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EXHIBIT 99.4
HT MEDICAL SYSTEMS, INC.
1998 STOCK OPTION PLAN
The purpose of this Plan is to encourage and enable certain officers, employees,
Directors, consultants and agents of HT Medical Systems, Inc. (the "Company"')
to acquire an interest in the Company through the granting of options, as herein
provided, to acquire its Common Stock, without par value (the "Common Stock").
Two separate forms of option may be granted pursuant to this Plan: Incentive
Stock Options under the provisions of Section 422A of the Internal Revenue Code
of 1954, as amended (the "Code") (referred to herein as "Incentive Stock
Options") and other options (referred to as "Non-Qualified Options"). Both forms
of option will be referred to collectively hereunder as "options".
1 SHARES OF STOCK SUBJECT TO THE PLAN
The stock that may be issued and sold pursuant to options granted under the Plan
shall not exceed, in the aggregate, 20% of the total number of outstanding
shares of Common Stock, which may be (i) authorized but unissued shares, (ii)
treasury shares, or (iii) shares previously reserved for issue upon exercise of
options under the Plan, which options have expired or terminated; provided,
however, that the number of shares subject to the Plan shall be subject to
adjustment as provided in Section 9.
2 ELIGIBILITY AND GRANTING OF OPTIONS
(a) Non-Qualified Options may be granted hereunder to any officer, employee,
Director, consultant or agent of the Company. Incentive Stock Options may only
be granted to employees of the Company, including those who are Directors.
(b) The Board of Directors of the Company (the "Board") shall determine the
persons to be granted options (the "Optionees"), the number of shares subject to
each option (which cannot with respect to any one Optionee exceed 5% of the then
outstanding shares of Common Stock), whether the options shall be Incentive
Stock Options or Non-Qualified Options, and the terms of the options,
consistently with the provisions of this Plan. The Board may appoint a committee
of three (3) or more persons who may exercise the powers of the Board in
granting options under the Plan.
(c) Each member of the Board (other than Directors who are employees of the
Company) shall receive a single grant of Non-Qualified Options to purchase not
more than fifteen thousand shares of Common Stock for an exercise price equal to
the fair market value of the Common Stock as of the date of grant. Such options
shall vest in eight equal quarterly installments over a period of two years and
shall be exercisable for a period of ten years from the date of grant.
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3 PRICE AND LIMITATION ON GRANT OF OPTIONS
(a) The purchase price of shares which may be purchased under each Incentive
Stock Option shall, except as provided in Paragraph (b) below, be at least equal
to the fair market value per share of the outstanding Common Stock of the
Company at the time the option is granted as determined by the Board in its
discretion. The aggregate fair market value (determined as of the time the
option is granted) of the stock for which an individual may be granted Incentive
Stock Options which vest in any calendar year under this Plan and all other
plans of the Company and any parent or subsidiary of the Company (as defined in
Section 425 of the Code) shall not exceed $100,000 plus any "unused limit
carryover" as that term is defined in Section 422A of the Code.
(b) The purchase price of shares which may be purchased under each Incentive
Stock Option issued to a person who, immediately prior to the grant of such
option owns (directly or indirectly) stock possessing more than ten percent of
the total combined voting power of all classes of stock of the Company or of its
parent or subsidiaries (a "restricted individual") shall be at least equal to
110 percent of the fair market value of the stock subject to the option, as
determined in Paragraph 3(a) above.
(c) The purchase price of shares, which may be purchased under each
Non-Qualified Option, shall be such amount as may be determined by the Board of
Directors of the Company.
(d) In no event shall the purchase price of any shares be less than that
permitted by applicable laws, rules or regulations.
4 PERIOD OF OPTION, VESTING, AND LIMITATIONS ON RIGHT TO EXERCISE
All options shall be evidenced by written agreements executed by the Company and
the Optionee, which in the case of Incentive Stock Options shall be in the form
of the Incentive Stock Option Agreement attached hereto as Exhibit A, and in the
case of Non-Qualified Options may be in the form of the Non-Qualified Option
Agreement attached hereto as Exhibit B. All Incentive Stock Option Agreements,
and such Non-Qualified Option Agreements as the Board may determine, shall
provide that any options granted thereunder shall vest and become exercisable in
equal annual installments over a period of not less than three years from the
date of grant. In addition, in the case of Options which have been in effect for
more than six months, all vesting will automatically accelerate, and such
Options shall immediately become fully vested and exercisable, upon the
completion of an underwritten public offering of the Company's securities which
results in gross proceeds to the Company of not less than $10,000,000.
Each Incentive Stock Option shall be exercisable at such time or times as are
set forth in the Incentive Stock Option Agreement related thereto, but in no
event after the expiration of ten (10) years from the date such option is
granted. An Incentive Stock Option granted to a restricted
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individual (as defined in Paragraph 3(b) above) shall not be exercisable after
the expiration of 5 years from the date such option is granted. A Non-Qualified
Option shall be exercisable for such consideration, in such manner and at such
time or times as shall be set forth in the Non-Qualified Option Agreement
related thereto, which shall contain such provisions as the Board shall
determine in granting such an option, and may be exercisable for a period of ten
years from the date such option is granted, but in no event after such period.
An Optionee may exercise an option with respect to a number of shares, not a
fractional number, which is less than the full number of shares for which the
Option may then be exercised. The delivery of certificates representing shares
under any option will be contingent upon receipt by the Company from the
Optionee (or a purchaser acting in his stead in accordance with the provisions
of the option) of the full purchase price for such shares (which may be paid as
specified in the following sentence) and the fulfillment of any other
requirements contained in the option or in applicable provisions of law; and
until such receipt of the purchase price and fulfillment of other requirements
no Optionee or person entitled to exercise the option shall be, or shall be
deemed to be, a holder of any shares subject to the option for any purpose. The
purchase price of shares may be paid either in United States dollars in cash or
by check, bank draft or money order payable to the order of the Company, or
through the delivery of shares of Common Stock with an aggregate fair market
value on the date of exercise equal to the purchase price, or in any combination
of the foregoing; provided, however, that the Company shall not be obligated to
purchase or accept the surrender of any such shares if such action would be
prohibited by applicable law or determined by the Board to be not in the best
interests of the Company.
The Company may, in its discretion, require an Optionee to pay to the Company
the amount, or make such other arrangements (including the withholding of Common
Shares which would otherwise be delivered upon exercise), at the time of
exercise or thereafter, that the Company deems necessary to satisfy its
obligation to withhold federal, state or local income or other taxes (which for
purposes of this Section includes an Optionee's FICA obligation) incurred by
reason of the exercise.
5 NON-TRANSFERABILITY OF OPTION
Each option granted under the Plan shall provide that it is personal to the
Optionee, is not transferable by the Optionee in any manner otherwise than by
will or the laws of descent and distribution and is exercisable, during the
Optionee's lifetime, only by the Optionee. In the event of any attempt by the
Optionee to assign, pledge or otherwise dispose of any option (except as
provided for herein) or in the event of any levy, attachment, execution or
similar process upon rights or interests conferred hereby, the Company may
terminate the option by notice to the Optionee and the option shall thereupon
become null and void.
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6 CESSATION OF EMPLOYMENT OR AFFILIATION BY OPTIONEE
The following provisions shall apply in the event of the cessation of an
Optionee's employment or affiliation with the Company:
(a) In the case of an Incentive Stock Option, in the event of the cessation by
the Optionee of his or her employment with the Company:
(i) If an Optionee shall cease to be employed by the Company otherwise
than by reason of retirement, disability or death (as defined in Section
105 of the Code), each option held by the Optionee, together with all
rights hereunder (including the right to any options not then vested),
shall terminate 45 days after the date of cessation of employment, to
the extent not previously exercised.
(ii) If an Optionee shall cease to be employed by the Company by reason
of retirement or disability, each vested option held by the Optionee
shall be exercisable until the termination date set forth in the option
or until one year after the date of cessation of employment, whichever
comes first, provided that no such extension shall be construed to grant
an optionee any rights to options not vested on the date of termination.
(iii) If an Optionee shall die while employed by the Company, or at any
time after cessation of employment by reason of retirement or
disability, an Option may be exercised at any time or from time to time
prior to the termination date set forth in the Option or until one year
after the date of death, whichever comes first, by the person or persons
to whom the Optionee's rights under each option shall pass by will or by
the applicable laws of descent and distribution, provided that no such
extension shall be construed to grant an optionee any rights to options
not vested on the date of termination. Any person or persons to whom an
Optionee's rights under an option shall have passed by will or by the
applicable laws of descent and distribution shall be subject to all
terms and conditions of the Plan and the option applicable to the
Optionee.
(b) In the case of a Non-Qualified Option, in the event of the cessation by the
Optionee of his or her affiliation with the Company, the termination of the
options shall be governed by the terms of the applicable Non-Qualified Option
Agreement.
7 NOTIFICATION OF SALES OF SHARES
Any Optionee who disposes of shares of Common Stock acquired upon the exercise
of an Incentive Stock Option either (a) within two years after the date of the
grant of the option under which the shares were acquired or (b) within one year
after the transfer of such shares to the
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Optionee, shall notify the Company of such disposition and of the amount
realized upon such disposition.
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8 DILUTION OR OTHER ADJUSTMENTS
The terms of the options and the number of shares subject to this Plan shall be
equitably adjusted in such manner as to prevent dilution or enlargement of
option rights in the following instances:
(a) the declaration of a stock dividend payable to the holders of Common Stock;
(b) a split-up of the Common Stock or a reverse split thereof;
(c) a recapitalization of the Company under which shares of one or more
different classes of stock of the Company are distributed in exchange for or
upon the Common Stock without payment of any valuable consideration by the
holders thereof.
The terms of any such adjustment shall be conclusively determined by the Board.
9 STOCKHOLDER'S AGREEMENT
All holders of shares of Common Stock issued upon exercise of options issued
pursuant hereto shall, as a condition of issuance of such shares, become parties
and become subject to the terms and provisions of the Stockholders' Agreement
among the Company and the holders of Common Stock, and all certificates
evidencing such shares shall contain the legends required by such Agreement.
10 ADMINISTRATION AND AMENDMENT OF THE PLAN
The Plan shall be administered by the Board, or a committee thereof as provided
in Section 2, which shall effect the grant of options under the Plan, determine
the form of options to be granted in each case, and make any other determination
under or interpretation of any provision of the Plan and any option. The Board
or such committee shall maintain separate records with respect to Incentive
Stock Options and Non-Qualified Options granted under the Plan to facilitate
determination of the appropriate tax treatment for such options. Any of the
foregoing actions taken by the Board or such committee shall be final and
conclusive. The Board may amend and make such changes in and additions to the
Plan as it may deem proper and in the best interest of the Company; provided,
however, that no such action shall adversely affect or impair any options
theretofore granted under the Plan without the consent of the Optionee; and
provided, further, that no amendment (i) increasing the maximum number of shares
which may be issued under the Plan, except as provided in Section 9, (ii)
extending the term of the Plan or any option, (iii) changing the minimum
exercise price of options to be granted under the Plan, (iv) changing the
requirements as to eligibility for participation in the Plan (except as provided
in Section 2(b)), or (v) materially increasing in any other way the benefits
accruing the Optionees, shall be adopted without the approval of the
shareholders of the Company.
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11 EXPIRATION AND TERMINATION OF THE PLAN
Options may be granted under the Plan at any time, or from time to time, within
ten (10) years from the date the Plan is adopted or the date on which it is
approved by the shareholders of the Company, whichever is earlier, as long as
the total number of shares purchased under the Plan and subject to outstanding
options under the Plan does not exceed 20% of the total outstanding shares of
the Common Stock of the Company, subject to adjustment as provided in Section 9.
The Plan may be abandoned or terminated at any time by the Board, except with
respect to any options then outstanding under the Plan.
12 EFFECT OF CERTAIN TRANSACTIONS
If the Company is merged into or consolidated with another corporation under
circumstances where the Company is not the surviving corporation, or if the
Company is liquidated or sells or otherwise disposes of all or substantially all
of its assets to another corporation while unexercised options remain
outstanding under the Plan, without limitation of any rights which Optionees may
have under Section 10, (i) after the effective date of such merger,
consolidation or sale, as the case may be, each holder of an outstanding option
shall be entitled, upon exercise of such option, to receive in lieu of shares of
Common Stock, shares of such stock or other securities as the holders of shares
of Common Stock received pursuant to the terms of the merger, consolidation or
sale; and (ii) the Board shall waive any discretionary limitations provided in
the stock option agreement so that all options from and after a date, specified
by the Board, prior to the effective date of such merger, consolidation,
liquidation or sale, as the case may be, shall be exercisable in full (provided
that no such acceleration shall be granted to optionees who have served the
Company for less than one year as of such effective date).
13 MISCELLANEOUS PROVISIONS
(a) The right of the Company to terminate at will (whether by dismissal,
discharge or otherwise) the Optionee's employment or affiliation (as the case
may be) with it at any time is specifically reserved. Neither the Optionee nor
any person entitled to exercise the Optionee's rights in the event of the
Optionee's death shall have any rights of a shareholder with respect to the
shares of Common Stock subject to each option, except to the extent that, and
until, such Shares shall have been issued upon the exercise of each option.
(b) Any expenses of administering the Plan shall be borne by the
Company.
(c) In addition to such other rights of indemnification as they may have
as members of the Board, or the Committee, the members of the Board and any
committee appointed pursuant to Section 2 shall be indemnified by the Company
against all costs and expenses reasonably incurred by them in connection with
any action, suit or proceeding to which they or any of them
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may be party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except a
judgment based upon a finding of bad faith; provided that upon the institution
of any such action, suit or proceeding, a Board or committee member shall, in
writing, give the Company notice thereof and an opportunity, at its own expense,
to handle and defend the same before such Board or committee member undertakes
to handle and defend it on such member's own behalf.
(d) The Plan shall be governed by Maryland law.
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