Document:

Exhibit

10.13

 

PLEDGE

AGREEMENT

 

In consideration of a loan made by Inverness Medical

Innovations, Inc., a Delaware corporation (together with any successor thereto,

the “Company”), to Ron Zwanziger (“Borrower”), under the Promissory Note dated

August 16, 2001, and any renewals or extensions thereof made in the sole

discretion of the Company (“Note”), Borrower agrees as follows:

 

Section 1. Pledge.  Borrower hereby pledges, assigns and transfers to the Company,

and grants to the Company a security interest in, the following property

(“Collateral”), to be held by the Company:

 

(a)      The 152.741423722644 shares of Common

Stock of the Company (each, together with any successor securities, a “Share”)

obtained pursuant to a certain Restricted Stock Agreement dated as of August

15, 2001 between Borrower and the Company (the “Restricted Stock Agreement”)

and held by Borrower, or any Permitted Transferee (as that term is defined in

the Restricted Stock Agreement), and any securities owned in respect thereof or

in exchange therefor.

 

(b)      All other securities, instruments and

other property issued or accepted in substitution for or in addition to any of

the foregoing.

 

(c)      All proceeds of any and all of the

Collateral.

 

Section 2. Obligations.  This Agreement and the security interest

granted hereby secure the payment of all obligations of Borrower to the Company

under the Note (“Obligations”), and the Obligations of Borrower under this

Agreement, and any and all renewals or extensions thereof.  So long as any of the Obligations are

outstanding, unless and until Borrower shall be in default hereunder or there

shall be any default of any of the Obligations, Borrower shall retain all

rights to dividends and distributions and voting rights, if any, with respect

to the Collateral.  In the event the

Obligations shall be in default or in the event that Borrower shall be in

default under the terms hereof, the Company may, in its discretion, vote and

exercise all of the powers of an owner with respect to any of the relevant

Collateral.  Without limiting the

generality of the other remedies provided herein and in addition thereto, in

the event any of the Obligations shall be in default or upon any default by

Borrower hereunder, the Company after the occurrence of an Event of Default may

take all steps necessary to cause the Collateral to be transferred into the

name of the Company, including but not limited to taking steps necessary to

comply with restrictions on sale or transfer of the shares constituting such

Collateral, and in connection therewith Borrower appoints the Company such

Borrower’s attorney-in-fact to execute and deliver such offers, tender offers,

certificates, documents or instruments of every nature or description required

for the purpose of the transfer of such shares into the name of the Company, or

any other person.

 

 

 

If Borrower receives any cash distribution or dividend

in respect of any Collateral, Borrower may retain such cash distribution or

dividend as his own property unless prior to such receipt an Event of Default

has occurred, in which event Borrower shall accept same in trust for the

Company, and shall upon request deliver same immediately to the Company in the

form received, with Borrower’s endorsement and/or assignment when necessary, to

be held by the Company as Collateral.

 

If Borrower receives any stock certificate or option

or deferred compensation right, whether as an addition to, in substitution of,

or in exchange for, any Collateral, or otherwise, Borrower shall accept same in

trust for the Company, and shall upon request deliver same immediately to the

Company in the form received, with Borrower’s endorsement and/or assignment

when necessary, to be held by the Company as Collateral.

 

Borrower is herewith delivering to the Company all

certificates or instruments representing or evidencing Collateral in suitable

form for transfer or delivery, or accompanied by duly executed instruments of

transfer or assignment to be held subject to the preceding paragraph.

 

Section 3. Restricted Stock Agreement.  Borrower acknowledges that transfer of the

Shares is subject to certain restrictions under the Restricted Stock

Agreement.  The obligation of the

Company to release certificates representing Shares to Borrower or his designee

hereunder shall in any event be subject to the requirements of the Restricted

Stock Agreement.  Subject to such

requirements and the terms hereof, the Company shall release from this pledge

Vested Shares or Restricted Shares (as those terms are defined in the

Restricted Stock Agreement) as designated by Borrower, provided that such

Shares shall remain subject to the Restricted Stock Agreement to the extent

applicable.

 

Section 4. Representations and Warranties.  Borrower represents and warrants to the

Company as follows:

 

(a)      Borrower is, and (as to any substitute or

additional Collateral) shall be, the sole owner of the Collateral pledged by

Borrower, free and clear of any lien, security interest, option or other charge

or encumbrance, except for (i) the security interest created by this Agreement,

(ii) certain restrictions under the Restricted Stock Agreement and (iii)

restrictions imposed by applicable laws, and, subject to the same exceptions,

Borrower has and shall have the right to transfer such Collateral and to grant

a security interest therein to the Company as provided in this Agreement.

 

(b)      No effective financing statement or

similar notice covering any Collateral pledged by Borrower is or shall be on

file in any recording office, and no other pledge or assignment thereof has been

made, or shall have been made, other than in favor of the Company, except as

the Company may approve.

 

Section 5. Further Action by Borrower.  Borrower shall, at the expense of Borrower,

promptly execute and deliver all further notices, instruments and documents,

including, without limitation, financing statements, and take all such further

action as may be reasonably necessary or reasonably advisable or as the Company

at any time may reasonably request, in order to 

 

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perfect, preserve and protect the security interest granted or

purported to be granted hereby or to enable the Company to exercise and enforce

such rights, powers and remedies with respect to the Collateral.

 

Section 6. Preservation of Collateral.

 

(a)      The Company shall give to the Collateral

the same degree of care and protection which it gives to its own property; provided,

however, that the Company shall have no liability to Borrower for any

losses, costs, expenses or damages due to any acts or omissions of third

parties, or due to any acts of God or other causes beyond its control.  The Company shall have no duty to preserve

any rights with respect to any Collateral, including, without limitation,

rights against prior parties, or to take, or to notify Borrower of the need to

take, any action respecting any rights, privileges or options relating to any

Collateral.  To replace any

certificates, however, Borrower shall not be required to supply any bond or

other indemnity.

 

(b)      Borrower shall furnish to the Company,

promptly upon receipt thereof, copies of all material notices, requests and

other documents received by Borrower relating to Collateral unless the same

were sent by the Company.

 

(c)      Borrower shall not (i) sell, assign,

transfer or otherwise dispose of any Collateral, or create or suffer to exist

any lien, security interest, assignment by operation of law or other charge or

encumbrance on, or with respect to, any Collateral, except for the security

interest created by this Agreement and the rights, remedies and restrictions

imposed by the Restricted Stock Agreement; or (ii) attempt any action

prohibited by paragraph (c)(i) of this Section 6.  Notwithstanding the foregoing, Borrower may

transfer Shares to Permitted Transferees pursuant to the Restricted Stock

Agreement or following the vesting of such Shares provided such transfer is in

accordance with the Restricted Stock Agreement; provided, however,

that the Shares so transferred shall remain subject to the security interest

created by this Agreement and any such Permitted Transferee(s) shall, as a

condition to any transfer, agree to be subject to the provisions of this

Agreement.

 

Section 7. Defaults.  A default (an “Event of Default”) shall be deemed to have

occurred hereunder if (a) Borrower fails in any material respect to perform any

material obligation hereunder, if any material representation or warranty

hereunder was untrue in any material respect when made, or if any default or

Event of Default by Borrower occurs under the Note or any agreement evidencing,

or constituting or granting security for, the Obligations, and (b) the Company

gives to Borrower written notice thereof and such default shall not have been

cured within fourteen (14) days or such additional time as determined by the

Board of Directors of the Company.

 

Section 8. Remedies.  Upon and after the occurrence of any Event of Default which is

then continuing or which has not been cured within the time period given for

such cure:

 

(a)      The Company may exercise its rights with

respect to the Collateral, without regard to the existence of any other

security or source of payment for Obligations, including without limitation the

rights set forth in Section 2, and may demand, sue for collection or make

any other compromise or settlement with respect to other rights and remedies

provided 

 

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for herein or otherwise available to it, and the

Company shall have all of the rights and remedies of a secured party under the

Uniform Commercial Code as in effect in the State of Delaware.

 

(b)      Except as specifically reserved herein,

Borrower waives all suretyship defenses at law and in equity, including waste

and impairment of Collateral, and further waives the requirement of any demand

and presentment.  Twenty-one (21) days’

prior notice to Borrower at the address provided below or at such other address

as Borrower shall provide to the Company in writing for such purpose, of the

time and place of any public sale of Collateral, or of the time after which any

private sale or any other intended disposition is to be made, shall constitute

reasonable notification.

 

(c)      The Company is authorized at any such sale

(including without limitation any sale to itself or any affiliate of the

Company, the same being expressly authorized and contemplated herein), if the

Company deems it advisable to do so, in order to comply with any applicable

securities laws, to restrict the prospective bidders or purchasers to persons

who will represent and agree that they are purchasing the Collateral for their

own account for investment, and not with a view to the distribution or resale

thereof.  Sales made subject to such

restriction shall not, solely by reason thereof, be deemed not to have been

made in a commercially reasonable manner.

 

(d)      The Company is specifically authorized,

with respect to any Collateral that consists of Shares, to acquire such

Collateral itself or to transfer such Collateral to any affiliate of the

Company at a price equal to the Repurchase Price as that term is defined in the

Restricted Stock Agreement.  Borrower

expressly waives any requirement that the Company conduct a public or private

sale with respect to such Shares and agrees that such a disposition is

commercially reasonable.

 

(e)      In case of any sale of all or part of the

Collateral on credit for future delivery, the Collateral so sold shall be

retained by the Company until the purchase price is paid.  The Company shall incur no liability in case

of the failure of the purchaser to pay for the Collateral as so sold if the

Collateral is recovered, or of the failure of the Company to make any sale of

Collateral after giving notice thereof, and in case of any such failure, such

Collateral may again be sold.

 

(f)       Subject to the terms of the Note, all

cash proceeds received by the Company in respect of any sale, collection or

other enforcement or disposition of Collateral shall be applied (after

deduction of any amounts payable to the Company for reasonable expenses of the

sale, collection or disposition of Collateral) against Obligations in such

order as the Company shall elect.  Upon

payment in full of all Obligations, Borrower shall be entitled to the return of

all Collateral pledged by him and all proceeds thereof, which have not been used

or applied toward the payment of Obligations as herein authorized.

 

Section 9. Waivers and Remedies.  Except as otherwise provided herein or by

law, Borrower waives presentment, demand, notice and protest, notice of

acceptance of this Agreement, and except as provided in Section 8(b) notice of

all action by the Company in reliance hereon. 

No failure by the Company to exercise, no delay by the Company in

exercising, and no single or partial exercise of, any right, remedy or power

hereunder or under any other 

 

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agreement relating to the Obligations or to Collateral shall operate as

a waiver thereof, or of any other right, remedy or power at any time.  No amendment, modification or waiver of any

provision of this Agreement shall be effective unless contained in a writing

signed by the Company.  Any such waiver

or consent shall be effective only in the specific instance and for the

specific purpose for which given.  The

rights, remedies and powers of the Company and Borrower, not only hereunder,

but also under any promissory note or notes of Borrower held by the Company,

any other agreements of Borrower with the Company and applicable law, are

cumulative and may be exercised successively, concurrently or alternatively.

 

Section 10. Term; Binding Effect.  This Agreement shall remain in full force

and effect until payment and satisfaction in full of all Obligations, shall be

binding upon Borrower and the heirs, legatees, legal representatives and

assigns of Borrower, including Permitted Transferees, and shall inure to the

benefit of the Company and its successors and assigns.  Notwithstanding the foregoing, the Company

may terminate this Agreement and release the Collateral, or may accept

substitute Collateral, at any time in its sole discretion without in any way

affecting the nonrecourse nature of a portion of the Obligations as provided in

the Note.

 

Section 11. 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, except to the extent that the perfection of the

security interest granted hereby in respect of any item of Collateral may be

governed by the law of another jurisdiction. 

Unless otherwise defined herein, all words and terms used in this

Agreement shall have the meanings provided in the Uniform Commercial Code of

the state of the jurisdiction of incorporation of the Company (including its

successor as issuer of the Shares).  If

any provision of this Agreement, or the application thereof to any person or

circumstance, is held invalid, such provision shall be deemed to be modified to

comply with applicable law or if not able to be so modified, shall be deemed to

be severed from the Agreement, the remaining provisions of which to be valid

and enforceable.

 

Section 12. Signatures.  This Agreement may be executed in

counterparts.

 

Section 13. Headings.  The captions in this Agreement have been included for reference

only and shall not define or limit the provisions hereof.

 

[SIGNATURE PAGE FOLLOWS]

 

 

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EXECUTED as of the date set forth below.

 

	

  August 16, 2001

  	

  BORROWER:

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  /s/ Ron Zwanziger

  	

   

  
	

   

  	

  Name:   Ron

  Zwanziger

  
	

   

  	

   

  
	

   

  	

  COMPANY:

  
	

   

  	

   

  
	

   

  	

  INVERNESS MEDICAL INNOVATIONS, INC.

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Duane L. James

  	

   

  
	

   

  	

   

  	

  Name:  Duane L. James

  
	

   

  	

   

  	

  Title:  Treasurer_______

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.

 

 

 

“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 

 

5

 

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

 

6

 

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.

 

7

 

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.

 

8

 

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]

 

9

 

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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