INNOVASIVE DEVICES, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
As Amended and Resated as of July 14, 1999
1. PURPOSE. The purpose of this Employee Stock Purchase Plan (the "Plan") is
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to provide employees of Innovasive Devices, Inc., a Massachusetts
corporation (the "Company"), and its subsidiaries, an opportunity to
purchase Common Stock, $.0001 par value, of the Company (the "Shares").
The Plan is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code").
2. ADMINISTRATION OF THE PLAN. The Board of Directors (the "Board") or any
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committee or persons to whom it delegates its authority (the
"Administrator") shall administer, interpret and apply all provisions of
the Plan. The Administrator may waive such provisions of the Plan as it
deems necessary to meet special circumstances not anticipated or covered
expressly by the Plan. Nothing contained in this Section shall be deemed
to authorize the Administrator to alter or administer the provisions of the
Plan in a manner inconsistent with the provisions of Section 423 of the
Code. No member of the Administrator shall be liable for any action or
determination made in good faith with respect to the Plan or any right
granted under it.
3. ELIGIBLE EMPLOYEES. Subject to the provisions of paragraphs 8, 9 and 10
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below, any individual who is in the full-time employment (as defined below)
of the Company or any of its subsidiaries (as defined in Section 424(f) of
the Code), the employees of which are designated by the Board as eligible
to participate in the Plan, is eligible to participate in any Offering of
Shares (as defined in paragraph 4 below) made by the Company hereunder.
Full-time employment shall include all employees whose customary employment
is:
(a) at least 20 hours per week; and
(b) more than five months in the relevant calendar year.
4. OFFERING DATES. From time to time the Company, by action of the Board,
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will grant rights to purchase Shares to employees eligible to participate
in the Plan pursuant to one or more offerings (each of which is an
"Offering") on a date or series
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of dates (each of which is an "Offering Date") designated for this purpose
by the Board.
5. PRICES. The price per share for each grant of rights hereunder shall be
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the lesser of:
(a) eighty-five percent (85%) of the fair market value of a Share on the
Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a Share on the
date such right is exercised. At its discretion, the Board may
determine a higher price for a grant of rights.
For purposes of this Plan, the term "fair market value" on any date means
(i) the average (on that date) of the high and low prices for shares of the
Common Stock on the principal national securities exchange on which the
Common Stock is traded, if the Common 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 listed on the Nasdaq National Market or on a national
securities exchange. If the Common Stock is not publicly traded at the
time a right is granted under this Plan, "fair market value" shall mean the
fair market value of the Common Stock as determined by the Administrator
after taking into consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices of shares of
the Common Stock in private transactions negotiated at arm's length.
6. EXERCISE OF RIGHTS AND METHOD OF PAYMENT.
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(a) Rights granted under the Plan will be exercisable periodically on
specified dates as determined by the Board.
(b) The method of payment for Shares purchased upon exercise or rights
granted hereunder shall be through regular payroll deductions or by
lump sum cash payment, or both, as determined by the Board. No
interest shall be paid upon payroll deductions unless specifically
provided for by the Board.
(c) Any payments received by the Company from a participating employee and
not utilized for the purchase of Shares upon exercise of a right
granted hereunder shall be promptly
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returned to such employee by the Company after termination of the
right to which the payment relates.
7. TERM OF RIGHTS. Rights granted on any Offering Date shall be exercisable
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upon the expiration of such period ("Offering Period"), as shall be
determined by the Board when it authorizes the Offering, provided that such
Offering Period shall in no event be longer than twenty-seven (27) months.
8. SHARES SUBJECT TO THE PLAN. No more than 150,000 Shares may be sold
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pursuant to rights granted under the Plan; provided, however, that
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appropriate adjustment shall be made in such number, in the number of
Shares covered by outstanding rights granted hereunder, in the exercise
price of the rights and in the maximum number of Shares which an employee
may purchase (pursuant to paragraph 9 below) to give effect to any mergers,
consolidations, reorganizations, recapitalizations, stock splits, stock
dividends or other relevant changes in the capitalization of the Company
occurring after the effective date of the Plan, provided that no fractional
Shares shall be subject to a right and each right shall be adjusted
downward to the nearest full Share. Any agreement of merger or
consolidation will include provisions for protection of the then existing
rights of participating employees under the Plan. Either authorized and
unissued Shares or issued Shares heretofore or hereafter reacquired by the
Company may be made subject to rights under the Plan. If for any reason
any right under the Plan terminates in whole or in part, Shares subject to
such terminated right may again be subjected to a right under the Plan.
9. LIMITATIONS ON GRANTS.
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(a) No employee shall be granted a right hereunder if such employee,
immediately after the right is granted, would own stock or 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 Company,
or of any subsidiary, computed in accordance with Sections 423(b)(3)
and 424(d) of the Code.
(b) No employee shall be granted a right which permits his right to
purchase shares under all employee stock purchase plans of the Company
and its subsidiaries to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) (or such other maximum as may be prescribed
from time to time by the Code) of the fair market value of such Shares
(determined at the time such right is granted) for each calendar year
in which such right is outstanding at any time in accordance with the
provisions of Section 423(b)(8) of the Code.
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(c) No rights granted to participating employees under a single Offering
shall cover more shares than may be purchased at an exercise price
equal to 10% of the compensation payable to the employees during the
Offering not taking into consideration any changes in the employee's
rate of compensation after the date the employee elects to participate
in the Offering, or such other maximum percentage of employees'
compensation as determined by the Board from time to time.
10. LIMIT ON PARTICIPATION. Participation in an Offering shall be limited to
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eligible employees who elect to participate in such Offering in the manner
and within the time limitation established by the Board when it authorizes
the offering.
11. CANCELLATION OF ELECTION TO PARTICIPATE. An employee who has elected to
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participate in an Offering may, unless the employee has waived this
cancellation right at the time of such election in a manner established by
the Board, cancel such election as to all (but not part) of the rights
granted under such Offering by giving written notice of such cancellation
to the Company before the expiration of the Offering Period. Any amounts
paid by the employee for the Shares or withheld for the purchase of Shares
from the employee's compensation through payroll deductions shall be paid
to the employee, without interest, upon such cancellation.
12. TERMINATION OF EMPLOYMENT. Upon termination of employment for any reason,
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including the death of the employee, before the date on which any rights
granted under the Plan are exercisable, all such rights shall immediately
terminate and amounts paid by the employee for the Shares or withheld for
the purchase of Shares from the employee's compensation through payroll
deductions shall be paid to the employee or to the employee's estate,
without interest.
13. EMPLOYEE'S RIGHTS AS STOCKHOLDER. No participating employee shall have
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any rights as a stockholder in the Shares covered by a right granted
hereunder until such right has been exercised, full payment has been made
for the corresponding Shares and a certificate representing such Shares
has been issued.
14. RIGHTS NOT TRANSFERABLE. Rights under the Plan are not assignable or
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transferable by a participating employee and are exercisable only by the
employee.
15. LIMITS ON SALE OF STOCK PURCHASED UNDER THE PLAN. The Plan is intended to
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provide shares of Common Stock for investment and not for resale. The
Company does not, however, intend to restrict or influence any employee in
the conduct of his/her own affairs. An employee may, therefore, sell
Shares
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purchased under the Plan at any time the employee chooses, subject
to compliance with any applicable Federal or state securities laws;
provided, however, that because of certain Federal tax requirements, each
employee agrees, by entering the Plan, to promptly give the Company notice
of any Shares disposed of within two years after the date of grant of the
applicable right, indicating the number of such Shares disposed of. THE
EMPLOYEE ASSUMES THE RISK OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE
STOCK.
16. AMENDMENTS TO OR DISCONTINUANCE OF THE PLAN. The Board may at any time
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terminate or amend this Plan without notice and without further action on
the part of stockholders of the Company, provided:
(a) that no such termination or amendment shall adversely affect the then
existing rights of any participating employee;
(b) that any such amendment which:
(i) increases the number of Shares subject to the Plan (subject to
the provisions of paragraph 7);
(ii) changes the class of persons eligible to participate under the
Plan; or
(iii) materially increases the benefits accruing to participants under
the Plan
shall be subject to approval of the stockholders of the Company.
17. EFFECTIVE DATE AND APPROVALS. The Plan was adopted by the Board on April
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2, 1996 and approved by the stockholders of the Company on April 23, 1996.
The Company's obligation to offer, sell and deliver its Shares under the
Plan is subject to any governmental authority required in connection with
the authorized issuance or sale of such Shares and is further subject to
the Company receiving the opinion of its counsel that all applicable
securities laws have been complied with.
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18. TERM OF PLAN. No rights shall be granted under the Plan after April 1,
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2006.
Date approved by the Board
of Directors of the Company: April 2, 1996
Date approved by the
Stockholders of the Company: April 26, 1996
Increase Authorized Shares
to 150,000 July 14, 1999
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