EXHIBIT 4
SENSORMEDICS CORPORATION
1984 Stock Option Plan
(as Restated through May 1, 1995)
Section 1. Description of Plan. This is the 1984
Stock Option Plan (as restated through May 1, 1995) (the "Plan"),
of SensorMedics Corporation, a California corporation (the
"Company"). Under this Plan, key employees of the Company or of
any present and future subsidiaries of the Company to be selected
as below set forth, may be granted options ("Options") to
purchase shares of the common stock, without par value, of the
Company ("Common Stock"). For purposes of this Plan, the term
"subsidiary" means any corporation 50% or more of the voting
stock of which is owned by the Company or by a subsidiary (as so
defined) of the Company. It is intended that the Options under
this Plan will either qualify for treatment as incentive stock
options under Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code"), and be designated Incentive Stock
Options,or not qualify for such treatment and be designated
Nonqualified Stock Options.
Section 2. Purpose of Plan. The purpose of this Plan
and of granting Options to specified employees is to further the
growth, development and financial success of the Company and its
subsidiaries by providing additional incentives to certain key
employees holding responsible positions by assisting them to
acquire shares of Common Stock and to benefit directly from the
Company's growth, development and financial success.
Section 3. Eligibility. The persons who shall be
eligible to receive grants of Options under this Plan shall be
the officers and key employees of the Company or any of its
subsidiaries, and those directors of the Company who are also key
employees. A person who holds an Option is herein referred to as
an "Optionee." More than one Option may be granted to any one
Optionee. Notwithstanding the foregoing, the Board of Directors
of the Company (the "Board") may at any time or from time to time
designate one or more Directors as ineligible for selection as
participants in this Plan.
The aggregate fair market value (determined as of the time
an Option is granted) of the Common Stock for which any Optionee
may exercise such Optionee's Incentive Stock Options in any
calendar year under this Plan and any other incentive stock
option plans (which qualify under Section 244A of the Code) of
the Company or any subsidiary shall not exceed $100,000.
Section 4. Administration. The Plan shall be
administered by a committee (the "Option Committee") to be
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composed of not less than three members of the Board who are not
officers or employees of the Company or its subsidiaries,
selected by and serving at the pleasure of the Board. The Option
Committee shall meet at such times and places as it determines
and may meet through a telephone conference call. A majority of
its members shall constitute a quorum, and the decision of a
majority of those present at any meeting at which a quorum is
present shall constitute the decision of the Option Committee.
A memorandum signed by all of its members shall constitute
the decision of the Option Committee without necessity, in such
event, for holding an actual meeting.
The Option Committee is authorized and empowered to
administer the Plan and, subject to the Plan (i) to select the
Optionees, to specify the number of shares of Common Stock with
respect to which Options are granted to each Optionee, to specify
the Option Price and the terms of the Options, and in general to
grant Options; (ii) to determine the dates upon which Options
shall be granted and the terms and conditions thereof in a manner
consistent with this Plan, which terms and conditions need not be
identical as to the various Options granted; (iii) to interpret
the Plan; (iv) to prescribe, amend and rescind rules relating to
the Plan; (v) to accelerate the time during which an Option may
be exercised, notwithstanding the provisions of the Option
Agreement (as defined in Section 12) stating the time during
which it may be exercised; (vi) to accelerate the date by which
any unexercised but vested portion of an Option terminates,
thereby requiring the Optionee to exercise the vested unexercised
portion of such Option or forfeit it, but in no event shall such
date be less than two weeks later than the date the Optionee is
informed of such acceleration; (vii) to permit the continued
vesting of Options in accordance with the terms of the applicable
Option Agreement or on an accelerated basis upon the Optionee's
termination of employment; (viii) to determine, subject to
Sections 3 and 6 hereof, whether Options will be Incentive Stock
Options or Nonqualified Stock Options; and (ix) to determine the
rights and obligations of participants under the Plan. The
interpretation and construction by the Option Committee of any
provision of the Plan or of any Option granted under it shall be
final. No member of the Option Committee shall be liable for any
action or determination made in good faith with respect to the
Plan or any Option granted under it.
Section 5. Shares Subject to the Plan. The aggregate
number of shares of Common Stock which may be purchased pursuant
to the exercise of Options granted under the Plan shall not
exceed _________ shares, subject to adjustment as provided in
Section 10 hereof to reflect all stock splits, stock dividends or
similar capital changes. Upon the expiration or termination for
any reason of an outstanding Option which shall not have been
exercised in full, any shares of Common Stock then remaining
unissued which shall have been reserved for issuance upon such
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exercise shall again become available for the granting of
additional Options under the Plan. No shares deliverable to the
Company in full or partial payment of an Option exercise price
payable pursuant to Section 7 hereof shall become available for
the grant of other Options under the Plan.
Section 6. Option Price. Except as provided in Section
11, the purchase price per share (the "Option Price") of the
shares of Common Stock underlying each Option shall be not less
than the fair market value of such shares on the date of granting
of the Option; provided, however, that if an Option is granted to
an Optionee who is a 10% shareholder of the Company as described
in Code Section 422A(b)(6) at the time such Option is granted,
the Option Price shall be not less than 110% of said fair market
value. Such fair market value shall be determined by the Option
Committee on the basis of the reported closing price on such date
or, in the absence of a reported closing sales price on such
date, on the basis of the average of the reported closing bid and
asked prices on such date. In the absence of either a reported
closing sales price or reported bid and asked prices, the Option
Committee shall determine such market value on the basis of the
best available evidence.
Section 7. Exercise of Options. Subject to all other
provisions of this Plan, each Option shall be exercisable for the
full number of shares of Common Stock subject thereto, or any
part thereof, in such installments and at such intervals as the
Option Committee may determine in granting such Option, provided
that (a) each Option shall become fully exercisable no later than
five years from the date the Option is granted, (b) the number of
shares of Common stock subject to each Option shall become
exercisable at the rate of at least 20% per year each year until
the Option is fully exercisable, and (c) no Option may be
exercisable subsequent to its termination date. Options granted
to an Optionee shall be exercisable without regard to whether
such Optionee holds any other Options under the Plan. Each
Option shall terminate and expire, and shall no longer be subject
to exercise, as the Option Committee may determine in granting
such Option, but in no event shall an Option be granted for a
period in excess of those specified in the first sentence of
Section 14 hereof. The Option shall be exercised by the Optionee
by giving written notice to the Company specifying the number of
shares to be purchased and accompanied by payment of the full
purchase price therefor in cash, by check or in such other form
of lawful consideration as the Board may approve from time to
time, including, without limitation and in the sole discretion of
the Board, the assignment and transfer by the Optionee to the
Company of outstanding shares of the Company's Common Stock
theretofore held by the Optionee in a manner intended to comply
with the provisions of Rule 16b-3 under the Securities and
Exchange Act of 1934, as amended.
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Section 8. Issuance of Common Stock. The Company's
obligation to issue shares of its Common Stock upon exercise of
an Option granted under the Plan is expressly conditioned upon
the completion by the Company of any registration or other
qualification of such shares under any state and/or federal law
or rulings or regulations or the making of such investment or
other representations and undertakings by the Optionee (or his or
her legal representative, heir or legatee, as the case may be) in
order to comply with the requirements of any exemption from any
such registration or other qualification of such shares which the
Company in its sole discretion shall deem necessary or advisable.
Such required representations and undertakings may include
representations and agreements that such Optionee (or his or her
legal representative, heir or legatee): (a) is purchasing such
shares for investment and not with any present intention of
selling or otherwise disposing thereof; and (b) agrees to have a
legend placed upon the face and reverse of any certificates
evidencing such shares (or, if applicable, an appropriate data
entry made in the ownership records of the Company) setting forth
(i) any representations and undertakings which such Optionee has
given to the Company or a reference thereto, and (ii) that, prior
to effecting any sale or other disposition of any such shares,
the Optionee must furnish to the Company an opinion of counsel,
satisfactory to the Company and its counsel, to the effect that
such sale or disposition will not violate the applicable
requirements of state and federal laws and regulatory agencies.
The Company will make a reasonable good faith effort to comply
with such state and/or federal laws,rulings or regulations as may
be applicable at the time the Optionee (or his or her legal
representative, heir or legatee, as the case may be) wishes to
exercise an Option, provided that the Optionee (or his or her
legal representative, heir or legatee) also makes a reasonable
good faith effort to comply with said laws,rulings and
regulations; however, there can be no assurance that either the
Company or the Optionee (or is or her legal representative, heir
or legatee), each in the respective exercise of their reasonable
good faith business judgment, will in fact comply with said laws,
rulings and regulations.
Section 9. Nontransferability. No Option shall be
assignable or transferable, except that an Option may be
transferable by will or by the laws of descent and distribution
provided such Option explicitly so provides or pursuant to a
qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act, or the
rules thereunder. During the lifetime of an Optionee, any Option
granted to him or her shall be exercisable only by him or her or
such Optionee's former spouse, if transferred in accordance with
the foregoing sentence. After the death of an Optionee, the
Option granted to him or her (if so transferable) may be
exercised, prior to its termination, only by his or her legal
representative, his or her legatee or a person who acquired the
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right to exercise the Option by reason of the death of the
Optionee or otherwise in accordance with this Section 9.
Section 10. Recapitalization, Reorganization, Merger or
Consolidation. If the outstanding shares of Common Stock of the
Company are increased, decreased or exchanged for different
securities through reorganization, merger, consolidation,
recapitalization, reclassification, stock split, stock dividend
or like capital adjustment,a proportionate adjustment shall be
made (a) in the aggregate number of shares of Common Stock which
may be purchased pursuant to the exercise of Options granted
under the Plan, as provided in Section 5, and (b) in the number,
price and kind of shares subject to any outstanding Option
granted under the Plan.
Upon the dissolution or liquidation of the Company or upon
any reorganization, merger or consolidation in which the Company
does not survive, the Plan and each outstanding Option shall
terminate; provided that the Company will give written notice
thereof to each Optionee at least 30 days prior to the date of
such dissolution, liquidation, reorganization, merger or
consolidation in which the Company does not survive, and in such
event (a) each Optionee who is not tendered an option by the
surviving corporation in accordance with all of the terms of
provision (b) immediately below, or who does not accept any such
substituted option which is so tendered, shall have the right
until ten days before the effective date of such dissolution,
liquidation, reorganization, merger or consolidation in which the
Company is not the surviving corporation, to exercise, in whole
or in part, any unexpired Option or Options issued to him or her
which said Optionee is then capable of exercising pursuant to the
installments provisions of said Option and of Section 7 of the
Plan; provided, however, that should the Option Committee so
elect in its sole and absolute discretion, said Optionee may be
given the right to surrender such Option or Options to the
Company for a price (which may be payable, in the sole discretion
of the Option Committee, in cash or in securities of the Company
or in a combination of both), equal to the difference between the
aggregate exercise price of that portion of the Option or Options
which the Optionee is then capable of exercising pursuant to the
installment provisions of said Option and of Section 7 of the
Plan and the aggregate fair market value (as determined in the
manner provided in Section 6 above) of the shares subject to such
vested portion of the Option or Options on the date one day
before the effective date of such dissolution, liquidation,
reorganization, merger or consolidation; or (b) in its sole and
absolute discretion, the surviving corporation may, but shall not
be so obligated, tender to any Optionee an option or options to
purchase shares of the surviving corporation, and such new option
or options shall contain such terms and provisions as shall be
required to substantially preserve the rights and benefits of any
Option then outstanding under the Plan.
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To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustment shall be made by
the Board, whose determination in that respect shall be final,
binding and conclusive. Except as hereinbefore expressly
provided in this Section 10, (a) the Optionee shall have no
rights by reason or any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of
any class, and (b) the number or price of shares of Common Stock
subject to any Option shall not be affected by,and no adjustment
shall be made by reason of, any dissolution, liquidation,
reorganization, merger or consolidation, or any issuance by the
Company of shares of stock of any class, or rights to purchase or
subscribe for stock of any class, or securities convertible into
shares of stock of any class.
The grant of an Option under the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications or changes in its capital or business
structures or to merger, consolidate, dissolve or liquidate or to
sell or transfer all or any part of its business or assets.
Section 11. Substitute Options. If the Company at any
time should succeed to the business of another corporation
through a merger or consolidation, or through the acquisition of
stock or assets of such corporation, Options may be granted under
the Plan to those employee of such corporation or its
subsidiaries who, in connection with such succession, become
employees of the Company or its subsidiaries, in substitution for
options to purchase stock of such corporation held by them at the
time of succession. The Option Committee shall in its sole and
absolute discretion determine the extent to which such substitute
Options shall be granted (if at all), the person or persons to
receive such substitute Options (who need not all optionees of
such corporation), the number and type of Options to be received
by each such person, the Option Price of such Option (which may
be determined without regard to Section 6) and the terms and
conditions of such substitute Options; provided, however, that
the Option Price of each such substituted Option shall be an
amount such that, in the sole and absolute judgment of the Option
Committee and, if the Options to be granted are Incentive Stock
Options, in compliance with Section 425(a) of the Code, the
economic benefit provided by such Option is not greater than the
economic benefit represented by the option in the acquired
corporation as of the date of the Company's acquisition of such
corporation. Any Option substituted for another option in
accordance with this Section 11 will expire upon the expiration
date of such other option (or ten years from the date such Option
is granted in the case of an Incentive Stock Option, if
earlier,or ten years and one week in the case of a Nonqualified
Stock Option, if earlier), and, notwithstanding the provisions of
Section 7 hereof, will be exercisable during the period in which
the option would have been exercisable. Notwithstanding anything
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to the contrary herein, no Options shall be granted, nor any
action taken, permitted or omitted, which would cause the Plan,
or any Options granted hereunder as to which Rule 16b-3 under the
Securities Exchange Act of 1934, as amended, may apply, not to
comply with such Rule.
Section 12. Option Agreement. Each Option granted
under the Plan shall be evidenced by a written stock option
agreement executed by the Company and accepted by the Optionee,
which (a) shall contain each of the provisions and agreements
herein specifically required to be contained therein, (b) shall
indicate whether such Option is to be an Incentive Stock Option
or a Nonqualified Stock Option, and if it is to be an Incentive
Stock Option such agreement shall contain terms and conditions
permitting such Option to qualify for treatment as an incentive
stock option under Section 422A of the Code, (c) in the case of
Optionees who are reporting persons under Section 16 of the
Securities Exchange Act of 1934, as amended, and the regulations
promulgated thereunder, may contain the agreement of the Optionee
not to dispose of the Option or any Common Stock received upon
exercise of the Option for at least six months from the date of
the Option grant, (d) may contain the agreement of the Optionee
to remain in the employ of, and to render services to, the
Company or any of its subsidiaries for a period of one year from
the date of the Option, but such agreement shall not impose upon
the Company or any of its subsidiaries any obligation to retain
the Optionee in their employ for any period whatever, (e) may
contain the agreement of the Optionee to resell any Common Stock
issued pursuant to the exercise of Options granted under the Plan
to the Company for the Option Price of such Options, and (f) may
contain such other terms and conditions as the Option Committee
deems desirable and which are not inconsistent with the Plan.
The respective stock option agreements evidencing Option grants
under the Plan need not be identical.
Section 13. Rights as a Shareholder. An Optionee or a
transferee of an Option shall have no rights as a shareholder
with respect to any shares covered by this Option until exercise
thereof except that each Optionee shall have the right to receive
a copy of the Company's audited financial statements no later
than 120 days following the end of each fiscal year of the
Company. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior
to the exercise date, except as expressly provided in Section 10.
Section 14. Termination of Options. Each Option
Agreement representing an Option granted under the Plan shall set
forth a termination date, which, for an Incentive Stock Option,
shall be not later than ten years from the date such Incentive
Stock Option is granted and which, for a Nonqualified Stock
Option, shall be not later than ten years and one week from the
date such Nonqualified Stock Option is granted; provided,
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however, that if the Option is an Incentive Stock Option and if
the Optionee is a 10% shareholder of the Company (as described in
Section 422A(b)(6) of the Code) at the time such Option is
granted, then the Option shall terminate no later than five years
form the date of the grant thereof. In any event, subject to
clause (vii) of the second paragraph of Section 4 hereof, all
Options shall terminate and expire upon the first to occur of the
following events:
(a) the expiration of three months from the
date of an Optionee's termination of employment by the Company or
any of its subsidiaries (other than by reason of death), except
that if an Optionee is then disabled (within the meaning of
Section 105(d)(4) of the Code), the expiration of one year from
the date of such Optionee's termination of employment; or
(b) the expiration of one year from the date
of the death of an Optionee if his or her death occurs while he
or she is, or not later than three months after he or she has
ceased to be, employed by the Company or any of its subsidiaries
in a capacity in which he or she would be eligible to receive
grants of Options under the Plan; or
(c) the termination of the Option pursuant to
Section 10 of the Plan;
or
(d) the termination date set forth in the
Option Agreement.
The termination of employment of an Optionee by death or
otherwise shall not accelerate or otherwise affect the number of
shares with respect to which an Option may be exercised and such
Option may only be exercised with respect to that number of
shares which could have been purchased under the Option had the
Option been exercised by the Optionee on the date of such
termination.
Section 15. Withholding of Taxes. The Company may
deduct and withhold from the wages, salary, bonus and other
compensation paid by the Company to the Optionee the requisite
tax upon the amount of taxable income, if any, recognized by the
Optionee in connection with the exercise n whole or in part of
any Option or the sale of Common Stock issued to the Optionee
upon exercise of the Option, all as may be required from time to
time under any federal or state tax laws and regulations. This
withholding of tax shall be made from the Company's concurrent or
next payment of wages, salary, bonus or other income to the
Optionee or by payment to the Company by the Optionee of the
required withholding tax, as the Option Committee may determine.
Section 16. Effectiveness and Termination of Plan. The
Plan shall be effective on the date on which it is adopted by the
Board; provided, however, that (a) no Option shall be exercised
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pursuant to the Plan until the Plan has been approved by the
shareholders of the Company, and (b) no Option may be granted
hereunder on or after May 1, 2005. The Plan shall terminate when
all Options granted hereunder either have been fully exercised,
and all shares of Common Stock which may be purchased pursuant to
the exercise of such Options have been so purchased,or have
expired; provided, however, that the Board may in its absolute
discretion terminate the Plan at any time. No such termination,
other than as provided for in Section 10 hereof, shall in any way
affect any Option then outstanding.
Section 17. Amendment of Plan. The Board may (a) make
such changes in the terms and conditions of granted Options as it
deems advisable, provided each Optionee affected by such change
consents thereto, and (b) make such amendments to the Plan as it
deems advisable. Such amendments and changes shall include, but
not be limited to, acceleration of the time at which an Option
may be exercised, but may not, without the written consent or
approval of the holders of a majority of that voting stock of the
Company which is represented and is entitled to vote at a duly
held shareholder's meeting (a) increase the maximum number of
shares subject to Options, except pursuant to Section 10 of the
Plan, (b) decrease the Option Price requirement contained in
Section 6 hereof (except as contemplated by Section 10 or 11
hereof) applicable to Incentive Stock Options, (c) change the
designation of the class of employees eligible to receive
Options, (d) modify the limits set forth in Section 3 of the Plan
regarding the value of Common Stock for which any Optionee may be
granted Incentive Stock Options, unless the provisions of Section
422A(b)(8) of the Code are likewise modified or (e) in any manner
materially increase the benefits accruing to participants under
the Plan.
Section 18. Not an Employment Agreement. Nothing
contained in the Plan or in any Option Agreement shall confer on
any Optionee any right to be continued in the employ of the
Company or one of its subsidiaries.
Section 19. Transfers and Leaves of Absence. For
purposes of the Plan, (a) a transfer of an Optionee's employment,
without an intervening period, from the Company to a subsidiary
or vice versa, or from one subsidiary to another shall not be
deemed a termination of employment and (b) an Optionee who is
granted in writing a leave of absence shall be deemed to have
remained in the employ of the Company during such leave of
absence.
Section 20. Repurchase of Stock. At the discretion of
the Option Committee, the Option granted to an Optionee may
provide that the Company shall have the right, in its sole and
absolute discretion, to purchase any and all shares of Common
Stock purchased pursuant to the exercise of Options granted under
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the Plan if the Optionee leaves the employ of the Company, either
voluntarily or involuntarily. Such right shall terminate upon
the sale of such shares in a broker's transaction in accordance
with applicable federal and state securities laws, subsequent to
the date the Company has registered shares of Common Stock under
the Securities Act of 1933, as amended. The price for repurchase
of such shares of Common Stock shall be the higher of the
original purchase price or the fair market value of such shares,
as determined in good faith by the Board of Directors of the
Company, using standard and appropriate valuation
methods,including without limitation asset valuation, market
valuation and/or discounted cash flow analysis. The Company's
repurchase right hereunder must be exercised for cash or
cancellation of purchase money indebtedness for the repurchased
shares within 90 days of termination of the Optionee's
employment.