REGEN BIOLOGICS, INC. NONQUALIFIED STOCK OPTION AGREEMENT
EXHIBIT
4.13
REGEN
BIOLOGICS, INC.
This
Nonqualified Stock Option Agreement (this “Agreement”), dated as of the Grant
Date set forth below, is by and between ReGen Biologics, Inc., a Delaware
corporation (the “Corporation”), and the employee or consultant of the
Corporation or its subsidiary identified below (the “Optionee”).
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Optionee:
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Grant
Date:
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Number
of shares subject to option (the “Shares”):
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Exercise
Price:
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Vesting:
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Optionee’s
Address for Notices:
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Exhibit
A attached hereto is incorporated herein by reference.
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REGEN
BIOLOGICS, INC.
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By:
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Title:
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OPTIONEE
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(Insert
name)
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EXHIBIT
A
TO
REGEN
BIOLOGICS, INC.
1. Grant of
Option. Subject to the provisions of the this Agreement, ReGen
Biologics, Inc. (the “Corporation”) hereby grants to the Optionee the right and
option (the “Option”) to purchase from the Corporation the class of shares of
the Corporation’s stock (the “Shares”) as set forth on the cover page to this
Agreement (the “Cover Page”). The number of Shares covered by the
Option and the exercise price per Share are set forth on the Cover
Page. It is not intended that the Option shall constitute an
“incentive stock option” within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended from time to time, or subsequent comparable
statute (the “Code”).
2. Definitions
Board: The Board
of Directors of the Corporation.
Change in
Control: The purchase or other acquisition by any person,
entity or group of persons, within the meaning of Sections 13(d) or 14(d) of the
Exchange Act or any comparable successor provisions, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or
more of either the outstanding shares of common stock or the combined voting
power of the Company's then outstanding voting securities entitled to vote
generally; the approval by the stockholders of the Company of a reorganization,
merger, or consolidation, in each case, with respect to which persons who were
stockholders of the Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than 30% of the combined
voting power entitled to vote generally in the election of directors of the
reorganized, merged or consolidated Company's then outstanding securities; a
liquidation or dissolution of the Company; or of the sale of all or
substantially all of the Company's assets.
Code: The Internal
Revenue Code of 1986, as amended from time to time.
Committee: The
Compensation Committee of the Board (or subcommittee thereof) or such other
committee (or subcommittee thereof) as shall be appointed by the Board to
administer this Agreement.
Disabled or
Disability: Permanent and total disability, as defined in Code
Section 22(e)(3). The Optionee shall not be considered Disabled unless the
Committee determines that the Disability arose prior to the Optionee's
termination of employment or, in the case of a non-employee Optionee, prior to
the termination of the consulting or advisor relationship between such Optionee
and the Company.
Exchange Act: The
Securities Exchange Act of 1934, as amended from time to time.
Fair Market
Value: The amount determined by the Committee from time to
time, using such good faith valuation methods as it deems appropriate, except
that as long as the Common Stock is traded on NASDAQ or a recognized stock
exchange, it shall mean the average of the highest and lowest quoted selling
prices for the shares on the relevant date, or, if there were no sales on such
date, the weighted average of the means between the highest and the lowest
quoted selling prices on the nearest day before and the nearest day after the
relevant date, as prescribed by Treasury Regulation Section 20.2031-2(b)(1), as
reported in the Wall Street Journal or a similar publication selected by the
Committee.
(a) Except
to the extent otherwise provided herein, the Option shall vest and become
exercisable according to the vesting schedule set forth on the Cover
Page.
(b) Notwithstanding
any other provision hereof, the Option shall expire on the tenth anniversary of
the Grant Date, provided that if the Optionee dies within the tenth year
following the Grant Date, the Option shall not expire before the eleventh
anniversary of the Grant Date.
4. Exercise Following
Termination of Employment or Consulting Relationship. If the
Optionee ceases “Continuous Service” as an employee or consultant of the
Corporation, the outstanding portion of the Option shall be exercisable only in
accordance with the provisions of this section. “Continuous Service”
means that the Optionee’s service with the Corporation or an “Affiliate”,
whether as an employee or consultant, is not interrupted or
terminated. The Optionee’s Continuous Service shall not be deemed to
have terminated merely because of a change in the capacity in which the Optionee
renders service to the Corporation or an Affiliate as an employee or consultant
or a change in the entity for which the Optionee renders such service, provided
that there is no interruption or termination of the Optionee’s Continuous
Service. For example, a change in status from an employee of the
Corporation to a consultant of an Affiliate shall not constitute an interruption
of Continuous Service. The Committee or the chief executive officer
of the Corporation, in that party’s sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave of
absence approved by that party, including sick leave, military leave or any
other personal leave. The term “Affiliate” includes the terms “parent
corporation” and “subsidiary corporation” as such terms are defined in Section
424 of the Code.
(a) If
the Optionee’s Continuous Service as an employee or consultant for the
Corporation is terminated for “cause” (as defined below), the Optionee's right
to exercise his or her options shall terminate at the time notice of termination
is given by the Company to such Optionee. For purposes of this
provision, “Cause” shall mean:
(i) The
commission of an action against or in derogation of the interests of the Company
which constitutes an act of fraud, dishonesty or moral turpitude or which, if
proven in a court of law, would constitute a violation of a criminal code or
similar law;
(ii) A
material breach of any material duty or obligation imposed upon the Optionee by
the Company;
(iii)
Divulging the Company's confidential information; or
(iv) The
performance of any similar action that the Committee, in its sole discretion,
may deem to be sufficiently injurious to the interests of the Company so as to
constitute substantial cause for termination.
(b) If
the Optionee’s Continuous Service as an employee or, consultant for the
Corporation is terminated for any reason other than for “cause” (as defined
above), the portion of the Option that was unvested as of such termination shall
be forfeited (except to the extent provided herein) and the unexercised portion
of the Option that was vested as of such termination shall remain exercisable
until the first to occur of (i) the expiration dates referred to in Section 2,
and (ii) the expiration of ninety (90) days from the date the Optionee ceases
Continuous Service as an employee or consultant for the Corporation, provided
that if the Optionee ceases Continuous Service as an employee or consultant for
the Corporation by reason of death or Disability, the period referred to in this
clause (ii) shall be one year following the date the Optionee ceases Continuous
Service as an employee or consultant for the Corporation and any unvested
portion of the Options granted under this Agreement shall become fully vested
and exercisable as of the date of death or the date of termination due to
Disability. If the Optionee dies during the ninety (90) day period
referred to in clause (ii), his or her estate may exercise the Option, but not
later than the earlier of one year after the date of death or the expiration of
the term of the Option.
5. Exercise. The
Option may be exercised by delivering to the Corporation at its principal
offices a written notice, signed by a person entitled to exercise the Option, of
the election to exercise the Option and stating the number of Shares to be
purchased. Such notice shall be accompanied by the payment of the
full exercise price of the Shares to be purchased. Upon payment in
accordance with the terms of this Agreement and within the time period specified
by the Corporation of the amount, if any, required to be withheld for Federal,
state and local tax purposes on account of the exercise of the Option, the
Option shall be deemed exercised as of the date the Corporation received such
notice. The Corporation may withhold, or allow the Optionee to remit
to the Corporation, any Federal, state or local taxes required by law to be
withheld with respect to any event giving rise to income tax liability with
respect to the Option. In order to satisfy all or any portion of such
income tax liability, the Optionee may elect to surrender Shares previously
acquired by the Optionee or to have the Corporation withhold Shares that would
otherwise have been issued to the Optionee pursuant to the exercise of the
Option, provided that
the Participant attests in a manner acceptable to the Committee that he or she
holds previously-acquired shares equal in number to the number of shares
withheld by the Company and has held such previously-acquired shares for at
least six months. The number of such withheld or surrendered Shares
shall not be greater than the amount that is necessary to satisfy the minimum
withholding obligation of the Company that arises with respect to the
Option. Payment of the full exercise price shall be (i) in cash, (ii)
through the surrender of previously-acquired Shares having a Fair Market Value
equal to the exercise price of the Option provided that such previously-acquired
shares have been held by the Optionee for at least six months, unless the
Committee in its discretion permits the use of shares held less than six months,
(iii) through the withholding by the Corporation (at the election of the
Optionee) of Shares having a Fair Market Value equal to the exercise price,
provided that the Optionee attests in a manner acceptable to the Committee that
he or she holds previously-acquired Shares equal in number to the number of
Shares withheld by the Corporation and has held such previously-acquired shares
for at least six months, (iv) through the withholding by the Corporation (at the
discretion of the Committee) of Shares having a Fair Market Value equal to the
exercise price, or (v) by a combination of (i), (ii), (iii) and (iv), in the
discretion of the Committee. Notwithstanding the foregoing, prior
to mandatory conversion of the Series E Stock, payment of the exercise price or
of Federal, state or local, in any form other than cash, will be at the
discretion of the Committee. Upon the proper exercise of the Option,
subject to the other provisions of this Agreement, the Corporation shall issue
in the name of the person exercising the Option, and deliver to such person, a
certificate or certificates for the Shares purchased.
6. Nontransferability of
Option. The Option shall not be transferable by the Optionee
except by will or the laws of descent and distribution. Without
limiting the generality of the foregoing, the Option shall not be sold,
transferred except as aforesaid, assigned, pledged or otherwise encumbered or
disposed of, shall not be assignable by operation of law, and shall not be
subject to execution, attachment or similar process. Any attempted
sale, transfer, pledge, assignment or other encumbrance or disposition of the
Option contrary to the provisions hereof, or the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect. During the lifetime of the Optionee, the Option may
be exercised only by the Optionee or the Optionee’s agent, attorney-in-fact or
guardian. Following the death of the Optionee, the Option may be
exercised by the Optionee’s beneficiary or estate to the extent permitted by
Section 3.
7. Adjustments Upon
Reorganization or Changes in Capitalization. In the event of a
stock split, stock dividend, recapitalization, reclassification or combination
of shares, merger, sale of assets or similar event, the Compensation Committee
of the Board of Directors shall adjust equitably (a) the number and class of
Shares or other securities that are reserved for issuance under the Option, (b)
the number and class of Shares or other securities that are subject to the
Option, and (c) the appropriate Fair Market Value and other price determinations
applicable to the Option, and make other changes in its discretion that are
appropriate and equitable in the context of the transaction. The
Compensation Committee of the Board of Directors shall make all determinations
under this Section 7, and all such determinations shall be conclusive and
binding. Notwithstanding the foregoing, in the event of a stock
split, stock dividend, reverse stock split, or substantially similar transaction
(the “Event”): (1) the number of Shares subject to the Option shall
be automatically adjusted so that upon exercise of the Option, the Optionee
shall be entitled to receive the number of Shares which the Optionee would have
been entitled to receive after the Event had the Option been exercised
immediately before the earlier of the date of the consummation of the Event or
the record date of the Event (the “Event Date”); (2) the exercise price of a
Share subject to the Option shall be automatically adjusted to equal the
exercise price per share set forth in the Agreement, divided by the “Adjustment
Factor” (the “Adjustment Factor” shall equal the number (or fractional number)
of Shares that the holder of one Share before the Event Date would hold after
the Event Date); (3) any per Share exercise price containing a fraction of a
cent shall be rounded up to the next highest cent; and (4) any Option to
purchase fractional shares shall be automatically eliminated. The
automatic adjustments described in the foregoing sentence shall not be made to
the extent that the Committee determines in its discretion that the automatic
adjustment(s) would result in a charge for financial accounting purposes or
would not constitute an equitable adjustment under the
circumstances. In such cases, the Committee shall determine the
appropriate adjustments to be made to outstanding awards, per share exercise
prices, and the Committee’s determination shall be binding and
conclusive.
(a) Change in
Control. Notwithstanding the provisions of Section 3, the
Option shall become, and until the expiration dates specified in Section 3 shall
remain, vested and exercisable as to all of the Shares forthwith upon the
occurrence of any Change in Control of the Corporation.
(b) Termination without
Cause. Notwithstanding the provisions of Section 3, the Option
shall become, and until the expiration dates specified in Section 3 shall
remain, vested and exercisable as to all of the Shares forthwith upon a
termination by the Corporation of the Optionee’s Continuous Service as a
consultant or employee for the Corporation without “cause” (as defined in
Section 4).
(a) Notices. Any
notice hereunder shall be in writing, and delivered or sent by first-class U.S.
mail, postage prepaid, addressed to:
(i) if
to the Corporation, at:
000
Xxxxxxxxxx Xxxxxx, 00xx
xxxxx
Xxxxxxxxxx,
XX 00000, and
(ii) if
to Optionee, at the address set forth on the Cover Page,
subject
to the right of either party, by written notice hereunder, to designate at any
time hereafter some other address.
(b) Compliance with Law and
Regulations. The Option and the obligation of the Corporation
to sell and deliver Shares hereunder shall be subject to all applicable Federal
and state laws, rules and regulations and to such approvals by any government or
regulatory agency as may be required. Notwithstanding any other
provision of this Agreement, the Option may not be exercised if its exercise, or
the receipt of Shares pursuant thereto, would be contrary to applicable
law.
(c) No Rights as
Stockholder. The Optionee shall have no rights as a
stockholder with respect to any Shares subject to the Option prior to the date
of issuance to the Optionee of a certificate or certificates for such
Shares.
(d)
No
Consulting or Employment Rights. Nothing in this Agreement or
the grant of an Option shall confer upon the Optionee any rights to continued
employment or consultant status with the Corporation or its Affiliates or shall
interfere with the right of the Corporation to terminate the Optionee’s
employment or consulting relationship with the Corporation.
(e)
Withholding. The
Corporation shall, to the extent permitted by law, have the right to deduct from
any payment of any kind otherwise due to the Optionee any Federal, state and
local taxes required by law to be withheld or collected with respect to the
Option.
(f)
Reservation of Shares;
Certain Costs. The Corporation shall keep available sufficient
authorized but unissued Shares needed to satisfy the requirements of this
Agreement. The Corporation shall pay any original issue tax that may
be due upon the issuance of Shares pursuant to the Option and all other costs
incurred by the Corporation in issuing such Shares.
(g) Choice of
Law. This Agreement shall be construed in accordance with and
be governed by the laws of the State of Delaware.