Exhibit 10.14

 

SUNSHINE HEART, INC.
FORM OF STOCK OPTION GRANT NOTICE
UNDER THE NEW-HIRE EQUITY INCENTIVE PLAN

 

Sunshine Heart, Inc. (the “Company”), pursuant to its New-Hire Equity Incentive
Plan (the “Plan”), hereby grants to the Participant an Option to purchase the
number of shares of the Company’s Common Stock set forth below as an inducement
material to the Participant entering into an employment relationship with the
Company (this “Option”).  This Option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and shall therefore
be treated as a non-qualified option.  This Option is subject to all of the
terms and conditions set forth in this Stock Option Grant Notice (this “Grant
Notice”), the related Option Agreement and Notice of Exercise, and the Plan, all
of which are attached hereto and incorporated herein in their entireties.
Capitalized terms not explicitly defined herein but defined in the Plan or the
Option Agreement will have the same definitions as in the Plan or the Option
Agreement. If there is any conflict between the terms in this Grant Notice and
the Plan, the terms of the Plan will control.

 

Participant:

 

 

 

 

 

Date of Grant:

 

 

 

 

 

Vesting Commencement Date:

 

 

 

 

 

Number of Shares Subject to Option:

 

 

 

 

 

Exercise Price (Per Share):

 

 

 

 

 

Expiration Date:

 

 

 

 

 

Vesting Schedule:

 

25% of the shares will vest on the one-year anniversary of the Date of Grant;
the remaining shares will vest in 36 equal consecutive monthly increments
thereafter, so that all of the shares will be vested on the four-year
anniversary of the Date of Grant.

 

 

 

Payment:

 

By one or a combination of the following items (in each case, as described in
the Option Agreement):

 

 

 

 

 

o By cash, check, bank draft or money order payable to the Company;

 

o Pursuant to a Regulation T Program (cashless exercise);

 

o By delivery of already-owned shares if the shares are publicly traded; or

 

o By a “net exercise” arrangement.

 

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Additional Terms/Acknowledgements: The Participant acknowledges receipt of, and
understands and agrees to, the terms and conditions of this Grant Notice, the
Option Agreement and the Plan. The Participant acknowledges and agrees that this
Grant Notice and the Option Agreement may not be modified, amended or revised
except as provided in the Plan. The Participant further acknowledges and agrees
that this Option was granted to the Participant as an inducement material the
Participant entering into an employment relationship with the Company.  The
Participant further acknowledges that as of the Date of Grant, this Grant
Notice, the Option Agreement, and the Plan set forth the entire understanding
between the Participant and the Company regarding this Option and supersede all
prior oral and written agreements, promises and/or representations on that
subject with the exception of (i) other Options previously granted and delivered
to the Participant, (ii) any compensation recovery policy that is adopted by the
Company or is otherwise required by applicable law and (iii) any written
employment or severance arrangement that would provide for vesting acceleration
of this Option upon the terms and conditions set forth therein.

 

By accepting this Option, the Participant consents to receive such documents by
electronic delivery and to participate in the Plan through an on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

 

This Grant Notice may be executed in one or more counterparts, each of which
shall be deemed to be an original, and all of which shall constitute one
document.

 

SUNSHINE HEART, INC.

 

PARTICIPANT:

 

 

 

By:

 

 

By:

 

 

 

 

 

 

Name:

 

 

Date:

 

 

 

 

 

Title:

 

 

 

 

 

 

 

Date:

 

 

 

 

ATTACHMENTS: Option Agreement, including Notice of Exercise, and New-Hire Equity
Incentive Plan

 

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ATTACHMENT I

 

SUNSHINE HEART, INC.
NEW-HIRE EQUITY INCENTIVE PLAN

 

FORM OF OPTION AGREEMENT FOR EMPLOYEES (NEW HIRES ONLY)
(NONSTATUTORY STOCK OPTION)

 

Pursuant to your Stock Option Grant Notice (the “Grant Notice”) and this Option
Agreement (this “Agreement”), Sunshine Heart, Inc. (the “Company”) has granted
you an Option (your “Option”) under its New-Hire Equity Incentive Plan (the
“Plan”) to purchase the number of shares of the Company’s Common Stock indicated
in the Grant Notice at the Exercise Price indicated in the Grant Notice.
Capitalized terms not explicitly defined in this Agreement or in the Grant
Notice but defined in the Plan will have the same definitions as in the Plan. 
If there is any conflict between the terms in this Agreement and the Plan, the
terms of the Plan will control.

 

The details of your Option, in addition to those set forth in the Grant Notice
and the Plan, are as follows:

 

1.                                      VESTING.  Subject to the provisions
contained herein, your Option will vest as provided in the Grant Notice. 
Vesting will cease upon the termination of your Continuous Service.

 

2.                                      NUMBER OF SHARES AND EXERCISE PRICE. 
The number of shares of Common Stock subject to your Option and the Exercise
Price per share set forth in the Grant Notice will be adjusted for
Capitalization Adjustments.

 

3.                                      EXERCISE.

 

(a)                                 You may exercise the vested portion of your
Option during its term by (i) delivering the Notice of Exercise attached hereto
as EXHIBIT A and by completing such other documents and/or procedures designated
by the Company for exercise and (ii) paying the Exercise Price per share set
forth in the Grant Notice and any applicable withholding taxes to the Company’s
Secretary, stock plan administrator, or such other person as the Company may
designate.  You may exercise your Option only for whole shares of Common Stock;
the Company shall not be required to issue any fractional shares of Common Stock
under any circumstances.

 

(b)                                 By exercising your Option you agree that, as
a condition to any exercise of your Option, the Company may require you to enter
into an arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of your Option.

 

(c)                                  The exercise of your Option must comply
with all applicable laws and regulations governing your Option, and you may not
exercise your Option if the Company determines that such exercise would not be
in material compliance with such laws and regulations.  Notwithstanding anything
to the contrary contained herein, the Committee may

 

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suspend your right to exercise your Option for any period of up to 180 days in
any 365-day period for which the Committee determines, in good faith, that such
suspension is necessary or advisable in order to comply with the requirements of
(i) any applicable federal securities law or rule or regulation thereunder;
(ii) any rule of a national securities exchange, national securities
association, or other self-regulatory organization; or (iii) any other federal
or state law or regulation (each, an “Option Exercise Suspension”). 
Notwithstanding the foregoing, no Option Exercise Suspension shall extend the
term of your Option in a manner that would result in your Option becoming
nonqualified deferred compensation subject to Section 409A of the Code.

 

4.                                      METHOD OF PAYMENT.  Payment of the
exercise price is due in full upon exercise of all or any part of your Option.
You may elect to make payment of the exercise price in cash or by check, bank
draft or money order payable to the Company, or in any one or more of the
following manners unless otherwise provided in the Grant Notice:

 

(a)                                 Provided that at the time of exercise the
Common Stock is publicly traded, pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board that, prior to the
issuance of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds.

 

(b)                                 Provided that at the time of exercise the
Common Stock is publicly traded, by delivery to the Company (either by actual
delivery or attestation) of already-owned shares of Common Stock that are owned
free and clear of any liens, claims, encumbrances or security interests, and
that are valued at Fair Market Value on the date of exercise. “Delivery” for
these purposes, in the sole discretion of the Company at the time you exercise
your Option, will include delivery to the Company of your attestation of
ownership of such shares of Common Stock in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your Option by delivery to
the Company of Common Stock if doing so would violate the provisions of the
applicable listing rules, or any law, regulation or agreement restricting the
redemption of the Company’s stock.

 

(c)                                  Subject to the consent of the Company at
the time of exercise, by a “net exercise” arrangement pursuant to which the
Company will reduce the number of shares of Common Stock issued upon exercise of
your Option by the largest whole number of shares with a Fair Market Value that
does not exceed the aggregate Exercise Price per share set forth in the Grant
Notice.  You must pay any remaining balance of the aggregate Exercise Price not
satisfied by the “net exercise” in cash or other permitted form of payment. 
Shares of Common Stock will no longer be outstanding under your Option and will
not be exercisable thereafter if those shares are (i) used to pay the Exercise
Price pursuant to the “net exercise,” (ii) delivered to you as a result of such
exercise, and (iii) withheld to satisfy your tax withholding obligations.

 

5.                                      TERM.  You may not exercise your Option
before the Date of Grant or after the Expiration Date set forth in the Grant
Notice. Subject to Section 6 below, the term of your Option commences on the
Date of Grant and terminates upon the earliest of the following:

 

(a)                                 three months after the termination of your
Continuous Service for any reason other than your death or Disability;

 

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(b)                                 12 months after the termination of your
Continuous Service due to your death or Disability;

 

(c)                                  the Expiration Date indicated in the Grant
Notice; or

 

(d)                                 the day before the tenth anniversary of the
Date of Grant.

 

6.                                      CORPORATE TRANSACTION; CHANGE IN
CONTROL.  In the event of a Corporate Transaction or Change in Control, your
Option shall be subject to the provisions of Sections 9(c) and (d) of the Plan,
respectively, including any forfeiture provisions described therein.

 

7.                                      TRANSFERABILITY.  Your Option is not
transferable, except (i) by will or by the laws of descent and distribution,
(ii) pursuant to a domestic relations order and (iii) with the prior written
approval of the Company, by instrument to an inter vivos or testamentary trust,
in a form accepted by the Company, in which your Option is to be passed to
beneficiaries upon the death of the trust or (settlor).

 

8.                                      WITHHOLDING OBLIGATIONS.

 

(a)                                 At the time you exercise your Option, in
whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you,
and otherwise agree to make adequate provision for, any sums required to satisfy
the federal, state, local and foreign tax withholding obligations of the Company
or an Affiliate, if any, which arise in connection with your Option.

 

(b)                                 Upon your request and subject to approval by
the Company, in its sole discretion, and in compliance with any applicable
conditions or restrictions of law, the Company may withhold from fully vested
shares of Common Stock otherwise issuable to you upon the exercise of your
Option a number of whole shares of Common Stock having a Fair Market Value,
determined by the Company as of the date of exercise, not in excess of the
minimum amount of tax required to be withheld by law (or such lower amount as
may be necessary to avoid classification of your Option as a liability for
financial accounting purposes). Any adverse consequences to you arising in
connection with such share withholding procedure shall be your sole
responsibility.

 

(c)                                  You may not exercise your Option unless the
tax withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your Option when desired even
though your Option is vested, and the Company will have no obligation to issue a
certificate for such shares of Common Stock unless such obligations are
satisfied.

 

9.                                      TAX CONSEQUENCES. You hereby agree that
the Company does not have a duty to design or administer the Plan or its other
compensation programs in a manner that minimizes your tax liabilities. You will
not make any claim against the Company, or any of its Officers, Directors,
Employees or Affiliates related to tax liabilities arising from your Option or
your other compensation. In particular, you acknowledge that your Option is
exempt from Section 409A of the Code only if the Exercise Price per share
specified in the Grant Notice is at least equal to the

 

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“fair market value” per share of the Common Stock on the Date of Grant indicated
in the Grant Notice and there is no other impermissible deferral of compensation
associated with your Option.

 

10.                               NOTICES. Any notices provided for in your
Option or the Plan will be given in writing and will be deemed effectively given
upon receipt or, in the case of notices delivered by mail by the Company to you,
five days after deposit in the U.S. mail, postage prepaid, addressed to you at
the last address you provided to the Company.  The Company may, in its sole
discretion, decide to deliver any documents related to participation in the Plan
and your Option by electronic means or to request your consent to participate in
the Plan by electronic means. By accepting your Option, you consent to receive
such documents by electronic delivery and to participate in the Plan through an
on-line or electronic system established and maintained by the Company or
another third party designated by the Company.

 

11.                               GOVERNING PLAN DOCUMENT. Your Option is
subject to all the provisions of the Plan, the provisions of which are hereby
made a part of your Option, and is further subject to all interpretations,
amendments, rules and regulations, which may from time to time be promulgated
and adopted pursuant to the Plan. If there is any conflict between the
provisions of your Option and those of the Plan, the provisions of the Plan will
control. In addition, your Option (and any compensation paid, shares issued
under your Option, or proceeds received upon the sale of such shares) is subject
to recoupment in accordance with The Dodd—Frank Wall Street Reform and Consumer
Protection Act and any implementing regulations thereunder, any clawback or
compensation recovery policy adopted by the Company and any compensation
recovery policy otherwise required by applicable law.

 

12.                               EFFECT ON OTHER EMPLOYEE BENEFIT PLANS.  The
value of your Option will not be included as compensation, earnings, salaries,
or other similar terms used when calculating your benefits under any employee
benefit plan sponsored by the Company or any Affiliate, except as such plan
otherwise expressly provides. The Company expressly reserves its rights to
amend, modify, or terminate any of the Company’s or any Affiliate’s employee
benefit plans.

 

13.                               VOTING RIGHTS.  You will not have voting or
any other rights as a stockholder of the Company with respect to the shares to
be issued pursuant to your Option until such shares are issued to you. Upon such
issuance, you will obtain full voting and other rights as a stockholder of the
Company. Nothing contained in your Option, and no action taken pursuant to its
provisions, will create or be construed to create a trust of any kind or a
fiduciary relationship between you and the Company or any other person.

 

14.                               SEVERABILITY.  If all or any part of this
Agreement or the Plan is declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity will not invalidate any
portion of this Agreement or the Plan not declared to be unlawful or invalid.
Any Section of this Agreement (or part of such a Section) so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Section or part of a Section to the fullest extent
possible while remaining lawful and valid.

 

15.                               CONSENT TO TRANSFER OF PERSONAL DATA.  In
administering the Plan, or to comply with applicable legal, regulatory, tax, or
accounting requirements, it may be necessary for the Company to transfer certain
Participant data to an Affiliate or to its outside service

 

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providers or governmental agencies. By accepting your Option, you consent, to
the fullest extent permitted by law, to the use and transfer, electronically or
otherwise, of your personal data to such entities for such purposes.

 

16.                               MISCELLANEOUS.

 

(a)                                 The rights and obligations of the Company
under your Option will be transferable by the Company to any one or more persons
or entities, and all covenants and agreements hereunder will inure to the
benefit of, and be enforceable by the Company’s successors and assigns.

 

(b)                                 You agree upon request to execute any
further documents or instruments necessary or desirable in the sole
determination of the Company to carry out the purposes or intent of your Option.

 

(c)                                  You acknowledge and agree that you have
reviewed your Option in its entirety, have had an opportunity to obtain the
advice of counsel prior to executing and accepting your Option, and fully
understand all provisions of your Option.

 

(d)                                 This Agreement will be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

 

(e)                                  All obligations of the Company under the
Plan and this Agreement will be binding on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.

 

*     *     *

 

This Agreement will be deemed to be signed by you upon the signing by you of the
Grant Notice to which it is attached.

 

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EXHIBIT A

 

NOTICE OF EXERCISE

 

SUNSHINE HEART, INC.

 

 

12988 Valley View Road

 

 

Eden Prairie, MN 55344

 

Date of Exercise:

 

 

This constitutes notice to Sunshine Heart, Inc. (the “Company”) under my Option
that I elect to purchase the below number of shares of Common Stock of the
Company (the “Shares”) for the price set forth below.

 

Type of Option (check one):

 

Nonstatutory

 

 

 

Stock Option dated:

 

 

 

 

 

Number of shares as to which Option is exercised:

 

 

 

 

 

Certificates to be issued in name of:

 

 

 

 

 

Total exercise price:

 

$

 

 

 

Cash payment delivered herewith:

 

$

 

 

 

[Value of                    shares delivered herewith(1):

 

$]

 

 

 

[Value of                    shares pursuant to net exercise(2):

 

$]

 

 

 

[[Regulation T Program (cashless exercise)(3):

 

$]

 

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(1)                                 Shares must meet the public trading
requirements set forth in the Option Agreement. Shares must be valued in
accordance with the terms of the Option being exercised, and must be owned free
and clear of any liens, claims, encumbrances or security interests. Certificates
must be endorsed or accompanied by an executed assignment separate from
certificate.

(2)                                 The Company must have established net
exercise procedures at the time of exercise, in order to utilize this payment
method.

(3)                                 Shares must meet the public trading
requirements set forth in the Option Agreement.

 

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EXHIBIT A

 

By this exercise, I agree (i) to provide such additional documents as you may
require pursuant to the terms of the Sunshine Heart, Inc. New-Hire Equity
Incentive Plan, and (ii) to provide for the payment by me to you (in the manner
designated by you) of your withholding obligation, if any, relating to the
exercise of my Option.

 

Very truly yours,

 

 

 

 

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ATTACHMENT II

 

NEW-HIRE EQUITY INCENTIVE PLAN

 

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