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EXHIBIT 10.32
ENDOSONICS CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
AGREEMENT made this 8th day of November 1999 by and between EndoSonics
Corporation, a corporation organized and existing under the laws of the State of
Delaware (the "Company"), and Robrecht X. X. Xxxxxxxx (the "Optionee").
RECITALS
A. The Company's Board of Directors (the "Board") has entered into this
Nonstatutory Stock Option Agreement (the "Agreement") for the purpose of
attracting and retaining the services of Optionee who is in a position to
contribute to the management, growth and financial success of the Company or its
parent or subsidiary corporations.
B. The granted option is intended to be a Nonstatutory stock option
which does not satisfy the requirements of Section 422 of the Internal Revenue
Code.
C. For purposes of this Agreement, the following definitions shall be in
effect:
"Affiliate" shall mean an entity other than a Subsidiary in
which the Company owns an equity interest.
"Board" shall mean the board of directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock of the Company, par
value $.001 per share.
"Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status
as an Employee shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the
Board, provided that such leave is for a period of not more than 90 days
or reemployment upon the expiration of such leave is guaranteed by
contract or stature.
"Employee" shall mean any person (including the Optionee)
employed by the Company or any Parent, Subsidiary or Affiliate of the
Company. The Optionee shall be deemed an Employee until the Optionee's
employment is terminated by either the Company or the Optionee.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
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"Fair Market Value" shall mean the fair market value per share
of Common Stock on any date in question shall be determined in
accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded on the
Nasdaq National Market, then the market value shall be the
closing selling price per share of Common Stock on the date in
question, as such prices are reported by the National
Association of Securities Dealers on the Nasdaq National Market
or any successor system. If there is no reported closing selling
price on the date in question, then the closing selling price on
the last preceding date for which such quotation exists shall be
determinative of fair market value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market
value shall be the closing selling price per share of Common
Stock on the date in question on the stock exchange serving as
the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on such
exchange on the date in question, then the fair market value
shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined
in good faith by the Board.
"Option" shall mean a non-qualified stock option granted
pursuant to this Agreement.
"Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
"Subsidiary" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
TERMS
1. RESERVATION OF SHARES. The stock issuable under this Agreement shall
be shares of authorized but unissued Common Stock. The Company, shall, until the
Expiration Date, reserve and keep available such number of shares of Common
Stock as shall be sufficient to satisfy the requirements of this Agreement. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any shares of Common Stock hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained.
2. GRANT OF OPTION. Pursuant to the provisions of this paragraph set
forth below, there is hereby granted to the Optionee, on the date first written
above (the "Grant Date"), an Option to purchase up to 40,000 shares of Common
Stock (the "Option Shares") upon the
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terms and conditions set forth in this Agreement. The Option Shares shall be
purchasable in accordance with such terms and conditions at the purchase price
of $3.50 per share (the "Option Price").
The terms of the Option granted under this Agreement shall be as
follows:
A. the Option shall be exercisable only while the Employee
remains an employee of the Company, except as otherwise set forth below;
B. the Option shall be come exercisable in installments
cumulatively as to 25% of the shares subject to the Option on each of the first,
second, third and fourth anniversary of the date of the grant of the Option.
3. OPTION TERM. The Option shall have a maximum term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on November 8, 2009 (the "Expiration Date"), unless sooner terminated
in accordance with this Agreement.
4. LIMITED TRANSFERABILITY. The Option shall not be transferable or
assignable by the Optionee except for a transfer of the Option by will or by the
laws of inheritance following the Optionee's death. Accordingly, the Option may
be exercised, during the Optionee's lifetime, only by the Optionee. Any attempt
to assign, pledge, transfer, and hypothecate or otherwise dispose of the Option,
and any levy of execution, attachment or similar process on the Option, shall be
null and void.
5. EXERCISE OF OPTIONS.
A. Except as provided in this paragraph and Paragraph 5.B below, the
Option shall become exercisable for the Option Shares in a series of
installments as follows:
(i) The Option shall become exercisable for twenty-five percent
(25%) of the Option Shares upon the Optionee's completion of twelve (12)
months of continuous service as an Employee measured from the Grant
Date.
(ii) One forty-eighth (1/48th) of the total number of Option
Shares shall become exercisable on each monthly anniversary of the Grant
Date thereafter, while the Optionee remains an employee of, or
consultant to, the Company.
B. Once the Option becomes exercisable for one or more installments of
the Option Shares, those installments shall accumulate, and the Option shall
remain exercisable for the accumulated installments until the Expiration Date or
sooner termination of the option term under Paragraph 6 or Paragraph 8.A of this
Agreement.
C. The Option shall not become exercisable for any additional Option
Shares following the Optionee's cessation of service as an Employee.
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6. TERMINATION OF EMPLOYMENT. Should the Optionee's service as an
Employee terminate while the Option remains outstanding, then the option term
specified in Paragraph 3 of this Agreement shall terminate (and this Option
shall cease to be exercisable) prior to the Expiration Date in accordance with
the following provisions.
(i) Should the Optionee cease service as an Employee for any
reason (other than death) while holding the Option, then the period for
exercising the Option shall be reduced to the three (3)-month period
commencing with the date of such cessation of service. During such
limited period of exercisability, the Option may not be exercised for
more than the number of Option Shares (if any) for which it is
exercisable on the date the Optionee ceased service as an Employee. Upon
the expiration of such three (3)-month period, the Option shall
terminate and cease to be outstanding.
(ii) Should the Optionee die either while serving as an Employee
or during the three (3)-month period following the cessation of service
as an Employee, then the personal representative of the Optionee's
estate (or the person or persons to whom the Option is transferred
pursuant to the Optionee's will or in accordance with the laws of
inheritance) shall have the right to exercise the Option for any or all
of the Option Shares for which the Option is exercisable on the date the
Optionee ceased service as an Employee, less any Option Shares
subsequently purchased by the Optionee prior to death. Such right shall
lapse, and the Option shall cease to be outstanding, upon the expiration
of the twelve (12)-month period measured from the date of the Optionee's
death.
(iii) In no event may the Option be exercised at any time after
the specified Expiration Date.
(iv) Upon the Optionee's termination of employment for any
reason, the Option shall immediately terminate and cease to be
outstanding with respect to any and all Option Shares for which the
Option is not otherwise at that time exercisable in accordance with the
normal exercise provisions of Paragraph 5.A or the special acceleration
provisions of Paragraph 8 of this agreement.
(v) The Board shall have full power and authority to extend the
period of time for which the Option is to remain exercisable following
the Optionee's termination of Continuous Status as an Employee or death
from the limited period in effect under this Paragraph 6 to such greater
period of time as the Board shall deem appropriate; provided, however,
that in no event shall such Option be exercisable after the Expiration
Date.
(vi) The Board shall have complete discretion, exercisable
either on the date first written above or at any time while the Option
remains outstanding, to permit the Option to be exercised, during the
limited period of exercisability provided under this Paragraph 6, not
only with respect to the number of shares for which the Option is
exercisable at the time of Optionee's
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termination of Continuous Status as an Employee but also with respect to
one or more subsequent installments of purchasable shares for which the
Option would otherwise have been exercisable had such termination not
occurred.
7. ADJUSTMENT IN OPTION SHARES. If any change is made to the company's
outstanding Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, appropriate adjustments shall automatically be made to the
class and/or number of securities subject to the Option and the Option Price
payable per share in order to reflect such transaction or change and thereby
preclude the dilution or enlargement of benefits hereunder.
8. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER.
A. In the event of any of the following stockholder-approved
transactions (a "Corporate Transaction"):
(i) A merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the State of the Company's incorporation,
(ii) The sale, transfer or other disposition of all or
substantially all of the assets of the Company, or
(iii) Any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to holders different from those
who held the stock immediately prior to such merger,
The Option (if outstanding at the time but not otherwise fully
exercisable) shall automatically accelerate so that the Option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable for all of the Option Shares and may be exercised for
all or any portion of such shares. However, the Option shall not so accelerate
if and to the extent: (i) the Option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or parent thereof
or be replaced with a comparable option to purchase shares of the capital stock
of the successor corporation or parent thereof, or (ii) the Option is to be
replaced with a cash incentive program of the successor corporation based on the
option spread at the time of the Corporate Transaction. The determination of
option comparability under clause (i) above shall be made by the Board, and its
determination shall be final, binding and conclusive.
For purposes of this Paragraph 8 the Option shall be considered
"assumed," without limitation, if, at the time of issuance of the stock or other
consideration upon such merger or sale of assets, the Optionee would be entitled
to receive upon exercise of the Option the same number and kind of shares of
stock or the same amount of property, cash or securities as the Optionee would
have been entitled to receive upon the occurrence of such
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transaction if the Optionee had been, immediately prior to such transaction, the
holder of the number of shares of Common Stock covered by the Option at such
time (after giving effect to any adjustments in the number of shares of Common
Stock covered by the Option as provided for in Paragraph 7 above).
B. Immediately following the consummation of the Corporate Transaction,
the Option shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation or its parent company.
C. Should there occur any Change in Control of the Company, then the
Option (if outstanding at the time but not otherwise fully exercisable) shall
automatically accelerate so that the Option shall, immediately prior to the
specified effective date for the Change in Control, become fully exercisable for
all the Option Shares and may be exercised for all or any portion of such shares
at any time prior to the Expiration Date or sooner termination of the option
term under Paragraph 6 or Paragraph 8.A of this Agreement. For purposes of this
Agreement, a "Change in Control" shall be deemed to occur in the event:
(i) Any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled
by, or is under common control with the Company) directly or indirectly
acquires beneficial ownership (within the meaning of Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the "1934 Act") of
securities possessing more than twenty-five percent (25%) of the total
combined voting power of the Company's outstanding securities pursuant
to a tender or exchange offer which the Board does not recommend the
Company's stock holders to accept; or
(ii) There is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a
majority of the Board members (rounded up to the next whole number)
ceases, by reason of one or more proxy contests for the election of
Board members, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B)
have been elected or nominated for election as Board members during such
period by at least two-thirds of the board members described in clause
(A) who were still in office at the time such election or nomination was
approved by the Board.
D. If the Option is accelerated in connection with the Change in
Control, the Option shall remain fully exercisable until the expiration or
sooner termination of the Option term.
E. Should a Hostile Take-Over of the Company occur at any time after the
Option has been outstanding for a period of at least six (6) months measured
from the Grant Date, then the Option (if outstanding at the time) shall
automatically be canceled upon the effective date of such Hostile Take-Over, and
the Optionee shall, in exchange, receive a cash distribution from the Company.
Such distribution shall be in an amount equal to the excess of (i) the Take-Over
Price of the shares of Common Stock at the time subject to the Option (whether
or
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not the Option is otherwise at the time exercisable for such shares) over (ii)
the aggregate Option Price payable for such shares. The cancellation of the
Option and the cash distribution to be paid in connection therewith is hereby
pre-approved by the Board. Accordingly, the cash distribution shall be made to
the Optionee within five (5) days following the effective date of the Hostile
Take-Over, and no further consent of the Board shall be required at the time of
the actual cancellation and cash distribution. For purposes of this Paragraph
8.E, the following definitional provisions shall be in effect:
(i) A "Hostile Take-Over" shall be deemed to occur in the event
(a) any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is
under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 of the 0000 Xxx)
of securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pursuant
to a tender or exchange offer which the Board does not recommend the
Company's stockholders to accept and (b) more than fifty percent (50%)
of the securities so acquired in such tender or exchange offer are
accepted from holders other than Company officers and directors
participating in the Plan.
(ii) The "Take-Over Price" per share shall be deemed to be equal
to the greater of (a) the Fair Market Value per share of Common Stock on
the date of cancellation of the Option or (b) the highest reported price
per share paid in effecting the Hostile Take-Over.
F. The Option granted pursuant to this Agreement shall not in any way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
make changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
G. If the Option is assumed in connection with a Corporate Transaction
or is otherwise to continue, then the Option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and class
of securities which would have been issuable, in consummation of such Corporate
Transaction, to an actual holder of the same number of shares of Common Stock as
are subject to the Option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option Price, provided the
aggregate Option Price shall remain the same.
H. The Board shall have the discretionary authority, exercisable at any
time while the Option remains outstanding, to provide for the automatic
acceleration of the Option upon the occurrence of a Change in Control. The Board
shall also have full power and authority to condition any such option
acceleration upon the subsequent termination of the Optionee's Continuous Status
as an Employee within a specified period following the Change in Control.
9. PRIVILEGE OF STOCK OWNERSHIP. The Optionee shall not have any
stockholder rights with respect to the Option Shares until such individual shall
have exercised the Option and paid the Option Price for the purchased shares.
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10. MANNER OF EXERCISING OPTION.
A. In order to exercise the Option for one or more Option Shares for
which the Option is at the time exercisable, the Optionee (or in the case of
exercise after the Optionee's death, the Optionee's executor, administrator,
heir or legatee, as the case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the Company a
written notice of exercise (the "Exercise Notice"), in substantially the
form of Exhibit I attached hereto, in which there is specified the
number of Option Shares for which the Option is exercised.
(ii) Pay the aggregate Option Price for the purchased shares in
one or more of the following alternative forms:
(a) full payment in cash or check made payable to the
Company's order;
(b) full payment in shares of Common Stock held by the
Optionee for the requisite period necessary to avoid a charge to
the Company's earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date;
(c) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee shall
provide irrevocable written instructions (1) to a designated
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate Option Price payable for the purchased shares and (2)
to the Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale transaction.
(iii) Furnish to the Company appropriate documentation that the
person or persons exercising the Option (if other than the Optionee)
have the right to exercise the Option.
(iv) Execute and deliver to the Company such representations and
documents as the Board, in its absolute discretion, deems necessary or
advisable to effect compliance with all applicable provisions of the
Securities Act of 1933, as amended, and any other federal or state
securities laws or regulations. The Board may, in its absolute
discretion, also take whatever additional actions it deems appropriate
to effect such compliance including, without limitation, placing legends
on share certificates and issuing stop-transfer notices to agents and
registrars.
B. For purposes of this Agreement, the Exercise Date shall be the date
on which the Exercise Notice shall have been delivered to the Company. Except to
the extent the
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sale and remittance procedure specified above may be utilized in connection with
the exercise of the Option, payment of the Option Price for the purchased shares
must accompany such notice.
C. As soon as practical after the exercise of the Option in accordance
with the provisions of this Agreement, the Company shall mail or deliver to or
on behalf of the Optionee (or to the other person or persons exercising the
Option) a stock certificate representing the purchased shares.
11. WITHHOLDING TAXES. As a condition to the exercise of the Option
granted hereunder, the Optionee shall make such arrangements as the Board may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of the Option. The company shall not be required to issue any shares
under this Agreement until such obligations are satisfied.
12. LEGALITY OF ISSUANCE. Option Shares shall be issued pursuant to the
exercise of an Option and the issuance and delivery of such shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of the Option, the Company may require
the Optionee (or such other person permitted to exercise the Option) to
represent and warrant at the time of any such exercise that the shares are being
purchased only for investment and without any present intention to sell or
distribute any such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
13. NO EMPLOYMENT RIGHTS. Neither the action of the Company in entering
into this Agreement, nor any action taken by the Board hereunder, nor any
provision of this Agreement shall be construed so as to grant the Optionee the
right to remain in the employ or service of the Company (or any Parent or
Subsidiary corporation) for any period of specific duration, and the Company (or
any Parent or Subsidiary corporation retaining the services of the Optionee) may
terminate the Optionee's employment or service at any time and for any reason,
with or without cause.
14. USE OF PROCEEDS. Any cash proceeds received by the Company from the
sale of shares pursuant to the Option granted pursuant to this Agreement shall
be used for general corporate purposes.
15. BINDING EFFECT. Subject to the limitations set forth in Paragraph 4
of this Agreement, this Agreement shall be binding upon, and shall inure to the
benefit of, (i) the executors, administrators, heirs, legal representatives and
assigns of the Optionee and (ii) the successors and assigns of the Company.
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16. NO IMPAIRMENT OF RIGHTS. Nothing in this Agreement or in the Plan
shall be deemed to impair or otherwise restrict the rights of the Company or the
stockholders to remove the Optionee from the Board at any time pursuant to the
provisions of applicable law.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed within the State of California by
residents of such State.
18. NOTICES. All notices and other communications under this Agreement
shall be in writing. Unless and until the Optionee is notified in writing to the
contrary, all notices, communications and documents directed to the Company and
related to this Agreement, if not delivered by hand, shall be mailed, addressed
as follows:
EndoSonics Corporation
0000 Xxxxxxx Xxxx
Xxxxxx Xxxxxxx, XX 00000
Unless and until the Company is notified in writing to the contrary, all
notices, communications and documents intended for the Optionee and related to
this Agreement, if not delivered by hand, shall be mailed to the Optionee's last
known address as shown on the Company's books.
Notices and communications shall be mailed by first class mail, postage
prepaid; documents shall be mailed by registered mail, return receipt requested,
postage prepaid. All mailings and deliveries related to this Agreement shall be
deemed received only when actually received, unless properly mailed by
registered mail, return receipt requested, in which event they shall be deemed
received two (2) days after the date of mailing.
19. CONSTRUCTION. The Option evidenced hereby is issued pursuant to this
Agreement and shall be subject to the express terms and provisions of this
Agreement applicable to such automatic grants.
(Signature Page Follows)
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IN WITNESS WHEREOF, EndoSonics Corporation has caused this Agreement to
be executed on its behalf by its duly-authorized officer and the Optionee has
executed this Agreement, all on the day and year first above written.
COMPANY:
ENDOSONICS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxx
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President and Chief Executive Officer
OPTIONEE:
/s/ Robrecht X.X. Xxxxxxxx
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ROBRECHT X. X. XXXXXXXX
Address:
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EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify EndoSonics Corporation (the "Company") that I elect to
purchase ______ shares of the Company's Common Stock (the "Purchased Shares")
pursuant to that certain option (the "Option") granted to me on November 8, 1999
to purchase up to ________ shares of such Common Stock at an option price of
$3.50 per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the Secretary
of the Company, I shall pay to the Company the Option Price for the Purchased
Shares in accordance with the provisions of my agreement with the Company
evidencing the Option and shall deliver whatever additional documents may be
required by such agreement as a condition for exercise. Alternatively, I may
utilize the special broker/dealer sale and remittance procedure specified in my
agreement to effect payment of the option price for the purchased shares.
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Date Optionee
Address:
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Print name in exact manner
it is to appear on the
stock certificate:
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Address to which certificate
is to be sent, if different
from address above:
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Social Security Number:
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