As Filed With the Securities and Exchange Commission on February 17, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON. D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RADIANCE MEDICAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 68-0328265
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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1996 STOCK OPTION/STOCK ISSUANCE PLAN
(AS AMENDED AND RESTATED AS OF APRIL 8, 1997, MARCH 12, 1998
AND NOVEMBER 3, 1998)
1997 STOCK OPTION PLAN (RADIANCE)
(AS AMENDED AS OF JUNE 15, 1998)
(Full title of the plan)
Stephen Kroll
Chief Financial Officer
Radiance Medical Systems, Inc.
13700 Alton Parkway, Suite 160
Irvine, California 92618
(Name and address of agent for service)
(949) 457-9546
(Telephone number, including area code, of agent for service)
Copy to:
Lawrence Cohn
Stradling Yocca Carlson & Rauth, a Professional Corporation 660 Newport Center Drive, Suite 1600, Newport Beach, California 92660 (949) 725-4000
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount To Be Offering Aggregate Offering Amount of
To Be Registered Registered (1) Price Per Share (2) Price (2) Registration Fee
--------------------------------------------------------------------------------------------------------------------
1996 Stock Option/Stock
Issuance Plan
Common Stock,
$0.001 par value 750,000 shares $3.59 $2,692,500 $748.52
1997 Stock Option Plan
(Radiance)
Common Stock,
$0.001 par value 317,780(3) shares $3.59 $1,140,830 $317.50
====================================================================================================================
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(1) Includes any additional shares of Common Stock that may become issuable pursuant to the anti-dilution adjustment provisions of the CardioVascular Dynamics, Inc. 1996 Stock Option/Stock Issuance Plan (as Amended and Restated as of April 8, 1997 and March 12, 1998 and November 3, 1998) (the "1996 Plan"). An aggregate of 2,100,000 shares issuable under the 1996 Plan were registered previously: 1,200,000 shares were registered on Form S-8 (Registration No. 333-07959), filed as of July 11, 1996; 700,000 shares were registered on Form S-8 (Registration No. 333-42161), filed as of December 12, 1997, and 200,000 shares were registered on Form S-8. (Registration No. 333-59305), filed as of July 17, 1998.
(2) Estimated solely for purposes of calculating the registration fee, in accordance with Rule 457(h), upon the basis of the price of securities of the same class, as determined in accordance with Rule 457(c), using the average of the high and low prices reported on the Nasdaq National Market for the Common Stock on February 10, 1999, which was $3.63 per share.
(3) Shares which are issuable upon the exercise of options granted under (the former) Radiance Medical Systems, Inc. 1997 Stock Option Plan (As Amended as of June 15, 1998) (the "1997 Plan"). The options were assumed by Registrant pursuant to its acquisition of (the former) Radiance Medical Systems, Inc. on January 14, 1999.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This Registration Statement registers shares of Registrant's Common Stock issuable upon exercise of options under: (i) the Registrant's 1996 Stock Option/Stock Issuance Plan (as Amended and Restated as of April 8, 1997, March 12, 1998 and November 3, 1998) (the "1996 Plan"); and (ii) (the former) Radiance Medical Systems, Inc. 1997 Stock Option Plan (As Amended as of June 15, 1998) (the "1997 Plan").
The 1996 Plan was amended by the Registrant's Board of Directors on November 3, 1998, subject to stockholder approval, which was obtained at the Registrant's Special Meeting of Stockholders held on January 14, 1999. As currently amended, 2,850,000 shares of Common Stock are available for grant under the 1996 Plan. Initially, an aggregate of 1,200,000 shares of Common Stock were available for grant or award under the 1996 Plan, which shares were registered on Form S-8 (Registration No. 333-07959), filed as of July 11, 1996. Pursuant to the April 8, 1997 amendment, 700,000 additional shares of Common Stock were available for grant or award under the 1996 Plan, which shares were registered on Form S-8 (Registration No. 333-42161), filed as of December 12, 1997. Pursuant to the March 12, 1998 amendment, 200,000 additional shares of Common Stock were available for grant or award under the 1996 Plan, which shares were registered on Form S-8 (Registration No. 333-59305), filed as of July 17, 1998. This Registration Statement covers the additional 750,000 shares of Common Stock issuable under the Plan.
This Registration Statement also registers 317,780 shares of Common Stock which are issuable upon the exercise of options granted under the 1997 Plan. These options were assumed by Registrant pursuant to its acquisition of (the former) Radiance Medical Systems, Inc. on January 14, 1999.
Radiance Medical Systems, Inc. (the "Registrant") hereby incorporates by reference into this Registration Statement the following documents previously filed with the Securities and Exchange commission (the "SEC"):
a) The contents of the Registrant's Registration Statement on Form 8-A (Registration No. 333-04560), filed as of May 3, 1996.
b) The contents of the Registrant's Registration Statement on Form S-8 (Registration No. 333-07959), filed as of July 11, 1996.
c) The contents of the Registrant's Registration Statement on Form S-8 (Registration No. 333-42161), filed as of December 12, 1997.
d) Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, filed as of March 31, 1998.
e) Registrant's Proxy Statement on Schedule 14A for the Annual Meeting of Stockholders, filed as of April 16, 1998.
f) Registrant's Registration Statement on Form S-8 (Registration No. 333-59305), filed as of July 17, 1998.
g) Registrant's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1998 (filed as of May 14, 1998), June 30, 1998 (filed as of August 11, 1998) and September 30, 1998 (filed as of November 16, 1998).
h) Registrant's Proxy Statement on Schedule 14A for the Special Meeting of Stockholders, filed as of December 18, 1998.
i) Registrant's Current Reports on Form 8-K, filed as of November 12, 1998, January 22, 1999 and February 5, 1999.
j) The contents of the Registrant's Registration Statement on Form S-3 (Registration No. 333-71053), filed as of January 22, 1999.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all of such securities then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
a part hereof from the date of filing of such documents, except as to any
portion of any future annual or quarterly report to stockholders or document
that is not deemed filed under such provisions. For the purposes of this
Registration Statement, any statement in a document incorporated by reference
shall be deemed to be modified or superseded to the extent that a statement
contained in this Registration Statement modifies or supersedes a statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Registrant's Amended & Restated Certificate of Incorporation limits the liability of directors to the maximum extent permitted by Delaware law. Delaware law provides that a director of a corporation will not be personally liable for monetary damages for beach of such individual's fiduciary duties as a director except for liability (i) for any breach of such director's duty of loyalty to the corporation, (ii) for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General corporation law, or (iv) for any transaction from which a director derives an improper personal benefit.
The Registrant's Bylaws provide that the Registrant will indemnify its directors and may indemnify its officers, employees and other agents to the full extent permitted by law. The Registrant believes that indemnification under its Bylaws covers at least negligence and gross negligence on the part of an indemnified party and permits the Registrant to advance expenses incurred by an indemnified party in connection with the defense of any action or proceeding arising out of such party's status or service as a director, officer, employee or other agent of the Registrant upon an undertaking by such party to repay such advances if it is ultimately determined that such party is not entitled to indemnification.
The Registrant has entered into separate indemnification agreements
with each of its directors and officers. These agreements require the
Registrant, among other things, to indemnify such director or officer against
expenses (including attorneys' fees), judgments, fines and settlements
(collectively, "Liabilities")
paid by such individual in connection with any action, suit or proceeding arising out of such individual's status or service as a director or officer of the Registrant (other than Liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest) and to advance expenses incurred by such individual in connection with any proceeding against such individual with respect to which such individual may be entitled to indemnification by the Registrant. The Registrant believes that its Amended & Restated Certificate of Incorporation and Bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. (As noted in S-8 filed July 1996.)
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed as part of this Registration Statement:
Number Description
------ -----------
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation, Counsel to the Registrant.
23.1 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in the Opinion filed as Exhibit 5.1).
23.2 Consent of Ernst & Young LLP, independent auditors, with
respect to the consolidated financial statements of the
Registrant.
24.1 Power of Attorney (included on signature page to the
Registration Statement at page S-1).
99.1* 1996 Stock Option/Stock Issuance Plan (as Amended and
Restated as of April 8, 1997, March 12, 1998 and November 3,
1998).
99.2 1997 Stock Option Plan (As Amended as of June 15, 1998)
assumed by Registrant pursuant to its acquisition of Radiance
Medical Systems, Inc. on January 14, 1999.
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* Previously filed as Annex III to the Registrant's Proxy Statement on Schedule 14A filed on December 18, 1998.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the information required to be included in a post-effective amendment by these paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Irvine, State of California, on February 4, 1999.
RADIANCE MEDICAL SYSTEMS, INC.
By: /s/ Stephen R. Kroll
-------------------------------
Stephen R. Kroll
Chief Financial Officer
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POWER OF ATTORNEY
We, the undersigned officers and directors of Radiance Medical Systems, Inc., do hereby constitute and appoint Michael R. Henson and Stephen Kroll, and each of them, our true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Registration Statement, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of such attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Michael R. Henson Chairman of the Board February 4, 1999
-------------------------------------------- of Directors and Director
Michael R. Henson
/s/ Jeffrey F. O'Donnell Chief Executive Officer February 4, 1999
-------------------------------------------- (Principal Executive Officer)
Jeffrey F. O'Donnell
/s/ Stephen R. Kroll Chief Financial Officer February 4, 1999
-------------------------------------------- (Principal Financial Officer and
Stephen R. Kroll Principal Accounting Officer)
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/s/ Franklin D. Brown Director February 4, 1999 -------------------------------------------- Franklin D. Brown /s/ William G. Davis Director February 4, 1999 -------------------------------------------- William G. Davis /s/ Edward M. Leonard Director February 4, 1999 -------------------------------------------- Edward M. Leonard /s/ Gerard von Hoffmann Director February 4, 1999 -------------------------------------------- Gerard von Hoffmann /s/ Maurice Buchbinder, M.D. Director February 4, 1999 -------------------------------------------- Maurice Buchbinder, M.D. |
EXHIBIT INDEX
Exhibit Sequential
Number Description Page Number
------ ----------- -----------
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation, Counsel to the Registrant.
23.1 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in the Opinion filed as Exhibit 5.1).
23.2 Consent of Ernst & Young LLP, independent auditors, with respect
to the consolidated financial statements of the Registrant.
24.1 Power of Attorney (included on signature page to the Registration
Statement at page S-1).
99.1* 1996 Stock Option/Stock Issuance Plan (as Amended and Restated as
of April 8, 1997, March 12, 1998 and November 3, 1998).
99.2 1997 Stock Option Plan (As Amended as of June 15, 1998) assumed by
Registrant pursuant to its acquisition of Radiance Medical
Systems, Inc. on January 14, 1999.
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Schedule 14A filed on December 18, 1998.
EXHIBIT 5.1
[STRADLING YOCCA CARLSON & RAUTH LETTERHEAD]
February 11, 1999
Radiance Medical Systems, Inc.
13700 Alton Parkway, Suite 160
Irvine, CA 92618
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
At your request, we have examined the form of Registration Statement on Form S-8 (the "Registration Statement") being filed by Radiance Medical Systems, Inc., a Delaware corporation (the "Company"), with the Securities and Exchange Commission in connection with the registration under the Securities Act of 1933, as amended, of: (i) 750,000 shares of the Company's common stock, $.001 par value ("Common Stock"), issuable under the 1996 Stock Option/Stock Issuance Plan (As Amended and Restated as of April 8, 1997, March 12, 1998 and November 3, 1998) (the "1996 Plan"); and (ii) 317,780 shares of Common Stock issuable upon exercise of options granted under (the former) Radiance Medical Systems, Inc. 1997 Stock Option Plan (As Amended As Of June 15, 1998) (the "1997 Plan"). The options granted under the 1997 Plan were assumed by the Company pursuant to its acquisition of (the former) Radiance Medical Systems, inc. on January 14, 1999.
We have examined the proceedings heretofore taken and are familiar with the additional proceedings proposed to be taken by the Company in connection with the authorization, issuance and sale of the securities referred to above.
Based on the foregoing, it is our opinion that the 750,000 shares of Common Stock to be issued under the 1996 Plan against full payment in accordance with the respective terms and conditions of the 1996 Plan, and the 317,780 shares of Common Stock to be issued under the 1997 Plan against full payment in accordance with the respective terms and conditions of the 1997 Plan, will be legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration Statement.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the 1996 Stock Option/Stock Issuance Plan (as amended and restated as of April 8, 1997 and March 12, 1998 and November 3, 1998) of Radiance Medical Systems, Inc. (formerly CardioVascular Dynamics, Inc.) and the 1997 Stock Option Plan (as amended as of June 15, 1998) of (the former) Radiance Medical Systems, Inc. of our report dated January 29, 1998, with respect to the consolidated financial statements and schedule of CardioVascular Dynamics, Inc. included in its Annual Report Form 10-K for the year ended December 31, 1997, filed with the Securities and Exchange Commission. We also consent to the incorporation by reference in this Registration Statement of our report dated May 8, 1998, with respect to the financial statements of Radiance Medical Systems, Inc. as of December 31, 1997, incorporated by reference into the Registration Statement (Form S-3 No. 333-71053) that is incorporated by reference herein.
Ernst & Young LLP
Orange County, CA
February 17, 1999
EXHIBIT 99.2
RADIANCE MEDICAL SYSTEMS, INC.
1997 STOCK OPTION PLAN
(AS AMENDED AS OF JUNE 15, 1998)
ARTICLE ONE
I. PURPOSE OF THE PLAN
This 1997 Stock Option Plan is intended to promote the interests of Radiance Medical Systems, Inc., a Delaware corporation, by providing eligible persons with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in the service of the Corporation.
Capitalized terms herein shall have the meanings assigned to such terms in the Appendix.
II. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Board. However, any or all administrative functions otherwise exercisable by the Board may be delegated to the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.
B. The Plan Administrator shall have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Plan and to make such determinations under, and issue such interpretations of, the Plan and any outstanding options as it may deem necessary or advisable. Decisions of the Plan Administrator shall be final and binding on all parties who have an interest in the Plan or any option or shares issued thereunder.
III. ELIGIBILITY
A. The persons eligible to receive option grants under the Plan are as follows:
(i) Employees,
(ii) non-employee members of the Board or the non-employee members of the board of directors of any Parent or Subsidiary, and
(iii) consultants who provide services to, and other persons with important business relations with the Corporation (or any Parent or Subsidiary).
B. The Plan Administrator shall have full authority to determine which eligible persons are to receive option grants under the Plan, the time or times when such option grants are to be made, the number of shares to be covered by each such grant, the time or times at which each option is to become exercisable, the vesting schedule (if any) applicable to the option shares and the maximum term for which the option is to remain outstanding.
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock. The maximum number of shares of Common Stock which may be issued over the term of the Plan shall not exceed 1,000,000 shares.
B. Shares of Common Stock subject to outstanding options shall be available for subsequent issuance under the Plan to the extent (i) the options expire or terminate for any reason prior to exercise in full or (ii) the options are canceled in accordance with the cancellation-regrant provisions of Article Two. All shares issued under the Plan, whether or not those shares are subsequently repurchased by the Corporation pursuant to its repurchase rights under the Plan, shall reduce on a share-for-share basis the number of shares of Common Stock available for subsequent issuance under the Plan.
C. In the event any change is made to the 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 Corporation's receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or class of securities issuable under the Plan and (ii) the number and/or class of securities and the exercise price per share in effect under each outstanding option in order to prevent the dilution or enlargement of benefits thereunder. The adjustments determined by the Plan Administrator shall be final, binding and conclusive. In no event shall any such adjustments be made in connection with the conversion of one or more outstanding shares of the Corporation's preferred stock into shares of Common Stock.
ARTICLE TWO
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.
A. EXERCISE PRICE.
1. The exercise price per share shall be fixed by the Plan Administrator in accordance with the following provisions:
(i) The exercise price per share shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the option grant date.
(ii) If the person to whom the option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I Article
Three and the documents evidencing the option grant, be payable in cash or check
made payable to the Corporation. Should the Common Stock be registered under
Section 12(g) of the 1934 Act at the time the option is exercised, then the
exercise price may also be paid as follows:
(i) in shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date, or
(ii) to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions (a) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction.
Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.
B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option grant. However, no option shall have a term in excess of ten (10) years measured from the option grant date.
C. EFFECT OF TERMINATION OF SERVICE. The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:
(i) Should the Optionee cease to remain in Service for any reason other than Disability or death, then the Optionee shall have a period of three (3) months following the date of such cessation of Service during which to exercise each outstanding option held by such Optionee.
(ii) Should such Service terminate by reason of
Disability, then the Optionee shall have a period of six (6) months following
the date of such cessation of Service during which to exercise each outstanding
option held by such Optionee. However, should such Disability be deemed to
constitute Permanent Disability, then the period during which each outstanding
option held by the Optionee is to remain exercisable shall be extended by an
additional six (6) months so that the exercise period shall be the twelve
(12)-month period following the date of the Optionee's cessation of Service by
reason of such Permanent Disability.
(iii) Should the Optionee die while holding one or more outstanding options, 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 descent and distribution shall have a period of twelve (12) months following the date of the Optionee's death during which to exercise each such option.
(iv) Under no circumstances, however, shall any such option be exercisable after the specified expiration of the option term.
(v) During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested shares for which the option is exercisable on the date of the Optionee's cessation of Service. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any vested shares for which the option has not been exercised. However, the option shall immediately upon the Optionee's cessation of Service, terminate and cease to be outstanding to the extent it is not exercisable for vested shares on the date of such cessation of Service.
D. STOCKHOLDER RIGHTS. The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares.
E. UNVESTED SHARES. The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock under the Plan. Should the Optionee cease Service while holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise price paid per share, all or (at the discretion of the Corporation and with the consent of the Optionee) any of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right. The Plan Administrator may not impose a vesting schedule upon any option grant or the shares of Common Stock subject to that option which is more restrictive than twenty percent (20%) per
year vesting, with the initial installment to vest not more than one (1) year after the option grant date. However, this minimum vesting requirement shall not be applicable with respect to any option granted to an executive officer of the Company or any other highly compensated individual whose earnings per calendar year form the Company or any Parent or Subsidiary exceed Seventy Five Thousand Dollars ($75,000.00) in the aggregate and who holds one or more other outstanding options under the Plan.
F. FIRST REFUSAL RIGHTS. Until such time as the Common Stock is first registered under Section 12(g) of the 1934 Act, the Corporation shall have the right of first refusal with respect to any proposed disposition by the Optionee (or any successor in interest) of any shares of Common Stock issued under the Plan. Such right of first refusal shall be exercisable in accordance with the terms established by the Plan Administrator and set forth in the document evidencing such right.
G. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the Optionee, the option shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or by laws of descent and distribution following the Optionee's death. However, a Non-Statutory Option may be assigned in whole or in part in accordance with the terms of a Qualified Domestic Relations Order. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to such Qualified Domestic Relations Order. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.
H. WITHHOLDING. The Corporation's obligation to deliver shares of Common Stock upon the exercise of any options granted under the Plan shall be subject to the satisfaction of all applicable Federal, state and local income and employment tax withholding requirements.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of the Plan shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options shall not be subject to the terms specified in this Section II.
A. ELIGIBILITY. Incentive Options may only be granted to Employees.
B. EXERCISE PRICE. The exercise price per share shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.
C. DOLLAR LIMITATION. The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during
any one (1) calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the offer in which such options are granted.
D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the option term shall not exceed five (5) years measured from the option grant date.
III. CORPORATE TRANSACTION
A. In the event of any Corporate Transaction, each outstanding option under the Plan whether or not assumed by the successor corporation (or parent thereof) shall be accelerated and become fully vested immediately prior to the consummation of such Corporate Transaction, provided Optionee is then providing Service to the Corporation
B. Each option which is assumed in connection with a Corporate Transaction shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to the Optionee in the consummation of such Corporate Transaction, had the option been exercised immediately prior to such Corporate Transaction. Appropriate adjustments shall also be made to (i) the number and class of securities available for issuance under the Plan following the consummation of such Corporate Transaction and (ii) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same.
C. All outstanding repurchase rights under the Plan shall terminate automatically in the event of any Corporate Transaction.
D. The grant of options under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time and from time to time, with the consent of the affected option holders, the cancellation of any or all outstanding options under the Plan and to grant in substitution therefore new options covering the same or different numbers of shares of Common Stock but with an exercise price per share based on the Fair Market Value per share of Common Stock on the new option grant date.
ARTICLE THREE
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.
A. Purchase Price.
1. The purchase price per share shall be fixed by the Plan Administrator, but shall not be less than eighty-five percent (85%) of the Fair Market Value per share of Common Stock on the issuance date.
2. Subject to the provisions of Section I of Article Four, shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any Parent or Subsidiary).
B. Vesting Provisions.
1. Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant's period of Service or upon attainment of specified performance objectives. The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program, namely:
(i) the Service period to be completed by the Participant or the performance objectives to be attained,
(ii) the number of installments in which the shares are to vest,
(iii) the interval or intervals (if any) which are to lapse between installments, and
(iv) the effect which death, Permanent Disability or other event designated by the Plan Administrator is to have upon the vesting schedule, shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement.
2. Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant's unvested shares of Common Stock by reason of any
stock dividend, stock split, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration shall be issued subject to
(i) the same vesting requirements applicable to the Participant's unvested
shares of Common Stock and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant's interest in those shares is vested. Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares. To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent (including the Participant's purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding purchase- money note of the Participant attributable to the surrendered shares.
5. The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the cessation of the Participant's Service or the non-attainment of the performance objectives applicable to those shares. Such waiver shall result in the immediate vesting of the Participant's interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected at any time, whether before or after the Participant's cessation of Service or the attainment or non-attainment of the applicable performance objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All outstanding cancellation rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Corporate Transaction, except to the extent (i) those cancellation rights are assigned to the successor corporation (or parent thereof) in connection with such Corporate Transaction or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's cancellation rights remain outstanding under the Stock Issuance Program, to provide that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those cancellation rights are assigned to the successor corporation (or parent thereof).
C. The Plan Administrator shall have the discretionary authority, exercisable either at the time the unvested shares are issued or any time while the Corporation's cancellation rights remain outstanding under the Stock Issuance Program, to provide that those rights shall automatically terminate in whole or in part, and the shares of Common Stock subject to those terminated rights shall immediately vest, in the event the Participant's Service should subsequently terminate by reason of an Involuntary Termination within a designated period (not to exceed eighteen (18) months) following the effective date of any Change in Control.
D. The Plan Administrator shall have the discretion to provide
for cancellation rights with terms different from those in effect under Section
II.A. in connection with a Corporate Transaction.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be held in escrow by the Corporation until the Participant's interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.
ARTICLE FOUR
I. FINANCING
The Plan Administrator may permit any Optionee to pay the option exercise price by delivering a promissory note payable in one or more installments. The terms of any such promissory note (including the interest rate and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. Promissory notes may be authorized with or without security or collateral. However, the maximum credit available to each Optionee may not exceed the sum of (i) the aggregate option exercise price payable for the purchased shares (less the par value of such shares) plus (ii) any Federal, state and local income and employment tax liability incurred by the Optionee in connection with the option exercise.
II. ADDITIONAL AUTHORITY
A. The Plan Administrator shall have the discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding:
(i) to extend the period of time for which the option is to remain exercisable following the Optionee's cessation of Service or death from the limited period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate; provided, that in no event shall such option be exercisable after the specified expiration of the option term, and/or
(ii) to permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common
Stock for which such option is exercisable at the time of the Optionee's cessation of Service or death but also with respect to one or more additional installments in which the Optionee would have otherwise vested had the Optionee continued in Service.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the Board, but no option granted under the Plan may be exercised until the Plan shall have been approved by the Corporation's stockholders. If such stockholder approval is not obtained within twelve (12) months after the date of the Board's adoption of the Plan, then all options previously granted under the Plan shall terminate and cease to be outstanding, and no further options shall be granted. Subject to such limitation, the Plan Administrator may grant options under the Plan at any time after the effective date of the Plan and before the date fixed herein for termination of the Plan.
B. The Plan shall terminate upon the earliest of (i) the expiration of the ten (10)-year period measured from the date the Plan is adopted by the Board, (ii) the date on which all shares available for issuance under the Plan shall have been issued or (iii) the termination of all outstanding options in connection with a Corporate Transaction. Upon such Plan termination, each option and unvested share issuance outstanding under the Plan shall continue to have full force and effect in accordance with the provisions of the documents evidencing that option or share issuance.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects. However, no such amendment or modification shall, without the consent of the Optionees, adversely affect their rights and obligations under their outstanding options. In addition, the Board shall not, without the approval of the Corporation's stockholders, (i) increase the maximum number of shares issuable under the Plan, except for permissible adjustments under Section V of Article One, (ii) materially modify the eligibility requirements for option grants or (iii) otherwise materially increase the benefits accruing to option holders.
B. Options may be granted under the Plan to purchase shares of Common Stock in excess of the number of shares then available for issuance under the Plan, provided any such options actually granted may not be exercised until there is obtained stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock available for issuance under the plan. If such stockholder approval is not obtained within twelve (12) months after the date the excess grants are first made, then any options granted on the basis of such excess shares shall terminate and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.
VI. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option hereunder and the issuance of Common Stock upon the exercise of any option shall be subject to the Corporation's procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the options granted under it and the shares of Common Stock issued pursuant to it.
VII. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate the Optionee's Service at any time for any reason, with or without cause.
VIII. FINANCIAL REPORTS
The Corporation shall deliver a balance sheet and an income statement at least annually to each individual holding an outstanding option under the Plan, unless such individual is a key Employee whose duties in connection with the Corporation (or any Parent or Subsidiary) assure such individual access to equivalent information.
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CODE shall mean the Internal Revenue Code of 1986, as amended.
C. COMMITTEE shall mean a committee of two (2) or more Board members appointed by the Board to exercise one or more administrative functions under the Plan.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially all of the Corporation's assets in complete liquidation or dissolution of the Corporation.
F. CORPORATION shall mean Radiance Medical Systems, Inc., a Delaware corporation.
G. DISABILITY shall mean the inability of an individual to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances.
H. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or order (including approval of a property settlement agreement) which provides or otherwise conveys, pursuant to applicable State domestic relations laws (including community property laws), marital property rights to any spouse or former spouse of the Optionee.
I. EMPLOYEE shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.
J. EXERCISE DATE shall mean the date on which the Corporation shall have received written notice of the option exercise.
K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National Market, the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on the Nasdaq National Market or any successor system. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed 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 determined by the Plan Administrator to be 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 closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock Exchange nor traded on the Nasdaq National Market then the Fair Market Value shall be determined by the Plan Administrator after taking into account such factors as the Plan Administrator shall deem appropriate.
L. INCENTIVE OPTION shall mean an option which satisfies the requirements of Code Section 422.
M. INVOLUNTARY TERMINATION shall mean the termination of the Service of any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A) a change in his or her position with the Corporation which materially reduces his or her level of responsibility, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and participation in corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without the individual's consent.
N. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
O. MISCONDUCT shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any
other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary).
P. NON-STATUTORY OPTION shall mean an option not intended to satisfy the requirements of Code Section 422.
Q. OPTIONEE shall mean any person whom an option is granted under the Plan.
R. PARENT shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
S. PARTICIPANT shall mean any person who is issued shares of Common Stock under the Stock Issuance Program.
T. PERMANENT DISABILITY shall mean any Disability which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.
U. PLAN shall mean the Corporation's 1997 Stock Option Plan, as set forth in this document.
V. PLAN ADMINISTRATOR shall mean either the Board or the Committee, to the extent the Committee is at the time responsible for the administration of the Plan.
W. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic Relations Order which substantially complies with the requirements of Code Section 414(p). The Plan Administrator shall have the sole discretion to determine whether a Domestic Relations Order is a Qualified Domestic Relations Order.
X. SERVICE shall mean the provision of services to the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or otherwise.
Y. STOCK EXCHANGE shall mean either the American Stock Exchange or the New York Stock Exchange.
Z. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.
AA. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in effect under the Plan.
AB. SUBSIDIARY shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
AC. 10% STOCKHOLDER shall mean the owner of stock (as determined under Code Section 424(d)) possessing ten percent (10%) or more of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).