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EXHIBIT 4.1
INVIVO CORPORATION
1994 STOCK OPTION PLAN
AS AMENDED
1. PURPOSE
The Purpose of the Invivo Corporation 1994 Stock Option Plan (the
"Plan) is to enable Invivo Corporation (the "Company") and its subsidiaries to
attract and retain officers and other key employees, directors, and consultants
and to provide them with additional incentive to advance the interests of the
Company. Options qualifying as incentive stock options under Section 422 of the
Internal Revenue Code of 1986, as amended ("Code"), and non-qualified options
may be granted under the Plan.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors of
the Company, or by a committee (the "Committee") of two or more directors
selected by the Board of Directors.
(b) The Board of Directors or the Committee shall have the power,
subject to the express provisions of the Plan:
(1) To determine the recipients of options under the Plan, the
time of grant of the options, and the number of shares covered by
the grant.
(2) To prescribe the terms and provisions of each option
granted (which need not be identical).
(3) To construe and interpret the Plan and options, to
establish, amend, and revoke rules and regulations for the Plan's
administration, and to make all other determinations necessary or
advisable for the administration of the Plan.
(3) SHARES SUBJECT TO THE PLAN
Subject to the provisions of Paragraph 7 (relating to the
adjustment upon changes in stock), the number of shares which may be sold
pursuant to options granted under the Plan shall not exceed in the aggregate
800,000 shares of Common Stock of the Company. Shares sold pursuant to options
granted under the Plan may be unissued shares or reacquired shares. If any
options granted under the Plan shall for any reason terminate or expire without
having been exercised in full, the shares not purchased under such options shall
be available again for the purposes of the Plan.
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(4) ELIGIBILITY
(a )Options under this Plan may be granted to officers and other
key employees and consultants of the Company or of its subsidiaries, provided
that incentive stock options may be granted hereunder only to officers and other
key employees (including directors who are also officers or employees).
(b) Each person who is a director and not an employee of the
Company or a subsidiary of the Company on the date of adoption of this Plan by
the Board of Directors shall receive a non-qualified stock option under the Plan
on the date of such adoption. Thereafter, each director of the Company who is
not an employee of the Company or a subsidiary of the Company shall receive a
non-qualified stock option under the Plan immediately following each annual
meeting of shareholders of the Company (provided that a person whose term
expires on such day and who is not reelected to the Board of Directors shall not
receive such an option). The first option received by a director under this
paragraph 4(b) shall cover 8,000 shares of Common Stock of the Company and each
option received by a director under this Plan thereafter shall cover 4,000
shares of Common Stock of the Company. Each such option shall have an exercise
price equal to the fair market value of the Common Stock of the Company on the
date of adoption by the Board of Directors or of the annual meeting of
shareholders to which it relates, as the case may be determined in accordance
with the provisions of paragraph 5(a)(2) of this Plan. The number of options
that directors may receive pursuant to this paragraph 4(b) shall be
appropriately adjusted in accordance with the provisions of paragraph 7 of this
Plan. This paragraph 4(b) shall not be amended more than once every six months,
other than to comply with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act or the rules or regulations thereunder.
(c) Persons to whom options to purchase shares are granted are
hereinafter referred to as "optionee(s)." Subject to the provisions of
paragraphs 3 and 4(b) of the Plan, there is no limitation on the number of
options that may be granted to an optionee.
5. TERMS OF OPTION AGREEMENTS
(a) All Option Agreements. Options granted pursuant to the Plan
shall be evidenced by agreements specifying the number of shares covered
thereby, in such form as the Board of Directors or Committee shall from time to
time establish, which agreements may incorporate all or any of the terms hereof
by reference and shall comply with and be subject to the following terms and
conditions:
(1) The Board of Directors or Committee shall have the power
to set the time or times within which each option shall be
exercisable and to at any time accelerate the time or times of
exercise (notwithstanding the terms of the option). Unless
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the stock option agreement executed by the optionee expressly
otherwise provides, (i) an option granted to an officer or other
key employee or consultant shall become exercisable on a
cumulative basis as to one-quarter of the total number of shares
covered thereby on each of the first, second, third, and fourth
anniversary dates of the date of grant of the option, (ii) an
option granted to a director who is not an employee of the
Company shall become exercisable on a cumulative basis as to
one-half of the total number of shares covered thereby on each of
the first and second anniversary dates of the date of grant of
the option, and (iii) an option shall not be exercisable after
the expiration of ten years from the date of grant. Any option
granted to an executive officer or director of the Company shall
in no event be exercisable until the elapse of six months from
the date of its grant.
(2) Except as provided in (b) below, the exercise price of any
incentive stock option shall not be less than 100% of the fair
market value of the shares of Common Stock of the Company on the
date of the granting of the option and the exercise price of any
non-qualified stock option shall not be less than 85% of the fair
market value of the shares of Common Stock of the Company on the
date of the granting of the option. The fair market value per
share shall be as determined in good faith by the administrator
of the Plan, provided that if the Company's Common Stock is
publicly traded the fair market value shall be the closing bid
price on the day the option is granted as reported on the Nasdaq
National Market or the closing sale price on such stock exchange
on which the shares may be listed if such exchange is then the
principle market for the shares, or, if such shares are not then
reported on the Nasdaq National Market or an exchange but
quotations are reported on the National Association of Securities
Dealers Automated Quotations System, the closing bid price on the
day the option is granted, in either event as such price or
quotes are listed in The Wall Street Journal, Western Edition (or
if not so reported in The Wall Street Journal, any other listing
service or publication known to the administrator of the Plan).
(3) To the extent that the right to purchase shares has
accrued hereunder, options may be exercised from time to time by
written notice to the Company, stating the number of shares being
purchased and accompanied by the payment in full of the option
price for such shares. Such payment shall be made in cash or in
shares of the outstanding Common Stock of the Company which have
been held by the optionee for at least six months (or such other
period as is specified by the Board of Directors or the
Committee) or in a combination of cash and such stock, except
that the Board of Directors or the Committee in its sole
discretion may authorize payment by any optionee (for all or part
of his or her purchase price) by a promissory note or such other
form of legal consideration that
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may be acceptable to the Board of Directors or Committee. Payment
may also be made by delivering a copy of irrevocable instructions
to a broker to deliver promptly to the Company the amount of sale
or loan proceeds sufficient to pay the purchase price, and, if
required, the amount of any federal, state, local or foreign
withholding taxes.
If shares of Common Stock are used in part or full payment for
the shares to be acquired upon exercise of the option, such
shares shall be valued for the purpose of such exchange as of the
date of exercise of the option in accordance with the provisions
of (2) above and the notice of exercise shall be accompanied by
such instruments and documentation as the Board of Directors or
Committee require to effect the delivery of such shares. In the
event the certificates tendered by the optionee in such payment
cover more shares than are required for such payment, the
certificates shall also be accompanied by instructions from the
optionee to the Company's transfer agent with regard to
disposition of the balance of the shares covered thereby.
If payment by promissory note is authorized, the interest
rate, term, repayment schedule and other provisions of such note
shall be as specified by the Board of Directors or the Committee;
provided, however, that such note shall bear interest at a rate
not less than the applicable test rate of interest prescribed by
Regulation 1.483-1(d)(1) of the Income Tax Regulations, as in
effect at the time the stock is purchased. The Board of Directors
or Committee may require that the optionee pledge Common Stock of
the Company for the purpose of securing the payment of such note,
and the Company may hold the certificate(s) representing such
stock in order to perfect its security interest.
An option may be exercised by a securities broker acting on
behalf of an optionee pursuant to authorization instructions
approved by the Company.
(4) The Company at all times shall keep available the number
of shares of Common Stock required to satisfy options granted
under the Plan.
(5) The Company may require any person to whom an option is
granted, including his or her legal representative, heir,
legatee, or distributee, as a condition of exercising any option
granted hereunder, to give written assurance satisfactory to the
Company to the effect that such person is acquiring the shares
subject to the option for his or her own account for investment
and not with any present intention of selling or otherwise
distributing the same. The Company reserves the right to place a
legend on any share certificate issued pursuant to this Plan to
assure compliance with this paragraph. No shares of Common Stock
of the Company shall be required to be distributed until the
Company shall have taken
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such action, if any, as is then required to comply with the
provisions of the Securities Act of 1933 or any other then
applicable securities law.
(6) Neither a person to whom an option is granted, nor such
person's legal representative, heir, legatee, or distributee,
shall be deemed to be the holder of, or to have any of the rights
of a holder with respect to, any shares of Common Stock subject
to such option unless and until such person has exercised his or
her option pursuant to the terms thereof.
(7) Options shall be transferable only by will or by the laws
of descent and distribution, and during the lifetime of the
person to whom they are granted such person alone may exercise
them, except that a non-qualified stock option may be transferred
pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security
Act, or the rules thereunder and to the extent provided in the
stock option agreement entered into in connection with such
option (including any amendment of such agreement).
(8) An option granted to an employee or director shall
terminate and may not be exercised if the person to whom it is
granted ceases to be employed by the Company or by a subsidiary
of the Company, or ceases to be a director (unless such person
continues as an employee), with the following exceptions:
(i) If the employment or directorship is terminated for
any reason other than the person's death or disability, he or
she may at any time within not more than three months after
such termination exercise the option, but only to the extent
that it was exercisable by such person on the date of such
termination and otherwise remains exercisable in accordance
with its terms, or
(ii) If such person becomes disabled while in the employ
of the Company or of a subsidiary, or while a director, or
dies while in the employ of the Company or a subsidiary, or
while a director, or within 30 days after termination of such
person's employment with the Company or a subsidiary, or
status as a director, his or her option may be exercised by
his or her personal representatives, heirs or legatees at any
time within not more than 12 months following the date of
death or disability, but only to the extent such option was
exercisable by such person on the date of death or disability
and otherwise remains exercisable in accordance with its
terms.
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An option granted to a consultant shall terminate in
accordance with the terms specified in the stock option
agreement.
(9) In no event may an option be exercised by anyone after the
expiration of the term of the option established pursuant to (1)
above.
(10) Each option granted pursuant to this Plan shall specify
whether it is a non-qualified or an incentive stock option,
provided that the Board of Directors or Committee may give the
optionee the right to elect to receive either an incentive or a
non-qualified stock option.
(11) An option granted pursuant to this Plan may have such
other terms as the Board of Directors or Committee in its
discretion may deem necessary or appropriate and shares issued
upon exercise of any option hereunder may be subject to such
restrictions as the Board of Directors or Committee deems
appropriate.
(b) Incentive Stock Options. In addition to the terms and
conditions specified above, incentive stock options granted under this Plan
shall be subject to the following terms and conditions:
(1) The aggregate fair market value (determined as of the time
the option is granted) of the stock with respect to which
incentive stock options are exercisable for the first time by any
optionee during any calendar year (under all option plans of the
Company or any parent and subsidiary corporations) shall not
exceed $100,000, provided that to the extent that the aggregate
fair market value of stock with respect to which options
designated as Incentive Stock Options first become exercisable in
any calendar year exceeds $100,000, such options shall be treated
as non-qualified options.
(2) As to individuals otherwise eligible under this Plan who
own more than 10 percent of the total combined voting power of
all classes of stock of the Company and any parent and subsidiary
corporations, an incentive option can be granted under this Plan
to any such individual only if at the time such option is granted
the option price is at least 110 percent of the fair market value
of the stock subject to the option and such option by its terms
is not exercisable after the expiration of five years from the
date such option is granted.
6. USE OF PROCEEDS FROM SHARES
Proceeds from the sale of shares pursuant to options granted
under the Plan shall be used for general corporate purposes.
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7. ADJUSTMENT UPON CHANGES IN SHARES
(a) If any change is made in the shares subject to the Plan,
including shares subject to any option granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise),
appropriate adjustments shall be made by the Board of Directors or Committee in
the maximum number of shares subject to the Plan and the number of shares and
price per share of stock subject to outstanding options.
(b) Other than in the case of a reincorporation of the Company in
another state, in the event of (i) approval by the shareholders of the Company
of the dissolution or liquidation of the Company, (ii) consummation of the sale
of all or substantially all of the assets of the Company, (iii) consummation of
a transaction in which more than 50 percent of the shares of the Company that
are entitled to vote are tendered or exchanged for cash or any other assets, or
(iv) any merger or consolidation or other reorganization in which the Company is
not the surviving corporation, or in which the Company becomes a subsidiary of
another corporation, outstanding options under this Plan shall become fully
exercisable immediately prior to any such event.
(c) In lieu of permitting any exercise of an outstanding option
pursuant to (b) above, the Board of Directors or the Committee may, subject to
the approval of the corporation purchasing or acquiring the stock or assets of
the Company (the "Surviving Corporation"), arrange for the optionee to receive
upon surrender of optionee's option a new option covering shares of the
Surviving Corporation in the same proportion, at an equivalent option price and
subject to the same terms and conditions as the surrendered option.
8. RIGHTS AS AN EMPLOYEE
Nothing in this Plan or in any options awarded hereunder shall
confer upon any employee any right to continue in the employ, or as a director,
of the Company or of any of its subsidiaries or interfere in any way with the
right of the Company or any such subsidiary to terminate such employee's
employment or directorship at any time.
9. WITHHOLDING TAX
There shall be deducted from the compensation of any employee
holding options under this Plan the amount of any tax required by any
governmental authority to be withheld and paid over by the Company to such
governmental authority for the account of the person with respect to such
options.
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10. TERMINATION AND AMENDMENT OF PLAN
The Board of Directors may at any time terminate this Plan or
make such modifications of the Plan as it shall deem advisable. Any modification
which increases the number of shares which may be issued under the Plan (other
than pursuant to Paragraph 7 hereof), or relaxes the requirements as to
eligibility for participation in the Plan, shall become effective only upon
approval of the holders of a majority of the securities of the Company present,
or represented, and entitled to vote at a meeting duly held in accordance with
the laws of the State of Delaware. Any options granted under the Plan prior to
shareholder approval of the Plan, and any options granted which are dependent
upon an amendment of the Plan requiring shareholder approval for their
effectiveness, shall be subject to shareholder approval of the Plan or such
amendment. If such approval is not obtained within 12 months of the date of
grant of any such option, such option shall expire without further action.
11. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective on October 6, 1994. Any rights
granted under this Plan must be granted within ten (10) years of such effective
date.
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