EXHIBIT 10.2
MICRO VISION MEDICAL SYSTEMS, INC.
STOCK OPTION GRANT LETTER
This Stock Option is granted to Xxxxxxx X. Xxxxxx (the "Grantee") on
June 13, 1996 (the "Date of Grant") by Micro Vision Medical Systems, Inc. (the
"Company").
1. Option Grant and Acceptance
(a) The Company hereby grants to the Grantee effective as of the Date
of Grant, the right and option (the "Option") to purchase 221,850 shares of
common stock of the Company (the "Shares"). The Option is not intended to
constitute an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code).
(b) The Grantee shall signify his acceptance of the Option by executing
this Grant Letter.
2. Option Price
The price of each Share covered by the Option shall be $1.00 (the
"Option Price"), which is 100% of the fair market value of a Share on the Date
of Grant.
3. Option Expiration
The Option, to the extent that it has not theretofore been exercised,
shall automatically expire on the earliest to occur of the following events:
(a) seven years from the Date of Xxxxx;
(b) if the Grantee's employment with the Company terminates voluntarily
or involuntarily for any reason other than death or Disability (as defined
below), the Option may thereafter be exercised by the Grantee, to the extent it
was exercisable at the time of such termination, for a period of three months
from the date of such termination of employment or until the occurrence of the
date specified in Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such three-month period, the unexercised portion
of the Option shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination of employment, for a period of twelve
months from the date of such death or until the occurrence of the date specified
in Section 3(a), whichever period is shorter;
(c) if the Grantee's employment with the Company terminates by reason
of death, the Option may be thereafter exercised, to the extent then
exercisable, by the legal representative of the estate or by the legatee of the
Grantee under the will of the Grantee, for a period of one year from the date of
such death or until the occurrence of the date specified in Section 3(a),
whichever period is shorter;
(d) if the Grantee's employment with the Company terminates by reason
of "Disability" (which for purposes of this Agreement shall mean permanent and
total disability within the meaning of Section 22(e)(3) of the Code), the Option
may thereafter be exercised by the Grantee, to the extent it was exercisable at
the time of such termination, for a period of one year from the date of such
termination of employment or until the occurrence of the date specified in
Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such one-year period, any unexercised portion of
the Option held by the Grantee shall thereafter be exercisable to the extent it
was exercisable at the time of termination of employment for a period of twelve
months from the date of death or until the occurrence of the date specified in
Section 3(a), whichever period is shorter;
(e) Notwithstanding the foregoing and unless otherwise
determined by the committee of the Board of Directors designated to administer
the Company's stock options and stock option plans (hereinafter the
"Committee"), if Xxxxxxx's employment is terminated for Cause, the Option
granted hereby shall terminate as of the date the Grantee ceases to be employed
by the Company, and the Grantee shall automatically forfeit all Shares
underlying any exercised portion of an Option for which the Company has not yet
delivered the share certificates upon refund by the Company of the exercise
price paid by the Grantee for such Shares. For purposes of this Agreement,
"Termination for Cause" shall have the meaning set forth in Xxxxxxx's employment
letter.
4. Vesting
(a) Subject to the terms, conditions and limitations expressed herein
and, except as provided below, the Option shall become exercisable in accordance
with the following vesting schedule:
Period Percentage Vested
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On or before December 30, 1996 0%
December 31, 1996 to December 30, 1997 25%
December 31, 1997 to December 30, 1998 50%
December 31, 1999 to December 30, 1999 75%
On or after December 31, 1999 100%
provided, however, that in the event the Option granted hereby has not otherwise
become fully vested and the Company consummates an initial public offering of
its shares of common stock, 50% of the unvested portion of the Option shall vest
on the closing date of the initial public offering and the remaining unvested
portion of the Option shall vest on the first anniversary of the closing date;
and provided further, that if Grantee is terminated by the Company not for
Cause, 50% of the then unvested portion of this Option shall immediately vest.
(b) The right to purchase Shares under the Option as provided in
Section 4(a) above may be exercised in a cumulative fashion, such that any right
to purchase Shares which becomes exercisable on a given date shall remain
exercisable until the date stated in any applicable provision of Section 3 (with
respect to the expiration of the Option).
(c) In the event of a "Change of Control" (as defined below), either
(i) all of the unvested portion of the Option shall vest immediately, or (ii) if
the Committee so determines, the difference between the fair market value of the
shares underlying such unvested portion of the Option and the exercise price
thereof shall be paid to Grantee in cash by the Company.
(d) "Change in Control" is defined to mean the issuance, sale or
transfer (including a transfer as a result of death, disability, operation of
law or otherwise) in a single transaction or group of related transactions to
any entity, person or group (other than Safeguard Scientifics, Inc. and/or its
affiliates) of the beneficial ownership of newly issued, outstanding or treasury
shares of the capital stock of the Company
having 50% or more of the combined voting power of the Company's then
outstanding securities entitled to vote for at least a majority of the
authorized number of directors of the Company, or any merger, consolidation,
sale of all or substantially all of the assets or other comparable transaction
as a result of which all or substantially all of the assets and business of the
Company are acquired directly or indirectly by another entity which prior to the
acquisition was not an affiliate of the Company (as defined in the regulations
of the Securities and Exchange Commission under the Securities Act of 1933).
Group shall have the same meaning as in Section 13(d) of the Securities Exchange
Act of 1934, and "affiliate" shall have the same meaning as in Rule 405 of the
Securities Exchange Commission adopted under the Securities Act of 1933.
5. Time and Method of Exercise
Subject to the terms of Section 4 above, the Option may be exercised at
any time, or from time to time, prior to expiration (as defined in Section 3
above), by written notice to the Stock Option Administrator of the Company. Such
written notice shall be effective upon receipt by the Stock Option Administrator
of the Company and shall be accompanied by:
(a) a check, or the equivalent thereof acceptable to the Company in its
discretion, for the full Option Price of the number of Shares being purchased;
(b) one or more certificates representing a number of Shares which are,
in the aggregate, equal in fair market value to the full Option Price for the
Shares being purchased, such certificates being duly endorsed (or accompanied by
stock powers signed in blank) so as to transfer to the Company all right, title
and interest in and to the Shares represented by such certificates;
(c) a combination of the forms of payment specified in Section 5(a) and
5(b) above which, in the aggregate, is equal to the full Option Price of the
number of Shares being purchased; or
(d) where there is a public market for the Shares, by delivering a
properly executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker to deliver to the Company on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option.
The fair market value of each share of Company stock delivered by the
Grantee pursuant to Section 5(b) or 5(c) above shall be as determined by the
Committee in good faith based on the best available facts and circumstances at
the time; provided, however, that where there is a public market for the stock
and the stock is registered under the Securities Exchange Act of 1934, as
amended, fair market value shall mean the per share or aggregate value of the
stock as of any given date, determined as follows: (i) if the principal trading
market for the stock is a national securities exchange or the Nasdaq National
Market, the last reported sale price thereof on the relevant date or, if there
were no trades on that date, the latest preceding date upon which a sale was
reported, or (ii) if the stock is not principally traded on such exchange or
market, the mean between the last reported "bid" and "asked" prices of stock on
the relevant date, as reported on Nasdaq or, if not so reported, as reported by
the National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Committee determines.
Payment in the form of unrestricted stock delivered pursuant to
paragraph 5(b) or 5(c) above (including Company stock acquired in connection
with the exercise of an Option), shall be subject to such restrictions as the
Committee deems appropriate, including, but not limited to, the requirement that
the stock
has been owned by the Grantee for the requisite period of time necessary to
avoid a charge to the Company's earnings for financial reporting purposes and
adverse accounting consequences to the Company with respect to the Option.
6. Replacement Option
Upon an exercise of the Option, in whole or in part, at any time, the
Grantee shall be entitled to receive a replacement Option covering such number
of shares of Common Stock, at such exercise price per share and upon such terms
and conditions as the Committee may, in its sole discretion, establish in any
policy or program adopted from time to time by the Committee. The Committee may,
in its sole discretion, amend, modify or terminate at any time any such policy
or program. Unless otherwise provided by the Committee, if any such policy or
program is amended or modified, such policy or program shall be deemed to become
part of this Grant Letter as so amended or modified without further action by
the Company or the Grantee. The Committee may specify in any such policy or
program that the grant of any such replacement Option may be automatic upon an
exercise of the Option complying with the terms and conditions of the policy or
program.
7. Restrictions on Transfer.
(a) The Company shall have the right of first refusal to repurchase any
shares offered for sale by the Grantee, his executor, administrator, or
beneficiaries, which shares were issued to the Grantee pursuant to one or more
Options granted to the Grantee. Such offer shall be communicated to the Company
by written notice, stipulating the terms and conditions of such offer therein,
forwarded by registered or certified mail. The Company shall exercise its right
to repurchase (or to designate a third party to repurchase) by giving written
notice thereof by registered or certified mail to the Grantee, his executor,
administrator or beneficiaries no later than 30 days after the date of the
receipt of the offer. Within 30 days after receipt of such notice, the Grantee,
his executor, administrator or beneficiaries shall deliver a certificate or
certificates for the shares being sold, together with appropriate duly signed
stock powers transferring such shares to the Company, and the Company shall
deliver to the Grantee, his executor, administrator or beneficiaries the
Company's check in the amount of the purchase price for the shares being sold.
In the event that such offer shall not be accepted by written
notice forwarded by registered or certified mail no later than 30 days after the
date of the receipt of the offer, the Grantee, his executor, administrator or
beneficiaries may dispose of the shares offered to any person, firm or
corporation, without restriction, except that the subsequent transfer of such
shares shall not be on terms more favorable to the transferee than the terms
upon which the shares were originally offered to the Company. If, within 60 days
after the expiration of the 30 day period of any offer made hereunder, the
Grantee, his executor, administrator, or beneficiaries offering to sell any
shares issued hereunder, shall fail to consummate a sale thereof to any other
purchaser, then no sale of such shares may be made thereafter without again
reoffering the same to the Company in accordance with the provisions of this
subparagraph.
(b) In the event of the Grantee's termination of employment for any
reason, whether voluntary or involuntary, the Company shall have the right to
repurchase all shares issued or to be issued to the Grantee under this Agreement
at net book value as hereinafter defined, but not less than Grantee's cost.
The net book value of the Company's common stock shall be
determined as of the end of the Company's fiscal quarter immediately preceding
the date of termination hereof. Net book value of the Company's common stock
shall be that amount computed by deducting the sum of total liabilities and the
liquidation value of any preferred stock from total assets, as determined in
accordance with generally accepted accounting principles consistently applied,
and as shown on the financial statements of the Company as of the end of the
applicable fiscal quarter. The net book value per share of the Company's common
stock shall be determined by dividing the remainder by the number of shares of
the Company's common stock issued and outstanding as of such date.
The Company's right to repurchase shall be exercisable at any
time within one year after the date of Xxxxxxx's termination of employment by
the delivery of written notice by the Company to such effect to the Grantee, his
executor, administrator or beneficiaries. Within 30 days after receipt of such
notice, the Grantee, his executor, administrator or beneficiaries shall deliver
a certificate or certificates for the shares being sold, together with
appropriate duly signed stock powers transferring such shares to the Company,
and the Company shall deliver to the Grantee, his executor, administrator or
beneficiaries the Company's check in the amount of the purchase price for the
shares being sold.
(c) The right of first refusal and buy-back rights shall terminate when
the Company has consummated a public offering of its common stock pursuant to
the Securities Act of 1933, as amended.
(d) The right of first refusal and buy-back rights granted to the
Company pursuant to subparagraphs 7(a) and 7(b) above are separate and
independent obligations of the Grantee and shall survive any termination of
employment. Furthermore, such rights shall not be construed as an absolute
obligation on the part of the Company to repurchase any shares tendered.
(e) Each certificate for shares issued by the Company to the Grantee
shall bear an appropriate legend that the transfer of such shares is restricted
by the provisions of this Agreement.
8. Nonassignability of Option Rights
The Option shall not be assigned or transferred by the Grantee except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. Upon a transfer by will or by the laws of descent and
distribution, the person to whom the Option is transferred shall have the right
to exercise the Option in accordance with this Grant Letter, subject to the
Company receiving satisfactory proof of his or her right to receive the Grant
under the Grantee's will or under the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge or dispose of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the foregoing, the Committee may provide, at or after Xxxxx,
that a Grantee may transfer the Option pursuant to a domestic relations order or
to family members or other persons or entities according to such terms as the
Committee may determine.
9. Adjustments
If any change is made to the common stock (whether by reason of stock
dividend, spin off, recapitalization, stock split, combination or exchange of
shares, merger, reorganization or consolidation in which the Company is the
surviving corporation, reclassification, change in par value, or any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding Company Stock is substantially reduced as a result of a spin off or
the Company's payment of an extraordinary dividend or distribution), then unless
such event or change results in the termination of this Option, the Committee
shall preserve the value of the Option by making appropriate adjustments to the
number and class of shares, the Option Price or otherwise, except that
any fractional shares resulting from such adjustments shall be eliminated by
rounding any portion of a share equal to .5 or greater up, and any portion of a
share equal to less than .5 down, in each case to the nearest whole number.
10. Withholding
The Grantee or other person receiving Shares upon an exercise of the
Option, in whole or in part, shall be subject to any applicable federal
(including FICA), state and local taxes that the Company is required to withhold
with respect to such exercise. The Company shall have the right to require a
Grantee to pay to the Company, or the Company may deduct from other wages paid
by the Company, the amount of any such withholding taxes the Company is required
to withhold with respect to such exercise. If the Committee so permits by formal
vote, at or after Xxxxx but prior to exercise of the Option, a Grantee may elect
to satisfy the Company's income tax withholding obligation with respect to such
exercise by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The Company's obligation to issue or transfer Shares upon
exercise of the Option shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
11. Employment by the Company
For purposes of this Agreement, employment by the Company shall mean
employment as an employee, so that for purposes of exercising this Option, a
Grantee shall not be considered to have terminated employment until the Grantee
ceases to be an employee, unless the Committee determines otherwise.
12. No Contract for Employment
(a) Nothing contained in this Grant Letter shall be deemed to require
the Company to continue the Grantee's employment by the Company. Except as may
be provided in a written employment contract executed by a duly authorized
officer of the Company and approved by the board of directors of the Company,
the Grantee shall at all times be an employee-at-will of the Company and the
Company may discharge the Grantee at any time for any reason, with or without
cause, and with or without severance compensation.
(b) From time to time, the Company may distribute employee manuals or
handbooks, and officers or other representatives of the Company may make written
or oral statements relating to the Company's policies and procedures. Such
manuals, handbooks and statements are intended only for the general guidance of
employees. No policies, procedures or statements of any nature by or on behalf
of the Company (whether written or oral, and whether or not contained in any
formal employee manual or handbook) shall be construed to modify this Grant
Letter or to create express or implied obligations to the Grantee of any nature.
13. Administration
All questions of interpretation and application of the Option granted
hereunder shall be determined by the Committee in its discretion, and such
determination shall be final and binding upon all persons. The validity,
construction and effect of this Option shall be determined in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
14. No Stockholder Rights
Neither the Grantee, nor any person entitled to exercise the Grantee's
rights in the event of the Grantee's death, shall have any of the rights and
privileges of a stockholder with respect to the Shares subject to the Option,
except to the extent that certificates for such Shares shall have been issued
upon the exercise of the Option as provided herein.
15. Cancellation or Amendment
This Option may be canceled or amended by the Committee, in whole or in
part, at any time that the Committee determines, in its sole discretion, that
the cancellation or amendment is necessary or advisable in light of any change
after the Date of Grant in (a) the Code or the regulations issued thereunder or
(b) any federal or state securities law or other law or regulation, which change
by its terms is effective retroactively to a date on or before the Date of
Grant; provided, however, that no such cancellation or amendment shall, without
the Grantee's consent, apply to or affect installments that matured on or before
the date on which the Committee makes such determination.
16. Notice
Any notice to the Company provided for in this Grant Letter shall be
addressed to it in care of the Stock Option Administrator of the Company, at
00000 000xx Xxxxxxx, Xxxxxxxxx, XX 00000 and any notice to the Grantee shall be
addressed to such Grantee at the current address shown on the payroll of the
Company, or to such other address as the Grantee may designate to the Company in
writing. Any notice provided for hereunder shall be delivered by hand, sent by
telecopy or telex or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage and registry being prepaid, in a post
office or branch post office regularly maintained by the United States Postal
Service.
17. Xxxxxxx's Securities Law Representations
If the Committee shall deem it appropriate by reason of any securities
law, it may require that the Grantee upon exercise in whole or in part of the
Option, represent to the Company and agree in writing that the purchase of the
Shares is for investment only and not with a view to distribution. The Committee
may require that the Share certificates be inscribed with a legend restricting
transfer in accordance with applicable securities law requirements.
MICRO VISION MEDICAL SYSTEMS, INC.
By:
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Accepted By:
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Xxxxxxx X. Xxxxxx
