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STOCK OPTION ASSUMPTION AND CONVERSION AGREEMENT
OPTIONEE: 1-
GRANT DATE: 2-
NUMBER OF CARDIOMETRICS SHARES: 3-
ORIGINAL EXERCISE PRICE PER SHARE: 4-
WHEREAS, the undersigned Optionee was previously granted the
stock option described above (the "Option") to purchase shares of the common
stock of Cardiometrics, Inc. ("Cardiometrics") pursuant to the Cardiometrics
1995 Stock Incentive Plan (the "Plan").
WHEREAS, Cardiometrics has been acquired by EndoSonics
Corporation, a Delaware corporation ("EndoSonics"), pursuant to the Agreement
and Plan of Reorganization dated as of January 26, 1997 (the "Reorganization
Agreement") by and among EndoSonics, River Acquisition Corporation, a
wholly-owned EndoSonics subsidiary ("EndoSonics Sub"), and Cardiometrics.
WHEREAS, the Reorganization Agreement was approved by an
affirmative vote of a majority of the Cardiometrics stockholders on July 23,
1997 ("Merger Effective Date"), and EndoSonics Sub was merged into Cardiometrics
(the "Merger") at that time so that Cardiometrics has become a wholly-owned
EndoSonics subsidiary.
WHEREAS, in consummation of the Merger, each Cardiometrics
stockholder received cash and securities with an aggregate value of $8.2765
("Merger Consideration") for each share of Cardiometrics common stock held of
record by such stockholder. The actual components of the Merger Consideration
were as follows:
(i) $3.00 in cash (the "Cash Consideration"),
(ii) a 0.1364 fractional interest in
CardioVascular Dynamics common stock valued
at $1.0196 (the "CVD Consideration"), and
(iii) a 0.35 fractional interest in EndoSonics
common stock valued at $4.2569 (the
"EndoSonics Consideration").
WHEREAS, the Option was outstanding on the Merger Effective
Date and eligible for assumption in accordance with the provisions of the Plan
and the agreement evidencing the Option (the "Option Agreement").
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WHEREAS, pursuant to Section 5.10 of the Reorganization
Agreement, all options outstanding under the Plan on the Merger Effective Date,
including the Option, were (i) assumed in part by EndoSonics so that the assumed
portion would be exercisable for shares of EndoSonics common stock, at the rate
of 0.35 shares of EndoSonics common stock for each share of Cardiometrics common
stock subject to the Option at the time of the Merger (the "Exchange Ratio), at
an adjusted exercise price per share and (ii) converted in part into the right
to receive a payment from EndoSonics (the "Conversion Payment") partly in cash
and partly in the form of shares of the common stock of Cardio Vascular
Dynamics, Inc., a Delaware corporation ("CVD").
WHEREAS, certain adjustments to the assumed portion of the
Option are necessary to reflect the effect of the assumption of that Option by
EndoSonics in connection with the merger.
NOW, THEREFORE, it is hereby agreed as follows:
1. EndoSonics hereby assumes part of the Option and all the
duties and obligations of Cardiometrics with respect to that part of the Option.
The portion of the Option hereby assumed shall cover the number of shares of
EndoSonics common stock indicated below which EndoSonics hereby agrees to issue
upon (i) the exercise of that Option in accordance with the provisions of the
Option Agreement (as supplemented hereby) and (ii) the payment of the adjusted
exercise price per share set forth below.
CARDIOMETRICS ASSUMED OPTION
STOCK OPTION
# OF SHARES # SHARES
CARDIOMETRICS EXERCISE ENDOSONICS ADJUSTED EXERCISE
COMMON STOCK PRICE/SHARE COMMON STOCK PRICE/SHARE
------------ ----------- ------------ -----------
3- 4- 5- 6-
2. The number of shares of EndoSonics common stock purchasable
under the Assumed Option has been adjusted to reflect the Exchange Ratio at
which the outstanding shares of Cardiometrics common stock have been converted
into shares of EndoSonics common stock upon the Merger Effective Date, with the
number of such EndoSonics shares rounded down to the next whole share. The
exercise price payable per share of EndoSonics common stock under the Assumed
Option has been adjusted first to
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reflect the Exchange Ratio and then to reflect the portion of the aggregate
exercise price in effect under the Option immediately prior to the Merger which
has been allocated to Optionee's right to the Conversion Payment and then
rounded up to the next whole cent.
3. The intent of such adjustments is to assure that the spread
(calculated immediately prior to the Merger Effective Date) between the
aggregate fair market value of the EndoSonics shares purchasable under the
Assumed Option and the aggregate exercise price (as adjusted hereunder) payable
for those shares will, when added to the Conversion Payment, equal the spread
which existed immediately prior to the Merger Effective Date between the then
aggregate fair market value of the Cardiometrics common stock subject to the
Option and the aggregate exercise price in effect at such time under the Option.
Such adjustments are also designed to preserve, on a per share basis immediately
after the Merger Effective Date, the same ratio of fair market value per option
share to exercise price per share which existed under the Option immediately
prior to the Merger Effective Date.
4. EndoSonics hereby agrees to convert the balance of the
Option into the right to receive the Conversion Payment in the form of cash and
CVD common stock in an amount determined in accordance with the following
provisions:
First, the number of shares of Cardiometrics common
stock subject to the Option immediately prior to the Merger Effective
Date shall be multiplied by the sum of $3.00 (the Cash Consideration)
and $1.0196 (the CVD Consideration), and
Then, that dollar amount shall be reduced by an
amount equal to the difference between the total exercise price in
effect for the Option immediately prior to the Merger Effective Date
and the total adjusted exercise price payable for the shares of
EndoSonics common stock subject to the Assumed Option.
5. The Conversion Payment for the Option shall be in the
amount indicated below and shall be paid to Optionee within thirty (30) days
after the Merger Effective Date. The payment shall be made in cash and CVD
common stock in the same ratio as the value of each of those components of
Merger Consideration ($3.00 and $1.0196, respectively) bears to the $4.0196 of
total consideration paid per share of Cardiometrics common stock in the form of
cash and CVD common stock in consummation of the Merger. However, EndoSonics
shall withhold all applicable federal, state and local income and employment
withholding taxes from the cash portion of such payment.
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CARDIOMETRICS CONVERSION PAYMENT
STOCK OPTION
# SHARES TOTAL # SHARES
CARDIOMETRICS CASH CVD
COMMON STOCK PAYMENT COMMON STOCK
------------ ------- ------------
3- 7- 8-
6. All references to the "Corporation" in the Option Agreement
shall be deemed to refer to EndoSonics, all references to "Common Stock" shall
be deemed to refer to the shares of EndoSonics common stock now subject to the
Assumed Option, all references to "Board" shall be deemed to refer to the Board
of Directors of EndoSonics, and all references to the "Plan Administrator" shall
be deemed to refer to the Compensation Committee of the Board. For purposes of
determining the holding period of any shares of EndoSonics common stock
delivered in payment of the exercise price of the Assumed Option, the period for
which such shares were held as Cardiometrics common stock prior to the Merger
Effective Date shall be taken into account.
7. The Assumed Option shall continue to have a maximum ten
(10)-year term measured from the original grant date of the Option, and all
references to the "Grant Date" in the Option Agreement shall continue to relate
to that original grant date. The Assumed Option, however, shall be subject to
earlier termination in accordance with Paragraph 5 of the Option Agreement
should the Optionee's Service with the Corporation terminate. However, for all
purposes of the Option Agreement, the Optionee shall be deemed to continue in
"Service" or "Service Provider" status (as applicable to the Option Agreement)
for so long as such individual continues in the service of EndoSonics or any
EndoSonics parent or subsidiary corporation now or hereafter existing, including
(without limitation) Cardiometrics, as an employee, non-employee member of the
board of directors or an independent consultant or advisor.
8. By reason of the Reorganization Agreement, the Option
accelerated upon the consummation of the Merger, and the Assumed Option is now
immediately exercisable for all the option shares and may be exercised for any
or all of those shares as fully-vested shares of EndoSonics common stock.
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9. All notices to the Company required or permitted to be
given to the Company pursuant to the provisions of the Option Agreement shall be
given to EndoSonics at the following address:
EndoSonics Corporation
0000 Xxxxxxx Xxxx
Xxxxxx Xxxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxx
10. Except to the extent specifically modified by this Stock
Option Assumption and Conversion Agreement, all of the terms and conditions of
the Option Agreement as in effect immediately prior to the Merger Effective Date
shall continue in full force and effect and shall not in any way be amended,
revised or otherwise affected by this Stock Option Assumption and Conversion
Agreement.
IN WITNESS WHEREOF, EndoSonics has caused this Stock Option
Assumption and Conversion Agreement to be executed on its behalf by its
duly-authorized officer as of the 23rd day of July 1997.
ENDOSONICS CORPORATION
By:
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Title:
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ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock
Option Assumption and Conversion Agreement and understands that all rights and
liabilities with respect to the Option as assumed in part by EndoSonics
Corporation and converted in part to the right to receive from EndoSonics
Corporation cash and shares of Cardio Vascular Dynamics, Inc. common stock are
as set forth in the Option Agreement, the Plan and such Stock Option Assumption
and Conversion Agreement.
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OPTIONEE
Dated: , 1997
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