INNOVASIVE DEVICES, INC.
1996 OMNIBUS STOCK PLAN
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1. Purpose. This 1996 Omnibus Stock Plan (the "Plan") of Innovasive
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Devices, Inc. (the "Company") is intended to provide incentives (a) to the
officers and other employees of the Company, its parent (if any) and any present
or future subsidiaries of the Company (collectively, "Related Corporations") by
providing them with opportunities to purchase stock in the Company pursuant to
options which qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), granted hereunder ("ISO"
or "ISOs"); (b) to directors, officers, employees and consultants of the Company
and Related Corporations by providing them with opportunities to purchase stock
in the Company pursuant to options granted hereunder which do not qualify as
ISOs ("Non- Qualified Option" or "Non-Qualified Options"); and (c) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with opportunities to make direct purchases of restricted stock
in the Company ("Restricted Stock"). Both ISOs and Non-Qualified Options are
referred to hereafter individually as an "Option" and collectively as "Options."
As used herein, the terms "parent" and "subsidiary" mean "parent corporation"
and "subsidiary corporation" as those terms are defined in Section 424 of the
Code.
2. Administration of the Plan. (a) The Plan shall be administered by the
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Board of Directors of the Company (the "Board"). The Board may appoint a
Compensation Committee (the "Committee") of two or more of its members to
administer this Plan. In the event the Company registers any class of any
equity security pursuant to Section 12 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), each member of the Committee shall be a "non-
employee director" as defined in Rule 16b-3 under the Exchange Act and each
shall be an "outside director" within the meaning of Section 162(m) of the Code.
Subject to ratification of the grant of each Option or Restricted Stock by the
Board (if so required by applicable state law), and subject to the terms of the
Plan, the Committee, if so appointed, shall have the authority to (i) determine
the employees of the Company and Related Corporations (from among the class of
employees eligible under paragraph 3 to receive ISOs) to whom ISOs may be
granted and to determine (from among the class of individuals and entities
eligible under paragraph 3 to receive Non-Qualified Options and Restricted
Stock) to whom Non-Qualified Options or Restricted Stock may be granted; (ii)
determine the time or times at which Options or Restricted Stock may be granted;
(iii) determine the option price of shares subject to each Option, which price
with respect to ISOs shall not be less than the minimum specified in paragraph
7, and the purchase price of Restricted Stock; (iv) determine whether each
Option granted
shall be an ISO or a Non-Qualified Option; (v) determine (subject to paragraph
7) the time or times when each Option shall become exercisable and the duration
of the exercise period; (vi) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options and to Restricted Stock,
and the nature of such restrictions, if any; (vii) establish, amend and waive
the terms and conditions of individual options and purchase authorizations
granted hereunder, including, without limitation, terms and conditions relating
to vesting, exercisability and effect of termination of employment by the
Company; and (viii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary, under Section 422 of
the Code and the regulations promulgated thereunder, to ensure that such Option
is not treated as an ISO. The interpretation and construction by the Committee
of any provisions of the Plan or of any Option or authorization or agreement for
Restricted Stock granted under it shall be final unless otherwise determined by
the Board. The Committee may from time to time adopt such rules and regulations
for carrying out the Plan as it may deem best. No member of the Board or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option or Restricted Stock granted under it.
(b) The Committee may select one of its members as its chairman, and shall
hold meetings at such time and places as it may determine. Acts by a majority
of the Committee, or acts reduced to or approved in writing by a majority of the
members of the Committee, shall be the valid acts of the Committee. All
references in this Plan to the Committee shall mean the Board if there is no
Committee so appointed. From time to time the Board may increase the size of
the Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused or remove all members of the Committee and thereafter directly
administer the Plan.
3. Eligible Employees and Others. ISOs may be granted to any officer or
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other employee of the Company or any Related Corporation. Those directors of
the Company who are not employees may not be granted ISOs under the Plan. Non-
Qualified Options and Restricted Stock may be granted to any director (whether
or not an employee), officer, employee or consultant of the Company or any
Related Corporation. The Committee may take into consideration an optionee's
individual circumstances in determining whether to grant an ISO or a Non-
Qualified Option or Restricted Stock. Granting of any Option or Restricted
Stock to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Options
or Restricted Stock.
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4. Stock. The stock subject to Options and Restricted Stock shall be
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authorized but unissued shares of Common Stock of the Company, par value $.0001
per share (the "Common Stock"), or shares of Common Stock re-acquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 800,000 plus such additional number of shares as may
become available due to the forfeiture of options granted under the 1992
MinVasive Devices Stock Option Plan, subject to adjustment as provided in
paragraph 14. Any such shares may be issued as ISOs, Non-Qualified Options or
Restricted Stock so long as the aggregate number of shares so issued does not
exceed such number, as adjusted. If any Option granted under the Plan shall
expire or terminate for any reason without having been exercised in full or
shall cease for any reason to be exercisable in whole or in part, or if any
Restricted Stock shall be reacquired by the Company by exercise of its
repurchase option, the shares subject to such expired or terminated Option and
reacquired shares of Restricted Stock shall again be available for grants of
Options or Restricted Stock under the Plan.
5. Individual Participant Limitation. Any other provision of this Plan
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notwithstanding, the number of shares of Common Stock for which options or
purchase authorizations may be granted in any single fiscal year of the Company
to any participant shall not exceed 250,000 shares (the "Individual Limit").
For purposes of the foregoing limitation, if any option or purchase
authorization is cancelled, the cancelled option or purchase authorization shall
continue to be counted against the Individual Limit; if after grant the exercise
price of an option or purchase authorization is modified, the transaction shall
be treated as the cancellation of the option or purchase authorization and the
grant of a new option or purchase authorization. In any such case, both the
option or purchase authorization that is cancelled and the option or purchase
authorization deemed to be granted shall be counted against the Individual
Limit.
6. Grants Under the Plan. Options or Restricted Stock may be granted
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under the Plan at any time on or after April 2, 1996 and prior to April 2, 2006.
The date of grant of an Option under the Plan will be the date specified by the
Committee at the time it awards the Option; provided, however, that such date
shall not be prior to the date of award. The Committee shall have the right,
with the consent of the optionee, to convert an ISO granted under the Plan to a
Non-Qualified Option pursuant to paragraph 16.
7. Minimum Option Price: ISO Limitations. (a) The price per share
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specified in the agreement relating to each ISO granted under the Plan shall not
be less than the fair market value per share of Common Stock on the date of such
grant. In the case of an ISO to be granted to an employee owning stock
possessing more than ten percent of the total combined voting power of all
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classes of stock of the Company or any Related Corporation, the price per share
specified in the agreement relating to such ISO shall not be less than 110
percent of the fair market value of Common Stock on the date of grant.
(b) In no event shall the aggregate fair market value (determined at the
time the option is granted) of Common Stock for which ISOs granted to any
employee are exercisable for the first time by such employee during any calendar
year (under all stock option plans of the Company and any Related Corporation)
exceed $100,000.
(c) If, at the time an Option is granted under the Plan, the Company's
Common Stock is publicly traded, "fair market value" shall be determined as of
the last business day for which the prices or quotes discussed in this sentence
are available prior to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
such stock is then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of the Common Stock on the Nasdaq National
Market, if the Common Stock is not then traded on a national securities
exchange; or (iii) the closing bid price (or average of bid prices) last quoted
(on that date) by an established quotation service for over-the-counter
securities, if the Common Stock is not reported on the Nasdaq National Market or
on a national securities exchange. However, if the Common Stock is not publicly
traded at the time an Option is granted under the Plan, "fair market value"
shall be deemed to be the fair value of the Common Stock as determined by the
Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
8. Option Duration. Subject to earlier termination as provided in
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paragraphs 10 and 11, each Option shall expire on the date specified by the
Committee, but not more than ten years from the date of grant and in the case of
ISOs granted to an employee owning stock possessing more than ten percent of the
total combined voting power of all classes of stock of the Company or any
Related Corporation, not more than five years from date of grant. Subject to
earlier termination as provided in paragraphs 10 and 11, the term of each ISO
shall be the term set forth in the original instrument granting such ISO, except
with respect to any part of such ISO that is converted into a Non-Qualified
Option pursuant to paragraph 16.
9. Exercise of Option. Subject to the provisions of paragraphs 10
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through 13, each Option granted under the Plan shall be exercisable as follows:
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(a) The Option shall either be fully exercisable on the date of grant or
shall become exercisable thereafter in such installments as the Committee may
specify.
(b) Once an installment becomes exercisable it shall remain exercisable
until expiration or termination of the Option, unless otherwise specified by the
Committee.
(c) Each Option or installment may be exercised at any time or from time
to time, in whole or in part, for up to the total number of shares with respect
to which it is then exercisable.
(d) The Committee shall have the right to accelerate the date of exercise
of any installment; provided that the Committee shall not accelerate the
exercise date of any installment of any Option granted to any employee as an ISO
(and not previously converted into a Non-Qualified Option pursuant to paragraph
16) if such acceleration would violate the annual vesting limitation contained
in Section 422(d) of the Code, which provides generally that the aggregate fair
market value (determined at the time the option is granted) of the stock with
respect to which ISOs granted to any employee are exercisable for the first time
by such employee during any calendar year (under all plans of the Company and
any Related Corporation) shall not exceed $100,000.
10. Termination of Employment. If an ISO optionee ceases to be employed by
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the Company or any Related Corporation other than by reason of death or
disability as provided in paragraph 11, no further installments of his ISOs
shall become exercisable, and his ISOs shall terminate after the passage of 90
days from the date of termination of his employment, but in no event later than
on their specified expiration dates except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. Leave of absence with the written approval of the
Committee shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Company or any
Related Corporation to continue the employment of the employee after the
approved period of absence. Employment shall also be considered as continuing
uninterrupted during any other bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute.
Nothing in the Plan shall be deemed to give any grantee of any Option or
Restricted Stock the right to be retained in employment or other service by the
Company or any Related Corporation for any period of time. ISOs granted under
the Plan shall not be affected by any change of employment within or among the
Company and Related Corporations, so long as the optionee continues to be an
employee of the Company or any Related Corporation. In granting any Non-
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Qualified Option, the Committee may specify that such Non- Qualified Option
shall be subject to the restrictions set forth herein with respect to ISOs, or
to such other termination or cancellation provisions as the Committee may
determine. Notwithstanding the provisions in this paragraph 10, the Committee
may, in its sole discretion, establish different terms and conditions pertaining
to the effect of a participant's termination of employment by the Company.
11. Death; Disability; Dissolution. If an optionee ceases to be employed
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by the Company and all Related Corporations by reason of his death, any Option
of his may be exercised, to the extent of the number of shares with respect to
which he could have exercised it on the date of his death, by his estate,
personal representative or beneficiary who has acquired the Option by will or by
the laws of descent and distribution, at any time prior to the earlier of the
Option's specified expiration date or one year from the date of the optionee's
death.
If an optionee ceases to be employed by the Company and all Related
Corporations by reason of his disability, he shall have the right to exercise
any Option held by him on the date of termination of employment, to the extent
of the number of shares with respect to which he could have exercised it on that
date, at any time prior to the earlier of the Option's specified expiration date
or one year from the date of the termination of the optionee's employment. For
the purposes of the Plan, the term "disability" shall have the meaning assigned
to it in Section 22(e)(3) of the Code or any successor statute.
In the case of a partnership, corporation or other entity holding a Non-
Qualified Option, if such entity is dissolved, liquidated, becomes insolvent or
enters into a merger or acquisition with respect to which such optionee is not
the surviving entity, such Option shall terminate immediately.
12. Assignability. Unless otherwise approved by the Board, no Non-
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Qualified Option shall be assignable or transferable by the optionee except by
will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order, and during the lifetime of the Optionee each Option
shall be exercisable only by him. No ISO shall be assignable or transferable by
the optionee except by will or by the laws of descent and distribution, and
during the lifetime of the Optionee each Option shall be exercisable only by
him.
13. Terms and Conditions of Options. Options shall be evidenced by
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instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 12 hereof and may contain such
other provisions as the Committee deems advisable that are not
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inconsistent with the Plan, including transfer and repurchase restrictions
applicable to shares of Common Stock issuable upon exercise of Options. The
Committee may from time to time confer authority and responsibility on one or
more of its own members and/or one or more officers of the Company to execute
and deliver such instruments. The proper officers of the Company are authorized
and directed to take any and all action necessary or advisable from time to time
to carry out the terms of such instruments.
14. Adjustments. Upon the happening of any of the following described
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events, an optionee's rights with respect to Options granted to him hereunder
shall be adjusted as hereinafter provided:
(a) In the event the Company is merged into or consolidated with another
corporation under circumstances where the Company is not the surviving
corporation or if the Company is liquidated or sells or otherwise disposes of
all or substantially all of its assets to another corporation while unexercised
options remain outstanding under the Plan, (i) subject to the provisions of
clauses (iii), (iv) and (v) below, after the effective date of such merger,
consolidation or sale, as the case may be, each holder of an outstanding option
shall be entitled, upon exercise of such option, to receive in lieu of shares of
Common Stock, shares of such stock or other securities as the holders of shares
of Common Stock received pursuant to the terms of the merger, consolidation or
sale; or (ii) the Board may waive any discretionary limitations imposed with
respect to the exercise of the option so that all options from and after a date
prior to the effective date of such merger, consolidation, liquidation or sale,
as the case may be, specified by the Board, shall be exercisable in full; or
(iii) all outstanding options may be cancelled by the Board as of the effective
date of any such merger, consolidation, liquidation or sale, provided that
notice of such cancellation shall be given to each holder of an option, and each
such holder thereof shall have the right to exercise such option in full
(without regard to any discretionary limitations imposed with respect to the
option) during a 30-day period preceding the effective date of such merger,
consolidation, liquidation or sale; or (iv) all outstanding options may be
cancelled by the Board as of the date of any such merger, consolidation,
liquidation or sale, provided that notice of such cancellation shall be given to
each holder of an option and each such holder thereof shall have the right to
exercise such option but only to the extent exercisable in accordance with any
discretionary limitations imposed with respect to the option prior to the
effective date of such merger, consolidation, liquidation or sale; or (v) the
Board may provide for the cancellation of all outstanding options and for the
payment to the holders thereof of some part or all of the amount by which
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the value thereof exceeds the payment, if any, which the holder would have been
required to make to exercise such option.
(b) In the event the Company shall issue any of its shares as a stock
dividend upon or with respect to the shares of stock of the class which shall at
the time be subject to option hereunder, each optionee upon exercising an Option
shall be entitled to receive (for the purchase price paid upon such exercise)
the shares as to which he is exercising his Option and, in addition thereto (at
no additional cost), such number of shares of the class or classes in which such
stock dividend or dividends were declared or paid, and such amount of cash in
lieu of fractional shares, as he would have received if he had been the holder
of the shares as to which he is exercising his Option at all times between the
date of grant of such Option and the date of its exercise.
(c) Notwithstanding the foregoing, any adjustments made pursuant to
subparagraph (a) or (b) shall be made only after the Committee, after consulting
with counsel for the Company, determines whether such adjustments with respect
to ISOs will constitute a "modification" of such ISOs as that term is defined in
Section 424 of the Code, or cause any adverse tax consequences for the holders
of such ISOs. No adjustments shall be made for dividends paid in cash or in
property other than securities of the Company.
(d) No fractional shares shall actually be issued under the Plan. Any
fractional shares which, but for this subparagraph (d), would have been issued
to an optionee pursuant to an Option, shall be deemed to have been issued and
immediately sold to the Company for their fair market value, and the optionee
shall receive from the Company cash in lieu of such fractional shares.
(e) Upon the happening of any of the foregoing events described in
subparagraphs (a) or (b) above, the class and aggregate number of shares set
forth in paragraph 4 hereof which are subject to Options which previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events specified in such subparagraphs. The Committee
shall determine the specific adjustments to be made under this paragraph 14, and
subject to paragraph 2, its determination shall be conclusive.
15. Means of Exercising Options. An Option (or any part or installment
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thereof) shall be exercised by giving written notice to the Company at its
principal office address. Such notice shall identify the Option being exercised
and specify the number of shares as to which such Option is being exercised,
accompanied by full payment of the purchase price therefor (i) in United States
dollars in cash or by check, (ii) at the discretion of the Committee, through
delivery of shares of Common Stock having fair
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market value equal as of the date of the exercise to the cash exercise price of
the Option, (iii) at the discretion of the Committee, by delivery of the
optionee's personal recourse note bearing interest payable not less than
annually at no less than 100% of the lowest applicable Federal rate, as defined
in Section 1274(d) of the Code, (iv) at the discretion of the Committee, by
delivery to the Company of irrevocable instructions to a broker to (a) either
sell the shares subject to the option or purchase authorization being exercised
or hold such shares as collateral for a margin loan and (b) promptly deliver to
the Company the amount of the sale or loan proceeds required to pay the exercise
price or purchase price, as the case may be, or (v) at the discretion of the
Committee, by any combination of (i), (ii), (iii) and (iv) above. If the
Committee exercises its discretion to permit payment of the exercise price of an
ISO by means of the methods set forth in clauses (ii), (iii) or (iv) of the
preceding sentence, such discretion shall be exercised in writing at the time of
the grant of the ISO in question. The holder of an Option shall not have the
rights of a shareholder with respect to the shares covered by his Option until
the date of issuance of a stock certificate to him for such shares. Except as
expressly provided above in paragraph 14 with respect to change in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.
16. Conversion of ISOs into Non-Qualified Options: Termination of ISOs.
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The Committee, at the written request of any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into Non-Qualified Options and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.
17. Restricted Stock. Each grant of Restricted Stock under the Plan shall
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be evidenced by an instrument (a "Restricted Stock Agreement") in such form as
the Committee shall prescribe from
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time to time in accordance with the Plan and shall comply with the following
terms and conditions, and with such other terms and conditions as the Committee,
in its discretion, shall establish:
(a) The Committee shall determine the number of shares of Common Stock to
be issued to an eligible person pursuant to the grant of Restricted Stock, and
the extent, if any, to which they shall be issued in exchange for cash, other
consideration, or both.
(b) Shares issued pursuant to a grant of Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise disposed of, except by will or the
laws of descent and distribution or as otherwise determined by the Committee in
the Restricted Stock Agreement, for such period as the Committee shall
determine, from the date on which the Restricted Stock is granted (the
"Restricted Period"). The Company will have the option to repurchase the Common
Stock at such price as the Committee shall have fixed in the Restricted Stock
Agreement, which option will be exercisable (i) if the Participant's continuous
employment or performance of services for the Company and the Related
Corporations shall terminate prior to the expiration of the Restricted Period,
(ii) if, on or prior to the expiration of the Restricted Period or the earlier
lapse of such repurchase option, the Participant has not paid to the Company an
amount equal to any federal, state, local or foreign income or other taxes which
the Company determines is required to be withheld in respect of such Restricted
Stock or (iii) under such other circumstances as determined by the Committee in
its discretion. Such repurchase option shall be exercisable on such terms, in
such manner and during such period as shall be determined by the Committee in
the Restricted Stock Agreement. Each certificate for shares issued as Restricted
Stock shall bear an appropriate legend referring to the foregoing repurchase
option and other restrictions; shall be deposited by the stockholder with the
Company, together with a stock power endorsed in blank; or shall be evidenced in
such other manner permitted by applicable law as determined by the Committee in
its discretion. Any attempt to dispose of any such shares in contravention of
the foregoing repurchase option and other restrictions shall be null and void
and without effect. If shares issued as Restricted Stock shall be repurchased
pursuant to the repurchase option described above, the stockholder, or in the
event of his death, his personal representative, shall forthwith deliver to the
Secretary of the Company the certificates for the shares, accompanied by such
instrument of transfer, if any, as may reasonably be required by the Secretary
of the Company. If the repurchase option described above is not exercised by
the Company, such repurchase option and the restrictions imposed pursuant to the
first sentence of this subparagraph (b) shall terminate and be of no further
force and effect.
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(c) If a person who has been in continuous employment or performance of
services for the Company or a Related Corporation since the date on which
Restricted Stock was granted to him shall, while in such employment or
performance of services, die, or terminate such employment or performance of
services by reason of disability or by reason of early, normal or deferred
retirement under an approved retirement program of the Company or a Related
Corporation (or such other plan or arrangement as may be approved by the
Committee in its discretion, for this purpose) and any of such events shall
occur after the date on which the Restricted Stock was granted to him and prior
to the end of the Restricted Period, the Committee may determine to cancel the
repurchase option (and any and all other restrictions) on any or all of the
shares of Restricted Stock; and the repurchase option shall become exercisable
at such time as to the remaining shares, if any.
18. Term and Amendment of Plan. This Plan was adopted by the Board on
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April 2, 1996 and approved by the stockholders of the Company on April 23, 1996.
The Plan shall expire on April 1, 2006 (except as to Options and Restricted
Stock outstanding on that date). The Board may terminate or amend the Plan in
any respect at any time, except that any amendment that (a) increases the total
number of shares that may be issued under the Plan (except by adjustment
pursuant to paragraph 14); (b) changes the class of persons eligible to
participate in the Plan, or (c) materially increases the benefits to
participants under the Plan, shall be subject to approval by stockholders
obtained within 12 months before or after the Board adopts a resolution
authorizing any of the foregoing amendments, and shall be null and void if such
approval is not obtained. Termination or any modification or amendment of the
Plan shall not, without consent of a participant, affect his rights under any
Option or Restricted Stock previously granted to him.
19. Application of Funds. The proceeds received by the Company from the
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sale of shares pursuant to Options and Restricted Stock authorized under the
Plan shall be used for general corporate purposes.
20. Governmental Regulation. The Company's obligation to sell and deliver
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shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
21. (a) Withholding Taxes; Delivery of Shares. The Company's obligation to
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deliver shares of Common Stock upon exercise of an option or purchase
authorization, in whole or in part, shall be subject to the participant's
satisfaction of all applicable federal, state and local income and employment
tax withholding obligations. The participant may satisfy the
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obligation, in whole or in part, by electing to (1) have the Company withhold
shares of Common Stock or (2) deliver to the Company already-owned shares of
Common Stock having a value equal to the amount required to be withheld;
provided, however, that participants who are subject to the requirements of
Section 16 of the Exchange Act ("Section 16 Persons") shall not have the benefit
of the foregoing election but rather the Company shall, in all cases where tax
withholding is required with respect to such participants, withhold shares of
Common Stock having a value equal to such withholding obligations. The value of
shares to be withheld or delivered shall be based on the fair market value of
the shares on the date the amount of tax to be withheld is to be determined (the
"Tax Date"). The election by a participant who is not a Section 16 Person to
have shares withheld for this purpose will be subject to the following
restrictions: (1) the election must be made prior to the Tax Date, (2) the
election must be irrevocable and (3) the election will be subject to the
disapproval of the Committee.
(b) Withholding of Additional Income Taxes. The Company may, in
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accordance with the Code, upon exercise of a Non- Qualified Option or the
purchase of Common Stock for less than its fair market value or the lapse of
restrictions on Restricted Stock or the making of a Disqualifying Disposition
(as defined in paragraph 22), require the employee to pay additional withholding
taxes in respect of the amount that is considered compensation includable in
such person's gross income.
22. Notice to Company of Disqualifying Disposition. Each employee who
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receives ISOs shall agree to notify the Company in writing immediately after the
employee makes a disqualifying disposition of any Common Stock received pursuant
to the exercise of an ISO (a "Disqualifying Disposition"). Disqualifying
Disposition means any disposition (including any sale) of such stock before the
later of (a) two years after the employee was granted the ISO under which he
acquired such stock or (b) one year after the employee acquired such stock by
exercising such ISO. If the employee has died before such stock is sold, these
holding period requirements do not apply and no Disqualifying Disposition will
thereafter occur.
23. Governing Laws; Construction. The validity and construction of the
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Plan and the instruments evidencing Options and Restricted Stock shall be
governed by the laws of the Commonwealth of Massachusetts. In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
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