Document:

ex4_2.htm

    
      
        

      
EXHIBIT 4.2

    

    

    CERTIFICATE
OF DESIGNATIONS, PREFERENCES

    

    AND
RIGHTS OF

    

    SERIES
A CONVERTIBLE PREFERRED STOCK

    

    of

    

    
      AROS
CORPORATION

      *
* * *

    

    
      
        

      

    Aros
Corporation, a Delaware corporation (hereinafter called the “Company”), hereby
certifies that, pursuant to the authority expressly vested in the Board of
Directors of the Company by the Certificate of Incorporation, as amended (the
“Certificate of Incorporation”), and in accordance with the provisions of
Sections 103 and 151 of the General Corporation Law of the State of Delaware,
the Board of Directors has duly adopted the following resolutions:

    

    RESOLVED, that, pursuant to
Article FOURTH of the Certificate of Incorporation (which authorizes 30,000,000
shares of Preferred Stock, $0.01 par value per share (“Preferred Stock”)), the
Board of Directors hereby fixes the number of shares, powers, designations,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations and restrictions, of a series of Preferred Stock
to be designated as Series A Convertible Preferred Stock (“Series A Preferred
Stock”);

    

    RESOLVED, that each share of
such Series A Preferred Stock established hereby shall rank equally in all
respects and shall be subject to the following provisions:

    

    1.       
    Number
and Designation. 15,309,822 shares of the Preferred Stock of the Company
shall be designated as Series A Preferred Stock.

    

    2.     
      Rank. The Series A Preferred
Stock shall, with respect to rights on liquidation, dissolution and winding up,
(i) rank senior to all classes of the Company's common stock, $0.01 par value
per share (“Common Stock”), to the Company’s Series B  Convertible
Preferred Stock and to each other class of capital stock of the Company or
series of Preferred Stock established hereafter by the Board of Directors of the
Company, the terms of which do not expressly provide that it ranks on a parity
with or senior to the Series A Preferred Stock as to rights on liquidation,
winding-up and dissolution of the Company (the securities in this clause (i)
collectively referred to as “Junior Securities”); (ii) rank on a parity with
each other class of capital stock of the Company or series of Preferred Stock of
the Company established hereafter by the Board of Directors of the Company, the
terms of which expressly provide that such class or series will rank on a parity
with the Series A Preferred Stock as to rights on liquidation, winding-up and
dissolution (the securities in this clause (ii) collectively referred to as
“Parity Securities”); and (iii) rank junior to each other class of capital stock
of the Company or series of Preferred Stock of the Company established hereafter
by the Board of Directors of the Company, the terms of which expressly provide
that such class or series will rank senior to the Series A Preferred Stock as to
rights on liquidation, winding-up and dissolution (the securities in this clause
(iii) collectively referred to as “Senior Securities”); provided, however, that the
Company may not establish a class or series of Senior Securities or Parity
Securities unless the Company shall have first obtained the consent of the
holders of a majority of the outstanding shares of Series A Preferred Stock
(“Majority Consent”) and, if necessary, the consent of the holders of a majority
of any other series of Preferred Stock outstanding. The respective definitions
of Junior Securities, Parity Securities and Senior Securities shall also include
any rights, options, or warrants to subscribe for, purchase, or otherwise
acquire Junior Securities, Parity Securities and Senior Securities, and any
indebtedness, shares or other securities convertible into or exchangeable for
Junior Securities, Parity Securities and Senior Securities as the case may
be.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    
 

    3.        
   Dividends. If dividends
in respect of the Company’s Common Stock, $0.01 par value (the “Common Stock”),
are declared by the Board of Directors out of funds legally available for that
purpose, then the holders of Series A Preferred Stock shall be entitled to
receive such dividends in respect of each share of Series A Preferred Stock in
such amount as the holder thereof would have received if such holder’s shares of
Series A Preferred Stock would have been converted into shares of Common Stock
pursuant to Section 8 hereof immediately prior to the record date for payment of
any such dividend.

    

    4.       
    Liquidation
Preference.  In accordance with, and upon the occurrence of an
event described in, Section 4 below, the holder of each share of Series A
Preferred Stock shall be entitled to receive an amount per share equal to
$0.4481 (which amount shall be subject to adjustment whenever there shall occur
a stock split, combination, reclassification or other similar event involving
the Series A Preferred Stock) (the "Liquidation Value"), plus any declared but
unpaid dividends accrued through such date.

    

    5.       
    Liquidation
Rights.  (a)  In the event of any liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary,
before any payment or distribution of the assets of the Company (whether capital
or surplus) shall be made to or set apart for the holders of Junior Securities
and after and subject to the payment in full of all amounts required to be
distributed to the holders of the Senior Securities in the event of any
liquidation, dissolution, dissolution or winding up of the Company, the holder
of each share of Series A Preferred Stock and any Parity Securities shall be
entitled to receive an amount per share equal to the Liquidation Value of such
share on the date of distribution, and such holders shall not be entitled to any
further payment; provided, however,
that upon any liquidation, dissolution or winding up of the Company, the assets
of the Company, or proceeds thereof, distributable after payment in full of the
Senior Securities shall be insufficient to pay in full the preferential amount
aforesaid to the Series A Preferred Stock and the liquidating payments on any
Parity Securities, then the assets of the Company, or the proceeds thereof,
shall be distributed among the holders of shares of Series A Preferred Stock and
any such Parity Securities ratably in accordance with the respective amounts
that would be payable on such shares of Series A Preferred Stock and any such
Parity Securities if all amounts payable thereon were paid in
full.

    
      
         

      

      
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    (b)           Subject
to the rights of the holders of any Parity Securities, after payment shall have
been made in full to the holders of the Series A Preferred Stock, as provided in
this paragraph 4, any other series or class or classes of Junior Securities
shall, subject to the respective terms and provisions (if any) applying thereto,
be entitled to receive any and all assets remaining to be paid and distributed
to holders of capital stock of the Company.

    

    (c)           Notwithstanding
anything to the contrary, in the event of a sale by the Company of all or
substantially all of its assets, or a merger or consolidation of the Company as
a result of which the stockholders of the Company own less than 50% of the
surviving entity, each holder of shares of the Series A Preferred Stock shall be
entitled to treat such event as a liquidation of the Company and to demand that
the Company pay such holder the Liquidation Value of all, but not less than all,
of such holder's Stock of Series A Preferred Stock upon the surrender of such
Stock to the Company.

    

    6.            Voting Rights. The holders of
record of shares of Series A Preferred Stock shall be entitled to the following
voting rights:

    

    (a) those
voting rights required by applicable law (including the right to vote as a
separate class when required by law); and

    

    (b) the
right to vote together with the holders of the Common Stock on an “as converted
basis” upon any matter submitted to such holders for a vote.

    

    (c) (i)
Each issued and outstanding share of the Series A Preferred Stock shall be
entitled to one vote if entitled to vote as a separate class and the holders of
a majority in interest of the Series A Preferred Stock entitled to vote shall
bind the entire class of Series A Preferred Stock.  The Company shall
give the holders of the Series A Preferred Stock at least 10 days’ prior notice
of any matter to be submitted to such holders for a vote as a separate
class.

    

    (ii) If
the holders of the Series A Preferred Stock are voting together with the holders
of the Common Stock, each holder of the Series A Preferred Stock shall be
entitled to such number of votes equal to the whole number of shares of Common
Stock which would be issuable upon conversion of such holders’ shares of Series
A Preferred Stock immediately after the close of business on the record date
established by the Company for a stockholder’s meeting or if no such date is
established, the date immediately preceding the date of the stockholders’
written consent in lieu of a meeting. The Company shall give the holders of the
Series A Preferred Stock the same notice it gives to the holders of Common Stock
on issues on which the Series A Preferred Stock and Common Stock vote together
and if the action is to be taken by written consent, at least one business day
prior to the date of this written consent.

    
      
         

      

      
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    7.           No Preemptive
Rights.  The holders of Series A Preferred Stock shall have no
preemptive rights.

    

    8.           Conversion. (a) Mandatory
Conversion Upon Qualified Offering. All outstanding shares of Series A Preferred
Stock shall be converted into Common Stock automatically, and without further
action by any party, immediately upon the closing of a firm commitment
underwritten secondary public offering pursuant to an effective registration
statement under the Securities Act of 1933 covering the offer and sale of Common
Stock by the Company to the public that results in gross cash proceeds to the
Company of at least $5,000,000 and assumes a minimum valuation of the Company of
$25,000,000 (a "Qualified Offering").  One share of Common Stock
(subject to adjustment in accordance with paragraph 7(g)) shall be deliverable
upon the conversion of each share of Series A Preferred Stock on the date on
which the Qualified Offering is consummated.  No notice delivered by
the Company pursuant to paragraph 7(h) will limit in any way the holders’ rights
to convert pursuant to this paragraph 7(a).

    

    (b)
Conversion at the Option of the Holder. Subject to the provisions of this
paragraph 7, each holder of shares of Series A Preferred Stock shall have the
right, at any time and from time to time, at such holder’s option, to convert
its outstanding shares of Series A Preferred Stock, in whole or in part, into
fully paid and non-assessable shares of Common Stock. One share of Common Stock
(subject to adjustment in accordance with paragraph 7(g)) shall be deliverable
upon the conversion of each share of Series A Preferred Stock pursuant to this
paragraph 7(b). No notice delivered by the Company pursuant to paragraph 7(h)
will limit in any way the holders’ rights to convert pursuant to this paragraph
7(b). In order to exercise the conversion privilege set forth in this paragraph
7(b), the holder of the shares of Series A Preferred Stock to be converted shall
surrender the certificate representing such shares at the office of the Company,
with a written notice of election to convert completed and signed, specifying
the number of shares to be converted. Each conversion pursuant to this paragraph
7(b) shall be deemed to have been effected immediately prior to the close of
business on the date on which the certificates for shares of Series A Preferred
Stock shall have been surrendered and such notice received by the Company as
aforesaid, and the person in whose name or names any certificate or certificates
for shares of Common Stock shall be issuable upon such conversion shall be
deemed to have become the holder of record of the shares of Common Stock
represented thereby at such time on such date.  Effective upon such
conversion, the shares of Series A Preferred Stock so converted shall no longer
be deemed to be outstanding, and all rights of a holder with respect to such
shares surrendered for conversion shall immediately terminate except the right
to receive the Common Stock and other amounts payable pursuant to this paragraph
7.

    

    (c) (i)
Unless the shares issuable on conversion pursuant to this paragraph 7 are to be
issued in the same name as the name in which such shares of Series A Preferred
Stock are registered, each share surrendered for conversion shall be accompanied
by instruments of transfer, in form reasonably satisfactory to the Company, duly
executed by the holder or the holder’s duly authorized attorney, and an amount
sufficient to pay any transfer or similar tax subject to subsection (e) below
for such transfer.

    
      
         

      

      
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    (ii) As
promptly as practicable after the surrender by the holder of the certificates
for shares of Series A Preferred Stock as aforesaid, the Company shall issue and
shall deliver to such holder, or on the holder’s written order to the holder’s
transferee, a certificate or certificates for the whole number of shares of
Common Stock issuable upon the conversion of such shares in accordance with the
provisions of this paragraph 7.

    

    (iii) All
shares of Common Stock delivered upon conversion of the Series A Preferred Stock
will upon delivery be duly and validly issued and fully paid and non-assessable,
free of all liens and charges and not subject to any preemptive
rights.

    

    (d) (i)
The Company covenants that it will at all times reserve and keep available, free
from preemptive rights, such number of its authorized but unissued shares of
Common Stock as shall be required for the purpose of effecting conversion of the
Series A Preferred Stock.  (ii) Prior to the delivery of any
securities that the Company shall be obligated to deliver upon conversion of the
Series A Preferred Stock, the Company shall comply with all applicable federal
and state laws and regulations that require action to be taken by the
Company.

    

    (e) The
Company shall pay any and all documentary stamp or similar issue or transfer
taxes payable in respect of the issue or delivery of shares of Common Stock on
conversion of the Series A Preferred Stock pursuant hereto.

    

    (f) In
connection with the conversion of any shares of Series A Preferred Stock, no
fractional shares of Common Stock shall be issued, but in lieu thereof the
Company shall round up any fractional shares to the nearest whole number of
shares of Common Stock if the fraction is .5 or above and round down if the
fraction is below .5.

    

    (g) (i)
In case the Company shall at any time after the date of issue of the Series A
Preferred Stock declare a dividend or make a distribution on Common Stock
payable in Common Stock, subdivide or split the outstanding Common Stock,
combine or reclassify the outstanding Common Stock into a smaller number of
shares or consolidate with, or merge with or into, any other entity, or engage
in any reorganization, reclassification or recapitalization that is effected in
such a manner that the holders of Common Stock are entitled to receive stock,
securities, cash or other assets with respect to or in exchange for Common
Stock, then the kind and amount of stock, securities, cash or other assets
issuable upon conversion of the Series A Preferred Stock in effect at the time
of the record date for such dividend or distribution or of the effective date of
such subdivision, split, combination, consolidation, merger, reorganization,
reclassification or recapitalization shall be adjusted so that the conversion of
the Series A Preferred Stock after such time shall entitle the holder to receive
the aggregate number of shares of Common Stock or securities, cash and other
assets that, if the Series A Preferred Stock had been converted immediately
prior to such time, such holder would have owned upon such conversion and been
entitled to receive by virtue of such dividend, distribution, subdivision,
split, combination, consolidation, merger, reorganization, reclassification or
recapitalization. Such adjustment shall be made successively whenever any event
listed above shall occur.

    
      
         

      

      
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    (ii) All
calculations under this paragraph 7(g) shall be made to the nearest four decimal
points.

    

    (iii) In
the event that, at any time as a result of the provisions of this paragraph
7(g), the holder of the Series A Preferred Stock upon subsequent conversion
shall become entitled to receive any securities other than Common Stock, the
number and kind of such other securities so receivable upon conversion of the
Series A Preferred Stock shall thereafter be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions contained herein.

    

    (h) The
holders of Series A Preferred Stock shall be notified of all adjustments
pursuant to this paragraph 7 promptly following the making thereof and such
notice shall be accompanied by a schedule of computations of the
adjustments.

    

    

    9.           Redemption.  To the
extent permitted by the General Corporation Law of the State of Delaware, and
subject to the provisions of any agreements between the Company and financial
institutions in connection with commercial credit arrangements which may
restrict or limit the Company's ability to redeem the Series A Preferred Stock
that are unanimously approved by the Board of Directors , the Company shall, at
any date from and after the date of the 7th
anniversary of the issuance and delivery of the Series A Preferred Stock, and
only upon the Company’s receipt of written requests (the “Redemption Notices”)
from the holders of not less than a majority of the Series A Preferred Stock
(the “Redemption Threshold”) to redeem such holder’s shares of Series A
Preferred Stock, redeem all, but not less than all, of the shares of the Series
A Preferred Stock at a per share redemption price equal to the Liquidation Value
(the “Redemption Price”) (which amount shall be subject to adjustment whenever
there shall occur a stock split, combination, reclassification or other similar
event involving the Series A Preferred Stock).

    The
Redemption Notice shall be in writing and shall be delivered to the Company’s
principal place of business via certified mail, return receipt
requested.  The Redemption Notice may also be delivered to the Company
by any other means of delivery, the evidence of the Company’s receipt of which
is acknowledged by the Company and can be independently
established.  Promptly following the satisfaction of the Redemption
Threshold, the Company shall cause a written notice thereof to be mailed, via
first class mail, to all holders of Series A Preferred Stock (the “Notice of
Satisfaction of Redemption Threshold”).

    

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    Promptly
following its provision of the Notice of Satisfaction of Redemption Threshold,
the Company shall redeem all, but not less than all, of the Series A Preferred
Stock at the Redemption Price, pro-rata among all of the holders of the Series A
Preferred Stock, in the following manner:  one-third (1/3) of the
issued and outstanding shares of Series A Preferred Stock shall be redeemed on
the sixtieth (60th) day
following the Notice of Satisfaction of Redemption Threshold (“Phase I of the
Redemption”); one-third (1/3) of the issued and outstanding shares of Series A
Preferred Stock shall be redeemed on the  first anniversary of Phase I
of the Redemption (“Phase II of the Redemption”); and one-third (1/3) of the
issued and outstanding shares of the Series A Preferred Stock shall be redeemed
on the second anniversary of Phase I of the Redemption (“Phase III of the
Redemption”).

    

    As a
condition of receipt of the Redemption Price for any shares of Series A
Preferred Stock, each holder of shares of Series A Preferred Stock shall have
delivered, or caused to have been delivered to the Company’s principal office,
or such other office or agency maintained for that purpose, a certificate or
certificates representing the holder’s number of shares of Series A Preferred
Stock eligible for redemption (which shall be in accordance with the Phases
enumerated in the immediately preceding paragraph).  If less than the
full number of shares of Series A Preferred Stock represented by any holder’s
share certificate is eligible for redemption according to the Phases outlined in
the immediately preceding paragraph, then a new certificate or certificates, of
like tenor, shall be prepared and delivered to the holder for such number of
shares of Series A Preferred Stock represented by the original certificate
presented to the Company for redemption, less the shares of Series A Preferred
Stock to be redeemed in accordance with the applicable Phase.

    

    10. Amendments and Other Actions.
So long as shares of Series A Preferred Stock are outstanding, the Company shall
not, without first obtaining the Majority Consent (by vote or written consent)
of Series A Preferred Stock, alter or change the rights, preferences or
privileges of the Series A Preferred Stock or any other capital stock of the
Company so as to adversely affect the Series A Preferred Stock. Notwithstanding
the foregoing, and unless otherwise required by applicable law, the Company when
authorized by resolutions of its Board of Directors may amend or supplement its
Certificate of Incorporation without the consent of any holder of Series A
Preferred Stock or any holder of Common Stock to cure any ambiguity, defect or
inconsistency in this Certificate of Designations that establishes the Series A
Preferred Stock.

    

    

    [The
remainder of this page has been left blank intentionally.]

    
      
         

      

      
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    IN WITNESS WHEREOF, Aros
Corporation has caused this Certificate of Designations to be signed by the
undersigned this 21 day of June, 2002.

     

    
      	 	AROS
      CORPORATION
	 	 	 
	 	 	 
	 	 	 
	 
      	
              By:

            	 
      
	 
      	
              Name:

            	 
      
	 
      	
              Title:

            	 
      

    

    
      
         

      

      
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    STATE
OF DELAWARE

    CERTIFICATE
OF CORRECTION

    

    FILED
TO CORRECT

    A
CERTAIN ERROR IN THE

    

    CERTIFICATE
OF DESIGNATIONS, PREFERENCES

    AND
RIGHTS OF

    SERIES
A CONVERTIBLE PREFERRED STOCK

    OF

    AROS
CORPORATION

    

    FILED
IN THE OFFICE OF THE SECRETARY OF STATE OF

    DELAWARE
ON SEPTEMBER 13, 2002

    

    

    Pursuant to Section 103 of the General
Corporation Law of the State of Delaware, it is hereby certified
that:

    

    1.           The
present name of the corporation is Aros Corporation (the “Corporation”), which
was originally incorporated under the name of APACHE Medical Systems, Inc. upon
filing of the original certificate of incorporation of the Corporation with the
Secretary of State of the State of Delaware on September 1, 1987 and amended and
restated on December 26, 1991, January 2, 1992, December 31, 1992 and January
20, 1994, amended on August 17, 1995, amended and restated on December 28, 1995,
June 19, 1996 and May 7, 1997, amended June 4, 1997, amended to change its name
from APACHE Medical Systems, Inc. to the present name of the Corporation on July
3, 2001, and amended on June 21, 2002;

    

    2.           The
Certificate of Designations, Preferences and Rights of Series A Convertible
Preferred Stock of the Company, which was originally filed with the Secretary of
State of the State of Delaware on June 21, 2002, is hereby corrected as set
forth in paragraph 4 below.

    

    3.           The
inaccuracies to be corrected in said instrument are as follows:

    

    The blank in Section 4 of the second
RESOLVED clause is to be filled in with regards to the liquidation preference of
the Series A Convertible Preferred Stock of the Company and a section reference
is to be corrected therein.

    

    4.           SECTION
4 of the second RESOLVED clause of the Certificate of Designations, Preferences
and Rights of Series A Convertible Preferred Stock of the Company is hereby
corrected to read as follows:

    

    
      
         

      

      
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    4.           Liquidation
Preference.  In accordance with, and upon the occurrence of an
event described in, Section 5 below, the holder of each share of Series A
Preferred Stock shall be entitled to receive an amount per share equal to
$0.4481 (which amount shall be subject to adjustment whenever there shall occur
a stock split, combination, reclassification or other similar event involving
the Series A Preferred Stock) (the “Liquidation Value”), plus any declared but
unpaid dividends accrued through such date.

    

    

    [The
remainder of this page has been intentionally left blank.]

    
      
         

      

      
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    IN WITNESS WHEREOF, the Corporation has
caused this Certificate of Correction to be executed by the undersigned, an
authorized officer, of the Corporation this 13 day of September,
2002.

    

    

    
      	 
      	
              /s/ Gerald E. Bisbee,
      Jr., Ph.D.

            
	 
      	
              Gerald
      E. Bisbee, Jr., Ph.D.

            
	 
      	
              Chairman
      and Chief Executive Officer

            

    

     

     

    11ex4_13.htm

    
      

    

    
      EXHIBIT
4.13

    

    

     

    REGEN
BIOLOGICS, INC.

     

    NONQUALIFIED
STOCK OPTION AGREEMENT

     

    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”).

     

    
      	
              Optionee:

            	
               

            

    

     

    
      	
              Grant
      Date:

            	
               

            

    

     

    
      	
              Number
      of shares subject to option (the “Shares”):

            	
                

            

    

     

    
      	
              Exercise
      Price:

            	
               

            

    

     

    
      	
              Vesting:

            	
               

            

    

     

    
      	
              Optionee’s
      Address for Notices:

            	
               

            

    

     

    
      	
              Exhibit
      A attached hereto is incorporated herein by reference.

            	 
      

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the Grant Date.

     

    
      	 
      	
              REGEN
      BIOLOGICS, INC.

            
	 
      	 
      	 
      
	 
      	
               

            	 
      
	 
      	
              By:  

            	 
      
	 	 	 
	 
      	
              Title:  

            	 
      
	 	 
	 
      	
              OPTIONEE

            
	 
      	
               

            	 
      
	 	 
	 
      	
              (Insert
      name)

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

    TO

    REGEN
BIOLOGICS, INC.

    NONQUALIFIED
STOCK OPTION AGREEMENT

    

     

    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.

    

    3.      Vesting and
Expiration.

     

    (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.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    8.      Acceleration of
Exercisability.

     

    (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).

     

    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:

     

    411
Hackensack Avenue, 10th
floor

    Hackensack,
NJ 07601, 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.

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