<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q/A
[X] Amendment No. 1 to the quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended March 31, 1998
or
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ______ to ______
Commission file number: 0-21001
Nitinol Medical Technologies, Inc.
----------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-4090463
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
27 Wormwood Street, Boston, Massachusetts 02210
- -----------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
617-737-0930
------------
(Registrant's Telephone Number, Including Area Code)
N/A
---
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
----- -----
As of April 29, 1998, there were 9,824,826 shares of Common Stock, $.001
par value per share, outstanding.
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NITINOL MEDICAL TECHNOLOGIES, INC.
INDEX
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<TABLE>
<CAPTION>
Part II. Other Information Page Number
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<C> <S> <C>
Item 6. Exhibits and Reports on Form 8-K 3
Signatures
Exhibit 10.1 Consulting Agreement between the Company and
Morris Simon, M.D., dated February 27, 1998
Exhibit 10.2 Assignment Agreement between the Company and
Morris Simon, M.D., dated February 27, 1998
Exhibit 10.3 Stock Option Agreement evidencing grant by the
Company to Morris Simon, M.D. on February 27, 1998
Exhibit 10.4 Non-Plan Stock Option Agreement evidencing grant
by the Company to Morris Simon, M.D. on
February 27, 1998
Exhibit 10.5 Registration Rights Agreement entered into by and
among the Company and Morris Simon, M.D., dated
February 27, 1998
</TABLE>
2
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PART II
OTHER INFORMATION
Item 6(a) is hereby amended in its entirety to read as follows:
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
--------
10.1 Consulting Agreement between the Company and Morris
Simon, M.D., dated February 27, 1998
10.2 Assignment Agreement between the Company and Morris
Simon, M.D., dated February 27, 1998
10.3 Stock Option Agreement evidencing grant by the Company
to Morris Simon, M.D. on February 27, 1998
10.4 Non-Plan Stock Option Agreement evidencing grant by
the Company to Morris Simon, M.D. on February 27, 1998
10.5 Registration Rights Agreement entered into by and among
the Company and Morris Simon, M.D., dated February 27,
1998
27.1 Financial Data Schedule
3
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NITINOL MEDICAL TECHNOLOGIES, INC.
Date: May 12, 1998 By: /s/ Thomas M. Tully
________________________________________
Thomas M. Tully
President and Chief Executive Officer
Date: May 12, 1998 By: /s/ Theodore I. Pincus
________________________________________
Theodore I. Pincus
Executive Vice President and
Chief Financial Officer
4
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Exhibit Index
-------------
Exhibits
- ------------
10.1 Consulting Agreement between the Company and
Morris Simon, M.D., dated February 27, 1998
10.2 Assignment Agreement between the Company and
Morris Simon, M.D., dated February 27, 1998
10.3 Stock Option Agreement evidencing grant by the
Company to Morris Simon, M.D. on February 27, 1998
10.4 Non-Plan Stock Option Agreement evidencing grant
by the Company to Morris Simon, M.D. on
February 27, 1998
10.5 Registration Rights Agreement entered into by and
among the Company and Morris Simon, M.D., dated
February 27, 1998
5
<PAGE>
Exhibit 10.1
NITINOL MEDICAL TECHNOLOGIES, INC.
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (the "Agreement"), made as of the 27th day of
February, 1998, is entered into by Nitinol Medical Technologies, Inc., a
Delaware corporation with its principal place of business at 27 Wormwood Street,
Boston, MA 02210 (the "Company"), and Morris Simon, M.D., residing at 8 Otis
Place, Boston, MA 02108 (the "Consultant").
INTRODUCTION
------------
The Company desires to retain the services of the Consultant and the
Consultant desires to perform certain services for the Company. In addition,
the Consultant has agreed to assign certain inventions to the Company in
consideration of the consultancy established by this Agreement. In
consideration of the mutual covenants and promises contained in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
is acknowledged by both parties, the parties agree as follows:
1. Services.
--------
1.1 Consulting Services. The Consultant agrees to perform the
-------------------
consulting, advisory and related services to and for the Company that are
specified on Exhibit A to this Agreement, and such other services as the Company
---------
and the Consultant may agree hereafter. During the Consultation Period (as
defined below), the Consultant shall serve as Chief Scientific Officer of the
Company, reporting to the Chief Executive Officer of the Company. During the
Consultation Period, the Consultant shall not engage in any competitive
employment, business, or other activity, and he shall not assist any other
person or organization that competes, or intends to compete, with the Company.
Notwithstanding the foregoing, the Consultant shall not be required to devote
more than eight (8) days per month to the performance of services under this
Agreement and, in addition, shall be entitled to vacation and sick time
consistent with past practice.
1.2 Other Employment and Policies. The Company acknowledges that the
-----------------------------
Consultant is a member of the staff of Beth Israel Deaconess Medical Center
("BIDMC") and a member of the faculty of Harvard University Medical School
("Harvard" and, together with BIDMC, the "Institutions") and is subject to the
policies and regulations of the Institutions, including policies and regulations
concerning consulting, conflicts of interest, and assignment of inventions and
intellectual property (the policies and regulations of the Institutions being
referred to herein
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collectively as the "Policies"). Consultant's obligations under this Agreement
shall be subject to his compliance with the Policies and, in the event of a
conflict, the Policies shall control. Notwithstanding anything in this Agreement
to the contrary, Consultant shall be under no obligation to perform or refrain
from any services or other actions under this Agreement if doing so would
violate or conflict with any of the Policies. In order to ensure that the
services to be performed by the Consultant in accordance with the provisions of
this Agreement (other than this Section 1.2) and compliance with the terms of
this Agreement, including the provisions of Article 7, are consistent with and
in compliance with the Policies, the Consultant shall notify the Institutions of
the execution of this Agreement and seek their approval of the terms hereof. The
Consultant shall notify the Company promptly upon receipt of notice from the
Institutions, or upon his otherwise becoming aware, that the Consultant's
performance of services or compliance with the terms of this Agreement would be
in conflict with the Policies. The Company shall have the right to terminate the
Consultation Period if, as a result of the Policies, the Consultant is not able
to comply with any material provision of this Agreement, such termination to be
effective thirty (30) days after written notice to the Consultant.
2. Term. This Agreement shall commence on the date hereof and shall
----
continue until December 31, 1999, unless sooner terminated in accordance with
the provisions of Section 5 (such term, as it may be extended pursuant to
Section 4, being referred to as the "Consultation Period").
3. Compensation.
------------
3.1 Consulting Fees. The Company shall pay to the Consultant
---------------
consulting fees of $8,333 per month during the Consultation Period, payable in
advance on the first day of each month. Payment for any partial month shall be
prorated.
3.2 Royalty on Product Sales.
------------------------
(a) The Company agrees to pay the Consultant a royalty in the
amount of (i) one percent (1%) of the Net Sales (as defined below) of Products
(as defined below) sold by the Company, its affiliates or licensees (or any of
their direct or indirect sublicensees) and (ii) five percent (5%) of License
Fees (as defined below). Such royalties shall be paid on a quarterly basis
within 60 days after the end of each calendar quarter, and shall be accompanied
by a statement setting forth in reasonable detail the calculation thereof. In
the case of a Covered Invention made jointly by the Consultant with others, if
the Consultant is not a primary inventor of the Covered Invention who made a
significant inventive contribution thereto (it being understood that the
inclusion of the Consultant as one of several inventors on a patent application
shall not be sufficient in and of itself to constitute primary inventorship or
to reflect significant inventive contribution), then the royalty payable to the
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Consultant hereunder shall be apportioned based on the number of inventors. For
example, if there is one other inventor of a Covered Invention as to which the
Consultant was not a primary inventor who made a significant inventive
contribution, the Consultant will be entitled to receive one half of the amount
of royalties the Consultant otherwise would have received as a result of that
Covered Invention. For avoidance of doubt, the parties acknowledge that if a
Covered Invention is made jointly by the Consultant with others but the
Consultant is a primary inventor of such Covered Invention who made a
--
significant inventive contribution thereto (it being understood that the
inclusion of the Consultant as one of several inventors on a patent application
shall not be sufficient in and of itself to constitute primary inventorship or
to reflect significant inventive contribution), then the royalty payable to the
Consultant hereunder relating to such Covered Invention shall not be
apportioned. In the event of the death of the Consultant, royalties shall
continue to be payable to the executors or personal representatives of his
estate or to such other persons as they may direct.
(b) As used herein, the following terms shall have the following
meanings:
(i) "Product" means any product, device, composition,
-------
method or service whose manufacture, use, provision or sale is covered by a
Claim of an Applicable Patent Right.
(ii) "Covered Inventions" has the meaning set forth in
------------------
Section 7.1.
(iii) "Applicable Patent Rights" means all United States and
------------------------
foreign patents and/or patent applications or the equivalent thereof that
describe or claim a Covered Invention, and all continuations, continuations-in-
part, divisionals, reissues, reexaminations or extensions thereof.
(iv) "Claim" means any (A) claim of an issued patent
-----
included in the Applicable Patent Rights that has not been declared invalid in
the jurisdiction in question by a court of competent jurisdiction in any
unappealed and unappealable decision, and (B) claim of a patent application
included in the Applicable Patent Rights, provided that such claim of a patent
-------- ----
application shall to constitute a Claim as of the seventh anniversary of the
date of filing of such patent application (or, in the case of a divisional or
continuation application, the date of filing of the earliest parent
application).
(v) "Net Sales" means the total amount received by the
---------
Company, its affiliates or licensees (or any of their direct or indirect
sublicensees) from the sale of Products to third parties, less only the
following amounts (to the extent the total amount received by the Company
otherwise reflects such amounts):
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(A) refunds for returned Products, (B) freight and insurance costs incurred in
shipping Products to customers and billed to such customers, (C) quantity and
trade discounts actually allowed and taken, (D) sales, use, value-added and
other taxes or government charges that are incurred in connection with the sale,
exportation or importation of the Products and are billed to customers (but
specifically excluding income taxes), and (E) charge back payments and/or
rebates for Products provided to managed health care organizations or federal,
state and local governments, including Medicare and Medicaid. With respect to
sales of Products by licensees, the definition of "Net Sales" shall be modified
to be consistent with the definition of such term in the agreement between the
Company and such licensee, such that the basis for payment of royalties from Net
Sales by such licensee shall be the same for the Company and the Consultant,
provided that the definition of "Net Sales" in such agreement between the
Company and such licensee is not materially less favorable to the licensor than
the definition contained herein.
(vi) "License Fees" means all fees and other payments of any
------------
kind (but excluding royalties or other payments based upon Net Sales) received
by the Company as consideration for any license or sublicense of a Covered
Invention or Applicable Patent Right, provided that License Fees shall not
-------- ----
include bona fide payments made by a third party to the Company to fund
---- ----
research and development or as an equity investment in the Company.
(c) If the Company wishes to sell or assign (rather than license) any
of the Applicable Patent Rights to any third party, then, prior to and as a
condition of such sale or assignment, the Company shall obtain the binding
written agreement of such third party, in form and substance reasonably
satisfactory to Consultant, to assume and perform all of the Company's royalty
payment and other obligations under this Section 3.2, Section 3.5 and Section 8
hereof that relate to such Applicable Patent Right or to any Product whose
manufacture, use, provision or sale is covered by a Claim of such Applicable
Patent Right.
3.3 Reimbursement of Expenses. The Company shall reimburse the
-------------------------
Consultant for all reasonable and necessary expenses incurred or paid by the
Consultant in connection with, or related to, the performance of his services
under this Agreement. The Consultant shall submit to the Company itemized
monthly statements, in a form satisfactory to the Company, of such expenses
incurred in the previous month. The Company shall pay to the Consultant amounts
shown on each such statement within 30 days after receipt thereof.
3.4 Benefits. The Consultant shall not be entitled to any benefits,
--------
coverages or privileges, including, without limitation, social security,
unemployment, medical or pension payments, made available to employees of the
Company.
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3.5 Records; Inspection. The Company shall keep full and accurate
-------------------
records containing all information necessary to calculate the royalties and
other amounts payable to the Consultant under Section 3.2. Upon at least five
days prior written notice to the Company, no more often than once in each
calendar year, the Consultant may inspect such records for the purpose of
verifying the proper amount of such payments.
4. Extension of Consultation Period. The Consultation Period shall
--------------------------------
automatically be extended for successive one year renewal periods unless either
the Company or the Consultant provides written notice to the other party, at
least 60 days prior to the expiration of the initial term or any renewal period,
of its or his desire to terminate the Consultation Period effective as of the
end of the initial term or the then current renewal period, as applicable. Upon
expiration of the Consultation Period, the Company's obligation to pay royalties
and other amounts to the Consultant pursuant to Section 3.2 shall remain in full
force and effect.
5. Termination.
-----------
(a) Termination by the Company. Without prejudice to any right or
--------------------------
remedy which either party may then have due to any failure of the other party to
perform his or its obligations under this Agreement, the Company may terminate
the Consultation Period upon 30 days' prior written notice to the Company. In
the event of such termination, the Consultant shall be entitled to payment for
services performed and expenses paid or incurred prior to the effective date of
termination, subject to the requirements regarding reimbursement of expenses set
forth in Section 3.3 and, in addition, to continued compensation under Section
3.1 for twelve (12) months after the effective date of termination. In
addition, the Company's obligation to pay royalties to the Consultant pursuant
to Section 3.2 shall remain in full force and effect. The Company may also
terminate the Consultation Period, effective upon giving written notice of
termination to the Consultant, if the Consultant materially breaches any
provision of Section 7 and if such breach is not cured within 30 days after
receipt by the Consultant of written notice thereof from the Company (or, if
such breach is not reasonably capable of being cured within that 30-day period,
the Consultant fails to commence and diligently pursue reasonable efforts to
cure), in which event, if such breach causes the Company substantial harm, the
Company's obligation to make payments under Sections 3.1 and 3.2 shall
terminate.
(b) Termination by the Consultant. Without prejudice to any right or
-----------------------------
remedy which either party may then have due to any failure of the other party to
perform his or its obligations under this Agreement, the Consultant may
terminate the Consultation Period upon 30 days' prior written notice to the
Company. In the event of such termination, the Consultant shall be entitled to
payment for services performed and expenses paid or incurred prior to the
effective date of termination, subject to the requirements regarding
reimbursement of expenses set forth in Section 3.3.
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In addition, the Company's obligation to pay royalties to the Consultant
pursuant to Section 3.2 shall remain in full force and effect.
6. Cooperation. The Consultant shall use his reasonable best efforts in
-----------
the performance of his obligations under this Agreement. The Company shall
provide such access to its information and property as may be reasonably
required in order to permit the Consultant to perform his obligations hereunder.
The Consultant shall cooperate with the Company's personnel, shall not interfere
with the conduct of the Company's business and shall observe all rules,
regulations and security requirements of the Company concerning the safety of
persons and property.
7. Inventions and Proprietary Information.
--------------------------------------
7.1 Inventions.
----------
(a) Except as otherwise provided in Section 7.1(d) below, all
inventions, discoveries, computer programs, data, technology, designs,
innovations and improvements (whether or not patentable and whether or not
copyrightable) ("Inventions") (i) which are made, conceived, reduced to
practice, created, written, designed or developed by the Consultant, solely or
jointly with others, in the course of rendering services to the Company within
the Consultation Period or while using Company facilities, or (ii) which involve
the use of nitinol in medical devices and are made, conceived, reduced to
practice, created, written, designed or developed by the Consultant, solely or
jointly with others, during the Consultation Period, whether or not in the
course of rendering services to the Company or while using Company facilities,
or (iii) which are made, conceived, reduced to practice, created, written,
designed or developed during the Consultation Period by the Consultant if
directly derived from Proprietary Information (as defined below), shall be the
sole property of the Company (the Inventions described in this sentence are,
subject to Section 7.1(d), referred to herein as "Covered Inventions"). The
Consultant hereby assigns to the Company all of his rights to Covered Inventions
and any and all related patents, copyrights, trademarks, trade names, and other
industrial and intellectual property rights and applications therefor, in the
United States and elsewhere. During the Consultation Period and for a period
ending ten (10) years after the date of this Agreement, upon request of the
Company and at the Company's expense (including, after the Consultation Period,
reasonable payment for the Consultant's time), the Consultant shall execute such
further assignments, documents and other instruments as may be necessary or
desirable to fully and completely assign all of his rights to Covered Inventions
to the Company and to assist the Company in applying for, obtaining and
enforcing patents or copyrights or other rights in the United States and in any
foreign country with respect to any Covered Invention.
(b) The Consultant shall promptly disclose to the Company all
Covered Inventions and will maintain adequate and current written records (in
the
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form of notes, sketches, drawings and as may be specified by the Company) to
document the conception and/or first actual reduction to practice of any Covered
Invention. Such written records shall be available to and remain the sole
property of the Company at all times, and shall be maintained at the facilities
of the Company.
(c) In addition to the foregoing, the Consultant agrees that the
Company shall have a right of first negotiation, as described in this
subsection, with regard to (i) any Inventions that involve the use of nitinol in
medical devices and are made, conceived, or reduced to practice by the
Consultant, solely or jointly with others, during the one year period
immediately following the end of the Consultation Period, and (ii) any
Inventions which are made, conceived, reduced to practice, created, written,
designed or developed at any time after the Consultation Period if directly
derived from Proprietary Information (as defined below) (the Inventions
described in preceding clauses (i) and (ii) are, subject to Section 7.1(d),
referred to herein as "Later Inventions"). If the Consultant makes a Later
Invention, he shall notify the Company reasonably promptly in writing thereof
and, if the Company wishes, shall enter into good faith negotiations in which
the Consultant and the Company shall endeavor to reach a mutually acceptable
agreement under which the Consultant would grant the Company an exclusive
license to his rights in such Later Invention on fair market terms. If the
Consultant and the Company have not reached and executed such an agreement
within 90 days after the Consultant's notice to the Company of the Later
Invention, then the Consultant may license a third party or otherwise exploit
such Later Invention as he wishes, provided that the Consultant shall not enter
into any license with a third party on terms that, taken as a whole, are more
favorable to such third party than the terms, taken as a whole, of any written
offer made by the Company to the Consultant in the course of their negotiations
in the 90-day period and rejected by the Consultant. Nothing in this subsection
(c) shall be construed as a waiver by the Company of its rights under Section
7.2 with respect to Proprietary Information if such rights are otherwise
applicable.
(d) Notwithstanding anything herein to the contrary, however,
neither the Covered Inventions nor the Later Inventions shall include any
Invention that Consultant is required to assign to an Institution pursuant to
any of the Policies, and the Consultant shall have no obligation to the Company
hereunder with respect to any such Invention.
7.2 Proprietary Information.
-----------------------
(a) The Consultant acknowledges that his relationship with the
Company is one of high trust and confidence and that in the course of his
service to the Company he will have access to and contact with Proprietary
Information. The Consultant agrees that he will not, during the Consultation
Period or at any time thereafter, disclose to others, or use for his benefit or
the benefit of others, any Proprietary Information.
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(b) For purposes of this Agreement, "Proprietary Information"
shall mean all confidential information (whether or not patentable and whether
or not copyrightable) owned, possessed or used by the Company, including,
without limitation, any Covered Invention, formula, vendor information, customer
information, apparatus, equipment, trade secret, process, research, report,
technical data, know-how, computer program, software, software documentation,
hardware design, technology, marketing or business plan, forecast, unpublished
financial statement, budget, license, price, cost and employee list that is
communicated to, learned of, developed or otherwise acquired by the Consultant
in the course of his service as a consultant to the Company, provided that
-------- ----
"Proprietary Information" shall not include any information that (i) is or
becomes known or available to the general public under circumstances involving
no breach by the Consultant of the terms of this Section 7.2, (ii) is generally
disclosed to third parties by the Company without restriction on such third
parties, (iii) is approved for release by written authorization of the Board of
Directors or Chief Executive Officer of the Company, (iv) is rightfully
furnished to the Consultant by a third party without an obligation of
confidentiality, or (v) is required to be disclosed by law, government
regulation or court order.
(c) This Agreement is not intended to inhibit the Consultant from
publishing research results or information generated or obtained in the course
of the Consultant's activities as a member of faculty or staff of the
Institutions. To the extent any such publication contains any Proprietary
Information, the Consultant shall furnish the Company a copy of such proposed
publication at least thirty (30) days prior to publication thereof, and shall,
at the request of the Company (i) delay such publication if and to the extent
reasonably necessary to permit the Company to file expeditiously a patent
application relating to information disclosed therein, if applicable, and (ii)
remove from such publication any Proprietary Information identified specifically
by the Company.
(d) Upon termination of this Agreement or at any other time upon
request by the Company, the Consultant shall promptly deliver to the Company all
records, files, memoranda, notes, designs, data, reports, price lists, customer
lists, drawings, plans, computer programs, software, software documentation,
sketches, laboratory and research notebooks and other documents (and all copies
or reproductions of such materials) relating to the business of the Company
except that the Consultant may retain a copy of such documents concerning the
Covered Inventions as may be reasonably necessary to enable the Consultant to
enforce his rights under this Agreement.
(e) The Consultant represents that his retention as a consultant
with the Company and his performance under this Agreement does not, and shall
not, breach any agreement that obligates him to keep in confidence any trade
secrets or confidential or proprietary information of his or of any other party
or to refrain from competing, directly or indirectly, with the business of any
other party. The
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Consultant shall not disclose to the Company any trade secrets or confidential
or proprietary information of any other party.
(f) The Consultant acknowledges that the Company from time to
time may have agreements with other persons or with the United States
Government, or agencies thereof, that impose obligations or restrictions on the
Company regarding inventions made during the course of work under such
agreements or regarding the confidential nature of such work. The Consultant
agrees, to the extent not inconsistent with the provisions of this Agreement, to
be bound by all such obligations and restrictions that are known to him and to
take all actions necessary to discharge the obligations of the Company under
such agreements.
7.3 Remedies. The Consultant acknowledges that a breach of the
--------
provisions of this Section 7 may result in serious and irreparable injury to the
Company for which the Company cannot be adequately compensated by monetary
damages alone. The Consultant agrees, therefore, that, in addition to any other
remedy it may have, the Company shall be entitled to enforce the specific
performance of this Agreement by the Consultant and to seek both temporary and
permanent injunctive relief (to the extent permitted by law) without the
necessity of proving actual damages.
8. Indemnification. The Company shall indemnify and hold harmless the
---------------
Consultant and his executors, administrators, personal representatives,
successors and assigns against all liabilities, damages, losses and expenses
(including reasonable attorneys' fees) incurred by or imposed upon any of the
foregoing persons in connection with any claim, suit, action, demand or judgment
(including but not limited to those based on any theory of product liability
whether brought in tort, warranty, strict liability or other form) arising out
of the design, production, manufacture, marketing, provision, use, sale or other
disposition of any product, process or service that uses any Covered Invention
or results from any services provided by the Consultant under this Agreement.
9. Independent Contractor Status. The Consultant shall perform all
-----------------------------
services under this Agreement as an "independent contractor" and not as an
employee or agent of the Company. The Consultant is not authorized to assume or
create any obligation or responsibility, express or implied, on behalf of, or in
the name of, the Company or to bind the Company in any manner.
10. Notices. All notices required or permitted under this Agreement shall
-------
be in writing and shall be deemed effective upon receipt or, if earlier and if
notice is mailed by registered or certified mail, postage prepaid, addressed to
the other party at the address shown above, or at such other address or
addresses as either party
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shall designate to the other in accordance with this Section 10, three days
after deposit in the mail.
11. Pronouns. Whenever the context may require, any pronouns used in this
--------
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular forms of nouns and pronouns shall include the plural, and vice
versa.
12. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
13. Amendment. This Agreement may be amended or modified only by a
---------
written instrument executed by both the Company and the Consultant.
14. Governing Law. This Agreement shall be construed, interpreted and
-------------
enforced in accordance with the laws of the Commonwealth of Massachusetts.
15. Successors and Assigns. This Agreement shall be binding upon, and
----------------------
inure to the benefit of, both parties and their respective executors,
administrators, personal representatives, successors and assigns, including any
corporation with which, or into which, the Company may be merged or which may
succeed to its assets or business, provided, however, that the obligations of
the Consultant are personal and shall not be delegated by him.
16. Miscellaneous.
-------------
16.1 No delay or omission by either party in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by either party on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
16.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
16.3 In the event that any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year set forth above.
NITINOL MEDICAL TECHNOLOGIES,
INC.
By:/s/ Thomas M. Tully
_____________________________
Title: Chief Executive Officer
__________________________
CONSULTANT
/s/ Morris Simon
________________________________
Morris Simon, M.D.
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EXHIBIT A
---------
Services
--------
1. Development of minimally invasive medical devices, including nitinol-based
medical devices, both independently and in collaboration with employees of
the Company.
2. Assistance concerning patent protection for Covered Inventions.
3. Clinical advice concerning the use of Company products.
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Exhibit 10.2
ASSIGNMENT AGREEMENT
--------------------
THIS ASSIGNMENT AGREEMENT (the "Agreement"), made as of the 27th day of
February 1998, is entered into by Nitinol Medical Technologies, Inc., a Delaware
corporation with its principal place of business at 27 Wormwood Street, Boston,
MA 02210 (the "Company"), and Morris Simon, M.D., residing at 8 Otis Place,
Boston, MA 02108 ("Simon").
INTRODUCTION
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The Company wishes to purchase, and Simon wishes to sell, all of Simon's
rights in certain inventions and related patent rights, on the terms and
conditions set forth herein.
1. Assignment. Simon hereby agrees to assign to the Company all of his
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right, title and interest to the inventions (the "Inventions") and related
patent rights specified on Exhibit A hereto. Such assignment shall be in the
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form of Exhibit B to this Agreement. Upon the request of the Company, and at
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the Company's expense, Simon shall execute such further assignments, documents
and other instruments as may be necessary or desirable to fully and completely
assign all of his right, title and interest to the Inventions to the Company and
to assist the Company in applying for, obtaining and enforcing patents or
copyrights or other rights in the United States and in any foreign country with
respect to the Invention.
2. Compensation.
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(a) In partial consideration for the sale and assignment of the
Inventions, the Company agrees to pay Simon the following amounts: (i) one
percent (1%) of the Net Sales (as defined below) of Products (as defined below)
sold by the Company, its affiliates or licensees (or any of their direct or
indirect sublicensees), and (ii) five percent (5%) of License Fees (as defined
below). Such amounts shall be paid on a quarterly basis within 60 days after
the end of each calendar quarter, and shall be accompanied by a statement
setting forth in reasonable detail the calculation thereof. In the event of
Simon's death, such amounts shall continue to be payable to the executors or
personal representatives of his estate or to such other persons as they may
direct.
(b) As used herein, the following terms shall have the following
meanings:
<PAGE>
(i) "Product" means any product, device, composition, method or
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service whose manufacture, use, provision or sale is covered by a Claim of an
Applicable Patent Right.
(ii) "Applicable Patent Rights" means all United States and
------------------------
foreign patents and/or patent applications or the equivalent thereof that
describe or claim an Invention, and all continuations, continuations-in-part,
divisionals, reissues, reexaminations or extensions thereof. Without limiting
the foregoing, "Applicable Patent Rights" includes all patents and patent
applications set forth on Exhibit A.
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(iii) "Claim" means any (A) claim of an issued patent included
-----
in the Applicable Patent Rights that has not been declared invalid in the
jurisdiction in question by a court of competent jurisdiction in any unappealed
and unappealable decision, and (B) claim of a patent application included in the
Applicable Patent Rights, provided that such claim of a patent application shall
-------- ----
cease to constitute a Claim as of the seventh anniversary of the date of filing
of such patent application (or, in the case of a divisional or continuation
application, the date of filing of the earliest parent application).
(iv) "Net Sales" means the total amount received by the Company,
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its affiliates or licensees (or any of their direct or indirect sublicensees)
from the sale of Products to third parties, less only the following amounts (to
the extent the total amount received by the Company otherwise reflects such
amounts): (A) refunds for returned Products, (B) freight and insurance costs
incurred in shipping Products to customers and billed to such customers, (C)
quantity and trade discounts actually allowed and taken, (D) sales, use, value-
added and other taxes or government charges that are incurred in connection with
the sale, exportation or importation of the Products and are billed to customers
(but specifically excluding income taxes), and (E) charge back payments and/or
rebates for Products provided to managed health care organizations or federal,
state and local governments, including Medicare and Medicaid. With respect to
sales of Products by licensees, the definition of "Net Sales" shall be modified
to be consistent with the definition of such term in the agreement between the
Company and such licensee, such that the basis for payment of royalties from Net
Sales by such licensee shall be the same for the Company and the Consultant,
provided that the definition of "Net Sales" in such agreement between the
Company and such licensee is not materially less favorable to the licensor than
the definition contained herein.
(v) "License Fees" means all fees and other payments of any kind
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(but excluding royalties or other payments based upon Net Sales) received by the
Company as consideration for any license or sublicense of an Invention or
Applicable Patent Right; provided that License Fees shall not include bona fide
---- ----
payments made by a third party to the Company to fund research and development
or as an equity investment in the Company.
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(c) If the Company wishes to sell or assign (rather than license) any
of the Applicable Patent Rights to any third party, then, prior to and as a
condition of such sale or assignment, the Company shall obtain the binding
written agreement of such third party, in form and substance reasonably
satisfactory to Consultant, to assume and perform all of the Company's royalty
payment and other obligations under Section 2(a), Section 2(e) and Section 4
hereof that relate to such Applicable Patent Right or to any Product whose
manufacture, use, provision or sale is covered by a Claim of such Applicable
Patent Right.
(d) In further consideration for the sale and assignment of the
Inventions, effective as of the date of this Agreement, the Company shall grant
to Simon two nonstatutory stock options to purchase a total of 50,000 shares of
the Company's Common Stock ($.001 per value per share) at an exercise price of
$10.50 per share. One of such options (the "Plan Option"), covering 25,000
shares, shall be in the form of Exhibit C to this Agreement and shall be granted
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under the Company's 1996 Stock Option Plan (the "Plan"). The other of such
options (the "Non-Plan Option"), also covering 25,000 shares, shall be in the
form of Exhibit D to this Agreement and shall be granted outside the Plan. In
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connection with such options, simultaneously herewith the Company and Simon
shall enter into a Registration Rights Agreement in the form of Exhibit E to
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this Agreement. The Company hereby represents and warrants that (i) the
issuance and delivery of the Plan Option and the Non-Plan Option have been duly
authorized by all requisite corporate action (including approval by the
Company's Board of Directors) and will not violate any provision of law, the
Company's charter or by-laws, or any agreement or instrument by which the
Company is bound, (ii) the Plan Option complies with all applicable provisions
of the Plan, and (iii) both the Plan Option and the Non-Plan Option represent
the legal, valid and binding obligations of the Company, enforceable in
accordance with their respective terms.
(e) The Company shall keep full and accurate records containing all
information necessary to calculate the amounts payable to Simon under Section
2(a). Upon at least five days prior written notice to the Company, no more often
than once in each calendar year, Simon may inspect such records for the purpose
of verifying the proper amount of such payments.
3. Certain Representations, Warranties and Disclaimers of Simon. Simon
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represents and warrants to the Company that he has the legal right to make the
assignment contemplated by Section 1. Except for the representation and
warranty set forth in the foregoing sentence, Simon makes no representations or
warranties of any kind, whether express, implied or otherwise, in connection
with the Inventions or this Agreement. Without limiting the foregoing, Simon
expressly disclaims any express or implied representation or warranty as to (i)
the validity or scope of any patent rights assigned hereunder, (ii) non-
infringement of the intellectual property
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rights of any third party, or (iii) the merchantability, fitness for a
particular purpose, or performance of any product that uses any Invention.
4. Indemnification. The Company shall indemnify and hold harmless Simon
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and his executors, administrators, personal representatives, successors and
assigns against all liabilities, damages, losses and expenses (including
reasonable attorneys' fees) incurred by or imposed upon any of the foregoing
persons in connection with any claim, suit, action, demand or judgment
(including but not limited to those based on any theory of product liability
whether brought in tort, warranty, strict liability or other form) arising out
of the design, production, manufacture, marketing, provision, use, sale or other
disposition of any product, process or service that uses any Invention.
5. Retrievable Filter, Technology Purchase Agreement. The Company
-------------------------------------------------
acknowledges and agrees that the retrievable vena cava filter invented by Simon
and others and described in Removable Embolus Blood Clot Filter (U.S. Serial No.
08-682192, filed on July 17, 1996) constitutes "New Technology" within the
meaning of the Technology Purchase Agreement dated as of April 14, 1987 between
the Company and Simon, and that the Company shall pay royalties on such filter
in accordance with the terms of the Technology Purchase Agreement. The parties
acknowledge that Simon previously assigned some of his rights under the
Technology Purchase Agreement to The Beth Israel Hospital Association. Nothing
in this Agreement is intended to or shall modify or supersede the Technology
Purchase Agreement.
6. Entire Agreement. This Agreement constitutes the entire agreement
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between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
7. Amendment. This Agreement may be amended or modified only by a
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written instrument executed by both the Company and Simon.
8. Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with the laws of the Commonwealth of Massachusetts.
9. Successors and Assigns. This Agreement shall be binding upon, and
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inure to the benefit of, both parties and their respective executors,
administrators, personal representatives, successors and assigns, including any
corporation with which, or into which, the Company may be merged or which may
succeed to its assets or business.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement as of the day and year set forth above.
NITINOL MEDICAL TECHNOLOGIES,
INC.
By: /s/ Thomas M. Tully
__________________________________________
Title: Chief Executive Officer
_______________________________________
/s/ Morris Simon
_____________________________________________
Morris Simon, M.D.
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EXHIBIT A
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Inventions
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The Inventions shall consist of the inventions described in "Daisy Occluder
and Method for Septal Defect Repair" (U.S. Patent Application filed on August
28, 1996, App. No. 08/697,837).
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<PAGE>
EXHIBIT B
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Form of Assignment
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ASSIGNMENT
In consideration of the sum of One Dollar ($1.00) or equivalent and other
good and valuable consideration paid to Dr. Morris Simon ("Simon"), Simon hereby
sell(s) and assign(s) to NITINOL MEDICAL TECHNOLOGIES, INC. (the "Assignee") all
of his right, title and interest, for the United States of America (as defined
in 35 U.S.C. (S)100) and throughout the world, in the invention(s) known as
"Daisy Occluder and Method for Septal Defect Repair" for which application(s)
for patent in the United States of America has (have) been executed by Simon
(also known as United States Application Serial No. 08/697,837, filed on August
28, 1996), in any and all applications thereon, in any and all Letters Patent(s)
therefor, and any and all reissues, extensions, renewals, reexaminations,
divisions and continuations of such applications or Letters Patent(s) to the
full end of the term or terms for which such Letters Patent(s) issue, such
entire right, title and interest to be held and enjoyed by the Assignee the same
as they would have been held and enjoyed by Simon had this assignment and sale
not been made.
Simon agrees to execute all papers necessary in connection with the
application(s) and any continuing, divisional, reissue, reexamination or
corresponding application(s) thereof and also to execute separate assignments in
connection with such applications as the Assignee may deem necessary or
expedient.
At Assignee's expense, Simon agrees to execute all papers necessary in
connection with any interference which may be declared concerning the
application(s) or any continuation, division, reissue or reexamination thereof,
or Letters Patent(s), and to cooperate reasonably with the Assignee in obtaining
evidence and going forward with such interference.
Simon hereby covenants that he has full right to convey the entire interest
herein assigned, and that he has not executed, and will not execute, any
agreement in conflict therewith.
The undersigned hereby grant(s) Daniel W. Sixbey of Sixbey, Friedman,
Leedom & Ferguson, Suite 600, 2010 Corporate Ridge, McLean, VA 22102, power to
insert on this assignment any further identification which may be necessary or
desirable in order to comply with the rules of the United States Patent and
Trademark Office for recordation of this document.
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<PAGE>
WITNESS my hand and seal as of the 27th day of February, 1998.
___________________________________
Morris Simon
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF ______________________________ )
Then personally appeared before me this ________________________ day of
, 1998, the above-named Morris Simon who acknowledged the foregoing
- ----------
instrument to be his free act and deed.
______________________________________
Notary Public
My commission expires:
WITNESS my hand and seal this _____ day of _________, 1998.
___________________________________
Morris Simon
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<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF ____________________________ )
Then personally appeared before me this ________________________ day of
, 1998, the above-named Morris Simon who acknowledged
- -------------
the foregoing instrument to be his free act and deed.
______________________________________
Notary Public
My commission expires:
WITNESS my hand and seal this ____ day of February, 1998.
___________________________________
Morris Simon
9
<PAGE>
Exhibit C intentionally omitted - See Exhibit 10.3 to Amendment No. 1 to
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1998 for an executed copy of the Stock Option Agreement.
Exhibit D intentionally omitted - See Exhibit 10.4 to Amendment No. 1 to
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1998 for an executed copy of the Non-Plan Stock Option Agreement.
Exhibit E intentionally omitted - See Exhibit 10.5 to Amendment No. 1 to
Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1998 for an executed copy of the Registration Rights Agreement.
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<PAGE>
Exhibit 10.3
Stock Option Agreement
----------------------
NITINOL MEDICAL TECHNOLOGIES, INC.
NON-STATUTORY STOCK OPTION LETTER AGREEMENT
TO: DR. MORRIS SIMON
We are pleased to inform you that you have been selected by the Plan
Administrator of the Nitinol Medical Technologies, Inc. (the "Company") 1996
Stock Option Plan (the "Plan") to receive a non-statutory stock option for the
purchase of 25,000 shares of the Company's common stock, $.001 par value
("Common Stock"), at an exercise price of $10.50 per share (the "Exercise
Price"), exercisable as set forth under "Vesting" below. A copy of the Plan is
attached and the provisions thereof, including, without limitation, those
relating to withholding taxes, are incorporated into this Agreement by
reference. This option is not intended to qualify as an incentive stock option
---
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended.
The terms of the option are as set forth in the Plan and in this Agreement. The
terms set forth in this Agreement are consistent with the Plan Administrator's
interpretation of the Plan and nothing in the Plan shall abrogate any of the
terms set forth in this Agreement. The most important of the terms set forth in
the Plan are summarized, and additional terms are provided, as follows:
Term. The term of the option is ten years from the date of grant, unless
----
sooner terminated.
Exercise. During your lifetime only you can exercise the option. The Plan
--------
also provides for exercise of the option by the personal representative of your
estate or the beneficiary thereof following your death. You may use the Notice
of Exercise in the form attached to this Agreement when you exercise the option.
Payment for Shares. The option may be exercised by the delivery of:
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(a) Cash, personal check (unless at the time of exercise the Plan
Administrator determines otherwise), or bank certified or cashier's checks; or
(b) A properly executed Notice of Exercise, together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price (the Plan Administrator having
determined to
1
<PAGE>
permit this manner of exercise whether or not you are an employee at the time of
exercise and whether or not you are subject to Section 16(b) of the Exchange
Act).
Termination. This option will terminate twelve months after the
-----------
termination of your relationship with the Company for any reason, including as a
result of death. Reference is made to the Consulting Agreement dated as of
February 27, 1998 between you and the Company (the "Consulting Agreement").
From and after the expiration of the Consultation Period (as defined in the
Consulting Agreement), you have certain ongoing obligations to the Company,
including, obligations with respect to the prosecution and maintenance of
intellectual property rights under Section 7.1(a) thereof. As used in this
paragraph, the "termination of your relationship with the Company" shall not be
deemed to have occurred for so long as any of your obligations under the
Consulting Agreement, including under Section 7.1(a), remains in effect. Hence,
except in the event of your death, neither the expiration nor any termination of
the Consultation Period shall constitute a "termination of your relationship
with the Company" for this purpose, regardless whether the Consultation Period
is terminated by the Company (with or without cause), or by you voluntarily, or
by reason of your total disability, or for any other reason except only your
death.
Transfer of Option. The option is not transferable except by will or by
------------------
the applicable laws of descent and distribution or pursuant to a qualified
domestic relations order.
Vesting. Except in the event the right to exercise this option is
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accelerated pursuant to the remaining provisions of this paragraph or pursuant
to the Plan, of the 25,000 shares subject to the option, fifteen thousand
(15,000) shares will first become exercisable upon the issuance of a United
States patent (the "Patent") for the Nitinol Septal Repair device (based on U.S.
patent application entitled "Daisy Occluder and Method for Septal Defect Repair"
(Application Serial No. 08/697,837) or any continuation, continuation-in-part or
divisional thereof) (the "Issuance Vesting Event"), and ten thousand (10,000)
shares will first become exercisable upon the first commercial sale of a product
whose manufacture, use or sale is covered by the Patent or by a corresponding
foreign patent (or by any reissue, reexamination or extension of the Patent or
any corresponding foreign patent) (the "Sale Vesting Event"; the Issuance
Vesting Event and the Sale Vesting Event are sometimes referred to herein
together as the "Vesting Events"). If you should die prior to the occurrence of
either or both of the Vesting Events, the vesting of this option shall
accelerate as follows. If you should die prior to the occurrence of the
Issuance Vesting Event, the 15,000 shares that otherwise would have vested upon
occurrence of the Issuance Vesting Event shall vest and become exercisable
immediately. If you should die prior to the occurrence of the Sale Vesting
Event, one-half of the 10,000 shares that otherwise would have vested upon
occurrence of the Sale Vesting Event shall vest and become exercisable
immediately. Thereafter, if the Sale Vesting Event occurs within the twelve
months following your death, the balance of the shares that otherwise would
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<PAGE>
have become exercisable upon occurrence of the Sale Vesting Event shall
thereupon become exercisable. In the event the number or class of shares subject
to this option is adjusted pursuant to the terms of the Plan, a corresponding
adjustment shall be made in the references to such shares in this paragraph.
Exercise by Exchange of Purchase Rights. In addition to and without
---------------------------------------
limiting your rights, this option (or any portion thereof) may be exercised by
exchanging purchase rights which are then exercisable hereunder for a number of
shares of Common Stock having an aggregate Market Value (as defined below) on
the date immediately preceding such exercise equal to the difference between (a)
the Market Value of the number of shares subject to the purchase rights thus
exchanged and (b) the aggregate exercise price otherwise payable by you
hereunder for such Shares. Upon any such exercise, the number of shares
purchasable upon exercise of this option shall be reduced by the number of
shares subject to the purchase rights thus exchanged and, if a balance of shares
remains after such exercise, this option will continue thereafter to be
exercisable for such balance of shares. No payment of any cash or other
consideration shall be required in connection with any such exercise. Such
exchange shall be effective upon the date of receipt by the Company of a written
request signed by you that the exchange pursuant to this Section be made, or at
such later date (on or prior to the expiration of the term of this option) as
may be specified in such request. No fractional shares arising out of the above
formula for determining the number of shares issuable in such exchange shall be
issued, and the Company shall in lieu thereof make payment to you of cash in the
amount of such fraction multiplied by the Market Value per share of the Common
Stock on the date of the exchange.
As used herein, "Market Value" shall mean, with respect to any securities,
the last sales price, regular way, on the last trading day on which such
securities were traded immediately preceding the date of determination, or, in
case no such sale takes place on such day, the average of the closing "bid" and
"asked" prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the securities are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities exchange on
which the securities are listed or admitted to trading, or, if the securities
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high "bid" and low
"asked" prices in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use, or, if on any such date the securities are not quoted
by any such organization, the average of the closing "bid" and "asked" prices as
furnished by a professional market maker making a market in the securities, or,
if no such prices were reported or can be determined, such value as the Company
and you may agree,
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or, failing such agreement, such value as may be determined by binding
arbitration before a single arbitrator sitting in Boston, Massachusetts under
the commercial rules of the American Arbitration Association (any cost of
arbitration to be shared equally by the Company and you). In no event, however,
shall the Market Value of any such securities be reduced or discounted on
account of the fact that such securities may represent a minority interest in
the issuer or may not be freely transferable, or for any other reason.
Date of Grant. The date of grant of the option is February 27, 1998.
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Please execute the Acceptance and Acknowledgement set forth below on the
enclosed copy of this Agreement and return it to undersigned.
Very truly yours,
NITINOL MEDICAL TECHNOLOGIES, INC.
By: /s/ Theodore I. Pincus
________________________________
NAME: THEODORE I. PINCUS
TITLE: CHIEF FINANCIAL OFFICER
ACCEPTANCE AND ACKNOWLEDGEMENT
------------------------------
I, Morris Simon, a resident of the Commonwealth of Massachusetts, accept
the stock option described above granted under the Nitinol Medical Technologies,
Inc. 1996 Stock Option Plan, and acknowledge receipt of a copy of this
Agreement, including a copy of the Plan. I have read and understand the Plan,
including the provisions of Section 8 thereof.
Dated: February 27, 1998
/s/ Morris Simon
_____________________________________ ______________________________
Taxpayer I.D. Number Signature
By his or her signature below, the spouse of the Optionee, acknowledges
that he or she has read this Agreement and the Plan and is familiar with the
terms and provisions thereof, and agrees to be bound by all the terms and
conditions of this Agreement and the Plan.
Dated: February 27, 1998
/s/ Jo Simon
______________________________
Spouse's Signature
Jo Simon
______________________________
Printed Name
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NOTICE OF EXERCISE
------------------
The undersigned, pursuant to an Non-Statutory Stock Option Letter Agreement
(the "Agreement") between the undersigned and Nitinol Medical Technologies, Inc.
(the "Company"), hereby irrevocably elects to exercise purchase rights
represented by the Agreement, and to purchase thereunder ________ shares (the
"Shares") of the Company's common stock, $.001 par value ("Common Stock"),
covered by the Agreement and herewith makes payment in full therefor.
1. If the sale of the Shares or the resale thereof has not, prior to the
date hereof, been registered pursuant to a registration statement filed and
declared effective under the Securities Act of 1933, as amended (the "Act"), the
undersigned hereby agrees, represents, and warrants that:
(a) The undersigned is acquiring the Shares for his or her own account
(and not for the account of others), for investment and not with a view to the
distribution or resale thereof;
(b) By virtue of his or her position, the undersigned has access to
the same kind of information which would be available in a registration
statement filed under the Act;
(c) The undersigned is a sophisticated investor;
(d) The undersigned understands that he or she may not sell or
otherwise dispose of the Shares in the absence of either (i) a registration
statement filed under the Act or (ii) an exemption from the registration
provisions thereof; and
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(e) The certificates representing the Shares may contain a legend to
the effect of subsection (d) of this Section 1.
2. If the sale of the Shares and the resale thereof has been registered
pursuant to a registration statement filed and declared effective under the Act,
the undersigned hereby represents and warrants that he or she has received the
applicable prospectus and a copy of the most recent annual report, as well as
all other material sent to stockholders generally.
3. The undersigned acknowledges that the number of shares of Common Stock
subject to the Agreement is hereafter reduced by the number of shares of Common
Stock represented by the Shares.
Very truly yours,
_______________________________________
Morris Simon
Social Security No._______________________
Address: 8 Otis Place, Boston, MA 02108
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Exhibit 10.4
Non-Plan Stock Option Agreement
-------------------------------
NITINOL MEDICAL TECHNOLOGIES, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
1. Grant of Option.
---------------
This Agreement evidences the grant by Nitinol Medical Technologies, Inc., a
Delaware corporation (the "Company") on February 27, 1998 to Dr. Morris Simon,
a director of the Company (the "Optionee"), of an option to purchase, in whole
or in part, on the terms provided herein, a total of 25,000 shares of common
stock, $.001 par value per share, of the Company ("Common Stock") (the
"Shares") at $10.50 per Share, subject to adjustment as hereinafter provided.
Unless earlier terminated, this option shall expire ten (10) years from the date
of grant (the "Final Exercise Date").
It is intended that the option evidenced by this Agreement shall not be an
incentive stock option as defined in Section 422 of the Internal Revenue Code of
1986, as amended and any regulations promulgated thereunder (the "Code").
Except as otherwise indicated by the context, the term "Optionee", as used in
this option, shall be deemed to include any person who acquires the right to
exercise this option validly under its terms.
2. Vesting.
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Except in the event the right to exercise this option is accelerated
pursuant to the provisions of Section 5 hereof, this option will first become
exercisable upon the first commercial sale of a product whose manufacture, use
or sale is covered by the Patent (as defined below) or by a corresponding
foreign patent (or by any reissue, reexamination or extension of the Patent or
any corresponding foreign patent). As used herein, the term "Patent" shall mean
a United States patent for the Nitinol Septal Repair device based on U.S. patent
application entitled "Daisy Occluder and Method for Septal Defect Repair"
(Application Serial No. 08/697,837) or any continuation, continuation-in-part or
divisional thereof.
3. Exercise of Option.
------------------
Each election to exercise this option shall be in writing in the form of
the attached Notice of Exercise, signed by the Optionee, and received by the
Company at its principal office, accompanied by payment in full. Payment shall
be made by delivery of cash, bank certified or cashier's checks, irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or proceeds to pay the
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exercise price (the Company having determined to permit this manner of exercise
whether or not the Optionee is an employee at the time of exercise and whether
or not the Optionee is subject to Section 16(b) of the Securities Exchange Act
of 1934, as amended) or by any other manner acceptable to the Company. This
option may be exercised in whole or in part from time to time, and the Optionee
may purchase less than the number of shares covered hereby, provided that no
partial exercise of this option may be for any fractional share.
4. Adjustment of Number of Option Shares.
-------------------------------------
The number and class of shares covered by this option, and the exercise
price per share thereof (but not the total price), shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock of the Company resulting from a split or consolidation of shares or any
like capital adjustment, or the payment of any stock dividend. Any adjustment
made pursuant to this paragraph shall become effective immediately after the
effective date of such event retroactive to the record date, if any, for such
event.
5. Acquisition Events
------------------
Upon the occurrence of an Acquisition Event (as defined below), this option
will become exercisable in full whether or not the requirements of Section 2
have been satisfied.
An "Acquisition Event" shall mean: (a) any merger or consolidation of the
Company with or into another entity other than a merger or consolidation as a
result of which the voting securities of the Company outstanding immediately
prior thereto represent immediately thereafter (either by remaining outstanding
or by being converted into securities of the surviving or acquiring entity) more
than 50% of the total voting power of the outstanding voting securities of the
surviving or acquiring entity, or (b) the sale, lease, exchange or transfer of
all or substantially all of the Company's assets.
6. Reorganizations, etc.
---------------------
If any reorganization or reclassification of the capital stock of the
Company, or recapitalization of the Company, or distribution by the Company (by
dividend or otherwise) to all holders of its Common Stock of assets (including
securities and evidences of indebtedness, but excluding any stock dividend
referred to in Section 4 and any dividend paid in cash out of the earned surplus
or capital surplus of the Company), or consolidation or merger of the Company
with or into another entity, or sale of all or substantially all of the assets
of the Company (each of the foregoing being referred to as an "Extraordinary
Event") shall be effected, then, as a condition of such Extraordinary Event,
lawful and adequate provision shall be made whereby
-2-
<PAGE>
the Optionee shall thereafter have the right to purchase and receive upon the
terms and conditions herein specified (and, if the outstanding shares of Common
Stock are being converted or exchanged as a result of such Extraordinary Event,
in lieu of the shares of Common Stock of the Company immediately theretofore
purchasable and receivable upon exercise of this option) such securities or
property as may be issued or payable with respect to or in exchange for a number
of outstanding shares of Common Stock equal to the number of shares of Common
Stock immediately theretofore purchasable and receivable upon the exercise of
this option had such Extraordinary Event not taken place, and in any such case
appropriate provision shall be made with respect to the rights and interests of
the Optionee to the end that the provisions hereof (including, without
limitation, provisions for adjustments of the exercise price and of the number
of Shares purchasable upon the exercise of this option) shall thereafter be
applicable, as nearly as may be, in relation to any securities or property
thereafter deliverable upon the exercise hereof. The Company shall not effect
any such consolidation or merger unless, prior to or contemporaneously with the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger shall assume by written instrument
executed and delivered to the Optionee, the obligation to deliver to the
Optionee such securities or property as, in accordance with the foregoing
provisions, the Optionee may be entitled to purchase or receive.
7. Certain Notices.
---------------
In the event of:
(a) any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right; or
(b) any capital reorganization of the Company, any reclassification of the
capital stock of the Company or any transfer of all or substantially all the
assets of the Company to or any consolidation or merger of the Company with or
into any other entity; or
(c) any voluntary or involuntary dissolution, liquidation or winding up of
the Company,
then, and in each such event, the Company will give to the Optionee a notice
specifying (i) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and stating the amount and character of
such dividend, distribution or right, and (ii) the estimated date on which any
such reorganization, reclassification, transfer, consolidation, merger,
dissolution, liquidation
-3-
<PAGE>
or winding up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property deliverable on such
reorganization, reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up. Such notice shall be mailed prior to the date
specified in such notice on which any such action is to be taken at a time
comparable to the time such notice generally is mailed to holders of options to
purchase Common Stock of the Company.
8. Exercise by Exchange of Purchase Rights.
---------------------------------------
In addition to and without limiting the rights of the Optionee, this option
(or any portion thereof) may be exercised by exchanging purchase rights which
are then exercisable hereunder for a number of shares of Common Stock having an
aggregate Market Value (as defined below) on the date immediately preceding such
exercise equal to the difference between (a) the Market Value of the number of
Shares subject to the purchase rights thus exchanged and (b) the aggregate
exercise price otherwise payable by the Optionee hereunder for such Shares.
Upon any such exercise, the number of Shares purchasable upon exercise of this
Option shall be reduced by the number of Shares subject to the purchase rights
thus exchanged and, if a balance of Shares remains after such exercise, this
option will continue thereafter to be exercisable for such balance of Shares.
No payment of any cash or other consideration shall be required in connection
with any such exercise. Such exchange shall be effective upon the date of
receipt by the Company of a written request signed by the Optionee that the
exchange pursuant to this Section be made, or at such later date (on or prior to
the Final Exercise Date) as may be specified in such request. No fractional
shares arising out of the above formula for determining the number of Shares
issuable in such exchange shall be issued, and the Company shall in lieu thereof
make payment to the Optionee of cash in the amount of such fraction multiplied
by the Market Value per share of the Common Stock on the date of the exchange.
As used herein, "Market Value" shall mean, with respect to any securities,
the last sales price, regular way, on the last trading day on which such
securities were traded immediately preceding the date of determination, or, in
case no such sale takes place on such day, the average of the closing "bid" and
"asked" prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the securities are not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on the principal national securities exchange on
which the securities are listed or admitted to trading, or, if the securities
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high "bid" and low
"asked" prices in the over-the-counter market, as reported by the National
-4-
<PAGE>
Association of Securities Dealers, Inc. Automated Quotations System or such
other system then in use, or, if on any such date the securities are not quoted
by any such organization, the average of the closing "bid" and "asked" prices as
furnished by a professional market maker making a market in the securities, or,
if no such prices were reported or can be determined, such value as the Company
and the Optionee may agree, or, failing such agreement, such value as may be
determined by binding arbitration before a single arbitrator sitting in Boston,
Massachusetts under the commercial rules of the American Arbitration Association
(any cost of arbitration to be shared equally by the Company and the Optionee).
In no event, however, shall the Market Value of any such securities be reduced
or discounted on account of the fact that such securities may represent a
minority interest in the issuer or may not be freely transferable, or for any
other reason.
9. Reservation of Option Shares; Authorizations.
--------------------------------------------
The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of issue
upon exercise of this option, a number of its duly authorized shares of Common
Stock equal to the total number of Shares issuable hereunder, and upon such
issuance all Shares shall be duly authorized, validly issued, fully paid and
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof. The Company shall use its reasonable best efforts to obtain any
authorization, consent, approval or other action by, and shall make any filing
with, any court or administrative body that may be required under applicable
state securities laws or otherwise in connection with the issuance of Shares
upon exercise of the option; and, if, despite such efforts, the Company is
unable to obtain any such authorization, consent, approval or other action, the
Company shall promptly take such other action, in consultation with the
Optionee, as may be necessary in order to permit the lawful exercise of the
option and issuance of such Shares.
10. No Impairment.
-------------
The Company shall not, by any voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company, but shall at all times in good faith assist in the
carrying out of all the provisions of this option and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Optionee against impairment.
-5-
<PAGE>
11. Governing Law.
-------------
This Agreement shall be construed, interpreted and enforced in accordance
with the laws of the Commonwealth of Massachusetts.
12. Legend.
------
The Optionee consents to the placement of any legend required by applicable
state securities laws and of a legend substantially in the form as follows on
each certificate representing the Stock:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, EXCHANGED OR OTHERWISE DISPOSED OF UNLESS (1) A
REGISTRATION STATEMENT UNDER SUCH ACT IS THEN IN EFFECT WITH RESPECT
THERETO, (2) A WRITTEN OPINION FROM COUNSEL FOR THE ISSUER OR OF OTHER
COUNSEL FOR THE HOLDER REASONABLY ACCEPTABLE TO THE ISSUER HAS BEEN
OBTAINED TO THE EFFECT THAT NO SUCH REGISTRATION IS REQUIRED, OR (3) A
"NO ACTION" LETTER OR ITS THEN EQUIVALENT HAS BEEN ISSUED BY THE
SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT NO SUCH
REGISTRATION IS REQUIRED IN CONNECTION THEREWITH."
13. Transferability of Option.
-------------------------
This option may not be sold, assigned, transferred, pledged or otherwise
encumbered by the Optionee, either voluntarily or by operation of law.
Notwithstanding the foregoing, this option may be assigned or transferred, in
whole or in part, (i) to the Optionee's spouse, issue and/or a trust for the
benefit of the Optionee's spouse and/or issue if said spouse, issue and/or trust
agree to be bound in writing to the terms and conditions of this Agreement,
provided that the transferee provides written notice of such assignment to the
Company and (ii) by will or the laws of descent and distribution.
-6-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this option to be executed under
its corporate seal by its duly authorized officer. This option shall take
effect as a sealed instrument.
Nitinol Medical Technologies, Inc.
Dated: February 27, 1998 By: /s/ Theodore I. Pincus
-----------------------------------
Name: Theodore I. Pincus
Title: Chief Financial Officer
-7-
<PAGE>
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions thereof.
Optionee:
/s/ Morris Simon
--------------------------------
Name: Dr. Morris Simon
Address: 8 Otis Place
Boston, MA 02108
-8-
<PAGE>
NOTICE OF EXERCISE
------------------
The undersigned, pursuant to a Non-Statutory Stock Option Agreement (the
"Agreement") between the undersigned and Nitinol Medical Technologies, Inc. (the
"Company"), hereby irrevocably elects to exercise purchase rights represented by
the Agreement, and to purchase thereunder _______ shares (the "Shares") of the
Company's common stock, $.001 par value ("Common Stock"), covered by the
Agreement and herewith makes payment in full therefor.
1. If the sale of the Shares or the resale thereof has not, prior to the
effective date of exercise hereof, been registered pursuant to a registration
statement filed and declared effective under the Securities Act of 1933, as
amended (the "Act"), the undersigned hereby agrees, represents, and warrants
that:
(a) The undersigned is acquiring the Shares for his or her own account
(and not for the account of others), for investment and not with a view to the
distribution or resale thereof;
(b) By virtue of his or her position, the undersigned has access to
the same kind of information which would be available in a registration
statement filed under the Act;
(c) The undersigned is a sophisticated investor;
(d) The undersigned understands that he or she may not sell or
otherwise dispose of the Shares in the absence of either (i) a registration
statement filed under the Act or (ii) an exemption from the registration
provisions thereof; and
-9-
<PAGE>
(e) The certificates representing the Shares may contain a legend to
the effect of subsection (d) of this Section 1.
2. If the sale of the Shares and the resale thereof has been registered
pursuant to a registration statement filed and declared effective under the Act,
the undersigned hereby represents and warrants that he or she has received the
applicable prospectus and a copy of the most recent annual report, as well as
all other material sent to stockholders generally.
3. The undersigned acknowledges that the number of shares of Common Stock
subject to the Agreement is hereafter reduced by the number of shares of Common
Stock represented by the Shares.
Very truly yours,
_______________________________________
Morris Simon
Social Security No._______________________
Address: 8 Otis Place
Boston, MA 02108
-10-
<PAGE>
Exhibit 10.5
Registration Rights Agreement
-----------------------------
NITINOL MEDICAL TECHNOLOGIES, INC.
REGISTRATION RIGHTS AGREEMENT
This Agreement dated as of February 27, 1998 is entered into by and among
Nitinol Medical Technologies, Inc., a Delaware corporation (the "Company"), and
Dr. Morris Simon (the "Optionee").
WHEREAS, the Company and the Optionee have entered into the Non-Plan Stock
Option Agreement of even date herewith (the "Non-Plan Option Agreement");
WHEREAS, the Company and the Optionee have entered into Non-Statutory Stock
Option Letter Agreement under the 1996 Stock Option Plan of the Company (the
"Plan Option Agreement"); and
WHEREAS, the Company and the Optionee desire to provide for certain
arrangements with respect to the registration of shares of capital stock of the
Company under the Securities Act of 1933;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission, or any
----------
other Federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.001 par value per share, of
------------
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any similar Federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Non-Plan Option" means the option granted pursuant to the Non-Plan
---------------
Option Agreement.
"Plan Option" means the option granted pursuant to the Plan Option
-----------
Agreement.
-1-
<PAGE>
"Registration Statement" means a registration statement filed by the
----------------------
Company with the Commission for a public offering and sale of Common Stock
(other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 4.
---------------------
"Registrable Shares" means (a) the shares of Common Stock issued or
------------------
issuable upon exercise of the Non-Plan Option pursuant to the Non-Plan Option
Agreement, (b) to the extent not otherwise included in a Registration Statement
on Form S-8 effective under the Securities Act, the shares of Common Stock
issued or issuable upon exercise of the Plan Option pursuant to the Plan Option
Agreement, and (c) any other shares of Common Stock issued in respect of such
shares (because of stock splits, stock dividends, reclassifications,
recapitalizations or similar events); provided, however, that shares of Common
-------- -------
Stock which are Registrable Shares shall cease to be Registrable Shares (i) upon
any sale pursuant to a Registration Statement or Rule 144 under the Securities
Act or (ii) upon any sale in any manner to a person or entity which, by virtue
of Section 9 of this Agreement, is not entitled to the rights provided by this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar Federal statute, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
"Shares" means the shares received upon the exercise of the Plan
------
Option under the Plan Option Agreement and/or the Non-Plan Option under the Non-
Plan Option Agreement.
"Stockholders" means the Optionee and any persons or entities to whom
------------
the rights granted under this Agreement are transferred by the Optionee, their
successors or assigns pursuant to Section 9 hereof.
2. Registration.
------------
(a) Whenever the Company proposes to file a Registration Statement
(either for its own account or at the request of any stockholder) at any time
and from time to time, it will, prior to such filing, give written notice to all
Stockholders of its intention to do so and, upon the written request of a
Stockholder or Stockholders given within 15 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested by such Stockholder or
Stockholders to register to be registered under the
-2-
<PAGE>
Securities Act to the extent necessary to permit their sale or other disposition
in accordance with the intended methods of distribution specified in the request
of such Stockholder or Stockholders; provided that the Company shall have the
right to postpone or withdraw any registration effected pursuant to this Section
2 without obligation to any Stockholder.
(b) In connection with any registration under this Section 2 involving
an underwriting, the Company shall not be required to include any Registrable
Shares in such registration unless the holders thereof accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it. If in the opinion of the managing underwriter it is appropriate because of
marketing factors to limit the number of Registrable Shares to be included in
the offering, then the Company shall be required to include in the registration
only that number of Registrable Shares, if any, which the managing underwriter
believes should be included therein. If the number of Registrable Shares to be
included in the offering in accordance with the foregoing is less than the total
number of shares which the holders of Registrable Shares have requested to be
included, then the holders of Registrable Shares who have requested registration
and other holders of securities entitled to include them in such registration
shall participate in the registration pro rata based upon their total ownership
of shares of Common Stock. If any holder would thus be entitled to include more
securities than such holder requested to be registered, the excess shall be
allocated among other requesting holders pro rata in the manner described in the
preceding sentence.
3. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall:
(a) file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that Registration
Statement to become and remain effective;
(b) as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective, in the case of a firm commitment underwritten
public offering, until each underwriter has completed the distribution of all
securities purchased by it and, in the case of any other offering, until the
earlier of the sale of all Registrable Shares covered thereby or 120 days after
the effective date thereof;
(c) as expeditiously as possible furnish to each selling Stockholder
such reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the selling Stockholder may reasonably request in order to
facilitate the
-3-
<PAGE>
public sale or other disposition of the Registrable Shares owned by the selling
Stockholder; and
(d) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the selling Stockholders shall
reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the selling Stockholder; provided, however, that the Company shall not be
-------- -------
required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling Stockholders and, if requested, the selling Stockholders
shall immediately cease making offers of Registrable Shares and return all
prospectuses to the Company. The Company shall promptly provide the selling
Stockholders with revised prospectuses and, following receipt of the revised
prospectuses, the selling Stockholders shall be free to resume making offers of
the Registrable Shares.
4. Allocation of Expenses. The Company will pay all Registration
----------------------
Expenses of all registrations under this Agreement. For purposes of this
Section 4, the term "Registration Expenses" shall mean all expenses incurred by
the Company in complying with this Agreement, including, without limitation, all
registration and filing fees, exchange listing fees, printing expenses, fees and
expenses of counsel for the Company, state Blue Sky fees and expenses, and the
expense of any special audits incident to or required by any such registration,
but excluding underwriting discounts, selling commissions and the fees and
expenses of selling Stockholders' own counsel, if any.
5. Indemnification and Contribution.
--------------------------------
(a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless the seller of such Registrable Shares, each underwriter of
such Registrable Shares, and each other person, if any, who controls such seller
or underwriter within the meaning of the Securities Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained
-4-
<PAGE>
in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse such seller, underwriter and each such controlling person
for any legal or any other expenses reasonably incurred by such seller,
underwriter or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
-------- -------
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or omission made in such Registration Statement, preliminary prospectus or final
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of such seller, underwriter or controlling person specifically for use in
the preparation thereof.
(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each seller of Registrable
Shares, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors and officers and each underwriter (if any) and each
person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of each such Stockholder
-------- -------
hereunder shall be limited to an amount equal to the proceeds to such
Stockholder of Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has
-5-
<PAGE>
actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
--------
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
-------- -------
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 5. The Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
-------- -------
shall pay such expense if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to actual
or potential differing interests between the Indemnified Party and any other
party represented by such counsel in such proceeding. No Indemnifying Party, in
the defense of any such claim or litigation shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation, and no Indemnified Party shall
consent to entry of any judgment or settle such claim or litigation without the
prior written consent of the Indemnifying Party.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Registrable Shares exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling Stockholder or any such controlling
person in circumstances for which indemnification is provided under this Section
5; then, in each such case, the Company and such Stockholder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportions so that such holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Shares offered by the Registration Statement
bears to the public offering price of all securities offered by such
Registration Statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such holder will be
-------- -------
required to contribute any amount in excess of the proceeds to it of all
Registrable Shares sold by it pursuant to such Registration Statement, and (B)
no person or entity guilty of fraudulent misrepresentation, within the meaning
of Section 11(f) of the Securities Act, shall be entitled to contribution from
any person or entity who is not guilty of such fraudulent misrepresentation.
-6-
<PAGE>
6. Information by Holder. Each Stockholder including Registrable Shares
---------------------
in any registration shall furnish to the Company such information regarding such
Stockholder and the distribution proposed by such Stockholder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
7. Rule 144 Requirements. The Company agrees to furnish to any holder of
---------------------
Registrable Shares upon request (i) a written statement by the Company as to its
compliance with the requirements of said Rule 144(c), and the reporting
requirements of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), (ii) a copy of the most
recent annual or quarterly report of the Company, and (iii) such other reports
and documents of the Company as such holder may reasonably request to avail
itself of any similar rule or regulation of the Commission allowing it to sell
any such securities without registration.
8. Termination. All of the Company's obligations to register Registrable
-----------
Shares under this Agreement shall terminate on the eleventh anniversary of this
Agreement.
9. Transfers of Rights. This Agreement, and the rights and obligations
-------------------
of the Optionee hereunder, may be assigned by the Optionee to any person or
entity to which Shares or Options are transferred by the Optionee, and such
transferee shall be deemed a "Stockholder" for purposes of this Agreement, and
be bound by all the obligations to which the Optionee is bound under this
Agreement; provided that the transferee provides written notice of such
assignment to the Company. If, as a result of a merger, consolidation,
reorganization or other transaction, either the Plan Option or Non-Plan Option
becomes exercisable pursuant to its terms for securities issued by an entity
other than the Company, then, as a condition of such transaction, the Company
shall cause lawful and adequate provision to be made (through assumption of this
Agreement by such other entity or otherwise) so that the Stockholders will have
rights with respect to such other securities which are reasonably equivalent to
their rights hereunder with respect to the Registrable Shares.
10. General.
-------
(a) Notices. All notices, requests, consents, and other
-------
communications under this Agreement shall be in writing and shall be delivered
by hand or mailed by first class certified or registered mail, return receipt
requested, postage prepaid:
If to the Company, at 27 Wormwood Street, Boston, Massachusetts 02210,
Attention: Theodore I. Pincus, Chief Financial Officer, or at such other
address or addresses as may have been furnished in writing by the Company to the
Optionee or
-7-
<PAGE>
Stockholders, with a copy to Steven D. Singer, Hale and Dorr LLP, 60 State
Street, Boston, Massachusetts 02109; or
If to the Optionee, at 8 Otis Place, Boston, Massachusetts 02108, or at
such other address or addresses as may have been furnished to the Company in
writing by the Optionee, with a copy to Jonathan H. Hulbert, Foley, Hoag &
Elliot LLP, One Post Office Square, Boston, Massachusetts 02109.
If to a Stockholder other than Optionee, at such address or addresses as
may have been furnished to the Company by such Stockholder.
Notices provided in accordance with this Section 10(a) shall be deemed
delivered upon personal delivery or two business days after deposit in the mail.
(b) Entire Agreement. This Agreement embodies the entire agreement
----------------
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
(c) Amendments and Waivers. Any term of this Agreement may be amended
----------------------
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), with the
written consent of the Company and the holders of at least a majority of the
Registrable Shares; provided, that this Agreement may be amended with the
--------
consent of the holders of less than all Registrable Shares only in a manner
which affects all Registrable Shares in the same fashion. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
(d) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
shall be one and the same document.
(e) Severability. The invalidity or unenforceability of any provision
------------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(f) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the Commonwealth of Massachusetts.
-8-
<PAGE>
Executed as of the date first written above.
Nitinol Medical Technologies, Inc.
By: /s/ Thomas M. Tully
---------------------------------------
Name: Thomas M. Tully
Title: President
Optionee:
By: /s/ Morris Simon
---------------------------------------
Name: Dr. Morris Simon
-9-
