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EXHIBIT 4.1
MINIMED INC.
THIRD AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
Section 1. PURPOSE OF PLAN
MiniMed Inc., a Delaware corporation (the "Company"), having previously
adopted the MiniMed Inc. Amended and Restated 1994 Stock Incentive Plan (the
"1994 Plan") hereby amends and restates the 1994 Plan as set forth in this Third
Amended and Restated 1994 Stock Incentive Plan ("Plan). The purpose of this Plan
is to enable the Company and its subsidiaries to attract, retain and motivate
their directors, employees, consultants and advisers by providing for or
increasing the proprietary interests of such persons in the Company, thereby
increasing the mutuality of interest between such persons and the Company's
stockholders.
Section 2. PERSONS ELIGIBLE UNDER PLAN
Any person, including any director of the Company, who is a director,
employee, consultant or adviser of the Company or any of its subsidiaries (a
"Grantee") shall be eligible to be considered for the grant of Awards (as
hereinafter defined) hereunder; provided, however, that only those Grantees who
are employees of the Company or any of its subsidiaries shall be eligible to be
considered for the grant of Incentive Stock Options (as hereinafter defined)
hereunder; provided, further, that Non-Employee Directors (as hereinafter
defined) shall be eligible only for Awards granted pursuant to Section 11 of
this Plan.
Section 3. AWARDS
(a) The Board of Directors of the Company (the "Board") or the Committee
(as hereinafter defined), on behalf of the Company, is authorized under this
Plan to enter into any type of arrangement with a Grantee that is not
inconsistent with the provisions of this Plan and that, by its terms, involves
or might involve the issuance of (i) shares of Common Stock, par value $.01 per
share, of the Company (the "Common Shares") or (ii) a Derivative Security (as
such term is defined in Rule 16a-1 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as such Rule may be amended from time
to time) with an exercise or conversion privilege at a price related to the
Common Shares or with a value derived from the value of the Common Shares. The
entering into of any such arrangement is referred to herein as the "grant" of an
"Award."
(b) Awards are not restricted to any specified form or structure and may
include, without limitation, sales or bonuses of stock, restricted stock, stock
options, reload stock options, stock purchase warrants, other rights to acquire
stock, securities convertible into or redeemable for stock, stock appreciation
rights, limited stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares, and an Award may consist of one such
security or benefit, or two or more of them in tandem or in the alternative.
(c) Common Shares may be issued pursuant to an Award for any lawful
consideration as determined by the Committee, including, without limitation,
services rendered by the recipient of such Award.
(d) Awards in the form of options shall provide for an exercise price
which is not less than 85% of the fair value of the stock at the time the option
is granted, except that the price shall be 110% of the fair value in the case of
an Incentive Stock Option (as hereinafter defined) granted to any person who
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company. For purposes of this Paragraph (d) the fair
value of stock issuable upon exercise of an option shall be determined by the
Board of Directors of the Company or Committee taking into account the
following:
(i) If stock of the same class is publicly traded in an active
market of substantial depth, the recent market price of such securities.
(ii) If stock of the same class has not been so publicly traded
the price at which securities of reasonably comparable corporations (if
any) in the same industry are being traded subject to appropriate
adjustment for the dissimilarities between corporations being compared.
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(iii) In the absence of any reliable indicator under
subparagraph (i) and (ii) above, the earnings history, book value and
prospects of the Company in the light of market conditions generally.
(e) The exercise period for awards granted in the form of options shall
be not more than 120 months from the date the option is granted.
(f) Awards granted in the form of options shall provide that the holder
of the option shall have the right to exercise in the event of termination of
employment, to the extent that the holder is entitled to exercise on the date
employment terminates, as follows:
(i) At least six months from the date of termination if
termination was caused by death or disability
(ii) At least 30 days from the date of termination if
termination was caused other than by death or disability.
(g) Subject to the other specific provisions of this Plan, the Board or
the Committee, in its sole and absolute discretion, shall determine all of the
terms and conditions of each Award granted under this Plan, which terms and
conditions may include, among other things:
(i) A provision permitting the recipient of such Award,
including any recipient who is a director or officer of the Company, to
pay the purchase price of the Common Shares or other property issuable
pursuant to such Award, or such recipient's tax withholding obligation
with respect to such issuance, in whole or in part, by any one or more
of the following:
(A) the delivery of previously owned shares of capital
stock of the Company (including "pyramiding") or other property,
(B) a reduction in the amount of Common Shares or other
property otherwise issuable pursuant to such Award, or
(C) the delivery of a promissory note, the terms and
conditions of which shall be determined by the Committee; or
(ii) A provision permitting the Grantee of an Award in the form
of an option which is not an Incentive Stock Option to transfer the
option to a family member of the Grantee through a gift or a domestic
relations order in settlement of marital property rights or to transfer
the option to an entity in which more than fifty percent of the voting
interests are owned by family members (or the Grantee) in exchange for
an interest in that entity."
(iii) A provision required in order for such Award to quality as
an incentive stock option under Section 422 of the Internal Revenue Code
(an "Incentive Stock Option").
For purposes of clause (ii) above, "family member" means any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, any person sharing the Grantee's household (other than a tenant
or employee), a trust in which these persons have more than fifty percent of the
beneficial interest, a foundation in which these persons (or the Grantee)
control the management of assets, and any other entity in which these persons
(or the Grantee) own more than fifty percent of the voting interests.
(h) If an Award is granted under this Plan in the form of an option
which is transferable as contemplated by Section 3(g)(ii) above and is
transferred in accordance with its terms, the following shall apply in
interpreting the provisions of this Plan:
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(i) The reference in Section 3(f) to the rights of a "holder" of
an option shall be deemed to refer to the rights of the transferee, but
the termination of employment referred to therein shall be deemed to
refer to the termination of employment of the Grantee;
(ii) The reference in Section 3(g)(i) to the "recipient" of an
Award shall be deemed to refer to the transferee, but the reference to
the "recipient's tax withholding obligation" in that Section will be
deemed to refer to the Grantee's tax withholding obligation.
(iii) The references to "grantee" and "holder" in the last
sentence of Section 7 shall be deemed to refer to the transferee.
(iv) Options granted to Non-Employee Directors after the date of
adoption of this Amendment shall include a provision permitting
transfers to family members as contemplated by Section 3(g)(ii), and
such options shall be exercisable by the transferee to the extent they
would otherwise be exercisable by the Non-Employee Director or his or
her personal representative notwithstanding the provisions of Section
11(d)(i)(A)(2). All Terminating Events, however, shall be determined in
relation to the Non-Employee Director ceasing to be a Non-Employee
Director.
(v) In no event will the transferee of an option have any
greater rights than the Grantee would have had if the option had not
been transferred, including without limitation no greater term for the
option.
Section 4. STOCK SUBJECT TO PLAN; ANNUAL GRANT LIMITATION
(a) The aggregate number of Common Shares that may be issued pursuant to
all Incentive Stock Options granted under this Plan shall be 7,500,000. Such
maximum number does not include the number of Common Shares subject to the
unexercised portion of any Incentive Stock Option granted under this Plan that
expires or is terminated. Such maximum number of Common Shares is subject to
adjustment as provided in Section 7 hereof (and is referred to herein as the
"Share Limitation"). If any Award shall expire, terminate or be reacquired by
the Company for any reason, the unexercised or reacquired portion thereof shall
again be available for the grant of Awards hereunder.
(b) At any time, the aggregate number of Common Shares issued and
issuable pursuant to all Awards (including all Incentive Stock Options) granted
under this Plan shall not exceed the Share Limitation, subject to adjustment as
provided in Section 7 hereof.
(c) For purposes of Section 4(b) hereof, the aggregate number of Common
Shares issued and issuable pursuant to Awards granted under this Plan shall at
any time be deemed to be equal to the sum of the foregoing:
(i) The number of Common Shares which were issued prior to such
time pursuant to Awards granted under this Plan excluding (except for
purposes of computing the Share Limitation applicable to Incentive Stock
Options granted under this Plan) shares which were reacquired by the
Company pursuant to provisions in the Awards with respect to which those
shares where issued giving the Company the right to reacquire such
shares upon the occurrence of certain events; plus
(ii) The number of Common Shares which are or may be issuable at
or after such time pursuant to outstanding Awards granted under this
Plan prior to such time.
(d) In no event shall any Grantee receive, in any fiscal year, Awards
which exceed an aggregate of 500,000 Common Shares.
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Section 5. DURATION OF PLAN
No Awards shall be granted under this Plan after February 15, 2006.
Although Common Shares may be issued after February 15, 2006 pursuant to Awards
granted prior to such date, no Common Shares shall be issued under this Plan
after February 15, 2016.
Section 6. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by the Board or a committee thereof
(the "Committee") consisting of two or more directors.
(b) Subject to the provisions of this Plan, the Board or the Committee
shall be authorized and empowered to do all things necessary or desirable in
connection with the administration of this Plan, including, without limitation,
the following:
(i) Adopt, amend and rescind rules and regulations relating to
this Plan;
(ii) Determine which persons meet the requirements of Section 2
hereof for eligibility under this Plan and to which of such eligible
persons, if any, Awards shall be granted hereunder;
(iii) Grant Awards to eligible persons and determine the terms
and conditions thereof, including the number of Common Shares issuable
pursuant thereto;
(iv) Determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof; and
(v) Interpret and construe this Plan and the terms and
conditions of any Award granted hereunder.
Section 7. ADJUSTMENTS; ACCELERATION UPON CHANGE IN CONTROL
(a) Adjustments.
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into a different number or
kind of shares or securities of the Company as a result of a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification, stock
dividend, stock split, reverse stock split or the like, then, unless the terms
of such transaction or document evidencing an Award shall provide otherwise, the
Committee may make appropriate and proportionate adjustments in (i) the number
and type of shares or other securities of the Company that may be acquired
pursuant to Incentive Stock Options and other Awards theretofore granted under
this Plan and (ii) the maximum number and type of shares or other securities of
the Company that may be issued pursuant to Incentive Stock Options and other
Awards thereafter granted under this Plan.
(b) Acceleration. Notwithstanding any contrary waiting period or
installment period in the Plan, or in any agreement or instrument evidencing any
Award granted prior to the effectiveness of this Plan (as set forth in Section 9
hereof), each outstanding Award shall, except as otherwise provided in any
applicable agreement or instrument evidencing an Award granted after the
effectiveness of this Plan (as set forth in Section 9 hereof), become
exercisable in full for the aggregate number of Common Shares covered thereby,
or shall vest unconditionally, in the event of (i) the acquisition by any single
entity or group of at least fifty percent (50%) of the outstanding voting
securities of the Company or (ii) a sale of all or substantially all of the
assets of the Company to another person or entity other than an affiliate of the
Company, or a reorganization, merger, business combination or consolidation of
the Company as a result of which at least 50% of the voting securities of the
Company or its successor are held, directly or indirectly, by persons or
entities who did not hold at least 50% of the voting securities of the Company
immediately prior to such transaction. The Committee may also, in its
discretion, accelerate the exercisability or vesting of any Award granted
hereunder in accordance with the administration of this Plan. For purposes of
(i) above, "group" shall have the meaning set forth in Rule 13d-5 of the
Securities and Exchange Commission under the Exchange Act, and shall include as
to each person, entity or group, each "affiliate" of that
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person, entity or group, as that term is defined in Rule 12b-2 of the Securities
and Exchange Commission under the Exchange Act. The terms "person," "entity" and
"group" as used in (i) above shall not include the Company or any of its
subsidiaries, any employee benefit plan of the Company or any of its
subsidiaries, any entity holding voting securities of the Company for or
pursuant to the terms of any such plan or any person, entity or group succeeding
to the ownership of all or any portion of the shares presently owned
beneficially by Alfred E. Mann who is his lawfully appointed executor,
administrator, guardian or custodian, his spouse or any of his issue, any trust,
partnership, corporation or entity in which any of the foregoing have
(individually or in the aggregate) more than 50% of the beneficial interest or
any charitable foundation established by Mr. Mann or any of the foregoing
persons or entities. Securities will be deemed to constitute 50% of the voting
securities of the Company or its successor if the holders thereof collectively
have the power to elect at least 50% of the directors or, if the successor is
not a corporation, 50% of the other analogous controlling persons. In order to
permit the grantee of any Award which is outstanding upon the occurrence of any
of the events referred to in (i) or (ii) above to receive the same consideration
as a result of such event as would the holder of the outstanding shares of
Common Stock of the Company subject to the Award, the grantee will have the
right to give notice of the exercise of the option or other analogous right
included in the Award in advance of the occurrence of the events described in
(i) or (ii) above effective upon the occurrence of such event, and any such
exercise shall be deemed effective upon the occurrence of the event and prior to
any termination of the Award as a result of the event.
Section 8. AMENDMENT AND TERMINATION OF PLAN
The Board may amend or terminate this Plan at any time and in any
manner; provided, however, that (a) no such amendment or termination shall
deprive the recipient of any Award theretofore granted under this Plan, without
the consent of such recipient, of any of his or her rights thereunder or with
respect thereto; and (b) no such amendment shall increase the aggregate number
of Common Shares that may be issued to all Incentive Stock Options granted under
this Plan (except pursuant to Section (a) 7 hereof) or change, alter or modify
the employees or class of employees eligible to receive Incentive Stock Options
under this Plan without the approval of the stockholders of the Company, which
approval must be obtained within 12 months after the adoption of such amendment
by the Board.
Section 9. INTENTIONALLY OMITTED
Section 10. STOCK EXCHANGE REQUIREMENTS; APPLICABLE LAWS
Notwithstanding anything to the contrary in this Plan, no Common Shares
purchased upon exercise of an Award, and no certificate representing all or any
part of such shares, shall be issued or delivered if (a) such shares have not
been admitted to listing upon official notice of issuance on each stock exchange
upon which shares of that class are then listed or (b) in the opinion of counsel
to the Company, such issuance or delivery would cause the Company to be in
violation of or to incur liability under any Federal, state or other securities
law, or any requirement of any listing agreement to which the Company is a party
or any other requirement of law or of any administrative or regulatory body
having jurisdiction over the Company.
Section 11. NON-EMPLOYEE DIRECTOR AWARDS
Notwithstanding anything to the contrary contained herein or in any
agreement evidencing any Award hereunder, each member of the Board who is not an
employee of the Company ("Non-Employee Directors") shall be eligible for Awards
only issued pursuant to and in accordance with the terms of this Section 11.
(a) Eligibility. Subject to the terms and conditions of this Plan, all
Non-Employee Directors of the Company shall automatically become participants in
this Plan under this Section 11 upon their election as directors of the Company.
(b) Automatic Option Grants. Each person who becomes a Non-Employee
Director shall automatically be awarded and issued on the date of his or her
first such election and without further action of the Board, a nonqualified
stock option to purchase 5,000 shares of Common Stock of the Company. Such grant
shall hereinafter be referred to as an "Initial Grant." If the date designated
in this subjection for any Initial Grant is not a
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trading day of the Common Stock, such Initial Grant shall be made on the first
trading day which follows such designated date.
On June 1 of each year (or, in any year, if such day is not a trading
day for the Common Stock, the first trading day thereafter), each Non-Employee
Director (other than a Non-Employee Director who received an Initial Grant
within twelve months) shall be automatically awarded and issued on such date,
without further action of the Board or Committee, a nonqualified stock option to
purchase 5,000 shares of Common Stock of the Company (an "Annual Grant");
provided that, in the case of a Non-Employee Director who received an Annual
Grant within 12 months, the number of shares covered by such Annual Grant shall
be 5,000 multiplied by a fraction, the numerator of which is the number of days
elapsed from the date of such Initial Grant until the next succeeding Annual
Grant, and the denominator of which is 365.
(c) Option Prices. The purchase price of the Common Stock under each
option granted pursuant to this Section 11 shall be 100% of the Fair Market
Value of the Common Stock on the grant date. The "Fair Market Value" of a share
of Common Stock or of a share of another class of capital stock of the Company
on any day shall be equal to the last sale price, regular way, of such a share
on the business day preceding such day or, in case no such sale takes place on
such day and there were sales within a reasonable period before the date for
which the Fair Market Value is to be determined, the mean between the lowest and
highest sales prices, regular way, on the nearest date before the date as of
which the Fair Market Value is to be determined, in either case as reported in
the principal consolidated transaction reporting system with respect to
securities listed or admitted to trading or the principal national securities
exchange on which such shares are listed or admitted to trading or, if such
shares are not listed or admitted to trading on any national securities
exchange, the last quoted price, or if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotations System or
such other system then in use. If none of the foregoing provisions for
determining Fair Market Value are applicable, the Fair Market Value will be
determined by the Board or the Committee.
(d) Term of Options. The term of each option issued to Non-Employee
Directors hereunder shall be for a period of eight years from the grant date.
(i) Termination of Director Status.
(A) Death or Permanent Disability. In the event that a
Non-Employee Director shall cease to be a Non-Employee Director
of the Company or any of its subsidiaries (such event shall be
referred to herein as a "Terminating Event") by reason of the
death or Permanent Disability (as hereinafter defined) of a
Non-Employee Director, then (1) the option shall terminate on
the first anniversary of the date of such Terminating Event and
(2) the option shall be exercisable during that one year period
by the Non-Employee Director or, in the event of death or a
Permanent Disability involving the appointment of a guardian,
custodian or other similar personal representative, the person
or persons to whom the Non-Employee Directors' rights under the
option shall have passed by will or by the applicable laws of
descent or distribution or as a result of any such appointment,
only to the extent that it was exercisable on the date of such
death or Permanent Disability. "Permanent Disability" shall mean
the inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not
less than twelve (12) months. The Non-Employee Director shall
not be deemed to have a Permanent Disability unless proof of the
existence thereof shall have been furnished to the Committee in
such form and manner, and at such times, as the Committee may
require. Any determination by the Committee that a Non-Employee
Director does or does not have a Permanent Disability and/or the
date thereof shall be final and binding upon the Company and the
Non-Employee Director.
(B) Other Termination. If the Terminating Event is for
any reason other than those enumerated in Subparagraph
11(d)(i)(A), the option shall terminate one (1) month from the
date of such Terminating Event and shall be exercisable only to
the extent it was exercisable on the date of the Terminating
Event.
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(ii) Death Following the Terminating Event. If a Non-Employee
Director shall die at any time after the occurrence of a Terminating
Event and prior to the last date on which the option could have been
exercised as provided above, then, to the extent that the option was
exercisable on the date of such Terminating Event, the option shall
terminate on the earlier of the date on which such option otherwise
would expire or the first anniversary of the date of such death.
(iii) Other Terminating Events. An option granted pursuant to
this Section 11 shall terminate upon the dissolution or liquidation of
the Company unless the terms of the plan of dissolution or liquidation
provide otherwise.
(e) Vesting of Options. Each option granted to a Non-Employee Director
pursuant to this Section 11 shall become exercisable immediately on the date of
the grant to the extent of 25% of the shares of Common Stock covered by such
option, and shall become exercisable on each subsequent anniversary of the Grant
Date to the extent of an additional 25% of the shares Common Stock covered by
the Option until such option becomes fully exercisable.
(f) No Right to Continue as Director. Nothing contained in this Plan or
in any agreement evidencing an Award granted hereunder to a Non-Employee
Director shall confer any right to continue as a director or shall any way
affect the right and power of the stockholders of the Company to remove such
participant as a member of the Board at any time, to the same extent as might
have been done if this Plan had not been adopted.
(g) Limitation on Amendments. This Section 11 may not be amended more
than once every six months, other than to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.
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