity or person, or any other corporate
reorganization, in each case in which the shareholders of the Corporation
immediately prior to such consolidation, merger or reorganization, own less than
50% of the Corporation's voting power immediately after such consolidation,
merger or reorganization, or any transaction or series of related transactions
in which in excess of 50% of the Corporation's voting power is transferred (an
"Acquisition"); or
(ii) a sale, lease or other disposition of all or
substantially all of the assets of the Corporation (an "Asset Transfer").
4. CONVERSION RIGHTS. The holders of the Series A Preferred shall have
the following rights with respect to the conversion of the Series A Preferred
into shares of Common Stock (the "Conversion Shares"):
(a) OPTIONAL CONVERSION.
(i) Subject to and in compliance with the provisions of this
Section 4(a), each holder of Series A Preferred shall have the right, at its
option, to convert up to a number of shares of Series A Preferred equal to the
number of shares of such Series A Preferred then held by such holder multiplied
by a fraction, the numerator of which shall be one (1), and the denominator of
which shall be three (3) at any time prior to the "Measurement Date", and
reduced by one (1) each on the Measurement Date and on the first anniversary
following the Measurement Date, such that one-third (1/3) of the shares held by
a holder may be converted immediately, and all shares held by a holder may be
converted on the date that is one year after the Measurement Date. "Measurement
Date" shall mean December 1, 1999.
(ii) The number of shares of Common Stock to which a holder of
Series A Preferred shall be entitled upon conversion shall be the product
obtained by multiplying the "Series A Conversion Rate" then in effect
(determined as provided in Section 4(b)) by the number of shares of Series A
Preferred being converted.
(b) SERIES A CONVERSION RATE. The conversion rate in effect at any
time for conversion of the Series A Preferred (the "Series A Conversion Rate")
shall be the quotient obtained by dividing the Original Issue Price of the
Series A Preferred by the "Series A Preferred Price" as defined in Section 4(c).
(c) SERIES A PREFERRED PRICE. The conversion price for the Series A
Preferred shall initially be the Original Issue Price of the Series A Preferred
(the "Series A Preferred Price"). Such initial Series A Preferred Price shall be
adjusted from
3.
<PAGE> 4
time to time in accordance with this Section 4. All references to the Series A
Preferred Price herein shall mean the Series A Preferred Price as so adjusted.
(d) CLOSING PRICE. "Closing Price" with respect to a share of Common
Stock shall mean the closing sale price or the average of the reported closing
bid and asked prices, as the case may be, on the principal national security
exchange or quotation system on which the Common Stock is quoted or listed or
admitted to trading, or, if not quoted or listed or admitted to trading on any
national securities or quotation system, the average of the closing bid and
asked prices of the Common Stock on the over-the-counter market as reported by
the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
New York Stock Exchange member firm selected from time to time by the Board of
Directors for that purpose, or a price determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution, and
(e) CURRENT MARKET VALUE. "Current Market Value" of a share of Common
Stock shall mean the average of the daily Closing Prices per share of Common
Stock for the ten (10) consecutive trading days immediately prior to the date in
question.
(f) MECHANICS OF CONVERSION. Each holder of Series A Preferred who
desires to convert the same into shares of Common Stock pursuant to this Section
4 shall surrender the certificate or certificates therefor, duly endorsed, at
the office of the Corporation or any transfer agent for the Series A Preferred,
and shall give written notice to the Corporation at such office that such holder
elects to convert the same. Such notice shall state the number of shares of
Series A Preferred being converted. Thereupon, the Corporation shall promptly
issue and deliver at such office to such holder a certificate or certificates
for the number of shares of Common Stock to which such holder is entitled and
shall promptly pay in cash or, to the extent sufficient funds are not then
legally available therefor, in Common Stock (at the Common Stock's Current
Market Value as of the date of such conversion), any declared and unpaid
dividends on the shares of Series A Preferred being converted as well as
promptly pay in cash any payment in lieu of issuing a fractional share as set
forth in Section 4(n). Such conversion shall be deemed to have been made at the
close of business on the date of such surrender of the certificates representing
the shares of Series A Preferred to be converted, and the person entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder of such shares of Common Stock on
such date.
(g) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Corporation
shall at any time or from time to time after the date that the first share of
Series A Preferred is issued by the Corporation (the "Original Issue Date")
effect a subdivision of the outstanding Common Stock without a corresponding
subdivision of the Preferred Stock, the Series A Preferred Price in effect
immediately before that subdivision shall be proportionately decreased.
Conversely, if the Corporation shall at any time or from time to time after the
Original Issue Date combine the outstanding shares of Common Stock into a
smaller number of shares without a corresponding combination of
4.
<PAGE> 5
the Preferred Stock, the Series A Preferred Price in effect immediately before
the combination shall be proportionately increased. Any adjustment under this
Section 4(g) shall become effective at the close of business on the date the
subdivision or combination becomes effective.
(h) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If the
Corporation at any time or from time to time after the Original Issue Date
makes, or fixes a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock, in each such event provision
shall be made so that the holders of the Series A Preferred shall receive upon
conversion thereof, in addition to the number of shares of Common Stock
receivable thereupon, the amount of other securities of the Corporation which
they would have received had their Series A Preferred been converted into Common
Stock on the date of such event and had they thereafter, during the period from
the date of such event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period, subject to all
other adjustments called for during such period under this Section 4 with
respect to the rights of the holders of the Series A Preferred or with respect
to such other securities by their terms.
(i) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at
any time or from time to time after the Original Issue Date, the Common Stock
issuable upon the conversion of the Series A Preferred is changed into the same
or a different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger,
consolidation or sale of assets provided for elsewhere in this Section 4), in
any such event each holder of Series A Preferred shall have the right thereafter
to convert such stock into the kind and amount of stock and other securities and
property receivable upon such recapitalization, reclassification or other change
by holders of the maximum number of shares of Common Stock into which such
shares of Series A Preferred could have been converted immediately prior to such
recapitalization, reclassification or change, all subject to further adjustment
as provided herein or with respect to such other securities or property by the
terms thereof.
(j) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALES OF ASSETS. If
at any time or from time to time after the Original Issue Date, there is a
capital reorganization of the Common Stock (other than an Acquisition or Asset
Transfer as defined in Section 3(b) or a recapitalization, subdivision,
combination, reclassification, exchange or substitution of shares provided for
elsewhere in this Section 4), as a part of such capital reorganization,
provision shall be made so that the holders of the Series A Preferred shall
thereafter be entitled to receive upon conversion of the Series A Preferred the
number of shares of stock or other securities or property of the Corporation to
which a holder of the maximum number of shares of Common Stock deliverable upon
conversion would have been entitled on such capital reorganization, subject to
adjustment in respect of such stock or securities by the terms thereof. In any
such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of Series
A Preferred after the capital reorganization to the end that
5.
<PAGE> 6
the provisions of this Section 4 (including adjustment of the Series A Preferred
Price then in effect and the number of shares issuable upon conversion of the
Series A Preferred) shall be applicable after that event and be as nearly
equivalent as practicable.
(k) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Series A Preferred Price for the number of shares of Common
Stock or other securities issuable upon conversion of the Series A Preferred, if
the Series A Preferred is then convertible pursuant to this Section 4, the
Corporation, at its expense, shall compute such adjustment or readjustment in
accordance with the provisions hereof and prepare a certificate showing such
adjustment or readjustment, and shall mail such certificate, by first class
mail, postage prepaid, to each registered holder of Series A Preferred at the
holder's address as shown in the Corporation's books. The certificate shall set
forth such adjustment or readjustment, showing in detail the facts upon which
such adjustment or readjustment is based.
(l) NOTICES OF RECORD DATE. Upon (i) any taking by the Corporation of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, or (ii) any acquisition or other capital reorganization of
the Corporation, any reclassification or recapitalization of the capital stock
of the Corporation, any merger or consolidation of the Corporation with or into
any other corporation, or any voluntary or involuntary dissolution, liquidation
or winding up of the Corporation, the Corporation shall mail to each holder of
Series A Preferred at least twenty (20) days prior to the record date specified
therein a notice specifying (1) the date on which any such record is to be taken
for the purpose of such dividend or distribution and a description of such
dividend or distribution, (2) the date on which any such acquisition,
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective, and (3) the date, if
any, that is to be fixed as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other securities) for securities or other property deliverable upon such
acquisition, reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation or winding up.
(m) CONVERSION BY THE CORPORATION.
(i) Subject to Section 403(a)(3) and Section 301.5(d) of the
California Corporations Code, so long as the average of the daily Closing Prices
per share of Common Stock for the fifteen (15) consecutive trading days
immediately prior to the date in question is at least $12.00 per share (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like), each share of Series A Preferred, at the option of the Corporation
upon notice to the holders of Series A Preferred, shall be converted into shares
of Common Stock; provided, however, that no such conversion shall occur unless
the Corporation is a "listed corporation" (as defined in Section 301.5(d) of the
California Corporations Code) both at the time of the original issuance of the
shares of Series A Preferred and at the time of conversion of the shares of
Series A Preferred, and the shares of Common Stock received upon conversion of
the Series A Preferred are listed or qualified for trading on a stock exchange
or market system defined in Section 301.5(d)
6.
<PAGE> 7
of the California Corporations Code, and provided further, that no such
conversion shall occur if, as a result of such conversion, the Conversion Shares
in the aggregate would constitute 20% or more of the then issued and outstanding
shares of Common Stock. Upon such conversion, any declared and unpaid dividends
shall be paid in accordance with the provisions of Section 4(f);
(ii) Upon written notice to the holders of Series A Preferred by
the Corporation, the outstanding shares of Series A Preferred shall be converted
without any further action by the holders of such shares and whether or not the
certificates representing such shares are surrendered to the Corporation or its
transfer agent; provided, however, that the Corporation shall not be obligated
to issue certificates evidencing the shares of Common Stock issuable upon such
conversion unless the certificates evidencing such shares of Series A Preferred
are either delivered to the Corporation or its transfer agent as provided below,
or the holder notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an agreement
satisfactory to the Corporation to indemnify the Corporation from any loss
incurred by it in connection with such certificates. Upon the occurrence of such
conversion of the Series A Preferred, the holders of Series A Preferred shall
surrender the certificates representing such shares at the office of the
Corporation or any transfer agent for the Series A Preferred. Thereupon, there
shall be issued and delivered to such holder promptly at such office and in its
name as shown on such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Series A Preferred surrendered were convertible on the date on which such
conversion occurred, and any declared and unpaid dividends shall be paid in
accordance with the provisions of Section 4(f).
(n) FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon conversion of Series A Preferred. All shares of Common Stock
(including fractions thereof) issuable upon conversion of more than one share of
Series A Preferred by a holder thereof shall be aggregated for purposes of
determining whether the conversion would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the conversion would
result in the issuance of any fractional share, the Corporation shall, in lieu
of issuing any fractional share, pay cash equal to the product of such fraction
multiplied by the Common Stock's Current Market Value on the date of conversion.
(o) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Corporation
shall at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Series A Preferred, such number of its shares of Common Stock
as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Series A Preferred. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Series A Preferred, the
Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
7.
<PAGE> 8
(p) NOTICES. Any notice required by the provisions of this Section
4 shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by facsimile if sent during
normal business hours of the recipient; if not, then on the next business day,
(iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All notices shall be addressed to each
holder of record at the address of such holder appearing on the books of the
Corporation.
(q) PAYMENT OF TAXES. The Corporation will pay all taxes (other
than taxes based upon income) and other governmental charges that may be imposed
with respect to the issue or delivery of shares of Common Stock upon conversion
of shares of Series A Preferred, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Series A Preferred
so converted were registered.
5. NO REISSUANCE OF SERIES A PREFERRED. No share or shares of Series
A Preferred acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued; and in addition, the Articles of
Incorporation shall be appropriately amended to effect the corresponding
reduction in the Corporation's authorized stock.
6. RESIDUAL RIGHTS. All rights accruing to the outstanding shares of
the Corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
IV.
A. The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent permissible under California
law.
B. The Corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the General Corporation Law of California) for
breach of duty to the Corporation and its shareholders through bylaw provisions
or through agreements with agents, or both, in excess of the indemnification
otherwise permitted by Section 317 of the General Corporation Law of California,
subject to the limits on such excess indemnification set forth in Section 204 of
the General Corporation Law of California. If, after the effective date of this
Article, California law is amended in a manner which permits a corporation to
limit the monetary or other liability of its directors or to authorize
indemnification of, or advancement of such defense expenses to, its directors or
other persons, in any such case to a greater extent than is permitted on such
effective date, the references in this Article to "California law" shall to that
extent be deemed to refer to California law as so amended.
8.
<PAGE> 9
C. Any repeal or modification of this Article shall only be prospective
and shall not effect the rights under this Article in effect at the time of the
alleged occurrence of any action or omission to act giving rise to liability."
THREE: The foregoing amendment and restatement of the Articles of
Incorporation has been duly approved by the Board of Directors of this
Corporation.
FOUR: The foregoing amendment and restatement of the Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 of the California Corporations Code. The Corporation
has one class of stock outstanding and such class of stock is entitled to vote
with respect to the amendment herein set forth. The total number of outstanding
shares of Common Stock of the Corporation entitled to vote on the amendment is
15,735,007 shares of Common Stock. No shares of Preferred Stock are outstanding.
The number of shares voting in favor of the amendment equaled or exceeded the
vote required. The percentage vote required was more than fifty percent (50%) of
the outstanding Common Stock voting as a class.
9.
<PAGE> 10
The undersigned, Paul J. Marangos and David W. Nassif, the President and
Secretary, respectively, of CYPROS PHARMACEUTICAL CORPORATION, declare under
penalty of perjury under the laws of the State of California that the matters
set out in the foregoing Certificate are true of their own knowledge.
Executed at Carlsbad, California on November 5, 1999.
/s/ Paul J. Marangos
-----------------------------------
Paul J. Marangos, President
/s/ David W. Nassif
-----------------------------------
David W. Nassif, Secretary
10.
<PAGE> 1
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
February 16, 2000
Questcor Pharmaceuticals, Inc.
26118 Research Road
Hayward, California 94545
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by QUESTCOR PHARMACEUTICALS, INC., a California corporation (the
"Company"), of a Registration Statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission, covering the offering
of up to 5,133,712 shares of the Company's Common Stock, without par value (the
"Shares"), for issuance pursuant to the Company's 1992 Stock Option Plan (the
"1992 Plan") and 1993 Non-Employee Directors' Equity Incentive Plan (the "1993
Plan").
In connection with this opinion, we have examined and relied upon the
Registration Statement, the 1992 Plan, the 1993 Plan, the Company's Amended and
Restated Articles of Incorporation and Bylaws, and the originals or copies
certified to our satisfaction of such records, documents, certificates,
memoranda and other instruments as in our judgment are necessary or appropriate
to enable us to render the opinion expressed below. We have assumed the
genuineness and authenticity of all documents submitted to us as originals, the
conformity to originals of all documents submitted to us as copies thereof and
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when issued and sold in accordance with the 1992 Plan or the
1993 Plan, as applicable, and the Registration Statement, will be validly
issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
/s/ M. Wainwright Fishburn, Jr.
- ---------------------------------
M. Wainwright Fishburn, Jr.
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1992 Stock Option Plan and 1993 Non-Employee Directors'
Equity Incentive Plan of Questcor Pharmaceuticals, Inc. (formerly Cypros
Pharmaceuticals Corporation) of our report dated August 23, 1999, with respect
to the consolidated financial statements of Questcor Pharmaceuticals, Inc.
included in its Annual Report (Form 10-K) for the year ended July 31, 1999 filed
with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
February 14, 2000
<PAGE> 1
EXHIBIT 99.1
CYPROS PHARMACEUTICAL CORPORATION
1992 STOCK OPTION PLAN
Adopted by the Board of Directors and Shareholders on August 20, 1992
Amended by the Committee on August 31, 1993
Amended by the Committee on November 15, 1993
Amended by the Committee on November 4, 1994
Amended by the Committee and the Board of Directors on November 14, 1997
Amended by the Board of Directors on August 4, 1999
Approved by the shareholders on November 5, 1999
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected Employees
and Directors of and Consultants to the Company, and its Affiliates, may be
given an opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services of persons
who are now Employees or Directors of or Consultants to the Company, to secure
and retain the services of new Employees, Directors and Consultants, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(c) The Company intends that the Options issued under the Plan shall, in the
discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation, whether
now or hereafter existing, as those terms are defined in Sections 424(e) and (f)
respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(e) "Company" means Cypros Pharmaceutical Corporation, a California corporation.
<PAGE> 2
(f) "Consultant" means any person, including an advisor, engaged by the Company
or an Affiliate to render services and who is compensated for such services,
provided that the term "Consultant" shall not include Directors who are paid
only a director's fee by the Company or who are not compensated by the Company
for their services as Directors.
(g) "Continuous Status as an Employee, Director or Consultant" means the
employment or relationship as a Director or Consultant is not interrupted or
terminated by the Company or any Affiliate. The Board, in its sole discretion,
may determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave; provided, however, that for purposes of Incentive Stock Options,
any such leave may not exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; or (ii) transfers between locations of the Company or
between the Company, Affiliates or its successor.
(h) "Director" means a member of the Board.
(i) "Disability" means total and permanent disability as defined in Section
22(e)(3) of the Code.
(j) "Employee" means any person, including Officers and Directors, employed by
the Company or any Affiliate of the Company. Neither service as a Director nor
payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l) "Non-Employee Director" means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee" for purposes of Rule 16b-3.
(m) "Incentive Stock Option" means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(n) "Nonstatutory Stock Option" means an Option not intended to qualify as an
Incentive Stock Option.
<PAGE> 3
(o) "Officer" means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder.
(p) "Option" means a stock option granted pursuant to the Plan.
(q) "Option Agreement" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. The
Option Agreement is subject to the terms and conditions of the Plan.
(r) "Optioned Stock" means the common stock of the Company subject to an Option.
(s) "Optionee" means an Employee, Director or Consultant who holds an
outstanding Option.
(t) "Outside Director" means a Director who is considered an "outside director"
for purposes of Section 162(m) of the Code.
(u) "Plan" means this 1992 Stock Option Plan.
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect with respect to the Company when discretion is being
exercised with respect to the Plan.
3. ADMINISTRATION
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations of,
the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible under the Plan
shall be granted Options; when and how the Option shall be granted; whether the
Option will be an Incentive Stock Option or a Nonstatutory Stock Option; the
provisions of each Option granted (which need not be identical), including the
time or times such Option may be exercised in whole or in part; and the number
of shares for which an Option shall be granted to each such person.
(ii) To construe and interpret the Plan and Options granted under it, and to
establish, amend and revoke rules and regulations for its administration. The
Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(iii) To amend the Plan as provided in Section 11.
<PAGE> 4
(c) The Board may delegate administration of the Plan to a committee composed of
not fewer than two (2) members (the "Committee"), all of the members of which
Committee may be, in the discretion of the Board, Non-Employee Directors. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board (and references in this Plan to the Board shall thereafter be to
the Committee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything in this Section 3 to the
contrary, at any time, the Board or the Committee may delegate to a committee of
one or more members of the Board the authority to grant Options to eligible
persons who are not then subject to Section 16 of the Exchange Act.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments upon changes
in stock, the stock that may be sold pursuant to Options shall not exceed in the
aggregate seven million five hundred thousand (7,500,000) shares of the
Company's common stock. If any Option shall for any reason expire or otherwise
terminate without having been exercised in full, the stock not purchased under
such Option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired shares,
bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Nonstatutory Stock
Options may be granted only to Employees, Directors or Consultants.
(b) No person shall be eligible for the grant of an Option if, at the time of
grant, such person owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of any of its Affiliates unless
the exercise price of such Option is at least one hundred ten percent (110%) of
the fair market value of such stock at the date of grant and the Option is not
exercisable after the expiration of five (5) years from the date of grant.
(c) In any calendar year, no Employee shall be eligible to be granted Options
covering an aggregate number of shares greater than one hundred thousand
(100,000) shares.
<PAGE> 5
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and conditions as
the Board shall deem appropriate. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:
(a) Term. No Option shall be exercisable after the expiration of ten (10) years
from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option shall be not less
than one hundred percent (100%) of the fair market value of the stock subject to
the Option on the date the Option is granted. The exercise price of each
Nonstatutory Stock Option shall be not less than eighty-five percent (85%) of
the fair market value of the stock subject to the Option on the date the Option
is granted.
(c) Consideration. The purchase price of stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the Option is exercised, or (ii) at the
discretion of the Board or the Committee, either at the time of the grant or
exercise of the Option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment arrangement or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to whom
the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be payable at
least annually and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of the Code, of
any amounts other than amounts stated to be interest under the deferred payment
arrangement.
(d) Transferability. An Incentive Stock Option shall not be transferable except
by will or by the laws of descent and distribution, and shall be exercisable
during the lifetime of the person to whom the Option is granted only by such
person. A Nonstatutory Stock Option shall only be transferable by the Optionee
upon such terms and conditions as are set forth in the option agreement for such
Nonstatutory Stock Option, as the Board or the Committee shall determine in its
discretion.
<PAGE> 6
(e) Vesting. The total number of shares of stock subject to an Option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. During the remainder of the term of the Option (if its term extends
beyond the end of the installment periods), the Option may be exercised from
time to time with respect to any shares then remaining subject to the Option.
The Option may be subject to such other terms and conditions on the time or
times when it may be exercised (which may be based on performance or other
criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary but in each case will provide for vesting of at
least twenty percent (20%) of the total number of shares subject to the Option
per year. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.
(f) Securities Law Compliance. The Company may require any Optionee, or any
person to whom an Option is transferred under subsection 6(d), as a condition of
exercising any such Option, (1) to give written assurances satisfactory to the
Company as to the Optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (2)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the Option for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
These requirements, and any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares upon the exercise of the
Option has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws.
<PAGE> 7
(g) Termination of Employment or Relationship as a Director or Consultant. In
the event that an Optionee's Continuous Status as an Employee, Director or
Consultant terminates (other than upon the Optionee's death or Disability), the
Optionee may exercise his or her Option, but only within such period of time as
is determined by the Board (which period shall not be less than thirty (30) days
from the date of such termination), and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event later than
the expiration of the term of such Option as set forth in the Option Agreement).
If, at the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his or her Option within the time specified in the Option Agreement, the Option
shall terminate, and the shares covered by such Option shall revert to the Plan.
(h) Disability of Optionee. In the event an Optionee's Continuous Status as an
Employee, Director or Consultant terminates as a result of the Optionee's
Disability), the Optionee may exercise his or her Option, but only within twelve
(12) months from the date of such termination (or such period of time as is
determined by the Board which period shall not be less than six (6) months from
the date of such termination), and only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to the Plan.
(i) 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
(or such period of time as is determined by the Board which period shall not be
less than six (6) months following the date of death) by the Optionee's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, and only to the extent the Optionee was entitled to exercise the
Option at the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). If, at the time of
death, the Optionee was not entitled to exercise his or her entire Option, the
shares covered by the unexercisable portion of the Option shall revert to the
Plan. If, after death, the Optionee's estate or a person who acquired the right
to exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate, and the shares
covered by such Option shall revert to the Plan.
<PAGE> 8
(j) Withholding. To the extent provided by the terms of an Option Agreement, the
Optionee may satisfy any federal, state or local tax withholding obligation
relating to the exercise of such Option by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of the common stock of
the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available at all
times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or agency
having jurisdiction over the Plan such authority as may be required to issue and
sell shares of stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
either the Plan, any Option or any stock issued or issuable pursuant to any such
Option. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Options unless and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute general
funds of the Company.
<PAGE> 9
9. MISCELLANEOUS.
(a) Neither an Optionee nor any person to whom an Option is transferred under
subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to such Option unless and
until such person has satisfied all requirements for exercise of the Option
pursuant to its terms.
(b) Nothing in the Plan or any instrument executed or Option granted pursuant
thereto shall confer upon any Employee, Director, Consultant or Optionee any
right to continue in the employ of the Company or any Affiliate (or to continue
acting as a Director or Consultant) or shall affect the right of the Company or
any Affiliate to terminate the employment or relationship as a Director or
Consultant of any Employee, Director, Consultant or Optionee with or without
cause.
(c) To the extent that the aggregate fair market value (determined at the time
of grant) of stock with respect to which Incentive Stock Options granted after
1986 are exercisable for the first time by any Optionee during any calendar year
under all plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to any
Option (through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), the Plan and outstanding Options will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan and
the class(es) and number of shares and price per share of stock subject to
outstanding Options.
(b) In the event of: (1) a merger or consolidation in which the Company is not
the surviving corporation or (2) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise then to the
extent permitted by applicable law: (i) any surviving corporation shall assume
any Options outstanding under the Plan or shall substitute similar Options for
those outstanding under the Plan, or (ii) such Options shall continue in full
force and effect. In the event any surviving corporation refuses to assume or
continue such Options, or to substitute similar options for those outstanding
under the Plan, then such Options shall be terminated if not exercised prior to
such event. In the event of a dissolution or liquidation of the Company, any
Options outstanding under the Plan shall terminate if not exercised prior to
such event.
<PAGE> 10
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan. However,
except as provided in Section 10 relating to adjustments upon changes in stock,
no amendment shall be effective unless approved by the shareholders of the
Company within twelve (12) months before or after the adoption of the amendment,
where the amendment will:
(i) Increase the number of shares reserved for Options under the Plan;
(ii) Modify the requirements as to eligibility for participation in the Plan (to
the extent such modification requires shareholder approval in order for the Plan
to satisfy the requirements of Section 422 of the Code); or
(iii) Modify the Plan in any other way if such modification requires shareholder
approval in order for the Plan to satisfy the requirements of Section 422 of the
Code or to comply with the requirements of Rule 16b-3.
(b) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(c) Rights and obligations under any Option granted before amendment of the Plan
shall not be altered or impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on August 1, 2002. No Options may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Option granted while the Plan is in effect
shall not be altered or impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF THE PLAN.
The Plan shall become effective as determined by the Board, but no Options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the shareholders of the Company, and, if required, an appropriate
permit has been issued by the Commissioner of Corporations of the State of
California.
<PAGE> 1
EXHIBIT 99.2
CYPROS PHARMACEUTICAL CORPORATION
1993 NON-EMPLOYEE DIRECTORS' EQUITY INCENTIVE PLAN
Adopted by the Board of Directors on June 8, 1993
Amended by the Board of Directors January 10, 1994
Approved by the Shareholders January 18, 1994
Amended by the Board of Directors on November 14, 1997
Approved by the Board of Directors on October 29, 1998
Approved by the Shareholders February 16, 1999
Amended by the Board of Directors on August 4, 1999
Approved by the shareholders on November 5, 1999
1. PURPOSE.
(a) The purpose of the Amended and Restated 1993 Non-Employee Directors'
Equity Incentive Plan (the "Plan") is to provide a means by which each director
of Cypros Pharmaceutical Corporation, a California corporation (the "Company"),
who is not otherwise an employee of the Company or of any Affiliate of the
Company (each such person being hereafter referred to as a "Non-Employee
Director") will be given an opportunity to purchase stock of the Company and
will receive stock bonus awards.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
persons now serving as Non-Employee Directors of the Company, to secure and
retain the services of persons capable of serving in such capacity, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the options issued under the Plan not be
incentive stock options as that term is used in Section 422 of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors of the Company
(the "Board") unless and until the Board delegates administration to a
committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To construe and interpret the Plan and options and stock bonus
awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this power,
may correct any defect, omission
1.
<PAGE> 2
or inconsistency in the Plan or in any option agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.
(ii) To amend the Plan as provided in paragraph 11.
(iii) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to options or issued
pursuant to stock bonus awards granted under the Plan shall not exceed in the
aggregate seven hundred fifty thousand (750,000) shares of the Company's common
stock. If any option granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the stock not
purchased under such option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options and stock bonus awards shall be granted only to Non-Employee
Directors of the Company.
5. NON-DISCRETIONARY GRANTS.
(a) Each person who is, on or after January 1, 1993, elected for the first
time to be a Non-Employee Director of the Company shall, upon the date of his or
her initial election to be a Non-Employee Director by the Board or shareholders
of the Company (or, if later, the date of amendment of the Plan by the Board to
include this provision), be automatically granted an option to purchase
twenty-five thousand (25,000) shares of common stock of the Company on the terms
and conditions set forth herein. Thereafter, so long as he or she is a
Non-Employee Director of the Company and the Plan remains in effect, each
Non-Employee Director shall, upon January 1 of each year beginning in 1997, be
automatically granted an option to purchase ten thousand (10,000) shares of
common
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stock of the Company on the terms and conditions set forth herein.
Notwithstanding the foregoing, no Non-Employee Director who owns, directly or
indirectly, shares representing ten percent (10%) or more of the total
outstanding shares of any class of stock of the Company shall be eligible for
the grant of an option pursuant to this Section 5.
(b) Each Non-Employee Director shall be granted shares of common stock of
the Company with a fair market value equal to two thousand dollars ($2,000) at
each Board meeting he or she attends beginning on or after the 1999 Annual
Shareholders' Meeting; provided, however, that no stock bonus award shall be
made prior to approval of the Plan by the shareholders, pursuant to paragraph
11. For purposes of these stock bonus awards, fair market value means the
ten-day average of the closing sales price for the common stock of the Company
as quoted on the American Stock Exchange on the ten (10) market trading days
immediately preceding the date of the Board meeting at which the stock bonus
award shall be granted, as reported in The Wall Street Journal or such other
source as the Board deems reliable. Stock bonus awards shall be one hundred
percent (100%) vested on the date of grant.
6. OPTION PROVISIONS.
Each option shall contain the following terms and conditions:
(a) No option shall be exercisable after the expiration of ten (10) years
from the date it was granted.
(b) The exercise price of each option shall be eighty-five percent (85%) of
the fair market value of the stock subject to such option on the date such
option is granted.
(c) The purchase price of stock acquired pursuant to an option shall be
paid, to the extent permitted by applicable statutes and regulations, either (1)
in cash at the time the option is exercised, or (2) by delivery to the Company
of shares of common stock of the Company that have been held for the requisite
period necessary to avoid a charge to the Company's reported earnings and valued
at the fair market value on the date of exercise, or (3) by a combination of
such methods of payment.
(d) Except as otherwise expressly provided in an optionholder's option
agreement, an option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or by his or her
guardian or legal representative. The person to whom the option is granted may,
by delivering written notice to the Company in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
optionholder, shall thereafter be entitled to exercise the option.
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(e) An option shall vest with respect to each optionholder in forty-eight
(48) equal monthly installments over the four (4) year period commencing on the
date of grant, provided that the optionholder has, during the entire month prior
to such vesting date, continuously served as a Non-Employee Director or as an
Employee of or Consultant to the Company or any Affiliate of the Company,
whereupon such Option shall become fully exercisable in accordance with its
terms with respect to that portion of the shares represented by that
installment.
(f) The Company may require any optionholder, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (1) to give written assurances satisfactory to the Company as to
the optionholder's knowledge and experience in financial and business matters;
and (2) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then-applicable securities laws.
(g) Notwithstanding anything to the contrary contained herein, an option
may not be exercised unless the shares issuable upon exercise of such option are
then registered under the Securities Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Securities Act.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
grant stock bonus awards and issue and sell shares of stock upon exercise of the
options granted under the Plan; provided, however, that this undertaking shall
not require the Company to register under the Securities Act either the Plan,
any option granted under the Plan, or any stock issued or issuable pursuant to
any stock bonus award or option. If the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to grant stock bonus
awards or issue and sell stock upon exercise of such options.
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8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the Plan
shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionholder nor any person to whom an option is transferred
under subparagraph 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such option unless
and until such person has satisfied all requirements for exercise of the option
pursuant to its terms.
(b) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall affect any right of the Company, its
Board or shareholders or any Affiliate to terminate the service of any
Non-Employee Director with or without cause.
(c) No Non-Employee Director, individually or as a member of a group, and
no beneficiary or other person claiming under or through him or her, shall have
any right, title or interest in or to any shares of common stock of the Company
or any option reserved for the purposes of the Plan except as to such shares of
common stock, if any, as shall have been reserved for him or her pursuant to a
stock bonus award or option granted to him or her.
(d) In connection with each option granted pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-Employee Director, or an affiliate of such Non-Employee Director, or to
evidence the removal of any restrictions on transfer, that such Non-Employee
Director make arrangements satisfactory to the Company to insure that the amount
of any federal or other withholding tax required to be withheld with respect to
such sale or transfer, or such removal or lapse, is made available to the
Company for timely payment of such tax.
(e) Throughout the term of any option and upon the grant of stock bonus
awards, the Company shall deliver to the holder of such option or award, not
later than one hundred twenty (120) days after the close of each of the
Company's fiscal years, such financial and other information regarding the
Company as comprises the annual report to the shareholders of the Company
provided for in the bylaws of the Company.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any option or stock bonus award granted under the Plan (through merger,
consolidation,
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reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Plan and outstanding
options and stock bonus awards will be appropriately adjusted in the class(es)
and maximum number of shares subject to the Plan and the class(es) and number of
shares and price per share of stock subject to outstanding options and awards.
(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a
sale of all or substantially all of the assets of the Company; (3) a merger or
consolidation in which the Company is not the surviving corporation; (4) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; (5) an acquisition by any person, entity or group
within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or any comparable or successor provisions
(excluding any employee benefit plan, or related trust, sponsored or maintained
by the Company or an Affiliate) of the beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act, or comparable successor rule)
of securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of directors; or (6)
individuals who, as of the date of the adoption of this Plan, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least fifty
percent (50%) of the Board (if the election, or nomination for election, by the
Company's shareholders of any new director was approved by vote of at least
fifty (50%) of the Incumbent Board, such new director shall be considered as a
member of the Incumbent Board), then any surviving corporation, other than the
Company, shall assume any options outstanding under the Plan or shall substitute
similar options for those outstanding under the Plan or, if the Company is the
surviving corporation, such options shall continue in full force and effect.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the shareholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for options and stock bonus
awards under the Plan;
(ii) Modify the requirements as to eligibility for participation in the
Plan (to the extent such modification requires shareholder approval in order for
the Plan to comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act); or
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(iii) Modify the Plan in any other way if such modification requires
shareholder approval in order for the Plan to comply with the requirements of
Rule 16b-3 promulgated under the Exchange Act.
(b) Rights and obligations under any option or stock bonus award granted
before any amendment of the Plan shall not be altered or impaired by such
amendment of the Plan unless (i) the Company requests the consent of the person
to whom the option or award was granted and (ii) such person consents in
writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on June 7, 2003. No options or stock bonus
awards may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any option or stock bonus award granted
while the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the
option or award was granted.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(a) The Plan shall become effective upon adoption by the Board of
Directors, subject to the condition subsequent that the Plan is approved by the
shareholders of the Company.
(b) No option granted under the Plan shall be exercised or exercisable and
no stock bonus award shall be granted unless and until the condition of
subparagraph 13(a) above has been met.
7.
