Exhibit 10.3

 

NITINOL MEDICAL TECHNOLOGIES, INC.

 

1996 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS

 

1.   PURPOSE

 

The purpose of the Nitinol Medical Technologies, Inc. 1996 Stock Option plan for
Non-Employee Directors (the “Plan”) is to promote the interests of Nitinol
Medical Technologies, Inc. (the “Company”) and its stockholders by increasing
the proprietary and vested interest of non-employee directors in the growth and
performance of the Company by granting such directors options to purchase shares
of Common Stock, par value $.001 per share (the “Shares”), of the Company.

 

2.   ADMINISTRATION

 

The Plan shall be administered by the Company’s Board of Directors (the
“Board”). Subject to the provisions of the Plan, the Board shall be authorized
to interpret the Plan, to establish, amend, and rescind any rules and
regulations relating to the Plan and to make all other determinations necessary
or advisable for the administration of the Plan; provided, however, that the
Board shall have no discretion with respect to the selection of directors to
receive options, the number of Shares subject to any such options, the purchase
price thereunder or the timing of grants of options under the Plan. The
determinations of the Board in the administration of the Plan, as described
herein, shall be final and conclusive. The Secretary of the Company shall be
authorized to implement the Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to effectuate the intent
and purposes thereof. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware.

 

It is the intention of the Company that the Plan comply in all respects with
Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), to the extent applicable, and in all events the Plan shall be construed
in favor of its meeting the requirements of Rule 16b-3. If any Plan provision is
later found not to be in compliance with such Rule, such provision shall be
deemed null and void. From and after the date that the Company first registers a
class of equity securities under Section 12 of the Exchange Act, no director may
or sell shares received upon the exercise of an option during the six month
period immediately following the grant of the option.

 

3.   ELIGIBILITY

 

The class of individuals eligible to receive grants of options under the Plan
shall be directors of the Company who are not employees of the Company or its
affiliates, who do not otherwise receive compensation from the Company or its
affiliates (other than compensation received solely for services rendered as a
director of the Company) and who have not, within one year immediately preceding
the determination of such director’s eligibility, received any award under any
other plan of the Company or its affiliates that entitles the participants
therein to

 

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acquire stock, stock options or stock appreciation rights of the Company or its
affiliates (other than any other plan under which participants’ entitlements are
governed by provisions meeting the requirements of Rule 16b-3(c)(2)(ii)
promulgated under the Securities Exchange Act of 1934) (“Eligible Directors”).
Any holder of an option granted hereunder shall hereinafter be referred to as a
“Participant.”

 

4.   SHARES SUBJECT TO THE PLAN

 

Subject to adjustment as provided in Section 6, an aggregate of 150,000 Shares,
as such Shares were constituted on the date of approval of the Plan by the
Company’s Board of Directors, shall be available for issuance upon the exercise
of options granted under the Plan. The Shares deliverable upon the exercise of
options may be made available from authorized but unissued Shares or treasury
Shares. If any option granted under the Plan shall terminate for any reason
without having been exercised, the shares subject to, but not delivered under,
such option shall be available for other options.

 

5.   GRANT, TERMS AND CONDITIONS OF OPTIONS

 

(a) Subject to approval of the Plan by the stockholders of the Company as
provided in Section 9 hereof, on the date that a registration statement (the
“Registration Statement”) with respect to the Common Stock is declared effective
by the Securities Exchange Commission (the “SEC”) each Eligible Director will be
granted an option hereunder to purchase 10,000 Shares. The options granted to
such Eligible Directors shall be subject to vesting in equal monthly
installments over a period of three years commencing with the date of grant;
provided, that only whole shares may be issued pursuant to the exercise of any
option.

 

(b) Upon first election or appointment to the Board, each newly elected Eligible
Director will be granted an option to purchase 10,000 Shares. Any such options
granted to newly elected Eligible Directors shall be subject to vesting in equal
monthly installments over a three year period commencing with the date of the
election of such Eligible Director to the Board; provided, that only whole
shares may be issued pursuant to the exercise of any option.

 

(c) Immediately following each Annual Stockholders Meeting, commencing with the
meeting following the close of fiscal year 1996, each Eligible Director, other
than an Eligible Director first elected to the Board within the 12 months
immediately preceding and including such meeting, will be granted an option to
purchase 2,500 Shares as of the date of such meeting. The options granted to
such Eligible Directors shall be fully vested six months after the date of
grant.

 

(d) The options granted will be nonstatutory stock options not intended to
qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Internal Revenue Code”), and shall have the following terms and conditions:

 

(i) PRICE. The purchase price per Share deliverable upon the exercise of each
option shall be 100% of the Fair Market Value per Share on the date the option
is granted. For purposes of this Plan, Fair Market Value of the options granted
pursuant to Section 5(a) hereof shall be deemed to be the initial public
offering price per share of Common Stock as set forth in the final Prospectus
filed with the SEC in connection with the Registration Statement, and Fair

 

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Market Value of all other options shall be the closing sales price as reported
on the NASDAQ National Market on the date in question, or, if the Shares shall
not have traded on such date, the closing sales price on the first date prior
thereto on which the Shares were so traded.

 

(ii) PAYMENT. Payment of the purchase price shall be made in full at the time
the notice of exercise of the option is delivered to the Company and shall be in
cash, bank certified or cashier’s check for the Shares being purchased.

 

(iii) EXERCISABILITY AND TERM OF OPTIONS. Subject to any vesting requirements,
options shall be exercisable in whole or in part at all times during the period
beginning on the date of grant until the earlier of ten years from the date of
grant and the expiration of the one year period provided in paragraph (iv)
below.

 

(iv) TERMINATION OF SERVICE AS ELIGIBLE DIRECTOR. Upon termination of a
participant’s service as a Director for any reason, all outstanding options
which have become vested as of the date of termination shall be exercisable in
whole or in part for a period of one year from the date upon which the
participant ceases to be a Director, provided that in no event shall the options
be exercisable beyond the period provided for in paragraph (iii) above.

 

(v) NONTRANSFERABILITY OF OPTIONS. No option may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a participant
otherwise than by will or the laws of descent and distribution, and during the
lifetime of the Participant to whom an option is granted it may be exercised
only by the participant or by the Participant’s guardian or legal
representative. Notwithstanding the foregoing, options may be transferred
pursuant to a qualified domestic relations order.

 

(vi) LISTING AND REGISTRATION. Each option shall be subject to the requirement
that if at any time the Board shall determine, in its discretion, that the
listing, registration or qualification of the Shares subject to such option upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or the issue or
purchase of Shares thereunder, no such option may be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any condition not acceptable to the
Board.

 

(vii) OPTION AGREEMENT. Each option granted hereunder shall be evidenced by an
agreement with the Company which shall contain the terms and provisions set
forth herein and shall otherwise be consistent with the provisions of the Plan.

 

6.   ADJUSTMENT OF AND CHANGES IN SHARES

 

In the event of a stock split, stock dividend, subdivision or combination of the
Shares or other change in corporate structure affecting the Shares, the number
of Shares authorized by the Plan shall be increased or decreased
proportionately, as the case may be, and the number of Shares subject to any
outstanding option shall be increased or decreased proportionately, as the case
may be, with appropriate corresponding adjustment in the purchase price per
Share thereunder.

 

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7. NO RIGHTS OF STOCKHOLDERS

 

Neither a Participant nor a Participant’s legal representative shall be, or have
any of the rights and privileges of, a shareholder of the Company in respect of
any Shares purchasable upon the exercise of any option, in whole or in part,
unless and until certificates for such Shares shall have been issued.

 

8. PLAN AMENDMENTS

 

The Plan may be amended by the Board, as it shall deem advisable or to conform
to any change in any law or regulation applicable thereto; provided, that the
Board may not, without the authorization and approval of stockholders of the
Company: (i) increase the number of Shares which may be purchased pursuant to
options hereunder, either individually or in the aggregate, except as permitted
by Section 6, (ii) change the requirement of Section 5(d) that option grants be
priced at Fair Market Value, except as permitted by Section 6, (iii) modify in
any respect the class of individuals who constitute Eligible Directors or (iv)
materially increase the benefits accruing to Participants hereunder. The
provisions of Sections 3 and/or 5 may not be amended more often than once every
six months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules under either such statute.

 

9. EFFECTIVE DATE AND DURATION OF PLAN

 

The Plan shall become effective on the date that the Registration Statement is
declared effective by the SEC so long as it is approved by the holders of a
majority of the Company’s outstanding shares of voting capital stock at any time
within 12 months before or after the adoption of the Plan by the Board. Unless
sooner terminated by the Board, the Plan shall terminate ten years from the
earlier of (a) the date on which the Plan is adopted by the Board or (b) the
date on which the Plan is approved by the stockholders of the Company. No option
may be granted after such termination or during any suspension of the Plan. The
amendment or termination of the Plan shall not, without the consent of the
option holder, alter or impair any rights or obligations under any option
theretofore granted under the Plan.

 

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NMT MEDICAL, INC.

 

Amendment No. 1

 

to

 

1996 Stock Option Plan for Non-Employee Directors

 

The 1996 Stock Option Plan for Non-Employee Directors (the “Plan”) of NMT
Medical, Inc., is hereby amended as follows (capitalized terms used herein and
not defined herein shall have the respective meaning ascribed to such terms in
the Plan):

 

1. The first sentence of Section 4 of the Plan shall be deleted in its entirety
and replaced with the following:

 

“Subject to adjustment as provided in Section 6, an aggregate of

225,000 Shares, as such Shares were constituted on the date of

approval of the Plan by the Company’s Board of Directors, shall be

available for issuance upon the exercise of options granted under

the Plan.”

 

2. The first sentence of Section 5(b) of the plan shall be deleted in its
entirety and replaced with the following:

 

“Upon first election or appointment to the Board, each newly

elected Eligible Director will be granted an option to purchase

15,000 Shares.”

 

3. The first sentence of Section 5(c) of the Plan shall be deleted in its
entirety and replaced with the following:

 

“Immediately following each Annual Stockholders Meeting,

commencing with the meeting following the close of fiscal year

1996, each Eligible Director, other than an Eligible Director first

elected to the Board within the 12 months immediately preceding

and including such meeting, will be granted an option to purchase

5,000 Shares as of the date of such meeting.”

 

Except as aforesaid, the Plan shall remain in full force and effect.

 

Adopted by the Board of Directors on April 26, 2001

Approved by the Stockholders on June 7, 2001.

 

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NMT MEDICAL, INC.

 

Amendment No. 2

 

to

 

1996 Stock Option Plan for Non-Employee Directors, as Amended

 

WHEREAS, NMT Medical, Inc. (the “Company”) wishes to recognize the additional
time commitments and responsibilities assumed by each member of the Board of
Directors who serves on one or more committees of the Board of Directors of the
Company, and

 

WHEREAS, the Board of Directors has adopted, and the Stockholders of the Company
have approved, the following amendments:

 

NOW, THEREFORE, the 1996 Stock Option Plan for Non-Employee Directors, as
amended (the “Plan”) of the Company, is hereby amended as follows (capitalized
terms used herein and not defined herein shall have the respective meaning
ascribed to such terms in the Plan):

 

1. The first sentence of Section 5(b) of the plan shall be deleted in its
entirety and replaced with the following:

 

“Upon first election or appointment to the Board, each newly
elected Eligible Director will be granted an option to purchase
20,000 Shares.”

 

2.   Section 5(c) of the Plan shall be deleted in its entirety and replaced with
the following:

 

“Immediately following each Annual Stockholders Meeting, each
Eligible Director, other than an Eligible Director first elected to
the Board within the 12 months immediately preceding and
including such meeting, will be granted an option to purchase
5,000 Shares as of the date of such meeting. In addition, also
following each Annual Stockholders Meeting, each Eligible
Director who served as a member of a committee of the Board
during the preceding fiscal year will be granted an additional
option to purchase (i) 2,000 Shares if such Eligible Director
served as chairperson of such committee or (ii) 1,000 Shares if
such Eligible Director did not serve as a chairperson of such
committee. The options granted to such Eligible Director shall be
fully vested six months after the date of grant.”

 

Except as aforesaid, the Plan shall remain in full force and effect.

 

Adopted by the Board of Directors on March 7, 2002.

Approved by the Stockholders on June 28, 2002.

 

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NMT MEDICAL, INC.

 

Amendment No. 3

 

to

 

1996 Stock Option Plan for Non-Employee Directors, as Amended

 

The 1996 Stock Option Plan for Non-Employee Directors, as amended (the “Plan”),
of NMT Medical, Inc. (the “Company”) is hereby amended as follows (capitalized
terms used herein and not defined herein shall have the respective meaning
ascribed to such terms in the Plan):

 

1.       The first sentence of Section 4 of the Plan shall be deleted in its
entirety and replaced with the following:

 

“Subject to adjustment as provided in Section 6, an aggregate of
325,000 Shares, as such Shares were constituted on the date of
approval of the Plan by the Company’s Board of Directors, shall
be available for issuance upon the exercise of options granted
under the Plan.”

 

Except as aforesaid, the Plan shall remain in full force and effect.

 

Adopted by the Board of Directors on February 20, 2003.

Approved by the Stockholders on June 18, 2003.

 

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