-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IwuKOMreGgD3NSs17hc12M+ivODddChhMlQffZXW3HkWQ6Tr87QggiEhThgEalWe S84IpKIT2lRX9X+n637Rng== 0000912086-02-000001.txt : 20020413 0000912086-02-000001.hdr.sgml : 20020413 ACCESSION NUMBER: 0000912086-02-000001 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20020107 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SYMBOLLON CORP CENTRAL INDEX KEY: 0000912086 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 363463683 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-47617 FILM NUMBER: 2503078 BUSINESS ADDRESS: STREET 1: 37 LORING DR CITY: FRAMINGHAM STATE: MA ZIP: 01702 BUSINESS PHONE: 5084430165 MAIL ADDRESS: STREET 1: 37 LORING DRIVE CITY: FRAMINGHAM STATE: MA ZIP: 01702 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: KESSLER JACK H CENTRAL INDEX KEY: 0000922950 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O SYMBOLLON CORP STREET 2: 37 LORING DR CITY: FRAMINGHAM STATE: MA ZIP: 01702 BUSINESS PHONE: 5086207676 MAIL ADDRESS: STREET 2: 37 LORING DR CITY: FRAMINGHAM STATE: MA ZIP: 01702 SC 13D 1 jhk13d.txt SCHEDULE 13D - JACK H. KESSLER SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* Symbollon Pharmaceuticals, Inc. (Name of Issuer) Common Stock, $0.001 par value per share (Title of Class of Securities) 87151H 10 6 (CUSIP Number) Paul C. Desjourdy, President Symbollon Pharmaceuticals, Inc. 37 Loring Drive Framingham, MA 01702 (508) 620-7676 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 19, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). The reporting person previously filed a Schedule 13G on February 11, 1994 pursuant to Rule 13d-1(d) with respect to the securities of the issuer. ________________________________________________________________________________ CUSIP NO. 87151H 10 6 SCHEDULE 13D PAGE 2 OF 7 PAGES ________________________________________________________________________________ 1) Names of reporting persons. I.R.S. Identification Nos. of above persons (entities only). Jack H. Kessler ________________________________________________________________________________ 2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] ________________________________________________________________________________ 3) SEC Use Only ________________________________________________________________________________ 4) Source of Funds (See Instructions) PF, SC ________________________________________________________________________________ 5) Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] ________________________________________________________________________________ 6) Citizenship or Place of Organization United States of America ________________________________________________________________________________ Number of (7) Sole Voting Power 621,514 Shares _________________________________________________________________ Beneficially Owned by (8) Shared Voting Power -0- Each _________________________________________________________________ Reporting Person (9) Sole Dispositive Power 621,514 With _________________________________________________________________ (10) Shared Dispositive Power -0- ________________________________________________________________________________ 11) Aggregate Amount Beneficially Owned by Each Reporting Person 621,514 shares ________________________________________________________________________________ 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [ ] ________________________________________________________________________________ 13) Percent of Class Represented by Amount in Row (11) 14.3% ________________________________________________________________________________ 14) Type of Reporting Person (See Instructions) IN ________________________________________________________________________________ ________________________________________________________________________________ CUSIP NO. 87151H 10 6 SCHEDULE 13D PAGE 3 OF 7 PAGES ________________________________________________________________________________ ITEM 1. SECURITY AND ISSUER The title of the class of equity securities to which this statement relates is Class A common stock, $0.001 par value per share, of Symbollon Pharmaceuticals, Inc. The name and address of the principal executive offices of the issuer are: Symbollon Pharmaceuticals, Inc. 37 Loring Drive Framingham, MA 01702 ITEM 2. IDENTITY AND BACKGROUND (a) Jack H. Kessler (b) Symbollon Pharmaceuticals, Inc. 37 Loring Drive Framingham, MA 01702 (c) Chief executive officer, chief scientific officer and chairman of the board of Symbollon Pharmaceuticals, Inc., a development-stage drug development company (business address listed in Item 2(b) above). (d) During the last five years, the reporting person has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) During the last five years, the reporting person was not a party to any civil proceeding of a judicial or administrative body of competent jurisdiction, where as a result of such proceeding, he was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Citizenship: United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The reporting person beneficially owned more than 5% of the issuer's common stock prior to the issuer's completion of its initial public offering on December 7, 1993, and accordingly filed a Schedule 13G on February 11, 1994. As a result of the vesting of certain stock options, as of October 19, 2001 the reporting person acquired more than 2% of the outstanding shares within a twelve month period, and became obligated to file on Schedule 13D. The reporting person currently owns 435,414 outstanding shares of the issuer's Class A common stock of which: 179,689 shares where obtained as founders' shares at the inception of the issuer, 44,444 shares were purchased from the issuer in satisfaction of $50,000 debt owed the reporting person and 211,281 shares were obtained upon exercise of previously granted stock options, paid for with $385,645 borrowed from the issuer. The reporting person is also ________________________________________________________________________________ CUSIP NO. 87151H 10 6 SCHEDULE 13D PAGE 4 OF 7 PAGES ________________________________________________________________________________ the beneficial owner of 1,100 shares owned by his minor child which shares were originally obtained by the reporting person as founders' shares at the inception of the issuer, and subsequently gifted to the reporting person's minor child. The issuer has previously granted to the reporting person, as incentive compensation under various stock option plans and agreements, currently exercisable stock options to purchase an aggregate of 185,000 shares of the issuer's Class A common stock at exercise prices ranging from $1.69 to $7.25 per share. Options to purchase an additional 160,000 shares of Class A common stock at exercise prices ranging from $1.94 to $9.06 per share vest from December 14, 2002 through December 19, 2003. ITEM 4. PURPOSE OF TRANSACTION The reporting person acquired the outstanding common stock described in Item 3 above as a personal investment, and the stock options described in Item 3 above as part of his compensation as an employee and executive officer of the issuer. The reporting person has no plans or proposals which relate to or would result in: (a) The acquisition by any person of additional securities of the issuer, or the disposition of securities of the issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation involving the issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the issuer or any of its subsidiaries; (d) Any change in the present board of directors or management of the issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the issuer; (f) Any other material change in the issuer's business or corporate structure; (g) Changes in the issuer's charter, bylaws, or instruments corresponding thereto or other actions which may impede the acquisition of control of the issuer by any person; (h) Causing a class of securities of the issuer to be delisted from a national securities exchange or cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Act; or ________________________________________________________________________________ CUSIP NO. 87151H 10 6 SCHEDULE 13D PAGE 5 OF 7 PAGES ________________________________________________________________________________ (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) The reporting person beneficially owns 621,514 shares of the common stock of the issuer, including 435,414 outstanding shares owned directly, 1,100 outstanding shares owned by his minor child and options exercisable currently or within 60 days to purchase 185,000 shares. These 621,514 shares represent approximately 14.3% of the issuer's outstanding common stock. (b) The reporting person has sole power to vote, direct the vote of, dispose of, and direct the disposition of 621,514 shares of common stock. He does not have shared power with respect to any shares. (c) In addition to the option vesting reported in Item 3 above, the issuer has previously granted the following Class A common stock options to the reporting person which vested during the past sixty days were: 60,000 shares exercisable at $7.25 per share vesting on December 14, 2001 and 15,000 shares exercisable at $1.86 per share vesting on December 1, 2001. The reporting person has had no other transactions in the issuer's securities during the past sixty days. (d) No other person has rights with respect to the securities which the reporting person beneficially owns. (e) Not Applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER In January 2001, the reporting person exercised options to purchase 211,281 shares of Class A common stock pursuant to the issuer's executive loan program by executing a promissory note for $385,645. The promissory note is secured by the 211,281 shares. The reporting person has options to purchase, currently or within 60 days, 185,000 shares of the issuer's common stock at exercise prices from $1.69 to $7.25 per share, and options for an additional 160,000 shares at exercise prices ranging from $1.94 to $9.06 per share which vest from December 14, 2002 through December 19, 2003, granted under various stock option plans of and agreements with the issuer. The plans and agreements provide the terms for the grant, exercise, termination, expiration and adjustment of the options. These options are not transferable during the life of the reporting person. The option terms do not include any restrictions or requirements relating to voting of any of the issuer's securities, finder's fees, joint ventures, loans, puts or calls, guarantees of profits, division of profit or loss, or the giving or withholding of proxies. ________________________________________________________________________________ CUSIP NO. 87151H 10 6 SCHEDULE 13D PAGE 6 OF 7 PAGES ________________________________________________________________________________ Except as stated above, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the reporting person and any other person or persons with respect to any other securities of the issuer. None of the shares of common stock of the issuer which the reporting person beneficially owns are pledged or otherwise subject to a contingency the occurrence of which would give another person voting power or investment power over such securities, other than in connection with standard default and similar provisions in loan agreements. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS The following documents are filed as exhibits: 1. Form of Stock Option Agreement entered into between the issuer and Jack H. Kessler. 2. Promissory Note, dated January 11, 2001, between the issuer and Jack H. Kessler, together with the Pledge Agreement and Letter Agreement related thereto. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: January 7, 2002 /s/ Jack H. Kessler ---------------------------- Jack H. Kessler ________________________________________________________________________________ CUSIP NO. 87151H 10 6 SCHEDULE 13D PAGE 7 OF 7 PAGES ________________________________________________________________________________ Index to Exhibits 99.1 Form of Stock Option Agreement entered into between the issuer and Jack H. Kessler. 99.2 Promissory Note, dated January 11, 2001, between the issuer and Jack H. Kessler, together with the Pledge Agreement and Letter Agreement related thereto. EX-99.1 3 optagr.txt FORM OF OPTION AGREEMENT SYMBOLLON CORPORATION STOCK OPTION AGREEMENT UNDER 1993 STOCK OPTION PLAN INCENTIVE STOCK OPTION --------------------- AGREEMENT entered into by and between Symbollon Corporation, a Delaware corporation with its principal place of business in Framingham, Massachusetts (together with its subsidiaries, if any, the "Company"), and the undersigned employee of the Company (the "Optionee"). A. The Company desires to grant the Optionee an incentive stock option under the Company's 1993 Stock Option Plan (the "Plan") to acquire shares of the Company's Class A Common Stock, par value $.001 per share (the "Shares"). B. The Plan provides that each option is to be evidenced by an option agreement, setting forth the terms and conditions of the option. ACCORDINGLY, in consideration of the premises and of the mutual covenants and agreements contained herein, the Company and the Optionee hereby agree as follows: 1. Grant of Option. The Company hereby grants to the Optionee an incentive stock option (the "Option") to purchase all or any part of an aggregate of the number of Shares shown at the end of this Agreement on the terms and conditions hereinafter set forth. The option is intended to be treated as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Purchase Price. The purchase price ("Purchase Price") for the Shares covered by the Option shall be the dollar amount per Share shown at the end of this Agreement. 3. Time of Exercise of Option. Subject to the provisions of Section 4 hereof, the Option shall vest and become exercisable one-third (1/3) annually on each of the first three anniversaries of this Agreement. To the extent the Option is not exercised by the Optionee when it becomes exercisable, it shall not expire, but shall be carried forward and shall be exercisable, on a cumulative basis, until the Expiration Date, as hereinafter defined. 4. Term of Exercisability; Extent of Exercisability. (a) Term of Exercisability. (i) Each Option shall expire on the date shown at the end of this Agreement (the "Expiration Date"), as determined by the Board of Directors of the Company (the "Board"), which shall not be more than ten (10) years from the date of the granting thereof, subject to earlier termination as herein provided. (ii) Except as otherwise provided in this Section 4, if the Optionee's employment by the Company is terminated, the Option granted to the Optionee hereunder shall terminate and be no longer exercisable on the earlier of (i) ninety days after the date the Optionee's employment by the Company is terminated, or (ii) the date on which the Option expires by its terms. (iii) If the Optionee's employment is terminated by the Company for cause or because the Optionee is in breach of any employment agreement, such Option will terminate and be no longer exercisable on the date the Optionee's employment is terminated by the Company. (iv) If the Optionee's employment is terminated by the Company because the Optionee has become permanently disabled (within the meaning of Section 22(e)(3) of the Code), such Option shall terminate and be no longer exercisable on the earlier of (i) one year after the date such Optionee's employment by the Company is terminated, or (ii) the date on which the Option expires by its terms. (v) In the event of the death of the Optionee, the Option granted to such Optionee shall terminate and be no longer exercisable on the earlier of (i) one year after the date of death of such Optionee, or (ii) the date on which the Option expires by its terms. (b) Extent of Exercisability. (i) Except as provided below, if the Optionee's employment by the Company is terminated, the Option granted to the Optionee hereunder shall be exercisable only to the extent that the right to purchase Shares under such Option had vested on the date the Optionee's employment by the Company is terminated. (ii) If the Optionee's employment is terminated by the Company because he or she has become permanently disabled, as defined above, the Option granted to the Optionee hereunder shall be immediately exercisable as to the full number of Shares covered by such Option, whether or not under the provisions of Section 3 hereof such Option was otherwise exercisable as of the date of disability. (iii) In the event of the death of the Optionee, the Option granted to such Optionee may be immediately exercised to the full number of Shares covered thereby, whether or not under the provisions of Section 3 hereof the Optionee was entitled to do so at the date of his or her death, by the executor, administrator or personal representative of such Optionee, or by any person or persons who acquired the right to exercise such Option by bequest or inheritance or by reason of the death of such Optionee. 5. Manner or Exercise of Option. (a) To the extent that the right to exercise the Option has vested and is in effect, the Option may be exercised in full or in part by giving written notice to the Company stating the number of Shares exercised and accompanied by payment in full for such Shares. No partial exercise may be made for less than one hundred (100) full Shares. Payment may be either wholly in cash or in whole or in part in shares of the Company's common stock already owned by the person exercising the Option, valued at fair market value as of the date of exercise; provided, however, that payment of the exercise price by delivery of shares of the Company's common stock already owned by the person exercising the Option may be made only if such payment does not result in a charge to earnings for financial accounting purposes as determined by the Board. Upon such exercise, delivery of a certificate for paid-up, non-assessable Shares shall be made at the principal office of the Company to the person exercising the Option, not less than thirty (30) and not more than ninety (90) days from the date of receipt of the notice by the Company. (b) The Company shall at all times during the term of the Option reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Option. 6. Non-Transferability. The right of the Optionee to exercise the Option shall not be assignable or transferable by the Optionee otherwise than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, and the Option may be exercised during the lifetime of the Optionee only by him or her. The Option shall be null and void and without effect upon the bankruptcy of the Optionee or upon any attempted assignment or transfer, except as hereinabove provided, including without limitation any purported assignment, whether voluntary or by operation of law, pledge, hypothecation or other disposition contrary to the provisions hereof, or levy of execution, attachment, trustee process or similar process, whether legal or equitable, upon the Option. 7. Representation Letter and Investment Legend (a) In the event that for any reason the Shares to be issued upon exercise of the Option shall not be effectively registered under the Securities Act of 1933, as amended (the "1933 Act"), upon any date on which the Option is exercised in whole or in part, the person exercising the Option shall give a written representation to the Company in the form attached hereto as Exhibit 1 and the Company shall place an "investment legend", so-called, as described in Exhibit 1, upon any certificate for the Shares issued by reason of such exercise. (b) The Company shall be under no obligation to qualify Shares or to cause a registration statement or a post-effective amendment to any registration statement to be prepared for the purposes of covering the issue of Shares. 8. Adjustments on Changes in Capitalization. Adjustments on changes in capitalization and the like shall be made in accordance with the Plan, as in effect on the date of this Agreement. 9. No Special Employment Rights. Nothing contained in the Plan or this Agreement shall be construed or deemed by any person under any circumstances to bind the Company to continue the employment of the Optionee for the period within which this Option may be exercised. However, during the period of the Optionee's employment, the Optionee shall render diligently and faithfully the services which are assigned to the Optionee from time to time by the Board or by the executive officers of the Company and shall at no time take any action which directly or indirectly would be inconsistent with the best interests of the Company. 10. Rights as a Shareholder. The Optionee shall have no rights as a shareholder with respect to any Shares which may be purchased by exercise of this Option unless and until a certificate or certificates representing such Shares are duly issued and delivered to the Optionee. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. 11. Withholding Taxes. Whenever Shares are to be issued upon exercise of this Option, the Company shall have the right to require the Optionee to remit to the Company any amount sufficient to satisfy all Federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. The Company may agree to permit the Optionee to withhold Shares purchased upon exercise of this Option to satisfy the above-mentioned withholding requirement; provided, however, no such agreement may be made by an Optionee who is an officer or director within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, except pursuant to a standing election to so withhold Shares purchased upon exercise of an Option, such election to be made in the form set forth in Exhibit 2 hereto and to be made not less than six (6) months prior to the date of such exercise. Such election may be revoked by the Optionee only upon six (6) months prior written notice to the Company. IN WITNESS WHEREOF, the Company has caused this Agreement to be executed, and the Optionee has hereunto set his or her hand and seal, all as of the day and year first above written. SYMBOLLON CORPORATION OPTIONEE By:______________________________ _______________________________ Title: Signature Name:__________________________ (Printed) Address:________________________ ------------------------------- ------------------------------- Social Security Number ------------------------------- Number of Shares ------------------------------- Purchase Price Per Share ------------------------------- Expiration Date EXHIBIT 1 TO STOCK OPTION AGREEMENT Gentlemen: In connection with the exercise by me as to [ ] shares of Class A Common Stock, $.001 per share par value (the "Common Stock" or the "shares"), of Symbollon Corporation (the "Company") under the incentive stock option agreement dated ---------------------------, granted to me under the 1993 Stock Option Plan, I hereby acknowledge that I have been informed as follows: 1. The Common Stock of the Company to be issued to me pursuant to the exercise of said option have not been registered under the securities Act of 1933 (the "1933 Act"), and accordingly, must be held indefinitely unless such shares are subsequently registered under the 1933 Act, or an exemption from such registration is available. 2. Routine sales of securities made in reliance upon Rule 144 under the 1933 Act can be made only after the holding period and in limited amounts in accordance with the terms and conditions provided by that Rule, and in any sale to which that Rule is not applicable, registration or compliance with some other exemption under the 1933 Act will be required. 3. The Company is under no obligation to me to register the shares or to comply with any such exemptions under the 1933 Act. 4. The availability of Rule 144 is dependent upon adequate current public information with respect to the Company being available and, at the time that I may desire to make a sale pursuant to the Rule, the Company may neither wish nor be able to comply with such requirement. In consideration of the issuance of certificates for the shares to me, I hereby represent and warrant that I am acquiring such shares for my own account for investment, and that I will not sell, pledge or transfer such shares in the absence of an effective registration statement covering the same, except as permitted by the provisions of Rule 144, if applicable, or some other applicable exemption under the 1933 Act. In view of this representation and warranty, I agree that there may be affixed to the certificates for the shares to be issued to me, and to all certificates issued hereafter representing such shares (until in the opinion of counsel, which opinion must be reasonably satisfactory in form and substance to counsel for the Company, it is no longer necessary or required) a legend as follows: "The shares of common stock represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act"), and were acquired by the registered holder, pursuant to a representation and warranty that such holder was acquiring such shares for his own account and for investment, with no intention to transfer or dispose of the same, in violation of the registration requirements of the Act. These shares may not be sold, pledged, or transferred in the absence of an effective registration statement under the Act, or an opinion of counsel, which opinion is reasonably satisfactory to counsel to the Company, to the effect that registration is not required under the Act." I further agree that the Company may place a stop order with its Transfer Agent, prohibiting the transfer of such shares, so long as the legend remains on the certificates representing the shares. Very truly yours, EXHIBIT 2 TO STOCK OPTION AGREEMENT Gentlemen: The undersigned Optionee hereby elects and agrees that, whenever the undersigned exercises a stock option (including any options which now or may hereafter be granted), the Company shall withhold from the shares issuable upon such exercise, such number of shares as is equal in value to the federal and state withholding taxes due upon such exercise. The undersigned further acknowledges and agrees that this election may not be revoked without six (6) months prior written notice to the Company. OPTIONEE: ---------------------------------- Signature Name:_____________________________ (Printed) ---------------------------------- Social Security Number EX-99.2 4 jknote.txt PROMISSORY NOTE, DATED JANUARY 11, 2001 PROMISSORY NOTE $385,645.05 Framingham, Massachusetts January 11, 2001 JACK H. KESSLER ("Kessler"), for value received, hereby promises to pay to the order of SYMBOLLON CORPORATION, a Delaware corporation (the "Company"), the principal amount of Three Hundred Eighty-Five Thousand Six Hundred Forty-Five Dollars and Five Cents ($385,645.05), with interest accruing on the unpaid principal amount hereof at the rate of 5.61% per annum, compounded annually. All outstanding principal and interest accrued thereon shall be due and payable in full on the earlier to occur of (a) the termination of Kessler's employment with the Company (for any reason) or (b) December 31, 2005. Kessler may at any time and from time to time prepay all or any portion of said principal and interest, without premium or penalty. The holder of this Note is entitled to the benefits of a Pledge Agreement of even date herewith by and between Kessler and the Company (the "Pledge Agreement"). Neither reference herein to the Pledge Agreement nor any provision thereof shall affect or impair the absolute and unconditional obligation of Kessler to pay the principal of and interest, if any, on this Note as provided herein. No delay or omission on the part of the holder of this Note in exercising any right hereunder or under the Pledge Agreement shall operate as a waiver of such right or of any other right of such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or any other right on any future occasion. All payments of principal of and interest, if any, on this Note shall be payable in immediately available funds at the address of the Company set forth in the Pledge Agreement. Kessler and all endorsers or guarantors of this Note, regardless of the time, order or place of signing, hereby waive presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance or enforcement of this Note. All rights and obligations hereunder shall be governed by the laws of The Commonwealth of Massachusetts and this Note shall be deemed to be under seal. /s/ Jack H. Kessler -------------------------------------- Jack H. Kessler PLEDGE AGREEMENT THIS AGREEMENT, dated as of the 11th day of January 11, 2001, by and between JACK H. KESSLER (the "Pledgor") and SYMBOLLON CORPORATION, a Delaware corporation (the "Company"). W I T N E S S E T H : WHEREAS, the Company has agreed to make a loan as of the date hereof in the principal amount of $385,645.05 to the Pledgor (the "Loan"), such Loan to be evidenced by the Pledgor's Promissory Note, payable to the order of the Company (the "Note"); and WHEREAS, the obligation of the Company to make the Loan is subject to the conditions, among others, that the Pledgor shall execute and deliver this Agreement and grant the security interest hereinafter described; NOW, THEREFORE, in consideration of the willingness of the Company to make the Loan to the Pledgor, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as follows: 1. Security Interest. The Pledgor hereby deposits with and pledges to the Company 211,281 shares of the Class A Common Stock, $.001 par value, of the Company (the "Pledged Stock"), and the Pledgor hereby grants to the Company a security interest in the Pledged Stock as security for the due and punctual payment and performance of the Secured Obligation described in section 2 hereof. 2. Secured Obligation. The security interest hereby granted shall secure the due and punctual payment of the principal of and interest, if any, on the Note (the "Secured Obligation"). 3. Special Warranties and Covenants of the Pledgor. The Pledgor hereby warrants and covenants to the Company that: (a) The Pledged Stock is duly and validly pledged with the Company in accordance with law and the Pledgor warrants and will defend the Company's right, title and security interest in and to the Pledged Stock against the claims and demands of all persons whomsoever. (b) The Pledgor has good title to the Pledged Stock, free and clear of all claims, mortgages, pledges, liens, security interests and other encumbrances of every nature whatsoever. (c) All of the Pledged Stock has been duly and validly issued and is fully paid and nonassessable. (d) The Pledgor will not sell, convey or otherwise dispose of any of the Pledged Stock, nor will the Pledgor create, incur or permit to exist any pledge, mortgage, lien, charge, encumbrance or any security interest whatsoever with respect to any of the Pledged Stock or the proceeds thereof, other than liens on and security interests in the Pledged Stock created hereby. 4. Distributions. In case, upon the dissolution, winding up, liquidation or reorganization of the Company, whether in bankruptcy, insolvency or receivership proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of the Company or otherwise, any sum shall be paid or any property shall be distributed upon or with respect to any of the Pledged Stock, such sum shall be paid over to the Company to be held as collateral security for the Secured Obligation. In case any stock dividend shall be declared on the Pledged Stock, or any share of stock or fraction thereof shall be issued pursuant to any stock split involving the Pledged Stock, or any distribution of capital (excluding ordinary cash dividends) shall be made on the Pledged Stock, or any property shall be distributed upon or with respect to the Pledged Stock pursuant to recapitalization or reclassification of the capital of the Company, the shares or other property so distributed shall be delivered to the Company to be held as collateral security for the Secured Obligation. 5. Events of Default. There shall exist a default under this Agreement upon the default in the due and punctual payment of any principal of or interest on the Secured Obligation as and when the same becomes due and payable (herein called an "Event of Default"). 6. Rights and Remedies of Company. Upon the occurrence of an Event of Default, such default not having previously been remedied or cured, the Company shall have all rights and remedies provided by law, including, without limitation, those provided by the Uniform Commercial Code, and all rights and remedies provided in this Agreement and the Note. 7. Right to Transfer into Name of Company, etc. In case there shall exist an Event of Default, but subject to the provisions of the Uniform Commercial Code or other applicable law, the Company may cause all or any of the Pledged Stock to be transferred into its name or into the name of its nominee or nominees. So long as no Event of Default shall exist, the Pledgor shall be entitled to exercise as the Pledgor shall deem fit, but in a manner not inconsistent with the terms hereof or of the Secured Obligation, the voting power with respect to the Pledged Stock. 8. Right of Company to Exercise Voting Power, etc. In case there shall exist an Event of Default, the Company shall be entitled to exercise the voting power with respect to the Pledged Stock, to receive and retain, as collateral security for the Secured Obligation, any and all dividends or other distributions at any time and from time to time declared or made upon the Pledged Stock, and to exercise any and all rights of payment, conversion, exchange, subscription or any other rights, privileges or options pertaining to the Pledged Stock as if it were the absolute owner thereof, including without limitation, the right to exchange, at its discretion, any and all of the Pledged Stock upon the merger, consolidation, reorganization, recapitalization or other readjustment of the Company or, upon the exercise of any such right, privilege or option pertaining to the Pledged Stock, and in connection therewith, to deposit and deliver any and all of the Pledged Stock with any committee, depositary, transfer agent, registrar or other designated agency upon such terms and conditions as the Company may determine, all without liability except to account for property actually received, but the Company shall have no duty to exercise any of the aforesaid rights, privileges or options and shall not be responsible for any failure to do so or delay in so doing. 9. Right of Company to Dispose of Pledged Stock, etc. Upon the occurrence of an Event of Default, such default not having previously been remedied or cured, the Company shall have the right at any time or times thereafter to sell, resell, assign and deliver all or any of the Pledged Stock in one or more parcels at any exchange or broker's board or at public or private sale. The Company will give the Pledgor at least ten (10) days' prior written notice at the address of the Pledgor specified in section 16 hereof of the date on which and manner in which any private or any other intended disposition thereof is to be made. Any such notice shall be deemed to meet any requirement hereunder or under any applicable law (including the Uniform Commercial Code) that reasonable notification be given of the time and place of such sale or other disposition. Such notice may be given without any demand of performance or other demand, all such demands being hereby expressly waived by the Pledgor. All such sales shall be at such commercially reasonable price or prices as the Company shall deem best. Upon any such sale or sales the Pledged Stock so purchased shall be held by the purchaser absolutely free from any claims or rights of whatsoever kind or nature, including any equity of redemption and any similar rights, all such equity of redemption and any similar rights being hereby expressly waived and released by the Pledgor. The proceeds of any such sale or sales, together with any other additional collateral security at the time received and held hereunder, shall be received and applied: first, to the payment of all costs and expenses of such sale, including reasonable attorneys' fees; second, to the payment of the Secured Obligation, and any surplus thereafter remaining shall be paid to the Pledgor or to whomever may be legally entitled thereto (including, if applicable, any subordinated creditor of the Pledgor). The Pledgor recognizes that the Company may be unable to effect a public sale of all or a part of the Pledged Stock by reason of certain prohibitions contained in the Securities Act of 1933, but may be compelled to resort to one or more private sales to a restricted group of purchasers, each of whom will be obligated to agree, among other things, to acquire such Pledged Stock for its own account, for investment and not with a view to the distribution or resale thereof. The Pledgor acknowledges that private sales so made may be at prices and upon other terms less favorable to the seller than if such Pledged Stock were sold at public sales, and that the Company has no obligation to delay sale of any such Pledged Stock for the period of time necessary to permit such Pledged Stock to be registered for public sale under the Securities Act of 1933. The Pledgor agrees that any such private sales shall not be deemed to have been made in a commercially unreasonable manner solely because they shall have been made under the foregoing circumstances. 10. Collection of Amounts Payable on Account of Pledged Stock, etc. Upon the occurrence of any Event of Default, the Company may, but without obligation to do so, demand, sue for and/or collect any money or property at any time due, payable or receivable, to which it may be entitled hereunder, on account of or in exchange for any of the Pledged Stock and shall have the right, for and in the name, place and stead of the Pledgor, to execute endorsements, assignments or other instruments of conveyance or transfer with respect to all or any of the Pledged Stock. 11. Care of Pledged Stock in Company's Possession. Beyond the exercise of reasonable care to assure the safe custody of the Pledged Stock while held hereunder, the Company shall have no duty or liability to collect any sums due in respect thereof or to protect or preserve rights pertaining thereto, and shall be relieved of all responsibility for the Pledged Stock upon surrendering the same to the Pledgor. 12. Waivers, etc. The Pledgor hereby waives presentment, demand, notice, protest and, except as is otherwise provided herein, all other demands and notices in connection with this Agreement or the enforcement of the Company's rights hereunder or in connection with the Secured Obligation or any Pledged Stock; consents to and waives notice of the granting of renewals, extensions of time for payment or other indulgences to the Company or the Pledgor or to any third party, or substitution, release or surrender of any collateral security for the Secured Obligation, the addition or release of persons primarily or secondarily liable on the Secured Obligation or on any collateral security for the Secured Obligation, the acceptance of partial payments on the Secured Obligation or on any collateral security for the Secured Obligation and/or the settlement or compromise thereof. No delay or omission on the part of the Company in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder. Any waiver of any such right on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion. The Pledgor further waives any right he may have under the constitution of The Commonwealth of Massachusetts or under the Constitution of the United States of America, to notice (other than any requirement of notice provided herein) or to a judicial hearing prior to the exercise of any right or remedy provided by this Agreement to the Company and waives his rights, if any, to set aside or invalidate any sale duly consummated in accordance with the foregoing provisions hereof on the grounds (if such be the case) that the sale was consummated without a prior judicial hearing. The Pledgor's waivers under this section have been made voluntarily, intelligently and knowingly and after the Pledgor has been apprised and counseled by his attorneys as to the nature thereof and his possible alternative rights. 13. Termination; Assignment, etc. This Agreement and the security interest in the Pledged Stock created hereby shall terminate when the Secured Obligation has been paid and finally discharged in full. No waiver by the Company or by any other holder of the Secured Obligation of any default shall be effective unless in writing nor operate as a waiver of any other default or of the same default on a future occasion. In the event of a sale or assignment by the Company of all or any of the Secured Obligation held by it, the Company may assign or transfer its rights and interest under this Agreement in whole or in part to the purchaser or purchasers thereof, whereupon such purchaser or purchasers shall become vested with all of the powers and rights of the Company hereunder, and the Company shall thereafter be forever released and fully discharged from any liability or responsibility hereunder with respect to the rights and interest so assigned. 14. Reinstatement. Notwithstanding the provisions of section 13, this Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by the Company in respect of the Secured Obligation is rescinded or must otherwise be restored or returned by the Company upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company or the Pledgor or upon the appointment of any intervenor or conservator of, or trustee or similar official for, the Company or the Pledgor or any substantial part of their respective properties, or otherwise, all as though such payments had not been made. 15. Restrictions on Transfer, etc. To the extent that any restrictions imposed by the charter or by-laws of the Company or any other document or instrument would in any way affect or impair the pledge of the Pledged Stock hereunder or the exercise by the Company of any right granted hereunder, including, without limitation, the right of the Company to dispose of the Pledged Stock upon the occurrence of an Event of Default, the Pledgor hereby waives such restrictions and the Pledgor hereby agrees that he will take any further action which the Company may reasonably request in order that the Company may obtain and enjoy the full rights and benefits granted to the Company by this Agreement free of any such restrictions. 16. Notices. Except as otherwise provided herein, all notices to the Pledgor or to the Company shall be in writing and shall be deemed to have been sufficiently given or served for all purposes hereof if personally delivered or mailed by first class mail, postage prepaid, as follows: (a) if to the Pledgor: Jack H. Kessler c/o Symbollon Corporation 37 Loring Drive Framingham, MA 01702 Tel: (508) 620-7676 Fax: (508) 620-7111 (b) if to the Company: Symbollon Corporation 37 Loring Drive Framingham, MA 01702 Tel: (508) 620-7676 Fax: (508) 620-7111 or at such other address as the party to whom such notice is directed may have designated in writing to the other party hereto. A notice shall be deemed to have been given upon the earlier to occur of (i) three (3) days after the date on which it is deposited in the U.S. mails or (ii) receipt by the party to whom such notice is directed. 17. Miscellaneous. This Agreement shall inure to the benefit of and be binding upon the Company and the Pledgor and their respective successors and assigns, and the term "Company" shall be deemed to include any other holder or holders of the Secured Obligation. In case any provision in this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which shall be an original, but all of which together shall constitute one instrument. 18. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement, including the validity hereof and the rights and obligations of the parties hereunder, shall be construed in accordance with and governed by the laws of The Commonwealth of Massachusetts. The Pledgor, to the extent that he may lawfully do so, hereby consents to service of process, and to be sued, in The Commonwealth of Massachusetts and consents to the jurisdiction of the courts of The Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of any of his obligations hereunder or with respect to the transactions contemplated hereby, and expressly waives any and all objections he may have as to venue in any such courts. The Pledgor further agrees that a summons and complaint commencing an action or proceeding in any of such courts shall be properly served and shall confer personal jurisdiction if served personally or by certified mail to him at his address provided in section 16 hereof or as otherwise provided under the laws of The Commonwealth of Massachusetts. The Pledgor irrevocably waives all right to a trial by jury in any suit, action or other proceeding instituted by or against the Pledgor in respect of his obligations hereunder or the transactions contemplated hereby. IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date first above written. By: /s/ Jack H. Kessler ----------------------------- Jack H. Kessler SYMBOLLON CORPORATION By: /s/ Paul C. Desjourdy ---------------------------- Paul C. Desjourdy, President SYMBOLLON CORPORATION 37 Loring Drive Framingham, MA 01702 January 11, 2001 Mr. Jack H. Kessler c/o Symbollon Corporation 37 Loring Drive Framingham, MA 01702 Dear Jack: Concurrent with the execution of this Letter Agreement, you exercised your stock option to purchase 211,281 shares (the "Shares") of the Company's Class A Common Stock, $.001 par value per share, at an exercise price ranging from $1.05 to $3.375 per share, and you paid for the Shares by delivering to Symbollon Corporation, a Delaware corporation (the "Company") a Promissory Note in the principal amount of $385,645.05 (the "Note"), secured by the Shares pursuant to a Pledge Agreement of even date herewith by and between you and the Company (the "Pledge Agreement"). Capitalized terms which are not defined herein shall have the same meanings as ascribed to such terms in the Pledge Agreement. You and the Company hereby agree that in the event your employment with the Company terminates prior to December 31, 2005 and the market value of the Shares on the date of such termination (the "Termination Date") is less than the principal and accrued but unpaid interest under the Note at the Termination Date, then, notwithstanding anything in the Pledge Agreement to the contrary, the Shares shall be the Company's sole recourse for payment of the Note. In such event, you agree to surrender your certificate for the Shares accompanied by a stock power executed in blank to the Company, and upon such surrender and delivery of the Shares to the Company, you shall have no further obligation to the Company with respect to the Note and the Note shall be returned to you marked "Paid In Full." This letter agreement shall be governed by the internal substantive laws of the Commonwealth of Massachusetts and shall be binding upon the heirs, personal representatives, executors, administrators, successors and permitted assigns of the parties. The rights and obligations of either party under this letter agreement may only be assigned with the prior written consent of the other party hereto. This letter agreement supersedes all prior written and oral agreements and understandings between the parties and represents the entire agreement between the parties with respect to the subject matter hereof and may only be modified or amended pursuant to a written instrument signed by both parties. The Company is not by reason of this letter agreement obligated to continue your employment. If the foregoing accurately reflects our understanding, please so acknowledge by countersigning this letter agreement in the space provided for your signature below. Very truly yours, SYMBOLLON CORPORATION By: /s/ Paul C. Desjourdy ------------------------ Paul C. Desjourdy President and COO Agreed and Accepted as of this 11th day of January 11, 2000: /s/ Jack H. Kessler - ------------------------ Jack H. Kessler -----END PRIVACY-ENHANCED MESSAGE-----