Document:

Exhibit 10.1

 

Exhibit 10.1

COMMON STOCK WARRANT EXCHANGE AGREEMENT

     This COMMON STOCK WARRANT EXCHANGE AGREEMENT, dated as of April 23, 2004 (the
“Agreement”), is entered into by and between KREIDO LABORATORIES, a California corporation
(the “Company”), and the undersigned holder (the “Holder”) of one or more
outstanding warrants to purchase shares of the Company’s common stock (the “Warrant”)
previously issued by the Company.

     WHEREAS pursuant to the Warrant, the Holder is entitled to purchase 1,450 shares of the
Company’s common stock, no par value per share (“Common Stock”), at an exercise price of
$1.00 per share.

     WHEREAS the Holder desires to exchange the Warrant for a new warrant issued by the Company
(the “New Warrant”), pursuant to which the Holder will be entitled to purchase a number of
shares of Common Stock equal to the number of shares of Common Stock underlying the Warrant at an
exercise price of $0.10 per share.

     WHEREAS concurrently herewith, the Company and certain other parties will enter into that
certain Series B1 Convertible Preferred Stock Purchase Agreement, of even date herewith (the
“Purchase Agreement”), pursuant to which the Company intends to issue and sell shares of
its Series B1 Convertible Preferred Stock, and the execution and delivery of this Agreement is a
condition precedent to the consummation of the transactions contemplated by the Purchase Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:

     1. Exchange of Warrants. The Holder hereby agrees to exchange its Warrant for a New
Warrant to purchase a number of shares of Common Stock equal to the number of shares of Common
Stock underlying the Warrant. The New Warrant shall (a) have an exercise price of $0.10 per share,
(b) have an exercise period expiring at 5:00 p.m., California time, on the fifth anniversary of its
date of issuance and (c) be in substantially the form attached hereto as Exhibit A.

     2. The Closing. The exchange of the Warrant for the New Warrant shall take place at,
and concurrently with, the Initial Closing (as such term is defined in the Purchase Agreement). At
the Initial Closing, (a) the Company shall deliver to the Holder the New Warrant, registered in the
name of the Holder or its nominee, and (b) the Holder shall deliver to the Company the original
Warrant.

     3. Title. The Holder hereby represents and warrants to the Company that the Holder
holds good and valid title to the Warrant, free and clear of any liens, claims or encumbrances, and
the Holder has not heretofore assigned, transferred or otherwise disposed of any interest in the
Warrant.

     4. Effectiveness. The effectiveness of this Agreement and the consummation of the
transactions contemplated hereby are conditioned upon the occurrence of the Initial

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Closing pursuant to the terms of the Purchase Agreement. In the event that the Initial
Closing does not occur on or before the Final Closing Date (as such term is defined in the Purchase
Agreement), this Agreement shall be of no force or effect.

     5. Miscellaneous

          5.1 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California applicable to a contract executed and performed in such
State, without giving effect to the conflicts of laws principles thereof.

          5.2 Jurisdiction; Waiver of Jury Trial. The parties hereto agree that any action or
proceeding arising out of or related to this Agreement shall be conducted only in Ventura,
California. Each party hereby irrevocably consents and submits to the exclusive personal
jurisdiction of and venue in the state courts located in Ventura, California, or in the event of
exclusive federal jurisdiction, the United States District Court for the Central District of
California). Each party hereto hereby waives to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Agreement or any transaction contemplated hereby.

          5.3 Successors and Assigns. This Agreement and the rights and obligations hereunder
may not be assigned by any party without the prior written consent of the other party. Any attempt
to assign the rights, duties or obligations of a party hereunder without the prior written consent
of the other party shall be void. Subject to the foregoing, the provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators
of the parties hereto.

          5.4 Amendments. Any term or provision of this Agreement may be amended or waived, or
the time for its performance may be extended, by the party or parties entitled to the benefit
thereof. Any such amendment or waiver shall be validly and sufficiently authorized for the
purposes of this Agreement if, as to any party, it is authorized in writing by an authorized
representative of such party.

          5.5 Entire Agreement. This Agreement and the other documents, instruments and
agreements referred to herein supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof and contain the sole and entire agreement
between the parties hereto with respect to the subject matter hereof and thereof.

          5.6 Notices. All notices or other communications required or permitted hereunder
shall be in writing and shall be deemed given or delivered (a) when delivered personally, against
written receipt, (b) if sent by registered or certified mail, return receipt requested, postage
prepaid, when received, (c) when received by facsimile transmission, if confirmed by the other
means described in clause (a) or (b), and (d) when delivered by a nationally recognized overnight
courier service, prepaid, and shall be addressed as follows:

          If to the Company, to:

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Kreido Laboratories

1140 Avenida Acaso

Camarillo, California 93012

Facsimile No.: (805) 384-0989

Attention: Phil Lichtenberger

with a copy to:

Sheppard, Mullin, Richter & Hampton, LLP

800 Anacapa Street

Santa Barbara, California 93101

Facsimile No.: (805) 569-1955

Attention: Joseph E. Nida, Esq.

          If to the Holder, to the address set forth under the Holder’s name on the
signature page hereto

or to such other address as such party may indicate by a written notice delivered to the other
party hereto.

          5.7 Severability. In the event that any provision of the Agreement is held to be
invalid, illegal or unenforceable by a court of competent jurisdiction, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the parties agree to negotiate, in good faith, a legal and enforceable
substitute provision which most nearly effects the parties’ intent in entering into this Agreement.

          5.8 Titles and Subtitles. The titles of the articles, sections, subsections,
paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to
be considered in construing this Agreement.

          5.9 Counterparts/Facsimile Signatures. This Agreement may be executed in two or more
counterparts and via facsimile, each of which shall be considered an original instrument, but all
of which shall be considered one and the same agreement, and shall become binding when one or more
counterparts have been and executed and delivered by each of the parties hereto.

          5.10 Attorneys’ Fees. If any action or proceeding for the enforcement of this
Agreement is brought, or because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions hereof, the successful or prevailing party shall be entitled
to recover reasonable attorneys’ fees and other costs incurred in that proceeding, in addition to
any other relief to which it may be entitled.

          5.11 Expenses. The Company and the Holder shall bear the entire cost of its own
expenses and legal fees incurred on its behalf with respect to this Agreement.

          5.12 Further Assurances. The parties shall at their own cost and expense execute and
deliver such further documents and instruments and shall take such other

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actions as may be reasonably required or appropriate to carry out the intent and purposes of
this Agreement and the transactions contemplated hereby.

          5.13 Time of Essence. Time is of the essence for each and every provision of this
Agreement.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of
the date first above written.

	 	 	 	 	 
	 	COMPANY: 

KREIDO LABORATORIES, a California corporation 

 	 
	 	By:  	
 	 
	 	 	Name:  	Philip Lichtenberger                                                       	 
	 	 	Title:  	Executive Vice President & COO	 

	 	 	 	 	 
	 	HOLDER: 
	 
	 	 	 
	 	 Philip L. Lichtenberger
 	 
	 	Printed Name of Holder                                                                 	 
	 	 	 
	 
	 	Signature of Holder or its Duly Authorized Representative
 	 
	 
	Address:  	 Philip Lichtenberger 

1396 Roselawn Avenue 

Thousand Oaks CA 91362

 	 
	 	 	 
	 	 	 
	 	 	 
	 

[SIGNATURE PAGE TO COMMON STOCK WARRANT EXCHANGE AGREEMENT]

 

 

EXHIBIT A

Form of New Warrant

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THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) NOR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN CONTRAVENTION OF THE SECURITIES ACT OR APPLICABLE STATE
SECURITIES LAWS.

KREIDO LABORATORIES

WARRANT

TO PURCHASE COMMON STOCK

			
	                     Shares
	 	Expiration Date: April 23, 2009

     THIS CERTIFIES THAT, in exchange for canceling, converting and or exchanging Warrants
currently held,                      or its registered assigns (the “Holder”) has the right
to purchase from KREIDO LABORATORIES, a California corporation (the “Company”), at any time
and from time to time prior to expiration date set forth above (the “Expiration Date”), up
to the number of shares of the Company’s common stock, no par value per share (“Common
Stock”) set forth above at an exercise price of TEN CENTS ($0.10) per share (the “Exercise
Price”).

     1. Term of Warrant. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable, in whole or in part, during the term commencing on the date hereof
and ending at 5:00 p.m., California time, on the Expiration Date (the “Exercise Period”),
and shall be void thereafter.

     2. Exercise Price. The Exercise Price at which this Warrant may be exercised shall be
$0.10 per share of Common Stock, as adjusted from time to time pursuant to Section 9 hereof.

     3. Exercise of Warrant

          3.1 The purchase rights represented by this Warrant are exercisable by the Holder in whole or
in part, at any time, or from time to time during the Exercise Period, by the surrender of this
Warrant and the Notice of Exercise attached hereto as Exhibit 1, duly completed and
executed on behalf of the Holder, at the office of the Company and upon payment in cash or by check
acceptable to the Company.

          3.2 This Warrant shall be deemed to have been exercised immediately prior to the close of
business on the date of its surrender for exercise as provided above, and the person entitled to
receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as
the holder of record of such shares as of the close of business on such date. As promptly as
practicable on or after such date and in any event

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within ten (10) days thereafter, the Company at its expense shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for the number of
shares issuable upon such exercise. In the event that this Warrant is exercised in part, the
Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the
number of shares for which this Warrant may then be exercised.

     4. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional
share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal
to the Exercise Price multiplied by such fraction.

     5. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and
substance to the Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense, shall execute and deliver, in lieu of this Warrant, a new
warrant of like tenor and amount.

     6. Rights of Shareholders. Subject to Sections 9 and 10 of this Warrant, the Holder
shall not be entitled to vote or receive dividends or be deemed the holder of Common Stock of the
Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or upon any matter
submitted to the shareholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock,
change of par value, consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have
been exercised as provided herein.

     7. Transfer of Warrant

          7.1 Warrant Register. The Company will maintain a register (the “Warrant
Register”) containing the names and addresses of the Holder or Holders of this Warrant. Any
Holder of this Warrant or any portion thereof may change his, her or its address as shown on the
Warrant Register by written notice to the Company requesting such change. Any notice or written
communication required or permitted to be given to the Holder may be delivered or given by mail to
such Holder as shown on the Warrant Register and at the address shown on the Warrant Register.
Until this Warrant is transferred on the Warrant Register of the Company, the Company may treat the
Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes,
notwithstanding any notice to the contrary.

          7.2 Warrant Agent. The Company may, by written notice to the Holder, appoint an agent
for the purpose of maintaining the Warrant Register referred to in Section 7.1 above, issuing the
Common Stock then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing
this Warrant, or any or all of the foregoing.

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Thereafter, any such registration, issuance, or replacement, as the case may be, shall be made
at the office of such agent.

          7.3 Transferability and Nonnegotiability of Warrant. This Warrant may not be
transferred or assigned in whole or in part without compliance with all applicable federal and
state securities laws by the transferor and the transferee (including the delivery of investment
representation letters and legal opinions reasonably satisfactory to the Company, if such are
requested by the Company). Subject to the provisions of this Warrant with respect to the
Securities Act of 1933, as amended (the “Act”), title to this Warrant may be transferred by
endorsement (by the Holder executing the Assignment Form attached hereto as Exhibit 2) and
delivery in the same manner as a negotiable instrument transferable by endorsement and delivery.

          7.4 Exchange of Warrant Upon Transfer. On surrender of this Warrant for exchange,
properly endorsed on the Assignment Form attached hereto as Exhibit 2 and subject to the
provisions of this Warrant with respect to compliance with the Act and with the limitations on
assignments and transfers contained in this Section 7, the Company, at its expense shall issue to
or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or
as the Holder (on payment by the Holder or any applicable transfer taxes) may direct, for the
number of shares issuable upon exercise hereof.

          7.5 Compliance with Securities Laws. The shares of Common Stock of the Company to be
issued upon exercise of this Warrant shall be stamped or imprinted with a legend substantially in
the following form (in addition to any legend required by state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL SUCH
SECURITIES ARE REGISTERED UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED,
OTHER THAN TO ANY OTHER PERSON OR ENTITY WHICH, DIRECTLY OR
INDIRECTLY, CONTROLS, IS CONTROLLED BY OR IS UNDER COMMON CONTROL
WITH, OR TO ANY PERSON OR ENTITY THAT IS A PARTNER OR MEMBER OF, THE
HOLDER HEREOF.

     8. Notices

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          8.1 Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted
pursuant to Section 9 hereof, the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated, and the Exercise Price and number
of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of
such certificate to be mailed (by first-class mail, postage prepaid) to the Holder of this Warrant.

          8.2 In case:

          (a) the Company shall take a record of the holders of its Common Stock (or other
stock or securities receivable upon the exercise of this Warrant) for the purpose of
entitling them to receive any dividend or other distribution, or any right to subscribe for
or purchase any shares of stock of any class or any other securities, or to receive any
other right, or

          (b) of any capital reorganization of the Company, any reclassification of the
capital stock of the Company, any consolidation or merger of the Company with or into
another corporation, or any conveyance of all or substantially all of the assets of the
Company to another Corporation, or

          (c) of any voluntary dissolution, liquidation or winding-up of the Company,

then, and in each such case, the Company will mail or cause to be mailed to the Holder or Holders a
notice specifying, as the case may be, (A) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (B) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any, as of which the holders of record of Common Stock (or such stock or securities
receivable upon the exercise of this Warrant) shall be entitled to exchange their share of Common
Stock (or such other stock or securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or
winding-up. Such notice shall be mailed at least fifteen (15) days prior to the date herein
specified.

          8.3 All such notice, advices and communications shall be deemed to have been received (i) in
the case of personal delivery, on the date of such delivery and (ii) in the case of mailing, on the
third business day following the date of such mailing.

     9. Adjustment Provisions. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:

          9.1 Merger, Sale of Assets, Etc. If at any time, while this Warrant, or any portion
thereof, is outstanding and unexpired there shall be (i) a reorganization, as defined in Section
181 of the California General Corporation Law (other than a combination,

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reclassification, exchange or subdivision of shares otherwise provided for herein), (ii) a
merger or consolidation of the Company with or into another corporation in which the Company is not
the surviving entity, or a reverse triangular merger in which the Company is the surviving entity
but the shares of the Company’s capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company’s properties and assets as, or substantially
as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation,
sale or transfer, lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein
and upon payment of the Exercise Price then in effect, the number of shares of stock or other
securities or property of the successor corporation resulting from such reorganization, merger,
consolidation, sale or transfer which a holder of the shares deliverable upon exercise of this
Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided in this Section 9.
The foregoing provisions of this Section 9.1 shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of any other
corporation which are at the time receivable upon the exercise of this Warrant. If the per share
consideration payable to the Holder hereof for shares in connection with any such transaction is in
a form other than cash or marketable securities, then the value of such consideration shall be
determined in good faith by the Company’s Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the
application of the provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant shall be applicable
after that event, as near as reasonably may be, in relation to any shares or other property
deliverable after that event upon exercise of this Warrant.

          9.2 Reclassification, Etc. If the Company at any time while this Warrant, or any
portion thereof, remains outstanding and unexpired shall, by reclassification of securities or
otherwise, change any of the securities as to which purchase rights under this Warrant exist into
the same or a different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were subject to the
purchase rights under this Warrant immediately prior to such reclassification or other change and
the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as
provided in this Section 9.

          9.3 Split, Subdivision or Combination of Shares. If the Company at any time while
this Warrant, or any portion thereof, remains outstanding and unexpired shall split, subdivide or
combine the securities as to which purchase rights under this Warrant exist, into a different
number of securities of the same class, the Exercise Price for such securities shall be
proportionately decreased in the case of a split or subdivision or proportionately increased in the
case of a combination.

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          9.4 Adjustments for Dividends in Stock or Other Securities or Property. If while this
Warrant, or any portion hereof, remains outstanding and unexpired the holders of the securities as
to which purchase rights under this Warrant exist at the time shall have received, or, on or after
the record date fixed for the determination of eligible Shareholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities or property (other
than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent
the right to acquire, in addition to the number of shares of the security receivable upon exercise
of this Warrant, and without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of the Company which
such holder would hold on the date of such exercise had it been the holder of record of the
security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such exercise, retained such shares and/or
all other additional stock available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this Section 9.

          9.5 Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment pursuant to this Section 9, the Company at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to each holder of this
Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the written request,
at any time, of any such holder, furnish or cause to be furnished to such holder a like certificate
setting forth: (i) such adjustments and readjustments; (ii) the Exercise Price at the time in
effect; and (iii) the number of shares and the amount, if any, of other property which at the time
would be received upon the exercise of the Warrant.

          9.6 No Impairment. The Company will not, by any voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith assist in the carrying out of all the provisions
of this Section 9 and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holders of this Warrant against impairment.

     10. Attorneys’ Fees. In the event any party is required to engage the services of any
attorneys for the purpose of enforcing this Warrant, or any provision thereof, the prevailing party
shall be entitled to recover its reasonable expenses and costs in enforcing this Warrant, including
attorneys’ fees.

     11. Governing Law. This Warrant shall be governed by and construed under the internal
laws of the State of California as applied to agreements among California residents entered into
and to be performed entirely within California, without reference to principles of conflict of laws
or choice of laws.

     12. Jurisdiction; Waiver of Jury Trial. The parties hereto agree that any action or
proceeding arising out of or related to this Warrant shall be conducted only in Ventura,

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California. Each party hereby irrevocably consents and submits to the exclusive personal
jurisdiction of and venue in the state courts located in Ventura, California, or in the event of
exclusive federal jurisdiction, the United States District Court for the Central District of
California). Each party hereto hereby waives to the fullest extent permitted by applicable law,
any right it may have to a trial by jury in respect of any litigation directly or indirectly
arising out of, under or in connection with this Warrant or any transaction contemplated hereby.

     13. Headings. The headings and captions used in this Warrant are used for convenience
only and are not to be considered in construing or interpreting this Warrant. All references in
this Warrant to sections and exhibits shall, unless otherwise provided, refer to sections hereof
and exhibits attached hereto, all of which exhibits are incorporated herein by this reference.

     14. Amendment; Waiver. Any term of this Warrant may be amended, and the observance of
any term of this Warrant may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and the Holder. Any
amendment effected in accordance with this Section shall be binding upon Holder, each future holder
of such securities, and the Company. No waivers of, or exceptions to, any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be, or construed as, a
further or continuing waiver of any such term, condition or provision.

     15. Severability. If one or more provisions of this Warrant are held to be
unenforceable under applicable law, such provision(s) shall be excluded from this Warrant and the
balance of the Warrant shall be interpreted as if such provision(s) were so excluded and shall be
enforceable in accordance with its terms.

     16. Terms Binding. By acceptance of this Warrant, the Holder accepts and agrees to be
bound by all the terms and conditions of this Warrant.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized
officer and effective as of April 23, 2004.

	 	 	 	 	 
	 	KREIDO LABORATORIES, a California corporation 

 	 
	 	By:  	
 	 
	 	 	Name:  	Philip L. Lichtenberger                                                    	 
	 	 	Title:  	Executive Vice President and COO 	 

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EXHIBIT 1 TO FORM OF WARRANT

NOTICE OF EXERCISE

(To be signed only upon exercise of Warrant)

To: Kreido Laboratories

     (1) The undersigned Holder hereby elects to purchase                      shares of Common Stock of
Kreido Laboratories pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price for such shares in full.

     (2) In exercising this Warrant, the undersigned Holder hereby confirms and acknowledges that
the shares of Common Stock are being acquired solely for the account of the undersigned and not as
a nominee for any other party, and for investment, and that the undersigned will not offer, sell or
otherwise dispose of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any applicable state securities
laws.

     (3) Please issue a certificate or certificates representing such shares of Common Stock in the
name of the undersigned or such other name as is specified below:

	 	 	 	 	 
	 

	 	 

(Name)
	 	 
	 
	 	 	 	 
	 

	 	 

(Name)
	 	 

     (4) Please issue a new Warrant for the unexercised portion of the attached Warrant in the name
of the undersigned or in such other name as is specified below:

	 	 	 	 	 
	 

	 	 

(Name)
	 	 

	 	 	 	 	 
	 

	 	 

Printed Name of Holder
	 	 
	 
	 	 	 	 
	 

	 	 

Signature of Holder
	 	 
	 
	 	 	 	 
	 

	 	 

Date
	 	 

 

 

EXHIBIT 2 TO FORM OF WARRANT

ASSIGNMENT FORM

     FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and
transfers unto the Assignee named below all of the rights of the undersigned under the attached
Warrant, with respect to the number of shares of Common Stock set forth below:

	 	 	 	 	 	 	 	 	 	 
	Name of Assignee	 	Address	 	No. of Shares
	     
	 	    	 	 	     	 

and does hereby irrevocably constitute and appoint the Secretary of Kreido Laboratories, a
California corporation (the “Company”) as its true and lawful attorney-in-fact to make such
transfer on the books of the Company, maintained for that purpose, with full power of substitution
in the premises.

	 	 	 	 	 
	 
	 

	 	 

Printed Name of Holder
	 	 
	 
	 	 	 	 
	 

	 	 

Signature of Holder
	 	 
	 
	 	 	 	 
	 

	 	 

Date
	 	 

The undersigned Assignee represents and warrants to the Company that this Warrant and the shares of
stock to be issued upon exercise hereof are being acquired for investment and that the Assignee
will not offer, sell or otherwise dispose of the Warrant or any shares of stock to be issued upon
exercise hereof except under circumstances which will not result in a violation of the Securities
Act of 1933, as amended, or any state securities laws. Further, the undersigned Assignee
represents and warrants that upon exercise of this Warrant, the Assignee shall, if requested by the
Company, confirm in writing, in a form satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view toward distribution or resale.

	 	 	 	 	 
	 
	 

	 	 

Printed Name of Assignee
	 	 
	 
	 	 	 	 
	 

	 	 

Signature of Assignee
	 	 
	 
	 	 	 	 
	 

	 	 

Dateexv10w1

 

Exhibit 10.1

SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

     This Amendment is made and entered into effective as of January 4, 2008 (the “Effective
Date”), between American Medical Systems, Inc., a Delaware corporation (the “Company”), and Martin
J. Emerson (the “Executive”).

R E C I T A  L S

     WHEREAS, the Company and the Executive are parties to an Employment Agreement, dated as of
April 26, 2004, as amended by a First Amendment to Employment Agreement dated as of January 5, 2005
(the “Employment Agreement”); and

     WHEREAS, the parties hereto desire to amend the Employment Agreement to reflect certain
changes necessary or desirable to comply with the requirements of Section 409A of the Internal
Revenue Code as set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:

A. EMPLOYMENT AGREEMENT AMENDMENTS

     1. Section 6(e) of the Employment Agreement is hereby amended in its entirety to read as
follows:

     “(e) Payments.

(1) In the event that the Executive’s employment terminates for any reason,
the Company shall pay to the Executive all amounts and benefits accrued but
unpaid hereunder through the date of termination in respect of Salary or
unreimbursed expenses, including accrued and unused vacation.

(2) In the event the Executive’s Termination of Employment (defined below)
by the Company without Cause, whether during or upon expiration of the then
current term of this Agreement, then in addition to the amounts specified in
the foregoing clause (1), the Company shall continue to pay the Executive
his Salary (less any applicable withholding or similar taxes) at the rate in
effect hereunder on the date of such termination periodically, in accordance
with the Company’s prevailing payroll practices, for a period of twelve (12)
months following the date of such termination (the ‘Severance Term’).

(3) In the event the Executive is entitled to salary continuation benefits
under clause (2) and if the Executive elects COBRA continuation coverage
under the Company’s group medical and/or dental plans, then for each month
of the Severance Term, the Company will pay or reimburse the Executive an
amount equal to the excess of (A) the portion of the monthly cost for the
Executive’s coverage under the Company’s group health and/or dental plans
that was borne by the Company immediately prior to the Executive’s Termination of

 

 

Employment (subject to the rule for coverage
changes discussed below) over (B) the portion of the monthly cost for the
Executive’s coverage under the Company’s group health and/or dental plans
that is borne by the Company during the Severance Term. If the level of the
Executive’s coverage changes during the Severance Term, as, for example,
from single to family coverage or to no coverage, the amount will be
determined as if the new coverage level had been the level of coverage in
effect immediately prior to the Termination of Employment. The Executive
shall be entitled to elect health care continuation coverage under the
Company’s group health and/or dental plans for up to 12 months beyond the
end of the 18-month COBRA period if he or she has not become eligible to
participate as an employee in a plan of another employer providing group
health and dental benefits to the Executive and the Executive’s eligible
family members and dependents, which plan does not contain any exclusion or
limitation with respect to any pre-existing condition of the Executive or
any eligible family member or dependent who would otherwise be covered under
the Company’s plan but for this clause. If continuation coverage is not
available to the Executive during any portion of the Severance Term (other
than by reason of his or her failure to elect COBRA continuation coverage or
to pay the required premiums for such coverage), the Company will provide
comparable medical and/or dental benefits pursuant to an alternative
arrangement, such as an individual medical and/or dental insurance contract,
and such alternative benefits will be treated as part of the Company’s
health and/or dental plan. Any reimbursement made under this Section
6(e)(3) shall be made on or before the last day of the calendar year
following the calendar year in which the expense was incurred.

(4) In addition, during each month of the Severance Term, the Executive
shall be entitled to receive life insurance coverage substantially
equivalent to the coverage Executive had on the day immediately prior to his
or her Termination of Employment, including coverage then in effect for
Executive’s spouse and dependents. Executive shall be required to pay no
more for such life insurance than Executive paid as an active employee
immediately before his or her Termination of Employment. In order to
continue life insurance coverage, Executive must timely elect continuation
or the portability option available under the Company’s group life insurance
policy or policies and pay the full premium for such coverage following
Termination of Employment. The Company will reimburse Executive at least
quarterly for the amount by which such life insurance premium exceeds the
amount Executive paid for such coverage as an active employee immediately
prior to his or her Termination of Employment, and in all events
reimbursement shall be made on or before the last day of the calendar year
following the calendar year in which the premium was incurred.

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(5) Further, in the event the Executive’s Termination of Employment without
Cause by reason of the Company having notified the Executive that this
Agreement will not be extended pursuant to Section 2, the Executive shall be
entitled to receive a pro-rated amount of the Bonus in a lump sum based on
the Executive’s period of employment during the calendar year in which such
termination occurs (less any applicable withholding or similar taxes), which
Bonus shall be paid promptly upon termination.

(6) In the event the Executive accepts other employment or engages in his
own business prior to the last date of the Severance Term, the Executive
shall forthwith notify the Company and the Company shall be entitled to set
off from amounts and benefits due the Executive under Section 6(e)(2), (3)
and (4) the amounts paid to and benefits received by the Executive in
respect of such other employment or business activity.

(7) Amounts owed by the Company in respect of the Salary, Bonus or
reimbursement for expenses under the provisions of Section 5 hereof shall,
except as otherwise set forth in this Section 6(e), be paid promptly upon
any termination, but not more than 90 days following such termination.

(8) The payments and benefits to be provided to the Executive as set forth
in this Section 6(e) in the event the Executive’s employment is terminated
by the Company without Cause: (i) shall be lieu of any and all benefits
otherwise provided under any severance pay policy, plan or program
maintained from time to time by the Company for its employees, and (ii)
shall not be paid to the extent that Executive’s employment is terminated
following a ‘change in control’ under circumstances entitling the Executive
to benefits under his Change in Control Severance Agreement.

(9) To the extent the Executive incurs a tax liability (including foreign,
federal, state and local taxes) in connection with the reimbursement under
Section 6(e)(3) and (4) which the Executive would not have incurred had the
Executive been an active employee of the Company participating in the
Company’s group health and dental plans, the Company will make a payment to
the Executive in an amount equal to such tax liability plus an additional
amount sufficient to permit the Executive to retain a net amount after all
taxes equal to the initial tax liability in connection with the benefit.
The payment pursuant to this Section 6(e)(9) will be made within [10] days
after the Executive’s remittal of a written request for payment accompanied
by a statement indicating the basis for and amount of the Executive’s tax
liability, but in no event later than December 31 of the calendar year next
following the calendar year in which the related taxes are remitted to the
appropriate taxing authority.

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(10) Notwithstanding the foregoing, if, at the time of his or her
Termination of Employment, the Executive is a ‘specified employee’ (defined
below), the Company will treat the payments due under Section 6(e)(2) as
deferred compensation subject to the requirements of Code Section 409A, and
such payments shall be suspended and not made until the first payroll date
after the end of the six (6) month period following the Executive’s
Termination of Employment, or, if earlier, upon the Executive’s death. The
Executive is a ‘Specified Employee’ if on the date of his or her
Termination of Employment he or she is a ‘key employee’ (defined below), and
the Company or any entity that owns 50% or more of the Company and has stock
that is publicly traded on an established securities market within the
meaning of such term under Section 409A(a)(2)(B) of the Code. For this
purpose, Executive is a ‘key employee’ during the 12-month period beginning
on the April 1 immediately following a calendar year, if he or she was
employed by the Company (or any other entity with whom the Company would be
treated as a single employer under Section 414(b) or 414(c) of the Code) and
satisfied, at any time during such preceding calendar year, the requirements
of Section 416(i)(1)(A)(i), (ii) or (iii) of the Code (applied in accordance
with the regulations issued thereunder and disregarding Section 416(i)(5) of
the Code). The Executive will not be treated as a Specified Employee if he
or she is not required to be treated as a Specified Employee under Treasury
regulations issued under Section 409A of the Code.

(11) When used in this Amendment, ‘Termination of Employment’ means a
termination of Executive’s employment relationship with the Company and all
Affiliates or such other change in the Executive’s employment relationship
with the Company and all Affiliates that would be considered a ‘separation
from service’ under Section 409A of the Code. The Executive’s employment
relationship will be treated as remaining intact while the Executive is on a
military leave, a sick leave or other bona fide leave of absence (pursuant
to which there is a reasonable expectation that the Executive will return to
perform services for the Company or an Affiliate) but only if the period of
such leave does not exceed six (6) months, or if longer, so long as the
Executive retains a right to reemployment by the Company or an Affiliate
under applicable statute or by contract, provided, however, where the
Executive’s leave is due to any medically determinable physical or mental
impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than six (6) months and such
impairment causes the Executive to be unable to perform the duties of his or
her position of employment or any substantially similar position of
employment, a twenty-nine (29) month period of absence shall be substituted
for such six (6) month period of absence. In all cases, the Executive’s
Termination of Employment must constitute a ‘separation from service’ under
Section 409A of the Code and any ‘separation from service’ under Section
409A of the Code shall be treated as a Termination of Employment. For this
purpose, ‘Affiliate’ means any entity that, together with the Company, is
treated as a single employer under Code Section 414(b) or (c).”

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     2. Sections 6(f) and (g) of the Employment Agreement are deleted and Section 6(h) is
redesignated as 6(f) and amended and restated to read as follows:

“(f) Survival of Operative Sections. Upon any termination of the
Executive’s employment, the provisions of Sections 6(e) and 7 through 18 of this
Agreement shall survive to the extent necessary to give effect to the provisions
thereof.”

B. MISCELLANEOUS

     1. No Other Amendment. Except as set forth herein, the Employment Agreement shall
remain in full force and effect in accordance with its terms.

     2. Definitions. All capitalized terms that are not defined herein shall be as defined
in the Employment Agreement.

     3. Counterparts. This Amendment may be executed in one or more counterparts, each of
which shall be deemed an original and all of which together shall be considered one and the same
agreement. Facsimile execution and delivery of this Agreement shall be legal, valid and binding
execution and delivery for all purposes.

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above
written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	AMERICAN MEDICAL SYSTEMS, INC.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:	 	 	 	 	 	 	 	 
	 

	 	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Title:
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	EXECUTIVE
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	Martin J. Emerson

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