Exhibit 10.3
Stock Option Agreement
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NITINOL MEDICAL TECHNOLOGIES, INC.
NON-STATUTORY STOCK OPTION LETTER AGREEMENT
TO: XX. XXXXXX XXXXX
We are pleased to inform you that you have been selected by the Plan
Administrator of the Nitinol Medical Technologies, Inc. (the "Company") 1996
Stock Option Plan (the "Plan") to receive a non-statutory stock option for the
purchase of 25,000 shares of the Company's common stock, $.001 par value
("Common Stock"), at an exercise price of $10.50 per share (the "Exercise
Price"), exercisable as set forth under "Vesting" below. A copy of the Plan is
attached and the provisions thereof, including, without limitation, those
relating to withholding taxes, are incorporated into this Agreement by
reference. This option is not intended to qualify as an incentive stock option
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within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
The terms of the option are as set forth in the Plan and in this Agreement. The
terms set forth in this Agreement are consistent with the Plan Administrator's
interpretation of the Plan and nothing in the Plan shall abrogate any of the
terms set forth in this Agreement. The most important of the terms set forth in
the Plan are summarized, and additional terms are provided, as follows:
Term. The term of the option is ten years from the date of grant, unless
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sooner terminated.
Exercise. During your lifetime only you can exercise the option. The Plan
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also provides for exercise of the option by the personal representative of your
estate or the beneficiary thereof following your death. You may use the Notice
of Exercise in the form attached to this Agreement when you exercise the option.
Payment for Shares. The option may be exercised by the delivery of:
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(a) Cash, personal check (unless at the time of exercise the Plan
Administrator determines otherwise), or bank certified or cashier's checks; or
(b) A properly executed Notice of Exercise, together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price (the Plan Administrator having
determined to
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permit this manner of exercise whether or not you are an employee at the time of
exercise and whether or not you are subject to Section 16(b) of the Exchange
Act).
Termination. This option will terminate twelve months after the
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termination of your relationship with the Company for any reason, including as a
result of death. Reference is made to the Consulting Agreement dated as of
February 27, 1998 between you and the Company (the "Consulting Agreement").
From and after the expiration of the Consultation Period (as defined in the
Consulting Agreement), you have certain ongoing obligations to the Company,
including, obligations with respect to the prosecution and maintenance of
intellectual property rights under Section 7.1(a) thereof. As used in this
paragraph, the "termination of your relationship with the Company" shall not be
deemed to have occurred for so long as any of your obligations under the
Consulting Agreement, including under Section 7.1(a), remains in effect. Hence,
except in the event of your death, neither the expiration nor any termination of
the Consultation Period shall constitute a "termination of your relationship
with the Company" for this purpose, regardless whether the Consultation Period
is terminated by the Company (with or without cause), or by you voluntarily, or
by reason of your total disability, or for any other reason except only your
death.
Transfer of Option. The option is not transferable except by will or by
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the applicable laws of descent and distribution or pursuant to a qualified
domestic relations order.
Vesting. Except in the event the right to exercise this option is
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accelerated pursuant to the remaining provisions of this paragraph or pursuant
to the Plan, of the 25,000 shares subject to the option, fifteen thousand
(15,000) shares will first become exercisable upon the issuance of a United
States patent (the "Patent") for the Nitinol Septal Repair device (based on U.S.
patent application entitled "Daisy Occluder and Method for Septal Defect Repair"
(Application Serial No. 08/697,837) or any continuation, continuation-in-part or
divisional thereof) (the "Issuance Vesting Event"), and ten thousand (10,000)
shares will first become exercisable upon the first commercial sale of a product
whose manufacture, use or sale is covered by the Patent or by a corresponding
foreign patent (or by any reissue, reexamination or extension of the Patent or
any corresponding foreign patent) (the "Sale Vesting Event"; the Issuance
Vesting Event and the Sale Vesting Event are sometimes referred to herein
together as the "Vesting Events"). If you should die prior to the occurrence of
either or both of the Vesting Events, the vesting of this option shall
accelerate as follows. If you should die prior to the occurrence of the
Issuance Vesting Event, the 15,000 shares that otherwise would have vested upon
occurrence of the Issuance Vesting Event shall vest and become exercisable
immediately. If you should die prior to the occurrence of the Sale Vesting
Event, one-half of the 10,000 shares that otherwise would have vested upon
occurrence of the Sale Vesting Event shall vest and become exercisable
immediately. Thereafter, if the Sale Vesting Event occurs within the twelve
months following your death, the balance of the shares that otherwise would
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have become exercisable upon occurrence of the Sale Vesting Event shall
thereupon become exercisable. In the event the number or class of shares subject
to this option is adjusted pursuant to the terms of the Plan, a corresponding
adjustment shall be made in the references to such shares in this paragraph.
Exercise by Exchange of Purchase Rights. In addition to and without
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limiting your rights, this option (or any portion thereof) may be exercised by
exchanging purchase rights which are then exercisable hereunder for a number of
shares of Common Stock having an aggregate Market Value (as defined below) on
the date immediately preceding such exercise equal to the difference between (a)
the Market Value of the number of shares subject to the purchase rights thus
exchanged and (b) the aggregate exercise price otherwise payable by you
hereunder for such Shares. Upon any such exercise, the number of shares
purchasable upon exercise of this option shall be reduced by the number of
shares subject to the purchase rights thus exchanged and, if a balance of shares
remains after such exercise, this option will continue thereafter to be
exercisable for such balance of shares. No payment of any cash or other
consideration shall be required in connection with any such exercise. Such
exchange shall be effective upon the date of receipt by the Company of a written
request signed by you that the exchange pursuant to this Section be made, or at
such later date (on or prior to the expiration of the term of this option) as
may be specified in such request. No fractional shares arising out of the above
formula for determining the number of shares issuable in such exchange shall be
issued, and the Company shall in lieu thereof make payment to you of cash in the
amount of such fraction multiplied by the Market Value per share of the Common
Stock on the date of the exchange.
As used herein, "Market Value" shall mean, with respect to any securities,
the last sales price, regular way, on the last trading day on which such
securities were traded immediately preceding the date of determination, or, in
case no such sale takes place on such day, the average of the closing "bid" and
"asked" prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the securities are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities exchange on
which the securities are listed or admitted to trading, or, if the securities
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high "bid" and low
"asked" prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use, or, if on any such date the securities are not quoted
by any such organization, the average of the closing "bid" and "asked" prices as
furnished by a professional market maker making a market in the securities, or,
if no such prices were reported or can be determined, such value as the Company
and you may agree,
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or, failing such agreement, such value as may be determined by binding
arbitration before a single arbitrator sitting in Boston, Massachusetts under
the commercial rules of the American Arbitration Association (any cost of
arbitration to be shared equally by the Company and you). In no event, however,
shall the Market Value of any such securities be reduced or discounted on
account of the fact that such securities may represent a minority interest in
the issuer or may not be freely transferable, or for any other reason.
Date of Grant. The date of grant of the option is February 27, 1998.
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Please execute the Acceptance and Acknowledgement set forth below on the
enclosed copy of this Agreement and return it to undersigned.
Very truly yours,
NITINOL MEDICAL TECHNOLOGIES, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
________________________________
NAME: XXXXXXXX X. XXXXXX
TITLE: CHIEF FINANCIAL OFFICER
ACCEPTANCE AND ACKNOWLEDGEMENT
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I, Xxxxxx Xxxxx, a resident of the Commonwealth of Massachusetts, accept
the stock option described above granted under the Nitinol Medical Technologies,
Inc. 1996 Stock Option Plan, and acknowledge receipt of a copy of this
Agreement, including a copy of the Plan. I have read and understand the Plan,
including the provisions of Section 8 thereof.
Dated: February 27, 1998
/s/ Xxxxxx Xxxxx
_____________________________________ ______________________________
Taxpayer I.D. Number Signature
By his or her signature below, the spouse of the Optionee, acknowledges
that he or she has read this Agreement and the Plan and is familiar with the
terms and provisions thereof, and agrees to be bound by all the terms and
conditions of this Agreement and the Plan.
Dated: February 27, 1998
/s/ Xx Xxxxx
______________________________
Spouse's Signature
Xx Xxxxx
______________________________
Printed Name
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NOTICE OF EXERCISE
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The undersigned, pursuant to an Non-Statutory Stock Option Letter Agreement
(the "Agreement") between the undersigned and Nitinol Medical Technologies, Inc.
(the "Company"), hereby irrevocably elects to exercise purchase rights
represented by the Agreement, and to purchase thereunder ________ shares (the
"Shares") of the Company's common stock, $.001 par value ("Common Stock"),
covered by the Agreement and herewith makes payment in full therefor.
1. If the sale of the Shares or the resale thereof has not, prior to the
date hereof, been registered pursuant to a registration statement filed and
declared effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned hereby agrees, represents, and warrants that:
(a) The undersigned is acquiring the Shares for his or her own account
(and not for the account of others), for investment and not with a view to the
distribution or resale thereof;
(b) By virtue of his or her position, the undersigned has access to
the same kind of information which would be available in a registration
statement filed under the Act;
(c) The undersigned is a sophisticated investor;
(d) The undersigned understands that he or she may not sell or
otherwise dispose of the Shares in the absence of either (i) a registration
statement filed under the Act or (ii) an exemption from the registration
provisions thereof; and
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(e) The certificates representing the Shares may contain a legend to
the effect of subsection (d) of this Section 1.
2. If the sale of the Shares and the resale thereof has been registered
pursuant to a registration statement filed and declared effective under the Act,
the undersigned hereby represents and warrants that he or she has received the
applicable prospectus and a copy of the most recent annual report, as well as
all other material sent to stockholders generally.
3. The undersigned acknowledges that the number of shares of Common Stock
subject to the Agreement is hereafter reduced by the number of shares of Common
Stock represented by the Shares.
Very truly yours,
_______________________________________
Xxxxxx Xxxxx
Social Security No._______________________
Address: 0 Xxxx Xxxxx, Xxxxxx, XX 00000
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