<PAGE>
As filed with the Securities and Exchange Commission on October 15, 1998
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------
CHROMAVISION MEDICAL SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation of organization)
75-2649072
(I.R.S. Employer Identification No.)
33171 Paseo Cerveza
San Juan Capistrano, California 92675
1-888-443-3310
(Address of principal executive offices)
CHROMAVISION MEDICAL SYSTEMS, INC.
1996 EQUITY COMPENSATION PLAN AND
STOCK OPTION AGREEMENTS WITH
KENNETH S. GARBER, DOUGLAS HARRINGTON, JAMES E. RING,
MICHAEL G. SCHNEIDER, DIETHART REICHARDT AND PATRICIA SISSON
(Full title of the plans)
DOUGLAS S. HARRINGTON, M.D.
Chief Executive Officer
CHROMAVISION MEDICAL SYSTEMS, INC.
33171 Paseo Cerveza San
Juan Capistrano, California 92675
(Name and address of agent for service)
1-888-443-3310
(Telephone number, including area code, of agent for service)
----------
Copy of all communications to:
N. JEFFREY KLAUDER, ESQ.
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103
(215) 963-5000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Title of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price aggregate registration fee
per share offering price (1)
------------------- ------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par 2,317,001 (2) (1) $8,521,510.06 $2,513.85
value $.01 per share
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated pursuant to Rule 457(h) under the Securities Act of 1933,
as amended, based upon the price at which options may be exercised
(317,938 shares at $0.80 per share, 1,083,750 shares at $2.40 per
share, 112,000 shares at $5.00 per share, 4,300 shares at $6.00 per
share, 500 shares at $6.25 per share, 137,600 shares at $6.50 per
share, 5,000 shares at $6.75 per share, 11,500 shares at $7.375 per
share, 20,000 shares at $8.00 per share, 54,000 shares at $8.375 per
share, 10,100 shares at $8.56 per share, 9,500 shares at $8.75, 40,000
shares at $9.375 per share, 2,000 shares at $9.75, 55,000 shares at
$10.00 per share, 12,500 shares at $10.1875, 50,000 shares at $10.25
per share, 5,000 shares at $10.75 per share, 25,000 shares at $11.125
per share and 16,000 shares at $11.875 per share) or, where the price
is not known, the average of the high and low prices of the Company's
Common Stock, as reported on the Nasdaq National market, of $3.40625
per share on October 14, 1998.
(2) Pursuant to Rule 416 under the Securities Act of 1933, this
Registration Statement also covers such additional shares as may
hereinafter be offered or issued to prevent dilution resulting from
stock splits, stock dividends, recapitalizations or certain other
capital adjustments.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, as filed by ChromaVision Medical Systems, Inc.
(the "Registrant") with the Securities and Exchange Commission (the
"Commission"), are incorporated by reference in this Registration Statement:
(a) The Registrant's Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1997.
(b) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.
(c) The Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998.
(d) The description of the Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed by the Registrant on June 27, 1997 to
register such securities under the Securities Exchange Act of 1934, including
all amendments and reports updating such description
All reports and other documents filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") after the date of this Registration Statement and
prior to the filing of a post-effective amendment to this Registration Statement
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be part hereof from the date of filing
of such documents.
Any statement contained in any document, all or a portion of which is
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained or incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
The financial statements incorporated in this Registration Statement on
Form S-8 by reference to the Registrant's Annual Report for the period ended
December 31, 1997, have been audited by KPMG Peat Marwick LLP, independent
accountants, as set forth in their report contained therein. Such financial
statements are, and audited annual financial statements to be included in
subsequently filed documents will be, incorporated herein in reliance upon the
reports of KPMG Peat Marwick LLP, pertaining to such financial statements (to
the extent covered by consents filed with the Commission) given upon the
authority of such firm as experts in accounting and auditing.
Item 6. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL")
permits a corporation to indemnify any of its directors or officers who was or
is a party or is threatened to be made a party to any third party proceeding by
reason of the fact that such person is or was a director or officer of the
corporation, against expenses (including attorney's fees), judgements, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action or proceeding, if such person acted in good faith
and in a manner such person reasonably believed to be in or not opposed to the
best interest of the corporation, and, with respect to any criminal action or
proceeding, had no reason to believe that such person's conduct was unlawful. In
a derivative action, i.e., one by or in the right of the corporation, the
corporation is permitted to indemnify directors and officers against expenses
(including attorney's fees) actually and reasonably incurred by them in
connection with the defense or settlement of an action or suit if they acted in
good faith and in a manner that they reasonably believed to be in or not opposed
to the best interests of the corporation, except that no indemnification shall
be made if such person shall have been adjudged liable to the
<PAGE>
corporation, unless and only to the extent that the court in which the action or
suit was brought shall determine upon application that the defendant directors
or officers are fairly and reasonably entitled to indemnity for such expenses
despite such adjudication of liability.
Section 7.01 of the Registrant's By-Laws requires the Registrant to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed proceeding by reason of the fact that he
is or was serving at the request of the Registrant as a director, officer,
employee, fiduciary or agent of another corporation, trust or other enterprise
against expenses (including attorney's fees), judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such proceeding if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Registrant, and,
with respect to any such criminal proceeding, had no reasonable cause to believe
his conduct was unlawful.
Section 7.03 of the Registrant's By-Laws provides that such
indemnification as to expenses is mandatory to the extent the individual is
successful on the merits of the matter. Delaware law permits the Registrant to
provide similar indemnification to employees and agents who are not directors or
officers. The determination of whether an individual meets the applicable
standard of conduct may be made by the disinterested directors, independent
legal counsel or the stockholders. The DGCL also permits indemnification in
connection with a proceeding brought by or in the right of the Registrant to
procure a judgment in its favor.
Section 7.05 of the Registrant's By-Laws mandates the advancement of
expenses to any director or officer who incurred such expenses in defending any
action or proceeding in advance of its final disposition provided that if
required by the DGCL or other applicable law, the payment of such expenses be
made only upon receipt of an undertaking by or on behalf of such person to repay
such amount if it is determined that he is not entitled to indemnification.
Reference is made to Section 8 of the Standby Underwriting Agreement
(Exhibit 1.1 to the S-1 Registration Statement) which provides for
indemnification among the Company and the Underwriters (as defined in such
Standby Underwriting Agreement).
The Registrant has a directors' and officers' liability insurance
policy that affords directors and officers with insurance coverage for losses
arising from claims based on breaches of duty, negligence, error and other
wrongful acts.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
The following exhibits are filed as part of this Registration
Statement.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------- -------
<S> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP
10.1 ChromaVision Medical Systems, Inc. 1996 Equity Compensation Plan, as amended and
restated
10.2 Stock Option Agreement between the Company and Kenneth S. Garber
10.3 Stock Option Agreement between the Company and Douglas Harrington
10.4 Stock Option Agreement between the Company and James E. Ring
10.5 Stock Option Agreement between the Company and Michael G. Schneider
10.6 Stock Option Agreement between the Company and Diethart Reichardt
</TABLE>
<PAGE>
<TABLE>
<S> <C>
10.7 Stock Option Agreement between the Company and Patricia Sisson
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1 hereto)
</TABLE>
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information in
the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with the Securities
and Exchange Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for the purpose
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and each filing of an employee benefit plan' s
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in this Registration Statement shall be deemed
to be a new registration statement relating to the securities offered herein and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in San Juan Capistrano, California, on October 12, 1998.
CHROMAVISION MEDICAL SYSTEMS, INC.
By: /s/ Douglas S. Harrington, M.D.
--------------------------------
Douglas S. Harrington, M.D.
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Capacity Date
---- -------- ----
<S> <C> <C>
/s/ Douglas S. Harrington, M.D. Chief Executive Officer (Principal October 12, 1998
- -------------------------------------- Executive Officer) and Director
Douglas S. Harrington, M.D.
/s/ Kevin C. O'Boyle Vice President and Chief Financial October 12, 1998
- -------------------------------------------- Officer (Principal Financial and
Kevin C. O'Boyle Accounting Officer)
/s/ John S. Scott, Ph.D. Chairman of the Board of October 12, 1998
- --------------------------------------------- Directors
John S. Scott, Ph.D.
/s/ Christoper Moller, Ph.D. Director October 12, 1998
- ----------------------------------------------
Christopher Moller, Ph.D.
/s/ Richard C.E. Morgan Director October 12, 1998
- ---------------------------------------------
Richard C. E. Morgan
/s/ Mary Lake Polan, M.D., Ph.D. Director October 12, 1998
- ----------------------------------------
Mary Lake Polan, M.D., Ph.D.
/s/ Charles A. Root Director October 12, 1998
- --------------------------------------------------
Charles A. Root
/s/ Thomas R. Testman Director October 12, 1998
- ---------------------------------------------
Thomas R. Testman
</TABLE>
<PAGE>
CHROMAVISION MEDICAL SYSTEMS, INC.
REGISTRATION STATEMENT ON FORM S-8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
-------- -------
<S> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP
10.1 ChromaVision Medical Systems, Inc. 1996 Equity Compensation Plan, as amended and restated
10.2 Stock Option Agreement between the Company and Kenneth S. Garber
10.3 Stock Option Agreement between the Company and Douglas Harrington
10.4 Stock Option Agreement between the Company and James E. Ring
10.5 Stock Option Agreement between the Company and Michael G. Schneider
10.6 Stock Option Agreement between the Company and Diethart Reichardt
10.7 Stock Option Agreement between the Company and Patricia Sisson
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1 hereto)
</TABLE>
<PAGE>
Exhibit 5.1
October 12, 1998
ChromaVision Medical Systems, Inc.
33171 Paseo Cerveza
San Juan Capistrano, California 92675
Re: ChromaVision Medical Systems, Inc. Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to ChromaVision Medical Systems, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-8 (the "Registration Statement") to be filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), relating to an aggregate of 2,317,001 shares of the
Company's common stock, par value $.01 per share (the "Shares"), that may be
awarded under the Company's 1996 Equity Compensation Plan and stock option
agreements with Kenneth S. Garber, Douglas Harrington, James E. Ring, Michael G.
Schneider, Diethart Reichardt and Patricia Sisson (together, the "Plans").
We have examined copies of the Plans, the Company's restated articles of
incorporation and such certificates, records, statutes and other documents as we
have deemed relevant in rendering this opinion. As to matters of fact, we have
relied on representations of officers of the Company. In our examination we have
assumed the genuineness of documents submitted to us as originals and the
conformity with the original of all documents submitted to us as copies thereof.
Based on the foregoing, it is our opinion that the Shares, when awarded in
accordance with the terms of the Plans, will be validly issued, fully paid and
nonassessable shares of common stock of the Company.
<PAGE>
ChromaVision Medical Systems, Inc.
Page 2
We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement. In giving such opinion, we do not thereby admit that we are acting
within the category of persons whose consent is required under Section 7 of the
Act or the rules or regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE>
EXHIBIT 10.1
CHROMAVISION MEDICAL SYSTEMS, INC.
1996 EQUITY COMPENSATION PLAN
SECTION 1. Purpose; Definitions
The purpose of the ChromaVision Medical Systems, Inc. 1996 Equity
Compensation Plan (the "Plan") is to provide employees (including employees who
are also officers or directors), non-employee directors, advisory board members
and Eligible Independent Contractors (as hereinafter defined) of ChromaVision
Medical Systems, Inc. (the "Company") with the opportunity to receive grants of
incentive stock options, nonqualified stock options, stock appreciation rights
and restricted stock awards. The Company believes that the Plan will enable the
Company to attract, retain and motivate its employees, non-employee directors,
advisory board members and Eligible Independent Contractors, will encourage Plan
participants to contribute materially to the growth of the Company for the
benefit of the Company's stockholders, and will align the economic interests of
the Plan participants with those of the stockholders.
For the purposes of the Plan, the following terms shall be defined as
set forth below:
a. "Board" means the Board of Directors of the Company.
b. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
c. "Committee" means the Committee designated by the Board to
administer the Plan.
d. "Company" means ChromaVision Medical Systems, Inc., its subsidiaries
or any successor organization.
e. "Disability" means permanent and total disability within the meaning
of Section 22(e)(3) of the Code.
f. "Eligible Independent Contractor" means an independent consultant or
advisor hired by the Company to provide bona fide services for the Company that
are not in connection with the offer or sale of securities in a capital-raising
transaction.
g. "Employed by the Company" shall mean employment as an employee,
Eligible Independent Contractor, member of any advisory board, or member of the
Board, so that for purposes of exercising Stock Options and Stock Appreciation
Rights and satisfying conditions with respect to Restricted Stock Grants, a
Participant shall not be considered to have terminated employment until the
Participant ceases to be an employee, Eligible Independent Contractor, member of
any advisory board, or member of the Board; provided, however, that the
Committee may determine otherwise as may be specified in an individual
Participant's Grant Letter.
h. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
i. "Fair Market Value" means the fair market value of the Stock as
determined by the Committee in good faith based on the best available facts and
circumstances at the time; provided, however,
<PAGE>
that where there is a public market for the Stock and the Stock is registered
under the Exchange Act, Fair Market Value shall mean the per share or aggregate
value of the Stock as of any given date, determined as follows: (i) if the
principal trading market for the Stock is a national securities exchange or the
Nasdaq National Market, the last reported sale price thereof on the relevant
date or, if there were no trades on that date, the latest preceding date upon
which a sale was reported, or (ii) if the Stock is not principally traded on
such exchange or market, the mean between the last reported "bid" and "asked"
prices of Stock on the relevant date, as reported on Nasdaq or, if not so
reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Committee determines.
j. "Grant" means any Stock Option, Stock Appreciation Right or
Restricted Stock award granted pursuant to the Plan.
k. "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
l. "Insider" means a Participant who is subject to Section 16 of the
Exchange Act.
m. "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
n. "Participant" means an employee, non-employee director or Eligible
Independent Contractor to whom an award is granted pursuant to the Plan.
o. "Plan" means the ChromaVision Medical Systems, Inc. 1996 Equity
Compensation Plan, as hereinafter amended from time to time.
p. "Restricted Stock" means an award of shares of Stock that is subject
to restrictions pursuant to Section 7 below.
q. "Securities Act" shall mean the Securities Act of 1933, as amended.
r. "Securities Broker" means the registered securities broker
acceptable to the Company who agrees to effect the cashless exercise of an
Option pursuant to Section 5(d) hereof.
s. "Stock" means the Common Stock of the Company, $.01 par value per
share.
t. "Stock Appreciation Right" means the right, pursuant to an award
granted under Section 6 below, to surrender to the Company all (or a portion) of
a Stock Option in exchange for an amount in cash and/or shares of Stock equal in
value to the excess of (i) the Fair Market Value, as of the date such right is
exercised and the related Stock Option (or such portion thereof) is surrendered,
of the shares of Stock covered by such Stock Option (or such portion thereof),
over (ii) the aggregate exercise price of such Stock Appreciation Right (or such
portion thereof).
u. "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock, if the Committee so determines) granted
pursuant to Section 5 below.
v. "Termination for Cause" shall mean, except to the extent specified
otherwise by the
<PAGE>
Committee, a finding by the Committee that the Participant has breached his or
her employment or service contract, non-competition or other obligation with the
Company, or has been engaged in disloyalty to the Company, including, without
limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment or service, or has disclosed
trade secrets or confidential information of the Company to persons not entitled
to receive such information.
SECTION 2. Administration
The Plan shall be administered by a Committee which shall consist of
two or more non-employee directors appointed by the Board. In the absence of the
designation of a Committee to administer the Plan, the Plan shall be
administered by the full Board.
The Committee shall have the authority to:
(a) select the Participants to whom Grants may from time to time be
made hereunder;
(b) determine the type, size and terms of the Grants to be made to each
such Participant;
(c) determine the time when the Grants will be made and the duration of
any applicable exercise or restriction period, including the criteria for
exercisability and the acceleration of exercisability;
(d) amend the terms of any outstanding award (with the consent of the
Participant) to reflect terms not otherwise inconsistent with the Plan,
including, but not limited to, amendments concerning vesting acceleration or
forfeiture waiver regarding any award or the extension of a Participant's right
with respect to Grants under the Plan as a result of termination of employment
or service or otherwise, based on such factors as the Committee shall determine,
in its sole discretion, or substitution of new Stock Options for previously
granted Stock Options, including previously granted Stock Options having high
option prices;
(e) establish from time to time any policy or program to encourage or
require Participants to achieve or maintain equity ownership in the Company
through the use of the Plan upon such terms and conditions as the Committee may
determine in its sole discretion, and thereafter to amend, modify or terminate
such policy or program as the Committee may from time to time deem appropriate;
and
(f) deal with any other matters arising under the Plan.
The Committee shall have full power and authority to administer and
interpret the Plan and any Grant made under the Plan, to make factual
determinations and to adopt, alter and repeal such administrative rules,
guidelines, practices, agreements and instruments for implementing the Plan and
for the conduct of its business as it deems necessary or advisable, in its sole
discretion. All decisions made by the Committee pursuant to the provisions of
the Plan shall be final and binding on all persons having any interest in the
Plan or in any Grants made hereunder. All power of the Committee shall be
executed in its sole discretion, in the best interest of the Company, not as a
fiduciary, and in keeping with the objectives of the Plan.
No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Grant made
under it. Nothing herein shall be deemed to expand the personal liability of a
member of the Board or Committee beyond that which may arise under any
applicable standards set forth in the Company's Articles of Incorporation,
by-laws and Delaware law, nor shall anything herein limit any rights to
indemnification or advancement of expenses to which any member
<PAGE>
of the Board or the Committee may be entitled under any applicable law, the
Company's Articles of Incorporation or by-laws, agreement, vote of the
stockholders or directors, or otherwise.
SECTION 3. Stock Subject to the Plan
(a) The aggregate number of shares of Stock that may be issued or
transferred under the Plan is 1,920,000 subject to adjustment pursuant to
Section 3(b) below. Such shares may be authorized but unissued shares or
reacquired shares of Stock, including shares purchased by the Company on the
open market for purposes of the Plan. In the event the number of shares of Stock
issued under the Plan and the number of shares of Stock subject to outstanding
awards equals the maximum number of shares of Stock authorized under the Plan,
no further awards shall be made unless the Plan is amended to increase the
number of shares of Stock issuable and transferable hereunder or additional
shares of Stock become available for further awards under the Plan. If and to
the extent that Options or Stock Appreciation Rights granted under the Plan
terminate, expire or are canceled, forfeited, exchanged or surrendered without
having been exercised, or if any shares of Restricted Stock are forfeited, the
shares subject to such Grants shall again be available for subsequent awards
under the Plan.
(b) If there is any change in the number or kind of shares of Company
Stock outstanding (i) by reason of a stock dividend, spin off, recapitalization,
stock split, or combination or exchange of shares, (ii) by reason of a merger,
reorganization or consolidation in which the Company is the surviving
corporation, (iii) by reason of a reclassification or change in par value, or
(iv) by reason of any other extraordinary or unusual event affecting the
outstanding Company Stock as a class without the Company's receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spin off or the Company's payment of an
extraordinary dividend or distribution, then unless such event or change results
in the termination of all outstanding awards under the Plan, the Committee shall
preserve the value of the outstanding awards by adjusting the maximum number and
class of shares issuable under the Plan to reflect the effect of such event or
change in the Company's capital structure, and by making appropriate adjustments
to the number and class of shares subject to an outstanding award and/or the
option price of each outstanding Option and Stock Appreciation Right, except
that any fractional shares resulting from such adjustments shall be eliminated
by rounding any portion of a share equal to .5 or greater up, and any portion of
a share equal to less than .5 down, in each case to the nearest whole number.
SECTION 4. Eligibility; Participant Limitations Concerning Issuances
All employees, non-employee directors and Eligible Independent
Contractors are eligible to participate in the Plan. The maximum aggregate
number of shares of Stock that shall be subject to Grants made under the Plan to
any Participant shall not exceed 875,000. The terms and provisions of Grants
made under the Plan may vary between Participants or as to the same Participant
to whom more than one Grant may be awarded.
SECTION 5. Stock Options
Stock Options may be granted alone, in addition to, or in tandem with
other awards granted under the Plan. Any Stock Option granted under the Plan
shall be in such form as the Committee may from time to time approve. Stock
Options granted under the Plan may be of two types: (i) Incentive Stock Options
and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant Incentive Stock
Options, Non-Qualified Stock
<PAGE>
Options or both types of Stock Options (in each case with or without Stock
Appreciation Rights). To the extent that any Stock Option does not qualify as an
Incentive Stock Option, it shall constitute a NonQualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of this
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify the Plan under Section 422 of the Code, or,
without the consent of the Participant affected, to disqualify any Incentive
Stock Option under Section 422.
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
appropriate:
(a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant,
provided, however, that the option price per share for any Incentive Stock
Option shall be not less than 100% of the Fair Market Value of the Stock at the
time of grant.
Any Incentive Stock Option granted to any Participant who, at
the time the Option is granted, owns more than 10% of the voting power of all
classes of stock of the Company or of a Parent or Subsidiary corporation (within
the meaning of Section 424 of the Code), shall have an exercise price no less
than 110% of the Fair Market Value per share on the date of the grant.
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date the Stock Option is granted. However, any Incentive Stock Option
granted to any Participant who, at the time the Option is granted, owns more
than 10% of the voting power of all classes of stock of the Company or of a
Parent or Subsidiary corporation may not have a term of more than five years. No
Stock Option may be exercised by any person after expiration of the term of the
Stock Option.
(c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant. If the Committee provides, in its discretion, that
any Stock Option is exercisable only in installments, the Committee may waive
such installment exercise provisions at any time at or after grant in whole or
in part, based on such factors as the Committee shall determine, in its sole
discretion.
(d) Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c), Stock Options may be exercised, in whole or
in part at any time and from time to time during the Option period, by giving
written notice of exercise to the Company specifying the number of shares to be
purchased. Such notice shall be accompanied by payment in full of the purchase
price, either by cash, check, or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of unrestricted
Stock already owned by the Participant (including Company Stock acquired in
connection with the exercise of an Option, subject to such restrictions as the
Committee deems appropriate); provided, however, that (i) in the case of an
Incentive Stock Option, the right to make a payment in the form of unrestricted
Stock already owned by the Participant may be authorized only at the time the
Option is granted and (ii) the Company may require that the Stock has been owned
by the Participant for the requisite period of time necessary to avoid a charge
to the Company's earnings for financial reporting purposes and adverse
accounting consequences
<PAGE>
to the Company with respect to the Option.
If specified by the Committee in the agreement governing a
Stock Option at the time of grant, the Committee may, in its sole discretion,
upon receipt of such Participant's written notice to exercise, elect to cash out
all or part of the portion of the Stock Option to be exercised by paying the
Participant an amount, in cash or Stock, equal to the excess of the Fair Market
Value of the Stock over the option price on the effective date of such cash-out.
To the extent permitted under the applicable laws and
regulations, at the request of the Participant and if authorized by the
Committee, in its sole discretion, at or after grant, the Company agrees to
cooperate in a "cashless exercise" of a Stock Option. The cashless exercise
shall be effected by the Participant delivering to the Securities Broker
instructions to sell a sufficient number of shares of Stock to cover the cost
and expenses associated therewith.
No shares of Stock shall be issued until full payment therefor
has been made. A Participant shall not have any right to dividends or other
rights of a stockholder with respect to shares subject to the Option until such
time as Stock is issued in the name of the Participant following exercise of the
Option in accordance with the Plan.
(e) Stock Option Agreement. Each Option granted under this Plan shall
be evidenced by an appropriate Stock Option agreement, which agreement shall
expressly specify whether such Option is an Incentive Stock Option or a
Non-Qualified Stock Option and shall be executed by the Company and the
Participant. The agreement shall contain such terms and provisions, not
inconsistent with the Plan, as shall be determined by the Committee.
(f) Replacement Options. The Committee may, in its sole discretion and
at the time of the original option grant, authorize the Participant to
automatically receive replacement Options pursuant to this part of the Plan. Any
such replacement option shall be granted upon such terms and subject to such
conditions and limitations as the Committee may deem appropriate. Any
replacement option shall cover a number of shares determined by the Committee,
but in no event more than the number of shares equal to the number of shares of
the original option exercised. The per share exercise price of any replacement
option shall equal the then current Fair Market Value of a share of Stock, and
shall have a term as determined by the Committee at the time of grant of the
original Option.
The Committee shall have the right, and may reserve the right
in any Option grant, in its sole discretion and at any time, to discontinue the
automatic grant of replacement options if it determines the continuance of such
grants to no longer be in the best interest of the Company.
(g) Non-transferability of Options. Except as provided below, no Stock
Option shall be transferable by the Participant other than by will or by the
laws of descent and distribution, and all Stock Options shall be exercisable,
during the Participant's lifetime, only by the Participant. When a Participant
dies, the representative or other person entitled to succeed to the rights of
the Grantee may exercise such rights, subject to the Company receiving
satisfactory proof of his or her right to receive the Grant under the
Participant's will or under the applicable laws of descent and distribution.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Participant may transfer Nonqualified Stock Options pursuant to a
domestic relations order or to family members or other persons or entities
according to such terms as the Committee may determine.
<PAGE>
(h) Termination of Employment; Disability; Death
(i) Unless otherwise determined by the Committee at or after
grant, in the event of a Participant's termination of employment
(voluntary or involuntary) for any reason other than as provided below,
any Stock Option held by such Participant may thereafter be exercised
by the Participant, to the extent it was exercisable at the time of
such termination or on such accelerated basis as the Committee may
determine at or after grant, for a period of three months (or such
shorter period as the Committee may specify at grant) from the date of
such termination of employment or until the expiration of the stated
term of such Stock Option, whichever period is shorter.
(ii) Unless otherwise determined by the Committee at or after
grant, if any Participant ceases to be employed by the Company on
account of a Termination for Cause by the Company, any Stock Option
held by such Participant shall terminate as of the date the Participant
ceases to be employed by the Company, and the Participant shall
automatically forfeit all Stock underlying any exercised portion of an
Option for which the Company has not yet delivered the share
certificates, upon refund by the Company of the Exercise Price paid by
the Participant for such Stock.
(iii) Unless otherwise determined by the Committee at or after
grant, if a Participant's employment by the Company terminates by
reason of Disability, any Stock Option held by such Participant may
thereafter be exercised by the Participant, to the extent it was
exercisable at the time of termination, or on such accelerated basis as
the Committee may determine at or after grant, for a period of one year
(or such shorter period as the Committee may specify at grant) from the
date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is shorter.
(iv) Unless otherwise determined by the Committee at or after
grant, if any Participant dies while employed by the Company or within
three months after the date on which the Participant ceases to be
employed by the Company on account of termination of employment
specified in Section 5(h)(i) above (or within such other period of time
as may be specified by the Committee), any Stock Option held by such
Participant may thereafter be exercised, to the extent then exercisable
or on such accelerated basis as the Committee may determine at or after
grant, by the legal representative of the estate or by the legatee of
the Participant under the will of the Participant, for a period of one
year (or such shorter period as the Committee may specify at grant)
from the date of such termination of employment or until the expiration
of the stated term of such Stock Option, whichever period is shorter.
(i) Incentive Stock Option Limitation. The aggregate Fair Market Value
(determined as of the time of grant) of the Stock with respect to which
Incentive Stock Options are exercisable for the first time by the Participant
during any calendar year under the Plan and/or any other stock option plan of
the Company shall not exceed $100,000. An Incentive Stock Option shall not be
granted to any person who is not an employee of the Company or a parent or
subsidiary (within the meaning of section 424(f) of the Code).
(j) Issuance of Shares . Within a reasonable time after exercise of an
Option, the Company shall cause to be delivered to the Participant a certificate
for the Stock purchased pursuant to the exercise of the Option.
<PAGE>
SECTION 6. Stock Appreciation Rights
(a) Grant and Exercise. Stock Appreciation Rights may be granted either
separately or in tandem with all or part of any Stock Option granted under the
Plan. The provisions of Stock Appreciation Rights awarded under the Plan need
not be the same with respect to each Participant. In the case of a NonQualified
Stock Option, such rights may be granted either at the grant of such Stock
Option or at any time thereafter while the Option remains outstanding. In the
case of an Incentive Stock Option, such rights may be granted only at the time
of the grant of such Stock Option. The Committee shall establish the base amount
of the Stock Appreciation Rights at the time the Stock Appreciation Right is
granted. Unless the Committee determines otherwise, the base amount of each
Stock Appreciation Right shall be equal to the per share option price of the
related Stock Option or, if there is no related Stock Option, the Fair Market
Value of a share of Stock as of the date of grant of such Stock Appreciation
Right.
A Stock Appreciation Right or applicable portion thereof
granted with respect to a given Stock Option shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option, except
that, unless otherwise determined by the Committee, in its sole discretion, at
the time of grant, a Stock Appreciation Right granted with respect to less than
the full number of shares covered by a related Stock Option shall not be reduced
until the number of shares covered by an exercise or termination of the related
Stock Option exceeds the number of shares not covered by the Stock Appreciation
Right.
A Stock Appreciation Right may be exercised by a Participant,
in accordance with Section 6(b), by surrendering the applicable portion of the
related Stock Option. Upon such exercise and surrender, the Participant shall be
entitled to receive an amount determined in the manner prescribed in Section
6(b). Stock Options which have been so surrendered, in whole or in part, shall
no longer be exercisable to the extent the related Stock Appreciation Rights
have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at
such time or times and to the extent that the Stock Options to which
they relate, if any, shall be exercisable in accordance with the
provisions of Section 5 and this Section 6 of the Plan.
(ii) Upon the exercise of a Stock Appreciation Right, a
Participant shall be entitled to receive up to, but not more than, an
amount in cash and/or shares of Stock equal in value to the excess of
the Fair Market Value of one share of Stock (as of the date the Stock
Appreciation Right is exercised and the related Stock Option is
surrendered) over the exercise price of the Stock Appreciation Right,
multiplied by the number of shares of Stock in respect of which the
Stock Appreciation Right shall have been exercised, with the Committee
having the right to determine the form of payment.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be
transferable under Section 5(g) of the Plan.
(iv) A Stock Appreciation Right granted in connection with an
Incentive Stock Option may be exercised only if and when the market
price of the Stock subject to the Incentive Stock
<PAGE>
Option exceeds the exercise price of such Stock Option.
SECTION 7. Restricted Stock
(a) Administration. Shares of Restricted Stock may be issued either
alone or in addition to other awards granted under the Plan. The Committee shall
determine the employees, non-employee directors or Eligible Independent
Contractors to whom, and the time or times at which, grants of Restricted Stock
will be made, the number of shares to be awarded, the price (if any) to be paid
by the recipient of Restricted Stock (subject to Section 7(b)), the time or
times within which such awards may be subject to forfeiture, and all other
conditions of the awards. The Committee may condition the grant of Restricted
Stock upon the attainment of specified performance goals or such other factors
as the Committee may determine, in its sole discretion. The provisions of
Restricted Stock awards need not be the same with respect to each Participant.
(b) Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be
established by the Committee and may be zero.
(ii) Awards of Restricted Stock may be accepted within a
period of 60 days (or such shorter period as the Committee may specify
at grant) after the grant date, by executing a Restricted Stock award
agreement and paying whatever price (if any) is required under Section
7(b)(i).
(iii) Each Participant receiving a Restricted Stock award
shall be issued a certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such award,
substantially in the following form:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) of the ChromaVision Medical
Systems, Inc. 1996 Equity Compensation Plan and an Agreement
entered into between the registered owner and ChromaVision
Medical Systems, Inc. Copies of such Plan and Agreement are on
file at the offices of ChromaVision Medical Systems, Inc."
(iv) The Committee shall require that the certificates
evidencing such Restricted Stock be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a
condition of any Restricted Stock award, the Participant shall have
delivered a stock power, endorsed in blank, relating to the Stock
covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the Restricted
Stock award agreement, during a period set by the Committee commencing
with the date of such award (the "Restriction Period"), the Participant
shall not be permitted to sell, transfer, pledge, assign or otherwise
encumber
<PAGE>
shares of Restricted Stock awarded under the Plan. Within these limits,
the Committee, at its sole discretion, may provide for the lapse of
such restrictions in installments and may accelerate or waive such
restrictions in whole or in part, based on service, performance and/or
such other factors or criteria as the Committee may determine, in its
sole discretion.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i), the Participant shall have, with respect to the shares of
Restricted Stock, all of the rights of a stockholder of the Company,
including the right to vote the shares and the right to receive any
cash dividends. The Committee, in its sole discretion, as determined at
the time of award, may permit or require the payment of cash dividends
to be deferred and, if the Committee so determines, reinvested in
additional Restricted Stock to the extent shares are available under
Section 3.
(iii) Subject to the applicable provisions of the Restricted
Stock award agreement and this Section 7, upon termination of a
Participant's employment with the Company for any reason during the
Restriction Period, all shares still subject to restriction shall be
forfeited by the Participant, subject to any payments for such shares
as may be provided in the Restricted Stock award agreement.
(iv) The Committee may, in its sole discretion, waive in whole
or in part any or all remaining restrictions with respect to such
Participant's shares of Restricted Stock, based on such factors as the
Committee may deem appropriate.
(v) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period,
the certificates for such shares shall be delivered to the Participant
promptly.
SECTION 8. Withholding and Use of Shares to Satisfy Tax Obligations
(a) Required Withholding. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local withholding requirements.
The Company shall have the right to deduct from all Grants paid in cash, or from
other wages paid to the Participant, any federal, state or local taxes required
by law to be withheld with respect to such Grants. In the case of Grants paid in
Company Stock, the Company may require the Participant or other person receiving
such Stock to pay to the Company the amount of any such taxes that the Company
is required to withhold with respect to such Grants, or the Company may deduct
from other wages paid by the Company the amount of any withholding taxes due
with respect to such Grants.
(b) Election to Withhold Shares. If the Committee so permits, a
Participant may elect to satisfy the Company's income tax withholding obligation
with respect to a Grant paid in Company Stock by having shares withheld up to an
amount that does not exceed the Participant's maximum marginal tax rate for
federal (including FICA), state and local tax liabilities. The election must be
in a form and manner prescribed by the Committee and shall be subject to the
prior approval of the Committee.
<PAGE>
SECTION 9. Amendments and Termination
The Board may amend or terminate the Plan at any time and from time to
time, but no amendment or termination shall be made which would impair the
rights of a Participant under a Grant theretofore awarded without the
Participant's consent; and provided, further, that the Board shall not amend the
Plan without stockholder approval if such approval is required pursuant to the
Code or the rules of any national securities exchange or over-the-counter market
on which the Company's Stock is then listed or included. Subject to the above
provisions, the Board shall have broad authority to amend the Plan to take into
account changes in applicable tax laws, securities laws and accounting rules, as
well as other developments.
SECTION 10. Unfunded Status of Plan
The Plan is intended to constitute an "unfunded" plan. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the payment of any Grants under this Plan.
In no event shall interest be paid or accrued on any Grant, including unpaid
installments of Grants.
SECTION 11. General Provisions
(a) The Committee may require each person purchasing shares pursuant to
a Stock Option or receiving Stock upon the expiration of any Restriction Period
under the Plan to represent to and agree with the Company in writing that the
Participant is acquiring the shares for investment and not with a view to
distribution thereof and that such Participant will not dispose of such Stock in
any manner that would involve a violation of applicable securities laws. In such
event no Stock shall be issued to such Participant unless and until the Company
is satisfied with such representation. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer under the Securities Act or any state securities law.
All certificates for shares of Stock or other securities
delivered under the Plan shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities Act, the Exchange Act, any stock
exchange or over-the-counter market upon which the Stock is then listed or
included, and any applicable federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required, and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any Participant any
right to continued employment with the Company nor shall it interfere in any way
with the right of the Company to terminate its relationship with any of its
employees, directors or independent contractors at any time.
(d) At the time of grant, the Committee may provide in connection with
any grant made under this Plan that (i) the shares of Stock received as a result
of such grant shall be subject to a right of first refusal, pursuant to which
the Participant shall be required to offer to the Company any shares that the
Participant wishes to sell, with the price being the then Fair Market Value of
the Stock, subject to such other terms and conditions as the Committee may
specify at the time of grant; and (ii) the shares of Stock received
<PAGE>
or to be received as a result of such grant shall be subject to repurchase by
the Company upon termination of employment, subject to a repurchase price and
such other terms and conditions as the Committee may specify at the time of
grant.
(e) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment shall only be permissible if sufficient shares of
Stock are available under Section 3 for such reinvestment.
(d) The Committee shall establish such procedures as it deems
appropriate for a Participant to designate a beneficiary to whom any amounts
payable in the event of the Participant's death are to be paid.
(e) The Plan shall be governed by and subject to all applicable laws
and to the approvals by any governmental or regulatory agency as may be
required.
SECTION 12. Effective Date and Term of Plan
The Plan shall be effective as December 12, 1996, subject to the
consent or approval of the Company's stockholders. No Stock Option, Stock
Appreciation Right or Restricted Stock award shall be granted pursuant to the
Plan on or after December 11, 2006, but awards granted prior to such tenth
anniversary may extend beyond that date; provided, however, that if the Plan is
not approved by the unanimous consent of all stockholders or by a majority of
the votes cast at a duly held meeting at which a quorum representing a majority
of all outstanding voting stock of the Company is, either in person or by proxy,
present and voting on the Plan, within 12 months after said date, the Plan and
all Grants awarded hereunder shall be null and void and no additional Grants
shall be awarded hereunder.
SECTION 13. Interpretation
A determination of the Committee as to any question which may arise
with respect to the interpretation of the provisions of this Plan or any Grants
awarded thereunder shall be final and conclusive, and nothing in this Plan, or
in any regulation hereunder, shall be deemed to give any Participant, his legal
representatives, assigns or any other person any right to participate herein
except to such extent, if any, as the Committee may have determined or approved
pursuant to this Plan. The Committee may consult with legal counsel who may be
counsel to the Company and shall not incur any liability for any action taken in
good faith in reliance upon the advice of such counsel.
SECTION 14. Governing Law.
With respect to any Incentive Stock Options granted pursuant to the
Plan and the agreements thereunder, the Plan, such agreements and any Incentive
Stock Options granted pursuant thereto shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of
Delaware shall govern the operation of, and the rights of Participants under,
the Plan, the agreements and any Grants awarded thereunder.
SECTION 15. Compliance With Section 16b of the Exchange Act.
Unless an Insider could otherwise transfer shares of Stock issued
hereunder without incurring liability under Section 16b of the Exchange Act, at
least six months must elapse from the date of grant of an Option, Stock
Appreciation Right or Restricted Stock award to the date of disposition of the
Stock issued
<PAGE>
upon exercise of such Option or Stock Appreciation Right or grant of such
Restricted Stock award.
<PAGE>
EXHIBIT 10.2
MICRO VISION MEDICAL SYSTEMS, INC.
STOCK OPTION GRANT LETTER
This Stock Option is granted to Kenneth S. Garber (the "Grantee") on
June 13, 1996 (the "Date of Grant") by Micro Vision Medical Systems, Inc. (the
"Company").
1. Option Grant and Acceptance
(a) The Company hereby grants to the Grantee effective as of the Date
of Grant, the right and option (the "Option") to purchase 221,850 shares of
common stock of the Company (the "Shares"). The Option is not intended to
constitute an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code).
(b) The Grantee shall signify his acceptance of the Option by executing
this Grant Letter.
2. Option Price
The price of each Share covered by the Option shall be $1.00 (the
"Option Price"), which is 100% of the fair market value of a Share on the Date
of Grant.
3. Option Expiration
The Option, to the extent that it has not theretofore been exercised,
shall automatically expire on the earliest to occur of the following events:
(a) seven years from the Date of Grant;
(b) if the Grantee's employment with the Company terminates voluntarily
or involuntarily for any reason other than death or Disability (as defined
below), the Option may thereafter be exercised by the Grantee, to the extent it
was exercisable at the time of such termination, for a period of three months
from the date of such termination of employment or until the occurrence of the
date specified in Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such three-month period, the unexercised portion
of the Option shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination of employment, for a period of twelve
months from the date of such death or until the occurrence of the date specified
in Section 3(a), whichever period is shorter;
(c) if the Grantee's employment with the Company terminates by reason
of death, the Option may be thereafter exercised, to the extent then
exercisable, by the legal representative of the estate or by the legatee of the
Grantee under the will of the Grantee, for a period of one year from the date of
such death or until the occurrence of the date specified in Section 3(a),
whichever period is shorter;
(d) if the Grantee's employment with the Company terminates by reason
of "Disability" (which for purposes of this Agreement shall mean permanent and
total disability within the meaning of Section 22(e)(3) of the Code), the Option
may thereafter be exercised by the Grantee, to the extent it was exercisable at
the time of such termination, for a period of one year from the date of such
termination of employment or until the occurrence of the date specified in
Section 3(a), whichever period is shorter; provided, however,
<PAGE>
that if the Grantee dies within such one-year period, any unexercised portion of
the Option held by the Grantee shall thereafter be exercisable to the extent it
was exercisable at the time of termination of employment for a period of twelve
months from the date of death or until the occurrence of the date specified in
Section 3(a), whichever period is shorter;
(e) Notwithstanding the foregoing and unless otherwise
determined by the committee of the Board of Directors designated to administer
the Company's stock options and stock option plans (hereinafter the
"Committee"), if Grantee's employment is terminated for Cause, the Option
granted hereby shall terminate as of the date the Grantee ceases to be employed
by the Company, and the Grantee shall automatically forfeit all Shares
underlying any exercised portion of an Option for which the Company has not yet
delivered the share certificates upon refund by the Company of the exercise
price paid by the Grantee for such Shares. For purposes of this Agreement,
"Termination for Cause" shall have the meaning set forth in Grantee's employment
letter.
4. Vesting
(a) Subject to the terms, conditions and limitations expressed herein
and, except as provided below, the Option shall become exercisable in accordance
with the following vesting schedule:
<TABLE>
<CAPTION>
Period Percentage Vested
------- -----------------
<S> <C>
On or before December 30, 1996 0%
December 31, 1996 to December 30, 1997 25%
December 31, 1997 to December 30, 1998 50%
December 31, 1999 to December 30, 1999 75%
On or after December 31, 1999 100%
</TABLE>
provided, however, that in the event the Option granted hereby has not otherwise
become fully vested and the Company consummates an initial public offering of
its shares of common stock, 50% of the unvested portion of the Option shall vest
on the closing date of the initial public offering and the remaining unvested
portion of the Option shall vest on the first anniversary of the closing date;
and provided further, that if Grantee is terminated by the Company not for
Cause, 50% of the then unvested portion of this Option shall immediately vest.
(b) The right to purchase Shares under the Option as provided in
Section 4(a) above may be exercised in a cumulative fashion, such that any right
to purchase Shares which becomes exercisable on a given date shall remain
exercisable until the date stated in any applicable provision of Section 3 (with
respect to the expiration of the Option).
(c) In the event of a "Change of Control" (as defined below), either
(i) all of the unvested portion of the Option shall vest immediately, or (ii) if
the Committee so determines, the difference between the fair market value of the
shares underlying such unvested portion of the Option and the exercise price
thereof shall be paid to Grantee in cash by the Company.
(d) "Change in Control" is defined to mean the issuance, sale or
transfer (including a transfer as a result of death, disability, operation of
law or otherwise) in a single transaction or group of related transactions to
any entity, person or group (other than Safeguard Scientifics, Inc. and/or its
affiliates) of the beneficial ownership of newly issued, outstanding or treasury
shares of the capital stock of the Company
<PAGE>
having 50% or more of the combined voting power of the Company's then
outstanding securities entitled to vote for at least a majority of the
authorized number of directors of the Company, or any merger, consolidation,
sale of all or substantially all of the assets or other comparable transaction
as a result of which all or substantially all of the assets and business of the
Company are acquired directly or indirectly by another entity which prior to the
acquisition was not an affiliate of the Company (as defined in the regulations
of the Securities and Exchange Commission under the Securities Act of 1933).
Group shall have the same meaning as in Section 13(d) of the Securities Exchange
Act of 1934, and "affiliate" shall have the same meaning as in Rule 405 of the
Securities Exchange Commission adopted under the Securities Act of 1933.
5. Time and Method of Exercise
Subject to the terms of Section 4 above, the Option may be exercised at
any time, or from time to time, prior to expiration (as defined in Section 3
above), by written notice to the Stock Option Administrator of the Company. Such
written notice shall be effective upon receipt by the Stock Option Administrator
of the Company and shall be accompanied by:
(a) a check, or the equivalent thereof acceptable to the Company in its
discretion, for the full Option Price of the number of Shares being purchased;
(b) one or more certificates representing a number of Shares which are,
in the aggregate, equal in fair market value to the full Option Price for the
Shares being purchased, such certificates being duly endorsed (or accompanied by
stock powers signed in blank) so as to transfer to the Company all right, title
and interest in and to the Shares represented by such certificates;
(c) a combination of the forms of payment specified in Section 5(a) and
5(b) above which, in the aggregate, is equal to the full Option Price of the
number of Shares being purchased; or
(d) where there is a public market for the Shares, by delivering a
properly executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker to deliver to the Company on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option.
The fair market value of each share of Company stock delivered by the
Grantee pursuant to Section 5(b) or 5(c) above shall be as determined by the
Committee in good faith based on the best available facts and circumstances at
the time; provided, however, that where there is a public market for the stock
and the stock is registered under the Securities Exchange Act of 1934, as
amended, fair market value shall mean the per share or aggregate value of the
stock as of any given date, determined as follows: (i) if the principal trading
market for the stock is a national securities exchange or the Nasdaq National
Market, the last reported sale price thereof on the relevant date or, if there
were no trades on that date, the latest preceding date upon which a sale was
reported, or (ii) if the stock is not principally traded on such exchange or
market, the mean between the last reported "bid" and "asked" prices of stock on
the relevant date, as reported on Nasdaq or, if not so reported, as reported by
the National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Committee determines.
Payment in the form of unrestricted stock delivered pursuant to
paragraph 5(b) or 5(c) above (including Company stock acquired in connection
with the exercise of an Option), shall be subject to such restrictions as the
Committee deems appropriate, including, but not limited to, the requirement that
the stock
<PAGE>
has been owned by the Grantee for the requisite period of time necessary to
avoid a charge to the Company's earnings for financial reporting purposes and
adverse accounting consequences to the Company with respect to the Option.
6. Replacement Option
Upon an exercise of the Option, in whole or in part, at any time, the
Grantee shall be entitled to receive a replacement Option covering such number
of shares of Common Stock, at such exercise price per share and upon such terms
and conditions as the Committee may, in its sole discretion, establish in any
policy or program adopted from time to time by the Committee. The Committee may,
in its sole discretion, amend, modify or terminate at any time any such policy
or program. Unless otherwise provided by the Committee, if any such policy or
program is amended or modified, such policy or program shall be deemed to become
part of this Grant Letter as so amended or modified without further action by
the Company or the Grantee. The Committee may specify in any such policy or
program that the grant of any such replacement Option may be automatic upon an
exercise of the Option complying with the terms and conditions of the policy or
program.
7. Restrictions on Transfer.
(a) The Company shall have the right of first refusal to repurchase any
shares offered for sale by the Grantee, his executor, administrator, or
beneficiaries, which shares were issued to the Grantee pursuant to one or more
Options granted to the Grantee. Such offer shall be communicated to the Company
by written notice, stipulating the terms and conditions of such offer therein,
forwarded by registered or certified mail. The Company shall exercise its right
to repurchase (or to designate a third party to repurchase) by giving written
notice thereof by registered or certified mail to the Grantee, his executor,
administrator or beneficiaries no later than 30 days after the date of the
receipt of the offer. Within 30 days after receipt of such notice, the Grantee,
his executor, administrator or beneficiaries shall deliver a certificate or
certificates for the shares being sold, together with appropriate duly signed
stock powers transferring such shares to the Company, and the Company shall
deliver to the Grantee, his executor, administrator or beneficiaries the
Company's check in the amount of the purchase price for the shares being sold.
In the event that such offer shall not be accepted by written
notice forwarded by registered or certified mail no later than 30 days after the
date of the receipt of the offer, the Grantee, his executor, administrator or
beneficiaries may dispose of the shares offered to any person, firm or
corporation, without restriction, except that the subsequent transfer of such
shares shall not be on terms more favorable to the transferee than the terms
upon which the shares were originally offered to the Company. If, within 60 days
after the expiration of the 30 day period of any offer made hereunder, the
Grantee, his executor, administrator, or beneficiaries offering to sell any
shares issued hereunder, shall fail to consummate a sale thereof to any other
purchaser, then no sale of such shares may be made thereafter without again
reoffering the same to the Company in accordance with the provisions of this
subparagraph.
(b) In the event of the Grantee's termination of employment for any
reason, whether voluntary or involuntary, the Company shall have the right to
repurchase all shares issued or to be issued to the Grantee under this Agreement
at net book value as hereinafter defined, but not less than Grantee's cost.
The net book value of the Company's common stock shall be
determined as of the end of the Company's fiscal quarter immediately preceding
the date of termination hereof. Net book value of the Company's common stock
shall be that amount computed by deducting the sum of total liabilities and the
<PAGE>
liquidation value of any preferred stock from total assets, as determined in
accordance with generally accepted accounting principles consistently applied,
and as shown on the financial statements of the Company as of the end of the
applicable fiscal quarter. The net book value per share of the Company's common
stock shall be determined by dividing the remainder by the number of shares of
the Company's common stock issued and outstanding as of such date.
The Company's right to repurchase shall be exercisable at any
time within one year after the date of Grantee's termination of employment by
the delivery of written notice by the Company to such effect to the Grantee, his
executor, administrator or beneficiaries. Within 30 days after receipt of such
notice, the Grantee, his executor, administrator or beneficiaries shall deliver
a certificate or certificates for the shares being sold, together with
appropriate duly signed stock powers transferring such shares to the Company,
and the Company shall deliver to the Grantee, his executor, administrator or
beneficiaries the Company's check in the amount of the purchase price for the
shares being sold.
(c) The right of first refusal and buy-back rights shall terminate when
the Company has consummated a public offering of its common stock pursuant to
the Securities Act of 1933, as amended.
(d) The right of first refusal and buy-back rights granted to the
Company pursuant to subparagraphs 7(a) and 7(b) above are separate and
independent obligations of the Grantee and shall survive any termination of
employment. Furthermore, such rights shall not be construed as an absolute
obligation on the part of the Company to repurchase any shares tendered.
(e) Each certificate for shares issued by the Company to the Grantee
shall bear an appropriate legend that the transfer of such shares is restricted
by the provisions of this Agreement.
8. Nonassignability of Option Rights
The Option shall not be assigned or transferred by the Grantee except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. Upon a transfer by will or by the laws of descent and
distribution, the person to whom the Option is transferred shall have the right
to exercise the Option in accordance with this Grant Letter, subject to the
Company receiving satisfactory proof of his or her right to receive the Grant
under the Grantee's will or under the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge or dispose of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Grantee may transfer the Option pursuant to a domestic relations order or
to family members or other persons or entities according to such terms as the
Committee may determine.
9. Adjustments
If any change is made to the common stock (whether by reason of stock
dividend, spin off, recapitalization, stock split, combination or exchange of
shares, merger, reorganization or consolidation in which the Company is the
surviving corporation, reclassification, change in par value, or any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding Company Stock is substantially reduced as a result of a spin off or
the Company's payment of an extraordinary dividend or distribution), then unless
such event or change results in the termination of this Option, the Committee
shall preserve the value of the Option by making appropriate adjustments to the
number and class of shares, the Option Price or otherwise, except that
<PAGE>
any fractional shares resulting from such adjustments shall be eliminated by
rounding any portion of a share equal to .5 or greater up, and any portion of a
share equal to less than .5 down, in each case to the nearest whole number.
10. Withholding
The Grantee or other person receiving Shares upon an exercise of the
Option, in whole or in part, shall be subject to any applicable federal
(including FICA), state and local taxes that the Company is required to withhold
with respect to such exercise. The Company shall have the right to require a
Grantee to pay to the Company, or the Company may deduct from other wages paid
by the Company, the amount of any such withholding taxes the Company is required
to withhold with respect to such exercise. If the Committee so permits by formal
vote, at or after Grant but prior to exercise of the Option, a Grantee may elect
to satisfy the Company's income tax withholding obligation with respect to such
exercise by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The Company's obligation to issue or transfer Shares upon
exercise of the Option shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
11. Employment by the Company
For purposes of this Agreement, employment by the Company shall mean
employment as an employee, so that for purposes of exercising this Option, a
Grantee shall not be considered to have terminated employment until the Grantee
ceases to be an employee, unless the Committee determines otherwise.
12. No Contract for Employment
(a) Nothing contained in this Grant Letter shall be deemed to require
the Company to continue the Grantee's employment by the Company. Except as may
be provided in a written employment contract executed by a duly authorized
officer of the Company and approved by the board of directors of the Company,
the Grantee shall at all times be an employee-at-will of the Company and the
Company may discharge the Grantee at any time for any reason, with or without
cause, and with or without severance compensation.
(b) From time to time, the Company may distribute employee manuals or
handbooks, and officers or other representatives of the Company may make written
or oral statements relating to the Company's policies and procedures. Such
manuals, handbooks and statements are intended only for the general guidance of
employees. No policies, procedures or statements of any nature by or on behalf
of the Company (whether written or oral, and whether or not contained in any
formal employee manual or handbook) shall be construed to modify this Grant
Letter or to create express or implied obligations to the Grantee of any nature.
13. Administration
All questions of interpretation and application of the Option granted
hereunder shall be determined by the Committee in its discretion, and such
determination shall be final and binding upon all persons. The validity,
construction and effect of this Option shall be determined in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
<PAGE>
14. No Stockholder Rights
Neither the Grantee, nor any person entitled to exercise the Grantee's
rights in the event of the Grantee's death, shall have any of the rights and
privileges of a stockholder with respect to the Shares subject to the Option,
except to the extent that certificates for such Shares shall have been issued
upon the exercise of the Option as provided herein.
15. Cancellation or Amendment
This Option may be canceled or amended by the Committee, in whole or in
part, at any time that the Committee determines, in its sole discretion, that
the cancellation or amendment is necessary or advisable in light of any change
after the Date of Grant in (a) the Code or the regulations issued thereunder or
(b) any federal or state securities law or other law or regulation, which change
by its terms is effective retroactively to a date on or before the Date of
Grant; provided, however, that no such cancellation or amendment shall, without
the Grantee's consent, apply to or affect installments that matured on or before
the date on which the Committee makes such determination.
16. Notice
Any notice to the Company provided for in this Grant Letter shall be
addressed to it in care of the Stock Option Administrator of the Company, at
10305 102nd Terrace, Sebastian, FL 32958 and any notice to the Grantee shall be
addressed to such Grantee at the current address shown on the payroll of the
Company, or to such other address as the Grantee may designate to the Company in
writing. Any notice provided for hereunder shall be delivered by hand, sent by
telecopy or telex or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage and registry being prepaid, in a post
office or branch post office regularly maintained by the United States Postal
Service.
17. Grantee's Securities Law Representations
If the Committee shall deem it appropriate by reason of any securities
law, it may require that the Grantee upon exercise in whole or in part of the
Option, represent to the Company and agree in writing that the purchase of the
Shares is for investment only and not with a view to distribution. The Committee
may require that the Share certificates be inscribed with a legend restricting
transfer in accordance with applicable securities law requirements.
MICRO VISION MEDICAL SYSTEMS, INC.
By:
--------------------------------------
Accepted By:
------------------------------------------
Kenneth S. Garber
<PAGE>
EXHIBIT 10.3
MICRO VISION MEDICAL SYSTEMS, INC.
STOCK OPTION GRANT LETTER
This Stock Option is granted to Douglas Harrington (the "Grantee") on
June 13, 1996 (the "Date of Grant") by Micro Vision Medical Systems, Inc. (the
"Company").
1. Option Grant and Acceptance
(a) The Company hereby grants to the Grantee effective as of the Date
of Grant, the right and option (the "Option") to purchase 10,000 shares of
common stock of the Company (the "Shares"). The Option is not intended to
constitute an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code).
(b) The Grantee shall signify his acceptance of the Option by executing
this Grant Letter.
2. Option Price
The price of each Share covered by the Option shall be $1.00 (the
"Option Price"), which is 100% of the fair market value of a Share on the Date
of Grant.
3. Option Expiration
The Option, to the extent that it has not theretofore been exercised,
shall automatically expire on the earliest to occur of the following events:
(a) seven years from the Date of Grant;
(b) if the Grantee's employment with the Company terminates voluntarily
or involuntarily for any reason other than death or Disability (as defined
below), the Option may thereafter be exercised by the Grantee, to the extent it
was exercisable at the time of such termination, for a period of three months
from the date of such termination of employment or until the occurrence of the
date specified in Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such three-month period, the unexercised portion
of the Option shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination of employment, for a period of twelve
months from the date of such death or until the occurrence of the date specified
in Section 3(a), whichever period is shorter;
(c) if the Grantee's employment with the Company terminates by reason
of death, the Option may be thereafter exercised, to the extent then
exercisable, by the legal representative of the estate or by the legatee of the
Grantee under the will of the Grantee, for a period of one year from the date of
such death or until the occurrence of the date specified in Section 3(a),
whichever period is shorter;
(d) if the Grantee's employment with the Company terminates by reason
of "Disability" (which for purposes of this Agreement shall mean permanent and
total disability within the meaning of Section 22(e)(3) of the Code), the Option
may thereafter be exercised by the Grantee, to the extent it was exercisable at
the time of such termination, for a period of one year from the date of such
termination of employment or until the occurrence of the date specified in
Section 3(a), whichever period is shorter; provided, however,
<PAGE>
that if the Grantee dies within such one-year period, any unexercised portion of
the Option held by the Grantee shall thereafter be exercisable to the extent it
was exercisable at the time of termination of employment for a period of twelve
months from the date of death or until the occurrence of the date specified in
Section 3(a), whichever period is shorter;
(e) Notwithstanding the foregoing and unless otherwise
determined by the committee of the Board of Directors designated to administer
the Company's stock options and stock option plans (hereinafter the
"Committee"), if Grantee's employment is terminated for Cause, the Option
granted hereby shall terminate as of the date the Grantee ceases to be employed
by the Company, and the Grantee shall automatically forfeit all Shares
underlying any exercised portion of an Option for which the Company has not yet
delivered the share certificates upon refund by the Company of the exercise
price paid by the Grantee for such Shares. For purposes of this Agreement,
"Termination for Cause" shall mean, except to the extent specified otherwise by
the Committee, a finding by the Committee that the Participant has breached his
or her employment or service contract, non-competition or other obligation with
the Company, or has been engaged in disloyalty to the Company, including,
without limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment or service, or has disclosed
trade secrets or confidential information of the Company to persons not entitled
to receive such information.
4. Vesting
(a) Subject to the terms, conditions and limitations expressed herein
and, except as provided below, the Option shall become exercisable in accordance
with the following vesting schedule:
<TABLE>
<CAPTION>
Period Percentage Vested
------ -----------------
<S> <C>
On or before March 30, 1997 0%
March 31, 1997 to March 30, 1998 50%
On or after March 31, 1998 100%
</TABLE>
(b) The right to purchase Shares under the Option as provided in
Section 4(a) above may be exercised in a cumulative fashion, such that any right
to purchase Shares which becomes exercisable on a given date shall remain
exercisable until the date stated in any applicable provision of Section 3 (with
respect to the expiration of the Option).
5. Time and Method of Exercise
Subject to the terms of Section 4 above, the Option may be exercised at
any time, or from time to time, prior to expiration (as defined in Section 3
above), by written notice to the Stock Option Administrator of the Company. Such
written notice shall be effective upon receipt by the Stock Option Administrator
of the Company and shall be accompanied by:
(a) a check, or the equivalent thereof acceptable to the Company in its
discretion, for the full Option Price of the number of Shares being purchased;
(b) one or more certificates representing a number of Shares which are,
in the aggregate, equal in fair market value to the full Option Price for the
Shares being purchased, such certificates being duly endorsed (or accompanied by
stock powers signed in blank) so as to transfer to the Company all right, title
and interest in and to the Shares represented by such certificates;
<PAGE>
(c) a combination of the forms of payment specified in Section 5(a) and
5(b) above which, in the aggregate, is equal to the full Option Price of the
number of Shares being purchased; or
(d) where there is a public market for the Shares, by delivering a
properly executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker to deliver to the Company on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option.
The fair market value of each share of Company stock delivered by the
Grantee pursuant to Section 5(b) or 5(c) above shall be as determined by the
Committee in good faith based on the best available facts and circumstances at
the time; provided, however, that where there is a public market for the stock
and the stock is registered under the Securities Exchange Act of 1934, as
amended, fair market value shall mean the per share or aggregate value of the
stock as of any given date, determined as follows: (i) if the principal trading
market for the stock is a national securities exchange or the Nasdaq National
Market, the last reported sale price thereof on the relevant date or, if there
were no trades on that date, the latest preceding date upon which a sale was
reported, or (ii) if the stock is not principally traded on such exchange or
market, the mean between the last reported "bid" and "asked" prices of stock on
the relevant date, as reported on Nasdaq or, if not so reported, as reported by
the National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Committee determines.
Payment in the form of unrestricted stock delivered pursuant to
paragraph 5(b) or 5(c) above (including Company stock acquired in connection
with the exercise of an Option), shall be subject to such restrictions as the
Committee deems appropriate, including, but not limited to, the requirement that
the stock has been owned by the Grantee for the requisite period of time
necessary to avoid a charge to the Company's earnings for financial reporting
purposes and adverse accounting consequences to the Company with respect to the
Option.
6. Replacement Option
Upon an exercise of the Option, in whole or in part, at any time, the
Grantee shall be entitled to receive a replacement Option covering such number
of shares of Common Stock, at such exercise price per share and upon such terms
and conditions as the Committee may, in its sole discretion, establish in any
policy or program adopted from time to time by the Committee. The Committee may,
in its sole discretion, amend, modify or terminate at any time any such policy
or program. Unless otherwise provided by the Committee, if any such policy or
program is amended or modified, such policy or program shall be deemed to become
part of this Grant Letter as so amended or modified without further action by
the Company or the Grantee. The Committee may specify in any such policy or
program that the grant of any such replacement Option may be automatic upon an
exercise of the Option complying with the terms and conditions of the policy or
program.
<PAGE>
7. Restrictions on Transfer.
(a) The Company shall have the right of first refusal to repurchase any
shares offered for sale by the Grantee, his executor, administrator, or
beneficiaries, which shares were issued to the Grantee pursuant to one or more
Options granted to the Grantee. Such offer shall be communicated to the Company
by written notice, stipulating the terms and conditions of such offer therein,
forwarded by registered or certified mail. The Company shall exercise its right
to repurchase (or to designate a third party to repurchase) by giving written
notice thereof by registered or certified mail to the Grantee, his executor,
administrator or beneficiaries no later than 30 days after the date of the
receipt of the offer. Within 30 days after receipt of such notice, the Grantee,
his executor, administrator or beneficiaries shall deliver a certificate or
certificates for the shares being sold, together with appropriate duly signed
stock powers transferring such shares to the Company, and the Company shall
deliver to the Grantee, his executor, administrator or beneficiaries the
Company's check in the amount of the purchase price for the shares being sold.
In the event that such offer shall not be accepted by written
notice forwarded by registered or certified mail no later than 30 days after the
date of the receipt of the offer, the Grantee, his executor, administrator or
beneficiaries may dispose of the shares offered to any person, firm or
corporation, without restriction, except that the subsequent transfer of such
shares shall not be on terms more favorable to the transferee than the terms
upon which the shares were originally offered to the Company. If, within 60 days
after the expiration of the 30 day period of any offer made hereunder, the
Grantee, his executor, administrator, or beneficiaries offering to sell any
shares issued hereunder, shall fail to consummate a sale thereof to any other
purchaser, then no sale of such shares may be made thereafter without again
reoffering the same to the Company in accordance with the provisions of this
subparagraph.
(b) In the event of the Grantee's termination of employment for any
reason, whether voluntary or involuntary, the Company shall have the right to
repurchase all shares issued or to be issued to the Grantee under this Agreement
at net book value as hereinafter defined, but not less than Grantee's cost.
The net book value of the Company's common stock shall be
determined as of the end of the Company's fiscal quarter immediately preceding
the date of termination hereof. Net book value of the Company's common stock
shall be that amount computed by deducting the sum of total liabilities and the
liquidation value of any preferred stock from total assets, as determined in
accordance with generally accepted accounting principles consistently applied,
and as shown on the financial statements of the Company as of the end of the
applicable fiscal quarter. The net book value per share of the Company's common
stock shall be determined by dividing the remainder by the number of shares of
the Company's common stock issued and outstanding as of such date.
The Company's right to repurchase shall be exercisable at any
time within one year after the date of Grantee's termination of employment by
the delivery of written notice by the Company to such effect to the Grantee, his
executor, administrator or beneficiaries. Within 30 days after receipt of such
notice, the Grantee, his executor, administrator or beneficiaries shall deliver
a certificate or certificates for the shares being sold, together with
appropriate duly signed stock powers transferring such shares to the Company,
and the Company shall deliver to the Grantee, his executor, administrator or
beneficiaries the Company's check in the amount of the purchase price for the
shares being sold.
(c) The right of first refusal and buy-back rights shall terminate when
the Company has consummated a public offering of its common stock pursuant to
the Securities Act of 1933, as amended.
<PAGE>
(d) The right of first refusal and buy-back rights granted to the
Company pursuant to subparagraphs 7(a) and 7(b) above are separate and
independent obligations of the Grantee and shall survive any termination of
employment. Furthermore, such rights shall not be construed as an absolute
obligation on the part of the Company to repurchase any shares tendered.
(e) Each certificate for shares issued by the Company to the Grantee
shall bear an appropriate legend that the transfer of such shares is restricted
by the provisions of this Agreement.
8. Nonassignability of Option Rights
The Option shall not be assigned or transferred by the Grantee except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. Upon a transfer by will or by the laws of descent and
distribution, the person to whom the Option is transferred shall have the right
to exercise the Option in accordance with this Grant Letter, subject to the
Company receiving satisfactory proof of his or her right to receive the Grant
under the Grantee's will or under the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge or dispose of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Grantee may transfer the Option pursuant to a domestic relations order or
to family members or other persons or entities according to such terms as the
Committee may determine.
9. Adjustments
If any change is made to the common stock (whether by reason of stock
dividend, spin off, recapitalization, stock split, combination or exchange of
shares, merger, reorganization or consolidation in which the Company is the
surviving corporation, reclassification, change in par value, or any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding Company Stock is substantially reduced as a result of a spin off or
the Company's payment of an extraordinary dividend or distribution), then unless
such event or change results in the termination of this Option, the Committee
shall preserve the value of the Option by making appropriate adjustments to the
number and class of shares, the Option Price or otherwise, except that any
fractional shares resulting from such adjustments shall be eliminated by
rounding any portion of a share equal to .5 or greater up, and any portion of a
share equal to less than .5 down, in each case to the nearest whole number.
10. Withholding
The Grantee or other person receiving Shares upon an exercise of the
Option, in whole or in part, shall be subject to any applicable federal
(including FICA), state and local taxes that the Company is required to withhold
with respect to such exercise. The Company shall have the right to require a
Grantee to pay to the Company, or the Company may deduct from other wages paid
by the Company, the amount of any such withholding taxes the Company is required
to withhold with respect to such exercise. If the Committee so permits by formal
vote, at or after Grant but prior to exercise of the Option, a Grantee may elect
to satisfy the Company's income tax withholding obligation with respect to such
exercise by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The Company's obligation to issue or transfer Shares upon
exercise of the Option shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
<PAGE>
11. Employment by the Company
For purposes of this Agreement, employment by the Company shall mean
employment as an employee or an independent consultant or service as a member of
the Board of Directors or any advisory board, so that for purposes of exercising
this Option, a Grantee shall not be considered to have terminated employment
until the Grantee ceases to be an employee, independent consultant or member of
the Board of Directors or any advisory board, unless the Committee determines
otherwise.
12. No Contract for Employment
(a) Nothing contained in this Grant Letter shall be deemed to require
the Company to continue the Grantee's employment by the Company. Except as may
be provided in a written employment contract executed by a duly authorized
officer of the Company and approved by the board of directors of the Company,
the Grantee shall at all times be an employee-at-will of the Company and the
Company may discharge the Grantee at any time for any reason, with or without
cause, and with or without severance compensation.
(b) From time to time, the Company may distribute employee manuals or
handbooks, and officers or other representatives of the Company may make written
or oral statements relating to the Company's policies and procedures. Such
manuals, handbooks and statements are intended only for the general guidance of
employees. No policies, procedures or statements of any nature by or on behalf
of the Company (whether written or oral, and whether or not contained in any
formal employee manual or handbook) shall be construed to modify this Grant
Letter or to create express or implied obligations to the Grantee of any nature.
13. Administration
All questions of interpretation and application of the Option granted
hereunder shall be determined by the Committee in its discretion, and such
determination shall be final and binding upon all persons. The validity,
construction and effect of this Option shall be determined in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
14. No Stockholder Rights
Neither the Grantee, nor any person entitled to exercise the Grantee's
rights in the event of the Grantee's death, shall have any of the rights and
privileges of a stockholder with respect to the Shares subject to the Option,
except to the extent that certificates for such Shares shall have been issued
upon the exercise of the Option as provided herein.
15. Cancellation or Amendment
This Option may be canceled or amended by the Committee, in whole or in
part, at any time that the Committee determines, in its sole discretion, that
the cancellation or amendment is necessary or advisable in light of any change
after the Date of Grant in (a) the Code or the regulations issued thereunder or
(b) any federal or state securities law or other law or regulation, which change
by its terms is effective retroactively to a date on or before the Date of
Grant; provided, however, that no such cancellation or amendment shall, without
the Grantee's consent, apply to or affect installments that matured on or before
the date on which the Committee makes such determination.
<PAGE>
16. Notice
Any notice to the Company provided for in this Grant Letter shall be
addressed to it in care of the Stock Option Administrator of the Company, at
10305 102nd Terrace, Sebastian, FL 32958 and any notice to the Grantee shall be
addressed to such Grantee at the current address shown on the payroll of the
Company, or to such other address as the Grantee may designate to the Company in
writing. Any notice provided for hereunder shall be delivered by hand, sent by
telecopy or telex or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage and registry being prepaid, in a post
office or branch post office regularly maintained by the United States Postal
Service.
17. Grantee's Securities Law Representations
If the Committee shall deem it appropriate by reason of any securities
law, it may require that the Grantee upon exercise in whole or in part of the
Option, represent to the Company and agree in writing that the purchase of the
Shares is for investment only and not with a view to distribution. The Committee
may require that the Share certificates be inscribed with a legend restricting
transfer in accordance with applicable securities law requirements.
MICRO VISION MEDICAL SYSTEMS, INC.
By:
------------------------------------------
Accepted By:
---------------------------------------------
Douglas Harrington
<PAGE>
EXHIBIT 10.4
MICRO VISION MEDICAL SYSTEMS, INC.
STOCK OPTION GRANT LETTER
This Stock Option is granted to James E. Ring (the "Grantee") on June
13, 1996 (the "Date of Grant") by Micro Vision Medical Systems, Inc. (the
"Company").
1. Option Grant and Acceptance
(a) The Company hereby grants to the Grantee effective as of the Date
of Grant, the right and option (the "Option") to purchase 15,000 shares of
common stock of the Company (the "Shares"). The Option is not intended to
constitute an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code).
(b) The Grantee shall signify his acceptance of the Option by executing
this Grant Letter.
2. Option Price
The price of each Share covered by the Option shall be $1.00 (the
"Option Price"), which is 100% of the fair market value of a Share on the Date
of Grant.
3. Option Expiration
The Option, to the extent that it has not theretofore been exercised,
shall automatically expire on the earliest to occur of the following events:
(a) seven years from the Date of Grant;
(b) if the Grantee's employment with the Company terminates voluntarily
or involuntarily for any reason other than death or Disability (as defined
below), the Option may thereafter be exercised by the Grantee, to the extent it
was exercisable at the time of such termination, for a period of three months
from the date of such termination of employment or until the occurrence of the
date specified in Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such three-month period, the unexercised portion
of the Option shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination of employment, for a period of twelve
months from the date of such death or until the occurrence of the date specified
in Section 3(a), whichever period is shorter;
(c) if the Grantee's employment with the Company terminates by reason
of death, the Option may be thereafter exercised, to the extent then
exercisable, by the legal representative of the estate or by the legatee of the
Grantee under the will of the Grantee, for a period of one year from the date of
such death or until the occurrence of the date specified in Section 3(a),
whichever period is shorter;
(d) if the Grantee's employment with the Company terminates by reason
of "Disability" (which for purposes of this Agreement shall mean permanent and
total disability within the meaning of Section 22(e)(3) of the Code), the Option
may thereafter be exercised by the Grantee, to the extent it was exercisable at
the time of such termination, for a period of one year from the date of such
termination of employment or until the occurrence of the date specified in
Section 3(a), whichever period is shorter; provided, however,
<PAGE>
that if the Grantee dies within such one-year period, any unexercised portion of
the Option held by the Grantee shall thereafter be exercisable to the extent it
was exercisable at the time of termination of employment for a period of twelve
months from the date of death or until the occurrence of the date specified in
Section 3(a), whichever period is shorter;
(e) Notwithstanding the foregoing and unless otherwise
determined by the committee of the Board of Directors designated to administer
the Company's stock options and stock option plans (hereinafter the
"Committee"), if Grantee's employment is terminated for Cause, the Option
granted hereby shall terminate as of the date the Grantee ceases to be employed
by the Company, and the Grantee shall automatically forfeit all Shares
underlying any exercised portion of an Option for which the Company has not yet
delivered the share certificates upon refund by the Company of the exercise
price paid by the Grantee for such Shares. For purposes of this Agreement,
"Termination for Cause" shall mean, except to the extent specified otherwise by
the Committee, a finding by the Committee that the Participant has breached his
or her employment or service contract, non-competition or other obligation with
the Company, or has been engaged in disloyalty to the Company, including,
without limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment or service, or has disclosed
trade secrets or confidential information of the Company to persons not entitled
to receive such information.
4. Vesting
(a) Subject to the terms, conditions and limitations expressed herein
and, except as provided below, the Option shall become exercisable in accordance
with the following vesting schedule:
<TABLE>
<CAPTION>
Period Percentage Vested
------ -----------------
<S> <C>
On or before June 12, 1997 0%
June 13, 1997 to June 12, 1998 25%
June 13, 1998 to June 12, 1999 50%
June 13, 1999 to June 12, 2000 75%
On or after June 13, 2000 100%
</TABLE>
provided, however, that in the event the Option granted hereby has not otherwise
become fully vested and the Company consummates an initial public offering of
its shares of common stock, the unvested portion of the Option shall vest on the
closing date of the initial public offering.
(b) The right to purchase Shares under the Option as provided in
Section 4(a) above may be exercised in a cumulative fashion, such that any right
to purchase Shares which becomes exercisable on a given date shall remain
exercisable until the date stated in any applicable provision of Section 3 (with
respect to the expiration of the Option).
5. Time and Method of Exercise
Subject to the terms of Section 4 above, the Option may be exercised at
any time, or from time to time, prior to expiration (as defined in Section 3
above), by written notice to the Stock Option Administrator of the Company. Such
written notice shall be effective upon receipt by the Stock Option Administrator
of the Company and shall be accompanied by:
(a) a check, or the equivalent thereof acceptable to the Company in its
discretion, for the full
<PAGE>
Option Price of the number of Shares being purchased;
(b) one or more certificates representing a number of Shares which are,
in the aggregate, equal in fair market value to the full Option Price for the
Shares being purchased, such certificates being duly endorsed (or accompanied by
stock powers signed in blank) so as to transfer to the Company all right, title
and interest in and to the Shares represented by such certificates;
(c) a combination of the forms of payment specified in Section 5(a) and
5(b) above which, in the aggregate, is equal to the full Option Price of the
number of Shares being purchased; or
(d) where there is a public market for the Shares, by delivering a
properly executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker to deliver to the Company on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option.
The fair market value of each share of Company stock delivered by the
Grantee pursuant to Section 5(b) or 5(c) above shall be as determined by the
Committee in good faith based on the best available facts and circumstances at
the time; provided, however, that where there is a public market for the stock
and the stock is registered under the Securities Exchange Act of 1934, as
amended, fair market value shall mean the per share or aggregate value of the
stock as of any given date, determined as follows: (i) if the principal trading
market for the stock is a national securities exchange or the Nasdaq National
Market, the last reported sale price thereof on the relevant date or, if there
were no trades on that date, the latest preceding date upon which a sale was
reported, or (ii) if the stock is not principally traded on such exchange or
market, the mean between the last reported "bid" and "asked" prices of stock on
the relevant date, as reported on Nasdaq or, if not so reported, as reported by
the National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Committee determines.
Payment in the form of unrestricted stock delivered pursuant to
paragraph 5(b) or 5(c) above (including Company stock acquired in connection
with the exercise of an Option), shall be subject to such restrictions as the
Committee deems appropriate, including, but not limited to, the requirement that
the stock has been owned by the Grantee for the requisite period of time
necessary to avoid a charge to the Company's earnings for financial reporting
purposes and adverse accounting consequences to the Company with respect to the
Option.
6. Replacement Option
Upon an exercise of the Option, in whole or in part, at any time, the
Grantee shall be entitled to receive a replacement Option covering such number
of shares of Common Stock, at such exercise price per share and upon such terms
and conditions as the Committee may, in its sole discretion, establish in any
policy or program adopted from time to time by the Committee. The Committee may,
in its sole discretion, amend, modify or terminate at any time any such policy
or program. Unless otherwise provided by the Committee, if any such policy or
program is amended or modified, such policy or program shall be deemed to become
part of this Grant Letter as so amended or modified without further action by
the Company or the Grantee. The Committee may specify in any such policy or
program that the grant of any such replacement Option may be automatic upon an
exercise of the Option complying with the terms and conditions of the policy or
program.
<PAGE>
7. Restrictions on Transfer.
(a) The Company shall have the right of first refusal to repurchase any
shares offered for sale by the Grantee, his executor, administrator, or
beneficiaries, which shares were issued to the Grantee pursuant to one or more
Options granted to the Grantee. Such offer shall be communicated to the Company
by written notice, stipulating the terms and conditions of such offer therein,
forwarded by registered or certified mail. The Company shall exercise its right
to repurchase (or to designate a third party to repurchase) by giving written
notice thereof by registered or certified mail to the Grantee, his executor,
administrator or beneficiaries no later than 30 days after the date of the
receipt of the offer. Within 30 days after receipt of such notice, the Grantee,
his executor, administrator or beneficiaries shall deliver a certificate or
certificates for the shares being sold, together with appropriate duly signed
stock powers transferring such shares to the Company, and the Company shall
deliver to the Grantee, his executor, administrator or beneficiaries the
Company's check in the amount of the purchase price for the shares being sold.
In the event that such offer shall not be accepted by written
notice forwarded by registered or certified mail no later than 30 days after the
date of the receipt of the offer, the Grantee, his executor, administrator or
beneficiaries may dispose of the shares offered to any person, firm or
corporation, without restriction, except that the subsequent transfer of such
shares shall not be on terms more favorable to the transferee than the terms
upon which the shares were originally offered to the Company. If, within 60 days
after the expiration of the 30 day period of any offer made hereunder, the
Grantee, his executor, administrator, or beneficiaries offering to sell any
shares issued hereunder, shall fail to consummate a sale thereof to any other
purchaser, then no sale of such shares may be made thereafter without again
reoffering the same to the Company in accordance with the provisions of this
subparagraph.
(b) In the event of the Grantee's termination of employment for any
reason, whether voluntary or involuntary, the Company shall have the right to
repurchase all shares issued or to be issued to the Grantee under this Agreement
at net book value as hereinafter defined, but not less than Grantee's cost.
The net book value of the Company's common stock shall be
determined as of the end of the Company's fiscal quarter immediately preceding
the date of termination hereof. Net book value of the Company's common stock
shall be that amount computed by deducting the sum of total liabilities and the
liquidation value of any preferred stock from total assets, as determined in
accordance with generally accepted accounting principles consistently applied,
and as shown on the financial statements of the Company as of the end of the
applicable fiscal quarter. The net book value per share of the Company's common
stock shall be determined by dividing the remainder by the number of shares of
the Company's common stock issued and outstanding as of such date.
The Company's right to repurchase shall be exercisable at any
time within one year after the date of Grantee's termination of employment by
the delivery of written notice by the Company to such effect to the Grantee, his
executor, administrator or beneficiaries. Within 30 days after receipt of such
notice, the Grantee, his executor, administrator or beneficiaries shall deliver
a certificate or certificates for the shares being sold, together with
appropriate duly signed stock powers transferring such shares to the Company,
and the Company shall deliver to the Grantee, his executor, administrator or
beneficiaries the Company's check in the amount of the purchase price for the
shares being sold.
(c) The right of first refusal and buy-back rights shall terminate when
the Company has consummated a public offering of its common stock pursuant to
the Securities Act of 1933, as amended.
<PAGE>
(d) The right of first refusal and buy-back rights granted to the
Company pursuant to subparagraphs 7(a) and 7(b) above are separate and
independent obligations of the Grantee and shall survive any termination of
employment. Furthermore, such rights shall not be construed as an absolute
obligation on the part of the Company to repurchase any shares tendered.
(e) Each certificate for shares issued by the Company to the Grantee
shall bear an appropriate legend that the transfer of such shares is restricted
by the provisions of this Agreement.
8. Nonassignability of Option Rights
The Option shall not be assigned or transferred by the Grantee except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. Upon a transfer by will or by the laws of descent and
distribution, the person to whom the Option is transferred shall have the right
to exercise the Option in accordance with this Grant Letter, subject to the
Company receiving satisfactory proof of his or her right to receive the Grant
under the Grantee's will or under the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge or dispose of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Grantee may transfer the Option pursuant to a domestic relations order or
to family members or other persons or entities according to such terms as the
Committee may determine.
9. Adjustments
If any change is made to the common stock (whether by reason of stock
dividend, spin off, recapitalization, stock split, combination or exchange of
shares, merger, reorganization or consolidation in which the Company is the
surviving corporation, reclassification, change in par value, or any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding Company Stock is substantially reduced as a result of a spin off or
the Company's payment of an extraordinary dividend or distribution), then unless
such event or change results in the termination of this Option, the Committee
shall preserve the value of the Option by making appropriate adjustments to the
number and class of shares, the Option Price or otherwise, except that any
fractional shares resulting from such adjustments shall be eliminated by
rounding any portion of a share equal to .5 or greater up, and any portion of a
share equal to less than .5 down, in each case to the nearest whole number.
10. Withholding
The Grantee or other person receiving Shares upon an exercise of the
Option, in whole or in part, shall be subject to any applicable federal
(including FICA), state and local taxes that the Company is required to withhold
with respect to such exercise. The Company shall have the right to require a
Grantee to pay to the Company, or the Company may deduct from other wages paid
by the Company, the amount of any such withholding taxes the Company is required
to withhold with respect to such exercise. If the Committee so permits by formal
vote, at or after Grant but prior to exercise of the Option, a Grantee may elect
to satisfy the Company's income tax withholding obligation with respect to such
exercise by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The Company's obligation to issue or transfer Shares upon
exercise of the Option shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
<PAGE>
11. Employment by the Company
For purposes of this Agreement, employment by the Company shall mean
employment as an employee, so that for purposes of exercising this Option, a
Grantee shall not be considered to have terminated employment until the Grantee
ceases to be an employee, unless the Committee determines otherwise.
12. No Contract for Employment
(a) Nothing contained in this Grant Letter shall be deemed to require
the Company to continue the Grantee's employment by the Company. Except as may
be provided in a written employment contract executed by a duly authorized
officer of the Company and approved by the board of directors of the Company,
the Grantee shall at all times be an employee-at-will of the Company and the
Company may discharge the Grantee at any time for any reason, with or without
cause, and with or without severance compensation.
(b) From time to time, the Company may distribute employee manuals or
handbooks, and officers or other representatives of the Company may make written
or oral statements relating to the Company's policies and procedures. Such
manuals, handbooks and statements are intended only for the general guidance of
employees. No policies, procedures or statements of any nature by or on behalf
of the Company (whether written or oral, and whether or not contained in any
formal employee manual or handbook) shall be construed to modify this Grant
Letter or to create express or implied obligations to the Grantee of any nature.
13. Administration
All questions of interpretation and application of the Option granted
hereunder shall be determined by the Committee in its discretion, and such
determination shall be final and binding upon all persons. The validity,
construction and effect of this Option shall be determined in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of law thereof.
14. No Stockholder Rights
Neither the Grantee, nor any person entitled to exercise the Grantee's
rights in the event of the Grantee's death, shall have any of the rights and
privileges of a stockholder with respect to the Shares subject to the Option,
except to the extent that certificates for such Shares shall have been issued
upon the exercise of the Option as provided herein.
15. Cancellation or Amendment
This Option may be canceled or amended by the Committee, in whole or in
part, at any time that the Committee determines, in its sole discretion, that
the cancellation or amendment is necessary or advisable in light of any change
after the Date of Grant in (a) the Code or the regulations issued thereunder or
(b) any federal or state securities law or other law or regulation, which change
by its terms is effective retroactively to a date on or before the Date of
Grant; provided, however, that no such cancellation or amendment shall, without
the Grantee's consent, apply to or affect installments that matured on or before
the date on which the Committee makes such determination.
<PAGE>
16. Notice
Any notice to the Company provided for in this Grant Letter shall be
addressed to it in care of the Stock Option Administrator of the Company, at
10305 102nd Terrace, Sebastian, FL 32958 and any notice to the Grantee shall be
addressed to such Grantee at the current address shown on the payroll of the
Company, or to such other address as the Grantee may designate to the Company in
writing. Any notice provided for hereunder shall be delivered by hand, sent by
telecopy or telex or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage and registry being prepaid, in a post
office or branch post office regularly maintained by the United States Postal
Service.
17. Grantee's Securities Law Representations
If the Committee shall deem it appropriate by reason of any securities
law, it may require that the Grantee upon exercise in whole or in part of the
Option, represent to the Company and agree in writing that the purchase of the
Shares is for investment only and not with a view to distribution. The Committee
may require that the Share certificates be inscribed with a legend restricting
transfer in accordance with applicable securities law requirements.
MICRO VISION MEDICAL SYSTEMS, INC.
By:
-------------------------------------------
Accepted By:
----------------------------------------------
James E. Ring
<PAGE>
EXHIBIT 10.5
MICRO VISION MEDICAL SYSTEMS, INC.
STOCK OPTION GRANT LETTER
This Stock Option is granted to Michael G. Schneider (the "Grantee") on
June 13, 1996 (the "Date of Grant") by Micro Vision Medical Systems, Inc. (the
"Company").
1. Option Grant and Acceptance
(a) The Company hereby grants to the Grantee effective as of the Date
of Grant, the right and option (the "Option") to purchase 15,000 shares of
common stock of the Company (the "Shares"). The Option is not intended to
constitute an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code).
(b) The Grantee shall signify his acceptance of the Option by executing
this Grant Letter.
2. Option Price
The price of each Share covered by the Option shall be $1.00 (the
"Option Price"), which is 100% of the fair market value of a Share on the Date
of Grant.
3. Option Expiration
The Option, to the extent that it has not theretofore been exercised,
shall automatically expire on the earliest to occur of the following events:
(a) seven years from the Date of Grant;
(b) if the Grantee's employment with the Company terminates voluntarily
or involuntarily for any reason other than death or Disability (as defined
below), the Option may thereafter be exercised by the Grantee, to the extent it
was exercisable at the time of such termination, for a period of three months
from the date of such termination of employment or until the occurrence of the
date specified in Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such three-month period, the unexercised portion
of the Option shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination of employment, for a period of twelve
months from the date of such death or until the occurrence of the date specified
in Section 3(a), whichever period is shorter;
(c) if the Grantee's employment with the Company terminates by reason
of death, the Option may be thereafter exercised, to the extent then
exercisable, by the legal representative of the estate or by the legatee of the
Grantee under the will of the Grantee, for a period of one year from the date of
such death or until the occurrence of the date specified in Section 3(a),
whichever period is shorter;
(d) if the Grantee's employment with the Company terminates by reason
of "Disability" (which for purposes of this Agreement shall mean permanent and
total disability within the meaning of Section 22(e)(3) of the Code), the Option
may thereafter be exercised by the Grantee, to the extent it was exercisable at
the time of such termination, for a period of one year from the date of such
termination of employment or until the occurrence of the date specified in
Section 3(a), whichever period is shorter; provided, however,
<PAGE>
that if the Grantee dies within such one-year period, any unexercised portion of
the Option held by the Grantee shall thereafter be exercisable to the extent it
was exercisable at the time of termination of employment for a period of twelve
months from the date of death or until the occurrence of the date specified in
Section 3(a), whichever period is shorter;
(e) Notwithstanding the foregoing and unless otherwise
determined by the committee of the Board of Directors designated to administer
the Company's stock options and stock option plans (hereinafter the
"Committee"), if Grantee's employment is terminated for Cause, the Option
granted hereby shall terminate as of the date the Grantee ceases to be employed
by the Company, and the Grantee shall automatically forfeit all Shares
underlying any exercised portion of an Option for which the Company has not yet
delivered the share certificates upon refund by the Company of the exercise
price paid by the Grantee for such Shares. For purposes of this Agreement,
"Termination for Cause" shall mean, except to the extent specified otherwise by
the Committee, a finding by the Committee that the Participant has breached his
or her employment or service contract, non-competition or other obligation with
the Company, or has been engaged in disloyalty to the Company, including,
without limitation, fraud, embezzlement, theft, commission of a felony or proven
dishonesty in the course of his or her employment or service, or has disclosed
trade secrets or confidential information of the Company to persons not entitled
to receive such information.
4. Vesting
(a) Subject to the terms, conditions and limitations expressed herein
and, except as provided below, the Option shall become exercisable in accordance
with the following vesting schedule:
<TABLE>
<CAPTION>
Period Percentage Vested
------ -----------------
<S> <C>
On or before December 31, 1996 0%
On or after January 1, 1997 25%
On or after the consummation of the
initial public offering 75%
On or after the first anniversary of the
consummation of the initial public offering 100%
</TABLE>
For purposes of this vesting schedule, the consummation of the public offering
shall mean the date upon which the closing of the initial public offering with
the underwriter(s) occurs.
(b) The right to purchase Shares under the Option as provided in
Section 4(a) above may be exercised in a cumulative fashion, such that any right
to purchase Shares which becomes exercisable on a given date shall remain
exercisable until the date stated in any applicable provision of Section 3 (with
respect to the expiration of the Option).
(c) In the event of a "Change of Control" (as defined below), either
(i) all of the unvested portion of the Option shall vest immediately, or (ii) if
the Committee so determines, the difference between the fair market value of the
shares underlying such unvested portion of the Option and the exercise price
thereof shall be paid to Grantee in cash by the Company.
(d) "Change in Control" is defined to mean the issuance, sale or
transfer (including a transfer as a result of death, disability, operation of
law or otherwise) in a single transaction or group of related transactions to
any entity, person or group (other than Safeguard Scientifics, Inc. and/or its
affiliates) of the
<PAGE>
beneficial ownership of newly issued, outstanding or treasury shares of the
capital stock of the Company having 50% or more of the combined voting power of
the Company's then outstanding securities entitled to vote for at least a
majority of the authorized number of directors of the Company, or any merger,
consolidation, sale of all or substantially all of the assets or other
comparable transaction as a result of which all or substantially all of the
assets and business of the Company are acquired directly or indirectly by
another entity which prior to the acquisition was not an affiliate of the
Company (as defined in the regulations of the Securities and Exchange Commission
under the Securities Act of 1933). Group shall have the same meaning as in
Section 13(d) of the Securities Exchange Act of 1934, and "affiliate" shall have
the same meaning as in Rule 405 of the Securities Exchange Commission adopted
under the Securities Act of 1933.
5. Time and Method of Exercise
Subject to the terms of Section 4 above, the Option may be exercised at
any time, or from time to time, prior to expiration (as defined in Section 3
above), by written notice to the Stock Option Administrator of the Company. Such
written notice shall be effective upon receipt by the Stock Option Administrator
of the Company and shall be accompanied by:
(a) a check, or the equivalent thereof acceptable to the Company in its
discretion, for the full Option Price of the number of Shares being purchased;
(b) one or more certificates representing a number of Shares which are,
in the aggregate, equal in fair market value to the full Option Price for the
Shares being purchased, such certificates being duly endorsed (or accompanied by
stock powers signed in blank) so as to transfer to the Company all right, title
and interest in and to the Shares represented by such certificates;
(c) a combination of the forms of payment specified in Section 5(a) and
5(b) above which, in the aggregate, is equal to the full Option Price of the
number of Shares being purchased; or
(d) where there is a public market for the Shares, by delivering a
properly executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker to deliver to the Company on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option.
The fair market value of each share of Company stock delivered by the
Grantee pursuant to Section 5(b) or 5(c) above shall be as determined by the
Committee in good faith based on the best available facts and circumstances at
the time; provided, however, that where there is a public market for the stock
and the stock is registered under the Securities Exchange Act of 1934, as
amended, fair market value shall mean the per share or aggregate value of the
stock as of any given date, determined as follows: (i) if the principal trading
market for the stock is a national securities exchange or the Nasdaq National
Market, the last reported sale price thereof on the relevant date or, if there
were no trades on that date, the latest preceding date upon which a sale was
reported, or (ii) if the stock is not principally traded on such exchange or
market, the mean between the last reported "bid" and "asked" prices of stock on
the relevant date, as reported on Nasdaq or, if not so reported, as reported by
the National Daily Quotation Bureau, Inc. or as reported in a customary
financial reporting service, as applicable and as the Committee determines.
Payment in the form of unrestricted stock delivered pursuant to
paragraph 5(b) or 5(c) above (including Company stock acquired in connection
with the exercise of an Option), shall be subject to such
<PAGE>
restrictions as the Committee deems appropriate, including, but not limited to,
the requirement that the stock has been owned by the Grantee for the requisite
period of time necessary to avoid a charge to the Company's earnings for
financial reporting purposes and adverse accounting consequences to the Company
with respect to the Option.
6. Replacement Option
Upon an exercise of the Option, in whole or in part, at any time, the
Grantee shall be entitled to receive a replacement Option covering such number
of shares of Common Stock, at such exercise price per share and upon such terms
and conditions as the Committee may, in its sole discretion, establish in any
policy or program adopted from time to time by the Committee. The Committee may,
in its sole discretion, amend, modify or terminate at any time any such policy
or program. Unless otherwise provided by the Committee, if any such policy or
program is amended or modified, such policy or program shall be deemed to become
part of this Grant Letter as so amended or modified without further action by
the Company or the Grantee. The Committee may specify in any such policy or
program that the grant of any such replacement Option may be automatic upon an
exercise of the Option complying with the terms and conditions of the policy or
program.
7. Restrictions on Transfer.
(a) The Company shall have the right of first refusal to repurchase any
shares offered for sale by the Grantee, his executor, administrator, or
beneficiaries, which shares were issued to the Grantee pursuant to one or more
Options granted to the Grantee. Such offer shall be communicated to the Company
by written notice, stipulating the terms and conditions of such offer therein,
forwarded by registered or certified mail. The Company shall exercise its right
to repurchase (or to designate a third party to repurchase) by giving written
notice thereof by registered or certified mail to the Grantee, his executor,
administrator or beneficiaries no later than 30 days after the date of the
receipt of the offer. Within 30 days after receipt of such notice, the Grantee,
his executor, administrator or beneficiaries shall deliver a certificate or
certificates for the shares being sold, together with appropriate duly signed
stock powers transferring such shares to the Company, and the Company shall
deliver to the Grantee, his executor, administrator or beneficiaries the
Company's check in the amount of the purchase price for the shares being sold.
In the event that such offer shall not be accepted by written
notice forwarded by registered or certified mail no later than 30 days after the
date of the receipt of the offer, the Grantee, his executor, administrator or
beneficiaries may dispose of the shares offered to any person, firm or
corporation, without restriction, except that the subsequent transfer of such
shares shall not be on terms more favorable to the transferee than the terms
upon which the shares were originally offered to the Company. If, within 60 days
after the expiration of the 30 day period of any offer made hereunder, the
Grantee, his executor, administrator, or beneficiaries offering to sell any
shares issued hereunder, shall fail to consummate a sale thereof to any other
purchaser, then no sale of such shares may be made thereafter without again
reoffering the same to the Company in accordance with the provisions of this
subparagraph.
(b) In the event of the Grantee's termination of employment for any
reason, whether voluntary or involuntary, the Company shall have the right to
repurchase all shares issued or to be issued to the Grantee under this Agreement
at net book value as hereinafter defined, but not less than Grantee's cost.
The net book value of the Company's common stock shall be
determined as of the end of the Company's fiscal quarter immediately preceding
the date of termination hereof. Net book value of the
<PAGE>
Company's common stock shall be that amount computed by deducting the sum of
total liabilities and the liquidation value of any preferred stock from total
assets, as determined in accordance with generally accepted accounting
principles consistently applied, and as shown on the financial statements of the
Company as of the end of the applicable fiscal quarter. The net book value per
share of the Company's common stock shall be determined by dividing the
remainder by the number of shares of the Company's common stock issued and
outstanding as of such date.
The Company's right to repurchase shall be exercisable at any
time within one year after the date of Grantee's termination of employment by
the delivery of written notice by the Company to such effect to the Grantee, his
executor, administrator or beneficiaries. Within 30 days after receipt of such
notice, the Grantee, his executor, administrator or beneficiaries shall deliver
a certificate or certificates for the shares being sold, together with
appropriate duly signed stock powers transferring such shares to the Company,
and the Company shall deliver to the Grantee, his executor, administrator or
beneficiaries the Company's check in the amount of the purchase price for the
shares being sold.
(c) The right of first refusal and buy-back rights shall terminate when
the Company has consummated a public offering of its common stock pursuant to
the Securities Act of 1933, as amended.
(d) The right of first refusal and buy-back rights granted to the
Company pursuant to subparagraphs 7(a) and 7(b) above are separate and
independent obligations of the Grantee and shall survive any termination of
employment. Furthermore, such rights shall not be construed as an absolute
obligation on the part of the Company to repurchase any shares tendered.
(e) Each certificate for shares issued by the Company to the Grantee
shall bear an appropriate legend that the transfer of such shares is restricted
by the provisions of this Agreement.
8. Nonassignability of Option Rights
The Option shall not be assigned or transferred by the Grantee except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. Upon a transfer by will or by the laws of descent and
distribution, the person to whom the Option is transferred shall have the right
to exercise the Option in accordance with this Grant Letter, subject to the
Company receiving satisfactory proof of his or her right to receive the Grant
under the Grantee's will or under the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge or dispose of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Grantee may transfer the Option pursuant to a domestic relations order or
to family members or other persons or entities according to such terms as the
Committee may determine.
9. Adjustments
If any change is made to the common stock (whether by reason of stock
dividend, spin off, recapitalization, stock split, combination or exchange of
shares, merger, reorganization or consolidation in which the Company is the
surviving corporation, reclassification, change in par value, or any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding Company Stock is substantially reduced as a result of a spin off or
the Company's payment of an extraordinary dividend or distribution), then unless
such event or change results in the termination of this Option, the Committee
shall preserve the value of the Option by
<PAGE>
making appropriate adjustments to the number and class of shares, the Option
Price or otherwise, except that any fractional shares resulting from such
adjustments shall be eliminated by rounding any portion of a share equal to .5
or greater up, and any portion of a share equal to less than .5 down, in each
case to the nearest whole number.
10. Withholding
The Grantee or other person receiving Shares upon an exercise of the
Option, in whole or in part, shall be subject to any applicable federal
(including FICA), state and local taxes that the Company is required to withhold
with respect to such exercise. The Company shall have the right to require a
Grantee to pay to the Company, or the Company may deduct from other wages paid
by the Company, the amount of any such withholding taxes the Company is required
to withhold with respect to such exercise. If the Committee so permits by formal
vote, at or after Grant but prior to exercise of the Option, a Grantee may elect
to satisfy the Company's income tax withholding obligation with respect to such
exercise by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The Company's obligation to issue or transfer Shares upon
exercise of the Option shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
11. Employment by the Company
For purposes of this Agreement, employment by the Company shall mean
employment as an employee, so that for purposes of exercising this Option, a
Grantee shall not be considered to have terminated employment until the Grantee
ceases to be an employee, unless the Committee determines otherwise.
12. No Contract for Employment
(a) Nothing contained in this Grant Letter shall be deemed to require
the Company to continue the Grantee's employment by the Company. Except as may
be provided in a written employment contract executed by a duly authorized
officer of the Company and approved by the board of directors of the Company,
the Grantee shall at all times be an employee-at-will of the Company and the
Company may discharge the Grantee at any time for any reason, with or without
cause, and with or without severance compensation.
(b) From time to time, the Company may distribute employee manuals or
handbooks, and officers or other representatives of the Company may make written
or oral statements relating to the Company's policies and procedures. Such
manuals, handbooks and statements are intended only for the general guidance of
employees. No policies, procedures or statements of any nature by or on behalf
of the Company (whether written or oral, and whether or not contained in any
formal employee manual or handbook) shall be construed to modify this Grant
Letter or to create express or implied obligations to the Grantee of any nature.
13. Administration
All questions of interpretation and application of the Option granted
hereunder shall be determined by the Committee in its discretion, and such
determination shall be final and binding upon all persons. The validity,
construction and effect of this Option shall be determined in accordance with
the laws of the State
<PAGE>
of Delaware, without giving effect to the principles of conflicts of law
thereof.
14. No Stockholder Rights
Neither the Grantee, nor any person entitled to exercise the Grantee's
rights in the event of the Grantee's death, shall have any of the rights and
privileges of a stockholder with respect to the Shares subject to the Option,
except to the extent that certificates for such Shares shall have been issued
upon the exercise of the Option as provided herein.
15. Cancellation or Amendment
This Option may be canceled or amended by the Committee, in whole or in
part, at any time that the Committee determines, in its sole discretion, that
the cancellation or amendment is necessary or advisable in light of any change
after the Date of Grant in (a) the Code or the regulations issued thereunder or
(b) any federal or state securities law or other law or regulation, which change
by its terms is effective retroactively to a date on or before the Date of
Grant; provided, however, that no such cancellation or amendment shall, without
the Grantee's consent, apply to or affect installments that matured on or before
the date on which the Committee makes such determination.
16. Notice
Any notice to the Company provided for in this Grant Letter shall be
addressed to it in care of the Stock Option Administrator of the Company, at
10305 102nd Terrace, Sebastian, FL 32958 and any notice to the Grantee shall be
addressed to such Grantee at the current address shown on the payroll of the
Company, or to such other address as the Grantee may designate to the Company in
writing. Any notice provided for hereunder shall be delivered by hand, sent by
telecopy or telex or enclosed in a properly sealed envelope addressed as stated
above, registered and deposited, postage and registry being prepaid, in a post
office or branch post office regularly maintained by the United States Postal
Service.
17. Grantee's Securities Law Representations
If the Committee shall deem it appropriate by reason of any securities
law, it may require that the Grantee upon exercise in whole or in part of the
Option, represent to the Company and agree in writing that the purchase of the
Shares is for investment only and not with a view to distribution. The Committee
may require that the Share certificates be inscribed with a legend restricting
transfer in accordance with applicable securities law requirements.
MICRO VISION MEDICAL SYSTEMS, INC.
By:
------------------------------------------
Accepted By:
---------------------------------------------
Michael G. Schneider
<PAGE>
EXHIBIT 10.6
CHROMAVISION MEDICAL SYSTEMS, INC.
STOCK OPTION GRANT LETTER
ChromaVision Medical Systems, Inc. (the "Company") is granting this
Stock Option to Deithart Reichardt (the "Grantee") on November 11, 1997 (the
"Date of Grant").
1. Option Grant and Acceptance
(a) The Company hereby grants to the Grantee effective as of the Date
of Grant, the right and option (the "Option") to purchase 40,000 shares of
Common Stock of the Company (the "Shares"). The Option is not intended to
constitute an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
(b) The Grantee shall signify his acceptance of the Option by executing
this Grant Letter.
2. Option Price
The price of each Share covered by the Option shall be $9.375 (the
"Option Price"), which is 100% of the fair market value of a Share on the Date
of Grant.
3. Option Expiration
The Option, to the extent that it has not theretofore been exercised,
shall automatically expire on the earliest to occur of the following events:
(a) ten years from the Date of Grant;
(b) if the Grantee's employment with the Company terminates voluntarily
or involuntarily for any reason other than death or Disability (as hereinafter
defined), the Option may thereafter be exercised by the Grantee, to the extent
it was exercisable at the time of such termination, for a period of three months
from the date of such termination of employment or until the occurrence of the
date specified in Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such three-month period, the unexercised portion
of the Option shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination of employment, for a period of twelve
months from the date of such death or until the occurrence of the date specified
in Section 3(a), whichever period is shorter;
(c) if the Grantee's employment with the Company terminates by reason
of death, the Option may be thereafter exercised, to the extent then
exercisable, by the legal representative of the estate or by the legatee of the
Grantee under the will of the Grantee, for a period of one year from the date of
such death or until the occurrence of the date specified in Section 3(a),
whichever period is shorter;
(d) if the Grantee's employment with the Company terminates by reason
of Disability, the Option may thereafter be exercised by the Grantee, to the
extent it was exercisable at the time of such termination, for a period of one
year from the date of such termination of employment or until the occurrence of
the date specified in Section 3(a), whichever period is shorter; provided,
however, that if the Grantee dies within such one-year period, any unexercised
portion of the Option held by the Grantee shall thereafter be
<PAGE>
exercisable to the extent it was exercisable at the time of termination of
employment for a period of twelve months from the date of death or until the
occurrence of the date specified in Section 3(a), whichever period is shorter;
(e) Notwithstanding the foregoing, if Grantee's employment is
Terminated for Cause (as hereinafter defined), the Option granted hereby shall
terminate as of the date the Grantee ceases to be Employed by the Company, and
the Grantee shall automatically forfeit all Shares underlying any exercised
portion of an Option for which the Company has not yet delivered the share
certificates upon refund by the Company of the exercise price paid by the
Grantee for such Shares.
4. Vesting
(a) Subject to the terms, conditions and limitations expressed herein
and, except as provided below, the Option shall become exercisable in accordance
with the following vesting schedule:
<TABLE>
<CAPTION>
Period Percentage Vested
------ -----------------
<S> <C>
On or before November 10, 1998 0%
November 11, 1998 to November 10, 1999 25%
November 11, 1999 to November 10, 2000 50%
November 11, 2000 to November 10, 2001 75%
On or after November 11, 2001 100%
</TABLE>
(b) The right to purchase Shares under the Option as provided in
Section 4(a) above may be exercised in a cumulative fashion, such that any right
to purchase Shares which becomes exercisable on a given date shall remain
exercisable until the date stated in any applicable provision of Section 3 (with
respect to the expiration of the Option).
(c) In the event of a "Change of Control" (as defined below), either
(i) all of the unvested portion of the Option shall vest immediately, or (ii) if
the Committee (as hereinafter defined) so determines, the difference between the
fair market value of the shares underlying such unvested portion of the Option
and the exercise price thereof shall be paid to Grantee in cash by the Company.
(d) "Change in Control" is defined to mean the issuance, sale or
transfer (including a transfer as a result of death, disability, operation of
law or otherwise) in a single transaction or group of related transactions to
any entity, person or group (other than Safeguard Scientifics, Inc. and/or its
affiliates) of the beneficial ownership of newly issued, outstanding or treasury
shares of the capital stock of the Company having 50% or more of the combined
voting power of the Company's then outstanding securities entitled to vote for
at least a majority of the authorized number of directors of the Company, or any
merger, consolidation, sale of all or substantially all of the assets or other
comparable transaction as a result of which all or substantially all of the
assets and business of the Company are acquired directly or indirectly by
another entity which prior to the acquisition was not an affiliate of the
Company (as defined in the regulations of the Securities and Exchange Commission
under the Securities Act of 1933). Group shall have the same meaning as in
Section 13(d) of the Securities Exchange Act of 1934, and "affiliate" shall have
the same meaning as in Rule 405 of the Securities Exchange Commission adopted
under the Securities Act of 1933.
<PAGE>
5. Time and Method of Exercise
Subject to the terms of Section 4 above, the Option may be exercised at
any time, or from time to time, prior to expiration (as defined in Section 3
above), by written notice to the Stock Option Administrator of the Company. Such
written notice shall be effective upon receipt by the Stock Option Administrator
of the Company and shall be accompanied by:
(a) a check, or the equivalent thereof acceptable to the Company in its
discretion, for the full Option Price of the number of Shares being purchased;
(b) one or more certificates representing a number of Shares which are,
in the aggregate, equal in Fair Market Value (as hereinafter defined) to the
full Option Price for the Shares being purchased, such certificates being duly
endorsed (or accompanied by stock powers signed in blank) so as to transfer to
the Company all right, title and interest in and to the Shares represented by
such certificates;
(c) a combination of the forms of payment specified in Section 5(a) and
5(b) above which, in the aggregate, is equal to the full Option Price of the
number of Shares being purchased; or
(d) where there is a public market for the Shares, by delivering a
properly executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker to deliver to the Company on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option.
6. Replacement Option
Upon an exercise of the Option, in whole or in part, at any time, the
Grantee shall be entitled to receive a replacement Option covering such number
of shares of Common Stock, at such exercise price per share and upon such terms
and conditions as the Committee may, in its sole discretion, establish in any
policy or program adopted from time to time by the Committee. The Committee may,
in its sole discretion, amend, modify or terminate at any time any such policy
or program. Unless otherwise provided by the Committee, if any such policy or
program is amended or modified, such policy or program shall be deemed to become
part of this Grant Letter as so amended or modified without further action by
the Company or the Grantee. The Committee may specify in any such policy or
program that the grant of any such replacement Option may be automatic upon an
exercise of the Option complying with the terms and conditions of the policy or
program.
<PAGE>
7. Nonassignability of Option Rights
The Option shall not be assigned or transferred by the Grantee except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. Upon a transfer by will or by the laws of descent and
distribution, the person to whom the Option is transferred shall have the right
to exercise the Option in accordance with this Grant Letter, subject to the
Company receiving satisfactory proof of his or her right to receive the Grant
under the Grantee's will or under the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge or dispose of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Grantee may transfer Nonqualified Stock Options pursuant to a domestic
relations order or to family members or other persons or entities according to
such terms as the Company may determine.
8. Adjustments
If any change is made to the Common Stock (whether by reason of stock
dividend, spin off, recapitalization, stock split, combination or exchange of
shares, merger, reorganization or consolidation in which the Company is the
surviving corporation, reclassification, change in par value, or any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding Company Stock is substantially reduced as a result of a spin off or
the Company's payment of an extraordinary dividend or distribution), then unless
such event or change results in the termination of this Grant, the Committee
shall preserve the value of the Option by making appropriate adjustments to the
number and class of shares, the Option Price or otherwise, except that any
fractional shares resulting from such adjustments shall be eliminated by
rounding any portion of a share equal to .5 or greater up, and any portion of a
share equal to less than .5 down, in each case to the nearest whole number.
9. Withholding
The Grantee or other person receiving Shares upon an exercise of the
Option, in whole or in part, shall be subject to any applicable federal
(including FICA), state and local taxes that the Company is required to withhold
with respect to such exercise. The Company shall have the right to require a
Grantee to pay to the Company, or the Company may deduct from other wages paid
by the Company, the amount of any such withholding taxes the Company is required
to withhold with respect to such exercise. If the Committee so permits by formal
vote, at or after Grant but prior to exercise of the Option, a Grantee may elect
to satisfy the Company's income tax withholding obligation with respect to such
exercise by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The Company's obligation to issue or transfer Shares upon
exercise of the Option shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
10. Employment by the Company
For purposes of this Grant, Employed by the Company shall mean
employment as an employee or a consultant, so that for purposes of exercising
this Option, a Grantee shall be considered to have terminated employment once
the Grantee ceases to be an employee or consultant, unless the Committee
determines otherwise.
<PAGE>
11. No Contract for Employment
(a) Nothing contained in this Grant Letter shall be deemed to require
the Company to continue the Grantee's employment by the Company. Except as may
be provided in a written employment contract executed by a duly authorized
officer of the Company and approved by the board of directors of the Company,
the Grantee shall at all times be an employee-at-will of the Company and the
Company may discharge the Grantee at any time for any reason, with or without
cause, and with or without severance compensation.
(b) From time to time, the Company may distribute employee manuals or
handbooks, and officers or other representatives of the Company may make written
or oral statements relating to the Company's policies and procedures. Such
manuals, handbooks and statements are intended only for the general guidance of
employees. No policies, procedures or statements of any nature by or on behalf
of the Company (whether written or oral, and whether or not contained in any
formal employee manual or handbook) shall be construed to modify this Grant
Letter or to create express or implied obligations to the Grantee of any nature.
12. Interpretation and Administration
All questions of interpretation and application of this Grant shall be
determined by the Committee in its discretion, and such determination shall be
final and binding upon all persons. The Committee may consult with legal counsel
who may be counsel to the Company and shall not incur any liability for any
action taken in good faith in reliance upon the advice of such counsel.
The validity, construction and effect of this Option shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
13. No Stockholder Rights
Neither the Grantee, nor any person entitled to exercise the Grantee's
rights in the event of the Grantee's death, shall have any of the rights and
privileges of a stockholder with respect to the Shares subject to the Option,
except to the extent that certificates for such Shares shall have been issued
upon the exercise of the Option as provided herein.
14. Cancellation or Amendment
This Option may be canceled or amended by the Committee, in whole or in
part, at any time that the Committee determines, in its sole discretion, that
the cancellation or amendment is necessary or advisable in light of any change
after the Date of Grant in (a) the Code or the regulations issued thereunder or
(b) any federal or state securities law or other law or regulation, which change
by its terms is effective retroactively to a date on or before the Date of
Grant; provided, however, that no such cancellation or amendment shall, without
the Grantee's consent, apply to or affect installments that matured on or before
the date on which the Committee makes such determination.
<PAGE>
15. Notice
Any notice to the Company provided for in this Grant Letter shall be
addressed to it in care of the Stock Option Administrator of the Company, at
33171 Paseo Cerveza, San Juan Capistrano, CA 92690 and any notice to the Grantee
shall be addressed to such Grantee at the current address shown on the payroll
of the Company, or to such other address as the Grantee may designate to the
Company in writing. Any notice provided for hereunder shall be delivered by
hand, sent by telecopy or telex or enclosed in a properly sealed envelope
addressed as stated above, registered and deposited, postage and registry being
prepaid, in a post office or branch post office regularly maintained by the
United States Postal Service.
16. Grantee's Securities Law Representations
If the Committee shall deem it appropriate by reason of any securities
law, it may require that the Grantee upon exercise in whole or in part of the
Option, represent to the Company and agree in writing that the purchase of the
Shares is for investment only and not with a view to distribution. The Committee
may require that the Share certificates be inscribed with a legend restricting
transfer in accordance with applicable securities law requirements.
17. Definitions
"Committee" means the committee appointed by the Board of Directors to
administer the Company's stock options and equity compensation plans, or, in the
absence of such a committee, the Board of Directors of the Company.
"Disability" means permanent and total disability within the meaning of
Section 22(e)(3) of the Code.
"Fair Market Value" means the fair market value of the Stock as
determined by the Committee in good faith based on the best available facts and
circumstances at the time; provided, however, that where there is a public
market for the Stock and the Stock is registered under the Exchange Act, Fair
Market Value shall mean the per share or aggregate value of the Stock as of any
given date, determined as follows: (i) if the principal trading market for the
Stock is a national securities exchange or the Nasdaq National Market, the last
reported sale price thereof on the relevant date or, if there were no trades on
that date, the latest preceding date upon which a sale was reported, or (ii) if
the Stock is not principally traded on such exchange or market, the mean between
the last reported "bid" and "asked" prices of Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines.
"Termination for Cause" shall mean, except to the extent specified
otherwise by the Committee, a finding by the Committee that the Grantee has
breached his or her employment or service contract, non-competition or other
obligation with the Company, or has been engaged in disloyalty to the Company,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his or her employment or service,
or has disclosed trade secrets or confidential information of the Company to
persons not entitled to receive such information.
CHROMAVISION MEDICAL SYSTEMS, INC.
<PAGE>
By:
---------------------------------------
Accepted By:
------------------------------------------
Deithart Reichardt
PH02A/10567.1
<PAGE>
EXHIBIT 10.7
CHROMAVISION MEDICAL SYSTEMS, INC.
STOCK OPTION GRANT LETTER
ChromaVision Medical Systems, Inc. (the "Company") is granting this
Stock Option to Patricia Sisson (the "Grantee") on November 3, 1997 (the "Date
of Grant").
1. Option Grant and Acceptance
(a) The Company hereby grants to the Grantee effective as of the Date
of Grant, the right and option (the "Option") to purchase 50,000 shares of
Common Stock of the Company (the "Shares"). The Option is not intended to
constitute an "incentive stock option" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
(b) The Grantee shall signify his acceptance of the Option by executing
this Grant Letter.
2. Option Price
The price of each Share covered by the Option shall be $10.00 (the
"Option Price"), which is 100% of the fair market value of a Share on the Date
of Grant.
3. Option Expiration
The Option, to the extent that it has not theretofore been exercised,
shall automatically expire on the earliest to occur of the following events:
(a) ten years from the Date of Grant;
(b) if the Grantee's employment with the Company terminates voluntarily
or involuntarily for any reason other than death or Disability (as hereinafter
defined), the Option may thereafter be exercised by the Grantee, to the extent
it was exercisable at the time of such termination, for a period of three months
from the date of such termination of employment or until the occurrence of the
date specified in Section 3(a), whichever period is shorter; provided, however,
that if the Grantee dies within such three-month period, the unexercised portion
of the Option shall thereafter be exercisable to the extent to which it was
exercisable at the time of termination of employment, for a period of twelve
months from the date of such death or until the occurrence of the date specified
in Section 3(a), whichever period is shorter;
(c) if the Grantee's employment with the Company terminates by reason
of death, the Option may be thereafter exercised, to the extent then
exercisable, by the legal representative of the estate or by the legatee of the
Grantee under the will of the Grantee, for a period of one year from the date of
such death or until the occurrence of the date specified in Section 3(a),
whichever period is shorter;
(d) if the Grantee's employment with the Company terminates by reason
of Disability, the Option may thereafter be exercised by the Grantee, to the
extent it was exercisable at the time of such termination, for a period of one
year from the date of such termination of employment or until the occurrence of
the date specified in Section 3(a), whichever period is shorter; provided,
however, that if the Grantee dies within such one-year period, any unexercised
portion of the Option held by the Grantee shall thereafter be
<PAGE>
exercisable to the extent it was exercisable at the time of termination of
employment for a period of twelve months from the date of death or until the
occurrence of the date specified in Section 3(a), whichever period is shorter;
(e) Notwithstanding the foregoing, if Grantee's employment is
Terminated for Cause (as hereinafter defined), the Option granted hereby shall
terminate as of the date the Grantee ceases to be Employed by the Company, and
the Grantee shall automatically forfeit all Shares underlying any exercised
portion of an Option for which the Company has not yet delivered the share
certificates upon refund by the Company of the exercise price paid by the
Grantee for such Shares.
4. Vesting
(a) Subject to the terms, conditions and limitations expressed herein
and, except as provided below, the Option shall become exercisable in accordance
with the following vesting schedule:
<TABLE>
<CAPTION>
Period Percentage Vested
------ -----------------
<S> <C>
On or before November 2, 1998 0%
November 3, 1998 to November 2, 1999 25%
November 3, 1999 to November 2, 2000 50%
November 3, 2000 to November 2, 2001 75%
On or after November 3, 2001 100%
</TABLE>
(b) The right to purchase Shares under the Option as provided in
Section 4(a) above may be exercised in a cumulative fashion, such that any right
to purchase Shares which becomes exercisable on a given date shall remain
exercisable until the date stated in any applicable provision of Section 3 (with
respect to the expiration of the Option).
(c) In the event of a "Change of Control" (as defined below), either
(i) all of the unvested portion of the Option shall vest immediately, or (ii) if
the Committee (as hereinafter defined) so determines, the difference between the
fair market value of the shares underlying such unvested portion of the Option
and the exercise price thereof shall be paid to Grantee in cash by the Company.
(d) "Change in Control" is defined to mean the issuance, sale or
transfer (including a transfer as a result of death, disability, operation of
law or otherwise) in a single transaction or group of related transactions to
any entity, person or group (other than Safeguard Scientifics, Inc. and/or its
affiliates) of the beneficial ownership of newly issued, outstanding or treasury
shares of the capital stock of the Company having 50% or more of the combined
voting power of the Company's then outstanding securities entitled to vote for
at least a majority of the authorized number of directors of the Company, or any
merger, consolidation, sale of all or substantially all of the assets or other
comparable transaction as a result of which all or substantially all of the
assets and business of the Company are acquired directly or indirectly by
another entity which prior to the acquisition was not an affiliate of the
Company (as defined in the regulations of the Securities and Exchange Commission
under the Securities Act of 1933). Group shall have the same meaning as in
Section 13(d) of the Securities Exchange Act of 1934, and "affiliate" shall have
the same meaning as in Rule 405 of the Securities Exchange Commission adopted
under the Securities Act of 1933.
<PAGE>
5. Time and Method of Exercise
Subject to the terms of Section 4 above, the Option may be exercised at
any time, or from time to time, prior to expiration (as defined in Section 3
above), by written notice to the Stock Option Administrator of the Company. Such
written notice shall be effective upon receipt by the Stock Option Administrator
of the Company and shall be accompanied by:
(a) a check, or the equivalent thereof acceptable to the Company in its
discretion, for the full Option Price of the number of Shares being purchased;
(b) one or more certificates representing a number of Shares which are,
in the aggregate, equal in Fair Market Value (as hereinafter defined) to the
full Option Price for the Shares being purchased, such certificates being duly
endorsed (or accompanied by stock powers signed in blank) so as to transfer to
the Company all right, title and interest in and to the Shares represented by
such certificates;
(c) a combination of the forms of payment specified in Section 5(a) and
5(b) above which, in the aggregate, is equal to the full Option Price of the
number of Shares being purchased; or
(d) where there is a public market for the Shares, by delivering a
properly executed notice of exercise of the Option to the Company and a broker,
with irrevocable instructions to the broker to deliver to the Company on the
settlement date the amount of sale proceeds necessary to pay the exercise price
of the Option.
6. Replacement Option
Upon an exercise of the Option, in whole or in part, at any time, the
Grantee shall be entitled to receive a replacement Option covering such number
of shares of Common Stock, at such exercise price per share and upon such terms
and conditions as the Committee may, in its sole discretion, establish in any
policy or program adopted from time to time by the Committee. The Committee may,
in its sole discretion, amend, modify or terminate at any time any such policy
or program. Unless otherwise provided by the Committee, if any such policy or
program is amended or modified, such policy or program shall be deemed to become
part of this Grant Letter as so amended or modified without further action by
the Company or the Grantee. The Committee may specify in any such policy or
program that the grant of any such replacement Option may be automatic upon an
exercise of the Option complying with the terms and conditions of the policy or
program.
<PAGE>
7. Nonassignability of Option Rights
The Option shall not be assigned or transferred by the Grantee except,
in the event of the death of the Grantee, by will or by the laws of descent and
distribution. Upon a transfer by will or by the laws of descent and
distribution, the person to whom the Option is transferred shall have the right
to exercise the Option in accordance with this Grant Letter, subject to the
Company receiving satisfactory proof of his or her right to receive the Grant
under the Grantee's will or under the applicable laws of descent and
distribution. Any attempt to assign, transfer, pledge or dispose of the Option
contrary to the provisions hereof, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the foregoing, the Committee may provide, at or after Grant,
that a Grantee may transfer Nonqualified Stock Options pursuant to a domestic
relations order or to family members or other persons or entities according to
such terms as the Company may determine.
8. Adjustments
If any change is made to the Common Stock (whether by reason of stock
dividend, spin off, recapitalization, stock split, combination or exchange of
shares, merger, reorganization or consolidation in which the Company is the
surviving corporation, reclassification, change in par value, or any other
extraordinary or unusual event affecting the outstanding Company Stock as a
class without the Company's receipt of consideration, or if the value of
outstanding Company Stock is substantially reduced as a result of a spin off or
the Company's payment of an extraordinary dividend or distribution), then unless
such event or change results in the termination of this Grant, the Committee
shall preserve the value of the Option by making appropriate adjustments to the
number and class of shares, the Option Price or otherwise, except that any
fractional shares resulting from such adjustments shall be eliminated by
rounding any portion of a share equal to .5 or greater up, and any portion of a
share equal to less than .5 down, in each case to the nearest whole number.
9. Withholding
The Grantee or other person receiving Shares upon an exercise of the
Option, in whole or in part, shall be subject to any applicable federal
(including FICA), state and local taxes that the Company is required to withhold
with respect to such exercise. The Company shall have the right to require a
Grantee to pay to the Company, or the Company may deduct from other wages paid
by the Company, the amount of any such withholding taxes the Company is required
to withhold with respect to such exercise. If the Committee so permits by formal
vote, at or after Grant but prior to exercise of the Option, a Grantee may elect
to satisfy the Company's income tax withholding obligation with respect to such
exercise by having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA), state and
local tax liabilities. The Company's obligation to issue or transfer Shares upon
exercise of the Option shall be conditioned upon the Grantee's compliance with
the requirements of this section to the satisfaction of the Committee.
10. Employment by the Company
For purposes of this Grant, Employed by the Company shall mean
employment as an employee or a consultant, so that for purposes of exercising
this Option, a Grantee shall be considered to have terminated employment once
the Grantee ceases to be an employee or consultant, unless the Committee
determines otherwise.
<PAGE>
11. No Contract for Employment
(a) Nothing contained in this Grant Letter shall be deemed to require
the Company to continue the Grantee's employment by the Company. Except as may
be provided in a written employment contract executed by a duly authorized
officer of the Company and approved by the board of directors of the Company,
the Grantee shall at all times be an employee-at-will of the Company and the
Company may discharge the Grantee at any time for any reason, with or without
cause, and with or without severance compensation.
(b) From time to time, the Company may distribute employee manuals or
handbooks, and officers or other representatives of the Company may make written
or oral statements relating to the Company's policies and procedures. Such
manuals, handbooks and statements are intended only for the general guidance of
employees. No policies, procedures or statements of any nature by or on behalf
of the Company (whether written or oral, and whether or not contained in any
formal employee manual or handbook) shall be construed to modify this Grant
Letter or to create express or implied obligations to the Grantee of any nature.
12. Interpretation and Administration
All questions of interpretation and application of this Grant shall be
determined by the Committee in its discretion, and such determination shall be
final and binding upon all persons. The Committee may consult with legal counsel
who may be counsel to the Company and shall not incur any liability for any
action taken in good faith in reliance upon the advice of such counsel.
The validity, construction and effect of this Option shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.
13. No Stockholder Rights
Neither the Grantee, nor any person entitled to exercise the Grantee's
rights in the event of the Grantee's death, shall have any of the rights and
privileges of a stockholder with respect to the Shares subject to the Option,
except to the extent that certificates for such Shares shall have been issued
upon the exercise of the Option as provided herein.
14. Cancellation or Amendment
This Option may be canceled or amended by the Committee, in whole or in
part, at any time that the Committee determines, in its sole discretion, that
the cancellation or amendment is necessary or advisable in light of any change
after the Date of Grant in (a) the Code or the regulations issued thereunder or
(b) any federal or state securities law or other law or regulation, which change
by its terms is effective retroactively to a date on or before the Date of
Grant; provided, however, that no such cancellation or amendment shall, without
the Grantee's consent, apply to or affect installments that matured on or before
the date on which the Committee makes such determination.
<PAGE>
15. Notice
Any notice to the Company provided for in this Grant Letter shall be
addressed to it in care of the Stock Option Administrator of the Company, at
33171 Paseo Cerveza, San Juan Capistrano, CA 92690 and any notice to the Grantee
shall be addressed to such Grantee at the current address shown on the payroll
of the Company, or to such other address as the Grantee may designate to the
Company in writing. Any notice provided for hereunder shall be delivered by
hand, sent by telecopy or telex or enclosed in a properly sealed envelope
addressed as stated above, registered and deposited, postage and registry being
prepaid, in a post office or branch post office regularly maintained by the
United States Postal Service.
16. Grantee's Securities Law Representations
If the Committee shall deem it appropriate by reason of any securities
law, it may require that the Grantee upon exercise in whole or in part of the
Option, represent to the Company and agree in writing that the purchase of the
Shares is for investment only and not with a view to distribution. The Committee
may require that the Share certificates be inscribed with a legend restricting
transfer in accordance with applicable securities law requirements.
17. Definitions
"Committee" means the committee appointed by the Board of Directors to
administer the Company's stock options and equity compensation plans, or, in the
absence of such a committee, the Board of Directors of the Company.
"Disability" means permanent and total disability within the meaning of
Section 22(e)(3) of the Code.
"Fair Market Value" means the fair market value of the Stock as
determined by the Committee in good faith based on the best available facts and
circumstances at the time; provided, however, that where there is a public
market for the Stock and the Stock is registered under the Exchange Act, Fair
Market Value shall mean the per share or aggregate value of the Stock as of any
given date, determined as follows: (i) if the principal trading market for the
Stock is a national securities exchange or the Nasdaq National Market, the last
reported sale price thereof on the relevant date or, if there were no trades on
that date, the latest preceding date upon which a sale was reported, or (ii) if
the Stock is not principally traded on such exchange or market, the mean between
the last reported "bid" and "asked" prices of Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Committee determines.
"Termination for Cause" shall mean, except to the extent specified
otherwise by the Committee, a finding by the Committee that the Grantee has
breached his or her employment or service contract, non-competition or other
obligation with the Company, or has been engaged in disloyalty to the Company,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty in the course of his or her employment or service,
or has disclosed trade secrets or confidential information of the Company to
persons not entitled to receive such information.
CHROMAVISION MEDICAL SYSTEMS, INC.
<PAGE>
By:
-----------------------------------------
Accepted By:
---------------------------------------------
Patricia Sisson
<PAGE>
EXHIBIT 23.1
Independent Auditors' Consent
To the Board of Directors and Shareholders
ChromaVision Medical Systems, Inc.:
We consent to incorporation by reference in this Registration Statement on Form
S-8 and in the prospectus related to this registration statement of our report
dated February 3, 1998, with respect to the balance sheets of ChromaVision
Medical Systems, Inc. (a development stage enterprise) as of December 31, 1996
and 1997, and the related statements of operations, stockholders' equity
(deficit) and cash flows for each of the years in the three-year period ended
December 31, 1997 and for the cumulative development stage from April 1, 1993
(inception) through December 31, 1997, which report appears in the December 31,
1997 annual report on Form 10-K of ChromaVision Medical Systems, Inc. and to the
reference of our firm under the heading "Interests of Named Experts and
Counsel."
Orange County, California
September 23, 1998
