Exhibit 10.1
Pursuant to the resolution of the Board of Directors of Kyphon
Inc. (the “ Company ”) dated
October 18, 2007, from and after the Effective Time, as such
term is defined in that certain Agreement and Plan of Merger, dated
as of July 26, 2007, by and among Medtronic, Inc., a Minnesota
corporation (“ Medtronic ”), Jets
Acquisition Corporation, a Delaware corporation and wholly owned
subsidiary of Medtronic (“ Merger Sub
”), and the Company, the Kyphon Inc. 2002 Stock Plan and
each agreement evidencing outstanding awards thereunder shall be
deemed amended to the extent necessary so that each reference to
the Company (other than references relating to a “change in
control” of the Company) shall refer to Medtronic.
MEDTRONIC, INC. – KYPHON INC. 2002 STOCK PLAN
(FORMERLY THE KYPHON INC. 2002 STOCK PLAN)
(Amended and Restated July 26, 2007, as further amended on
October 18, 2007)
1. Purposes of the Plan
. The purposes of this 2002 Stock Plan are:
| |
• |
|
to attract and retain the best available personnel for
positions of substantial responsibility, |
| |
| |
• |
|
to provide additional incentive to Employees, Directors and
Consultants, and |
| |
| |
• |
|
to promote the success of the Company’s business. |
Options
granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at
the time of grant. Stock Purchase Rights and Restricted Stock Units
may also be granted under the Plan.
2. Definitions . As used
herein, the following definitions shall apply:
(a)
“ Administrator ” means the Board or any of its
Committees as shall be administering the Plan, in accordance with
Section 4 of the Plan.
(b)
“ Applicable Laws ” means 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, Restricted Stock Units or
Stock Purchase Rights are, or will be, granted under the
Plan.
(c)
“ Board ” means the Board of Directors of the
Company.
(d)
“ Change in Control ” means the occurrence of
any of the following events:
1
(i) Any
“person” (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the “beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; or
(ii) A
change in the composition of the Board occurring within a two-year
period, as a result of which fewer than a majority of the directors
are Incumbent Directors. “Incumbent Directors” will
mean directors who either (A) are directors of the Company as
of the date hereof, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or
nomination (but will not include an individual whose election or
nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company);
or
(iii) The
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets; or
(iv) The
consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or its parent) at least fifty percent (50%)
of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.
(e)
“ Code ” means the Internal Revenue Code of
1986, as amended.
(f)
“ Committee ” means a committee of Directors
appointed by the Board in accordance with Section 4 of the
Plan.
(g)
“ Common Stock ” means the common stock of the
Company.
(h)
“ Company ” means Kyphon Inc., a Delaware
corporation.
(i)
“ Consultant ” means any natural person,
including an advisor, engaged by the Company or a Parent or
Subsidiary to render services to such entity.
(j)
“ Director ” means a member of the Board.
(k)
“ Disability ” means total and permanent
disability as defined in Section 22(e)(3) of the Code.
(l)
“ Employee ” means any person, including
Officers and Directors, employed by the Company or any Parent or
Subsidiary of the Company. A Service Provider shall not cease to be
an Employee in the case of (i) any leave of absence approved
by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any
successor. For purposes of Incentive Stock Options, no such leave
may exceed ninety days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment
2
upon
expiration of a leave of absence approved by the Company is not so
guaranteed, then three (3) months following the 90 th day of such
leave, any Incentive Stock Option held by the Optionee shall cease
to be treated as an Incentive Stock Option and shall be treated for
tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director’s fee by the Company shall
be sufficient to constitute “employment” by the
Company.
(m)
“ Equity Restructuring ” means a non-reciprocal
transaction between the Company and its stockholders, such as a
stock dividend, stock split, spin-off, rights offering or
recapitalization through a large, nonrecurring cash dividend, that
affects the shares of Common Stock (or other securities of the
Company) or the share price of Common Stock (or other securities)
and causes a change in the per share value of the Common Stock
underlying outstanding Options, Restricted Stock Units and Stock
Purchase Rights.
(n)
“ Exchange Act ” means the Securities Exchange
Act of 1934, as amended.
(o)
“ Fair Market Value ” means, as of any date, the
value of Common Stock determined as follows:
(i) If
the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock
Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or system on the day of determination, as
reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If
the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the Fair Market Value
of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the day of
determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(iii) For
purposes of any awards granted on the first day the Company
initially offers it equity securities to the public, the Fair
Market Value shall be the initial price to the public as set forth
in the final prospectus included within the registration statement
in Form S-1 filed with the Securities and Exchange Commission for
the initial public offering of the Company’s Common
Stock.
(iv) In
the absence of an established market for the Common Stock, the Fair
Market Value shall be determined in good faith by the
Administrator.
(p)
“ Incentive Stock Option ” means an Option
intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code and the regulations promulgated
thereunder.
(q)
“ Nonstatutory Stock Option ” means an Option
not intended to qualify as an Incentive Stock Option.
3
(r)
“ Notice of Grant ” means a written or
electronic notice evidencing certain terms and conditions of an
individual Option, Restricted Stock Units or Stock Purchase Right
grant. The Notice of Grant is part of the Option Agreement,
Restricted Stock Unit Agreement and Restricted Stock Purchase
Agreement.
(s)
“ Officer ” means 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.
(t)
“ Option ” means a stock option granted pursuant
to the Plan.
(u)
“ Option Agreement ” means an agreement between
the Company and an Optionee evidencing the terms and conditions of
an individual Option grant. The Option Agreement is subject to the
terms and conditions of the Plan.
(v)
“ Option Exchange Program ” means a program
whereby outstanding Options are surrendered in exchange for Options
with a lower exercise price.
(w)
“ Optioned Stock ” means the Common Stock
subject to an Option, Restricted stock Unit or Stock Purchase
Right.
(x)
“ Optionee ” means the holder of an outstanding
Option, Restricted Stock Unit or Stock Purchase Right granted under
the Plan.
(y)
“ Parent ” means a “parent
corporation,” whether now or hereafter existing, as defined
in Section 424(e) of the Code.
(z)
“ Plan ” means this 2002 Stock Plan, as amended
and restated herein.
(aa)
“ Restricted Stock ” means shares of Common
Stock acquired pursuant to a grant of Stock Purchase Rights under
Section 11 of the Plan.
(bb)
“ Restricted Stock Purchase Agreement ” means a
written agreement between the Company and the Optionee evidencing
the terms and restrictions applying to stock purchased under a
Stock Purchase Right. The Restricted Stock Purchase Agreement is
subject to the terms and conditions of the Plan and the Notice of
Grant.
(cc)
“ Restricted Stock Unit ” means an award granted
under Section 12 of the Plan.
(dd)
“ Restricted Stock Unit Agreement ” means a
written agreement between the Company and the Optionee evidencing
the terms and conditions of an award of Restricted Stock Units. The
Restrictred Stock Unit Agreement is subject to the terms and
conditions of the Plan and the Notice of Grant.
(ee)
“ Rule 16b-3 ” means Rule 16b-3 of the
Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.
(ff)
“ Section 16(b) “ means Section 16(b) of
the Exchange Act.
4
(gg)
“ Service Provider ” means an Employee, Director
or Consultant.
(hh)
“ Share ” means a share of the Common Stock, as
adjusted in accordance with Section 14 of the Plan.
(ii)
“ Stock Purchase Right ” means the right to
purchase Common Stock pursuant to Section 11 of the Plan, as
evidenced by a Notice of Grant.
(jj)
“ Subsidiary ” means a “subsidiary
corporation”, whether now or hereafter existing, as defined
in Section 424(f) of the Code.
3. Stock Subject to the
Plan . Subject to the provisions of Section 14 of the
Plan, the maximum aggregate number of Shares that may be optioned
and sold under the Plan is 2,500,000 Shares plus (a) any
Shares which have been reserved but not issued under the
Company’s 1996 Stock Option Plan (the “1996
Plan”) as of the date of stockholder approval of this Plan,
(b) any Shares returned to the 1996 Plan as a result of
termination of options or repurchase of Shares issued under the
1996 Plan and (c) an annual increase to be added on the first
day of the Company’s fiscal year beginning in 2003, equal to
the lesser of (i) 3,500,000 shares, (ii) 5% of the
outstanding shares on such date or (iii) an amount determined
by the Board. The Shares may be authorized, but unissued, or
reacquired Common Stock.
If an
Option, Restricted Stock Unit or Stock Purchase Right expires or
becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased
Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated);
provided , however, that Shares that have actually been
issued under the Plan, whether upon exercise of an Option,
Restricted Stock Unit or Stock Purchase Right, shall not be
returned to the Plan and shall not become available for future
distribution under the Plan, except that if Shares of Restricted
Stock are repurchased by the Company at their original purchase
price, such Shares shall become available for future grant under
the Plan.
4. Administration of the
Plan .
(a)
Procedure .
(i)
Multiple Administrative Bodies . Different Committees with
respect to different groups of Service Providers may administer the
Plan.
(ii)
Section 162(m) . To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder
as “performance-based compensation” within the meaning
of Section 162(m) of the Code, the Plan shall be administered by a
Committee of two or more “outside directors” within the
meaning of Section 162(m) of the Code.
(iii)
Rule 16b-3 . To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the
transactions contemplated hereunder shall be structured to satisfy
the requirements for exemption under Rule 16b-3.
5
(iv)
Other Administration . Other than as provided above, the
Plan shall be administered by (A) the Board or (B) a
Committee, which committee shall be constituted to satisfy
Applicable Laws.
(b)
Powers of the Administrator . Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator
shall have the authority, in its discretion:
(i) to
determine the Fair Market Value;
(ii) to
select the Service Providers to whom Options, Restricted Stock
Units and Stock Purchase Rights may be granted hereunder;
(iii) to
determine the number of shares of Common Stock to be covered by
each Option, Restricted Stock Unit and Stock Purchase Right granted
hereunder;
(iv) to
approve forms of agreement for use under the Plan;
(v) to
determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Option, Restricted Stock Unit or Stock Purchase
Right granted hereunder. Such terms and conditions include, but are
not limited to, the exercise price, the time or times when Options
or Stock Purchase Rights may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation
regarding any Option, Restricted Stock Unit or Stock Purchase Right
or the shares of Common Stock relating thereto, based in each case
on such factors as the Administrator, in its sole discretion, shall
determine;
(vi) to
institute an Option Exchange Program subject to shareholder
approval;
(vii) to
construe and interpret the terms of the Plan and awards granted
pursuant to the Plan;
(viii) to
establish, amend and rescind rules and regulations relating to the
Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign
laws;
(ix) to
modify or amend each Option, Restricted Stock Unit or Stock
Purchase Right (subject to Section 16(c) of the Plan), including
the discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise provided
for in the Plan;
(x)
to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Shares to be issued
upon exercise of an Option, Restricted Stock Unit or Stock Purchase
Right that number of Shares having a Fair Market Value equal to the
minimum amount required to be withheld. 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. All elections
by
6
an
Optionee to have Shares withheld for this purpose shall be made in
such form and under such conditions as the Administrator may deem
necessary or advisable;
(xi) to
authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option, Restricted
Stock Unit or Stock Purchase Right previously granted by the
Administrator;
(xii) to
correct any defect, supply any omission, or reconcile any
inconsistency in the Plan, or in any Option Agreement, Restricted
Stock Unit Agreement or Restricted Stock Purchase Agreement, in a
manner and to the extent it shall deem necessary, all of which
determinations and interpretations made by the Administrator shall
be conclusive and binding on all Optionees, any other holders of
Options and on their legal representatives and beneficiaries;
and
(xiii) except
to the extent prohibited by, or impermissible in order to
obta
| 
