appas8080708ex42.htm


     
      
        

      

    

     

    
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      EXHIBIT
        4.2

    

    A.P.
      pharma, inc.

     

    NON-QUALIFIED
      STOCK PLAN

     

    NONQUALIFIED
      STOCK OPTION AGREEMENT

     

    
      	
              (A)

            	
              Name
                of Optionee:

            	
              Name

            
	
              (B)

            	
              Grant
                Date:

            	
              Grant
                Date

            
	
              (C)

            	
              Number
                of Shares:

            	
              Shares
                Granted

            
	
              (D)

            	
              Exercise
                Price:

            	
              Grant
                Exercise
                Price(FMV)

            
	
              (E)

            	
              Vesting
                Base Date:

            	
              Vest
                Start Date

            
	
              (F) 

            	
              Effective
                Date:

               

            	
              Effective
                Date

            


    

    THIS
      NONQUALIFIED STOCK OPTION AGREEMENT (the “Agreement”),
      is made and entered into as of the date set forth in Item F above (the “Effective
      Date”) between A.P.
      Pharma, Inc., a Delaware corporation (the “Company”)
      and Enter Name (“Optionee”).

     

    THE
      PARTIES AGREE AS FOLLOWS:

     

    1. Grant
      of
      Option.  The Company hereby grants to Optionee pursuant to the
      Company’s Non-Qualified Stock Plan (the “Plan”),
      a
      copy of which is attached to this Agreement as Exhibit 1, a nonqualified stock
      option (the “NQO”)
      to
      purchase all or any part of an aggregate of the number of shares (the “NQO
      Shares”) of the Company’s Common Stock (as defined in the Plan) listed in
      Item C above on the terms and conditions set forth herein and in the Plan,
      the
      terms and conditions of the Plan being hereby incorporated into this Agreement
      by reference.

     

    2. Exercise
      Price.  The exercise price for purchase of each share of Common
      Stock covered by this NQO shall be the price set forth in Item D
      above.

     

    3. Term.  This
      NQO shall expire ten (10) years after the Grant
      Date

     

    4. Adjustment
      of
      NQOs.  The Company shall adjust the number and kind of shares
      and the exercise price thereof in certain circumstances in accordance with
      the
      provisions of Section 3(b) of the Plan.

     

    5. Exercise
      of
      Options.

     

    5.1 Vesting;
      Time of
      Exercise.  This NQO shall be exercisable according to the
      schedule set forth on Exhibit 5.1 attached hereto.  Such schedule
      shall commence as of the date set forth in Item (E) above (the “Vesting
      Base
      Date”).

     

    5.2 Exercise
      After
      Termination of Status as an Employee, Director or
      Consultant.  In the event of termination of Optionee’s
      continuous status as an employee, director or consultant, this NQO may be
      exercised in whole or in part at
      any time within 90 days of the date of such termination (but in no event after
      the expiration date of this NQO pursuant to Section 3), provided, however,
      that
      in the event of death or disability, this NQO may be exercised in accordance
      with the provisions of Section 9(d) of the Plan.

     

    5.3 Manner
      of
      Exercise.  Optionee may exercise this NQO, or any portion of
      this NQO, by giving written notice to the Company at its principal executive
      office, to the attention of the officer of the Company designated by the Plan
      Administrator, accompanied by payment of the exercise price and payment of
      any
      applicable withholding or employment taxes.  The date the Company
      receives written notice of an exercise hereunder accompanied by payment will
      be
      considered as the date this NQO was exercised.

     

    5.4 Payment.  Except
      as provided in Exhibit 5.4 attached hereto, if any (the absence of such exhibit
      indicating that no exhibit was intended), payment may be made for NQO Shares
      purchased at the time written notice of exercise of the NQO is given to the
      Company, by delivery of cash, check or, in the exercise of the absolute
      discretion of the Administrator, previously owned shares of Common Stock
      (including constructive delivery) or a full recourse promissory note equal
      to up
      to 90% of the exercise price and payable over no more than five
      years.  Any applicable taxes must be paid in cash.  The
      proceeds of any payment shall constitute general funds of the
      Company.

     

    5.5 Delivery
      of
      Certificate.  Promptly after receipt of payment and written
      notice of exercise of the NQO, the Company shall, without stock issue or
      transfer taxes to the Optionee or other person entitled to exercise, deliver
      to
      the Optionee or other person a certificate or certificates for the requisite
      number of NQO Shares or shall register the Optionee as a shareholder on the
      books of the Company.  An Optionee or transferee of an Optionee shall
      not have any privileges as a shareholder with respect to any NQO Shares covered
      by the option until the date of issuance of a stock certificate or, if
      applicable, such registration.

     

    6. Nonassignability
      of NQO.  This NQO is not assignable or transferable by Optionee
      except by will or by the laws of descent and distribution.  During the
      life of Optionee, the NQO is exercisable only by the Optionee.  Any
      attempt to assign, pledge, transfer, hypothecate or otherwise dispose of this
      NQO in a manner not herein permitted, and any levy of execution, attachment,
      or
      similar process on this NQO, shall be null and void.

     

    7. Company’s
      Right
      of Repurchase Upon Termination of Employment.  The NQO Shares
      arising from exercise of this NQO shall be subject to a right of repurchase
      in
      favor of the Company (the “Right
      of
      Repurchase”) to
      the extent set forth on Exhibit 7 attached hereto (the absence of such exhibit
      indicating that no such exhibit was intended and that the NQO shall be subject
      only to the limitations set forth on Exhibit 5.1).

     

    8. Restriction
      on
      Transfer.  Regardless whether the sale of the NQO Shares has
      been registered under the Securities Act or has been registered or qualified
      under the securities laws of any state, the Company may impose restrictions
      upon
      the sale, pledge, or other transfer of NQO Shares (including the placement
      of
      appropriate legends on stock certificates) if, in the judgment of the Company
      and the Company’s counsel, such restrictions are necessary or desirable in order
      to achieve compliance with the provisions of the Securities Act, the securities
      laws of any state, or any other law, or if the Company does not desire to have
      a
      trading market develop for its securities.

     

    9. Tax
      Advice.  The Company has made no warranties or representations
      to Purchaser with respect to the income tax consequences of the transactions
      contemplated by the agreement pursuant to which the NQO Shares will be purchased
      and Purchaser is in no manner relying on the Company or its representatives
      for
      an assessment of such tax consequences.

     

    10. Assignment;
      Binding Effect.  Subject to the limitations set forth in this
      Agreement, this Agreement shall be binding upon and inure to the benefit of
      the
      executors, administrators, heirs, legal representatives, and successors of
      the
      parties hereto; provided, however, that Optionee may not assign any of
      Optionee’s rights under this Agreement.

     

    11. Damages.  Optionee
      shall be liable to the Company for all costs and damages, including incidental
      and consequential damages, resulting from a disposition of NQO Shares which
      is
      not in conformity with the provisions of this Agreement.

     

    12. Governing
      Law.  This Agreement shall be governed by, and construed in
      accordance with, the laws of the State of California excluding those laws that
      direct the application of the laws of another jurisdiction.

     

    13. Notices.  All
      notices and other communications under this Agreement shall be in
      writing.  Unless and until the Optionee is notified in writing to the
      contrary, all notices, communications, and documents directed to the Company
      and
      related to the Agreement, if not delivered by hand, shall be mailed, addressed
      as follows:

     

    
      
        

      



    A.P.
      Pharma, Inc.

     

    123
      Saginaw Drive

     

    Redwood
      City, CA 94063

     

    Attention:  President

     

    Unless
      and until the Company is notified in writing to the contrary, all notices,
      communications, and documents intended for the Optionee and related to this
      Agreement, if not delivered by hand, shall be mailed to Optionee’s last known
      address as shown on the Company’s books.  Notices and communications
      shall be mailed by first class mail, postage prepaid; documents shall be mailed
      by registered mail, return receipt requested, postage prepaid.  All
      mailings and deliveries related to this Agreement shall be deemed received
      when
      actually received, if by hand delivery, and two business days after mailing,
      if
      by mail.

     

    14. Arbitration.  Any
      and all disputes or controversies arising out of this Agreement shall be finally
      settled by arbitration conducted in California in accordance with the then
      existing rules of the American Arbitration Association, and judgment upon the
      award rendered by the arbitrators may be entered in any court having
      jurisdiction thereof; provided that nothing in this Section 14 shall prevent
      a
      party from applying to a court of competent jurisdiction to obtain temporary
      relief pending resolution of the dispute through arbitration.  The
      parties hereby agree that service of any notices in the course of such
      arbitration at their respective addresses as provided for in Section 13 shall
      be
      valid and sufficient.

     

    15. Entire
      Agreement.  Company and Optionee agree that this Agreement
      (including its attached Exhibits) is the complete and exclusive statement
      between Company and Optionee regarding its subject matter and supersedes all
      prior proposals, communications, and agreements of the parties, whether oral
      or
      written, regarding the grant of stock options or issuances of shares to
      Optionee.

     

    IN
      WITNESS WHEREOF, the parties have executed this Nonqualified Stock Option
      Agreement as of the Effective Date.

     

    A.P.
      Pharma, Inc.

     

    


     

    


    By:   Gregory
      Turnbull

    Title: Chief
      Financial Officer

     

    


     

    The
      Optionee hereby accepts and agrees to be bound by all of the terms and
      conditions of this Agreement and the Plan.

     

    


     

    


     

    Name

     

    


     

    Optionee’s
      spouse indicates by the execution of this Nonqualified Stock Option Agreement
      his or her consent to be bound by the terms thereof as to his or her interests,
      whether as community property or otherwise, if any, in the option granted
      hereunder, and in any NQO Shares purchased pursuant to this
      Agreement.

     

    


     

    


     

    Optionee’s
      Spouse

     


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        

      



    EXHIBITS

     

    
      	
              
              

              Exhibit
                1

            	
              
              

              Non-Qualified
                Stock Plan

            
	
              
              

              Exhibit
                5.1

            	
              
              

              Time
                of Exercise

            
	
              
              

              Exhibit
                5.4

                (if
                applicable)

            	
              
              

              Payment
                (not applicable)

            
	
              
              

              Exhibit
                7

                (if
                applicable)

            	
              
              

              Right
                of Repurchase (not applicable)

            


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        

      



    EXHIBIT
      1 OF THE NONQUALIFIED STOCK

     

    OPTION
      AGREEMENT

     

    NON-QUALIFIED
      STOCK PLAN

     

    See
      Exhibit
      4.1


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        

      



    EXHIBIT
      5.1 OF THE NONQUALIFIED STOCK

     

    OPTION
      AGREEMENT

     

    The
      NQO
      shall be exercisable with respect to 25% of the total number of NQO Shares
      one
      year after the Vesting Base Date and with respect to an additional 1/48 of
      the
      total number of NQO Shares on the monthly anniversary of the Vesting Base Date
      of each month thereafter, so that the NQO shall be exercisable with respect
      to
      all of the NQO Shares on and after four years after the Vesting Base
      Date.

     

    Executed
      by:                                                                           
A.P.
      Pharma, Inc.

     

     

    
                            ______________________

    By:   Gregory
      Turnbull

    


    Title: Chief
      Financial Officer

     

    


     

    


     

    


                                ______________________

    Name