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EXHIBIT 10.18
MASIMO CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
I. PURPOSE OF THE PLAN
This Employee Stock Purchase Plan is intended to promote the interests
of MASIMO Corporation., a Delaware corporation, by providing eligible employees
with the opportunity to acquire a proprietary interest in the Corporation
through participation in a payroll deduction-based employee stock purchase plan
designed to qualify under Section 423 of the Code.
Capitalized terms herein shall have the meanings assigned to such terms
in the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The Plan Administrator shall have full authority to interpret and
construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of Code Section 423. Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.
III. STOCK SUBJECT TO PLAN
A. Reserved Shares. The stock purchasable under the Plan shall
be shares of authorized but unissued or reacquired Common Stock,
including shares of Common Stock purchased on the open market. The
number of shares of Common Stock initially reserved for issuance over
the term of the Plan shall be Five Hundred Thousand (500,000) shares.
B. Annual Increase of Reserved Shares. The number of shares of
Common Stock available for issuance under the Plan shall automatically
increase on the first trading day of January each calendar year during
the term of the Plan, beginning with calendar year 2001, by an amount
equal to one percent (1%) of the total number of shares of Common Stock
outstanding on the last trading day in December of the immediately
preceding calendar year, but in no event shall any such annual increase
exceed any such lesser amount determined by the Board.
C. Adjustments. Should any change be made to the 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 Corporation's receipt
of consideration, appropriate adjustments shall be made to (i) the
maximum number and class of securities issuable under the Plan, (ii)
the maximum number and class of securities purchasable per Participant
on any one Purchase Date, (iii) the maximum number and class of
securities purchasable in total by
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all Participants on any one Purchase Date, (iv) the maximum number
and/or class of securities by which the share reserve is to increase
automatically each calendar year pursuant to the provisions of Section
III.B of this Article One and (v) the number and class of securities
and the price per share in effect under each outstanding purchase right
in order to prevent the dilution or enlargement of benefits thereunder.
IV. OFFERING PERIODS
A. Offering Periods. Shares of Common Stock shall be offered
for purchase under the Plan through a series of successive offering
periods until such time as (i) the maximum number of shares of Common
Stock available for issuance under the Plan shall have been purchased
or (ii) the Plan shall have been sooner terminated.
B. Duration. Each offering period (except the initial offering
period) shall be of such duration (not to exceed twenty-four (24)
months) as determined by the Plan Administrator prior to the start date
of such offering period. However, the initial offering period shall
commence at the Effective Time and terminate on the last business day
in December 2002. The next offering period shall commence on the first
business day in January 2003, and subsequent offering periods shall
commence as designated by the Plan Administrator.
C. Purchase Intervals. Each offering period shall consist of a
series of one or more successive Purchase Intervals. Purchase Intervals
shall run from the first business day in January to the last business
day in June each year and from the first business day in July to the
last business day in December each year. However, the first Purchase
Interval in effect under the initial offering period shall commence at
the Effective Time and terminate on the last business day in June 2001.
D. Adjustment. Should the Fair Market Value per share of
Common Stock on any Purchase Date within an offering period be less
than the Fair Market Value per share of Common Stock on the start date
of that offering period, then that offering period shall automatically
terminate immediately after the purchase of shares of Common Stock on
such Purchase Date, and a new offering period shall commence on the
next business day following such Purchase Date. The new offering period
shall have a duration of twenty (24) months, unless a shorter duration
is established by the Plan Administrator within five (5) business days
following the start date of that offering period.
V. ELIGIBILITY
A. Entry on Start Date. Each individual who is an Eligible
Employee on the start date of any offering period under the Plan may
enter that offering period on such start date or on any subsequent
Semi-Annual Entry Date within that offering period, provided he or she
remains an Eligible Employee.
B. Entry After Start Date. Each individual who first becomes
an Eligible Employee after the start date of an offering period may
enter that offering period on any
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subsequent Semi-Annual Entry Date within that offering period on which
he or she is an Eligible Employee.
C. Entry Date. The date an individual enters an offering
period shall be designated his or her Entry Date for purposes of that
offering period.
D. Participation. To participate in the Plan for a particular
offering period, the Eligible Employee must complete the enrollment
forms prescribed by the Plan Administrator (including a subscription
agreement and a payroll deduction authorization) and file such forms
with the Plan Administrator (or its designate) on or before his or her
scheduled Entry Date.
VI. PAYROLL DEDUCTIONS
A. Payroll Deductions. The payroll deduction authorized by the
Participant for purposes of acquiring shares of Common Stock during an
offering period may be any multiple of one percent (1%) of the Cash
Earnings paid to the Participant during each Purchase Interval within
that offering period, up to a maximum of fifteen percent (15%). The
deduction rate so authorized shall continue in effect throughout the
offering period, except to the extent such rate is changed in
accordance with the following guidelines:
(i) The Participant may, at any time during the
offering period, reduce his or her rate of payroll deduction
to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. The Participant
may not, however, effect more than one (1) such reduction per
Purchase Interval.
(ii) The Participant may, prior to the commencement
of any new Purchase Interval within the offering period,
increase the rate of his or her payroll deduction by filing
the appropriate form with the Plan Administrator. The new rate
(which may not exceed fifteen percent (15%) shall become
effective on the start date of the first Purchase Interval
following the filing of such form.
B. Effective Date. Payroll deductions shall begin on the first
pay day administratively feasible following the Participant's Entry
Date into the offering period and shall (unless sooner terminated by
the Participant) continue through the pay day ending with or
immediately prior to the last day of that offering period. The amounts
so collected shall be credited to the Participant's book account under
the Plan, but no interest shall be paid on the balance from time to
time outstanding in such account. The amounts collected from the
Participant shall not be required to be held in any segregated account
or trust fund and may be commingled with the general assets of the
Corporation and used for general corporate purposes.
C. Termination. Payroll deductions shall automatically cease
upon the termination of the Participant's purchase right in accordance
with the provisions of the Plan.
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D. No Limitation or Requirement. The Participant's acquisition
of Common Stock under the Plan on any Purchase Date shall neither limit
nor require the Participant's acquisition of Common Stock on any
subsequent Purchase Date, whether within the same or a different
offering period.
VII. PURCHASE RIGHTS
A. Grant of Purchase Rights. A Participant shall be granted a
separate purchase right for each offering period in which he or she
participates. The purchase right shall be granted on the Participant's
Entry Date into the offering period and shall provide the Participant
with the right to purchase shares of Common Stock, in a series of
successive installments over the remainder of such offering period,
upon the terms set forth below. The Participant shall execute a
subscription agreement embodying such terms and such other provisions
(not inconsistent with the Plan) as the Plan Administrator may deem
advisable.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately
after the grant, own (within the meaning of Code Section 424(d)) or
hold outstanding options or other rights to purchase, stock possessing
five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Corporation or any Corporate Affiliate.
B. Exercise of the Purchase Right. Each purchase right shall
be automatically exercised in installments on each successive Purchase
Date within the offering period, and shares of Common Stock shall
accordingly be purchased on behalf of each Participant on each such
Purchase Date. The purchase shall be effected by applying the
Participant's payroll deductions for the Purchase Interval ending on
such Purchase Date to the purchase of whole shares of Common Stock at
the purchase price in effect for the Participant for that Purchase
Date.
C. Purchase Price. The purchase price per share at which
Common Stock will be purchased on the Participant's behalf on each
Purchase Date within the offering period shall be equal to eighty-five
percent (85%) of the lower of (i) the Fair Market Value per share of
Common Stock on the Participant's Entry Date into that offering period
or (ii) the Fair Market Value per share of Common Stock on that
Purchase Date.
D. Number of Purchasable Shares. The number of shares of
Common Stock purchasable by a Participant on each Purchase Date during
the offering period shall be the number of whole shares obtained by
dividing the amount collected from the Participant through payroll
deductions during the Purchase Interval ending with that Purchase Date
by the purchase price in effect for the Participant for that Purchase
Date. However, the maximum amount which may be collected from the
Participant through payroll deductions during the Purchase Interval
shall not exceed $12,500. In addition, the maximum number of shares of
Common Stock purchasable in total by all Participants on any one
Purchase Date shall not exceed 0.5% of the total shares of Common Stock
then outstanding; provided, however, that during the first four
Purchase Periods, the maximum number of shares of Common Stock
purchasable in total by all Participants on any one Purchase Date shall
not exceed 0.75% of the total shares of Common Stock then outstanding
shares, in either case subject to periodic adjustments in the event of
certain changes in the Corporation's capitalization.
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the Plan Administrator shall have the discretionary authority,
exercisable prior to the start of any offering period under the Plan,
to increase or decrease the limitations to be in effect for the maximum
amount which may be collected per Participant and in total by all
Participants on each Purchase Date during that offering period.
E. Excess Payroll Deductions. Any payroll deductions not
applied to the purchase of shares of Common Stock on any Purchase Date
because they are not sufficient to purchase a whole share of Common
Stock shall be held for the purchase of Common Stock on the next
Purchase Date. However, any payroll deductions not applied to the
purchase of Common Stock by reason of the limitation on the maximum
number of shares purchasable per Participant or in total by all
Participants on the Purchase Date shall be promptly refunded.
F. Termination of Purchase Right. The following provisions
shall govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior to the next
scheduled Purchase Date in the offering period, terminate his
or her outstanding purchase right by filing the appropriate
form with the Plan Administrator (or its designate), and no
further payroll deductions shall be collected from the
Participant with respect to the terminated purchase right. Any
payroll deductions collected during the Purchase Interval in
which such termination occurs shall, at the Participant's
election, be immediately refunded or held for the purchase of
shares on the next Purchase Date. If no such election is made
at the time such purchase right is terminated, then the
payroll deductions collected with respect to the terminated
right shall be refunded as soon as possible.
(ii) The termination of such purchase right shall be
irrevocable, and the Participant may not subsequently rejoin
the offering period for which the terminated purchase right
was granted. In order to resume participation in any
subsequent offering period, such individual must re- enroll in
the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date
into that offering period.
(iii) Should the Participant cease to remain an
Eligible Employee for any reason (including death, disability
or change in status) while his or her purchase right remains
outstanding, then that purchase right shall immediately
terminate, and all of the Participant's payroll deductions for
the Purchase Interval in which the purchase right so
terminates shall be immediately refunded. However, should the
Participant cease to remain in active service by reason of an
approved unpaid leave of absence, then the Participant shall
have the right, exercisable up until the last business day of
the Purchase Interval in which such leave commences, to (a)
withdraw all the payroll deductions collected to date on his
or her behalf for that Purchase Interval or (b) have such
funds held for the purchase of shares on his or her behalf on
the next scheduled Purchase Date. In no event, however, shall
any further payroll deductions be collected on the
Participant's behalf during such leave. Upon the Participant's
return to active
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service (x) within ninety (90) days following the commencement
of such leave or (y) prior to the expiration of any longer
period for which such Participant's right to reemployment with
the Corporation is guaranteed by statute or contract, his or
her payroll deductions under the Plan shall automatically
resume at the rate in effect at the time the leave began,
unless the Participant withdraws from the Plan prior to his or
her return. An individual who returns to active employment
following a leave of absence that exceeds in duration the
applicable (x) or (y) time period will be treated as a new
Employee for purposes of subsequent participation in the Plan
and must accordingly re-enroll in the Plan (by making a timely
filing of the prescribed enrollment forms) on or before his or
her scheduled Entry Date into the offering period.
G. Change in Control. Each outstanding purchase right shall
automatically be exercised, immediately prior to the effective date of
any Change in Control, by applying the payroll deductions of each
Participant for the Purchase Interval in which such Change in Control
occurs to the purchase of whole shares of Common Stock at a purchase
price per share equal to eighty-five percent (85%) of the lower of (i)
the Fair Market Value per share of Common Stock on the Participant's
Entry Date into the offering period in which such Change in Control
occurs or (ii) the Fair Market Value per share of Common Stock
immediately prior to the effective date of such Change in Control.
However, the applicable limitation on the number of shares of Common
Stock purchasable per Participant shall continue to apply to any such
purchase, but not the limitation applicable to the maximum number of
shares of Common Stock purchasable in total by all Participants on any
one Purchase Date.
The Corporation shall use its best efforts to provide at least
ten (10) days' prior written notice of the occurrence of any Change in
Control, and Participants shall, following the receipt of such notice,
have the right to terminate their outstanding purchase rights prior to
the effective date of the Change in Control.
H. Proration of Purchase Rights. Should the total number of
shares of Common Stock to be purchased pursuant to outstanding purchase
rights on any particular date exceed the number of shares then
available for issuance under the Plan, the Plan Administrator shall
make a pro-rata allocation of the available shares on a uniform and
nondiscriminatory basis, and the payroll deductions of each
Participant, to the extent in excess of the aggregate purchase price
payable for the Common Stock pro-rated to such individual, shall be
refunded.
I. Assignability. The purchase right shall be exercisable only
by the Participant and shall not be assignable or transferable by the
Participant.
J. Stockholder Rights. A Participant shall have no stockholder
rights with respect to the shares subject to his or her outstanding
purchase right until the shares are purchased on the Participant's
behalf in accordance with the provisions of the Plan and the
Participant has become a holder of record of the purchased shares.
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VIII. ACCRUAL LIMITATIONS
A. Limitation. No Participant shall be entitled to accrue
rights to acquire Common Stock pursuant to any purchase right
outstanding under this Plan if and to the extent such accrual, when
aggregated with (i) rights to purchase Common Stock accrued under any
other purchase right granted under this Plan and (ii) similar rights
accrued under other employee stock purchase plans (within the meaning
of Code Section 423)) of the Corporation or any Corporate Affiliate,
would otherwise permit such Participant to purchase more than Twenty-
Five Thousand Dollars ($25,000.00) worth of stock of the Corporation or
any Corporate Affiliate (determined on the basis of the Fair Market
Value per share on the date or dates such rights are granted) for each
calendar year such rights are at any time outstanding.
B. Application of Limitation. For purposes of applying such
accrual limitations to the purchase rights granted under the Plan, the
following provisions shall be in effect:
(i) The right to acquire Common Stock under each
outstanding purchase right shall accrue in a series of
installments on each successive Purchase Date during the
offering period on which such right remains outstanding.
(ii) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the
Participant has already accrued in the same calendar year the
right to acquire Common Stock under one or more other purchase
rights at a rate equal to Twenty-Five Thousand Dollars
($25,000.00) worth of Common Stock (determined on the basis of
the Fair Market Value per share on the date or dates of grant)
for each calendar year such rights were at any time
outstanding.
C. Refund. If by reason of such accrual limitations, any
purchase right of a Participant does not accrue for a particular
Purchase Interval, then the payroll deductions that the Participant
made during that Purchase Interval with respect to such purchase right
shall be promptly refunded.
D. Conflict. In the event there is any conflict between the
provisions of this Article and one or more provisions of the Plan or
any instrument issued thereunder, the provisions of this Article shall
be controlling.
IX. EFFECTIVE DATE AND TERM OF THE PLAN
A. Effective Date. The Plan was adopted by the Board on
August 29, 2000, and shall become effective at the Effective Time,
subject to the approval of the stockholders of the Corporation within
12 months before or after its adoption by the Board.
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B. Term. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the last business day in December
2010, (ii) the date on which all shares available for issuance under
the Plan shall have been sold pursuant to purchase rights exercised
under the Plan or (iii) the date on which all purchase rights are
exercised in connection with a Change in Control. No further purchase
rights shall be granted or exercised, and no further payroll deductions
shall be collected, under the Plan following such termination.
X. AMENDMENT OF THE PLAN
A. Amendment. The Board may alter, amend, suspend or terminate
the Plan at any time to become effective immediately following the
close of any Purchase Interval. However, the Plan may be amended or
terminated immediately upon Board action, if and to the extent
necessary to assure that the Corporation will not recognize, for
financial reporting purposes, any compensation expense in connection
with the shares of Common Stock offered for purchase under the Plan,
should the financial accounting rules applicable to the Plan at the
Effective Time be subsequently revised so as to require the Corporation
to recognize compensation expense in the absence of such amendment or
termination.
B. Amendment Requiring Consent. In no event may the Board
effect any of the following amendments or revisions to the Plan without
the approval of the Corporation's stockholders: (i) increase the number
of shares of Common Stock issuable under the Plan, except for
permissible adjustments in the event of certain changes in the
Corporation's capitalization, (ii) alter the purchase price formula so
as to reduce the purchase price payable for the shares of Common Stock
purchasable under the Plan or (iii) modify the eligibility requirements
for participation in the Plan.
XI. GENERAL PROVISIONS
A. Cost and Expenses. All costs and expenses incurred in the
administration of the Plan shall be paid by the Corporation; however,
each Plan Participant shall bear all costs and expenses incurred by
such individual in the sale or other disposition of any shares
purchased under the Plan.
B. No Right to Continued Employment. Nothing in the Plan shall
confer upon the Participant any right to continue in the employ of the
Corporation or any Corporate Affiliate for any period of specific
duration or interfere with or otherwise restrict in any way the rights
of the Corporation (or any Corporate Affiliate employing such person)
or of the Participant, which rights are hereby expressly reserved by
each, to terminate such person's employment at any time for any reason,
with or without cause.
C. Governing Law. The provisions of the Plan shall be governed
by the laws of the State of California without resort to that State's
conflict-of-laws rules.
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APPENDIX
The following definitions shall be in effect under the Plan:
A. Board shall mean the Corporation's Board of Directors.
B. Cash Earnings shall mean (i) the regular base salary paid
to a Participant by one or more Participating Companies during such
individual's period of participation in one or more offering periods
under the Plan plus (ii) all overtime payments, bonuses, commissions,
profit-sharing distributions and other incentive-type payments received
during such period. Such Cash Earnings shall be calculated before
deduction of (A) any income or employment tax withholdings or (B) any
contributions made by the Participant to any Code Section 401(k) salary
deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Corporation or any Corporate Affiliate.
However, Cash Earnings shall not include any contributions made by the
Corporation or any Corporate Affiliate on the Participant's behalf to
any employee benefit or welfare plan now or hereafter established
(other than Code Section 401(k) or Code Section 125 contributions
deducted from such Cash Earnings).
C. Change in Control shall mean a change in ownership of the
Corporation pursuant to any of the following transactions:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons
holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Corporation in
complete liquidation or dissolution of the Corporation, or
(iii) the acquisition, directly or indirectly, by a
person or related group of persons (other than the Corporation
or a person that directly or indirectly controls, is
controlled by or is under common control with the Corporation)
of 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 Corporation's
outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders.
D. Code shall mean the Internal Revenue Code of 1986, as
amended.
E. Common Stock shall mean the Corporation's common stock.
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F. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code
Section 424), whether now existing or subsequently established.
G. Corporation shall mean Masimo Corporation, a Delaware
corporation, and any corporate successor to all or substantially all of
the assets or voting stock of Masimo Corporation. that shall by
appropriate action adopt the Plan.
H. Effective Time shall mean the time at which the
Underwriting Agreement is executed and the Common Stock priced for the
initial public offering of such Common Stock. Any Corporate Affiliate
that becomes a Participating Corporation after such Effective Time
shall designate a subsequent Effective Time with respect to its
employee-Participants.
I. Eligible Employee shall mean any person who is employed by
a Participating Corporation on a basis under which he or she is
regularly expected to render more than twenty (20) hours of service per
week for more than five (5) months per calendar year for earnings
considered wages under Code Section 3401 (a).
J. Entry Date shall mean the date an Eligible Employee first
commences participation in the offering period in effect under the
Plan. The earliest Entry Date under the Plan shall be the Effective
Time.
K. Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be
the closing selling price per share of Common Stock on the
date in question, as such price is reported by the National
Association of Securities Dealers on the Nasdaq National
Market. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date
for which such quotation exists.
(ii) If the Common Stock is at the time listed 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 determined by the Plan
Administrator to be 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 closing selling
price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(iii) For purposes of the initial offering period
that begins at the Effective Time, the Fair Market Value shall
be deemed to be equal to the price per share at which the
Common Stock is sold in the initial public offering pursuant
to the Underwriting Agreement.
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L. 1934 Act shall mean the Securities Exchange Act of 1934, as
amended.
M. Participant shall mean any Eligible Employee of a
Participating Corporation who is actively participating in the Plan.
N. Participating Corporation shall mean the Corporation and
such Corporate Affiliate or Affiliates as may be authorized from time
to time by the Board to extend the benefits of the Plan to their
Eligible Employees.
O. Plan shall mean the Corporation's 2000 Employee Stock
Purchase Plan, as set forth in this document.
P. Plan Administrator shall mean the committee of two (2) or
more Board members appointed by the Board to administer the Plan.
Q. Purchase Date shall mean the last business day of each
Purchase Interval. The initial Purchase Date shall be June 30, 2001.
R. Purchase Interval shall mean each successive six (6)-month
period within the offering period at the end of which there shall be
purchased shares of Common Stock on behalf of each Participant.
S. Semi-Annual Entry Date shall mean the first business day in
January and July each year on which an Eligible Employee may first
enter an offering period.
T. Stock Exchange shall mean either the American Stock
Exchange or the New York Stock Exchange.
U. Underwriting Agreement shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial
public offering of the Common Stock.
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