REGEN BIOLOGICS, INC. NONQUALIFIED STOCK OPTION AGREEMENT
EXHIBIT 4.14
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 non-employee director 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:
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Exercise
Price per Share:
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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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IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the Grant Date.
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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 this Agreement, ReGen
Biologics, Inc. (the “Corporation”) hereby grants to the Optionee the right and
option (the “Option”) to purchase from the Corporation shares of the
Corporation’s common stock, par value $0.01 per share (the
“Shares”). The number of Shares covered by the Option and the
exercise price per Share are set forth on the cover page to this Agreement (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 section 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 Corporation's then outstanding voting securities entitled to vote
generally; the approval by the stockholders of the Corporation of a
reorganization, merger, or consolidation, in each case, with respect to which
persons who were stockholders of the Corporation 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 Corporation; or of
the sale of all or substantially all of the Corporation's assets.
Code: The Internal
Revenue Code of 1986, as amended from time to time.
Committee: The
Chairman of the Board and such other employee members of the Board, if any, who
the Chairman may select to assist him or her in the administration of this
Agreement.
Common Stock: The
common stock, $0.01 par value, of the Corporation or such other class of shares
or other securities as may be applicable pursuant to the provisions of Section
8.
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 membership on the Board.
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.
3. Vesting and
Expiration.
(a) Except
to the extent otherwise provided herein or in the Plan, 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 (10th)
anniversary of the Grant Date, provided that if the Optionee dies within the
tenth (10th) year
following the Grant Date, the Option shall not expire before the eleventh
(11th)
anniversary of the Grant Date.
4. Treatment of Option Upon
Termination of Director Relationship. Treatment of the Option
upon termination of the Optionee’s membership on the Corporation’s Board of
Directors will be determined in accordance with the provisions of this
section.
(a) Upon
the termination of the Optionee’s membership on the Board by reason of
Disability or death, the Option shall become or remain fully vested and shall be
exercisable by such Optionee (or, in the case of death, by his or her estate)
until the earlier of one year after the Optionee’s termination date or the
expiration of the term of the Option.
(b) Except
as otherwise determined by the Committee in its sole discretion, or set forth in
this Agreement, upon the termination of the Optionee's membership on the Board
for any reason other than for Cause (as defined in Section 3(c)), Disability or
death, the Option (to the extent vested prior to such termination) may be
exercised by the Optionee during the six-month period commencing on the date of
termination, but not later than the expiration of the term of the Option. If the
Optionee dies during such six-month period, his or her estate may exercise the
Option (to the extent vested and exercisable prior to death), until the earlier
of one year after the date of death or the expiration of the term of the
options.
(c) Upon
termination of the Optionee's membership on the Board for Cause (as defined
below), the Optionee's right to exercise his or her Option shall terminate at
the time notice of termination is given by the Corporation to the Optionee. For
purposes of this provision, “Cause” shall mean:
The
commission of an action against or in derogation of the interests of the
Corporation 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;
A
material breach of any material duty or obligation imposed upon the Optionee by
the Corporation;
Divulging
the Corporation’s confidential information; or
The
performance of any similar action that the Board, in its sole discretion, may
deem to be sufficiently injurious to the interests of the Corporation so as to
constitute substantial cause for termination.
5. Exercise. The
Option may only be exercised to the extent vested. The Option may be
exercised by delivering to the Chief Financial Officer of 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 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. 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, or (iv) by a combination of
(i), (ii), and (iii), in 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. Reorganization or Changes in
Capitalization and Corporate Events. In the event of a stock
split, stock dividend, recapitalization, reclassification or combination of
shares, merger, sale of assets or similar event, the Board of Directors shall
adjust equitably (a) the number and class of Shares or other securities that are
subject to the Option, and (b) exercise price, and make other changes (including
cashing out the Option) in its discretion that are appropriate and equitable in
the context of the transaction. 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 Board of Directors 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 Board of Directors shall determine
the appropriate adjustments to be made to the Option, and the Board of
Director’s determination shall be binding and conclusive.
8. Acceleration of
Exercisability In the Event of Change in
Control. Notwithstanding the provisions of Section 3, in the
event of a Change in Control prior to the Optionee's termination of service as a
director, the Option shall become fully vested, and until the expiration dates
specified in Section 3 shall remain, vested and exercisable as to all of the
Shares covered by this Agreement.
9. Miscellaneous.
(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:
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(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, Employment or
Director Relationship Rights. Nothing in this Agreement or the
grant of an Option shall confer upon the Optionee any rights to continued
employment, consultant or director status with the Corporation or its affiliates
or shall interfere with the right of the Corporation to terminate the Optionee’s
relationship with the Corporation.
(e)
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.
(f) Choice of
Law. This Agreement shall be construed in accordance with and
be governed by the laws of the State of Delaware.