Document:

exv10w5

 

Exhibit 10.5

Hansen Medical, Inc.

2006 Employee Stock Purchase Plan

Adopted
by the Board of Directors: August 4, 2006

Amended by the Board of Directors: September 21, 2006

Approved by the
Stockholders: ___, 2006

1. General.

     (a) The purpose of the Plan is to provide a means by which Employees of the Company and
certain designated Related Corporations may be given an opportunity to purchase shares of the
Common Stock of the Company.

     (b) The Company, by means of the Plan, seeks to retain the services of such Employees, to
secure and retain the services of new Employees and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Related Corporations.

     (c) The Company intends that the Purchase Rights be considered options issued under an
Employee Stock Purchase Plan.

2. Administration.

     (a) The Board shall administer the Plan unless and until the Board delegates administration of
the Plan to a Committee, as provided in Section 2(c).

     (b) The Board shall have the power, subject to, and within the limitations of, the express
provisions of the Plan:

          (i) To determine when and how Purchase Rights to purchase shares of Common Stock shall be
granted and the provisions of each Offering of such Purchase Rights (which need not be identical).

          (ii) To designate from time to time which Related Corporations of the Company shall be
eligible to participate in the Plan.

          (iii) To construe and interpret the Plan and Purchase Rights, and to establish, amend and
revoke rules and regulations for its administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.

          (iv) To adopt such procedures and sub-plans as are necessary or appropriate to permit
participation in the Plan by Employees who are foreign nationals or employed outside the United
States.

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          (v) To amend the Plan as provided in Section 13.

          (vi) Generally, to exercise such powers and to perform such acts as it deems necessary or
expedient to promote the best interests of the Company and its Related Corporations and to carry
out the intent that the Plan be treated as an Employee Stock Purchase Plan.

     (c) The Board may delegate some or all of the administration of the Plan to a Committee or
Committees. If administration is delegated to a Committee, the Committee shall have, in connection
with the administration of the Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in this Plan to the
Board shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board.
The Board may retain the authority to concurrently administer the Plan with the Committee and may,
at any time, revest in the Board some or all of the powers previously delegated.

     (d) All determinations, interpretations and constructions made by the Board in good faith
shall not be subject to review by any person and shall be final, binding and conclusive on all
persons.

3. Shares of Common Stock Subject to the Plan.

     (a) Subject to the provisions of Section 12(a) relating to Capitalization Adjustments, the
shares of Common Stock that may be sold pursuant to Purchase Rights shall not exceed in the
aggregate two million five hundred thousand (2,500,000) shares of Common Stock, plus an annual
increase to be added on January 1st each year for a period of ten (10) years, commencing
on January 1, 2007 and ending on (and including) January 1,
2016, in an amount equal to the lesser of (i) two percent (2%) of the total number of shares of Common Stock outstanding on December 31st
of the preceding calendar year (rounded down to the nearest whole
share), or (ii) seven hundred fifty thousand (750,000) Shares of
Common Stock. Notwithstanding the foregoing, the Board may act,
prior to the first day of any calendar year, to increase the share reserve by such number of shares
of Common Stock as the Board shall determine, which number shall be
less than each of (i) and (ii).

     (b) If any Purchase Right granted under the Plan shall for any reason terminate without having
been exercised, the shares of Common Stock not purchased under such Purchase Right shall again
become available for issuance under the Plan.

     (c) The stock purchasable under the Plan shall be shares of authorized but unissued or
reacquired Common Stock, including shares repurchased by the Company on the open market.

4. Grant of Purchase Rights; Offering.

     (a) The Board may from time to time grant or provide for the grant of Purchase Rights to
purchase shares of Common Stock under the Plan to Eligible Employees in an Offering (consisting of
one or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board. Each
Offering shall be in such form and shall contain such terms and conditions as

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the Board shall deem appropriate, which shall comply with the requirement of Section 423(b)(5)
of the Code that all Employees granted Purchase Rights shall have the same rights and privileges.
The terms and conditions of an Offering shall be incorporated by reference into the Plan and
treated as part of the Plan. The provisions of separate Offerings need not be identical, but each
Offering shall include (through incorporation of the provisions of this Plan by reference in the
document comprising the Offering or otherwise) the period during which the Offering shall be
effective, which period shall not exceed twenty-seven (27) months beginning with the Offering Date,
and the substance of the provisions contained in Sections 5 through 8, inclusive.

     (b) If a Participant has more than one Purchase Right outstanding under the Plan, unless he or
she otherwise indicates in agreements or notices delivered hereunder: (i) each agreement or notice
delivered by that Participant shall be deemed to apply to all of his or her Purchase Rights under
the Plan, and (ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase
Right, if different Purchase Rights have identical exercise prices) shall be exercised to the
fullest possible extent before a Purchase Right with a higher exercise price (or a later-granted
Purchase Right if different Purchase Rights have identical exercise prices) shall be exercised.

     (c) The Board shall have the discretion to structure an Offering so that if the Fair Market
Value of the shares of Common Stock on the first day of a new Purchase Period within that Offering
is less than or equal to the Fair Market Value of the shares of Common Stock on the Offering Date,
then (i) that Offering shall terminate immediately, and (ii) the Participants in such terminated
Offering shall be automatically enrolled in a new Offering beginning on the first day of such new
Purchase Period.

5. Eligibility.

     (a) Purchase Rights may be granted only to Employees of the Company or, as the Board may
designate as provided in Section 2(b), to Employees of a Related Corporation. Except as provided
in Section 5(b), an Employee shall not be eligible to be granted Purchase Rights under the Plan
unless, on the Offering Date, such Employee has been in the employ of the Company or the Related
Corporation, as the case may be, for such continuous period preceding such Offering Date as the
Board may require, but in no event shall the required period of continuous employment be greater
than two (2) years. In addition, the Board may provide that no Employee shall be eligible to be
granted Purchase Rights under the Plan unless, on the Offering Date, such Employee’s customary
employment with the Company or the Related Corporation is more than twenty (20) hours per week and
more than five (5) months per calendar year or such other criteria as the Board may determine
consistent with Section 423 of the Code.

     (b) The Board may provide that each person who, during the course of an Offering, first
becomes an Eligible Employee shall, on a date or dates specified in the Offering which coincides
with the day on which such person becomes an Eligible Employee or which occurs thereafter, receive
a Purchase Right under that Offering, which Purchase Right shall thereafter be deemed to be a part
of that Offering. Such Purchase Right shall have the same characteristics as any Purchase Rights
originally granted under that Offering, as described herein, except that:

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          (i) the date on which such Purchase Right is granted shall be the “Offering Date” of such
Purchase Right for all purposes, including determination of the exercise price of such Purchase
Right;

          (ii) the period of the Offering with respect to such Purchase Right shall begin on its
Offering Date and end coincident with the end of such Offering; and

          (iii) the Board may provide that if such person first becomes an Eligible Employee within a
specified period of time before the end of the Offering, he or she shall not receive any Purchase
Right under that Offering.

     (c) No Employee shall be eligible for the grant of any Purchase Rights under the Plan if,
immediately after any such Purchase Rights are granted, such Employee owns stock possessing five
percent (5%) or more of the total combined voting power or value of all classes of stock of the
Company or of any Related Corporation. For purposes of this Section 5(c), the rules of Section
424(d) of the Code shall apply in determining the stock ownership of any Employee, and stock which
such Employee may purchase under all outstanding Purchase Rights and options shall be treated as
stock owned by such Employee.

     (d) As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted
Purchase Rights under the Plan only if such Purchase Rights, together with any other rights granted
under all Employee Stock Purchase Plans of the Company and any Related Corporations, do not permit
such Eligible Employee’s rights to purchase stock of the Company or any Related Corporation to
accrue at a rate which exceeds twenty five thousand dollars ($25,000) of Fair Market Value of such
stock (determined at the time such rights are granted, and which, with respect to the Plan, shall
be determined as of their respective Offering Dates) for each calendar year in which such rights
are outstanding at any time.

     (e) Officers of the Company and any designated Related Corporation, if they are otherwise
Eligible Employees, shall be eligible to participate in Offerings under the Plan. Notwithstanding
the foregoing, the Board may provide in an Offering that Employees who are highly compensated
Employees within the meaning of Section 423(b)(4)(D) of the Code shall not be eligible to
participate.

6. Purchase Rights; Purchase Price.

     (a) On each Offering Date, each Eligible Employee, pursuant to an Offering made under the
Plan, shall be granted a Purchase Right to purchase up to that number of shares of Common Stock
purchasable either with a percentage or with a maximum dollar amount, as designated by the Board,
but in either case not exceeding fifteen percent (15%) of such Employee’s earnings (as defined by
the Board in each Offering) during the period that begins on the Offering Date (or such later date
as the Board determines for a particular Offering) and ends on the date stated in the Offering,
which date shall be no later than the end of the Offering.

     (b) The Board shall establish one (1) or more Purchase Dates during an Offering as of which
Purchase Rights granted pursuant to that Offering shall be exercised and purchases of shares of
Common Stock shall be carried out in accordance with such Offering.

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     (c) In connection with each Offering made under the Plan, the Board may specify a maximum
number of shares of Common Stock that may be purchased by any Participant on any Purchase Date
during such Offering. In connection with each Offering made under the Plan, the Board may specify
a maximum aggregate number of shares of Common Stock that may be purchased by all Participants
pursuant to such Offering. In addition, in connection with each Offering that contains more than
one Purchase Date, the Board may specify a maximum aggregate number of shares of Common Stock that
may be purchased by all Participants on any Purchase Date under the Offering. If the aggregate
purchase of shares of Common Stock issuable upon exercise of Purchase Rights granted under the
Offering would exceed any such maximum aggregate number, then, in the absence of any Board action
otherwise, a pro rata allocation of the shares of Common Stock available shall be made in as nearly
a uniform manner as shall be practicable and equitable.

     (d) The purchase price of shares of Common Stock acquired pursuant to Purchase Rights shall be
not less than the lesser of:

          (i) an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of
Common Stock on the Offering Date; or

          (ii) an amount equal to eighty-five percent (85%) of the Fair Market Value of the shares of
Common Stock on the applicable Purchase Date.

7. Participation; Withdrawal; Termination.

     (a) A Participant may elect to authorize payroll deductions pursuant to an Offering under the
Plan by completing and delivering to the Company, within the time specified in the Offering, an
enrollment form (in such form as the Company may provide). Each such enrollment form shall
authorize an amount of Contributions expressed as a percentage of the submitting Participant’s
earnings (as defined in each Offering) during the Offering (not to exceed the maximum percentage
specified by the Board). Each Participant’s Contributions shall be credited to a bookkeeping
account for such Participant under the Plan and shall be deposited with the general funds of the
Company except where applicable law requires that Contributions be deposited with a third party.
To the extent provided in the Offering, a Participant may begin such Contributions after the
beginning of the Offering. To the extent provided in the Offering, a Participant may thereafter
reduce (including to zero) or increase his or her Contributions. To the extent specifically
provided in the Offering, in addition to making Contributions by payroll deductions, a Participant
may make Contributions through the payment by cash or check prior to each Purchase Date of the
Offering.

     (b) During an Offering, a Participant may cease making Contributions and withdraw from the
Offering by delivering to the Company a notice of withdrawal in such form as the Company may
provide. Such withdrawal may be elected at any time prior to the end of the Offering, except as
provided otherwise in the Offering. Upon such withdrawal from the Offering by a Participant, the
Company shall distribute to such Participant all of his or her accumulated Contributions (reduced
to the extent, if any, such Contributions have been used to acquire shares of Common Stock for the
Participant) under the Offering, and such Participant’s Purchase Right in that Offering shall
thereupon terminate. A Participant’s withdrawal from an Offering shall

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have no effect upon such Participant’s eligibility to participate in any other Offerings under
the Plan, but such Participant shall be required to deliver a new enrollment form in order to
participate in subsequent Offerings.

     (c) Purchase Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon a Participant ceasing to be an Employee for any reason or for no reason (subject
to any post-employment participation period required by law) or other lack of eligibility. The
Company shall distribute to such terminated or otherwise ineligible Employee all of his or her
accumulated Contributions (reduced to the extent, if any, such Contributions have been used to
acquire shares of Common Stock for the terminated or otherwise ineligible Employee) under the
Offering.

     (d) Purchase Rights shall not be transferable by a Participant except by will, the laws of
descent and distribution, or by a beneficiary designation as provided in Section 10. During a
Participant’s lifetime, Purchase Rights shall be exercisable only by such Participant.

     (e) Unless otherwise specified in an Offering, the Company shall have no obligation to pay
interest on Contributions.

8. Exercise of Purchase Rights.

     (a) On each Purchase Date during an Offering, each Participant’s accumulated Contributions
shall be applied to the purchase of shares of Common Stock up to the maximum number of shares of
Common Stock permitted pursuant to the terms of the Plan and the applicable Offering, at the
purchase price specified in the Offering. No fractional shares shall be issued upon the exercise
of Purchase Rights unless specifically provided for in the Offering.

     (b) If any amount of accumulated Contributions remains in a Participant’s account after the
purchase of shares of Common Stock and such remaining amount is less than the amount required to
purchase one share of Common Stock on the final Purchase Date of an Offering, then such remaining
amount shall be held in such Participant’s account for the purchase of shares of Common Stock under
the next Offering under the Plan, unless such Participant withdraws from such next Offering, as
provided in Section 7(b), or is not eligible to participate in such Offering, as provided in
Section 5, in which case such amount shall be distributed to such Participant after the final
Purchase Date, without interest. If the amount of Contributions remaining in a Participant’s
account after the purchase of shares of Common Stock is at least equal to the amount required to
purchase one (1) whole share of Common Stock on the final Purchase Date of the Offering, then such
remaining amount shall be distributed in full to such Participant at the end of the Offering,
without interest.

     (c) No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be
issued upon such exercise under the Plan are covered by an effective registration statement
pursuant to the Securities Act and the Plan is in material compliance with all applicable federal,
state, foreign and other securities and other laws applicable to the Plan. If, on a Purchase Date
during any Offering hereunder, the shares of Common Stock are not so registered or the Plan is not
in such compliance, no Purchase Rights of any Offering shall be exercised on such Purchase Date,
and the Purchase Date shall be delayed until the shares of

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Common Stock are subject to such an effective registration statement and the Plan is in such
compliance, except that the Purchase Date shall not be delayed more than twelve (12) months and the
Purchase Date shall in no event be more than twenty-seven (27) months from the Offering Date. If,
on the Purchase Date under any Offering hereunder, as delayed to the maximum extent permissible,
the shares of Common Stock are not registered and the Plan is not in such compliance, no Purchase
Rights of any Offering shall be exercised and all Contributions accumulated during the Offering
(reduced to the extent, if any, such Contributions have been used to acquire shares of Common
Stock) shall be distributed to the Participants, without interest.

9. Covenants of the Company.

     The Company shall seek to obtain from each federal, state, foreign or other regulatory
commission or agency having jurisdiction over the Plan such authority as may be required to issue
and sell shares of Common Stock upon exercise of the Purchase Rights. If, after commercially
reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency
the authority that counsel for the Company deems necessary for the lawful issuance and sale of
Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such Purchase Rights unless and until such authority is
obtained.

10. Designation of Beneficiary.

     (a) A Participant may file a written designation of a beneficiary who is to receive any shares
of Common Stock and/or cash, if any, from the Participant’s account under the Plan in the event of
such Participant’s death subsequent to the end of an Offering but prior to delivery to the
Participant of such shares of Common Stock or cash. In addition, a Participant may file a written
designation of a beneficiary who is to receive any cash from the Participant’s account under the
Plan in the event of such Participant’s death during an Offering. Any such designation shall be on
a form provided by or otherwise acceptable to the Company.

     (b) The Participant may change such designation of beneficiary at any time by written notice
to the Company. In the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such Participant’s death, the
Company shall deliver such shares of Common Stock and/or cash to the executor or administrator of
the estate of the Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its sole discretion, may deliver such shares of Common
Stock and/or cash to the spouse or to any one or more dependents or relatives of the Participant,
or if no spouse, dependent or relative is known to the Company, then to such other person as the
Company may designate.

11. Miscellaneous Provisions.

     (a) The Plan and Offering do not constitute an employment contract. Nothing in the Plan or in
the Offering shall in any way alter the at will nature of a Participant’s employment or be deemed
to create in any way whatsoever any obligation on the part of any Participant to

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continue in the employ of the Company or a Related Corporation, or on the part of the Company
or a Related Corporation to continue the employment of a Participant.

     (b) The provisions of the Plan shall be governed by the laws of the State of Delaware without
resort to that state’s conflicts of laws rules.

     (c) Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights shall
constitute general funds of the Company.

     (d) A Participant shall not be deemed to be the holder of, or to have any of the rights of a
holder with respect to, shares of Common Stock subject to Purchase Rights unless and until the
Participant’s shares of Common Stock acquired upon exercise of Purchase Rights are recorded in the
books of the Company (or its transfer agent).

12. Adjustments upon Changes in Common Stock; Corporate Transactions.

     (a) In the event of a Capitalization Adjustment, the Board shall equitably adjust: (i) the
class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a); (ii) the
class(es) and maximum number of securities by which the share reserve is to increase automatically
each year pursuant to Section 3(a); (iii) the class(es) and number of securities subject to
outstanding Purchase Rights; and (iv) the class(es) and number of securities imposed by purchase
limits under each ongoing Offering. The Board shall make such adjustments, and its determination
shall be final, binding and conclusive.

     (b) In the event of a Corporate Transaction, then: (i) any surviving corporation or acquiring
corporation (or the surviving or acquiring corporation’s parent company) may assume or continue
Purchase Rights outstanding under the Plan or may substitute similar rights (including a right to
acquire the same consideration paid to the stockholders in the Corporate Transaction) for those
outstanding under the Plan, or (ii) if any surviving or acquiring corporation (or its parent
company) does not assume or continue such Purchase Rights or does not substitute similar rights for
Purchase Rights outstanding under the Plan, then the Participants’ accumulated Contributions shall
be used to purchase shares of Common Stock within ten (10) business days prior to the Corporate
Transaction under any ongoing Offerings, and the Participants’ Purchase Rights under the ongoing
Offerings shall terminate immediately after such purchase.

13. Amendment of the Plan.

     (a) The Board at any time, and from time to time, may amend the Plan. However, except as
provided in Section 12(a) relating to Capitalization Adjustments and except as to amendments solely
to benefit the administration of the Plan, to take account of a change in legislation or to obtain
or maintain favorable tax, exchange control or regulatory treatment for Participants or the Company
or any Related Corporation, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to satisfy the
requirements of Section 423 of the Code or other applicable laws or regulations.

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     (b) It is expressly contemplated that the Board may amend the Plan in any respect the Board
deems necessary or advisable to provide Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated thereunder relating to
Employee Stock Purchase Plans and/or to bring the Plan and/or Purchase Rights into compliance
therewith.

     (c) The rights and obligations under any Purchase Rights granted before amendment of the Plan
shall not be impaired by any amendment of the Plan except: (i) with the consent of the person to
whom such Purchase Rights were granted, or (ii) as necessary to comply with any laws or
governmental regulations (including, without limitation, the provisions of the Code and the
regulations promulgated thereunder relating to Employee Stock Purchase Plans).

14. Termination or Suspension of the Plan.

     (a) The Board may suspend or terminate the Plan at any time. Unless sooner terminated, the
Plan shall terminate at the time that all of the shares of Common Stock reserved for issuance under
the Plan, as increased and/or adjusted from time to time, have been issued under the terms of the
Plan. No Purchase Rights may be granted under the Plan while the Plan is suspended or after it is
terminated.

     (b) Any benefits, privileges, entitlements and obligations under any Purchase Rights while the
Plan is in effect shall not be impaired by suspension or termination of the Plan except (i) as
expressly provided in the Plan or with the consent of the person to whom such Purchase Rights were
granted, (ii) as necessary to comply with any laws, regulations or listing requirements, or (iii)
as necessary to ensure that the Plan and/or Purchase Rights comply with the requirements of Section
423 of the Code.

15. Effective Date of Plan.

     The Plan shall become effective on the IPO Date, but no Purchase Rights shall be exercised
unless and until the Plan has been approved by the stockholders of the Company, which approval
shall be within twelve (12) months before or after the date the Plan is adopted by the Board.

16. Definitions.

     As used in the Plan, the following definitions shall apply to the capitalized terms indicated
below:

     (a) “Board” means the Board of Directors of the Company.

     (b) “Capitalization Adjustment” means any change that is made in, or other events that occur
with respect to, the Common Stock subject to the Plan or subject to any Purchase Right after the
Effective Date without the receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than
cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in
corporate structure or other transaction not involving the receipt of consideration by the
Company). Notwithstanding the foregoing, the conversion of any

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convertible securities of the Company shall not be treated as a transaction “without receipt
of consideration” by the Company.

     (c) “Code” means the Internal Revenue Code of 1986, as amended.

     (d) “Committee” means a committee of one (1) or more members of the Board to whom authority
has been delegated by the Board in accordance with Section 2(c).

     (e) “Common Stock” means the common stock of the Company.

     (f) “Company” means Hansen Medical, Inc., a Delaware corporation.

     (g) “Contributions” means the payroll deductions and other additional payments specifically
provided for in the Offering that a Participant contributes to fund the exercise of a Purchase
Right. A Participant may make additional payments into his or her account, if specifically provided
for in the Offering, and then only if the Participant has not already had the maximum permitted
amount withheld during the Offering through payroll deductions.

     (h) “Corporate Transaction” means the occurrence, in a single transaction or in a series of
related transactions, of any one or more of the following events:

          (i) a sale or other disposition of all or substantially all, as determined by the Board in its
sole discretion, of the consolidated assets of the Company and its Subsidiaries;

          (ii) a sale or other disposition of at least ninety percent (90%) of the outstanding
securities of the Company;

          (iii) the consummation of a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or

          (iv) the consummation of a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise.

     (i) “Director” means a member of the Board.

     (j) “Eligible Employee” means an Employee who meets the requirements set forth in the Offering
for eligibility to participate in the Offering, provided that such Employee also meets the
requirements for eligibility to participate set forth in the Plan.

     (k) “Employee” means any person, including Officers and Directors, who is employed for
purposes of Section 423(b)(4) of the Code by the Company or a Related Corporation. However,
service solely as a Director, or payment of a fee for such services, shall not cause a Director to
be considered an “Employee” for purposes of the Plan.

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     (l) “Employee Stock Purchase Plan” means a plan that grants Purchase Rights intended to be
options issued under an “employee stock purchase plan,” as that term is defined in Section 423(b)
of the Code.

     (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (n) “Fair Market Value” means, as of any date, the value of the Common Stock determined as
follows:

          (i) If the Common Stock is listed on any established stock exchange or traded on the Nasdaq
National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest volume of trading in
the Common Stock) on the date of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable. Unless otherwise provided by the Board, if there is no
closing sales price (or closing bid if no sales were reported) for the Common Stock on the date of
determination, then the Fair Market Value shall be the closing selling price (or closing bid if no
sales were reported) on the last preceding date for which such quotation exists.

          (ii) In the absence of such markets for the Common Stock, the Fair Market Value shall be
determined by the Board in good faith.

     (o) “IPO Date” means the date of the underwriting agreement between the Company and the
underwriter(s) managing the initial public offering of the Common Stock, pursuant to which the
Common Stock is priced for the initial public offering.

     (p) “Offering” means the grant of Purchase Rights to purchase shares of Common Stock under the
Plan to Eligible Employees.

     (q) “Offering Date” means a date selected by the Board for an Offering to commence.

     (r) “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.

     (s) “Participant” means an Eligible Employee who holds an outstanding Purchase Right granted
pursuant to the Plan.

     (t) “Plan” means this Hansen Medical, Inc. 2006 Employee Stock Purchase Plan.

     (u) “Purchase Date” means one or more dates during an Offering established by the Board on
which Purchase Rights shall be exercised and as of which purchases of shares of Common Stock shall
be carried out in accordance with such Offering.

     (v) “Purchase Period” means a period of time specified within an Offering beginning on the
Offering Date or on the next day following a Purchase Date within an Offering and ending on a
Purchase Date. An Offering may consist of one or more Purchase Periods.

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     (w) “Purchase Right” means an option to purchase shares of Common Stock granted pursuant to
the Plan.

     (x) “Related Corporation” means any “parent corporation” or “subsidiary corporation” of the
Company whether now or subsequently established, as those terms are defined in Sections 424(e) and
424(f), respectively, of the Code.

     (y) “Securities Act” means the Securities Act of 1933, as amended.

     (z) “Trading Day” means any day on which the exchange(s) or market(s) on which shares of
Common Stock are listed, whether it be an established stock exchange or otherwise, is open for
trading.

 12.exv10w18

 

Exhibit 10.18

Non-Employee Director Compensation Arrangements

     
In August 2006, our board of
directors adopted a compensation program for non-employee
directors. This compensation program will be effective
immediately upon the closing of our initial public offering. Pursuant to this
program, each member of our board of directors who is not an
employee will receive the following cash compensation for board
services, as applicable:

			
	 	• 	
    $20,000 per year for service as a board member;
	 
	 	• 	
    $12,000 per year for service as chairman of the audit
    committee;
	 
	 	• 	
    $5,000 per year for service as chairman of the compensation
    committee;
	 
	 	• 	
    $5,000 per year for service as chairman of the nominating
    and corporate governance committee;
	 
	 	• 	
    $2,000 per year for service as a non-chairman member of the
audit committee;
	 
	 	• 	
    $1,000 per year for service as a non-chairman member of the compensation
    committee;
	 
	 	• 	
    $1,000 per year for service as a non-chairman member of the
nominating and corporate governance
    committee;
	 
	 	• 	
    $1,500 for each board meeting attended in person ($500 for
    meetings attended by video or telephone conference);
	 
	 	• 	
    $500 for each audit committee meeting attended ($1,000 for the
    chairman of the audit committee for each meeting attended);
	 
	 	• 	
    $500 for each compensation committee meeting attended; and
	 
	 	• 	
    $500 for each nominating and corporate governance committee
    meeting attended.

     
We will also reimburse our non-employee directors for
their reasonable expenses incurred in attending meetings of our
board of directors and committees of the board of directors.

     
Additionally, members of our board of directors who are not our
employees will receive non-statutory stock options under our
2006 Equity Incentive Plan, which will become effective as of
the effective date of our initial public offering. Each non-employee director
joining our board of directors after the closing of our initial
public offering will automatically be granted a non-statutory stock
option to purchase 30,000 shares of common stock with
an exercise price equal to the then fair market value of our
common stock. On the date of each annual meeting of our
stockholders beginning in 2007, each non-employee will also
automatically be granted a non-statutory stock option to
purchase 10,000 shares of our common stock on that
date with an exercise price equal to the then fair market value
of our common stock. Initial grants will vest monthly over three
years. Automatic annual grants will vest over twelve months. All
stock options granted under our 2006 Equity Incentive Plan may
have a term of up to ten years.

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