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EXHIBIT 10.14
INVIVO CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT is made effective as of February 25, 1998, by and
between Invivo Corporation, a Delaware corporation (the "Company"), Xxxxxx
Management Corporation Pension Fund For The Benefit Of Xxxxxx Xxxxx (the
"Initial Optionee"), and Xxxxxx Xxxxx (the "Beneficiary").
THE PARTIES AGREE AS FOLLOWS:
1. Definitions.
(a) "Administrator" shall mean the Board of Directors of the Company,
or by a committee of two or more directors selected by the Board of
Directors.
(b) "Fair Market Value Per Share" shall mean the closing bid price per
Common Share of the Company on that day as reported on the Nasdaq National
Market or that day's closing sale price on such stock exchange on which the
shares may be listed if such exchange is then the principle market for the
shares, or, if such shares are not then reported on the Nasdaq National
Market or an exchange but quotations are reported on the National
Association of Securities Dealers Automated Quotations System, the closing
bid price on that day, in either event as such price or quotes are listed
in The Wall Street Journal, Western Edition (or if not so reported in The
Wall Street Journal, any other listing service or publication known to the
Administrator). If none of the foregoing applies, the Fair Market Value Per
Share shall be as determined in good faith by the Administrator.
(c) "Optionee" shall mean the then current holder of the Option (as
defined below), provided that such holder has acquired the Option in
accordance with the terms and conditions of this Agreement.
2. Grant of the Option. Subject to the terms of this Agreement, the
Initial Optionee shall have a stock option (the "Option") to acquire 20,000
shares of Common Stock of the Company (the "Shares") at a price of $10.00 per
share, which price is not less than 85% of the Fair Market Value Per Share on
the effective date of the Option. The Option expires on February 24, 2008,
provided that expiration shall occur at an earlier date if the Beneficiary
shall cease to be employed by the Company or cease to be a director of the
Company prior to such date. The Option is not intended to be an Incentive Stock
Option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended.
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3. Vesting of Option. The Option will become exercisable on a
cumulative basis as to one-half of the total number of shares covered by the
Option on each of the first and second anniversary dates of this Agreement.
Notwithstanding the foregoing, the Administrator shall have the power to at any
time accelerate the time or times of exercise.
4. Exercise of Option. To the extent that the Option has become
exercisable pursuant to Section 3 above, the Option may be exercised in
accordance with the following terms and conditions:
(a) The Optionee may exercise the Option to the extent
exercisable pursuant to Section 3 above from time to time by written notice to
the Company, stating the number of shares being purchased and accompanied by the
payment in full of the option price for such shares. Such payment shall be made
in cash or in shares of the outstanding Common Stock of the Company which have
been held by the Optionee for at least six months (or such other period as is
specified by the Administrator) or in a combination of cash and such stock,
except that the Administrator in its sole discretion may authorize payment by
the Optionee (for all or part of his or her purchase price) by a promissory note
or such other form of legal consideration that may be acceptable to the
Administrator. Payment may also be made by delivering a copy of irrevocable
instructions to a broker to deliver promptly to the Company the amount of sale
or loan proceeds sufficient to pay the purchase price, and, if required, the
amount of any federal, state, local or foreign withholding taxes.
(b) If shares of Common Stock are used in part or full payment
for the shares to be acquired upon exercise of the Option, such shares shall
be valued at the Fair Market Value Per Share as of the date of exercise of the
Option and the notice of exercise shall be accompanied by such instruments and
documentation as the Administrator requires to effect the delivery of such
shares. In the event the certificates tendered by the Optionee in such payment
cover more shares than are required for such payment, the certificates shall
also be accompanied by instructions from the Optionee to the Company's transfer
agent with regard to disposition of the balance of the shares covered thereby.
(c) If payment by promissory note is authorized, the interest
rate, term, repayment schedule and other provisions of such note shall be as
specified by the Administrator; provided, however, that such note shall bear
interest at a rate not less that the applicable test rate of interest
prescribed by Regulation 1.483-3 of the Income Tax Regulations, as in effect at
the time the stock is purchased. The Administrator may
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require that the Optionee pledge Common Stock of the Company for the
purpose of securing the payment of such note, and the Company may hold the
certificate(s) representing such stock in order to perfect its security
interest.
(d) The Option may be exercised to the extent exercisable pursuant
to Section 3 by a securities broker acting on behalf of the Optionee
pursuant to authorization instructions approved by the Company.
5. Shares Reserved for the Option. The Company at all times shall keep
available the number of shares of Common Stock required to satisfy the Option.
6. Certain Conditions to Exercise; Stock Legend. The Company may require
the Optionee and/or his or her legal representative as a condition of exercising
the Option granted hereunder, to give written assurance satisfactory to the
Company to the effect that such entity or person is acquiring the shares subject
to the Option for his or her own account for investment and not with any present
intention of selling or otherwise distributing the same (except if the Optionee
is the Initial Optionee, then for a distribution from the Initial Optionee to
the Beneficiary). The Company reserves the right to place a legend on any share
certificate issued pursuant to this Agreement to assure compliance with this
paragraph. No shares of Common Stock of the Company shall be required to be
distributed until the Company shall have taken such action, if any, as is then
required to comply with the provisions of the Securities Act of 1933 or any
other then applicable securities law.
7. No Shareholder Rights. Neither the Beneficiary nor any Optionee shall
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such option unless and until
such person has exercised his or her option pursuant to the terms thereof.
8. Restrictions on Transfer. Excepting a distribution of the Option from
the Initial Optionee to the Beneficiary, the Option shall be transferable only
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act, or the rules
thereunder.
9. Termination of the Option. The Option shall terminate and may not be
exercised if the Beneficiary ceases to be a director (unless the Beneficiary
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continues as an employee in which case the Option will terminate upon when he
ceases to be employed by the Company), with the following exceptions:
(a) If the employment or directorship is terminated for any reason
other than the Beneficiary's death or disability, the Optionee may at any
time within not more than three months after such termination exercise the
Option, but only to the extent that it was exercisable on the date of such
termination and otherwise remains exercisable in accordance with its terms,
or
(b) If the Beneficiary becomes disabled while in the employ of the
Company or of a subsidiary, or while a director, or dies while in the
employ of the Company or a subsidiary, or while a director, or within 30
days after termination of his employment with the Company or a subsidiary,
or status as a director, the Option may be exercised by the Optionee or his
or her legal representative at any time within not more than 12 months
following the date of death or disability, but only to the extent the
Option was exercisable on the date of the Beneficiary's death or disability
and otherwise remains exercisable in accordance with its terms.
10. Expiry of Term. In no event may the Option be exercised by anyone
after the expiration of the term of the option established above.
11. Adjustment to the Option Upon Changes in Shares.
(a) If any change is made in the shares subject to the Option
(through merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or otherwise), appropriate adjustments shall be made by the
Administrator in the number of shares and price per share of stock subject
to the portion of the Option which has not yet been exercised.
(b) Other than in the case of a reincorporation of the Company in
another state, in the event of (i) approval by the shareholders of the
Company of the dissolution or liquidation of the Company, (ii) consummation
of the sale of all or substantially all of the assets of the Company, (iii)
consummation of a transaction in which more than 50 percent of the shares
of the Company that are entitled to vote are tendered or exchanged for cash
or any other assets, or (iv) any merger or consolidation or other
reorganization in which the Company is not the surviving corporation, or in
which the Company becomes a
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subsidiary of another corporation, the portion of the Option not yet
exercised shall become fully exercisable immediately prior to any such
event.
(c) In lieu of permitting any exercise of an outstanding option
pursuant to (b) above, the Administrator may, subject to the approval of
the corporation purchasing or acquiring the stock or assets of the Company
(the "Surviving Corporation"), arrange for the Optionee to receive upon
surrender of the portion of the Option not yet exercised, a new option
covering shares of the Surviving Corporation in the same proportion, at an
equivalent option price and subject to the same terms and conditions as the
surrendered Option.
12. Rights as an Employee or Director. Nothing in this Agreement or in
the Options awarded hereunder shall confer upon the Beneficiary any right to
continue in the employ, or as a director, of the Company or of any of its
subsidiaries or interfere in any way with the right of the Company or any such
subsidiary to terminate the Beneficiary's employment or directorship at any
time.
13. Withholding Tax. There shall be deducted from the compensation of the
Beneficiary the amount of any tax required by any governmental authority to be
withheld and paid over by the Company to such governmental authority for the
account of the Beneficiary with respect to the Option.
14. No Tax Advice. THE INITIAL OPTIONEE AND THE BENEFICIARY ACKNOWLEDGE
THAT THE COMPANY HAS GIVEN NO TAX ADVICE CONCERNING THE OPTION AND HAS ADVISED
THE INITIAL OPTIONEE AND THE BENEFICIARY TO CONSULT WITH THEIR OWN TAX OR
FINANCIAL ADVISORS ABOUT THE TAX TREATMENT OF THE OPTION AND ITS EXERCISE.
15. Notices. Any notice to be given by any Optionee or the Beneficiary
under the terms of this Agreement shall be deemed to have been duly given if
sent by Certified Mail, postage and certification prepaid, to Invivo
Corporation, 00000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxxxx 00000, Attention:
Corporate Secretary, or to such subsequent address, if any, at which the
Company's headquarters office may be located.
16. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of California.
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17. Binding Nature. The terms of this Agreement shall be binding upon
all Optionees and upon the executors, administrators, heirs, successors,
transferees and assignees of the Beneficiary.
18. Fees. In any action at law or in equity to enforce any of the
provisions or rights under this Agreement, the unsuccessful party to such
litigation, as determined by the court in a final judgment or decree, shall pay
the successful party or parties all costs, expenses and reasonable attorneys'
fees incurred by the successful party or parties (including without limitation
costs, expenses and attorneys' fees on any appeals), and if the successful
party recovers judgment in any such action or proceeding, such costs, expenses
and attorneys' fees shall be included as part of the judgment.
19. Further Acts. The Initial Optionee and the Beneficiary agrees to
perform all acts and execute and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement, including but not
limited to all acts and documents relating to compliance with federal and/or
state securities laws.
20. Counterparts. For convenience this Agreement may be executed in any
number of identical counterparts, each of which shall be deemed a complete
original in itself and may be introduced in evidence or used for other purpose
without the production of any other counterparts.
21. Invalid Provisions. In the event that any provision of this
agreement is found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or unenforceability shall not be construed as
rendering any other provisions contained herein invalid or unenforceable, and
all such other provisions shall be given full force and effect to the same
extent as though the invalid and unenforceable provision was not contained
herein.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year referred to above.
INVIVO CORPORATION "Initial Optionee"
XXXXXX MANAGEMENT
By: /s/ XXXXX X. XXXXXXX CORPORATION PENSION FUND
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FOR THE BENEFIT OF XXXXXX
Its: XXXXX
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By:
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Its:
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Address:
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"Beneficiary"
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Xxxxxx Xxxxx
Address:
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Social Security No.:
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