Exhibit 10.20
NEITHER THIS SECURITY NOR THE
SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (AS AMENDED, THE “
SECURITIES ACT ”) OR UNDER THE SECURITIES LAWS OF ANY
STATE. NEITHER THIS SECURITY NOR THE SHARES OF STOCK ISSUED UPON
EXERCISE HEREOF MAY BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND EXEMPTION OR QUALIFICATION
UNDER ANY APPLICABLE STATE SECURITIES LAWS AND, IF REQUESTED BY THE
COMPANY, DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED. ANY ATTEMPT TO TRANSFER, SELL, PLEDGE OR HYPOTHECATE
THIS SECURITY OR SUCH SHARES IN VIOLATION OF THESE RESTRICTIONS
SHALL BE VOID. THE TRANSFER OF THIS SECURITY AND THE SHARES OF
STOCK ISSUABLE UPON EXERCISE HEREOF ARE ALSO RESTRICTED BY THIS
AGREEMENT.
DIAMETRICS MEDICAL,
INC.
STOCK OPTION
AGREEMENT
PURSUANT TO 2006 INCENTIVE
COMPENSATION PLAN
Jeffrey Lawton
(the “ Optionee
”) is hereby granted an option (the “ Option
”) to purchase shares of the Common Stock of Diametrics
Medical, Inc., a Minnesota corporation (the “ Company
”) pursuant to this Stock Option Agreement (this “
Agreement ”) and the Company’s 2006 Incentive
Compensation Stock Option Plan (as amended, the “ Plan
”), the provisions of which are incorporated herein by
reference.
1. TERMS OF GRANT
.
“ Date of Option Grant
” means September 20, 2006.
“ Option Shares ”
means 348,480 shares of Common Stock; $1.00 per share, of the
Company.
“ Exercise Price
” means $0.7587 per share of Common Stock
“ Option Expiration
Date ” means September 20, 2011.
2. DEFINITIONS AND
CONSTRUCTION .
2.1 Definitions . Unless
otherwise defined herein, capitalized terms shall have the meanings
assigned to such terms in the Plan.
2.2 Construction . Captions
and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this
Agreement. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the
singular. Use of the term “or” is not intended to be
exclusive, unless the context clearly requires
otherwise.
3. TAX CONSEQUENCES
.
The Option is intended to constitute
an “incentive stock option” as that term is used in
Code Section 422. To the extent that the aggregate fair market
value (determined at the time of grant) of Option Shares with
respect to which incentive stock options are exercisable for the
first time by the Participant during any calendar year under all
plans of the Company and its subsidiaries exceeds $100,000, the
options or portions thereof which exceed such limit (according to
the order in which they were granted) shall be treated as
nonstatutory stock options. It should be understood that there is
no assurance that the Option will, in fact, be treated as an
incentive stock option. The Optionee should consult with the
Optionee’s own tax advisor regarding the tax effects of this
Option (and any requirements necessary to obtain favorable income
tax treatment under Code Section 422, including, but not
limited to, holding period requirements). If the Option is treated
as an Incentive Stock Option in part and as a Nonstatutory Stock
Option in part by reason of the limitation set forth in this
Section 3, the Optionee may designate which portion of such
Option the Optionee is exercising.
4. EXERCISE OF THE
OPTION .
4.1 Right to Exercise .
Except as otherwise provided herein, and prior to the termination
of the Option (as provided in Section 6), the Option shall be
exercisable; (i) on the date that is three months after its date of
grant, for 25% of the shares of Common Stock subject to such Option
on its date of grant, (ii) on the date that is six months after its
date of grant, for an additional 25% of the shares of Common Stock
subject to such Option on its date of grant, (iii) on the date that
is nine months after its date of grant, for an additional 25% of
the shares of Common Stock subject to such Option on its date of
grant and (iv) on the date that is twelve months after its date of
grant, for an additional 25% of the shares of Common Stock subject
to such Option on its date of grant.
4.2 Method of Exercise .
Exercise of the Option shall be by written notice to the Company in
the form of Exhibit A and Exhibit B hereto. The
written notice must be signed by the Optionee and must be delivered
in person, by certified or registered mail, return receipt
requested, by confirmed facsimile transmission, or by such other
means as the Company may permit, to the Chief Executive Officer of
the Company, or other authorized representative of the Company,
prior to the termination of the Option as set forth in
Section 6, accompanied by full payment of the aggregate
Exercise Price for the number of Option Shares being purchased. The
Option shall be deemed to be exercised upon receipt by the Company
of such written notice and the aggregate Exercise Price.
4.3 Payment of Exercise Price
.
(a) Forms of Consideration
Authorized . Except as otherwise provided below, payment of
the aggregate Exercise Price for the number of Option Shares for
which the Option is being exercised shall be made (i) in cash,
by check or cash equivalent, (ii) by tender to the Company of
whole Option Shares owned by the Optionee having a Fair Market
Value not less than the aggregate Exercise Price (iii) by
retention by the Company of that number of Options Shares (the
“Retained Shares”) having an aggregate Fair
Market Value on the date of exercise equal to the aggregate
exercise price for all Option Shares for which the Option is being
exercised, so that the Optionee receives the number of Option
Shares for which the Option is exercised less the Retained Shares
or (iv) by any combination of the foregoing. If the Retained
Shares include a fractional share, the Retained Shares will be
rounded up to the nearest whole share.
(b) Limitations on Forms of
Consideration . Notwithstanding the foregoing, the Option
may not be exercised by tender to the Company of Option Shares to
the extent such tender, or attestation to the ownership, of Stock
would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the
Company’s stock. The Option may not be exercised by tender to
the Company of shares of Stock unless such shares either have been
owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.
4.4 Tax Withholding . At the
time the Option is exercised, in whole or in part, or at any time
thereafter as requested by the Company, the Optionee hereby
authorizes withholding from payroll and any other amounts payable
to the Optionee, and otherwise agrees to make adequate provision
for any sums required to satisfy the federal, state, local and
foreign tax withholding obligations of the Company, if any, which
arise in connection with the Option, including, without limitation,
obligations arising upon (i) the exercise, in whole or in
part, of the Option, (ii) the transfer, in whole or in part,
of any
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Option Shares acquired upon exercise of the
Option, (iii) the operation of any law or regulation providing
for the imputation of interest, or (iv) the lapsing of any
restriction with respect to any shares acquired upon exercise of
the Option. The Optionee is cautioned that the Option is not
exercisable unless the tax withholding obligations of the Company
are satisfied. Accordingly, the Optionee may not be able to
exercise the Option when desired even though the Option is vested,
and the Company shall have no obligation to issue a certificate for
such shares.
4.5 Certificate Registration
. The certificate for the Option Shares as to which the Option is
exercised shall be registered in the name of the Optionee, or, if
applicable, the Optionee’s heirs.
4.6 Restrictions on Grant of the
Option and Issuance of Shares . The grant of the Option and the
issuance of Option Shares upon exercise of the Option shall be
subject to compliance with all applicable requirements of federal,
state or foreign law with respect to such securities. The Option
may not be exercised if the issuance of Option Shares upon exercise
would constitute a violation of any applicable federal, state or
foreign securities laws or other law or regulations or the
requirements of any stock exchange or market system upon which the
Stock may then be listed. THE OPTIONEE IS CAUTIONED THAT THE OPTION
MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.
ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERCISE THE OPTION
WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the
Company to obtain from any regulatory body having jurisdiction the
authority, if any, deemed by the Company’s legal counsel to
be necessary to the lawful issuance and sale of any shares subject
to the Option shall relieve the Company of any liability in respect
of the failure to issue or sell such shares as to which such
requisite authority shall not have been obtained. As a condition to
the exercise of the Option, the Company may require the Optionee to
satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to
make any representation or warranty with respect thereto as may be
requested by the Company.
4.7 Fractional Shares . The
Company shall not be required to issue fractional shares upon the
exercise of the Option.
5. NONTRANSFERABILITY OF THE
OPTION AND OPTION SHARES .
The Option may be exercised during
the lifetime of the Optionee only by the Optionee or the
Optionee’s guardian or legal representative and may not be
assigned or transferred in any manner except by will or by the laws
of descent and distribution. Following the death of the Optionee,
the Option, to the extent provided in Section 7, may be
exercised by the Optionee’s legal representative or by any
person empowered to do so under the deceased Optionee’s will
or under the then applicable laws of descent and
distribution.
6. TERMINATION OF THE
OPTION .
The Option shall terminate and may
no longer be exercised on the first to occur of (a) the Option
Expiration Date or (b) the last date for exercising the Option
following termination of the Optionee’s Service as described
in Section 7.
7. EFFECT OF TERMINATION OF
SERVICE .
7.1 Option Exercisability
.
(a) Disability . If
the Optionee’s service to the Company (“ Service
”) is terminated because of the Disability of the Optionee,
the Option, to the extent unexercised and exercisable on the date
on which the Optionee’s Service terminated, may be exercised
by the Optionee (or the Optionee’s guardian or legal
representative) at any time prior to the expiration of one year
after the date on which the Optionee’s Service terminated,
but in any event no later than the Option Expiration Date. (NOTE:
If an Incentive Stock Option is exercised more than three
(3) months after the date on
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which the Optionee’s Service as an
Employee terminated as a result of a Disability other than a
permanent and total disability as defined in Section 22(e)(3)
of the Code, the Option will be treated as a Nonstatutory Stock
Option and not as an Incentive Stock Option to the extent required
by Section 422 of the Code.)
(b) Death . If the
Optionee’s Service is terminated because of the death of the
Optionee, the Option, to the extent unexercised and exercisable on
the date on which the Optionee’s Service terminated, may be
exercised by the Optionee’s legal representative or other
person who acquired the right to exercise the Option by reason of
the Optionee’ s death at any time prior to the expiration of
one year after the date on which the Optionee’s Service
terminated, but in any event no later than the Option Expiration
Date. The Optionee’s Service shall be deemed to have
terminated on account of death if the Optionee dies within thirty
(30) days after the Optionee’s termination of Service
(other than for Cause).
(c) Cause . If the
Optionee’s Service is terminated for Cause, the Option shall
terminate and cease to be exercisable immediately upon such
termination of Service.
(d) Other Termination of
Service . If the Optionee’s Service terminates for
any reason, except Disability, death or for Cause, the Option, to
the extent unexercised and exercisable by the Optionee on the date
on which the Optionee’s Service terminated, may be exercised
by the Optionee within one year (or such other longer period of
time as determined by the Board, in it
