Exhibit 10.14

 

Non-Qualified Stock Option Agreement
under the Inverness Medical Innovations, Inc.
2001 Stock Option and Incentive Plan

 

Name of Optionee:

 

Jerry McAleer (the “Optionee”)

 

 

 

No. of Option Shares:

 

49.6083960575621

 

 

 

Option Exercise Price per Share:

 

$47,418.5982  (the “Option Exercise Price Per Share”)

 

 

 

Grant Date:

 

August 15, 2001

 

 

 

Expiration Date:

 

January 31, 2002 (the “Expiration Date”)

 

Pursuant to the Inverness Medical Innovations, Inc. 2001 Stock Option and
Incentive Plan (the “Plan”), Inverness Medical Innovations, Inc., a Delaware
corporation (together with its successors, the “Company”), hereby grants to the
Optionee, who is an officer, employee, director, consultant or other key person
of the Company or any of its subsidiaries, an option (the “Stock Option”) to
purchase on or prior to the Expiration Date all or part of the number of shares
of Common Stock, par value $.001 per share (the “Stock”), of the Company
specified above (the “Option Shares”) at the Option Exercise Price Per Share. 
The Optionee agrees to the provisions set forth herein and acknowledges that
each such provision is a material condition of the Company’s agreement to grant
the Stock Option to him.

 

1.                                       Definitions.  For the purposes of this
Agreement, the following terms shall have the following respective meaning . All
capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Plan.

 

“Cause” means a vote of the Board resolving that the Optionee has committed
willful misconduct or gross negligence in the performance of duty in connection
with the business affairs of the Company which, as determined in good faith by
the Board, would:  (i) materially adversely affect the business or the
reputation of the Company with its current or prospective customers, suppliers,
lenders and/or other third parties with whom it does or might do business; or
(ii) expose the Company to a risk of civil or criminal legal damages,
liabilities or penalties; provided that if such willful misconduct or gross
negligence and any adverse effects or damages therefrom may be cured, the
Optionee shall have fourteen (14) days or such additional time as may be
reasonably determined by the Board to effect such cure from receipt by the
Optionee of a written demand from the Board.

 

“Constructive Termination” means the occurrence of any of the following events
in the absence of Cause:  (i) a significant adverse change in the nature or
scope of the Optionee’s responsibilities, authorities, powers, functions or
duties; (ii) a Change of Control of the Company, except for a Change of Control
which results from the Merger; or (iii) the sale of all or substantially all of
the assets of the Company.

 

 

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“Disability” means the Optionee’s inability to perform his normal required
services for the Company and its subsidiaries by reason of his mental or
physical disability, as determined by the Board in good faith in its sole
discretion.

 

“Merger” means the merger of Inverness Medical Technology, Inc. with a
wholly-owned subsidiary of Johnson & Johnson pursuant to the Agreement and Plan
of Split-Off and Merger dated as of May 23, 2001, among Johnson & Johnson,
Sunrise Acquisition Corp. and Inverness Medical Technology, Inc. (the “Merger
Agreement”).

 

“Negative Vote” means the failure of the stockholders of Inverness Medical
Technology, Inc. entitled to vote at the Special Meeting to adopt the Merger
Agreement, approve the Company’s 2001 Stock Option and Incentive Plan and
approve the Company’s Executive Bonus Plan, each as described in the
Registration Statement on Form S-4 filed by the Company with the Securities and
Exchange Commission on August 13, 2001, as the same may be amended from time to
time.

 

“Permitted Transferees” means any of the following to whom the Optionee may
transfer Repurchasable Shares hereunder (as set forth in Section 6):  the
Optionee’s spouse, children (natural or adopted) or stepchildren, a trust for
the sole benefit of one or more such family members of which the Optionee is the
settlor, or a family limited partnership or family limited liability company of
which the limited partners or members, as the case may be, consist solely of one
or more such family members; provided, however, that any such trust, family
limited partnership, or family limited liability company does not require or
permit distribution of any Repurchasable Shares during the term of this
Agreement unless subject to the terms of this Agreement.  Upon the death of the
Optionee (or a Permitted Transferee to whom Repurchasable Shares have been
transferred hereunder), the term Permitted Transferees shall also include such
deceased Optionee’s (or such deceased Permitted Transferee’s) estate,
executions, administrations, personal representations, heirs, legatees and
distributees, as the case may be.

 

“Person” means any individual, corporation, partnership (limited or general),
limited liability company, limited liability partnership, association, trust,
joint venture, unincorporated organization or any similar entity.

 

“Repurchasable Shares” shall initially mean all of the Option Shares purchased
by the Optionee, provided that, for so long as the Optionee remains an employee
of the Company or any of its subsidiaries, Option Shares acquired hereunder
shall become Non-Repurchasable Shares in 36 equal monthly installments
commencing on the last day of the calendar month during which such Option Shares
are purchased (such date, the “Exercise Date”).

 

“Special Meeting” means the special meeting of the stockholders of Inverness
Medical Technology, Inc. at which such stockholders will vote upon a proposal to
adopt the Merger Agreement, a proposal to approve the Company’s 2001 Stock
Option and Incentive Plan and a proposal to approve the Company’s Executive
Bonus Plan.

 

“Termination Event” means the termination of the Optionee’s employment with the
Company and its subsidiaries for any reason whatsoever, regardless of the
circumstances thereof, and including without limitation upon retirement or
discharge or resignation for any

 

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reason, whether voluntary or involuntary; provided, however, that none of death,
Disability, Constructive Termination or the termination by the Company or its
subsidiaries of the Optionee’s employment with the Company and its subsidiaries
without Cause shall be a Termination Event.  For purposes hereof, the Board’s
determination of the reason for termination of the Optionee’s employment shall
be conclusive and binding on the Optionee and the Optionee’s representatives or
legatees.  Upon a Termination Event, all remaining Repurchasable Shares shall
remain Repurchasable Shares and shall no longer become Non-Repurchasable Shares
notwithstanding anything to the contrary set forth herein.

 

“Non-Repurchasable Shares” means all Option Shares that are not Repurchasable
Shares.

 

2.                                       Exercisability.

 

(a)           This Stock Option may not be exercised until it has becomes
exercisable.  This Stock Option shall be exercisable with respect to all or any
portion of the Option Shares at any time or times during the period commencing
immediately after the Merger becomes effective and ending on the close of
business on the Expiration Date (the “Exercise Period”), subject to the
provisions hereof and of the Plan; provided, however, that this Stock Option may
not be exercised more than twice.

 

(b)           To the extent the Optionee has not exercised this Stock Option in
full within the Exercise Period, upon the Optionee’s delivery to the Company of
the unexercised portion of this Stock Option, the Company shall grant the
Optionee a ten-year non-qualified stock option, pursuant to a Remainder Option
Agreement in the form attached hereto as Exhibit A to purchase a number of
shares of Stock equal to the number of Option Shares not purchased within the
Exercise Period (such options, the “Remainder Option” and such shares, the
“Remainder Option Shares”).  Notwithstanding the foregoing, the Optionee shall
be granted the Remainder Option prior to the expiration of the Exercise Period
upon the earlier of (i) the Optionee’s second partial exercise of this Stock
Option or (ii) receipt by the Company of the Optionee’s written request to
receive the Remainder Option in lieu of any remaining rights to exercise this
Stock Option.

 

3.                                       Manner of Exercise.

 

(a)           The Optionee may exercise this Stock Option only in the following
manner: from time to time during the Exercise Period, the Optionee may give
written notice to the Administrator of his election to purchase some or all of
the Option Shares.  This notice shall specify the number of Option Shares to be
purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more
of the following methods:  (i) in cash, by certified or bank check or other
instrument acceptable to the Administrator; or (ii) in cash in an amount no less
than the par value of the Option Shares being purchased together with delivery
by the Optionee to the Company of a promissory note in the form attached hereto
as Exhibit B in the amount of the remaining portion of the purchase price. 
Payment instruments will be received subject to collection.

 

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The delivery of certificates representing the Option Shares will be contingent
upon the Company’s receipt from the Optionee of full payment for the Option
Shares, as set forth above and any agreement, statement or other evidence that
the Company may require to satisfy itself that the issuance of Stock to be
purchased pursuant to the exercise of Stock Options under the Plan and any
subsequent resale of the shares of Stock will be in compliance with applicable
laws and regulations.

 

(b)           Certificates for shares of Stock purchased upon exercise of this
Stock Option shall be issued and delivered to the Optionee upon compliance to
the satisfaction of the Administrator with all requirements under applicable
laws or regulations in connection with such issuance and with the requirements
hereof and of the Plan.  The determination of the Administrator as to such
compliance shall be final and binding on the Optionee.  The Optionee shall not
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Stock subject to this Stock Option unless and until
this Stock Option shall have been exercised pursuant to the terms hereof, the
Company shall have issued and delivered the shares to the Optionee, and the
Optionee’s name shall have been entered as the stockholder of record on the
books of the Company.  Thereupon, the Optionee shall have full voting, dividend
and other ownership rights with respect to such shares of Stock.

 

(c)           Notwithstanding any other provision hereof or of the Plan, no
portion of this Stock Option shall be exercisable after the earlier of (i) the
issuance of the Remainder Option, if any, and (ii) the Expiration Date hereof.

 

4.                                       Repurchase Right.

 

(a)           Repurchase.  Upon the occurrence of a Termination Event, the
Company or its assigns shall have the right and option to repurchase all or any
portion of the Repurchasable Shares held by the Optionee or any Permitted
Transferee.  The purchase and sale arrangements contemplated by the preceding
sentence of this Section 4(a) are referred to herein as the “Repurchase.”

 

(b)           Repurchase Price.  Subject to Section 4(a), the per share purchase
price of the Repurchasable Shares subject to the Repurchase (the “Repurchase
Price”) shall be the Fair Market Value of a share of Stock as of the date of
such Termination Event.

 

(c)           Closing Procedure.  The Company or its assigns shall effect the
Repurchase (if so elected) by delivering or mailing to the Optionee (and/or, if
applicable, any Permitted Transferee) written notice within six (6) months after
the Termination Event, specifying a date within such six-month period in which
the Repurchase shall be effected.  Upon such notification, the Optionee and any
Permitted Transferees shall promptly surrender to the Company any certificates
representing the Option Shares being purchased, together with a duly executed
stock power for the transfer of such Option Shares to the Company or the
Company’s assignee or assignees.  Upon the Company’s or its assignee’s receipt
of the certificates from the Optionee or any Permitted Transferees, the Company
or its assignee or assignees shall deliver to him, her or them a check for the
Repurchase Price of the Repurchasable Shares being purchased; provided, however,
that the Company may pay the Repurchase Price for such shares by offsetting and
canceling firstly any indebtedness to the Company incurred in connection with
the

 

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exercise of the Stock Option and then, secondly, any other obligations then owed
by the Optionee to the Company.  At such time, the Optionee and/or any holder of
the Repurchasable Shares being purchased shall deliver to the Company the
certificate or certificates representing the shares so repurchased, duly
endorsed for transfer, free and clear of any liens or encumbrances.

 

(d)           Notwithstanding anything to the contrary in Sections 4(b) and 4(c)
above, if the Optionee has, within the six-month period ending on the date of
the Termination Event, paid for any Option Shares, then (i) the Company’s right
to elect to Repurchase such Option Shares shall expire at the end of the
six–month period commencing on the date on which the Optionee paid for such
Option Shares, (ii) the Repurchase Price for such Option Shares shall be the
Fair Market Value of the Stock as of the date of such Repurchase and (iii) the
Optionee or any Permitted Transferee shall retain ownership interest in such
Option Shares, including, without limitation, the right to vote such Option
Shares and receive dividends issued in respect of such Option Shares until the
date of Repurchase.  For purposes of this Section 4(d), such Option Shares shall
be considered “paid for” only upon payment of that portion (the “Relevant
Proportion”) of the principal balance and interest owed under any promissory
note used to purchase such shares or secured in whole or in part by such shares
which is calculated by multiplying the aggregate amount of the principal balance
and interest owed under the relevant promissory note by a percentage calculated
as follows: A/B x 100/1 where A equals the number of Option Shares the Optionee
considers as having been “paid for”, and B equals the total number of Option
Shares purchased under the relevant promissory note.

 

(e)           The Repurchase right specified in this Section 4 shall survive and
remain in effect as to Repurchasable Shares following and notwithstanding any
public offering by or merger or other transaction involving the Company and
certificates representing such Repurchasable Shares shall bear legends to such
effect.

 

5.                                       Termination of Repurchase Right.  Upon
the death, Disability or Constructive Termination of the Optionee or upon the
termination by the Company or its subsidiaries of the Optionee’s employment with
the Company and its subsidiaries without Cause, all Repurchasable Shares at the
time of such death, Disability or constructive or actual termination shall
become Non-Repurchasable Shares.

 

6.                                       Limitations Pending Lapse of Repurchase
Right and Repayment of Certain Debt.

 

(a)           Shares of Option Shares acquired hereunder may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of by the
Optionee until such shares are no longer subject to the right of Repurchase set
forth in Section 4 and unless the Company has received, or is satisfied that it
will receive, payment of the Relevant Proportion of the amounts outstanding,
including without limitation the principal balance interest owed, under any
promissory note used to purchase such shares or secured in whole or in part by
such shares.

 

(b)           Any attempted disposition of Option Shares not in accordance with
the terms and conditions of this Section 6 shall be null and void, and the
Company shall not reflect on its records any change in record ownership of any
Option Shares as a result of any such

 

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disposition, shall otherwise refuse to recognize any such disposition and shall
not in any way give effect to any such disposition of any Option Shares.

 

(c)           Other than the limitations set forth in Sections 6(a) and 6(b)
above, this Agreement is not intended to subject the Options Shares to
involuntary transfer, reversion or forfeiture.

 

(d)           Notwithstanding the foregoing provisions, the Optionee (but not
any transferee thereof) may sell, assign, transfer or give away any or all of
the Option Shares to Permitted Transferees; provided, however, that such
Permitted Transferee(s) shall, as a condition to any such transfer, agree to be
subject to the provisions of this Agreement (including, without limitation, the
provisions of Section 4 and this Section 6) and shall have delivered a written
acknowledgment to that effect to the Company.

 

7.                                       Termination.  This Stock Option shall
terminate immediately and be of no further force and effect upon the

occurrence, as determined by the Board, of any of the following events:

 

(a)           a Negative Vote;

 

(b)           termination for Cause of the Optionee’s employment by the Company
or a subsidiary; or

 

(c)           resignation of the Optionee from the Company or a subsidiary other
than as a result of Constructive Termination.

 

8.                                       Incorporation of Plan.  Notwithstanding
anything herein to the contrary, the Stock Option and this Agreement shall be
subject to and governed by all the terms and conditions of the Plan.

 

9.                                       Legend.  Certificates evidencing the
Option Shares acquired hereunder shall bear an appropriate legend, as determined
by the Administrator in its sole discretion, to the effect that such Shares are
subject to certain rights set forth herein and in the Plan.

 

10.                                 Transferability.  This Agreement is personal
to the Optionee, is non-assignable and is not transferable in any manner, by
operation of law or otherwise, other than by will or the laws of descent and
distribution.  This Stock Option is exercisable, during the Optionee’s lifetime,
only by the Optionee, and thereafter, only by the Optionee’s legal
representative or legatee.

 

11.                                 Tax Withholding.  The Optionee shall, not
later than the date as of which the exercise of this Stock Option becomes a
taxable event for Federal income tax purposes, pay to the Company or make
arrangements satisfactory to the Administrator for payment of any Federal,
state, local and foreign taxes required by law to be withheld on account of such
taxable event.

 

12.                                 Assignment.  At the discretion of the Board,
the Company shall have the right to assign its rights with respect to the
Repurchase to any Person or Persons, in whole or in part in

 

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any particular instance, upon the same terms and conditions applicable to the
exercise thereof by the Company, and such assignee or assignees of the Company
shall then take and hold any Option Shares so acquired subject to such terms as
may be specified by the Company in connection with any such assignment.

 

13.                                 Miscellaneous Provisions.

 

(a)           Adjustments for Stock-Split.  In the event that the Company
effectuates a stock split of its Common Stock in connection with the Merger, the
Stock Option and Option Exercise Price Per Share shall be adjusted accordingly;
provided that the resulting number of Option Shares shall be rounded up to the
nearest whole number and the resulting Option Exercise Price Per Share shall be
rounded up to the nearest one-tenth of a dollar.

 

(b)           Record Owner; Dividends.  Following the exercise of this Stock
Option, the Optionee and any Permitted Transferees, during the duration of this
Agreement, shall be considered the record owners of and shall be entitled to
vote the purchased Option Shares if and to the extent such shares are entitled
to voting rights.  The Grantee and any Permitted Transferees shall be entitled
to receive all dividends and any other distributions declared on the purchased
Option Shares; provided, however, that the Company is under no duty to declare
any such dividends or to make any such distribution.

 

(c)           Equitable Relief.  The parties hereto agree and declare that legal
remedies are inadequate to enforce the provisions of this Agreement and that
equitable relief, including specific performance and injunctive relief, may be
used to enforce the provisions of this Agreement.

 

(d)           Change and Modifications.  This Agreement may not be orally
changed, modified or terminated, nor shall any oral waiver of any of its terms
be effective. This Agreement may be changed, modified or terminated only by an
agreement in writing signed by the Company and the Optionee.

 

(e)           Governing Law.  This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to conflict
of law principles.

 

(f)            Headings.  The headings are intended only for convenience in
finding the subject matter and do not constitute part of the text of this
Agreement and shall not be considered in the interpretation of this Agreement.

 

(g)           Saving Clause.  If any provision(s) of this Agreement shall be
determined to be illegal or unenforceable, such determination shall in no manner
affect the legality or enforceability of any other provision hereof.

 

(h)           Notices.  All notices, requests, consents and other communications
shall be in writing and be deemed given when delivered personally, by facsimile
transmission or when received if mailed by first class registered or certified
mail, postage prepaid.  Notices to the Company or the Optionee shall be
addressed as set forth underneath their signatures below, or to such other
address or addresses as may have been furnished by such party in writing to the
other.

 

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Notices to any holder of the Option Shares other than the Optionee shall be
addressed to the address furnished by such holder to the Company.

 

(i)            Continued Employment.  This Stock Option does not confer upon the
Optionee any rights with respect to continuance of employment by the Company or
any subsidiary.

 

(j)            Benefit and Binding Effect.  This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, their respective
successors, assigns, and legal representatives.  Without limitation of the
foregoing, upon any stock-for-stock merger in which the Company is not the
surviving entity, shares of the Company’s successor issued in respect of the
Option Shares shall remain subject to the Repurchase rights and the schedule for
release of Repurchase rights set forth in this Agreement.  The Company has the
right to assign this Agreement, and such assignee shall become entitled to all
the rights of the Company hereunder to the extent of such assignment.

 

(k)           Dispute Resolution.  Except as provided below, any dispute arising
out of or relating to this Agreement or the breach, termination or validity
hereof shall be finally settled by binding arbitration conducted expeditiously
in accordance with the Comprehensive Arbitration Rules and Procedures of JAMS or
its successors (the “JAMS Rules”).  The arbitration shall be governed by the
United States Arbitration Act, 9 U.S.C. §§ 1-16, and judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction
thereof.  The place of arbitration shall be Boston, Massachusetts.

 

The parties covenant and agree that the arbitration shall commence within 60
days of the date on which a written demand for arbitration is filed by any party
hereto.  In connection with the arbitration proceeding, the arbitrator shall
have the power to order the production of documents by each party and any
third-party witnesses.  In addition, each party may take up to three depositions
as of right, and the arbitrator may in his or her discretion allow additional
depositions upon good cause shown by the moving party.  However, the arbitrator
shall not have the power to order the answering of interrogatories or the
response to requests for admission.  In connection with any arbitration, each
party shall provide to the other, no later than seven (7) business days before
the date of the arbitration, the identity of all persons that may testify at the
arbitration and a copy of all documents that may be introduced at the
arbitration or considered or used by a party’s witness or expert.  The
arbitrator’s decision and award shall be made and delivered within six (6)
months of the selection of the arbitrator.  The arbitrator’s decision shall set
forth a reasoned basis for any award of damages or finding of liability.  The
arbitrator shall not have power to award damages in excess of actual
compensatory damages and shall not multiply actual damages or award punitive
damages or any other damages that are specifically excluded under this
Agreement, and each party hereby irrevocably waives any claim to such damages.

 

The parties covenant and agree that they will participate in the arbitration in
good faith.  This Section 13(k) applies equally to requests for temporary,
preliminary or permanent injunctive relief, except that in the case of temporary
or preliminary injunctive relief any party may proceed in court without prior
arbitration for the limited purpose of avoiding immediate and irreparable harm.

 

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Each of the parties hereto (i) hereby irrevocably submits to the jurisdiction of
any United States District Court of competent jurisdiction for the purpose of
enforcing the award or decision in any such proceeding, (ii) hereby waives, and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
suit, action or proceeding, any claim that it is not subject personally to the
jurisdiction of the above-named courts, that its property is exempt or immune
from attachment or execution (except as protected by applicable law), that the
suit, action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that this Agreement or the
subject matter hereof may not be enforced in or by such court, and hereby waives
and agrees not to seek any review by any court of any other jurisdiction which
may be called upon to grant an enforcement of the judgment of any such court. 
Each of the parties hereto hereby consents to service of process by registered
mail at the address to which notices are to be given.  Each of the parties
hereto agrees that its, his or her submission to jurisdiction and its, his or
her consent to service of process by mail is made for the express benefit of the
other parties hereto.  Final judgment against any party hereto in any such
action, suit or proceeding may be enforced in other jurisdictions by suit,
action or proceeding on the judgment, or in any other manner provided by or
pursuant to the laws of such other jurisdiction.

 

(l)            Counterparts.  For the convenience of the parties and to
facilitate execution, this Agreement may be

executed in two or more counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same document.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Company and the Optionee have executed this
Non-Qualified Stock Option Agreement as of the date first above written.

 

 

COMPANY

 

 

 

INVERNESS MEDICAL

 

INNOVATIONS, INC.

 

 

 

By:

/s/ Duane L. James

 

 

 

Name:  Duane L. James

 

 

Title:  Vice President and Treasurer

 

 

 

OPTIONEE

 

 

 

/s/ Jerry McAleer

 

 

Name:  Jerry McAleer

 

Address:

 

 

52 Noble’s Close

 

 

Grove, Wantage

 

 

Oxon OX12 0NR

 

 

United Kingdom

 

 

 

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