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Medtronic - Amended 1998 Outside Director Stock Comp. Plan
Exhibit 10.1
MEDTRONIC, INC.
1998 OUTSIDE DIRECTOR STOCK COMPENSATION PLAN
(as amended and restated effective September 1, 2007)
1.
Purpose. The purpose of this Plan is to facilitate recruiting and retaining non-employee directors of outstanding ability.
2.
Definitions. The capitalized terms used in this Plan have the meanings set forth below.
(a)
" Account" means a bookkeeping account maintained for a Participant to which Deferred Stock Units are credited pursuant to Section 8 of this Plan.
(b)
" Affiliate" means any corporation that is a " parent corporation" or " subsidiary corporation" of the Company, as those terms are defined in Sections 424(e) and (f) of the Code, or any successor provision, and any joint venture in which the Company or any such " parent corporation" or " subsidiary corporation" owns an equity interest.
(c)
" Agreement" means a written contract entered into between the Company or an Affiliate and a Participant containing the terms and conditions of an Award granted hereunder (not inconsistent with this Plan).
(d)
" Annual Award" means an Option or Stock Appreciation Right granted pursuant to Section 7(c) of this Plan.
(e)
" Annual Retainer" of a Participant means the fixed annual fee for such Participant in effect on the first day of the Plan Year for which such Annual Retainer is payable for services to be rendered as a Non-Employee Director of the Company. For purposes of determining Awards, other than an Initial Award, for the short Plan Year beginning September 1, 2007 and ending on April 25, 2008, the Annual Retainer in effect on September 1, 2007 shall be 8/12 of the annual fee in effect as of September 1, 2007.
(f)
" Award" means an Option granted pursuant to Section 5 of this Plan, a Stock Appreciation Right granted pursuant to Section 6 of this Plan, an Annual or Initial Award granted pursuant to Section 7 of this Plan or a credit of Deferred Stock Units pursuant to Section 8 of this Plan.
(g)
" Board" means the Board of Directors of the Company.
(h)
" Change in Control" shall mean:
(i)
Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the " Exchange Act" )) (a " Person" ) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (i) the then outstanding Shares (the " Outstanding Company Common Stock" ) or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the election of directors (the " Outstanding Company Voting Securities" ); provided , however , that for purposes of this clause (h)(i), the following acquisitions shall not constitute a Change in Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company or any of its subsidiaries, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries, (4) any acquisition by an underwriter temporarily holding securities pursuant to an offering of such securities or (5) any acquisition pursuant to a transaction that complies with clauses (A), (B) and (C) of clause (iii) below; or
(ii)
Individuals who, as of the date hereof, constitute the Board (the " Incumbent Directors" ) cease for any reason to constitute at least a majority of the Board; provided , however , that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company' s shareholders, was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii)
Consummation of a reorganization, merger, statutory share exchange or consolidation (or similar corporate transaction) involving the Company or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity (a " Business Combination" ), in each case, unless, immediately following such Business Combination, (A) substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 55% of, respectively, the then outstanding Shares and the total voting power of (1) the corporation resulting from such Business Combination (the " Surviving Corporation" ) or (2) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 80% or more of the voting securities eligible to elect directors of the Surviving Corporation (the " Parent Corporation" ), in substantially the same proportion as their ownership, immediately prior to the Business Combination, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no person (other than any employee benefit plan (or related trust) sponsored
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or maintained by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of 30% or more of the outstanding Shares and the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board' s approval of the execution of the initial agreement providing for such Business Combination; or
(iv)
Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. Notwithstanding the foregoing provisions of this definition, a Change in Control shall not be deemed to occur with respect to the Participant if the acquisition of the 30% or greater interest referred to in clause (a) is by a group, acting in concert, that includes the Participant or if at least 40% of the then outstanding common stock or combined voting power of the then outstanding voting securities (or voting equity interests) of the Surviving Corporation or, if applicable, the Parent Corporation shall be beneficially owned, directly or indirectly, immediately after a Business Combination by a group, acting in concert, that includes the Participant.
(i)
" Code" shall mean the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor statute.
(j)
" Committee" means any committee of the Board designated by the Board to administer this Plan under Section 3 hereof which shall be composed of not less than two members, each of whom shall be a " non-employee director" as defined in Exchange Act Rule 16b-3.
(k)
" Company" means Medtronic, Inc., a Minnesota corporation, or any successor to all or substantially all of its businesses by merger, consolidation, purchase of assets or otherwise.
(l)
" Deferred Stock Unit" means the right to receive one Share pursuant to Section 8 of this Plan.
(m)
" Disability" means the disability of a Participant such that the Participant is unable due to a physical or mental illness or condition that is expected to be of a duration of twelve (12) months or more to perform the essential duties of a member of the Board.
(n)
" Exchange Act" means the Securities Exchange Act of 1934, as amended; " Exchange Act Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act as in effect with respect to the Company or any successor regulation.
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(o)
" Fair Market Value" means, on a given date, (i) if there should be a public market for the Shares on such date, the closing sale price of the Shares on The New York Stock Exchange, or, if the Shares are not listed or admitted on any national securities exchange, the arithmetic mean of the per Share closing bid price and per Share closing asked price on such date as quoted on the National Association of Securities Dealers Automated Quotation System (or such market in which such prices are regularly quoted) (the " NASDAQ" ), or, if no sale of Shares shall have been reported on The New York Stock Exchange or quoted on the NASDAQ on such date, then the immediately preceding date on which sales of the Shares have been so reported or quoted shall be used, and (ii) if there should not be a public market for the Shares on such date, the Fair Market Value shall be the value established by the Committee in good faith.
(p)
" Fundamental Change" means a dissolution or liquidation of the Company, a sale of substantially all of the assets of the Company, a merger or consolidation of the Company with or into any other corporation, regardless of whether the Company is the surviving corporation, or a statutory share exchange involving capital stock of the Company.
(q)
" Initial Award" means an Option or Stock Appreciation Right granted pursuant to Section 7(b) of this Plan.
(r)
" Meeting" means a regular or special meeting of the Board or of a committee of the Board on which a particular Participant serves.
(s)
" Non-Employee Director" means a member of the Board who is not an employee of the Company or any Affiliate.
(t)
" Option" means a right to purchase Stock granted pursuant to Sections 5 and 7 of this Plan.
(u)
" Participant" means any Non-employee Director to whom an Award is made.
(v)
" Plan" means this 1998 Outside Director Stock Compensation Plan, as amended and in effect from time to time.
(w)
" Plan Year" means the period from September 1 of any year through the following August 31. Effective Septmber 1, 2007 the Plan Year shall be a short year ending on April 25, 2008 and thereafter the Plan Year shall correspond to the Company' s fiscal year.
(x)
" Pro-Ration Factor" means: (A) in the case of a Participant who is a Non-Employee Director for the entire Plan Year in question and attends at least 75 percent of the Meetings that occur during such Plan Year (such Meetings, the " Plan Year Meetings" ), 100 percent; (B) in the case of a Participant who is a
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Non-Employee Director for only a portion of a Plan Year and attends at least 75 percent of the Meetings that occur during that portion of a Plan Year (such meetings, the " Applicable Meetings" ), a percentage determined by dividing the number of Applicable Meetings by the total number of Plan Year Meetings for that Plan Year; and (C) in the case of a Non- Employee Director who fails to satisfy the Meeting attendance requirement of clause (A) or (B), as applicable, 75 percent of the percentage specified in clause (A) or (B), as applicable.
(y)
" Share" means a share of common stock of the Company, $.10 par value per share.
(z)
" Stock Appreciation Right" means a stock appreciation right granted pursuant to Sections 6 and 7 of this Plan.
(aa)
" Subsidiary" means a " subsidiary corporation," as that term is defined in Section 424(f) of the Code, or any successor provision.
(bb)
" Successor" with respect to a Participant means a court appointed conservator or guardian of a Participant; if the Participant is deceased, the legal representative of the estate of the Participant; or the person or persons who may, by bequest or inheritance, or pursuant to a transfer permitted under Section 9(d) of this Plan, acquire the right to exercise an Option or Stock Appreciation Right or receive Shares issuable in satisfaction of Deferred Stock Units in the event of the Participant' s death.
(cc)
" Term" means the period during which an Award may be exercised. Except when otherwise indicated by the context, reference to the masculine gender shall include, when used, the feminine gender and any term used in the singular shall also include the plural.
3.
Administration.
(a)
Authority of Committee. The Committee or its delagee shall administer this Plan. The Committee shall have the authority to interpret this Plan and any Award or Agreement made under this Plan, to establish, amend, waive and rescind any rules and regulations relating to the administration of this Plan (including without limitation the manner in which Participants shall make elections provided for herein), to determine the terms and provisions of any Agreements entered into hereunder (not inconsistent with this Plan), and to make all other determinations necessary or advisable for the administration of this Plan. The Committee may correct any defect, supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent it shall deem desirable. The determinations of the Committee in the administration of this Plan, as described herein, shall be final, binding and conclusive.
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(b)
Indemnification. To the full extent permitted by law, each member and former member of the Committee and each person to whom the Committee delegates or has delegated authority under this Plan shall be entitled to indemnification by the Company against and from any loss, liability, judgment, damage, cost and reasonable expense incurred by such member, former member or other person by reason of any action taken, failure to act or determination made in good faith under or with respect to this Plan.
4.
In General.
(a)
Shares Available. The number of Shares available for distribution under this Plan is 3,000,000 (subject to adjustment under Section 9(f) hereof). Any Shares subject to the terms and conditions of an Award under this Plan which are not used because the terms and conditions of the Award are not met may again be used for an Award under this Plan. Any undistributed portion of any terminated, expired, exchanged, exercised or forfeited Award or any portion of an Award settled in cash in lieu of Shares shall be available for further Awards.
(b)
No Fractional Shares. No fractional Shares may be issued under this Plan; fractional Shares will be rounded to the nearest whole Share.
(c)
Rights as Shareholder. A participant shall have no rights as a shareholder with respect to any securities covered by an Award until the date the Participant becomes the holder of record.
5.
Options.
(a)
Agreements. Each Option granted under this Plan shall be evidenced by an Option Agreement setting forth the terms and conditions thereof.
(b)
Discretionary Options. The Board or the Committee may, in its discretion, at any time or from time to time grant to any Non-Employee Director an Option to purchase such number of Shares, on such terms and conditions, as it shall determine.
(c)
Purchase Price; Term and Exercisability of Options. The purchase price of each share subject to an Option shall be the Fair Market Value of a Share as of the date the Option is granted. Options granted to a Non-Employee Director under this Section 5 shall vest and be exercisable in full on the date of grant, except to the extent the Board or Committee provides otherwise in the Option Agreement; provided , however, that in no event shall a Non-Employee Director initially appointed by the Board be entitled to exercise an Option unless, and until such
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time as, such director shall have been elected to the Board by the shareholders of the Company. Notwithstanding the foregoing, except as otherwise provided in the Option Agreement, vesting of an Option granted to a Non-Employee Director who shall have been elected by the shareholders of the Company shall accelerate and shall become immediately exercisable in full upon the occurrence of a Change in Control or in the event that the Non-Employee Director ceases to serve as a director of the Company due to death, Disability, resignation or retirement under the policies of the Company then in effect. Options shall expire no later than the ten-year anniversary date of the Option' s grant; provided , that an Option granted to a Non-Employee Director initially appointed by the Board shall expire on the date such director ceases to be a director of the Company unless such director shall have been elected by the shareholders subsequent to the grant of the Initial Award to such director.
(d)
Payment of Option Price. The purchase price of the Shares with respect to which an Option is exercised shall be payable in full at the time of exercise; provided , that to the extent permitted by law, Participants may simultaneously exercise Options and sell the Shares thereby acquired pursuant to a brokerage or similar relationship and use the proceeds from such sale to pay the purchase price of such Shares. The purchase price may also be paid in cash, or by delivery to the Company of Shares held by such Participant for at least six months before such exercise (in each case, such Shares having a Fair Market Value as of the date the Option is exercised equal to the purchase price of the Shares being purchased pursuant to the Option), or a combination thereof, in the discretion of the Participant. In no event shall any Option be exercisable at any time after its Term. When an Option is no longer exercisable, it shall be deemed to have lapsed or terminated.
6.
Stock Appreciation Rights.
(a)
Agreements. Each Stock Appreciation Right granted under this Plan shall be evidenced by an Agreement setting forth the terms and conditions thereof.
(b)
Discretionary Grant of Stock Appreciation Right. The Board or the Committee may, in its discretion, at any time or from time to time grant to any Non-Employee Director a Stock Appreciation Right (" Stock Appreciation Right" ), on such terms and conditions, as it shall determine.
(c)
Term and Exercisability of Stock Appreciation Rights. Stock Appreciation Rights granted to a Non-Employee Director under this Section 6 shall vest and be exercisable in full on the date of grant, except to the extent the Board or Committee pr...
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