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                                                                   EXHIBIT 10.31

                             ENDOSONICS CORPORATION
                       1999 NONSTATUTORY STOCK OPTION PLAN

                                   ARTICLE ONE
                               GENERAL PROVISIONS

I. GENERAL

        A. PURPOSES OF PLAN. This 1999 Nonstatutory Stock Option Plan (the
"Plan") is intended to promote the interests of EndoSonics Corporation, a
Delaware corporation (the "Company"), by providing a method whereby eligible
individuals may be offered incentives and rewards which will encourage them to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Company and continue to render services to the Company (or any
Parent or Subsidiary corporation (as defined below)).

        B. DEFINITIONS. For purposes of the Plan, the following definitions
shall apply:

                (i) "Administrator" shall mean the Board or any of its
Committees appointed pursuant to Section I of Article Two of the Plan.

                (ii) "Affiliate" shall mean an entity other than a Subsidiary in
which the Company owns an equity interest.

                (iii) "Applicable Laws" shall mean the requirements relating to
the administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options are granted under the Plan.

                (iv) "Board" shall mean the Company's board of directors.

                (v) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                (vi) "Common Stock" shall mean the Common Stock of the Company.

                (vii) "Consultant" shall mean any consultant or adviser if: (i)
the consultant or adviser renders bona fide services to the Company; (ii) the
services rendered by the consultant or adviser are not in connection with the
offer or sale of securities in a capital-raising transaction and do not directly
or indirectly promote or maintain a market for the Company's securities; and
(iii) the consultant or adviser is a natural person who has contracted directly
with the Company to render such services.

                (viii) "Continuous Status as an Employee or Consultant" shall
mean the absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave,

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military leave, or any other leave of absence approved by the Administrator,
provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute. For purposes of this Plan, a change in status from an Employee to a
Consultant or from a Consultant to an Employee will not constitute a termination
of employment.

                (ix) "Director" shall mean a member of the Board.

                (x) "Employee" shall mean any person employed by the Company or
any Parent, Subsidiary or Affiliate of the Company.

                (xi) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

                (xii) "Fair Market Value" shall mean, as of any date, the value
of Common Stock determined as follows:

                        (a) If the Common Stock is listed on any established
stock exchange or a national market system including without limitation the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the
closing sales price for such stock as quoted on such system on the date of
determination (if for a given day no sales were reported, the closing bid on
that day shall be used), as such price is reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

                        (b) If the Common Stock is quoted on the Nasdaq System
(but not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the bid and asked prices for the Common Stock; or

                        (c) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.

                (xiii) "Officer" shall mean a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

                (xiv) "Option" shall mean a nonstatutory stock option, not
intended to meet the requirements of Section 422 of the Code, granted pursuant
to this Plan. All Options granted under this Plan shall be nonstatutory stock
options.

                (xv) "Parent" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                (xvi) "Rule 16b-3" shall mean Rule 16b-3 promulgated under the
Exchange Act as the same may be amended from time to time, or any successor
provision.

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                        (xvii) "Subsidiary" shall mean a "subsidiary
corporation," whether now or hereafter existing, as defined in Section 424(f) of
the Code.

II. STRUCTURE OF THE PLAN

        A. OPTION PROGRAMS. Eligible individuals may, at the discretion of the
Administrator, be granted options to purchase shares of Common Stock in
accordance with the provisions of Article Two.

        B. GENERAL PROVISIONS. Unless the context clearly indicates otherwise,
the provisions of Articles One and Two of the Plan shall apply to all Option
grants under the Plan and shall accordingly govern the interests of all
individuals under the Plan.

III. ELIGIBILITY FOR OPTION GRANTS

        A. The persons eligible to participate in the Plan shall be limited to
the following:

                (i) Employees and Consultants of the Company (or its Parent or
Subsidiary corporations) who render services which contribute to the management,
growth and financial success of the Company (or its Parent or Subsidiary
corporations) and who are not Officers or Directors of the Company;

                (ii) Employees and Consultants of the Company who, as of the
date of grant of Options to them hereunder, were not previously employed by the
Company; provided, that the grant of such Options is an inducement essential to
each such individual's entering into an employment contract with the Company.

        B. The Administrator shall have full authority to make Option grants
under the Plan to the eligible individuals within the scope of its
administrative functions under the Plan and to determine the number of shares to
be covered by each such grant, including the time or times at which each such
option is to become exercisable, and the maximum term for which the Option is to
remain outstanding.

IV. STOCK SUBJECT TO THE PLAN

        A. The stock issuable under the Plan shall be shares of the Company's
authorized but unissued or reacquired Common Stock. The aggregate number of
shares which may be issued under the Plan shall not exceed 200,000 shares. The
total number of shares issuable under the Plan shall be subject to adjustment
from time to time in accordance with the provisions of this Section IV of
Article One.

        B. Should an outstanding Option expire or terminate for any reason prior
to exercise in full, the shares subject to the portion of the Option not so
exercised shall be available for subsequent Option grant. Notwithstanding any
other provision of the Plan, shares issued under the Plan and later repurchased
by the Company shall not become available for future grant under the Plan.
Exercise of an Option in any manner shall result in a decrease in the number of
shares which thereafter may be available, both for purposes of the Plan and for
sale under the Option, by

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the number of shares as to which the Option is exercised. Should the exercise
price of an Option be paid with shares of Common Stock or should shares of
Common Stock otherwise issuable under the Plan be withheld by the Company in
satisfaction of the withholding taxes incurred in connection with the exercise
of an Option under the Plan, then the number of shares of Common Stock available
for issuance under the Plan shall be reduced by the gross number of shares for
which the Option is exercised and not by the net number of shares of Common
Stock issued to the holder of such Option.

        C. If any change is made to the outstanding Common Stock by reason of
any stock split, reverse stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company's receipt of
consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual may be granted
stock options, and (iii) the number and/or class of securities and price per
share in effect under each outstanding Option under the Plan; provided, however
that the conversion of convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustments to
the outstanding Options shall preclude the enlargement or dilution of rights and
benefits under such Options. Such adjustment shall be made by the Administrator,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of stock subject to an Option. In the event of a
dissolution or liquidation of the Company, each outstanding Option shall expire
on a date specified in a written notice given by the Administrator to an
Optionee specifying the terms and conditions of such termination (which date
shall be at least fifteen (15) days after the date the Administrator gives the
written notice).

                                   ARTICLE TWO
                                  OPTION GRANTS

I. ADMINISTRATION AND ELIGIBILITY

        A. ADMINISTRATION OF OPTIONS. With respect to Option grants, the Plan
shall be administered by (A) the Board or (B) a committee designated by the
Board ("Committee"), which committee shall be constituted in such a manner as to
satisfy the Applicable Laws. Options granted pursuant to this Article Two shall
be authorized by action of the Administrator and shall be nonstatutory stock
options which are not intended to meet the requirements of Section 422 of the
Code. Each Option granted shall be evidenced by one or more instruments in the
form approved by the Administrator. Each such instrument shall, however, comply
with the terms and conditions specified below. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:

                (a) to determine the Fair Market Value of the Common Stock, in
accordance with Section I.B.(xii) of Article One of the Plan;

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                (b) to select the Employees and Consultants to whom options may
from time to time be granted hereunder;

                (c) to determine whether and to what extent Options are granted
hereunder;

                (d) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;

                (e) to approve forms of agreement for use under the Plan;

                (f) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions regarding any option and/or
the shares of Common Stock relating thereto, based in each case on such factors
as the Administrator shall determine, in its sole discretion); and

                (g) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted.

        B. RECIPIENTS OF GRANTS. Options may be granted to Employees and
Consultants. An Employee or Consultant who has been granted an Option may, if he
or she is otherwise eligible, be granted an additional Option or Options.

II. TERMS AND CONDITIONS OF OPTIONS

        A. OPTION EXERCISE PRICE AND CONSIDERATION.

                (i) EXERCISE PRICE. The per share exercise price for the shares
to be issued pursuant to exercise of an Option shall be such price as is
determined by the Administrator, but shall be no less than 85% of the Fair
Market Value on the date of the grant.

                (ii) PERMISSIBLE CONSIDERATION. The consideration to be paid for
the shares to be issued upon exercise of an Option, including the method of
payment, shall be determined by the Administrator and may consist entirely of
(1) cash, (2) check, (3) other shares that (x) in the case of shares acquired
upon exercise of an Option either have been owned by the Optionee for more than
six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the shares as to which said
Option shall be exercised, (4) authorization from the Company to retain from the
total number of shares as to which the Option is exercised that number of shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of shares as to which the Option is exercised, (5) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to deliver promptly to the Company the amount of sale or loan proceeds
required to pay the exercise price, (6) a combination of any of the foregoing
methods of payment, (7) a combination of any of the foregoing methods of payment
at least equal in value to the stated capital represented by the

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shares to be issued, plus a promissory note for the balance of the exercise
price, or (8) such other consideration and method of payment for the issuance of
shares to them to the extent permitted under Applicable Laws. In making its
determination as to the type of consideration to accept, the Administrator shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

        B. TERM OF OPTIONS. The term of each Option shall be the term stated in
the written Option agreement, provided, however that the term shall be no more
than ten (10) years from the date of grant thereof or such shorter term as may
be provided in the written Option agreement.

        C. EXERCISE OF OPTIONS.

                (i) PROCEDURE FOR EXERCISE: RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan. An Option may not be exercised for a fraction of a share.

                An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section II.A.(ii) of this
Article Two. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
optioned stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Option. No adjustment will be made for a dividend or other right for which
the date is prior to the date the stock certificate is issued, except as
provided in Section IV.C. of Article One of the Plan.

                (ii) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such optionee may, but only within three (3) months (or such other
period of time, not exceeding six (6) months, as is determined by the
Administrator) after the date of such termination (but in no event later than
the date of expiration of the term of such Option set forth in the written
Option agreement), exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination. To the extent that the
optionee was not entitled to exercise the Option at the date of such
termination, or if the optionee does not exercise such Option (which he or she
was entitled to exercise) within the time specified herein, the Option shall
terminate.

                (iii) DISABILITY OF OPTIONEE. Notwithstanding Section II.C.(ii)
of this Article Two above, in the event of termination of an optionee's
Continuous Status as an Employee or Consultant as a result of his or her total
and permanent disability (as defined in Section 22(e)(3) of the Code), he or she
may, but only within six (6) months (or such other period of time not

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exceeding twelve (12) months as is determined by the Administrator) from the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the written Option agreement), exercise
his or her Option to the extent he or she was entitled to exercise it at the
date of such termination. To the extent that he or she was not entitled to
exercise the Option at the date of termination, or if he does not exercise such
Option (which he was entitled to exercise) within the time specified herein, the
Option shall terminate.

                (iv) DEATH OF OPTIONEE. In the event of the death of an
Optionee:

                        (a) during the term of the Option who is at the time of
his death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months (or such
other period of time, not exceeding twelve (12) months, as is determined by the
Administrator) following the date of death (but in no event later than the date
of expiration of the term of such Option as set forth in the written Option
agreement), by the optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance but only to the extent of the
right to exercise that would have accrued had the optionee continued living and
remained in Continuous Status as an Employee or Consultant three (3) months (or
such other period of time as is determined by the Administrator as provided
above) after the date of death, subject to the limitation set forth in Article
Two; or

                        (b) within thirty (30) days (or such other period of
time not exceeding three (3) months as is determined by the Administrator after
the termination of Continuous Status as an Employee or Consultant, the Option
may be exercised, at any time within six (6) months following the date of death
(but in no event later than the date of expiration of the term of such Option as
set forth in the written Option agreement), by the optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
termination.

                (v) EARLY EXERCISE. The Administrator shall have complete
discretion, exercisable either at the time the Option is granted or at any time
while the Option remains outstanding, to permit one or more Options held by the
optionee under this Article Two to be exercised, during the limited period of
exercisability provided under Sections II.C.(ii), II.C.(iii) and II.C.(iv)
above, not only with respect to the number of shares for which each such Option
is exercisable at the time of the optionee's termination of Continuous Status as
an Employee or Consultant but also with respect to one or more subsequent
installments of purchasable shares for which the Option would otherwise have
become exercisable had such termination not occurred.

                (vi) EXTENSION OF EXERCISE PERIOD. The Administrator shall have
full power and authority, within the scope of its administrative functions under
the Plan, to extend the period of time for which any Option granted under this
Plan is to remain exercisable following the optionee's termination of Continuous
Status as an Employee or Consultant or death from the limited period in effect
under Sections II.C.(ii) and II.C.(iv) of this Article Two to such greater
period of time as the Administrator shall deem appropriate; provided, however,
that in no event shall such Option be exercisable after the specified expiration
date of the Option term.

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                (vii) RULE 16B-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.

        D. REPURCHASE RIGHTS. The shares of Common Stock acquired upon the
exercise of Options granted under the Plan may be subject to one or more
repurchase rights of the Company in accordance with the following provisions:

                (i) The Administrator may in its discretion determine that it
shall be a term and condition of one or more Options exercised under the Plan
that the Company (or its assignees) shall have the right, exercisable upon the
optionee's termination of Continuous Status as an Employee or Consultant, to
repurchase, at the Option price any or all of the unvested shares of Common
Stock at the time held by the optionee. Any such repurchase right shall be
exercisable by the Company (or its, assignees) upon such terms and conditions
(including the establishment of the appropriate vesting schedule and other
provision for the expiration of such right in one or more installments over the
optionee's period of Continuous Status as an Employee or Consultant) as the
Administrator may specify in the instrument evidencing such right.

                (ii) The Administrator may assign the Company's repurchase
rights under subparagraph D.(i) above to any person or entity selected by the
Administrator, including one or more stockholders of the Company.

                (iii) All of the Company's outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated rights shall
immediately vest in full, upon the occurrence of any Corporate Transaction under
Section III of this Article Two, except to the extent (i) the Company's
outstanding repurchase rights are to be assigned to the successor corporation
(or parent thereof) in connection with the Corporate Transaction or (ii) such
termination of repurchase rights and acceleration of vesting are precluded by
other limitations imposed by the Administrator at the time of the Option grant.

        E. LIMITED TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution provided that the
Administrator may in its discretion grant transferable Options pursuant to
Option agreements specifying (i) the manner in which such Options are
transferable and (ii) that any such transfer shall be subject to the Applicable
Laws. The designation of a beneficiary by an optionee will not constitute a
transfer. An Option may be exercised, during the lifetime of the optionee, only
by the optionee or a transferee permitted by this subparagraph E.

        F. TIME OF GRANTING OPTIONS. The date of grant of an Option under this
Article Two shall, for all purposes, be the date on which the Administrator
makes the determination granting such Option or such other date as is determined
by the Administrator. Notice of the determination shall be given to each
Employee or Consultant to whom an Option is so granted within a reasonable time
after the date of such grant.

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III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL

        A. In the event of any of the following stockholder-approved
transactions (a "Corporate Transaction");

                (i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation,

                (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company, or

                (iii) any reverse merger in which the Company is the surviving
entity but in which fifty percent (50%) or more of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to such merger, the exercisability of each Option outstanding
under this Article Two shall automatically accelerate so that each such Option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such Option and may be exercised for all
or any portion of such shares. However, an outstanding Option under this Article
Two shall not so accelerate if and to the extent: (i) such Option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof or be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation or parent
thereof, (ii) such Option is to be replaced with a cash incentive program of the
successor corporation based on the option spread at the time of the Corporate
Transaction, or (iii) the acceleration of such Option is subject to other
limitations imposed by the Administrator at the time of grant. The determination
of option comparability under clause (i) above shall be made by the Committee,
and its determination shall be final, binding and conclusive.

                For purposes of this Section III of Article Two, an Option shall
be considered "assumed," without limitation, if, at the time of issuance of the
stock or other consideration upon such merger or sale of assets, each optionee
would be entitled to receive upon exercise of an Option the same number and kind
of shares of stock or the same amount of property, cash or securities as the
optionee would have been entitled to receive upon the occurrence of such
transaction if the optionee had been, immediately prior to such transaction, the
holder of the number of shares of Common Stock covered by the Option at such
time (after giving effect to any adjustments in the number of shares covered by
the Option as provided for in Section IV.C. of Article One).

        B. Immediately following the consummation of the Corporate Transaction,
all outstanding Options under this Article Two shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company.

        C. Each outstanding Option under this Article Two which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of

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securities which would have been issuable, in consummation of such Corporate
Transaction, to an actual holder of the same number of shares of Common Stock as
are subject to such Option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option price payable per
share, provided the aggregate Option price payable for such securities shall
remain the same. In addition, the class and number of securities available for
issuance under the Plan on both an aggregate and per participant basis following
the consummation of the Corporate Transaction shall be appropriately adjusted.

        D. The Options outstanding under this Article Two shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

        E. The Administrator shall have the discretionary authority, exercisable
either at the time the Option is granted or at any time while the Option remains
outstanding, to provide for the automatic acceleration of one or more
outstanding Options under this Article Two upon the occurrence of a Change in
Control (as defined below). The Administrator shall also have full power and
authority to condition any such Option acceleration upon the subsequent
termination of the optionee's Continuous Status as an Employee or a Consultant
within a specified period following the Change in Control.

        F. For purposes of this Section III of Article Two, a "Change in
Control" shall be deemed to occur in the event:

                (i) any person or related group of persons (other than the
Company or a person that directly or indirectly controls, is controlled by, or
is under common control with, the Company) directly or indirectly acquires
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than twenty-five percent (25%) of the total combined
voting power of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's stockholders which the Board does
not recommend such stockholders to accept; or

                (ii) there is a change in the composition of the Board over a
period of twenty-four (24) consecutive months or less such that a majority of
the Board members (rounded up to the next whole number) cease, by reason of one
or more proxy contests for the election of Board members, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election as
Board Members during such period by at least two-thirds of the Board members
described in clause (A) who were still in office at the time such election or
nomination was approved by the Board.

        G. Any Options accelerated in connection with the Change in Control
shall remain fully exercisable until the expiration or sooner termination of the
Option term.

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IV. LOANS OR INSTALLMENT PAYMENT

        The Administrator may assist any optionee in the exercise of one or more
outstanding Options under this Article Two by (a) authorizing the extension of a
loan to such optionee from the Company or (b) permitting the optionee to pay the
Option price for the purchased Common Stock in installments over a period of
years. The terms of any loan or installment method of payment (including the
interest rate and terms of repayment) will be established by the Administrator
in its sole discretion. Loans and installment payments may be granted without
security or collateral, but the maximum credit available to the optionee shall
not exceed the sum of (i) the aggregate Option price of the purchased shares
(less the par value) plus (ii) any federal and state income and employment tax
liability incurred by the optionee in connection with the exercise of the
Option.

                                  ARTICLE THREE
                                  MISCELLANEOUS

I. AMENDMENT OF THE PLAN

        A. AGREEMENT OF THE PLAN. The Board may amend or terminate the Plan from
time to time in such respects as the Board may deem advisable.

                Notwithstanding the foregoing, the provisions set forth in
Section II.B. of Article Three (and any other Sections of the Plan that affect
the formula award terms to be specified in this Plan by Rule 16b-3) shall not be
amended more than once every six (6) months, other than to comport with changes
in the Code, the Employee Retirement Income Security Act of 1974, as amended, or
the rule thereunder.

        B. EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination
of the Plan that would impair the rights of any optionee shall not affect
Options already granted to such optionee and such Options shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the optionee and the Board, which agreement
must be in writing and signed by the optionee and the Company.

II. WITHHOLDING TAXES AND TAX WITHHOLDING

        A. WITHHOLDING TAXES. As a condition to the exercise of Options granted
hereunder, the optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option. The Company shall not be required to issue any shares
under the Plan until such obligations are satisfied.

        B. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, optionees may satisfy withholding obligations
as provided in this paragraph. When an optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the optionee may
satisfy the

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withholding tax obligation by one or some combination of the following methods:
(a) by cash payment, or (b) out of optionee's current compensation, or (c) if
permitted by the Administrator, in its discretion, by surrendering to the
Company shares that (i) in the case of shares previously acquired from the
Company, have been owned by the optionee for more than six (6) months on the
date of surrender, and (ii) have a Fair Market Value on the date of surrender
equal to or less than the applicable taxes, or (d) by electing to have the
Company withhold from the shares to be issued upon exercise of the Option that
number of shares having a fair market value equal to the statutory minimum
amount required to be withheld. For this purpose, the fair market value of the
shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined (the "Tax Date").

        Any surrender of previously owned shares to satisfy tax withholding
obligations arising upon exercise of this option must comply with the applicable
provisions of Rule 16b-3.

        All elections by an optionee to have shares withheld to satisfy tax
withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:

                (a) the election must be made on or prior to the applicable Tax
Date;

                (b) once made, the election shall be irrevocable as to the
particular shares of the Option as to which the election is made; and

                (c) all elections shall be subject to the consent or disapproval
of the Administrator.

        In the event the election to have shares withheld is made by an optionee
and the Tax Date is deferred under Section 83 of the Code because no election is
filed under Section 83(b) of the Code, the optionee shall receive the full
number of shares with respect to which the Option is exercised but such optionee
shall be unconditionally obligated to tender back to the Company the proper
number of shares on the Tax Date.

III. EFFECTIVE DATE AND TERM OF PLAN

        The Plan shall become effective upon its adoption by the Board. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section I of this Article Three.

IV. USE OF PROCEEDS

        Any cash proceeds received by the Company from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.

V. REGULATORY APPROVALS

        Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended,

                                       12
<PAGE>   13

the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

        As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.

VI. NO EMPLOYMENT/SERVICE RIGHTS

        Neither the action of the Company in establishing the Plan, nor any
action taken by the Administrator hereunder, nor any provision of the Plan shall
be construed so as to grant any individual the right to remain in the employ or
service of the Company (or any Parent or Subsidiary corporation) for any period
of specific duration, and the Company (or any Parent or Subsidiary corporation
retaining the services of such individual) may terminate such individual's
employment or service at any time and for any reason, with or without cause.

VII. OPTION AGREEMENTS

        Options issued under the Plan shall be evidenced by written Option
agreements in such form as the Board shall from time to time approve.

VIII. RESERVATION OF SHARES

        The Company, during the term of this Plan, will at all times reserve and
keep available such number of shares as shall be sufficient to satisfy the
requirements of the Plan. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such shares as to which such requisite authority shall not have
been obtained.

                                       13<PAGE>   1

                                                                   EXHIBIT 10.32

                             ENDOSONICS CORPORATION

                       NONSTATUTORY STOCK OPTION AGREEMENT

        AGREEMENT made this 8th day of November 1999 by and between EndoSonics
Corporation, a corporation organized and existing under the laws of the State of
Delaware (the "Company"), and Robrecht L. W. Michiels (the "Optionee").

                                    RECITALS

        A. The Company's Board of Directors (the "Board") has entered into this
Nonstatutory Stock Option Agreement (the "Agreement") for the purpose of
attracting and retaining the services of Optionee who is in a position to
contribute to the management, growth and financial success of the Company or its
parent or subsidiary corporations.

        B. The granted option is intended to be a Nonstatutory stock option
which does not satisfy the requirements of Section 422 of the Internal Revenue
Code.

        C. For purposes of this Agreement, the following definitions shall be in
effect:

                "Affiliate" shall mean an entity other than a Subsidiary in
        which the Company owns an equity interest.

                "Board" shall mean the board of directors of the Company.

                "Code" shall mean the Internal Revenue Code of 1986, as amended.

                "Common Stock" shall mean the common stock of the Company, par
        value $.001 per share.

                "Continuous Status as an Employee" shall mean the absence of any
        interruption or termination of service as an Employee. Continuous Status
        as an Employee shall not be considered interrupted in the case of sick
        leave, military leave, or any other leave of absence approved by the
        Board, provided that such leave is for a period of not more than 90 days
        or reemployment upon the expiration of such leave is guaranteed by
        contract or stature.

                "Employee" shall mean any person (including the Optionee)
        employed by the Company or any Parent, Subsidiary or Affiliate of the
        Company. The Optionee shall be deemed an Employee until the Optionee's
        employment is terminated by either the Company or the Optionee.

                "Exchange Act" shall mean the Securities Exchange Act of 1934,
        as amended.

<PAGE>   2

                "Fair Market Value" shall mean the fair market value per share
        of Common Stock on any date in question shall be determined in
        accordance with the following provisions:

                        (i) If the Common Stock is not at the time listed or
                admitted to trading on any stock exchange but is traded on the
                Nasdaq National Market, then the market value shall be the
                closing selling price per share of Common Stock on the date in
                question, as such prices are reported by the National
                Association of Securities Dealers on the Nasdaq National Market
                or any successor system. If there is no reported closing selling
                price on the date in question, then the closing selling price on
                the last preceding date for which such quotation exists shall be
                determinative of fair market value.

                        (ii) If the Common Stock is at the time listed or
                admitted to trading on any stock exchange, then the fair market
                value shall be the closing selling price per share of Common
                Stock on the date in question on the stock exchange serving as
                the primary market for the Common Stock, as such price is
                officially quoted in the composite tape of transactions on such
                exchange. If there is no reported sale of Common Stock on such
                exchange on the date in question, then the fair market value
                shall be the closing selling price on the exchange on the last
                preceding date for which such quotation exists.

                        (iii) In the absence of an established market for the
                Common Stock, the Fair Market Value thereof shall be determined
                in good faith by the Board.

                "Option" shall mean a non-qualified stock option granted
        pursuant to this Agreement.

                "Parent" shall mean a "parent corporation," whether now or
        hereafter existing, as defined in Section 424(e) of the Code.

                "Subsidiary" shall mean a "subsidiary corporation," whether now
        or hereafter existing, as defined in Section 424(f) of the Code.

                                      TERMS

        1. RESERVATION OF SHARES. The stock issuable under this Agreement shall
be shares of authorized but unissued Common Stock. The Company, shall, until the
Expiration Date, reserve and keep available such number of shares of Common
Stock as shall be sufficient to satisfy the requirements of this Agreement. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any shares of Common Stock hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained.

        2. GRANT OF OPTION. Pursuant to the provisions of this paragraph set
forth below, there is hereby granted to the Optionee, on the date first written
above (the "Grant Date"), an Option to purchase up to 40,000 shares of Common
Stock (the "Option Shares") upon the

                                       2
<PAGE>   3

terms and conditions set forth in this Agreement. The Option Shares shall be
purchasable in accordance with such terms and conditions at the purchase price
of $3.50 per share (the "Option Price").

        The terms of the Option granted under this Agreement shall be as
follows:

                A. the Option shall be exercisable only while the Employee
remains an employee of the Company, except as otherwise set forth below;

                B. the Option shall be come exercisable in installments
cumulatively as to 25% of the shares subject to the Option on each of the first,
second, third and fourth anniversary of the date of the grant of the Option.

        3. OPTION TERM. The Option shall have a maximum term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on November 8, 2009 (the "Expiration Date"), unless sooner terminated
in accordance with this Agreement.

        4. LIMITED TRANSFERABILITY. The Option shall not be transferable or
assignable by the Optionee except for a transfer of the Option by will or by the
laws of inheritance following the Optionee's death. Accordingly, the Option may
be exercised, during the Optionee's lifetime, only by the Optionee. Any attempt
to assign, pledge, transfer, and hypothecate or otherwise dispose of the Option,
and any levy of execution, attachment or similar process on the Option, shall be
null and void.

        5. EXERCISE OF OPTIONS.

        A. Except as provided in this paragraph and Paragraph 5.B below, the
Option shall become exercisable for the Option Shares in a series of
installments as follows:

                (i) The Option shall become exercisable for twenty-five percent
        (25%) of the Option Shares upon the Optionee's completion of twelve (12)
        months of continuous service as an Employee measured from the Grant
        Date.

                (ii) One forty-eighth (1/48th) of the total number of Option
        Shares shall become exercisable on each monthly anniversary of the Grant
        Date thereafter, while the Optionee remains an employee of, or
        consultant to, the Company.

        B. Once the Option becomes exercisable for one or more installments of
the Option Shares, those installments shall accumulate, and the Option shall
remain exercisable for the accumulated installments until the Expiration Date or
sooner termination of the option term under Paragraph 6 or Paragraph 8.A of this
Agreement.

        C. The Option shall not become exercisable for any additional Option
Shares following the Optionee's cessation of service as an Employee.

                                       3
<PAGE>   4

        6. TERMINATION OF EMPLOYMENT. Should the Optionee's service as an
Employee terminate while the Option remains outstanding, then the option term
specified in Paragraph 3 of this Agreement shall terminate (and this Option
shall cease to be exercisable) prior to the Expiration Date in accordance with
the following provisions.

                (i) Should the Optionee cease service as an Employee for any
        reason (other than death) while holding the Option, then the period for
        exercising the Option shall be reduced to the three (3)-month period
        commencing with the date of such cessation of service. During such
        limited period of exercisability, the Option may not be exercised for
        more than the number of Option Shares (if any) for which it is
        exercisable on the date the Optionee ceased service as an Employee. Upon
        the expiration of such three (3)-month period, the Option shall
        terminate and cease to be outstanding.

                (ii) Should the Optionee die either while serving as an Employee
        or during the three (3)-month period following the cessation of service
        as an Employee, then the personal representative of the Optionee's
        estate (or the person or persons to whom the Option is transferred
        pursuant to the Optionee's will or in accordance with the laws of
        inheritance) shall have the right to exercise the Option for any or all
        of the Option Shares for which the Option is exercisable on the date the
        Optionee ceased service as an Employee, less any Option Shares
        subsequently purchased by the Optionee prior to death. Such right shall
        lapse, and the Option shall cease to be outstanding, upon the expiration
        of the twelve (12)-month period measured from the date of the Optionee's
        death.

                (iii) In no event may the Option be exercised at any time after
        the specified Expiration Date.

                (iv) Upon the Optionee's termination of employment for any
        reason, the Option shall immediately terminate and cease to be
        outstanding with respect to any and all Option Shares for which the
        Option is not otherwise at that time exercisable in accordance with the
        normal exercise provisions of Paragraph 5.A or the special acceleration
        provisions of Paragraph 8 of this agreement.

                (v) The Board shall have full power and authority to extend the
        period of time for which the Option is to remain exercisable following
        the Optionee's termination of Continuous Status as an Employee or death
        from the limited period in effect under this Paragraph 6 to such greater
        period of time as the Board shall deem appropriate; provided, however,
        that in no event shall such Option be exercisable after the Expiration
        Date.

                (vi) The Board shall have complete discretion, exercisable
        either on the date first written above or at any time while the Option
        remains outstanding, to permit the Option to be exercised, during the
        limited period of exercisability provided under this Paragraph 6, not
        only with respect to the number of shares for which the Option is
        exercisable at the time of Optionee's

                                       4
<PAGE>   5

        termination of Continuous Status as an Employee but also with respect to
        one or more subsequent installments of purchasable shares for which the
        Option would otherwise have been exercisable had such termination not
        occurred.

        7. ADJUSTMENT IN OPTION SHARES. If any change is made to the company's
outstanding Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, appropriate adjustments shall automatically be made to the
class and/or number of securities subject to the Option and the Option Price
payable per share in order to reflect such transaction or change and thereby
preclude the dilution or enlargement of benefits hereunder.

        8. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER.

        A. In the event of any of the following stockholder-approved
transactions (a "Corporate Transaction"):

                (i) A merger or consolidation in which the Company is not the
        surviving entity, except for a transaction the principal purpose of
        which is to change the State of the Company's incorporation,

                (ii) The sale, transfer or other disposition of all or
        substantially all of the assets of the Company, or

                (iii) Any reverse merger in which the Company is the surviving
        entity but in which fifty percent (50%) or more of the Company's
        outstanding voting stock is transferred to holders different from those
        who held the stock immediately prior to such merger,

        The Option (if outstanding at the time but not otherwise fully
exercisable) shall automatically accelerate so that the Option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become fully exercisable for all of the Option Shares and may be exercised for
all or any portion of such shares. However, the Option shall not so accelerate
if and to the extent: (i) the Option is, in connection with the Corporate
Transaction, either to be assumed by the successor corporation or parent thereof
or be replaced with a comparable option to purchase shares of the capital stock
of the successor corporation or parent thereof, or (ii) the Option is to be
replaced with a cash incentive program of the successor corporation based on the
option spread at the time of the Corporate Transaction. The determination of
option comparability under clause (i) above shall be made by the Board, and its
determination shall be final, binding and conclusive.

        For purposes of this Paragraph 8 the Option shall be considered
"assumed," without limitation, if, at the time of issuance of the stock or other
consideration upon such merger or sale of assets, the Optionee would be entitled
to receive upon exercise of the Option the same number and kind of shares of
stock or the same amount of property, cash or securities as the Optionee would
have been entitled to receive upon the occurrence of such

                                       5
<PAGE>   6

transaction if the Optionee had been, immediately prior to such transaction, the
holder of the number of shares of Common Stock covered by the Option at such
time (after giving effect to any adjustments in the number of shares of Common
Stock covered by the Option as provided for in Paragraph 7 above).

        B. Immediately following the consummation of the Corporate Transaction,
the Option shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation or its parent company.

        C. Should there occur any Change in Control of the Company, then the
Option (if outstanding at the time but not otherwise fully exercisable) shall
automatically accelerate so that the Option shall, immediately prior to the
specified effective date for the Change in Control, become fully exercisable for
all the Option Shares and may be exercised for all or any portion of such shares
at any time prior to the Expiration Date or sooner termination of the option
term under Paragraph 6 or Paragraph 8.A of this Agreement. For purposes of this
Agreement, a "Change in Control" shall be deemed to occur in the event:

                (i) Any person or related group of persons (other than the
        Company or a person that directly or indirectly controls, is controlled
        by, or is under common control with the Company) directly or indirectly
        acquires beneficial ownership (within the meaning of Rule 13d-3 of the
        Securities Exchange Act of 1934, as amended (the "1934 Act") of
        securities possessing more than twenty-five percent (25%) of the total
        combined voting power of the Company's outstanding securities pursuant
        to a tender or exchange offer which the Board does not recommend the
        Company's stock holders to accept; or

                (ii) There is a change in the composition of the Board over a
        period of twenty-four (24) consecutive months or less such that a
        majority of the Board members (rounded up to the next whole number)
        ceases, by reason of one or more proxy contests for the election of
        Board members, to be comprised of individuals who either (A) have been
        Board members continuously since the beginning of such period or (B)
        have been elected or nominated for election as Board members during such
        period by at least two-thirds of the board members described in clause
        (A) who were still in office at the time such election or nomination was
        approved by the Board.

        D. If the Option is accelerated in connection with the Change in
Control, the Option shall remain fully exercisable until the expiration or
sooner termination of the Option term.

        E. Should a Hostile Take-Over of the Company occur at any time after the
Option has been outstanding for a period of at least six (6) months measured
from the Grant Date, then the Option (if outstanding at the time) shall
automatically be canceled upon the effective date of such Hostile Take-Over, and
the Optionee shall, in exchange, receive a cash distribution from the Company.
Such distribution shall be in an amount equal to the excess of (i) the Take-Over
Price of the shares of Common Stock at the time subject to the Option (whether
or

                                       6
<PAGE>   7

not the Option is otherwise at the time exercisable for such shares) over (ii)
the aggregate Option Price payable for such shares. The cancellation of the
Option and the cash distribution to be paid in connection therewith is hereby
pre-approved by the Board. Accordingly, the cash distribution shall be made to
the Optionee within five (5) days following the effective date of the Hostile
Take-Over, and no further consent of the Board shall be required at the time of
the actual cancellation and cash distribution. For purposes of this Paragraph
8.E, the following definitional provisions shall be in effect:

                (i) A "Hostile Take-Over" shall be deemed to occur in the event
        (a) any person or related group of persons (other than the Company or a
        person that directly or indirectly controls, is controlled by, or is
        under common control with, the Company) directly or indirectly acquires
        beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act)
        of securities possessing more than fifty percent (50%) of the total
        combined voting power of the Company's outstanding securities pursuant
        to a tender or exchange offer which the Board does not recommend the
        Company's stockholders to accept and (b) more than fifty percent (50%)
        of the securities so acquired in such tender or exchange offer are
        accepted from holders other than Company officers and directors
        participating in the Plan.

                (ii) The "Take-Over Price" per share shall be deemed to be equal
        to the greater of (a) the Fair Market Value per share of Common Stock on
        the date of cancellation of the Option or (b) the highest reported price
        per share paid in effecting the Hostile Take-Over.

        F. The Option granted pursuant to this Agreement shall not in any way
affect the right of the Company to adjust, reclassify, reorganize or otherwise
make changes in its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.

        G. If the Option is assumed in connection with a Corporate Transaction
or is otherwise to continue, then the Option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and class
of securities which would have been issuable, in consummation of such Corporate
Transaction, to an actual holder of the same number of shares of Common Stock as
are subject to the Option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option Price, provided the
aggregate Option Price shall remain the same.

        H. The Board shall have the discretionary authority, exercisable at any
time while the Option remains outstanding, to provide for the automatic
acceleration of the Option upon the occurrence of a Change in Control. The Board
shall also have full power and authority to condition any such option
acceleration upon the subsequent termination of the Optionee's Continuous Status
as an Employee within a specified period following the Change in Control.

        9. PRIVILEGE OF STOCK OWNERSHIP. The Optionee shall not have any
stockholder rights with respect to the Option Shares until such individual shall
have exercised the Option and paid the Option Price for the purchased shares.

                                       7
<PAGE>   8

        10. MANNER OF EXERCISING OPTION.

        A. In order to exercise the Option for one or more Option Shares for
which the Option is at the time exercisable, the Optionee (or in the case of
exercise after the Optionee's death, the Optionee's executor, administrator,
heir or legatee, as the case may be) must take the following actions:

                (i) Execute and deliver to the Secretary of the Company a
        written notice of exercise (the "Exercise Notice"), in substantially the
        form of Exhibit I attached hereto, in which there is specified the
        number of Option Shares for which the Option is exercised.

                (ii) Pay the aggregate Option Price for the purchased shares in
        one or more of the following alternative forms:

                        (a) full payment in cash or check made payable to the
                Company's order;

                        (b) full payment in shares of Common Stock held by the
                Optionee for the requisite period necessary to avoid a charge to
                the Company's earnings for financial reporting purposes and
                valued at Fair Market Value on the Exercise Date;

                        (c) full payment through a broker-dealer sale and
                remittance procedure pursuant to which the Optionee shall
                provide irrevocable written instructions (1) to a designated
                brokerage firm to effect the immediate sale of the purchased
                shares and remit to the Company, out of the sale proceeds
                available on the settlement date, sufficient funds to cover the
                aggregate Option Price payable for the purchased shares and (2)
                to the Company to deliver the certificates for the purchased
                shares directly to such brokerage firm in order to complete the
                sale transaction.

                (iii) Furnish to the Company appropriate documentation that the
        person or persons exercising the Option (if other than the Optionee)
        have the right to exercise the Option.

                (iv) Execute and deliver to the Company such representations and
        documents as the Board, in its absolute discretion, deems necessary or
        advisable to effect compliance with all applicable provisions of the
        Securities Act of 1933, as amended, and any other federal or state
        securities laws or regulations. The Board may, in its absolute
        discretion, also take whatever additional actions it deems appropriate
        to effect such compliance including, without limitation, placing legends
        on share certificates and issuing stop-transfer notices to agents and
        registrars.

        B. For purposes of this Agreement, the Exercise Date shall be the date
on which the Exercise Notice shall have been delivered to the Company. Except to
the extent the

                                       8
<PAGE>   9

sale and remittance procedure specified above may be utilized in connection with
the exercise of the Option, payment of the Option Price for the purchased shares
must accompany such notice.

        C. As soon as practical after the exercise of the Option in accordance
with the provisions of this Agreement, the Company shall mail or deliver to or
on behalf of the Optionee (or to the other person or persons exercising the
Option) a stock certificate representing the purchased shares.

        11. WITHHOLDING TAXES. As a condition to the exercise of the Option
granted hereunder, the Optionee shall make such arrangements as the Board may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of the Option. The company shall not be required to issue any shares
under this Agreement until such obligations are satisfied.

        12. LEGALITY OF ISSUANCE. Option Shares shall be issued pursuant to the
exercise of an Option and the issuance and delivery of such shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.

        As a condition to the exercise of the Option, the Company may require
the Optionee (or such other person permitted to exercise the Option) to
represent and warrant at the time of any such exercise that the shares are being
purchased only for investment and without any present intention to sell or
distribute any such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.

        13. NO EMPLOYMENT RIGHTS. Neither the action of the Company in entering
into this Agreement, nor any action taken by the Board hereunder, nor any
provision of this Agreement shall be construed so as to grant the Optionee the
right to remain in the employ or service of the Company (or any Parent or
Subsidiary corporation) for any period of specific duration, and the Company (or
any Parent or Subsidiary corporation retaining the services of the Optionee) may
terminate the Optionee's employment or service at any time and for any reason,
with or without cause.

        14. USE OF PROCEEDS. Any cash proceeds received by the Company from the
sale of shares pursuant to the Option granted pursuant to this Agreement shall
be used for general corporate purposes.

        15. BINDING EFFECT. Subject to the limitations set forth in Paragraph 4
of this Agreement, this Agreement shall be binding upon, and shall inure to the
benefit of, (i) the executors, administrators, heirs, legal representatives and
assigns of the Optionee and (ii) the successors and assigns of the Company.

                                       9
<PAGE>   10

        16. NO IMPAIRMENT OF RIGHTS. Nothing in this Agreement or in the Plan
shall be deemed to impair or otherwise restrict the rights of the Company or the
stockholders to remove the Optionee from the Board at any time pursuant to the
provisions of applicable law.

        17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed within the State of California by
residents of such State.

        18. NOTICES. All notices and other communications under this Agreement
shall be in writing. Unless and until the Optionee is notified in writing to the
contrary, all notices, communications and documents directed to the Company and
related to this Agreement, if not delivered by hand, shall be mailed, addressed
as follows:

                             EndoSonics Corporation
                             2870 Kilgore Road
                             Rancho Cordova, CA 95670

        Unless and until the Company is notified in writing to the contrary, all
notices, communications and documents intended for the Optionee and related to
this Agreement, if not delivered by hand, shall be mailed to the Optionee's last
known address as shown on the Company's books.

        Notices and communications shall be mailed by first class mail, postage
prepaid; documents shall be mailed by registered mail, return receipt requested,
postage prepaid. All mailings and deliveries related to this Agreement shall be
deemed received only when actually received, unless properly mailed by
registered mail, return receipt requested, in which event they shall be deemed
received two (2) days after the date of mailing.

        19. CONSTRUCTION. The Option evidenced hereby is issued pursuant to this
Agreement and shall be subject to the express terms and provisions of this
Agreement applicable to such automatic grants.

                            (Signature Page Follows)

                                       10
<PAGE>   11

        IN WITNESS WHEREOF, EndoSonics Corporation has caused this Agreement to
be executed on its behalf by its duly-authorized officer and the Optionee has
executed this Agreement, all on the day and year first above written.

                                        COMPANY:

                                        ENDOSONICS CORPORATION

                                        By: /s/ Reinhard J. Warnking
                                           -------------------------------------
                                           President and Chief Executive Officer

                                        OPTIONEE:

                                        /s/ Robrecht L.W. Michiels
                                        ----------------------------------------
                                        ROBRECHT L. W. MICHIELS

                                        Address:
                                                --------------------------------

                                        ----------------------------------------

                                       11
<PAGE>   12

                                    EXHIBIT I

                       NOTICE OF EXERCISE OF STOCK OPTION

        I hereby notify EndoSonics Corporation (the "Company") that I elect to
purchase ______ shares of the Company's Common Stock (the "Purchased Shares")
pursuant to that certain option (the "Option") granted to me on November 8, 1999
to purchase up to ________ shares of such Common Stock at an option price of
$3.50 per share (the "Option Price").

        Concurrently with the delivery of this Exercise Notice to the Secretary
of the Company, I shall pay to the Company the Option Price for the Purchased
Shares in accordance with the provisions of my agreement with the Company
evidencing the Option and shall deliver whatever additional documents may be
required by such agreement as a condition for exercise. Alternatively, I may
utilize the special broker/dealer sale and remittance procedure specified in my
agreement to effect payment of the option price for the purchased shares.

---------------------                       --------------------------------
Date                                        Optionee

                                Address:
                                            ------------------------------------

                                            ------------------------------------

        Print name in exact manner
        it is to appear on the
        stock certificate:

                                            ------------------------------------

                                            ------------------------------------

        Address to which certificate
        is to be sent, if different
        from address above:

                                            ------------------------------------

                                            ------------------------------------

        Social Security Number:
                                            ------------------------------------

                                       12

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