Document:

appas80108ex43.htm

    
      

    

     

    A.P.
      PHARMA, INC.

    2007
      EQUITY INCENTIVE PLAN

    NOTICE
      OF GRANT OF STOCK OPTION

    

    You
      have
      been granted an option to purchase Common Stock of A.P. Pharma, Inc. (the
“Company”) as follows:

    

    Committee
      Approval
      Date:                                     
 ___________________

    

    Date
      of
      Grant:                                                             ___________________

    

    Exercise
      Price per
      Share:                                          $__________________

    

    Total
      Number of Shares
      Granted:                            ___________________

    

    Total
      Exercise
      Price:                                                  $__________________

    

    Type
      of
      Option:                                                          ______
      Nonstatutory Stock Option

    

                      ______
      Incentive Stock Option

    

    Expiration
      Date:                                                 
        ___________________

     

    Vesting
      Commencement
      Date:                           
     ___________________

    

    
      	
              Vesting/Exercise
                Schedule:

            	
              So
                long as you are in Continuous Service with the Company, the Shares
                underlying this Option shall vest and become exercisable in accordance
                with the following schedule:[___________ of the total number of
                Shares subject to the Option shall vest and become exercisable on
                the
                ______month anniversary of the Vesting Commencement Date and _______
                of
                the total number of Shares subject to the Option shall vest and become
                exercisable on each monthly anniversary
                thereafter.]

            

    

     

    Termination
      Period:    This Option may be
      exercised for ninety (90) days aftertermination of Optionee’s Continuous
      Service.  Optionee isresponsible for keeping track of these exercise
      periods following termination for any reason of his or her service relationship
      with the Company.  The Company will not provide further notice of such
      periods.

    

    Transferability:                    This
      Option may not be transferred except as set forth inthe attached A.P. Pharma,
      Inc. Stock Option Agreement.

    

    By
      your signature and the signature of
      the Company’ representative below, you and the Company agree that this option is
      granted under and governed by the terms and conditions of the A.P. Pharma,
      Inc.
      2007 Equity Incentive Plan and the A.P. Pharma, Inc. Stock Option Agreement,
      both of which are attached and made a part of this document.

    

    In
      addition, you agree and acknowledge
      that your rights to any Shares underlying the Option will be earned only as
      you
      provide services to the Company over time, that the grant of the Option is
      not
      as consideration for service you rendered to the Company prior to your Vesting
      Commencement Date, and that nothing in the Notice or the attached documents
      confers upon you any right to continue your employment or consulting
      relationship with the Company for any period of time, nor does it interfere
      in
      any way with your right or the Company’s right to terminate that relationship at
      any time, for any reason, with or without cause.

    

    

    

    OPTIONEE                                                                                     A.P.
      PHARMA, INC.

    

    ________________________________                                                                                                __________________________________

    Name:

    Title:

     

    

     

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    A.P.
      PHARMA, INC.

     

    2007
      EQUITY INCENTIVE PLAN

     

    STOCK
      OPTION AGREEMENT

     

     

    THIS
      STOCK OPTION AGREEMENT (the
      "Agreement") dated on the grant date ("Grant Date") as stated in the Notice
      of
      Stock Option Grant (“Notice of Grant”) between A.P. Pharma, Inc., a Delaware
      corporation (the "Company"), and ________________ ("Optionee"), is entered
      into
      as follows:

     

    WITNESSETH:

     

    WHEREAS,
      the Company has established
      the A.P. Pharma, Inc. 2007 Equity Incentive Plan (the "Plan"); and

     

     

    WHEREAS,
      the Compensation Committee of
      the Board of Directors of the Company or its delegates (the "Committee") has
      determined that Optionee shall be granted an option under the Plan as
      hereinafter set forth;

     

     

    The
      parties hereby agree that the
      Company grants, effective as of the Grant Date, Optionee [an
      Incentive][a Nonstatutory] Stock Option (this
      "Option") to purchase the number of Shares, as stated in the Notice of Grant,
      of
      its $0.001 par value Common Stock (the "Shares") upon the terms and conditions
      set forth in the Notice of Grant and this Agreement.

     

    1.           Plan
      Award.  This Option is granted under and
      pursuant to the Plan and is subject to each and all of the provisions
      thereof.  If this Option is designated as an Incentive Stock Option,
      it is intended to qualify as an Incentive Stock Option as defined in
      Section 422 of the Internal Revenue Code of 1986, as amended, and to the
      extent this Option does not qualify as an Incentive Stock Option under
      Applicable Laws, then it is intended to be and will be treated as a Nonstatutory
      Stock Option.  Notwithstanding the above, in the event that the Shares
      subject to this Option (and all other Incentive Stock Options granted to
      Optionee by the Company or any Subsidiary, including under other plans of the
      Company or any Subsidiary) that first become exercisable in any calendar year
      have an aggregate fair market value (determined for each Share as of the date
      of
      grant of the option covering such Share) in excess of $100,000, this Option
      shall be treated as a Nonstatutory Stock Option, in accordance with Section
      10(b) of the Plan.

    

    2.           Exercise
      Price.  The exercise price applicable to
      this Option (meaning, the price Optionee must pay in order to purchase any
      Shares hereunder) shall be the price per Share as stated
      in the Notice of Grant.

    

    3.           Vesting
      and Exercise of Option.  Subject to
      Optionee's not experiencing a Termination of Continuous Service during the
      stated vesting period, Optionee shall vest in and earn the right to exercise
      this Option on the vesting schedule as set forth in the Notice of
      Grant.

    

    4.           Expiration.  This
      Option will expire ten (10) years from the Grant Date, unless sooner
      terminated or canceled in accordance with the provisions of the
      Plan.  This means that (subject to the continuing service requirement
      set forth in Section 3 above and subject to earlier termination upon certain
      other events as set forth in the Plan) this Option must be exercised, if at
      all,
      on or before the expiration date as stated in the Notice of Grant (the
      "Expiration Date").  If this Option expires on a stock exchange
      holiday or weekend day, this Option will expire on the last trading day
prior to the holiday or weekend.  Optionee
      shall be solely responsible for exercising this Option, if at all, prior to
      its
      Expiration Date.  The Company shall have no obligation to notify
      Optionee of this Option's expiration.

    

    5.           Exercise
      Mechanics.  This Option may be exercised
      by delivering to the Stock Plan Administrator at the Company's head office
      a
[completed Exercise of Stock Option form] stating the number of
      Shares as to which the Option is exercised or by any other method the Committee
      has approved.  The notice must be accompanied by the payment of the
      full Option exercise price of such Shares.  Exercise shall not be
      deemed to have occurred unless and until Optionee has delivered to the Company
      (or its authorized representative) an approved notice of exercise, full payment
      of the exercise price for the Shares being exercised and payment of any
      applicable withholding taxes in accordance with Section 8
      below.  Payment of the Option exercise price may be in cash; check or
      wire transfer; through an approved cashless-brokered exercise program, with
      other shares of the Company's Common Stock which have a Fair Market Value on
      the
      date of surrender equal to the aggregate exercise price of the Shares as to
      which the Option is being exercised (subject to the Company's discretion to
      withhold approval for such payment method at any time), cashless “net exercise”
arrangement pursuant to which the Company will reduce the number of Shares
      having an aggregate Fair Market Value that does not exceed the aggregate
      exercise price; provided that the Company shall accept a cash or other payment
      from the Optionee to the extent of any remaining balance of the exercise price
      not satisfied by such reduction in the number of whole Shares to be issued;
      such
      other consideration and method of payment for the issuance of Shares to the
      extent permitted by Applicable Laws; or a combination thereof to the extent
      permissible under Applicable Law.

    

    6.           Termination
      of Continuous Service.  All rights of
      Optionee in this Option, to the extent that it has not previously become vested
      and been exercised, shall terminate upon Optionee's Termination of Continuous
      Service except as set forth in this Section 6.  The portion of the
      Option that relates to any Shares that were unvested and unexercisable as of
      the
      date of Optionee's Termination of Continuous Service shall terminate and expire
      effective immediately upon such date.  With respect to the vested and
      exercisable portion of the Option, and subject to the final sentence of this
      Section 6:

    

    (i)           In
      the event of Termination of Continuous Service other than as a result of
      Optionee's death or disability or for Cause, any outstanding Options that were
      vested and exercisable as of the date of Termination of Continuous Service
      may
      be exercised by the Optionee until the earlier of [ninety (90) days] following
      the Optionee’s Termination of Continuous Service. 

    

    (ii)           In
      the event of Termination of Continuous Service as a result of Optionee's
      disability (including a Total and Permanent Disability), Optionee shall have
      twelve (12) months to exercise the Option as to the Shares subject to the Option
      that were vested and exercisable as of the date of Termination of
      Employment;

    

    (iii)           In
      the event of Termination of Continuous Service as a result of Optionee’s death,
      Optionee shall have twelve (12) months following the Optionee’s death to
      exercise the Option as to the Shares subject to the Option that were vested
      and
      exercisable as of the date of death; and

    

    (iv)           In
      the event of Termination of Continuous Service for Cause, all rights of the
      Optionee in this Option, whether vested or unvested, shall terminate and expire
      effective immediately upon the first notification to Optionee of the Optionee’s
      Termination of Continuous Service.

    

    Notwithstanding
      the above, in no event may an Option be exercised, even as to vested and
      otherwise exercisable Shares, after the Expiration Date set forth in
      Section 4 above.

    

    7.           Transferability.  This
      Option generally is not transferable by Optionee otherwise than by will or
      the
      laws of descent and distribution, and is exercisable only by Optionee during
      Optionee’s lifetime; provided however that if this Option is a Nonstatutory
      Stock Option, it may be transferred by instrument to an inter vivos or
      testamentary trust in which the Option is to be passed to beneficiaries upon
      the
      death of the trustor (settlor) or by gift or pursuant to domestic relations
      orders to "Immediate Family Members" (as defined below) of the
      Optionee.  "Immediate Family" means any child, stepchild, grandchild,
      parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
      mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
      or
      sister-in-law (including adoptive relationships), a trust in which these persons
      have more than fifty percent of the beneficial interest, a foundation in which
      these persons (or the Optionee) control the management of assets, and any other
      entity in which these persons (or the Optionee) own more than fifty percent
      of
      the voting interests.

    

    8.           Tax
      Matters.

    

    (i)           Optionee
      is responsible for, and by accepting this Option agrees to bear, all taxes
      of
      any nature, including withholding taxes, interest or penalties arising out
      of
      the grant of this Option, the vesting or exercise of this Option or the
      subsequent sale of the Shares acquired pursuant to the exercise of this Option,
      or any violation of Code Section 409A that impacts this Option, that are legally
      imposed upon Optionee in connection with this Option, and the Company does
      not
      assume, and will not be liable to any party for, any cost or liability arising
      in connection with such tax liability legally imposed on
      Optionee.  The Company has not provided any tax advice with respect to
      this Option or the disposition of the Shares.  Optionee should obtain
      advice from an appropriate independent professional adviser with respect to
      the
      taxation implications of any aspect of this Option, including the grant, vesting
      or exercise of this Option or the subsequent sale of any Shares.

    

    (ii)           In
      the event that the Company or the Optionee’s employer, including any affiliate
      or subsidiary qualified to deduct tax at source (the “Employer”), is required to
      withhold any amount (including in connection with income tax, employment or
      payroll taxes, social security contributions or other similar amounts, with
      such
      obligation in aggregate referred to herein as the “Withholding Obligation”) as a
      result of any event occurring in connection with this Option, the Optionee
      shall
      make a cash payment to the Company as necessary to cover all applicable
      Withholding Obligations at or prior to the time the event giving rise to the
      Withholding Obligation occurs; provided that (a) the Company has the right
      to
      withhold a portion of the Shares otherwise to be delivered upon exercise of
      this
      Option having a Fair Market Value equal to the amount of the Withholding
      Obligation in accordance with such rules as the Company may from time to time
      establish, (b) the Company or the Employer has the right, and the Optionee
      in
      accepting this grant explicitly authorizes the Company, to deduct an amount
      equal to the Withholding Obligation from the Optionee’s compensation or (c) the
      Company may establish alternative procedures to ensure satisfaction of all
      applicable Withholding Obligations arising in connection with this
      Option.  The Optionee will receive a cash refund for any payment of
      cash or fraction of a surrendered share not necessary to satisfy the Withholding
      Obligations.

    

    (iii)           Optionee
      acknowledges and agrees that the ultimate liability for any tax-related item
      legally due by Optionee is and remains Optionee’s responsibility and that the
      Company and or the Employer (a) make no representations or undertakings
      regarding the treatment of any such tax items in connection with any aspect
      of
      this Option, including the grant, vesting or exercise of this Option or the
      subsequent sale of the Shares acquired upon exercise of this Option; and
      (b) do not commit to structure the terms or any aspect of this Option to
      reduce or eliminate the Optionee’s liability for such tax items.  The
      Company may refuse to honor the exercise of this Option and refuse to deliver
      the Shares if Optionee fails to comply with Optionee’s obligations in connection
      with the satisfaction of the Withholding Obligations. 

    

    9.           Optionee
      Acknowledgements.  By accepting the
      grant of this Option, Optionee acknowledges and agrees that the Plan is
      established voluntarily by the Company, it is discretionary in nature and may
      be
      modified, amended, suspended or terminated by the Company at any time unless
      otherwise provided in the Plan or this Agreement.  Optionee
      acknowledges that all decisions with respect to future grants, if any, will
      be
      at the sole discretion of the Company.  Optionee's participation in
      the Plan shall not create a right to further employment with the Company and
      shall not interfere with the ability of the Company to terminate Optionee's
      service relationship at any time with or without cause and it is expressly
      agreed and understood that the service relationship is terminable at the will
      of
      either party, insofar as permitted by law.  Optionee agrees that this
      Option is an extraordinary item that does not constitute compensation of any
      kind for services of any kind rendered to the Company or the Employer, and
      is
      outside the scope of Optionee's service contract, if any.  This Option
      is not part of normal or expected compensation or salary for any purposes,
      including, but not limited to calculating any severance, resignation,
      termination, redundancy, end-of-service payments, bonuses, long-service awards,
      pension or retirement benefits or similar payments insofar as permitted by
      law.  In the event that Optionee does not have a service relationship
      with the Company, this Option grant will not be interpreted to form a service
      contract or relationship with the Company, the Employer or any Subsidiary or
      Affiliate of the Company.  Optionee acknowledges that the future value
      of the underlying Shares is unknown, may increase or decrease in the future,
      and
      cannot be predicted with certainty.  In consideration of the grant of
      this Option, no claim or entitlement to compensation or damages shall arise
      from
      termination of this Option or diminution in value of this Option or Shares
      purchased through exercise of this Option resulting from Optionee's Termination
      of Continuous Service by the Company or the Employer (for any reason whatsoever
      and whether or not in breach of Applicable Laws).

    

    10.           Data
      Transfer.  Optionee explicitly and
      unambiguously consents to the collection, use and transfer, in electronic or
      other form, of Optionee's personal data as described in this document by and
      among, as applicable, the Employer, and the Company and its Subsidiaries and
      Affiliates for the exclusive purpose of implementing, administering and managing
      Optionee's participation in the Plan.  Optionee understands that the
      Company, its Affiliates, its Subsidiaries and the Employer hold certain personal
      information about Optionee, including, but not limited to, name, home address
      and telephone number, date of birth, social security number (or other
      identification number), salary, nationality, job title, any shares of stock
      or
      directorships held in the Company, details of all options or any other
      entitlement to shares of stock awarded, canceled, purchased, exercised, vested,
      unvested or outstanding in Optionee's favor for the purpose of implementing,
      managing and administering the Plan ("Data").  Optionee understands
      that the Data may be transferred to any third parties assisting in the
      implementation, administration and management of the Plan, that these recipients
      may be located in Optionee's country or elsewhere and that the recipient country
      may have different data privacy laws and protections than Optionee's
      country.  Optionee may request a list with the names and addresses of
      any potential recipients of the Data by contacting the Company’s [Stock
      Plan Administrator].  Optionee authorizes the recipients to
      receive, possess, use, retain and transfer the Data, in electronic or other
      form, for the purposes of implementing, administering and managing Optionee's
      participation in the Plan, including any requisite transfer of such Data, as
      may
      be required to a broker or other third party with whom Optionee may elect to
      deposit any Shares acquired upon the exercise of this
      Option.  Optionee understands that Data will be held only as long as
      is necessary to implement, administer and manage participation in the
      Plan.  Optionee may, at any time, view Data, request additional
      information about the storage and processing of the Data, require any necessary
      amendments to the Data or refuse or withdraw the consents herein, in any case
      without cost, by contacting the Company’s [Stock Plan
      Administrator] in writing. Optionee understands that refusing or
      withdrawing consent may affect Optionee's ability to participate in the
      Plan.  For more information on the consequences of refusing to consent
      or withdrawing consent, Optionee may contact the Company’s [Stock Plan
      Administrator] at the Company.

    

    11.           Copies
      of Plan Materials.  Optionee
      acknowledges that Optionee has received a copy of the Plan from the Company
      and
      agrees to receive stockholder information, including copies of any annual
      report, proxy statement and periodic report, from [the Company's website
      at http://www.appharma.com/_______].  Optionee acknowledges
      that copies of the Plan and stockholder information are also available upon
      written or telephonic request to the Company’s [Stock Plan
      Administrator].

    

    12.           Entire
      Agreement; Plan Controls.  The Plan is
      incorporated herein by reference.  The Plan and this Agreement
      constitute the entire agreement of the parties with respect to the subject
      matter hereof and supersede in their entirety all prior undertakings and
      agreements of the Company and Optionee with respect to the subject matter
      hereof, and may not be modified adversely to Optionee's interest except by
      means
      of a writing signed by the Company and Optionee.  This Agreement is
      governed by the laws of the state of Delaware.  In the event of any
      conflict between the terms and provisions of the Plan and this Agreement, the
      Plan terms and provisions shall govern.  Capitalized terms used but
      not defined in this Agreement or the Notice of Grant have the meanings assigned
      to them in the Plan.  Certain other important terms governing this
      Agreement are contained in the Plan.

    

    
      	
              Accepted
                by Optionee:

               

               

               

              _________________________________

              [Optionee
                Name]

            	
              A.P.
                PHARMA, INC.

               

               

              By:
                __________________________________

               

              Name:________________________________

               

              Title:
                _________________________________

            
	
               

               

              I,
                __________________, spouse of __________________ (the “Optionee’), have
                read and hereby approve the foregoing Agreement.  In
                consideration of the Company’s granting my spouse the right to purchase
                Shares of the Company’s common stock as set forth in the Agreement, I
                hereby agree to be irrevocably bound by the Agreement and further
                agree
                that any community property or other such interest shall hereby be
                similarly bound by the Agreement.  I hereby appoint my spouse as
                my attorney-in-fact with respect to any amendment or exercise of
                any
                rights under the Agreement.

              ________________________________

              Spouse
                of Optionee

               

               

               

            

    

    

    RETAIN
      THIS AGREEMENT FOR YOUR RECORDS

    
      
              

                            
                          
      

           

                  SV
            2327078 v1appas80108ex44.htm

    
      

    

    A.P.
      PHARMA, INC.

     

    2007
      EQUITY INCENTIVE PLAN

     

    RESTRICTED
      STOCK UNIT GRANT NOTICE

     

    A.P.
      Pharma, Inc. (the “Company”), pursuant to its 2007 Equity Incentive Plan (the
“Plan”), hereby grants to the participant under the Plan (the “Participant”)
      restricted stock units covering the number of shares of the Company’s common
      stock (the “Common Stock”) set forth below (the “Stock Units”).  Each
      Stock Unit represents one share of Common Stock.  The Stock Units are
      subject to all of the terms and conditions as set forth in this Restricted
      Stock
      Unit Grant Notice (the “Grant Notice”), the Restricted Stock Unit Agreement, and
      the Plan, all of which are attached hereto and incorporated herein in their
      entirety.

     

    
      	
              Participant:

            	 
	
              Date
                of Grant:

            	 
	
              Vesting
                Commencement Date:

            	 
	
              Number
                of Shares Subject to Stock Units:

            	 
	
              Vesting
                Schedule:

            	
              Subject
                to Participant’s not experiencing a Termination of Continuous Service,
                [twenty five percent (25%) of the Stock Units per year on
                the
                anniversary of the Vesting Commencement
                Date.]

            

    

     

    Additional
      Terms/Acknowledgements: The undersigned Participant acknowledges receipt of,
      and understands and agrees to the terms and conditions of this Grant Notice,
      the
      Restricted Stock Unit Agreement, and the Plan.  Participant further
      acknowledges that as of the Date of Grant, this Grant Notice, the Restricted
      Stock Unit Agreement and the Plan set forth the entire understanding between
      Participant and the Company regarding the acquisition of restricted stock units
      and the stock in the Company covered by the restricted stock units and supersede
      all prior oral and written agreements relating thereto, with the exception
      of
      other awards previously granted and delivered to Participant under the
      Plan.

     

    A.P.
      Pharma,
      Inc.                                                                           Participant:

     

    By:
      _____________________________                                                                                     By:
      _____________________________

     

    Signature                                                                                                   Signature

     

    Title:                                                                                                     Date:

     

    _________________________________                                                                                     _________________________________

     

    Date:

     

    ____________________________________

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    A.P.
      PHARMA, INC.

     

    2007
      EQUITY INCENTIVE PLAN

     

    RESTRICTED
      STOCK UNIT AGREEMENT

     

    THIS
      RESTRICTED STOCK UNIT AGREEMENT (the “Agreement”), dated ____________, 200_, is
      entered into by and between _______________ (“Participant”) and A.P. Pharma,
      Inc., a Delaware corporation (the “Company”).

     

    RECITALS

     

    WHEREAS,
      the Company has adopted the A.P. Pharma, Inc. 2007 Equity Incentive Plan (the
      “Plan”), which provides for awards of restricted stock units to the Company’s
      Employees, Consultants and Directors; and

     

    WHEREAS,
      Participant is currently serving as an Employee or Director of, or a Consultant
      to, the Company; and

     

    WHEREAS,
      in order to provide Participant incentive to continue in the employ of the
      Company and his or her commitment to the success of the Company, the
      Compensation Committee of the Board of Directors of the Company (the
“Committee”) has determined that Participant shall be granted restricted stock
      units (“Stock Units”) representing hypothetical shares of the Company’s common
      stock, par value $0.0001 per share (the “Common Stock”), with each Stock Unit
      equal in value to one share of the Company’s Common Stock, subject to the terms
      and restrictions set forth in the Restricted Stock Unit Grant Notice (the “Grant
      Notice”) and this Agreement and in accordance with the terms and conditions of
      the Plan.

     

    NOW
      THEREFORE, in consideration of the foregoing, and the mutual covenants and
      agreements set forth herein, the parties hereto agree as follows:

     

        1.  Definitions.

     

    Capitalized
      terms not explicitly defined in this Agreement or the Grant Notice but defined
      in the Plan shall have the same meanings ascribed to them in the
      Plan.

     

      
      2.  Grant
      of Stock
      Units.

     

    The
      Company hereby grants to Participant, pursuant to the terms of the Grant Notice
      and this Agreement (collectively, the “Award Agreement”) Stock Units covering
      the number of shares of Common Stock indicated in the Grant Notice (the
“Shares”).

     

    
      	
              3.  

            	
              Agreement
                to Accept
                Stock Units.

            

    

     

    Participant
      hereby agrees to accept from the Company, and the Company hereby agrees to
      issue
      to Participant, the Stock Units.

     

    
      	
              4.  

            	
              Vesting.

            

    

     

    Subject
      to the limitations contained herein, the Stock Units issued to Participant
      shall
      vest as provided in the Grant Notice, provided, however, that vesting shall
      cease upon the Participant’s Termination of Continuous Service.

     

    
      	
              5.  

            	
              Benefit
                Upon Vesting.

            

    

     

    Upon
      the vesting of the Stock Units,
      Participant shall be entitled to receive, as soon as administratively
      practicable, a number of Shares equal to:

    

    (a)           the
      number of Stock Units that have vested multiplied by the fair market value
      (as
      defined in the Plan) of a share of Common Stock on the date on which such Stock
      Units vest, and

    

    (b)           a
      dividend equivalent payment determined by

    

    (1)           multiplying
      the number of vested Stock Units by the dividend per share of Common Stock
      on
      each dividend payment date between the date hereof and the vesting date to
      determine the dividend equivalent amount for each dividend payment
      date;

    

    (2)           dividing
      the amount determined in (1) above by the fair market value of a share of
      Common Stock on the date of such dividend payment to determine the number of
      additional Stock Units to be credited to the Participant; and

    

    (3)           multiplying
      the number of additional Stock Units determined in (2) above by the fair
      market value of a share of Common Stock on the vesting date to determine the
      aggregate amount of dividend equivalent payments for such vested Stock
      Units;

    

    provided,
      however, that if any aggregated dividend equivalent payments in
      paragraph (b)(3) above or otherwise results in a payment of a fractional
      Share, such fractional share shall be rounded down to the nearest whole
      Share.

    

    
      	
              6.  

            	
              Securities
                Law Compliance.

            

    

     

    Notwithstanding
      anything to the contrary contained herein, the Company shall not deliver, and
      shall have no liability for failing to deliver, any Shares under the Award
      Agreement unless the Shares are then registered under the Securities Act or,
      if
      such Shares are not then so registered, the Company has determined that such
      issuance and transfer would be exempt from the registration requirements of
      the
      Securities Act.  The issuance and transfer of the Shares also must
      comply with other applicable laws and regulations governing such Stock Units
      and
      Shares, and the Company shall not issue, and shall have no liability for failing
      to issue, the Shares if the Company determines that such issuance and transfer
      would not be in material compliance with such laws and regulations.

     

    
      	
              7.  

            	
              Forfeiture.

            

    

     

    In
      the
      event of the Termination of Continuous Service of the Participant, at any time
      for any reason (including as a result of the Participant’s death or disability)
      prior to the vesting of the Stock Units, except as otherwise provided for in
      the
      Award Agreement, all Stock Units granted hereunder that have not vested by
      such
      termination date and that are held by the Participant as of such date shall
      be
      forfeited by, and no further rights shall accrue to, the
      Participant.  In addition, in the event of Participant’s Termination
      of Continuous Service for Cause (as defined in the Plan), any Stock Units
      (including any vested portion thereof) held by Participant shall immediately
      be
      forfeited in their entirety upon first notification to Participant of such
      Termination for Cause.  If Participant’s Continuous Service with the
      Company is suspended pending an investigation of whether Participant shall
      be
      terminated for Cause, all of Participant’s rights under the Award Agreement
      likewise shall be suspended during the investigation period.  This
      Section 7 shall apply with equal effect to vested Shares issued upon vesting
      of
      the Stock Units in that the Company shall have the right to recover from
      Participant any such Shares, and/or to recover any profits Participant might
      have received upon Participant’s sale or other transfer of such Shares, provided
      the Company commences action to recover such Shares or profits within six months
      following the date of Participant’s Termination of Continuous Service for
      Cause.

     

    
      	
              8.  

            	
              Corporate
                Transactions.

            

    

     

    In
      the
      event of a Change in Control pursuant to Section 14(c) of the Plan, the Company
      may provide for the assumption or substitution of, or adjustment to, the Stock
      Units; accelerate the vesting of Stock Units and terminate any restrictions
      on
      the Stock Units and/or provide for termination of the Stock Units.  To
      the extent the Stock Units remain in effect following such Change in Control,
      such Stock Units shall apply to the new capital stock or other property received
      in exchange for the Common Stock in consummation of the corporate
      transaction.

     

    
      	
              9.  

            	
              Rights
                as
                Shareholder.

            

    

     

    Stock
      Units represent hypothetical shares of Common Stock.  Until the Stock
      Units become vested, the Participant shall not be entitled to any of the rights
      or benefits generally accorded to shareholders.

     

    
      	
              10.  

            	
              Limitations
                on
                Transfer.

            

    

     

    Except
      as
      otherwise provided for in the Award Agreement, the Stock Units or rights granted
      hereunder may not be sold, pledged or otherwise transferred until the Stock
      Units become vested in accordance with Section 4 and the Shares are issued
      under Section 5.

     

    
      	
              11.  

            	
              Award
                not a Service
                Contract.

            

    

     

    The
      Award
      Agreement is not an employment or service contract, and nothing in the Award
      Agreement shall be deemed to create in any way whatsoever any obligation on
      the
      Company or an Affiliate to continue Participant’s employment or
      service.  In addition, nothing in the Award Agreement shall obligate
      the Company or an Affiliate, their respective shareholders, Boards of Directors,
      officers or Employees to continue any relationship that Participant may have
      as
      an Employee or Director of, or a Consultant to, the Company or an
      Affiliate.

     

    
      	
              12.  

            	
              Tax
                and Withholding
                Obligations.

            

    

     

    12.1  Participant
      understands and agrees that Participant is solely responsible for any and all
      federal, state, local and foreign tax withholding obligations in connection
      with
      the Stock Units.  Participant further agrees to make adequate
      provision for any sums required to satisfy the federal, state, local and foreign
      tax withholding obligations of the Company or an Affiliate, if any, which arise
      in connection with the grant or vesting of the Stock Units, or the issuance
      of
      Shares subject to the Stock Units or the subsequent sale of Common Stock
      acquired pursuant to such Stock Units, or due upon receipt of dividend
      equivalent payments.

     

    12.2  If
      Participant does not deliver to the Company’s [Stock Plan
      Administrator] at least five (5) days prior to any date on which Stock
      Units vest (each, a “Vesting Date”) a written notice of Participant’s election
      to satisfy by cash, check or other manner agreeable to the Company, all federal,
      state, local or foreign tax withholding obligations related to such Shares,
      Participant and the Company agree that the Company shall retain that number
      of
      the Shares, based on the fair market value of the Company’s common stock on such
      Vesting Date, with an aggregate value equal to the amount of all federal, state,
      local or foreign tax withholding obligations that Participant, the Company,
      or
      an Affiliate would incur as a result of the vesting relating to such
      Shares.

     

    12.3  Unless
      and until the tax withholding obligations of the Company or any Affiliate are
      satisfied, the Company shall have no obligation to issue a certificate for,
      or
      permit the transfer, alienation, etc. of, any of the Shares.

     

    
      	
              13.  

            	
              Representations.

            

    

     

    Participant has
      reviewed with his or her own tax advisors the federal, state, local and
      foreign tax consequences relating to the Stock Units and the transactions
      contemplated by the Award Agreement.  Participant is relying solely on
      such advisors and not on any statements or representations of the Company or
      any
      of its agents.  Participant understands that he or she (and not the
      Company) shall be responsible for any tax liability that may arise as a result
      of the Stock Units or the transactions contemplated by the Award
      Agreement.

     

    
      	
              14.  

            	
              Data
                Privacy
                Consent.

            

    

     

    Optionee
      explicitly and unambiguously consents to the collection, use and transfer,
      in
      electronic or other form, of Optionee's personal data as described in this
      document by and among, as applicable, the Employer, and the Company and its
      Subsidiaries and Affiliates for the exclusive purpose of implementing,
      administering and managing Optionee's participation in the
      Plan.  Optionee understands that the Company, its Affiliates, its
      Subsidiaries and the Employer hold certain personal information about Optionee,
      including, but not limited to, name, home address and telephone number, date
      of
      birth, social security number (or other identification number), salary,
      nationality, job title, any shares of stock or directorships held in the
      Company, details of all options or any other entitlement to shares of stock
      awarded, canceled, purchased, exercised, vested, unvested or outstanding in
      Optionee's favor for the purpose of implementing, managing and administering
      the
      Plan ("Data").  Optionee understands that the Data may be transferred
      to any third parties assisting in the implementation, administration and
      management of the Plan, that these recipients may be located in Optionee's
      country or elsewhere and that the recipient country may have different data
      privacy laws and protections than Optionee's country.  Optionee may
      request a list with the names and addresses of any potential recipients of
      the
      Data by contacting the Company’s [Stock Plan
      Administrator].  Optionee authorizes the recipients to
      receive, possess, use, retain and transfer the Data, in electronic or other
      form, for the purposes of implementing, administering and managing Optionee's
      participation in the Plan, including any requisite transfer of such Data, as
      may
      be required to a broker or other third party with whom Optionee may elect to
      deposit any Shares acquired upon the exercise of this
      Option.  Optionee understands that Data will be held only as long as
      is necessary to implement, administer and manage participation in the
      Plan.  Optionee may, at any time, view Data, request additional
      information about the storage and processing of the Data, require any necessary
      amendments to the Data or refuse or withdraw the consents herein, in any case
      without cost, by contacting the Company’s [Stock Plan
      Administrator] in writing. Optionee understands that refusing or
      withdrawing consent may affect Optionee's ability to participate in the
      Plan.  For more information on the consequences of refusing to consent
      or withdrawing consent, Optionee may contact the Company’s [Stock Plan
      Administrator] at the Company.

    

    
      	
              15.  

            	
              Acknowledgment.

            

    

     

    Participant
      acknowledges and agrees that notwithstanding any terms or conditions of the
      Plan
      to the contrary, in the event of involuntary Termination of Continuous Service
      (whether or not in breach of local labor laws), Participant’s right to receive
      benefits under the Award Agreement, if any, will terminate effective as of
      the
      date that Participant no longer has a service relationship with the Company
      and
      will not be extended by any notice period mandated under local law (e.g., active
      employment would not include a period of “garden leave” or similar period
      pursuant to local law); furthermore, in the event of involuntary Termination
      of
      Continuous Service (whether or not in breach of local labor laws), Participant’s
      right to receive benefits under the Award Agreement after Termination of
      Continuous Service, if any, will be measured by the date of termination of
      Participant’s service relationship and will not be extended by any notice period
      mandated under local law.

     

    
      	
              16.  

            	
              Notices.

            

    

     

    Any
      notices provided for in the Award Agreement or the Plan shall be given in
      writing and shall be deemed effectively given upon receipt or, in the case
      of
      notices delivered by mail by the Company to Participant, five (5) days after
      deposit in the United States mail, postage prepaid, addressed to Participant
      at
      the last address provided by Participant to the Company.

     

    
      	
              17.  

            	
              Survival
                of
                Terms.

            

    

     

    The
      Award
      Agreement shall apply to and bind Participant and the Company and their
      respective permitted assignees and transferees, heirs, legatees, executors,
      administrators and legal successors.

     

    
      	
              18.  

            	
              Failure
                to Enforce not a
                Waiver.

            

    

     

    The
      failure of the Company to enforce at any time any provision of the Award
      Agreement shall in no way be construed to be a waiver of such provision or
      of
      any other provision hereof.

     

    
      	
              19.  

            	
              Amendments.

            

    

     

    The
      Award
      Agreement may be amended or modified at any time only by an instrument in
      writing signed by each of the parties hereto, provided that the Administrator
      may amend an outstanding Stock Award in order to conform it to the
      Administrator’s intent (in its sole discretion) that such Stock Award not be
      subject to Code Section 409A(a)(1)(B).

     

    
      	
              20.  

            	
              Authority
                of the
                Committee.

            

    

     

    The
      Committee shall have full authority to interpret and construe the terms of
      the
      Award Agreement.  The determination of the Committee as to any such
      matter of interpretation or construction shall be final, binding and
      conclusive.

     

    
      	
              21.  

            	
              Miscellaneous.

            

    

     

    21.1  The
      rights and obligations of the Company under the Award Agreement shall be
      transferable to any one or more persons or entities, and all covenants and
      agreements hereunder shall inure to the benefit of, and be enforceable by the
      Company’s successors and assigns.

     

    21.2  Participant
      agrees upon request to execute any further documents or instruments necessary
      or
      desirable in the sole determination of the Company to carry out the purposes
      or
      intent of the Award Agreement.

     

    21.3  Participant
      acknowledges and agrees that he or she has reviewed the Award Agreement in
      its
      entirety, has had an opportunity to obtain the advice of counsel prior to
      executing and accepting the Award Agreement and fully understands all provisions
      of the Award Agreement.

     

    21.4  If
      Participant has received this or any other document related to the Plan
      translated into a language other than English and if the translated version
      is
      different than the English version, the English version will
      control.

     

    21.5  The
      Award
      Agreement may be signed in counterparts, each of which shall be deemed an
      original, and all of which together shall constitute one and the same
      instrument.

     

    21.6  The
      Award
      Agreement is governed by the laws of the state of Delaware.

     

    
      	
              22.  

            	
              Governing
                Plan
                Document.

            

    

     

    The
      Stock
      Units are subject to all the provisions of the Plan, the provisions of which
      are
      hereby made a part of the Award Agreement, and is further subject to all
      interpretations, amendments, rules and regulations which may from time to time
      be promulgated and adopted pursuant to the Plan.  In the event of any
      conflict between the provisions of the Award Agreement and those of the Plan,
      the provisions of the Plan shall control.  Participant represents
      that he or she has read this Agreement, the Grant Notice and the Plan, and
      is familiar with their terms and provisions.  Participant hereby agrees to
      accept as binding, conclusive and final all decisions or interpretations of
      the
      Committee upon any questions arising under the Award Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
      first above written.

     

    A.P.
      Pharma,
      Inc.                                                                           Participant:

     

    By:
      _____________________________                                                                                     By:
      _____________________________

     

          Signature                                                                                  Signature

     

    Name:
      __________________________

     

    Title:
      ___________________________

     

    

     

    I,
      __________________, spouse of __________________ (the “Participant’), have read
      and hereby approve the foregoing Agreement.  In consideration of the
      Company’s granting my spouse restricted stock units covering the number of
      Shares of the Company’s common stock as set forth in the Agreement, I hereby
      agree to be irrevocably bound by the Agreement and further agree that any
      community property or other such interest shall hereby be similarly bound by
      the
      Agreement.  I hereby appoint my spouse as my attorney-in-fact with
      respect to any amendment or exercise of any rights under the
      Agreement.

     

    ________________________________

     

    Spouse
      of Participant

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    [SIGNATURE
      PAGE TO RESTRICTED STOCK UNIT AGREEMENT]

     

    

     

    

     

    
      
              

                  
      
      

                  SV
            2327070 v1 (10008.0000-P007)

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